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MEXICO | ‘La Familia leader' arrested. On 21 June the federal police arrested José de Jesús Méndez Vargas (‘el Chango'), who was presented as the leader of La Familia Michoacana (LFM), the drug cartel which, in February, had announced its dissolution. The official version is that Méndez Vargas had taken over the reins of the LFM after its previous leader, Nazario Moreno (‘el Más Loco'), was reported killed in a two-day shootout with federal police in December 2010 (his body has never materialised).

In the wake of this episode another group emerged in Michoacán, Los Caballeros Templarios (The Knights Templar), who announced that they would be continuing in the steps of the LFM. Official sources have suggested that this group is led by another of the LFM leaders, Servando Gómez Martínez (‘la Tuta'), who in November 2010 offered the government a truce and a ‘pact' — which was rejected.

More recently Gómez Martínez was said to have been discussing an alliance with José Efraín Zarco Cárdenas (also known as José Villalobos, ‘el Villa'), the reputed successor of Edgar Valdez Villareal (‘la Barbie') (leader of a breakaway faction of the Beltrán Leyva organisation). Zarco Cárdenas was arrested by the federal police in May.

MEXICO | Marines accused of murder. On 13 June the Comisión Nacional de Derechos Humanos (CNDH, the official body that acts as a public ombudsman) held the marines responsible for the ‘extrajudicial execution' of a retail drug trafficker in Monterrey last March. The trafficker was last seen alive (and videoed) when he was being bundled aboard a naval helicopter. His body was found on 22 March, bearing signs of torture.

The navy ministry (Semar) has argued that the marines were only assisting the local police, who were in charge of the prisoner; the CNDH, without actually accusing the marines of having tortured and killed him, ruled that they had been responsible for him inasmuch as they took him away in one of their aircraft.

This is the second recent censure of the marines by the CNDH. On 30 May it ruled that they had used ‘unjustified force' in an April incident in which they killed one person and injured two when they opened fire on a car that had failed to halt at a checkpoint. Semar has since announced that four marines were being investigated for this action.

MEXICO | Hank Rhon arrested, then released. On 4 June army troops arrested the former mayor of Tijuana, Jorge Hank Rhon (one of Mexico's wealthiest men), and reported the seizure of a substantial arsenal in his home. Despite the high profile of the case, the absence of video documentation of the operation allowed Hank's lawyers to claim that the weapons had been planted by the military. A federal court ordered Hank's release, but he was promptly rearrested on a murder charge; on 14 June a state court ordered him released again.

Though he is still under investigation, Hank Rhon announced that he was seriously considering running for office again. Several media reports have claimed that while in office Hank Rhon had enjoyed an ‘understanding' with the Tijuana/Arellano Félix cartel.

MEXICO | Success claimed for multi-state anticrime sweep. On 19 June the Mexican government announced that Conago 1, a coordinated anticrime sweep by 300,000 police officers in all 32 states, had resulted in 3,705 arrests. It is the first time that such a coordinated operation has been attempted: the federal government has underlined that the state police forces were targeting criminal offences that were not within the scope of federal jurisdiction.

Development: On 3 July the main traditional Partido Revolucionario Institucional (PRI) won the three gubernatorial elections in Mexico.

Significance: The PRI's easy win in the most important of these elections, in the Estado de México, means that Enrique Peña Nieto, the incumbent state governor, is almost certain to be the PRI's presidential candidate in 2012. The latest contests also demonstrate that the only way the PRI can be defeated at the ballot box is if the two other main parties, the Partido Accion Nacional (PAN) and the Partido de la Revolución Democrática (PRD) run tactical alliances, as in 2010.

Key points:

• The turnout in the Estado was almost as low as in 2005: abstention in 2005 was 57%; yesterday it was 56%. The new governor will be Eruviel Avila, a former mayor of Ecatepec. He won more than 60% of the votes cast and came in almost 40 percentage points ahead of his left-wing rival, Alejandro Encinas. Luis Felipe Bravo Mena, the PAN candidate, won only 12.5% of the votes cast: a humiliating result for him and President Felipe Calderón Hinojosa, who obliged him to run.

• The PRI was always going to win in Coahuila, where Rubén Moreira succeeded his brother Humberto, who is the PRI's national president. In Nayarit, the PRI candidate Roberto Sandoval won by about 14 percentage points from the PAN candidate who was the wife of a previous governor and had been a PRD federal deputy.

• Separately, the widow of Lucio Cabañas, a revolutionary guerrilla in Guerrero who was killed in 1974, was gunned down with her sister as they came out of church. Their bodies were left outside the church for at least three hours, the Asamblea Popular de los Pueblos de Guerrero claimed.

Development:  On 2 May the Honduran court of appeals voted 2-1 to annul criminal charges (for corruption) against the ousted former president Manuel Zelaya (2006-2009).

Significance:  The secretary general of the Organization of American States (OAS), José Miguel Insulza, yesterday said that the ruling had cleared up Zelaya's "juridical situation", adding that Honduras has now met "the principal requirement" for the OAS to lift its nigh on two-year suspension of the country. The Honduran government hopes to return to the OAS fold in June, at the San Salvador general assembly meeting. Zelaya, who has spent the past year seeking to make political hay in Honduras and beyond out of his legal limbo, will now have to decide carefully his next move, having long refused to return home citing fears of persecution. It's unclear if his former ally, Venezuela's President Hugo Chávez, who latterly joined Colombia's President Juan Manuel Santos in seeking a solution for Zelaya and Honduras, would be inclined to throw in his lot with the newly radicalised Honduran Left now overseen by Zelaya.

Key points:

• Political and criminal charges against Zelaya were issued by the public ministry and the supreme court in July 2009, after the 28 June coup d'état. Congress threw out the political charges over a year ago. The remaining criminal ones were for fraud and falsification of public documents and embezzlement of L$57m (US$2.95m) from the presidency and the Honduran Fund for Social Investment (FHIS). The defence argued that Zelaya was unable to defend himself when the charges were issued, given that he was facing persecution by the interim government that succeeded his administration. The public appointed attorneys for Zelaya argued his right to due process was violated. On 25 March, a supreme court judge had dismissed three outstanding arrest warrants against Zelaya relating to the charges. The public ministry could appeal the ruling, but it's unlikely.

• Zelaya has been living in the Dominican Republic since 27 January 2010.

Leadership candidates are surfacing in both the ruling PNP and the opposition JLP, though neither PJ Patterson nor Edward Seaga are yet putting a date on their departure. 

The poor performance of the ruling People's National Party (PNP) in last month's local elections has brought to the fore, earlier than expected, the question of who will replace prime minister PJ Patterson. Three prominent party figures are seen to be already in the running: former cabinet minister Karl Blythe (the only one who has publicly acknowledged that he is a contender), national security minister Peter Phillips and local government minister Portia Simpson Miller. All three are vice-presidents of the PNP. 

The Sunday Gleaner claims that there is a move afoot to enhance Phillips' chances and reduce those of Blythe. It involves securing the election, at the PNP conference in September, of development minister Paul Robertson, an ally of Phillips, as one of the party's four vice-presidents. Of the current four, only one, agriculture minister Roger Clarke, is deemed not to aspire to the top post. 

Prime minister Patterson said last weekend, 'It would be unrealistic to expect that potential candidates will not begin to position themselves for the starting gate. But until that time when a vacancy is imminent, any campaigning or positioning that could prove to divide the party or distract from our current mission of continuing the social and economic transformation of Jamaica, must and will be discouraged.' It is widely believed that Patterson will step down sometime next year. 

Two declared contenders in JLP 

In the Jamaica Labour Party (JLP) it has been assumed for some time that former deputy leader Pearnel Charles would be a leading contender to replace Edward Seaga when he steps down. Now an unexpected rival has appeared in the form of current deputy leader Derrick Smith, hitherto not considered to harbour leadership aspirations. 

These two have openly declared that they are in the running. Political commentators also cite two other deputy leaders, Audley Shaw and Ed Bartlett, as well as former party chairman Bruce Golding, as possible contenders. Both Charles and Golding - who are brothers-in-law - are rumoured to be seeking election as deputy leaders at the JLP's conference in November (though Golding has denied this outright and Charles says he hasn't yet made up his mind). 

Some analysts suggest that deputy leader Audley Shaw, who as spokesman on financial affairs has earned a reputation as the scourge of the ruling PNP, might also emerge as a leadership contender. 

Apart from Seaga's position as leader, another one is expected to become vacant soon: that of party chairman, currently held by Ryan Peralto, who has been suffering from ill health. Golding has dismissed suggestions that he might seek to get his old job back, which leaves the acting deputy chairman, Percy Broderick, as the favourite to succeed Peralto. 

It is expected that Seaga will step down before the next general election, due in 2007: Patterson has stated that he will not be in the running, and few think Seaga, now 73, would chance contending against a younger PNP leader.

COLOMBIA | Portfolio flight leads investment plunge. The net inflow of foreign investment in Colombia last year reached little more than US$1bn — a plunge of 82% from the US$5.86bn recorded in 2001. What most influenced this was the outflow of US$1.01bn of portfolio investment, as against an inflow of US$3.34bn the previous year. Foreign direct investment (FDI) shrank by 19%, to just over US$2bn. Deputy trade minister Claudia Uribe, who painted this discouraging picture from data provided by the central bank and Coinvertir, the investment promotion agency, said, `The government is very concerned, not only to attract investment but also to retain what we've got.' She attributed the poor performance last year to the international financial environment and the public-order situation in Colombia.

PERU | Growth expectations lowered. The Peruvian government has lowered its growth forecast for next year from 5% to 4%, as part of a review intended to make `more realistic and consistent' its macroeconomic projections up to 2006 (originally made in May last year). Economy minister Jaime Quijandrí­a blames the world economic environment for the poorer performance expected. The government is expecting private investment next year to reach 14.9% of GDP (instead of 16.4%), and has cut its own investment from 3.3% of GDP to 2.8%. In real terms, the falls are greater than these figures suggest, since GDP will be smaller than anticipated.

Last year Peru grew by the highest rate in the region, 5.3%. In the first half of this year the rate slowed to 4.5% (still among the highest), but most economists expected a further slowdown in the second half.

Quijandrí­a has warned that a key feature of the projections, the fiscal deficit target of 1.4% of GDP, could be jeopardised if the budget is compromised by demands for higher spending from the regional governments and some unions.

Gutiérrez and Uribe bury the hatchet, but new developments heighten Ecuadorean concerns about the spillover from the Colombian war.

Ecuadorean President Lucio Gutiérrez and his Colombian peer Alvaro Uribe have decided to ignore the friction recently caused by the latter's claim that arms from Ecuador's military arsenals were being used by Colombian guerrillas [WR-03-41]. This, however, has not yet cooled tempers in Ecuador, where that spat had translated into a magnification of all the grievances arising from the `spillover' of the Colombian conflict.

Indeed, concerns about the `spillover' were heightened last week as a result of two separate developments: the discovery of a camp established by the Farc guerrillas inside Ecuador, and the prediction of a continuing influx of Colombian refugees.

The manner in which the Farc camp was discovered is a bit of an embarrassment for the Ecuadoreans, who had been contrasting their deployment of 7,000 troops along the border with Colombia's neglect of the area. A Colombian engineer kidnapped by the Farc was being ferried by launch on the San Miguel river, the border between the Ecuadorean province of Sucumbí­os and the Colombian department of Putumayo. Spying Ecuadorean soldiers on the bank, he dived overboard and swam ashore. There he told the military where to find the camp where the guerrillas had been holding him — only 22 kilometres away from the township of General Farfán.

This is not the first Farc camp to have been found in the border area, but it is the first known to have been in use recently. Like others, it was found to contain caches of foodstuffs, munitions, explosives and communications equipment.

This example of border porosity was followed by another: the local representative of the UN High Commissioner for Refugees, José Euceda, reported that Colombians had been fleeing the conflict and crossing into Ecuador at a rate of about 1,000 a month — three times as many as in 2001. Euceda said his agency projected a continuation of this trend throughout next year.

Since 2000, the year the US-backed Plan Colombia was launched, about 20,000 Colombians have applied for refugee status in Ecuador, which allows them to reside and work legally. Only 5,000 have so far been accepted. Reception facilities in the border area have already been overwhelmed, but in any case the newcomers do their best to move away to the cities as fast as possible. Ecuador, worried about its ability to absorb this influx, has requested urgent international financial assistance to expand facilities near the border, and has been trying to persuade Colombia to agree to some form of migration control.

Peru has embarked on a series of arms purchases which, defence minister Roberto Chiabra insists, is not tantamount to entering an arms race with Chile — just correcting a `strategic imbalance' created by Chile with its most recent military procurement drive. A number of Peruvian politicians are preparing an international campaign against `excessive' arms purchases by their southern neighbours.

Peru last week announced its intention to buy from Italy two secondhand missile-equipped Lupo-class frigates, with a price tag of about US$38m. It is also taking an option on the purchase of another two Lupo frigates in 2005.

The official rationale is that the frigates will replace two obsolete ships already decommissioned, another to be mothballed this year, and the destroyer Almirante Grau, to be withdrawn from service in 2008.

The `imbalance' to which Chiabra alluded was allegedly caused by Chile's recent decision to start negotiating the acquisition from the Netherlands of four secondhand L-class anti-aircraft frigates (upgraded in 2000), plus two multipurpose M-class frigates that have been in service since 1993. This comes on top of the recent purchase from Britain of the frigate HMS Sheffield, now Almirante Williams. Chile's rationale is that it needs to renew its fleet, whose ships are on average 32 years old.

The Chilean government responded to Chiabra's statement with one of its own, highlighting that its policy was to equip its armed forces with the `necessary infrastructure' for a strategy based on `dissuasion' and permanent availability for `cooperation, integration and development.' Government spokesman Francisco Vidal added, `Each country has its defence doctrines, it defence policies, its acquisition policies: we don't comment on those of other countries.' Chiabra said that if the phrase `strategic imbalance' had offended the Chilean, he would gladly change it for `technological imbalance'. He added that relations between the armed forces of Peru and Chile were `at their highest level'.

He then went on to announce that Peru's procurement drive would not be confined to upgrading the fleet. The next step would be to `raise the potential' (potenciar) of the armed forces' helicopters and airplanes — by which he meant buying new ones. Priority, said Chiabra, would be granted to transport aircraft, for two purposes: fighting the `remnants of terrorist forces' [Sendero Luminoso] and providing aid in natural disasters.

Public debate
The issue of military acquisitions has become a very public one. An association of retired Peruvian navy officers published an open letter to the government urging it to go ahead with the frigate purchases, which they said was necessary in order to `recover the navy's potential.' On a slightly different tack, a group of 70 congressmen have said that they will be circulating abroad documentation on the `excessive purchases of weaponry' by Chile. At least one Chilean legislator, the Christian Democrat Jorge Burgos, has urged his government to keep in mind that renewal of defence materiel `must follow the logic of the continent we live in.'

CENTRAL AMERICA | Cafta to be signed this month. The US-Central America Free Trade Agreement (Cafta) will be signed in Washington on 28 May. The US has finished negotiations with the Dominican Republic to include that nation in Cafta, but a period of congressional consultation on that agreement required under the Trade Act has not yet concluded. The Bush administration plans to submit a single legislative package to the US Congress that includes Cafta and the Dominican Republic together.

 

US exports to the region have grown 71% since 1996, to US$10.9bn in 2003. More than 70% of Cafta imports already enter the US duty-free under the Caribbean Basin Initiative and Generalised System of Preference programmes; Cafta will provide reciprocal access for US products and services. Including the Dominican Republic in Cafta will create the second-largest US export market in Latin America, after Mexico.

Last month the US and Panama conducted their first round of free-trade negotiations, and talks with Colombia, Ecuador, and Peru will begin this week.

GUATEMALA | Remittances & tourism top US$1bn. In the first four months of the year, the inflow of hard currency generated by remittances by expatriates and tourism reached US$1.04bn. By far the biggest contribution was made by remittances, which totalled US$807m, up 28% on the same period last year. Earnings from tourism were up 3.4% to US$231.6m.

CUBA | New round of belt-tightening. The Bush administration's threat to restrict remittances by Cuban expatriates to their families (which amount to some US$1.2bn annually) has been invoked, together with other announced US restrictions, as the motive for a new round of belt-tightening at home. All products by `essentials' such as foodstuffs and hygiene products have been withdrawn from sale at shops selling in US dollars; and the goods still on offer will suffer price increases. It is expected that the withdrawn goods will reappear once they have been repriced. Also to be increased are fuel prices.

A US State Department mission has turned up in Guyana to assess whether its claims of having made progress on curbing what Washington calls 'trafficking in persons' (TIP) are enough to lift the threat of sanctions that accompany its 'Tier 3' classification - which at their worst could hinder Guyana's access to both US markets and to credit from international financial organisations.

The Guyanese government, while protesting that it does not merit a 'Tier 3' rating, says it is working hard to meet the higher benchmarks. Labour and human services minister Bibi Shadick said, after meeting last week with Rachel Owen, one of the authors of the State Department's 2004 report on TIP, and Eric Falls of the Bureau of Western Hemisphere Affairs, that she felt confident of an upgrade.

Roger Luncheon, head of the presidential secretariat, went as far as to state his belief that Guyana might even rise to 'Tier 1' status. The State Department ´s classification of TIP performance has puzzled many Latin American governments. Only Colombia is in Tier 1 (top marks). Four countries - Cuba, Ecuador, Guyana and Venezuela - are in Tier 3 (worst marks, subject to sanctions). Another 17 countries are in Tier 2, and of these nine are on the State Department's TIP 'watch list'.

Arm-twisting has begun in earnest as congress approves 'in general' the new hydrocarbons bill in their joint development committee's version, which has replaced the more foreign-friendly version drafted by the Mesa government [WR-04-36]. Both the US and Brazil have sent emissaries to press for changes. Interestingly, the possibility of amendments is already being mentioned by the hardliners of Evo Morales's Movimiento al Socialismo (MAS).

The lower chamber of congress approved the new hydrocarbons bill, in its first, 'general' reading, on 20 October. The only votes against it came from a handful of congressmen from Tarija, the department which holds about 87% of Bolivia's gas deposits. The article-by-article debate is scheduled to begin this week. The president of the chamber of deputies, Mario Cossí­o (who is from Tarija), said that the first vote had been 'a formality' and that the forthcoming consideration of the bill's 142 articles would be 'meticulous'.

The very next day Charles Shapiro, Deputy Assistant Secretary of State at the Bureau for Western Hemisphere Affairs (former ambassador to Venezuela at the time of the 2002 coup), turned up for a chat with President Carlos Mesa. After that, he said that he could not comment in detail on the hydrocarbons bill, which was 'an internal affair', and then went on to warn that congressmen and the government should weigh its consequences, since an enforced 'migration' from old contracts to new (as envisaged in the bill just approved) would trigger the US government's obligation to protect US investments.

Shapiro took advantage of the occasion to draw another battle line: he said that President Mesa had assured him that eradication of coca plantations would continue and that this year's target of 8,000ha would be met. US ambassador David Greenlee, accompanying Shapiro, joined the dots. He noted that the 'worrying aspect' of the executive's recent agreement with the coca growers [WR-04-40] was the one-year exception for 3,200ha in the Chapare while actual demand for 'legal' coca is determined, but added that he hoped the rest of the deal would allow 'accelerated eradication in other parts of the Chapare' since the US stance on this is unbending.

On 25 October another envoy turned up: Marco Aurélio Garcia, Brazilian President Lula da Silva's foreign-affairs adviser. He held separate meetings with Mesa, Morales, former President Jaime Paz Zamora (leader of the Movimiento de la Izquierda Revolucionaria, MIR) and Mirtha Quevedo (leader of the Movimiento Nacionalista Revolucionario, MNR). 

Publicly he made all the right noises about respecting whatever decision Bolivia should make. Paz Zamora, however, said that he had expressed concern at the provision for enforced 'migration' of contracts and said that future investment was dependent upon an 'adequate treatment' of the hydrocarbons sector.

Morales told a different tale - that Garcia 'at no time asked us to soften, change or modify' the bill. In congress, the president of the lower chamber's economic development committee, Santos Ramí­rez (of the MAS), said it was quite possible that the bill might be amended here and there, as long as care was taken to 'respect sovereignty' as decided in the July referendum.

It is an article of faith in the Haitian left, and among likeminded people abroad, that the US was behind the rebellion that created the conditions for the ouster of President Jean-Bertrand Aristide. One of the prime movers of that rebellion, Buteur Métayer, has just discovered that, whatever the truth behind this assumption, he is not automatically considered a friend of the US.

Buteur is the brother of the late Amiot Métayer, leader of the Gonaí¯ves-based Armée Cannibale, a gang which initially supported Aristide until a falling-out led to Amiot's murder. Transmuted into the Front de Résistance Artibonite, that gang struck an alliance with the former soldiers mustered by Guy Philippe, a former chief of police of Cap Haí¯tien who had been forced into exile after two successive coup attempts against Aristide, and Louis Jodel Chamblain.

Chamblain is a former deputy to the notorious Emmanuel (Toto) Constant, who headed the Front Révolutionnaire pour l'Avancement et le Progrí¨s Haí¯tien (FRAPH) - a paramilitary group responsible for many of the atrocities committed by the military regime led by General Raoul Cedras in 1991-94. As a onetime CIA 'asset', Constant enjoyed US protection after the reinstatement of Aristide.

In December, Buteur Métayer did not think twice about travelling to the US for medical treatment and to visit his mother at her home in Orlando, Florida. To his surprise, soon after his arrival he was arrested and confined in the Krome detention centre, apparently at the behest of the INS. On 12 January a judge ordered Métayer deported back to Haiti. He is reported not to intend to appeal the ruling. The INS has invoked security reasons to keep the date of his deportation secret.

The IMF expects Latin America to grow this year by little more than 4% (the World Bank ventures 4.3%), a rate it describes as 'strong', even though in many countries it translates into fairly low per capita growth (probably none in Paraguay), and it falls well short of the 6% Eclac has estimated as necessary to start rolling back poverty in earnest.

Presenting the IMF's outlook on 15 April, Anoop Singh, director of the Fund's Western Hemisphere Department, said that, against the backdrop of last year's unexpectedly good results, 'we continue to see still strong growth in 2005 in the Latin American region of a little over 4%, even though the effects of the boom in commodity prices wane and the recoveries in countries such as Brazil, Uruguay, and Argentina mature'.

He added a warning: 'There are downside risks, particularly if oil prices spike higher, interest rates in industrial countries rise more sharply than expected, or industrial country growth slows in a prolonged way. I would also add that the removal this year of quotas for textiles and clothing will pose a particular challenge to producers in the region. These factors underscore the importance for countries such as Mexico and in Central America of policies that improve labour and product market flexibility.'

Singh drew attention to 'encouraging' features that distinguish the current economic cycle from previous episodes of what he called 'fast' growth: (1) the upturn has been supported by macroeconomic policy frameworks that incorporate much greater flexibility to buffer against external and domestic shocks; (2) recent policymaking in the region contrasts with past periods of growth, in which large inflows of external financing were used to fuel both private and public spending rather than as an opportunity to strengthen and crisis-proof underlying fiscal, external, and structural positions; (3) despite high commodity prices, inflation has been well contained, falling to an average of about 6.5% in 2004, the lowest level since 2001, and is projected to decline further in 2005; and (4) in this environment of prudent fiscal and monetary policies, the initial phase of the recoveries has been led by improved external performance more than by strong domestic demand.

Last year Latin America grew by 5.7%, the strongest rate in 24 years and well above the initial forecasts of the multilateral agencies.

Last week it was the Mexican authorities' turn to look silly over the stamp issue commemorating Memí­n Pinguí­n, the country's best-loved cartoon character, decried as racist and unacceptable by the White House and even the US National Security adviser [WR-05-26]. The postal service decided to assuage US feelings and limit distribution of the stamp to collectors only - but the public reacted and snapped up the entire issue within less than a week. The publishers of the comic are racing to keep up with demand.

News that Sepomex, the Mexican postal service, had retreated in face of US criticism, was relayed on 4 July by the head of the philately section in the border city of Tijuana, who said that Sepomex personnel had been instructed to avoid crossing over to the US.

The very next day, Gustavo Islas, assistant director-general of Sepomex, reported that all 700,000 stamps offered to the general public had been sold (the postal service kept 50,000 for itself). The communications & transport ministry followed up with a communiqué claiming that it had never issued any orders to restrict sales.

Meanwhile, Editorial Vid, the publishers of the Memí­n Pinguí­n comic, has been moved to launch a sixth edition of the 324-chapter series - when the fifth one is still less than two-thirds of the way through. The fifth edition had been selling 125,00 copies a week; the sixth has started out with 300,000.

Vid's director, Manelik de la Parra, said on 8 July that both US and Latin American firms had expressed an interest in taking Memí­n Pinguí­n to television or even the big screen. 'They want to carry the story,' he said, 'as a soap opera, radio drama, an animated cartoon or a film with live actors. It is a matter of sitting down to negotiate.'

 

The leaders of the paramilitary Autodefensas Unidas de Colombia (AUC) have suspended any further demobilisations until the government reverses actions taken against their former 'inspector-general', Diego Fernández Murillo. Though they have focused on this, they are also concerned about other indications that the government is adopting a tougher attitude towards the paramilitary organisations.

On 30 September, after approving the extradition of Murillo (also known as Don Berna) to the US on drug-trafficking charges, the government transferred him from a farm in Córdoba, where he was under house arrest, to the Cómbita maximum-security prison in Boyacá.

On 6 October the AUC leadership announced that it was freezing all further demobilisations until Don Berna was restored to his status as a negotiator. 'Ernesto Báez' (Iván Roberto Duque), the political director of the AUC, told Interior Minister Sabas Pretelt and Peace Commissioner Luis Carlos Restrepo that the paramilitaries are not demobilising in order to go to prison or to be extradited to the US. He stopped short, however, of breaking off negotiations.

On 10 October the government moved Don Berna again - to the top-security prison of Itagüí­, the same prison where ELN spokesman Francisco Galán (now on leave for negotiations) is confined.

For this week the AUC had scheduled the surrender of large units of the Bloque Central Bolí­var (BCB), the strongest of the paramilitary units, which is actually still engaged in combat in the south of the country. So far about 11,000 purported members of the AUC have demobilised - almost 2,000 more than their estimated total strength at the outset of the negotiations. They are saying that about as many again are still up in arms.

Peace commissioner Restrepo has ordered an investigation into claims that one demobilised paramilitary leader, Jairo Angarita (a close associate of former top AUC leader Salvatore Mancuso), has been organising a 'third generation' of paramilitary units and putting pressure on government officials in Córdoba. Angarita has been smarting ever since a pro-government party refused to include him in their list of congressional candidates, but he denies the accusations. President Alvaro Uribe has reportedly ordered an investigation into claims that members of a paramilitary organisation are still collecting 'taxes' from ranchers, farmers and landowners in the department of Guaviare. Congressman Pedro Arenas said these comments were passed to Uribe last weekend when he held a 'communal council' in San José del Guaviare and that he promptly ordered the military and police commanders of the area to 'lock up' all those involved in setting and collecting those 'taxes'.

• Court seen leaning against reelection
  
  The constitutional court has decided that it will be ruling on both the procedural aspects and the substance of the constitutional reform which lifted the ban on presidential reelection, according to a report published in El Tiempo on 5 October. Many commentators had assumed that it would concentrate, as has been its wont in the past, on the procedural aspects because they offered an easier target and kept it clear of a thorny political issue. The reported decision is now being seen as probably heralding a ruling against reelection.

Come the day, it was Michelle Bachelet who provided the surprise - by rising suddenly above the 'plateau' which opinion surveys had been predicting and attracting 53.5% of the vote in the 15 January run-off. Her rival, Sebastián Piñera, did not manage to attract all of the votes that had gone to the candidates of the right in the first round and ended up with 46.5%.

Bachelet has become Chile's first woman president and the fourth directly elected one in Latin America. She is perceived as more of a Socialist than outgoing president Ricardo Lagos, though it remains to be seen if she will depart from the long-ruling Concertación's tradition of conservative management of the economy. This will condition her ability to address the biggest pending item on the Concertación's agenda: Chile's huge social inequities - the second most acute in Latin America, after Argentina's.

The new president will have the ability to push through most of her legislative programme as the Concertación enjoys a majority of its own in both chambers of congress (though it lacks the qualified majority required for legislation of constitutional import).

The big question during her term will be what happens to the right. Four days before the presidential run-off, a split in the rightwing vote prevented passage in congress of what would have been landmark legislation: a bill granting constitutional recognition to the rights of Chile's indigenous communities. Piñera had thrown his weight behind it, calling explicitly for his own party, Renovación Nacional (RN), and the farther-right Unión Demócrata Independiente (UDI) to vote for it. The UDI congressmen abstained en masse, aborting approval.

In so doing they provided the Concertación with valuabe last-minute electoral ammunition. The episode was portrayed by government officials and Concertación leaders as evidence that governability would not be assured under a Piñera government. As put by Gabriel Ascencio, president of the chamber of deputies: 'Piñera offers and his legislators are the ones who decide.' UDI leaders later blamed this 'government misinformation' for Piñera's defeat. Senator Hernán Larraí­n went as far as to say: 'The disinformation campaign has been successful and this is harmful for democracy.' In Larraí­n's reading, what the presidential elections have shown is that 'Piñera and Laví­n together can provide a good presidential option for the 2010 elections'.

For anything like that to happen, the right will have to overcome the resentment these last elections have bred in two quarters. First, within UDI - where many still blame Piñera for splitting the right-wing vote by running under his own colours instead of supporting Joaquí­n Laví­n as the sole candidate. Second, within RN - where many see UDI's pre-election stance in congress as unpardonable 'sabotage'.

An important part of the equation is how successful Bachelet proves in keeping the right wing of the Christian Democrat party on board. Piñera sought to coax them away from the Concertación where, as the biggest partners, they felt entitled to the presidential slot. While accepting Bachelet's victory with far greater grace than UDI, Piñera did promise that he would conduct 'firm and constructive opposition' to her government. This means that he will be alert to any opportunity to drive a wedge between the right and left wings of the ruling coalition. Economic policy is likely to be his target of preference.

Just as President Oscar Berger was commissioning the new auxiliary police unit drawn from among former members of the military to combat crime, peasant organisations served notice that they will be launching a national uprising to demand concrete responses to a lengthy petition submitted to the government at the end of March.

The 22-point petition was submitted as the crowning event of a march by several thousand indigenous peasants, organised by the Coordinadora Nacional Indí­gena y Campesina (Conic). It was formally received by Vice-President Eduardo Stein, who promptly proposed the establishment of a 'dialogue table' to discuss the demands. On 5 April Conic leader Juan Tiney said that, as the government had come up with 'a list of activities but no response to any of the demands', the peasants were resorting to an uprising in the style of those staged in Bolivia and Ecuador.

Tiney called upon members of indigenous communities who have been appointed to government positions (the most notable of whom is Nobel Peace Prize winner Rigoberta Menchú) to resign in solidarity with the peasants. He said the unions and the teachers had pledged their support to the uprising, which will continue 'until they give us clear answers and specific solutions'. He did not spell out what kind of actions would be carried out.

The early-May shoot-outs, which left a toll of at least 20 dead [WR-06-28], have been accompanied by a sudden surge in kidnappings, many in broad daylight, and by a further round of shooting incidents last week that left a toll estimated at 11 killed. The UN mission and some politicians see a political motivation behind the violence, but the Préval administration insists that it is just the work of criminals.

The kidnappings have attracted much attention because three of the victims were US nationals (two of them Franciscans released with the assistance of FBI negotiators). All told, though, there were 30 reported kidnapping cases in the first 20 days of July, a rate almost 50% higher than that of June. While clearly preferring foreigners and wealthy Haitians, the kidnappers have been varied in their choice of victims.

On 19 and 20 July shooting incidents were reported in several parts of Port-au-Prince: the north-eastern district of Delmas, the no-longer-pacified Cité Soleil and Drouillard, on the northern access to the capital. Gangs hijacking vehicles and attempting to kidnap passengers and drivers clashed with police and Minustah troops. Eyewitnesses reported three fatalities: two bystanders caught in a crossfire and one person seen fleeing the scene of a shoot-out.

Minustah and the government remained silent until 21 July when a UN representative announced that over the previous three days 'armed groups attacked various positions of the national police, the blue helmets and civilians in Port-au-Prince'. Minustah and the police responded and 'killed in total eight attackers and wounding another four'.

The government, through spokesman Joseph Jasmin, said: 'This phenomenon is chiefly linked to common criminal activity.' The senate president, Joseph Lambert, did not quite agree. He said in a radio interview that the violence reflected 'chronic unemployment and political problems related with the return, or not, of [former president Jean-Bertrand] Aristide.' Lambert believes this is fairly easy to solve: 'If we give something to these people, they will forget the past.'

UN officials believe that the simultaneous nature of the recent attacks suggests coordination, and this in turn suggests an attempt to draw the government's attention to their displeasure with its failure to bring Aristide back from exile.

The government, backed by the ruling Lespwa party and by business leaders, has returned to the line favoured by the previous Latortue administration: that Minustah, for all its force, is not being tough enough with the armed gangs. Some officials note that there have been no arrests for the shooting which took place earlier in the month. This, of course, is a criticism which could apply just as well to the national police. Its chief, Mario Andrésol, complains that arresting people is pointless if the judges immediately release them. Few recall that just as the latest bout of shootings was about to begin, government spokesman Jasmin proclaimed that 'the arrival of a new secretary of state [for security] and the new leadership of the police have the potential to combat the criminal acts' and to contain the violence.

President Lula da Silva had to soothe the financial markets on 30 October following comments from his ministers, which seemed to indicate there would be a shift in the government's fiscal policy. The comments reveal the split between the "conservatives" and the so-called "developmentalists" within the government will continue over the next four years. Lula, however, seems determined to seek a "middle path" to boost economic growth without compromising the hard-gained economic stability. 

Lula assured reporters, and the markets, that the government will continue to follow "responsible fiscal policy" in the next four years. His statement was a rebuff to his political coordination minister, Tarso Genro, who criticised the economic policy envisaged by the former finance minister, Antonio Palocci, as "marked by low economic growth, with a neurotic preoccupation with inflation and without regard to wealth distribution". Genro, together with Lula's influential chief of staff, Dilma Rousseff, wants the government to spur faster economic growth by lowering interest rates and promoting more state intervention in the economy. This kind of policy, however, means the government would have to loosen its austere fiscal policy. 

While it is true that Palocci's conservative economic policy of high interest rates and expenditure curbs led to slower economic growth rates, it is also undeniable that it brought economic stability. Analysts were quick to remind Genro that Lula's government gained economic credibility home and abroad thanks to Palocci's tough monetary and fiscal policies, which brought inflation and the government's accounts under control. Champions of Palocci's austerity remain in the government (despite his fall in April following corruption allegations), the most important being the central bank's president, Henrique Meirelles. 

Palocci's replacement, Guido Mantega, is a former planning minister who is part of the so-called "developmentalist" group led by Rousseff. Since Mantega's appointment Rousseff has been struggling to bring the central bank back under the executive's control, which led to Meirelles losing ground in the government. Under Palocci, Meirelles and the central bank's monetary committee had "complete independence" to decide Brazil's monetary policy. This is no longer the case and it is unlikely the situation will change. The problem for Lula is that the rise to power of the "developmentalists" could be understood by market analysts as providing a carte blanche for the government to ditch the inflation target system that brought prices under control in the last four years. 

Change in finance ministry
It seems, however, that Lula is well aware of this clash of ideas within the government and is wiling to find a "middle path" that will lead to faster economic growth and at the same time maintain economic stability. This will mean a change in the finance ministry with a name to "counterbalance" Rousseff, whom, according to government insiders, Lula trusts but thinks can be "a bit too forceful" at times. 

A few names have been banded about: the president of Petrobras, Sérgio Gabrielli, is one of them. Gabrielli performed well as head of the state-controlled oil company, and is a close ally of Meirelles but also maintains good relations with Rousseff. Lula's preferred choice, however, seems to be Jorge Gerdau Johannpeter, the owner of Gerdau, one of Brazil's largest steel companies, who seems willing to take a position in the government.

It took less than one month for the first spat between President Daniel Ortega and the US: appropriately enough the catalyst was the Soviet-era Sam-7 missiles. Ortega this week warned the opposition in the national assembly, in no uncertain terms, not to proceed with its plans to destroy 651 Sam-7 missiles while Honduras "is busy procuring planes from the US". He said that he was loath to enter into an arms race but he would consider buying more missiles if Honduras decided to expand its air force. His words exposed the difficulties inherent in greater integration in Central America.

The US has been pressuring Nicaragua to destroy its arsenal of Sam-7 missiles ever since the 11 September attacks, for fear that they could fall into the hands of terrorists. Ortega's predecessor, Enrique Bolaños, was receptive to Washington's call but only partially successful due to his lack of support in the national assembly. The opposition Partido Liberal Constitucionalista (PLC) and the Alianza Liberal Nicaragüense (ALN), with 48 seats between them, want to approve a bill sent by Bolaños to eliminate 651 missiles, leaving 400 for self-defence as recommended by the armed forces.

Ortega, who did not fill the position of defence minister when he named his cabinet, said that Nicaragua had done more than any other country to downsize its armed forces and did not even have an air force: Honduras and El Salvador, he argued, could attack Nicaraguan towns in a matter of minutes. The US embassy in Managua explained that the US had not offered Honduras fighter planes; rather it was planning to provide the country with eight "Storm Rally" reconnaissance aircraft, but that these were light aircraft to be used to counter the threat of illegal logging or drug smugglers. It added that Honduras was a sovereign nation that could make its own decisions.

This, of course, was a red rag to a bull. Ortega insisted that Nicaragua was also "sovereign" and did not have to comply with demands from the US to destroy its missiles, which would be "absurd" unless Honduras disbanded its air force. Ortega's diatribe comes just two months after a visit to Tegucigalpa when he dismissed a maritime dispute with Honduras over 50,000 sq km in the Caribbean Sea as "absurd", arguing that there should be no borders between the two countries. He proposed to Honduran President Manuel Zelaya reducing Central America's armed forces in the interests of deepening regional integration and channelling more resources into poverty-reduction programmes [WR-06-48].

Cosying up to the Church
Shortly after backing a draconian law outlawing abortion in all cases, President Daniel Ortega reached out to the Roman Catholic Church again this week. He offered Cardinal Miguel Obando y Bravo, 81, a position in the government presiding over the council for reconciliation. Obando, an inveterate opponent of Ortega in the 1980s and 90s, is now a close ally after Ortega's conversion to Catholicism. Along with former Contra now Vice-President Jaime Morales, he embodies the reconciliation that Ortega is championing. Ortega created the position by decree on 30 January. He sees it as an integral part of the popular democracy he is intent on establishing. Obando has appealed to the Vatican for permission to take up the post. His role is unclear. Unlike during the civil war, when Obando served as president of the reconciliation committee, there is currently no conflict in Nicaragua.

 

President Alan Garcí­a accepted the resignation of his maverick agriculture minister, Juan José Salazar, on 20 May after he made another headline-grabbing concession to coca growers which Garcí­a dismissed as "mad and stupid". Salazar signed an agreement with coca growers from the province of La Convención, in Cusco, committing the government to evaluate its stance regarding the 1961 Vienna Convention on Narcotic Drugs. Fearful of jeopardising US congressional support for an FTA with Peru at a crucial time, Garcí­a appointed Ismael Benavides, an avowed neoliberal, successful banker and agro-exporter, to replace Salazar.

Salazar, the first member of the ruling Partido Aprista Peruano (PAP) to lose his position, had one of the toughest jobs in the cabinet. Agriculture ministers in Peru are forever trying to find a delicate balance between upholding coca eradication policies, introducing alternative development projects and containing social unrest in the poor coca-producing regions. Significantly, Benavides chose to wash his hands of the cocalero problem from the outset. He said that coca eradication was the exclusive remit of Devida, Peru's antidrugs agency, and policing was in the hands of the interior ministry. The agriculture ministry, he said, was responsible only for alternative development.

Salazar had already courted controversy, and been slapped down by Garcí­a, by striking a deal in March with coca growers in Tocache, in the northern department of San Martí­n, offering a temporary suspension of eradication. A week later he told congress there was no true anti-drug policy in Peru and that some areas had been all but set aside for drug-trafficking. Not only did the concessions to Tocache encourage more radical coca growers in neighbouring Monzón to seek an end to eradication but they came at an awkward time for Garcí­a, who shortly afterwards travelled to Washington to try and persuade Democrats to back the FTA. He felt compelled to reaffirm his government's commitment to eradication.

Salazar's latest faux pas, in La Convención, was slightly exaggerated. Although he initially committed Peru to establish a commission to evaluate whether to withdraw from the Vienna Convention, which insists that the state controls the cultivation of coca, he later inserted an annexe to the document signed with the coca growers clarifying that Peru would only appeal for coca leaf to be struck off the UN Convention's blacklist. 

Publicly rebuked by Garcí­a, Salazar admitted he had made a serious mistake and tendered his resignation. He had little choice but to go: the discrepancy between his actions and the government's rhetoric could not be reconciled. It was no coincidence that Salazar was a marginalised figure in the talks conducted with the Monzón coca growers which were carried out by the prime minister, Jorge del Castillo, and concluded in Lima on 7 May.

Pushing for the declassification of coca is not a new idea. Congress presented a motion to pursue this in 2001 and Garcí­a himself backed the idea during his first administration. The timing now, however, with the US FTA in the balance, rendered such a suggestion impossible. The moderate cocalera leader, Nancy Obregón, a legislator, said that the government was reacting to pressure from the US. It is more likely that it acted to avoid putting the FTA at risk unnecessarily.

The new broom
The appointment of Benavides looks calculated to reassure the US. President of the Asociación de Bancos (Asbanc), Benavides worked for the World Bank monitoring the privatisation process in Bolivia between 1986 and 1988. A former fisheries minister under president Fernando Belaunde (1980-1985), he has been a member of the centrist Acción Popular (AP) since 1994. His appointment appealed to agroexporters: he is a successful exporter of pisco and asparagus. It did not please the PAP, which had hoped to keep hold of the ministry, still less coca growers from La Convención, who reacted to his appointment by declaring a 72-hour strike. They marched to Quillabamba, the capital of the province, and blocked roads to demand that the agreement signed with Salazar be upheld. The big question is whether other coca growers' unions join in. 

The challenge for Benavides will be to bring the success of the coastal agro-exporting industry to the Andean highlands under Garcí­a's Sierra Exportadora initiative, which envisages the cultivation of niche market crops instead of coca to help reduce poverty in the highlands. This has not really taken off, mainly because no other crop grows so well, or is as profitable, as coca. Garcí­a made several frank confessions while swearing in Benavides, chief among them an admission that channelling the fruits of Peru's growth to the people had so far been managed inefficiently. He could have been motivated by his falling approval rating, down three points on April to 46% in May. 

Reversing Fujimori's autogolpe
Congress, meanwhile, has a miserable 20% approval rating. The fact that public opinion has hardened against congress - mainly because of a series of corruption scandals in recent months (see sidebar) - explains why the president of congress, Mercedes Cabanillas, has decided to postpone voting on restoring a bicameral system to Peru in time for elections in 2011. Opinion polls show that the proposal is none too popular as increasing the number of legislators will inevitably lead to more public spending and, the public fears, more corruption.

The legislature's constitutional committee voted by 10 votes to two last week to create a 50-seat senate alongside the 120-seat lower chamber. One of the two dissenting voices was Santiago Fujimori, the brother of the former president Alberto Fujimori who in April 1992, lacking a majority in both chambers of congress, staged an autogolpe, suspending the 1979 constitution and dissolving congress before drafting a new constitution adopting a unicameral system. 

President Alejandro Toledo tried to restore the senate in April 2005 but he failed to muster the two-thirds support required. It is likely to be different now. Legislators representing the PAP and the nationalist opposition parties, Partido Nacionalista Peruano (PNP) and Unión por el Perú (UPP), support the proposal. 

The idea is that the lower chamber will cater to the interests of individual departments - there will be at least one representative from each electoral district - while the senate, elected nationally, will concentrate on the national interest. Some legislators are concerned this will make the senate too Lima-centric. 

 

• Congressional corruption
  Two legislators from the Unidad Nacional (UN) party, Walter Menchola and Elsa Canchaya, have been accused of irregularities: Menchola got a job for his alleged lover as a salaried congressional employee, who does no work; Canchaya employed her maid as a congressional adviser. Juana Huancahuari, a legislator for the Unión por el Perú (UPP), is accused of fraud. They are all being investigated by the congressional ethics commission.