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Development: On 12 October a poll published two weeks before national elections on 25 October put the presidential candidate for the ruling Frente Amplio (FA), José Mujica, on 44% support, to 31% for the main opposition Partido Nacional (Blancos) candidate, Luis Alberto Lacalle. The second opposition candidate, Pedro Bordaberry, of the Partido Colorado trails on 12%.

Significance: This means that the presidential contest is almost certain to go to a second round run-off on 29 November, as neither Mujica nor Lacalle of the Blancos looks capable of mustering the 50% of the vote required to win at the first hurdle. This is likely to be a very close race: the Blancos and Colorados would line up behind Lacalle in a run-off giving him 43% support, while Mujica would mop up supporters of the small Asamblea Popular, putting him narrowly ahead on 44.5%.

The poll, carried out by Interconsult between 2 and 5 October, suggests that Mujica has managed to bounce back after the recent publication of a book Pepe Coloquios, which showcases his tactlessness. The book contains a series of 'off the record' interviews with Mujica, in which he makes some injudicious remarks about neighbouring Argentina, a country, he says in one interview, of “totally irrational, hysteric, mad, paranoiac reactions (which) has not reached a level of representative democracy, and whose institutions are not worth a damn". The last Interconsult poll, carried out amid the controversy, placed Mujica on 42%, down 3 points from the 45% he polled at the beginning of September. Lacalle has manifestly failed to capitalise on Mujica's woes: his support has in fact fallen by three points since the beginning of September.

The final result looks set to hinge on the 7% of voters who remain undecided. In theory, if Mujica could put in a strong finish to his campaign, he could win the contest in the first round on 25 October by topping 50% of the vote. This scenario appears increasingly unlikely: popular disenchantment is high following an acrimonious election campaign that has included very little in the way of policy debate. This disillusionment with the two main candidates is working in favour of the smaller parties. The Colorados candidate, Bordaberry, has gradually increased his support from around 8% earlier in the year, to his current 12%. Similarly, Pablo Mieres of the Partido Independiente (PI), has crept up from 2% to 3% over the past fortnight.

A second round would put pressure on Mujica, a left-leaning former Tupamaro guerrilla, and cente-right former president Lacalle (1990-1995) to spell out their policy proposals. In truth, they have much more in common than they would like to admit. Lacalle's attempts to paint Mujica as a radical liability would appear largely misplaced. Mujica has made clear that he will make few major changes to the country's current economic policy under the popular President Tabaré Vázquez. He has agreed to delegate economic policy decisions to his vice presidential running mate and Vázquez's former economy minister, Danilo Astori, a moderate who has pledged to continue with the government's successful policy of attracting foreign investment.

Argentina: Unemployment rose to 9.1% in the third quarter of 2009, up from 7.8% in the same period of 2008.

Colombia: The central bank unexpectedly cut the benchmark interest rate to 3.5%, citing low inflation and reduced growth expectations.   The bank set its 2010 inflation target at 2.0%-4.0%, down from 4.5%- 5.5% in 2009. Retail sales fell 7.3% year-on-year in September, the weakest result since at least 2000. Industrial production fell 3.8% year-on-year in September.

Paraguay: The national statistics institute has raised the official poverty rate to 37.9% in 2008, based on a new methodology, up from a previous rate of 33.3%, which was based on an older measurement. Nonetheless, both methodologies show poverty declining in the period 2007-2008, amid strengthening real GDP growth. Rural areas are still the most impoverished, with a poverty rate of 48.8% in 2008.   Extreme poverty was put at 19%.

Development: On 13 January Vice President Federico Franco called for a 'state of exception' in the North of the country, following the kidnapping of a wealthy rancher by the Ejército del Pueblo Paraguayo (EPP) rebel group over 90 days ago.

Significance: While the government may be getting more concerned about the EPP, Franco's statement can also be seen as a further attack on President Francisco Lugo, towards whom Franco is openly hostile. Franco has been increasingly vitriolic in his claims that Lugo is failing to do enough to curb the activities of the EPP and protect internal security. By publicly calling for tougher measures, he has undermined the president's authority. His comments will add further fuel to the attempts by the opposition to push for the impeachment of Lugo.

Franco - of the Partido Liberal Radical Auténtico - claimed that the EPP, which is concentrated in Northern regions, represents a growing security threat. He insists that local police services in the region are ill equipped to deal with it.

Fidel Zavala was kidnapped from his estate near the border with Brazil in late October. The EPP has demanded US$5m for his release. The group is thought to be a faction of the left-wing Partido Patria Libre, whose members were accused of the kidnap and murder, in 2005, of Cecilia Cubas, the daughter of former president Raúl Cubas (1998-1999).

Franco's proposal comes a day after Zavala's family were apparently ordered by the kidnappers to give 30 of their cattle to three poor indigenous communities. The interior minister, Rafael Filizzola, reacted by describing the incident as an “insult". Filizzola had earlier raised the alarm by claiming that the EPP had warned they “would be carrying out kidnappings and other activities in order to raise funds".

Under Paraguayan's constitution, the president and congress have the power to call a 'state of exception' when internal security is at risk. It gives the government a period of thirty days during which it can deploy greater security resources and carry out extrajudicial detentions.

Development: On 25 February the US announced that it was closing, temporarily, its consulate in Reynosa, because of the violence in the state of Tamaulipas.

Significance: Tamaulipas has suffered a series of shootouts between drug-trafficking gangsters and the army this year. On 25 February, a group of gangsters attacked an army patrol on a road just outside Matamoros (another town in the state), where the US consulate still remains open. The army said that it killed four of the attackers and took no casualties.

In Tamaulipas and the neighbouring state of Nuevo León at least 25 people have been killed in shootouts in the past few days. Some of these shootouts are between gangs; others are between gangs and the police or the army.

The authorities in Mexico say that the reason for the upswing in violence is that a gang war has broken out between the Golfo gang and its gang of contract killers, Los Zetas. For most of last year, security analysts had assumed that Los Zetas had actually taken over the Golfo gang. According to the Mexican press, the Golfo gang has sent 50 pickups into Tamaulipas each one with the letters CDG (Cártel del Golfo) on the side.

In various rural parts of Nuevo León schools have closed because of the upswing in violence. In Tamaulipas, the Golfo gang has put up banners asking people not to panic, claiming it “will not get involved with the general population".

Development: On 8 April, Colombia's defence minister, Gabriel Silva Luján, announced that the government will not hold peace talks with the Fuerzas Armadas Revolucionarias de Colombia (Farc).

Significance: Silva's comments put an end to the speculation about a possible humanitarian agreement between the Colombian government and the Farc before President Alvaro Uribe leaves office on 7 August.

The Farc's recent unilateral release of Josué Daniel Calvo and Pablo Emilio Moncayo, on 28 and 30 March respectively, had given new boost to the call for a humanitarian swap. While in the past both sides have appeared rhetorically willing to hold a humanitarian exchange, in practice insurmountable pre-conditions on both sides have always stymied progress.

Silva stated that a negotiated peace with the Farc would only take place after the terrorist group had been completely defeated militarily. He argued that the negotiations “are not intended to build peace but to win a tactical space, some oxygen, some time for narco-terrorism to recover its energy, catch a breath and start threatening and attacking Colombia [again]".

According to Silva, and most regional security experts, that is what the Farc did during the failed peace process led by Andrés Pastrana during his presidency (1998-2002); the Colombian government does not want to repeat the experience.

President Uribe has also stated in the past that talks of a humanitarian agreement during an electoral campaign were the Farc's attempt to insert themselves in the political process and disrupt constructive political debate. Interestingly, none of the presidential candidates in the 30 May election have shown a predisposition or stated intentions to establish peace talks with the guerrilla group, indicating that a peace process is unlikely under this or the future government.

Development: On 19 May in Madrid, Spain, President Porfirio Lobo said that the former president Manuel Zelaya could return at any time, reiterating that the supreme court would not act arbitrarily against him or seek to enforce an arrest warrant over the 20 or so pending criminal charges levied against him by the court and the public ministry.

Significance:  Lobo is under firm pressure from the international community to deal more proactively with the implicit causes of the 28 June coup against Zelaya. Brazil in particular is insistent that constitutional reforms are essential to the process of national reconciliation. The problem for Lobo is that he cannot risk alienating the powerful state institutions, not least the judiciary, or the entrenched traditional political elite. Zelaya's lengthy brinkmanship with these ended in tears.

Yesterday in Washington, Eduardo Stein, the Guatemalan head of the Truth Commission to investigate the coup, said that the commission had begun work (on 4 May) amidst “enormous polarisation" and noted that it faced criticism, doubts and scepticism “from both sides". He questioned whether it would be possible, “given the current Honduran reality", for the commission to really get to the bottom of what happened and make recommendations to avoid a repetition in the future.

Stein's comments chime with the latest findings of the Inter American Commission on Human Rights (IACHR), which yesterday issued a statement of concern following a recent (15-18 May) country visit to follow up on its on-site visit of August 2009  and its December 2009 report 'Honduras: Human Rights and the Coup d'État'.

The IACHR statement expressed “deep concern over the continuation of human rights violations in the context of the coup d'état", noting that “without prejudice to the high rate of criminality that in general exists in Honduras_.the complaints received could correspond to the same pattern of violence". It expressed particular concern about “acts of harassment directed against judges who participated in activities against the coup d'état" (several were struck off by the supreme court on 5 May).

It also warned that the state “is not exempt from its international obligation to investigate, prosecute, and punish through the judicial system those agents of the state who may have committed human rights violations."

Development: On 27 June Keith Rowley, 60, officially became the new leader of the now opposition People's National Movement (PNM) after his nomination for the post was uncontested.

Significance: A political old-timer with a string of past cabinet posts to his name, Rowley will have to rebuild the PNM following its disastrous defeat in the 24 May general election. The ill-advised decision by Rowley's predecessor and now ex prime minister, Patrick Manning, to call a snap election saw the People's Partnership, a five party coalition led by Kamla Persad-Bissessar, sweep to power, while the PNM's representation in the 41-seat parliament collapsed from 26 to 12 seats.

Manning had called the vote in the hope of exploiting opposition disunity and averting a no-confidence vote in parliament over corruption allegations involving the Urban Development Corporation of Trinidad & Tobago (Udecott). Rowley was fired by Manning from his post as trade minister in April 2008 after he was critical of a lack of cabinet supervision of Udecott.

Rowley said that any major restructuring of the PNM would take place after the 26 July local government elections. He announced that a former health minister, John Rahael, would replace Conrad Enill as campaign manager.

As acting opposition leader, Rowley has appeared willing to negotiate with the new government on issues of national interest such as the appointment of new police commissioner (amid disagreements over the selection process). He also offered PNM endorsement of PP nominees for key parliamentary posts as speaker of the house of representatives and senate president.

Panama: According to Panama's comptroller general, Panama exported 5,749 ounces of gold (worth US$1.4m) in 2009. So far in 2010, Panama has exported 33,369 ounces of gold, generating US$23.2m in revenue.

Development: Early on 11 September, the federal police deactivated a car-bomb in Ciudad Juárez.

Significance: Car-bombs exploding in northern Mexico worry US policymakers. Hillary Clinton, the US secretary of State, said as much in a major foreign policy speech last week. This was the third car-bomb in the past two months. As with the first car-bomb on 15 July, (which ended up killing four people) the police received a warning. The police said that they suspected that the warning, late on 10 September, was a trap, so they found the bomb which they deactivated.

This success boosted the government which confessed that the death toll for 11 September in Ciudad Juárez at 25 was the highest daily figure since January 2008. Since then, over 6,400 people have been killed in Ciudad Juárez alone. Since President Felipe Calderón took office on 1 December 2006, over 28,000 people have been killed by gangsters. 

The government is also hailing its success in arresting, on 12 September, another senior figure in the Beltrán Leyva organisation, Sergio Enrique Villareal Barragán, alias “El Grande", in Puebla. “El Grande" is alleged to head one faction of the Beltrán Leyva gang which was fighting the faction loyal to Héctor Beltrán Leyva and Edgar Váldez Villareal (alias “La Barbie"). “La Barbie" was arrested on 30 August. “El Grande" was arrested by marines, who have not been operating much in Puebla.

Development: On 24 October the United Nations (UN) reported that a cholera epidemic in Haiti had killed 253 people to date, with a further 3,015 cases reported.

Significance: This is the worst humanitarian crisis to hit the country since the 12 January earthquake that killed up to 300,000. The declared epidemic will prompt renewed criticism of the UN and international aid agencies for failing to take the necessary preventative measures in the large camps housing the homeless survivors of the earthquake. The epidemic also raises further questions as to whether the scheduled presidential and legislative elections, due to take place on 28 November, can realistically go ahead. Notably, the health minister Alex Larsen yesterday called on presidential candidates to suspend campaign activities.

The government and international agencies are sending out mixed messages. On the one hand, the director-general of Haiti's health department, Gabriel Thimote, said yesterday that there were signs that the cholera outbreak was stabilizing. In contrast international officials led by the UN humanitarian coordinator in Haiti, Nigel Fisher, said that the outbreak was likely to widen. He told reporters, “We must gear up for a serious epidemic, even though we hope it won't happen". Only last week (20 October), Catherine Bragg, the secretary-general of the UN Office for the Coordination of Humanitarian Affairs (UNOCHA), had denied the possibility of an epidemic.

The main affected area is the Artibonite region in Central Haiti, some two hours from the capital, Port-au-Prince, where many of the displaced people from Port au Prince are now living, many in camps. The source of contamination appears to be the Artibonite River, which acts as the main drainage system for the area. However, five deaths have also been reported in Port-au-Prince itself. The UN said that the victims had been infected in Arbonite before travelling to the capital, and stressed that the capital was not considered an infection risk zone. However, bearing out Fisher's concerns, there are other suspected cases in Croix-des-Bouquet, just outside the city, and in Carrefour and Petionville, both inside it.

A bacterial infection, cholera is typically spread by contaminated water and food. The disease is treatable but without treatment it can kill within hours. According to the World Health Organization (WHO), cholera transmission is “closely linked to inadequate environmental management". It says that “typical at-risk areas include urban slums, where basic infrastructure is not available, as well as camps for internally displaced people or refugees, where minimum requirements of clean water and sanitation are lacking".

The UN is leading the effort to coordinate and manage the 1,300 camps (accommodating some 1.3m displaced people). Its performance was recently criticised by an independent US aid agency, Refugees International, which   in a report released earlier this month pointed to a “humanitarian response that appears paralyzed", with “less than 30% of the camps with managers". The report noted that despite “alarming conditions, the UN co-ordination system in Haiti is not prioritising activities to protect people's rights."

Pointer: A multi-national medical response is currently underway in an attempt to slow the disease. According to the latest press release from the Pan American Health Organisation, the Haitian government is leading this effort, and is working closely with the 12,000 strong UN stabilisation mission, Minustah, the WHO and the local humanitarian community. Some 12 cholera treatment centres are being erected to allow for the isolation and treatment of cases: six in Artibonite, one in Central, and five in Port-au-Prince. Individual and community based prevention measures such as the distribution of soap, water purification tablets and rehydration salts are ongoing, while tens of thousands of litres of chlorinated water are being sent to affected areas for widespread distribution.

Development:   On 7 December, the unicameral national assembly (AN) appointed in a special session nine permanent magistrates and 32 alternates to the supreme court of justice, a move widely seen as a manoeuvre by the government of   President Hugo Chávez to retain control of the judiciary.

Significance:   The outgoing Chavista assembly is in permanent session this week in order to approve some 10 bills that the executive wants in place before newly elected opposition legislators take up their seats in early January. The agenda includes a controversial package of five 'popular power' organic laws corresponding to President Chávez 's so-called 'geometry of powers';   a plan to redraw the country's political and administrative map and devolve power down to the so-called 'People's Branch' (grouped in communal councils) as part of his plans for a more direct, participatory form of democracy. Organic laws require a two thirds majority for approval, hence the rush.

The five bills are: the Law on People's Power; the Law on Planning and Popular Power; the Law on Communes; the Social Comptroller Law; and an amendment to the Law on the Development and Promotion of a Communal Economy. They flesh out the People's Branch and complement the February 2010-created Federal Council of Government, a new decision-making body grouping the communal councils with elected mayors, state governors and central government ministries. The Federal Council of Government, which ultimately falls under the president's authority, will oversee decentralisation funds.

The domestic opposition is highly suspicious of all this. The biggest fear is that this new 'geometry' will undercut existing elected representatives and that the Chávez government will in fact strengthen its centralising hold on power by bypassing intermediary elected officials like state governors and mayors and by selectively directing funds to certain areas. It's worth noting that local authorities will be obliged to transfer part of their allocated funds to the communes, some of which cross existing municipal boundaries. (Chávez also has a plan to appoint five new regional 'vice presidents', whose powers would supersede elected state governors.)

The Communal Economy law has also generated controversy; by establishing so-called 'social property' it seems that the government may be seeking greater control over the means of production.

Development: On 27 January, Uruguay's president José Mujica, on official visit in Venezuela, remarked that not allowing Venezuela to join the Southern Cone Common Market (Mercosur) was “idiotic".
 
Significance: Mujica's left-wing Frente Amplio (FA) government is becoming increasingly outspoken and eager to align itself behind Venezuela's president Hugo Chávez .  Mujica's remarks come almost immediately after some controversial comments on the governments of Peru and Colombia from Uruguay's vice-foreign minister, Roberto Conde. Conde said that in his opinion the governments of Peru and Colombia represented a “regression for the region", characterising them as “militarist and fascistic" governments. 

Key points: 

 Venezuela's full admission into Mercosur has been held up by Paraguayan congress since 2009. Some Paraguayan legislators claim that President Chávez 's regime does not meet Mercosur's democratic clause.  The other three Mercosur member countries, Argentina, Brazil, and Uruguay have already ratified Venezuela's admission into the block.

 Speaking to journalists after meeting with Chávez , Mujica said that “we need the Venezuelan people in Mercosur, because if we don't include them we are idiotic and anti-patriotic [Latin] Americans". Mujica explained that some groups within Mercosur may have a “negative view regarding the Venezuelan process led by Chávez " but advised that a distinction must be made between the Venezuelan people and the government. “Governments are definitely transitory, the only permanent thing is the people; and we need the Venezuelan people in Mercosur" he argued. However in his next breath Mujica argued that “if we add Venezuela's resources to Mercosur's, the potential is infinite".

 Mujica also referred to Colombia and its internal conflict with the left-wing subversive group, the Fuerzas Armadas Revolucionarias de Colombia (Farc) and the possibility of a peace process. “If any day they need my help with any process, I am available; if we could help, we would" he said. Finally, he backed Venezuela's economy minister, Alí­ Rodrí­guez's bid to become the Union of South American Nations' (Unasur) next secretary general.

Development: The White House insisted today (18 March) that President Barack Obama's trip to Brazil, Chile and El Salvador remains on, despite the humanitarian and nuclear crisis in Japan and the imminent threat of international military action in Libya.

Significance: Brazil demonstrated its growing international strength and confidence in itself last night by abstaining from the United Nations (UN) Security Council vote to approve the imposition of a no-fly zone over Libya. Ten of the 15 council members voted in favour and five abstained: Brazil, China, Germany, India, and Russia. Brazil's foreign minister, Antonio Patriota, declared yesterday that US recognition of Brazil “as an equal partner" is paramount, noting that that recognition is more important to Brazil than any direct declaration by President Obama of US support for Brazil's bid for a seat on a reformed UN security council (which he gave to India on his trip there in October 2010). The way the Brazilians see it, that day is coming regardless, and US support, while it might be a welcome pre-emptive gesture by the Obama administration, is largely immaterial in the bigger scheme of things.

Key points:

Analysts make the point that Dilma Rousseff is one of the first Latin American presidents not to have to schlep to Washington DC to receive the White House 'blessing', instead the Obama administration appears to be trying to signal its understanding of Brazil's growing global importance, as well as the shifts that have occurred in the region. In his main speech in Santiago, Chile, Obama will apparently highlight the successful social democracies established in Brazil and Chile as examples the world (not least the Arab world) might want to emulate.

However, in order for this trip to have the political resonance it needs with Latin Americans, Obama needs not only to recapture the spirit of Trinidad 2009, when, making his debut at a regional summit, the new president loftily promised to turn the page on US-Latin American relations, but also he needs to strike a note of humility, in recognising that the region, led by Brazil, is now an important global player in its own right. It cannot be lost on the White House that the region has thrived in the past few years in the glaring absence of full US attention.

“In simple and direct language, we hope for a relationship of equals", Patriota stated yesterday. “World circumstances today favour that. Brazil has consolidated itself as a democracy, as an economy".

While the Brazilian government is rolling out the red carpet for Obama, neither is it under too many illusions. The White House press office has, rather clumsily, framed this trip very loudly in terms of US economic interests and the US recovery, and while the fact that Obama is coming at all is a major coup for President Rousseff, in private she is rumoured to be frustrated at the apparent US reluctance to discuss issues of importance to Brasí­lia like Brazil's trade deficit with the US and US tariffs on ethanol.   Few new policy announcements are expected on this trip, beyond vague promises of additional support for Central America.   Like all his predecessors, Obama's Latin America policy is a prisoner of the US domestic political scenario and US Republicans in congress are not in a generous mood.

Obama will be accompanied by his wife and daughters as well as key economics and energy sector officials, including Treasury Secretary Tim Geithner, US Trade Representative Ron Kirk, Energy Secretary Steven Chu, and Environmental Protection Agency (EPA) Administrator Lisa Jackson.

  There was some speculation today that Obama's highly anticipated open public speech to the Brazilian people in central Rio on Sunday afternoon (20 March) might be scaled down to a smaller indoor venue in light of the Libyan situation, although this could not be confirmed.

Pointer: Brazil's UN ambassador Maria Luisa Viotti issued a statement via the foreign office (Itamaraty) stating that Brazil's vote “should not in any way be interpreted as an endorsement of the behaviour of the Libyan authorities or negligence with regard to the need to protect the civilian population and respect their human rights. We are not convinced that the use of force as contemplated under paragraph four of the current resolution will lead to the realisation of our common objective, an immediate end to violence and the protection of civilians".

Development: On 6 May, a group of armed men shot dead José Aristeo Martí­nez Rodrí­guez, the leader of one of the ruling Frente Sandinista de Liberación Nacional's citizen power councils (CPCs), in the Autonomous Region of the Northern Atlantic (Raan) on the Caribbean Coast.

Significance: This is the first assassination ahead of the 6 November general elections.

Key points:

According to Martí­nez's widow, six men armed with carbines broke into their residence, in the Rosita municipality, kidnapped her husband, saying they were going to exterminate “all Sandinistas, particularly CPC members" and painted the words “Comando Patriótico por Nicaragua Juan Uriel 380" on the wall of the house.

The police chief responsible for the municipality, Otilio Duarte Herrera, claimed that there are armed groups operating in the municipalities of Puerto Cabezas, Rosita, Siuna, Bonanza, Prinzapolka and Mulukukú. The army denies the existence of such groups, claiming they are merely vandals.

The possible existence of these groups last attracted attention in February following the alleged assassination of a former Contra, José Gabriel Garmendia (AKA Comandante Yahob), by official forces in the department of Jinotega. The mysterious circumstances surrounding his death prompted a call from the Nicaraguan centre for human rights for an extensive investigation.

In May 2009, church leaders had warned that armed groups were operating in some rural areas. This followed a statement by the “Comando de Justicia Nacional Rigoberto López Pérez" declaring it had taken up arms against the “bi-party dictatorship" of President Ortega and former president Arnoldo Alemán (1997-2002).

Similarly, in November 2009, a march against Ortega included former Contra groups such as the Fuerza Democrática Nicaragüense (FDN), Resistencia Nicaragüense (RN) and the Partido Resistencia Nicaragüense (PRN). PRN leader Roberto Ferrey told journalists at the time that his movement had seen a resurgence in rural areas. This came amid other reports that FDN-RN had been holding clandestine meetings in the northern regions of Jinotega and Matagalpa to “reactivate" their old resistance movement against what they call “the second dictatorship of Daniel Ortega".

The US has become alarmed about China's increasing interest and involvement in Latin America. In June, the US Army War College published a paper entitled The US national security implications of Chinese involvement in Latin America by R.Evan Ellis. The paper is particularly fearful about the prospect of increasing amounts of Venezuelan oil going across Colombia to ports for export to China. Here we analyse the arguments and update some of the data Ellis uses. 

Ellis argues that China's pursuit of long-term strategic objectives is leading the country to increase its presence in Latin America, with serious national security implications for the US. Sustained Chinese economic growth requires ever greater quantities of basic commodities such as petroleum products, coal, iron and steel, and strategic minerals. Secondly, the new generation of Chinese leadership under Hu Jintao is moving away from the more cautious approach of his predecessor, Jiang Zemin. The combination of these two developments is that China has begun to court Latin America as its principal source of supply outside Asia. Figures from the Chinese National Statistics Office show that 77% of all Chinese foreign investment outside Asia in 2003 went to Latin America.

It is worth noting that when Ellis talks about Latin America, he means South America. He concedes that there is little Chinese investment in Mexico. Historically, the US has been most fearful of a foreign, particularly Asian power, forming links to Mexico. Central America is still Taiwan's only major bloc of support in the world. Ellis argues that Hutchinson Whampoa's investments in port facilities at both ends of the Panama Canal give China a strategic position. It seems to us that the threat looks more dangerous on paper than it is in reality. Hutchison has no control over access to the canal or its management. 

The pattern of Chinese investment in countries such as Argentina, Brazil, and Chile suggests, Ellis argues, that China is seeking to assure access to critical commodities by constructing vertically integrated supply networks over which it has leverage. The study points out that China has already placed some bets on Latin America. China is purchasing interests in key Latin American suppliers such as a Canadian mining company, Noranda, and an Argentine oil company, PlusPetrol Norte. It is also building cooperative relationships with supplier governments such as the joint oil exploration and refinery construction deals signed with Venezuela and Brazil in 2004.

Ellis argues that the expanded Chinese trade and investment presence in the region ultimately will give China a stake in the politics of the region and may tempt it to become involved in the region's security affairs. Chinese investments in Latin American extractive industries and increasing dependence on its production will cause the Chinese government to seek to detect political movements in Latin American countries that could expropriate these investments or disrupt these resource flows. To some extent, Ellis argues, China's involvement in Latin America will buttress US interests in making the region less unstable. Ellis adds, however, that the US needs to consider to what degree it is willing to accept a China that has increasing leverage in Latin America through its investment and trade presence -and a growing interest in the political course of the region. 

Some stats
As long as China continues on its path of sustained, dramatic growth, its resource needs will outstrip its ability to obtain these resources at home, or within Asia. As an example, China's imports of crude oil increased almost 40% in 2004 to 2.2m bpd (110m t). By 2025, extrapolating current trends, the Energy Information Agency (EIA) forecasts that China will be importing 9.4m barrels of oil per day. The US currently imports about 11m bpd and uses about 20m bpd. The next biggest oil importer is Japan, which imports about 5m bpd. World oil output in 2004 was 83m bpd. 

At the same time, Chinese attempts to secure sources of oil, including projects in the South China Sea as well as pipeline deals from Russian and Central Asian fields, have been beset by a series of difficulties. Although Latin American oil production is relatively modest compared with that of the Middle East, its 6% of global production is still significant enough to merit China's attention as part of a larger global strategy.

Energy is not the only commodity where Chinese demand is growing: its demand for copper is growing at a 17% annual compound rate; the rate for zinc is 15% while nickel demand doubles every five years. In 2003 Chinese imports of nickel doubled. China also has become the world's largest importer of iron ore, with its imports of this commodity increasing by 33% in 2003 alone. 

In 2002 China passed the US to become the world's largest consumer of copper. Such growing resource needs, in combination with problems in meeting them within Asia, increasingly creates a long-term imperative for China to look further abroad to secure long-term sources of supply. Latin America has too many commodities that China needs in quantities too large for the Asian giant to ignore. 

The significant jump in Chinese investment in Latin America has two components. First, Chinese foreign investment globally has expanded tremendously in recent years as a function of a Chinese effort to "internationalise key businesses". In 2004 Chinese companies invested US$3.6bn in non-financial sectors abroad, representing a 27% increase over the previous year. Secondly, and more importantly, Latin America is the central focus of the new foreign investment strategy. Almost half of all Chinese direct investment abroad in 2004 went to Latin America, almost doubling the quantity of investment going to China's neighbouring states in its own region.

In parallel with the growth in Chinese investment, China's trade with Latin America has also increased dramatically over the past few years. To be fair it is starting from a relatively low base. Total Chinese bilateral trade with Latin America more than doubled, from US$12.6bn in 2001 to US$26.8bn in 2003. In the first seven months of 2004, Chinese trade with Latin America rose by 55% percent and probably reached about US$30bn in 2004. A significant part of this increase in bilateral trade was more exports from Latin America to China. 

Latin American exports to China, largely in metals though also in agricultural products, increased by 73% in 2003, to reach US$10.9bn. China is not simply looking to Latin America as a free-market vendor of ever increasing quantities of the strategic materials that it requires for economic growth. Rather, the Chinese are seeking to achieve assured sources of supply in Latin America through a strategy that focuses on securing the entire supply chain in critical industries. 

This strategy of "vertical integration" involves using strategic purchases and investments to ensure an acceptable amount of leverage over, and functionality of, all elements of the supply chain, including transport infrastructure such as railways and ports. The pattern of Chinese investment illustrates the strategy of "vertical integration". In 2004 53% Chinese overseas investment was concentrated in the mining sector.

Venezuela
The US seems most concerned about China's growing interest in Venezuela. Until President Hugo Chávez started his Bolivarian Revolution in 1998, Venezuela had been close to the US. It was one of only two Latin American members of Opec, but like the Saudis, the Venezuelans used their oil revenues to buy US goods and services. 

This is changing under Chávez : the most significant change has been Chávez 's decision to equip the Venezuelan armed forces with Russian guns and helicopters and Brazilian ground support and reconnaissance aircraft. 

Ellis suggests that Venezuela is China's principal strategic partner in Latin America, both in terms of the volume of investment, as well as in the nature of the relationship between the two countries. This looks plausible. What is less plausible are some of the figures he uses to back up this contention.

Ellis claims that China has over US$1.5bn invested in Venezuela. This looks dubious. Ellis also claims that bilateral trade between China and Venezuela increased from US$150m in 2003 to US$1.2bn in 2004. On 7 June, a senior Chinese foreign ministry official, Qin Huasan, said that trade between the two countries hit US$1.4bn in 2004. This was more business than the two countries had expected to do: when President Hugo Chávez visited China at the end of 2004, the official line was that trade between the two countries would be US$1.2bn in 2004. Qin Huasan now expects bilateral trade to swell to US$2.5bn in the next three years. 

This year, Ellis says, trade between the two countries should reach US$3bn, if the agreements signed during Chávez 's state visit to China during the 2004 Christmas holiday are satisfied. Venezuelan imports from China grew by 120% in 2004 to US$560m, while Venezuela's oil exports to China grew by at least as much, allowing Venezuela to maintain a net trade surplus. 

The Chinese relationship with Venezuela reflects not only Chinese interest in Venezuelan resources, but also Chávez 's policy decisions. He is interested in developing alternative markets for Venezuelan oil, and also probably natural gas (when these projects come on-stream) petroleum, and developing a hedge against US influence. 

Chávez signed a number of accords during his 2004 state visit to China. These committed Venezuela to put its oil production "at the disposition of the great Chinese fatherland." 

Ellis argues that Chávez is also a potential threat to Chinese interests, insofar as his Bolivarian revolution and support for indigenous populism and anti-globalist causes could foment instability in China's trading partners in the region and undermine Chinese access to the resources. 

China's principal interest in Venezuela, based on trade and investment patterns, is the same as everyone else's: oil. Exports of Venezuelan petroleum products to China increased by 75% in 2003, according to a Spanish bank, BBVA, and they rose by a further 25% in 2004, to US$640m. 

Geography
Geographical factors limit the volume of petroleum shipments from Venezuela to China. Not only is Venezuela not on the Pacific but there are also restrictions on the size of tankers and cargo ships which can be sent through the Panama Canal. Ellis points out that there are infrastructure projects under consideration which could sidestep these constraints by using pipelines to carry the oil overland to Pacific ports either across Colombia or Panama. 

As part of a series of accords signed during Chávez 's state visit Venezuela will give China access to 15 mature oil fields, with proven reserves of up to 1bn barrels of oil, for Chinese firms to develop and exploit. Ellis cites The People's Daily as the source for this information. 

As part of this deal, China will invest US$350m in bringing these fields "on line" and in exchange will be allowed to build refineries on Venezuelan territory to process the oil. The agreement will help the Venezuelan government to overcome the shortfalls in technical management that it created when most of the engineers and managers employed by the state oil company, Petróleos de Venezuela (PDVSA) left in March 2003 following a strike. The Venezuelans hope that by allowing the Chinese to develop these fields, PDVSA will be able to double its production. That would take Venezuela's oil output close to 5m bpd.

Gas and Orimulsion: China is also investing US$60m in a number of projects to help Venezuela extract its natural gas. China is now the only significant market for PDVSA's patented orimulsion, which uses the heavy oil of the Orinoco tarbelt. Orimulsion is a low-grade, dirty, fuel oil. In December 2001 the China National Petroleum Company and PDVSA established the joint venture Orifuels Sinoven, S.A (Sinovensa) and invested US$330m to develop a capability to produce 6.5m t of orimulsion per year by the end of 2004. 

In conjunction with this effort, in November 2003 CNPC began constructing a special new type of power plant capable of burning orimulsion in the Guangdong province of China. Through a deal finalised in 2004 China's commercial agent, Petrochina, a subsidiary of CNPC, is currently purchasing 1.5m t of orimulsion a year from Venezuela. By building the new power plant, China is able to make use of Venezuelan orimulsion: other potential users, in the US and Europe, have dropped the fuel after testing it. 

Telecoms: Ellis notes that China is also helping Venezuela to develop its telecommunications industry, including assistance over satellites. As part of the series of accords reached during Chávez 's 2004 to China, the two nations announced that China will launch a telecommunications satellite for Venezuela. This will reduce Venezuela's dependence on US telecommunications networks. The initiative built on broader discussions of how China could help Venezuela to develop and modernise its telecommunications infrastructure. 

Argentina: Complementing and predating these commitments, a Chinese petroleum firm, Sonangol, is engaged in a joint venture with the new Argentine state energy firm, Energí­a Argentina SA (Enarsa), in which it has committed US$4.8bn to explore potential oil fields off the coast of Argentina, and to investigate secondary extraction of oil from mature oil wells. With respect to Argentina's modest iron ore industry, the Chinese firm, Ling Cheng, was awarded a contract in mid-2004 to reactivate a mine in Patagonia. The award is strategically significant because the deposit represents the only proven iron deposits in Argentina.

HAITI: Noriega responds to criticism

COLOMBIA: Trinidad extradited

ZOELLICK: In the running for World Bank president

MEXICAN INVESTMENT: Imsa buys Alabama steel coating plant

IMMIGRATION: Proposition 200 frozen

PUERTO RICO: Acevedo Vilá inaugurated

HAITI
The Assistant Secretary of State for Western Hemisphere Affairs, Roger Noriega, wrote a letter to the editor of the 'Washington Post', published on 1 January in response to an editorial entitled "Failing Haiti", which came out on 11 December. The editorialist argued that "when presented with an opportunity to help create jobs and lift living standards in Haiti, the Bush administration took a powder". Noreiga claimed that the Bush administration was well aware of the "extraordinary opportunity to help Haiti break free from the debilitating cycle of corrupt and autocratic rulers who have provided little opportunity for Haitians to realize their full potential". He said that the US had provided Haiti with US$230m for basic services and disaster relief and to get private enterprise off the ground. He did not respond to criticism that the Bush administration allowed a trade bill that would have created an estimated 100,000 jobs in the Haitian textile industry to languish in congress. The so-called Haitian Economic Recovery Opportunity Act, known as HERO, would have given duty-free access to US markets for low-priced T-shirts, shorts and sweatshirts assembled in Haiti using foreign fabric. Noriega focused instead on the assistance provided by the US to the Organization of American States and the UN stabilisation mission in Haiti, Minustah, to return stability to Haiti in advance of elections, which are scheduled to be held later in 2005. "Along with our international partners, we are committing resources and manpower to provide Haitians with the security and stability they need to begin constructing a functioning polity and economy," Noriega said.

COLOMBIA
The Colombian government extradited 'Simón Trinidad' to the US on 31 December. Trinidad, whose real name is Juvenal Ovidio Ricardo Palmera, a former banker and graduate of Harvard University, is the highest-ranking member of the Farc to have been captured by the government in the last 40 years. He was sent to Washington to face charges of drug trafficking, kidnapping and terrorism a day after a deadline expired for the Farc to release 63 hostages, who include politicians, soldiers and three US civilian contractors whose aircraft was downed in February 2002.

ZOELLICK
Robert Zoellick, the US Trade Representative (USTR) and driving force for the Free Trade Area of the Americas, is one of the front-runners to take over from John Wolfensohn as president of the World Bank. Wolfensohn completes his second five-year term at the Bank in June 2005. Wolfensohn said over Christmas in a TV interview with ABC that 10 years seemed to be long enough to have served as president of the World Bank. The appointment of World Bank president is in the gift of the US. Other possible candidates for World Bank president include the outgoing US Secretary of State, Colin Powell; Carla Hills, the USTR under President George H Bush; and John Taylor the current US Treasury undersecretary responsible for international affairs. Zoellick has been successful in keeping the current round of World Trade Organization talks to liberalise trade going. He presided over free-trade deals for the US with Chile and then Central America. He has been less successful in concluding the FTAA: on 31 December a USTR spokesman denied that the FTAA was dead but admitted that it was wasting away. There is supposed to be an FTAA summit at the end of January, but the USTR said that neither the location nor the date had been fixed.

MEXICAN INVESTMENT
A Mexican steelmaker, Imsa, paid US$29m on 3 January to buy a steel coating plant in Alabama, Polymer Coil Coaters. The plant is in Fairfield and provides coated steel for the construction industry across the southern US. The plant can coat 135,000t of steel a year. Imsa said that the deal will be integrated with its existing US business, Steelscape, and takes it into the eastern part of the US. Another Mexican company, Banorte, the country's fourth-largest bank announced, also on 3 January, that it was interested in buying a bank or money-distribution company in either Texas or California to boost its share of the Hispanic remittance business. Banorte claims to have US$3.6bn available to spend on an acquisition.

IMMIGRATION
On 21 December a federal judge overturned a lower court decision to freeze the introduction of Proposition 200 in Arizona. The opponents of Proposition 200, which is designed to deter migrants from using public services such as the fire service, libraries, schools and nurseries, say that they will appeal and take the case right up to the supreme court if necessary. Proposition 200 was approved in a state-wide vote on US election day: 56% of those who voted supported it. One of its most controversial aspects is that it makes those state employees who allow illegal immigrants access to public services liable for criminal prosecution.

PUERTO RICO
Aní­bal Acevedo Vilá was inaugurated as governor of Puerto Rico on 2 January. He had to wait until 23 December to have his victory confirmed after the elections on 2 November failed to provide a conclusive result. The State Elections Committee of Puerto Rico announced that Acevedo Vilá had won by 3,566 votes. Acevedo Vilá's victory means that Puerto Rico will not pursue statehood over the next four years. He is in favour of keeping Puerto Rico's commonwealth status. Pedro Roselló, who narrowly lost out to Acevedo Vilá, was conspicuous by his absence at the inauguration ceremony. Rosselló refused to recognise Acevedo Vila's victory. Acevedo Vilá, who served as an advisor to former governor Rafael Hernández Colón before being elected to the House of Representatives in 1992, will serve a four-year term. His main challenge will be addressing an alarming increase in crime and attempting to heal deep political divisions. He started in his inaugural speech: "Beginning today, we should not speak of the red agenda, blue agenda or green agenda, (a reference to the colours of the island's three political parties). We should talk about the agenda of Puerto Rico," he said.

Brazil: On 24 May the Brazilian daily Folha de São Paulo reported that President Barack Obama had decided not to accept President Lula da Silva's invitation to visit Brazil ahead of the general elections in October this year. The official excuse is that Obama doesn't think it appropriate to visit in the middle of an election. Lula had been hoping to sprinkle some 'Obama dust' on his heir apparent, Dilma Rousseff, who is beginning to strengthen in the opinion polls. The daily speculated that the White House is miffed with Lula's recent diplomatic foray in Iran. The US secretary of state, Hillary Clinton, long a hawk on Iran, has been dismissive of the Brazil-Turkey negotiated deal and is pressing ahead for UN-led sanctions on Iran. She is in China this week to confirm its support for the sanctions.  The US state department stated that nothing in the letter changed the broader concerns over Iran's failure to “meaningfully engage" (over the nuclear issue).

Mexico:On 25 May an unnamed US official told the Mexican press that President Barack Obama was about to deploy 1,200 troops to the border with Mexico. The message was received and understood by the Mexican government. While the Mexican foreign ministry then issued a statement saying that the deployment was aimed at curbing the flow of weapons from the US to drug gangs in Mexico and would have nothing to do with securing the border against illegal migrants, the message in the US is different; the government says that it is responding to demands from politicians for tougher security along the border.

Mexico: On 19 May, during the state visit of Mexico's President Felipe Calderón, US President Barack Obama criticised the Arizona law while defending his own record on border security. He used the occasion to press Congress to pass legislation that enforces immigration laws and establishes a mechanism allowing illegal immigrants to pay a fine and back taxes to achieve legal status. The Arizona law was “a misdirected expression of frustration over our broken immigration system," Obama said. “We're examining any implications, especially for civil rights, because in the United States of America, no law-abiding person, be they an American citizen, a legal immigrant, or a visitor or tourist from Mexico, should ever be subject to suspicion simply because of what they look like."

Peru: A working group on energy from the Extraordinary High Level Commission for APEC 2008 will meet.

Ecuador: Ecuadorean President Rafael Correa will visit Cuba to take part in an international conference on globalisation.

Monday

Nicaragua: Closing date for political parties to register electoral alliances for the November municipal elections.

Tuesday

Mexico: Mexican President Felipe Calderón will meet his Salvadorean counterpart Tony Saca to discuss US immigration and bilateral trade.

Wednesday

Mexico: Mexican President Felipe Calderón will visit Panama.

Mexican presidential aspirant Andrés Manuel López Obrador has drawn back his 'civic resistance' campaign from situations in which he ran the risk of a direct clashes with the army or the federal police. One of the reasons was the visible waning of public support for his campaign. Another was the fear that deliberate attempts might be made to provoke such confrontations, with the purpose of drawing the federal forces into acts of repression which, in turn, would radicalise the 'resistance'.

Such provocations, say sources close to López Obrador, could come from two quarters. One is the 'hard' faction within López Obrador's Partido de la Revolución Democrática (PRD), who favour proclaiming López the 'legitimate' president and preventing the official president-elect, Felipe Calderón, from taking office. The other is the remnants of Mexico's far-left guerrilla groups, three of which have already signalled their determination to 'respond to repression' with armed action.

On 30 August the dormant Ejército Popular Revolucionario (EPR) guerrilla group celebrated its tenth anniversary by warning that it will return to armed action if the government represses the pro-López Obrador protest actions. In a statement to the press, leaders of this group said, 'If the federal government decides on repression, it will cancel the possibility that the people might carry out social transformations peacefully, and will clear the way for blunt action by our commandos and military units in the state of Oaxaca and other jurisdictions.'

On 7 September the media received a communiqué from the Ejército Revolucionario del Pueblo Insurgente (ERPI), active — albeit mainly in small-scale political initiatives — in the states of Oaxaca and Guerrero. Addressing the members of the military, it said, 'Do not repress or murder the people from which you come, because surely, sooner or later, you will be ordered to do so.' The communiqué also urges the soldiers not to fire upon any ERPI units they may come across: 'Our combatants will not do so if you don't.'

That same day another group active in Guerrero, the Comando Magonista de Liberación (CML), issued a communiqué addressing 'the possible intervention of repressive federal agencies' against López Obrador's followers. The CML said that 'with the ruling of the federal electoral court in favour of the rightwing candidate' its military leaders had ended 'the truce declared in January this year, which we prolonged until the exhaustion of the electoral contest.' It added, 'We will act militarily in response to repressive action.'

Of these organisations, the most significant is the EPR, formed in 1994 by the convergence of several groups, under leaders coming from the Partido Revolucionario Obrero Clandestino-Unión del Pueblo (PROCUP). Its political wing, the still-extant Partido Democrático Popular Revolucionario (PDPR), first appeared in 1996. It was initially active in three southern states: Guerrero, Oaxaca and Chiapas, but the datelines of subsequent communiqués suggested expansion into Jalisco, Michoacán and Veracruz..

In 1998-99 it was riven by splits, with a core of 'conservatives' hewing to the old PROCUP line of building up towards a 'prolonged people's war', and factions described as 'rupturist' who advocated a more insurrectionist approach. In 2001 the rump EPR restated its commitment to the 'prolonged people's war'. It has remained active to the present day, but mainly through communiqués adopting positions towards elections at local, state and federal level. 

The Fox administration has claimed that the EPR has set up a number of 'front' organisations not ostensibly in favour of armed action, and infiltrated others. Among the former are the Frente Popular Revolucionario, Frente Popular Francisco Villa, Comité por la Liberación de los Hermanos Cerezo Contreras and Movimiento de Lucha Popular. Among the latter, the umbrella labour federation Central Unitaria de Trabajadores (CUT), the Comité General de Huelga de la Universidad Autónoma de México, Unión Popular 28 de Octubre and Unión Popular de la Juventud Revolucionaria. All the latter and many of the former have denied any connection with the EPR.

The ERPI broke away from the EPR in 1998, adopting an insurrectionist line based on building up a grassroots following in rural communities and among social organisations. In its early phases it carried out some armed actions in the state of Guerrero and Morelos. Many of its members, including some top leaders, have been arrested, tried and sentenced to long terms in prison. Since late 2002 the ERPI has been seeking alliances with other armed groups. It was last heard from in July this year, via a communiqué on the elections.

The CML, the least-known of the three, is connected with the Tendencia Democrática Revolucionaria-Ejército del Pueblo (TDR-EP), another splinter of the EPR, which took its present form in 2004. This organisation has been active distributing propaganda in support of the teachers, and their allied civic movement, which have been campaigning since May for the resignation of the governor of Oaxaca.

Expect 2005 to be a difficult year for the country. It is a pre-election year, so the electoral jockeying and elbowing will be particularly vicious: what happened to the mayor of Mexico City, Andrés Manuel López Obrador, in 2004 is probably only a dry run of the dirty tricks in store for other candidates in 2005. This electoral jockeying will probably take place against the backdrop of a spluttering economy: oil prices may well weaken. The effect of this will be compounded by a slowdown in the US and a weak US dollar.

The presidential elections of July 2006 are only 19 months away. The change of government in December 2006 is now less than two years away. Just as it was at this point in the previous administration, it is far from clear who will win the election. What is clear is that whoever it is will not have a majority in congress.

The frontrunner for the presidency must be Roberto Madrazo, the president of the Partido Revolucionario Institucional. He is likely to be the PRI's presidential candidate. He lost the primary for the PRI presidential nomination in 1999. A recent opinion poll, in Reforma, found that although Madrazo was the third-most popular candidate, the highest proportion of voters (36%) thought that the PRI would win in 2006. As we note inside, the PRI has had a terrific year in the gubernatorial and other elections held in 2004, winning seven of the 10 contests. 

Next year may prove more difficult for the PRI electorally. The key election in 2005 is in the Estado de México, the country's richest and electorally most important state. The PRI is making a mess of picking its candidate for the July election: it is very likely the party in the state will split over the choice. As the state is already pretty evenly divided between the three main parties, both the Partido Acción Nacional and the Partido de la Revolución Democratica quietly fancy their chances. 

The Estado is also a tricky contest for the PRI because the existing fissures in the party run through the state. Madrazo's deputy, Elba Esther Gordillo, has a strong position in the state. If she does not approve of the candidate the party chooses, or if one of her allies breaks with the party, she may well try to exacerbate the problem by breaking with Madrazo. Gordillo's powerbase is the 1m strong teachers' union (the SNTE). Its branch network gives Gordillo the basis for a national party. 

Gordillo can probably count on the support of at least 50 of the PRI's 223 members of congress. So far her flirtation with the PAN, first in congress and then in gubernatorial elections in Aguascalientes has not been decisive. Almost certainly she will have to raise the stakes in the Estado or drop out of the game. 

The PRI is not the only party with the potential to split in factions which will diminish the party's overall influence. The leftwing Partido de la Revolución Democrática is probably even more divided. 

The PRD has Andrés Manuel López Obrador, the most popular candidate for the presidency, according to the opinion polls. López Obrador is the mayor of Mexico City and, with one exception, has headed the opinion polls for the presidency ever since they started being run a year ago. The problem for him and the PRD is that his popularity has been sliding for most of 2004. This may be a result of what López Obrador claims is a dirty tricks campaign waged against him by the federal government. More worryingly for him the slide may also be the result of growing unhappiness at the way Mexico City has been run.

There are two main challengers to López Obrador's command of, and candidature for, the PRD. One comes from the radical direct-action wing of the party, headed by René Bejarano. He was López Obrador's private secretary and in November became the first politician for over 20 years to be stripped of his parliamentary immunity by congress. Bejarano, who led the PRD in Mexico City's assembly, is now in custody. He is accused of taking bribes from Carlos Ahumada, a dodgy Argentine-born property developer. Bejarano forms a powerful political axis with his wife, Dolores Padierna, a PRD federal deputy. Padierna halted sessions of congress in October in an attempt to stop Mexico City's budget being cut. 

López Obrador has, so far, failed to come to the help of Bejarano. This lack of support is diminishing López Obrador's standing with Bejarano's Izquierda Democrática Nacional wing of the PRD. The case against Bejarano looks overwhelming. Videos of him stuffing his pockets with Ahumada's dollars were broadcast on national TV.

The other challenge to López Obrador comes from Cuauhtémoc Cárdenas, the PRD's traditional presidential candidate. He is as well known, nationally, as López Obrador, but speaks for a different sort of perredista. López Obrador is in tune with (some) of the metropolitan elite whereas Cárdenas represents social and peasant activists who have struggled for years. Cárdenas also has the magic of his name: he is the son of Lázaro Cárdenas, the Revolutionary general who became president and nationalised the foreign oil companies in 1938. President Cárdenas laid the foundations for the PRI's two generations of political hegemony. Some Prií­stas now see virtues in Cárdenas that they did not perceive in 2000. Cuauhtémoc has run for the presidency in every election since 1988: he was almost certainly cheated out of victory in 1988. 

The realistic competitors for the PAN nomination are, so far, the most numerous. There are four declared candidates: Santiago Creel, the interior minister; Luis Ernesto Derbez, the foreign minister; Felipe Calderón Hinojosa, a former party president and energy minister; and Carlos Medina Plascencia, a federal senator. The opinion polls have Creel well ahead of the rest. Derbez is a dark horse: few people suspected that he had presidential ambitions until he announced them at the end of November in an interview with Reforma. About 10 days later, in a wide-ranging interview with the same newspaper on 5 December, Calderón made a bold move for the middle-ground. He said that he would try to establish a working relationship with congress by bringing in politicians who had clout in congress into his cabinet. The subtext of Calderón's statement is that President Fox squandered his opportunities by failing to sort out a way of getting his reforming legislation through congress. Finding a way of working with congress, in which none of the three main parties has a majority, is likely to be the biggest task facing whoever is elected president in 2006.