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EL SALVADOR | Price cushions coffee slump. A US$10-per-bag increase in the price fetched by Salvadorean coffee in the 2002-03 season (ended on 30 September) was able to cushion a 14% fall in output and turn it into a decline of only 2% in earnings, according to figures provided by the Consejo Salvadoreño del Café (CSC). Exports totalled 1.7m bags (of 46 kilos), as against just under 2m in the previous system, but the average price rose to about US$60 per bag, which means that earnings for the season must have come close to US$103m.

Trade statistics for the first eight months of the calendar year show coffee bringing in US$90.1m. Coffee is the most important of El Salvador's `traditional' exports, but this year it has accounted for only 4.3% of total export earnings (WR-03-38).

The 2002-03 coffee harvest yielded about 1.3m bags (of 60 kilos), which made it the worst in 40 years. This made a strong impact on the employment scene, as the number of jobs available, 52,000, was down by 22%. This is unlikely to change, as the CSC is predicting for 2003-04 an even smaller harvest, of 1.25m bags.

JAMAICA | Debt burden squeezing fiscal accounts. The finance ministry has been making much of August fiscal accounts showing tax revenues up by 21%, ahead of the 15% increase in expenditure. This notwithstanding, US investment bankers Bear Stearns say the figures show `a country under continued extreme fiscal pressure [where] current trends do not look sustainable.' The bank has focused particularly on the weight of debt-servicing on the fiscal accounts: interest, which amounts to 47% of total expenditure, is taking up 67% of revenues. As put by the bank's senior managing director, Gregory Fisher, `We know of no other country with these ratios.'

CUBA | Brazil offers export-tied debt deal. During Brazilian President Lula da Silva's recent visit to Cuba, a framework agreement was signed on the bilateral debt of US$40m: the two countries expressed `willingness to widen the mechanism for the settlement of the debt, based on assigning to that purpose a percentage of the earnings from [Cuban] exports to Brazil.' No figure was divulged. Contrary to pre-visit reports, bilateral cooperation agreements did not include a special line of credit from Brazil's development bank, BNDES; bank officials said that Brazilian exporters would have, as usual, access to regular BNDES lines.

If the opposition Sandinistas needed an extra boost they could not have asked for a better one than the announcement by US ambassador Barbara Moore that embassy officials had been meeting the rival factions of the ruling Partido Liberal Constitucionalista (PLC) in an attempt to reunify the `democratic forces'.

The PLC has been plunged into a new crisis as a result of a call by jailed former President Arnoldo Alemán's for a convention to expel the `traitors' who refuse to press for his release. This has precipitated the resignation of four members of the party's national executive, including national secretary René Herrera.

The ambassador said she was not so much worried by the Sandinistas profiting from the split in the PLC as `interested in solving the party's problems so that the democratic forces may come together.' Predictably, the Sandinistas are portraying this as unwarranted involvement in domestic politics.

“The only dictatorship left is Castro's Cuba and it is no longer a threat to the rest of the hemisphere."

Colin Powell US Secretary of State.


“There are various aspects of the sort of threat that Cuba might represent."

Roger Noriega, US Assistant Secretary of State for Western Hemisphere Affairs.


“This doesn't seem spontaneous or casual […] It could be that subliminal messages are being sent to someone."

Alberto Fernández, Argentina's prime minister, on the upsurge in kidnappings as the government of Buenos Aires province cracks down on police corruption.

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		04.10.02	26.09.03	03.10.03
Argentina	peso	3.71	2.93	2.91
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.37	7.77	7.78
Brazil	real	3.62	2.93	2.88
Chile	peso	742.90	667.00	662.00
Colombia	peso	2,881.98	2,871.60	2,905.56
Costa Rica	colón	369.72	408.59	409.48
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	_	32.88	34.03
Ecuador	dollar	1.00	1.00	1.00
El Salvador	colón	8.75	8.75	8.75
Grenada	EC dollar	2.70	2.70	2.70
Guatemala	quetzal	7.75	8.00	8.11
Honduras	lempira	16.89	17.76	17.77
Mexico	nuevo peso	10.28	11.08	11.31
Nicaragua	córdoba oro	14.47	15.48	15.50
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,450.00	6,240.00	6,220.00
Peru	nuevo sol	3.63	3.48	3.49
Uruguay	nuevo peso	28.50	28.75	28.65
Venezuela	bolí­var	1,493.50	1,600.00	1,600.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	July	August	September	Last 12m	Jan-Dec 2002
Argentina	Indec	0.40	0.00	0.00	3.50	41.00
Bolivia	INE	0.60	0.64	0.23	3.62	2.45
Brazil	FGV	-0.20	0.62	_	22.03	26.41
Chile	INE	-0.10	0.20	0.20	2.20	2.80
Colombia	Dane	-0.14	0.31	_	7.26	6.99
Costa Rica	DGEC	0.80	0.70	0.13	8.36	9.68
Ecuador	Inec	0.03	0.06	0.73	7.54	9.36
El Salvador	Min.Ec.	-0.40	0.30	_	1.70	2.80
Guatemala	BCG	0.27	0.28	_	4.97	6.33
Honduras	BCH	0.40	0.90	_	7.90	8.10
Mexico	Bco.Mx.	0.14	-0.07	_	5.24	5.70
Nicaragua	BCN	-0.08	0.30	_	4.04	3.87
Paraguay	BCP	-0.70	-0.20	0.20	8.10	14.60
Peru	INE	0.15	0.01	_	1.89	1.52
Uruguay	DGEC	0.50	1.16	0.80	11.63	25.94
Venezuela	BCV	1.80	1.30	1.30	26.60	31.20
US	DOL	0.10	0.40	_	2.20	1.60
Previous: WR-03-37

The stockmarket in figures
Market	Index	26.09.03	03.10.03	Variation (%)
Buenos Aires	Merval	810.26	830.16	2.46
São Paulo	Bovespa	15810.66	17089.30	8.09
Santiago	IPSA	1415.21	1475.70	4.27
Bogotá	IGBC	2096.96	2145.25	2.30
San José	BCT	11583.92	11672.53	0.76
Quito & Guayaquil	Interinvest	67.42	67.42	0.00
Mexico	BMV	7786.22	7838.77	0.67
Lima	ISVBL	1965.75	2028.04	3.17
Caracas	BC	17132.13	16914.17	-1.27
Source: Daily market reports.

It is most unlikely that the Free Trade Area of the Americas (FTAA) will have been finalised by its original launch deadline of 2005. The prediction comes from Sebastián Edwards, president of the Latin American and Caribbean Economics Association (Lacea), which last year held its eighth congress in Puebla, Mexico. Edwards sees two obstacles in the way of the original calendar: the issue of agricultural trade — motive for the collapse of the WTO meeting in Cancún — and Brazil's stance.

`Brazil,' he said, `has shown itself reluctant, sceptical, to continue with these negotiations. We shall have to wait and see if perhaps there is a convergence between that nation and its allies, including Argentina, and the other countries: the US, the Central Americans, Mexico and Chile, among others.' Edwards underlined that `it is unthinkable that there could be a free-trade association of the Americas without Brazil's participation.'

`The failure of Cancún is far more serious and grave than it may have appeared at first,' said Edwards. He sees it affecting the FTAA negotiations, because it allows the US to maintain its subsidies as long as they remain in place in the European Union and Japan. He suggested that a gesture of the US that might help move forward with the FTAA would be the elimination of the protection it offers its steel industry, which has had a negative impact on several countries. Edwards is convinced that, though not as speedily as expected, the FTAA will materialise: `Integration between the various regions continues to advance, so I believe that, albeit more slowly, it is possible that we will see the integration of the Americas in a not too distant future.'

Headlines concentrate instead on alleged trampling of press freedom by the Chávez government.

To judge from media headlines, the most important event of last week was that OAS secretary-general César Gaviria cut short his attendance at a seminar on inequality, because he was either (a) offended by President Hugo Chávez 's tirade against an OAS agency, the Inter-American Human Rights Commission, or (b) indignant at having been `ambushed' by the opposition, who got him into a meeting with media owners which offended the government because they were not informed.

What remained below the news radar was that Gaviria, before leaving early (he skipped a scheduled press conference), had delivered a speech with fulsome praise for `the undoubtable strengthening of Venezuelan institutions' — a message that clashes with the impression the Venezuelan opposition, the pro-opposition press and the US government are trying to convey.

Gaviria commended both Chávez 's government and the opposition for their respect for institutional decisions in favour of a peaceful and democratic solution to the political crisis. The `strengthening' of the institutions, he said, owed much to the supreme court's ability to `fill institutional vacuums and solve differences', and to the new electoral council's performance as `an impartial arbiter'.

`Without any doubt,' he said, `the continuity of this performance will ensure that the Venezuelans will solve the problems that are their responsibility [...] The international institutions that have facilitated this process are here to accompany it and try to prevent it departing from the agreed parameters of strict respect to the Bolivarian constitution.'

Those last remarks can be interpreted in two ways. One is that he emphasised that the process is a Venezuelan matter and must be solved according to the constitution — and that outsiders play only a strictly limited role. The other is that he was delivering a warning to Chávez that he might be departing from strict respect for the constitution.

The Globovisión affair & beyond
Chávez has been accused of constraining the freedom of the press, following the seizure of equipment being used by the Globovisión TV network, the government says, to broadcast on an unauthorised frequency. This action did not take Globovisión off the air, and the matter is going before the courts.

The network, backed by most of the Venezuelan media, rushed to lobby the IACHR, which immediately condemned the government's action. The US press reported that Washington, through the ambassador to the OAS, John Maisto, was seeking the application of the OAS's Democratic Charter to Venezuela — which would entail the application of sanctions by the inter-American community.

Maisto's Venezuelan peer, Jorge Valero, described this as `media manipulation', since Maisto had made no such request. It was the IACHR's reaction that prompted Chávez to protest, in Gaviria's presence, against the `media tyranny' that led to `a human rights agency to come, without communicating first with the government, to order a precautionary measure in favour of delinquents.' This, he said, was tantamount to calling into question `the honesty of the Venezuelan government, without knowing what it is all about; without realising that they are taking the side of those who are breaking the law.'

Ambassador Maisto may not have requested the application of the Democratic Charter to Venezuela, but another US official, John Walters, head of the DEA, refloated charges that the Chávez government has `probably' been granting safe haven to terrorist groups and drug traffickers, and maybe even provided them with weapons and other kinds of support. He said he had got this information from press reports.

This came shortly after the magazine US News & World Report published a `review' of information on Venezuela, largely provided off the record by government and intelligence officials, which contained the charges mentioned by Walters.

Obeying the court
In the mean time, the Chávez government was obeying a supreme court order to withdraw the military elements who had taken control of the Caracas metropolitan police (PM), the fifth-largest armed organisation in Venezuela, which had been engaged in an occasionally violent conflict with the national guard. The PM reports to the chief mayor of Caracas, Alfredo Peña, a onetime chavista who has become a bitter opponent of the national government.

The government had accused Peña of turning the PM into the `armed wing' of the opposition, and in November last year had placed it under military supervision. Peña and the rest of the opposition had said this was a blatant breach of the OAS's Democratic Charter, which commits government to `ensuring [...] the autonomy of public powers.'

Insistence on extending IVA, even accompanied by rate cuts, is seen as risking a repeat of congressional deadlock.

For reasons that are still unclear, last week President Vicente Fox decided to preempt the still unfinished negotiations on fiscal reform and go to the public with the administration's proposals. The initial response from the opposition parties suggested that he might have recreated the situation that led to the blocking of the reform when first tabled in 2001.

What Fox proposed was the lowering of rates for both the value-added tax (IVA) and income tax — the former from 15% to 10%, the latter from 33% to 30%. His main purpose, he said, was to increase competitiveness; hence the tax cut. He also seems to have hoped that it would render more palatable the other main plank of his reform: the extension of the IVA to foodstuffs and medicines, currently exempt. It was this feature that ran into most opposition in 2001.

Senator Manuel Bartlett of the Partido Revolucionario Institucional (PRI), one of the most vocal representatives of the `hardline' or `popular' wing of the party, said that the PRI as a whole opposes the extension of the IVA `because people with middle to low incomes cannot pay those taxes.' Much the same was said by congresswoman Dolores Padierna, of the leftist Partido de la Revolución Democrática (PRD): the extension of the IVA, she noted, would most affect the 50m Mexicans who devote almost 70% of their earnings to food and medicines.

Andrés Manuel López Obrador, the PRD mayor of Mexico city, who the polls show as the country's most popular politician, sounded more regretful than angry when he summed up his reaction: `I had though they would have reflected and come up with a more imaginative proposal.'

Tactics questioned
Fox's decision to unveil the government's proposals was also faulted as insensitive. Roberto Campa, deputy leader of the PRI's lower-chamber bloc, said it was a slight to have gone public before a consensus had emerged on fiscal reform from the negotiations, launched in August last year, between the political, economic and productive sectors. This complaint was echoed by the president of the lower chamber's finance committee, Gustavo Madero, of the ruling Partido Acción Nacional (PAN).

Madero urged the President not to `air' proposals in the press before he had discussed them in depth with the legislators. Doing otherwise, he said, carries the risk of seeing the reform blocked again because of the extension of the IVA. `There is not only a technical problem,' he said, `but political problems regarding the generation of agreements, and it is in this area that we should be sensitive and prudent.'

Local political analysts have not come up with any clear explanation of why Fox chose to jump the gun on fiscal reform. One view is that he felt nothing more could be expected to emerge from the quest for a broad consensus among politicians and leaders of business and labour, and that he might as well take his case to the public. Another is that he might have intended to bring out into the open the differences of opinion that exist within the opposition parties. These differences have been most visible within the PRI [WR-03-40] but they also exist within the PRD.

Indeed, one of the few non-critical responses to Fox's proposals (apart, that is, from those of Fox loyalists within the PAN) came from the deputy leader of the PRD in the chamber of deputies, René Arce. `At first sight,' he said, `the proposal seems to me worthy of attention and analysis: there are positive things. We shall have to analyse the matter of medicines and foodstuffs to see which of them could remain free from taxation.'

Agreement on energy
Consensus on the areas Fox wants to reform is not universally elusive, though where it emerges it may not quite be in the direction the government wants. Take the senate, where all members of the energy committee last week agreed on one proposal to help stave off the expected power crisis. Their recipe: legislation that would allow the state oil company, Pemex, to join the Comisión Federal de Electricidad (CFE) as an authorised supplier of electricity.

Energy minister Felipe Calderón welcomed the initiative, but added that it would not be enough to solve the problem. If it is to remain abreast of energy demand, he said, over the coming decade Mexico needs to invest M$560bn (US$50.9bn); `a figure that cannot be contributed by the government, nor the CFE nor Pemex on their own.'

The government's proposal, submitted in August last year, is to reform the constitutional provision reserving the supply of electricity to the state, so as to allow private participation `while retaining the state's commanding role.' A majority in congress have opposed this, fearing that it would be the first step towards the privatisation of the electricity sector.

Government blames opposition radicals; opposition says government is staging them to justify halting the referendum.

A string of bombings in Caracas which began on 19 September has the government accusing the most radical opposition group and the opposition claiming that the government itself is staging the attacks in order to justify a state of emergency which would halt progress towards a mandate-revocation referendum.

None of the bombings claimed any victims; all were carried out in the dead of night, and nobody has yet claimed responsibility. The first appeared to be a mortar attack against military premises just across the road from Chávez 's offices in the presidential palace. On 4 October an explosive was hurled from a passing motorcycle at the premises of Conatel, the national telecommunications council; it did little more than shatter windows. On 5 October a device exploded at the Fuerte Tiuna barracks, seat of the defence ministry and the largest army garrison in the capital; damage was slight. Potentially more dangerous was the bombing, hours later, of an army fuel truck at La Carlota airport, which caused a second truck to explode — fortunately not close to any aircraft. La Carlota is the seat of the air force and army air arm high commands. Opposition governor Enrique Mendoza predicts that the next act will be a staged `guerrilla' attack on a border unit and the assassination of a high-ranking military officer.

Government is again talking to the ELN; guerrillas look into suspicions that two hostages are gunrunners.

The kidnapping of eight foreign tourists, now acknowledged by the guerrillas of the Ejército de Liberación Nacional (ELN) to have been their handiwork, has had repercussions beyond the international attention that accompanies such events. The most important is that the government has found itself again talking to the ELN — through its imprisoned spokesmen — and not only for the ostensible purpose of agreeing to mediation on the kidnapping.

These developments came just before chief ELN spokesman Carlos Arturo Velandia Jagua (better known as Felipe Torres) was due to be freed on parole after having served three-fifths of a 20-year sentence. The government offered to free as well another ELN spokesman, Gerardo Bermúdez (aka Francisco Galán) if they would both withdraw from the ELN and help seek a peace agreement. They both declined; Torres added that, as a free man who had paid his dues, he had no intention of ceasing to act as the `political representative of an organisation that is seeking paths of peace for the country' or of renouncing his `revolutionary principles'. This creates an interesting situation.

The second repercussion is that the ELN has announced it will investigate what its hostages had been up to in Colombia. This is the result of claims by government officials that two of them had not entered Colombia legally. Unofficially they were both identified as Israelis, and the suspicion was voiced that they were involved in gunrunning.

COLOMBIA | More taxpayers, lower receipts. Despite having broadened the taxpayer base by 33%, to 600,000, Colombia's tax-collecting agency, Dian, has found itself collecting US$190m less than it had estimated — a most inconvenient development when the fiscal deficit is already headed for 2.8% of GDP, or half a point more than what had been agreed with the IMF. Dian's director, Mauricio Aranguren, has ventured that the low receipts might reflect lower sales.

The Uribe administration is gambling on a drastic enlargement of the taxpayer base to boost fiscal receipts. It has put before congress legislation that would lower the filing threshold for the value-added tax (IVA) by 67%, to US$13,843, and the one for income tax by 52%, to US$24,000. It also intends to farm out to private enterprise the collection of tax arrears, currently US$796m. Tax evasion in Colombia is estimated at 30% of liabilities — about US$2.4bn.

VENEZUELA | Unemployment rate shrinking. There is as yet no sign of the job-creating drive which, according to President Hugo Chávez , will bring down Venezuela's open unemployment rate to 13% by the end of this year. What there has been is a trend turnaround. Between July and August the rate shrank by half a percentage point (some 40,000 people), to 17.8%. The national statistical institute, INE, reports 9.9m people in formal employment in August, and 5.2m working in the informal sector.

The average unemployment rate in the first half of this year was 19.3%, compared with 15.5% in the same period of 2002.

PGR acknowledges upsurge and links it to drugs and people traffickers on access point of routes to the US.

The office of the federal chief prosecutor (PGR) has acknowledged that the climate of criminal violence denounced by business leaders and politicians in the southern state of Chiapas has indeed become exacerbated of late. This came after the state authorities requested PGR assistance to solve the execution-style killing of a state police agent a fortnight ago.

The PGR delegate in Tuxtla Gutiérrez, Martí­n Salido, says that some 50 people have been murdered in recent months in the area close to the Guatemalan border by sicarios (contract killers) working for drug traffickers, people traffickers or other forms of organised crime. Many of these murders had been committed with high-power weapons and finished off with a coup de grace. Of the 24 cases handled by the PGR, Salido reported, two have been solved. The municipalities most affected by the violence are Mapastepec, Suchiate, Tapachula, Tuxtla Chico and Villa Comaltitlán, all on the routes favoured by illegal migrants and drugs traffickers on their way to the US. The state's chief prosecutor, Mariano Herrán, says the matter should be kept in proper perspective: only 18 of the 50 murders cited, he claims, can be traced to organised crime — the rest are related to land disputes and domestic or personal problems.

The supreme court has agreed to hear what is likely to become a landmark case in Mexico's attempts to bring to book those responsible for the `disappearances' (abductions by agencies of the state) during the `dirty war' against dissidents between the late 1960s and the early 1980s.

It will have to decide whether these crimes are covered by the general statute of limitations or are to be deemed `continuing crimes' until such time as the victims are produced or their fate is determined — the latter being the criterion which has allowed the filing of otherwise barred lawsuits in Chile and Argentina.

The case in question is the abduction in 1975 of Jesús Piedra Ibarra, son of former presidential candidate Rosario Ibarra. In April this year, the special prosecutor for `social and political movements of the past' (a post created in 2000) sought an arrest warrant against two former agents of the now-defunct DFS (secret police), Luis de la Barreda Moreno and Miguel Nazar Haro. The two have been accused by human rights organisations of participation in up to 200 `disappearances'. A lower-court judge blocked the warrants on the grounds that the charge was no longer actionable due to statutory limitations.

The prosecutor's office appealed to the supreme court, whose first panel now has until end-November to rule. The official Comisión Nacional de Derechos Humanos has found that at least 74 officials (which it did not name) were involved in 275 `disappearances' that took place during the `dirty war'. Human rights organisations estimate total `disappearances' at 1,500 to 3,000.

ECONOMIC GROWTH | Slim sees three years of growth. Carlos Slim, owner of the Grupo Carso and reputedly the wealthiest man in Latin America, predicts that Mexico will have three years of growth at an average rate of 3%, `whether we want to or not'. This, he says, is because the country enjoys a set of favourable conditions it had not seen for years, such as record low interest rates and the highest-ever level of international reserves.

The finance ministry recently lowered its growth forecast for this year, originally 3%, to 1.5%, and ventured that the rate next year would be 3.5%.

Slim's intention was to portray a good short-term outlook. His forecast, though, does not look all that favourable when set against the 5% average cited as necessary by Elena Zúñiga, head of the population council, if Mexico is to create enough jobs for new entrants to the labour market. She noted that Mexico will have a `population bonus', with a predominantly young population, for the next 30 years.

INVESTMENT | Perking up in construction, still low in industry. Gross fixed investment in Mexico in the first seven months of the year was 1.5% lower than in the comparable period of 2002. This overall figure was the result of a 5.6% decline in investment in machinery (most marked in domestic purchases) and a 3.4% increase in investment in construction. The July results show a slowing of both the downturn in machinery and the upturn in construction.

In both areas the comparisons are made against a low starting-point. Last year gross fixed investment contracted by 1.3%.

Announcements focus on tightening the embargo; dissidents within Cuba don't see them bringing about much change.

Leaders of Cuba's opposition dismissed as domestic US electioneering a speech by President George Bush Jr on 10 October in which he restated his administration's hardline stance on Cuba and announced the creation of a commission `to plan for the happy day when Castro's régime is no more.'

Key excerpts of what Bush portrayed as `new initiatives intended to hasten the arrival of a new, free Cuba':

• `Strengthening enforcement of those travel restrictions to Cuba that are already in place [...] I've instructed the Department of Homeland Security to increase inspections of travelers and shipments to and from Cuba [...] We will also target those who travel to Cuba illegally through third countries and those who sail to Cuba on private vessels in violation of the embargo.'
• `Working to ensure that Cubans fleeing the dictatorship do not risk their lives at sea [...] We will better inform Cubans of the many routes to safe and legal entry into the United States [...] We'll increase the number of new Cuban immigrants we welcome every year.'
• `Increasing the amount and expanding the distribution of printed material to Cuba of Internet-based information inside of Cuba and of AM, FM and shortwave radios for Cubans. [Enhancing] the effectiveness of Radio and TV Martí­.'
• `Our government will establish a commission for the assistance to a free Cuba to plan for the happy day when Castro's régime is no more and democracy comes to the island. This commission will be co-chaired by the secretary of state, Colin Powell, and the [Cuban-born] secretary of housing and urban development, Mel Martí­nez.'

Earlier in the week, the State Department's Western Hemisphere man, Roger Noriega, had told a seminar at Miami University, `The President is determined to see the end of the Castro régime and the dismantling of the apparatus that has kept him in office for so long [...] We would like to see more Latin American countries talk for democracy in Cuba and against repression in the island.'

Noriega defended the 42-year-old embargo on trade with and travel to Cuba, saying, `This is an effective tool of our policy and we're not going to give it up. This will ensure that the dictatorship that is coming to an end will see the Cubans and not Castro's friends take the lead in Cuba.' He also made it clear that Bush would veto any legislation lifting or easing the embargo — such as the easing of travel restrictions recently approved by the House and expected to clear the US Congress this week [WR-03-36].

Dissidents speak
Within Cuba it was not only the government which, quite predictably, dismissed Bush's announcements as ineffectual. Opposition leaders said much the same. Vladimiro Roca, of Todos Unidos, said, `[The announcements] contain no great novelties; it is simply about enforcing existing rules that were not being obeyed [...] Bush is seeking reelection, and Florida was the state that gave him victory in the last elections.' In similar vein, Eloy Gutiérrez Menoyo of Cambio Cubano wrote off the announcements as being `the same old language meant to please some elitist exile groups'. He added, `Transition in Cuba will be the product of agreement among Cubans. I don't believe the White House has any role in it.'

Far from admitting defeat to US onslaught, Brazil musters `high-density' core for new anti-subsidy drive.

What started out as the G-20 and grew to become the G-22, the coalition of developing countries led by Brazil whose firm stand on agricultural trade led to the failure of the WTO talks at Cancún, has now shrunk to G-18. The US made it a policy aim to break up the group, and after applying intense pressure achieved the withdrawal of six Latin American countries.

The first to pull out, even before Cancún was over, was El Salvador. Two of its Central American neighbours, Costa Rica and Guatemala, held out a bit longer, but bowed to the warning that they might be left out of the US-Central America free-trade agreement (Cafta). Colombia did not take much coaxing; Peru opted for the face-saving device of claiming that the group had never been meant to last beyond Cancún; and Ecuador buckled as last week drew to a close.

On 10 October, when members of the group — jokingly described as `G-flux' by Argentine foreign minister Rafael Bielsa — gathered in Buenos Aires for a follow-up session, there were only 12 signatories to the final document: Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, India, Mexico, Paraguay, South Africa and Venezuela.

Brazilian failure?
This has already begun to be portrayed as the defeat of Brazil's first major-league attempt to lead an `independent' (the Brazilians prefer `assertive') foreign policy. Brazilian diplomats say this is just spin. As pointed out by Luiz Felipe de Seixas Correa, ambassador to the WTO, the countries that remain include some of `great density' both within Latin America (Brazil, Mexico, Argentina) and beyond (China, India, South Africa, Egypt, Nigeria, Thailand). They all intend, he says, to `go on being a positive factor in negotiations'.

One point the Brazilians and other `G-flux' members are keen to make is that, whatever the claims emerging from Washington, they are neither `reediting the North-South confrontation' nor acting as wreckers of the multilateral trading régime. To quote Seixas Correa, `The US and the EU moved towards the centre of the negotiating board with their joint proposal on agriculture, and we did likewise seeking a convergence between countries of the Cairns group and others who were more protectionist.'

Cancún, he says, was not a failure, just `inconclusive': the gathering never got around to negotiating the latest proposals on agriculture or market access for industrial products, and did not even finish negotiations on cotton subsidies or the so-called Singapore issues (investment and the like). The next session at Geneva, he says, should take up where Cancún left off.

His Argentine colleague Alfredo Vicente Chiaradia also rejects US claims that the G-22 sought to `politicise' the negotiations. `This,' he says, `is absolutely false. It is others who are politicising the issue and trying to turn it into a North-South confrontation. There are countries determined to discredit [us]; the group has not budged an inch from its defence of agricultural interests.'

Wielding a big stick
Lest this kind of talk should suggest that Brazil and its fellow members of `G-flux' have gone soft, some are already serving notice that they can play hardball too. Argentine and Brazilian diplomats have stated that they will not extend the WTO's so-called Peace Clause, under which countries subsidising their agricultural sectors cannot be sued for breaching the rules. This immunity expires on 31 December next, and cannot be renewed if even a single member of the WTO votes against it.

As put, tongue firmly in cheek, by Martí­n Redrado, Argentina's secretary of economic policy, `All WTO rulings must be honoured, so therefore countries that subsidise agriculture could be forced to dismantle this structure.' The targets are, obviously, the US, the EU and Japan.

At their Buenos Aires meeting, the group reiterated its call for the elimination of agricultural subsidies and for `fair and balanced' trade liberalisation, underlining that it believes the multilateral trading system is essential to achieve this.

This week the US ambassador in Managua, Barbara Moore, will receive a petition from ex-Contras for some US$700m in compensation from the US, which armed and financed their war against the Sandinistas in 1979-90. The initiative was announced last week by Salvador Talavera, president of the Partido Resistencia Nicaragüense (PRN, the party formed by the ex-Contras) — but he says the party is merely endorsing a decision taken by 300 former Contra comandantes.

Talavera says they are asking for the same treatment as the US gave to Vietnamese who fought on their side in the Vietnam war. Washington gave them some US$400m. The PRN leader says he will also be submitting to congress, supported by legislators of the ruling PLC, a bill earmarking 1% of the budget for aid to former combatants: 32,000 ex-Contras, 50,000 former members of the Sandinista army, and some 6,000 disabled veterans of both sides.

Former Contra comandantes Efrén Altamirano, Luis Fley and Oscar Sobalvarro oppose the idea because, they say, it would diminish their role to that of mere mercenaries. Talavera, in return, says that the opposition comes from some `old comandantes' who benefited from handouts and land after the war. He says the Contras have `friends in the US who were by our side during the war' who might help their claim: Assistant Secretary of State for western hemisphere affairs Roger Noriega; John Maisto, former US ambassador to Nicaragua and current ambassador to the OAS; and ambassador to the UN John Negroponte — names familiar to anyone who remembers the Iran-Contra affair.

JAMAICA | Remittances expected to overtake tourism as top earner. Remittances by Jamaican expatriates are expected to grow by as much as 25% this year, which would make them overtake tourism as the country's top foreign-exchange earner. Last year the two were almost at par: tourism earnings totalled US$1.18bn, remittances US$1.15bn. In the first quarter of this year tourism earnings were proportionally further ahead, reaching US$332.3m, as against US$302m in remittances.

CENTRAL AMERICA | Neighbours help boost tourism. All Central American countries are reporting increases in tourist arrivals this year — and in all cases a substantial part of the increase is accounted for by visitors from neighbouring countries. Last year Central America as a whole received 3.4m tourists, earning just over US$1bn from the trade.

El Salvador reports a 27.5% increase in arrivals in the first half of the year, to 464,208, who spend almost US$202m; almost 40% of the visitors came from Guatemala. Tourism ministries in Honduras and Guatemala report that almost 50% of their visitors in January-August came from El Salvador.

In Nicaragua, tourism earned US$113m in January-July, making it the third-biggest foreign-exchange earner; the proportion of visitors from nearby was `very important'. Costa Rica, with the most developed tourism industry in the subregion, expects 6% growth this year, with `a good part' of that coming from Central America. It is worth pointing out that the governments of the region have come together to conduct joint tourism promotion campaigns, seeking to brand `Central America' as a single destination — a unique experiment.

Interior minister leaves under a cloud; Duarte's choice of ruling party leader irks a top aspirant and threatens with a split.

In less than two months since he took office, President Nicanor Duarte has been landed with two crises; one in his cabinet, over corruption, and the other in the ruling party, which threatens a split.

The crisis in the cabinet was triggered by the revelation that interior minister Roberto González had personally intervened in freeing a cargo of CDs of doubtful origin that had been impounded by the police. To compound the matter, he had also dismissed the head of the police's criminal investigations department, Silvio Vera. President Duarte gave the minister, and customs director Gustavo Volpe, an ultimatum: a satisfactory explanation within 48 hours, or their resignation. On 12 October they both resigned.

The party crisis was triggered by Duarte himself, when he selected senator Herminio Cáceres to replace him as leader of the ruling Colorado party until the first quarter of 2005, when internal elections are due. This aroused the ires of the party's first vice-president, and leader of the Colorado bloc in the chamber of deputies, Cándido Aguilera — hitherto considered one of the politicians closest to the President.

Aguilera has already proclaimed that this has created a rift in the party, and says he will seek the convocation of a convention to select a new party leader. Aguilera is backed by the argañista faction of the party. Some analysts say that this situation could combine with the irritation caused by Duarte's appointment of returning oviedistas to government positions, and create a three-way split of the Colorados: a pro-Duarte faction, the argañistas and the oviedistas (the former are led by the sons of the late Vice-President Luis Marí­a Argaña; the latter by the exiled former army chief Lino Oviedo, accused of having masterminded the murder of Argaña). This comes only days after Duarte had managed to weld together a working majority in congress through an alliance with the opposition Partido Liberal Radical Auténtico (PLRA) — the same kind of arrangement his predecessor, Luis González Macchi, started out with, before the PLRA walked out to strike an alliance with the argañistas.

Come next year, foreign copper-mining companies in Chile may find themselves having to pay royalties and facing a more demanding tax régime. The prospect has been enhanced by a report submitted to a senatorial committee by the Servicio de Impuestos Internos (SII, the tax collection agency), showing that only two of the 10 biggest companies in that group paid any taxes over the past 10 years. The two who did pay were BHP-Billiton of Australia and the local Luksic group.

State-owned Codelco, which produces 42% of Chile's copper output, paid US$1.6bn in tax over the decade, as against US$1.1bn from the big private firms, because most of the latter posted losses. Christian Democrat senator Jorge Lavandero, a committee member who has long campaigned for taxing the mining firms, says this is perhaps the best argument against privatising Codelco. Since 1990, he says, the private mining companies have taken out US$38bn and paid US$1.4bn in tax. Lavandero also objects to allowing the mining transnationals to register in a category designed for small and medium-sized firms, in order to receive tax benefits.

The SII reported that last year the total tax paid by the top 10 private mining firms was US$39m, on sales worth US$5bn. So far this year, their joint tax contribution is US$5.8m.

A report by the committee is due to be submitted to the full senate, together with recommended legislation, at the beginning of December.

BRAZIL | At last, an upturn in industry. Industrial production in August was up 1.5% on July, which in turn had been 0.4% higher than in June, the month when output hit its lowest point since November 2001. The increase in August was the highest on record this year. Encouraging as the recovery was, it has not yet fully offset the accumulated decline: January-August output was 0.5% lower than in the same period of last year.

Ibge reports that expansion was recorded in 13 of the 20 industrial sectors surveyed. The greatest increases in August were in mechanical products (2.9%), textiles (2.9%) and the auto industry (2.3%). The upturn has been attributed chiefly to the lowering of interest rates and government measures to provide easier access to credit for purchases of home appliances and cars.

ARGENTINA | Setback on the farm front. Drought in Argentina's main grain-producing regions has led to the loss of about a quarter of the expected 2003/04 wheat harvest: originally forecast at 15m tonnes (roughly in line with production over the past seven years), it is now only expected to reach 11.2mt — the worst yield in a decade. This could translate into a loss of about US$600m in exports.

ARGENTINA | Sustainability of debt burden in doubt. Even if Argentina gets its bondholding creditors to accept the proposed 75% `haircut', it will face an annual debt-servicing burden of more than US$10bn over the coming 15 years. Treasury secretary Carlos Mosse says it will have to borrow in order to cope, and raises the prospect of a return to international capital markets in the medium-to-long term. Economy minister Roberto Lavagna has reckoned that it will take more than four years to create the conditions for a return to the markets.