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Public Argentine opposition to an Uruguayan industrial project on the banks of the river running along the common border is peaking with an indefinite blockade of the three bridges over the river Uruguay - just as Argentine tourists head by the thousands towards Uruguay's seaside resorts. The two governments, for whom the issue has become a diplomatic 'controversy', do not seem close to any kind of agreement on the matter.

At stake are two projected cellulose plants, to be installed by Spanish firm Ence and Botnia of Finland, on the riverbank close to Fray Bentos, just across the river from Gualeguaychú in Argentina. Environmentalists in Argentina say the plants will be using 'dirty' technology and will have a devastating impact on agricultural production, fish and birds. Their stance is supported by the Argentine government and Greenpeace (though the latter also faults Argentina for allowing similar technology).

For Uruguay the projects represent an investment of US$1.8bn - jointly the biggest ever such inflow; the outcome of the dispute could also affect plans by the Swedish-Finnish firm Stora-Enso to build a third cellulose plant, requiring an investment of US$1.25bn. The Uruguayan government has dismissed as 'non-viable' an Argentine suggestion that the location of the plants be moved 'a few kilometres' downstream, where their impact will, they say, be lower. The environmentalists are hoping that Montevideo will start counting the potential loss of tourism revenues resulting from the closure of the bridges.

The coming hurricane season in the Caribbean could be, once more, among the most active on record with a probable eight hurricanes, of which four could be intense. These figures are, respectively, 29% and 48% higher than the average for the past 56 years.

The prediction, with a declared 80% probability, comes from Tropical Storm Risk (TSR), a British-based consortium supported by the insurance industry and reliant on the scientific expertise of the Benfield Hazard Research Centre at University College London. It was issued on 5 April.

Last year TSR also forecast a major hurricane season, with eight hurricanes. It fell short of the mark: there were 14 hurricanes, and the season, more than a month longer than usual, was the longest on record. Last year's hurricane season was also the most damaging ever: TSR calculates it caused US$50bn worth of insured losses (of which more than three-quarters attributable to Hurricane Katrina which struck Louisiana and Mississippi in the US).

Estimates of the probable intensity of a hurricane season are based on the observation of 'drivers' such as the speed of the trade winds in the Caribbean and North Atlantic and the temperature of the sea surface in the tropical North Atlantic. The former determines the upward spin (vorticity) of hurricanes; the latter the heat and moisture that provide the power propelling the storms.

It is conventionally accepted that the hurricane season lasts from early June to late November. The 2005 season, however, lasted until 6 January 2006 and the unexpected number of storms forced the World Meteorological Organisation to dip into a contingency list of extra names to allocate to them.

The Honduran announcement that it will be building a military base on its stretch of the Mosquito Coast has caused concern in Nicaragua, where the government has very publicly asked its military for an assessment. The base in question appears to be linked to President Manuel Zelaya's offer of new base facilities to the US in exchange for the conversion of the US base in Palmerola to civilian use.

General Romeo Vázquez, chairman of the Honduran joint general staff, announced on 15 July that Honduras would be building, with US assistance, a new military base in the department of Gracias a Dios on the Mosquito Coast - the homeland of the Miskito people which straddles the border between Honduras and Nicaragua. He said the base would serve to help curb the flow of drugs along the coastal route, recently favoured by traffickers.

In May President Zelaya offered the US new, non-permanent military base facilities as a trade-off for permission to convert the Palmerola base, built in the 1980s and now housing US as well as Honduran troops, into a civilian airport [WR-06-21]. The US government promptly gave its approval for the conversion of Palmerola [WR-06-22]. In June, during a visit to the US, Zelaya asked President George W Bush to deploy special forces on the Mosquito Coast to assist in the antidrugs effort [WR-06-23].

On 22 July the Nicaraguan army announced that it was analysing, at the government's request, the implications of the planned Honduran base. An army spokesman, Colonel Adolfo Zepeda, pointedly stated that there is a bilateral memorandum of understanding which establishes 'mechanisms to coordinate actions taken by the military forces in border areas, both on land and maritime'. The implication was that Honduras had failed to activate these mechanisms.

DOMINICAN REPUBLIC: Booming. The economy grew by 11.3% in the first nine months of the year compared with the same period in 2005, according to the central bank. The best performing sectors were construction (up 29.8%), communications (26%), agriculture and fisheries (14.9%) and trade (10.7%). Growth in the third quarter was 10.3%. The government sent a controversial fiscal reform package to the legislative assembly, where the ruling Partido de la Liberación Nacional (PLD) enjoys a majority, which it says is crucial to prepare the country for joining Cafta-DR and preserving the high growth rate.

TRINIDAD & TOBAGO: Mixed bag. Central bank Governor Ewart Williams expressed concern last week that Trinidad & Tobago was "too close to the slippery slope of double-digit inflation." Inflation for the 12 months ending in September was 9.6%. The economy, however, is expected to grow by 12.6% in 2006, the highest rate of growth in Latin America and the Caribbean.  

COSTA RICA: Cafta-DR protests. President Oscar Arias faced down protest marches by unions on 23 and 24 October against Cafta-DR by refusing to withdraw the treaty from the legislative assembly. He said that Cafta-DR was one of his campaign promises. Some 9,000 protesters from the umbrella protest union, Coordinadora Nacional contra el TLC - an amalgam of unions, civic and environmental groups - participated in marches in San José which wound up at the legislative assembly building. Some health workers, teachers and workers from the state electricity monopoly Instituto Costarricense de Electricidad (ICE) went on strike. More protest actions are planned for November. Arias said he would be happy to meet protesters to discuss their concerns.

BERMUDA: Ousting of PM. Bermuda swore in a new Prime Minister on 30 October after a leadership challenge in the ruling centre-left Progressive Labour Party. Alex Scott was defeated 107 to 76 by his former deputy and tourism minister Ewart Brown in a vote by delegates and lawmakers. Brown, who must call a general election by the end of 2008, said the people wanted a leader "strategic enough, courageous enough, connected enough and, yes, stubborn enough to move them towards independence."

CUBA | Boosting nickel output. Cuba will invest US$300m to expand its nickel industry, according to a brief news item in Prensa Latina this week. It did not say as much but it looks like this investment will be coming from Venezuela. Cuba signed a US$521m deal with Venezuela last week to complete the Las Camarioca ferro-nickel plant in eastern Holguí­n province. Venezuela is taking over from China's state-owned Minmetals Corp. which, in 2004, sealed a US$500m investment deal with Cuba, but nothing happened. Cuba reckons Las Camarioca could produce 68,000 tonnes of ferro-nickel annually which will be used to produce stainless steel in a planned US$600m steel plant in Venezuela. 

PANAMA | Toll increase to fund expansion plans. The Panama Canal Authority (ACP) has finally revealed details of its proposal for increasing tolls in order to finance the construction of two new three-step locks at the Atlantic and Pacific gateways, conservatively estimated at US$5.25bn. The ACP plans to steadily increase tolls for freight containers over the next three years by one-third from US$54 in May this year to US$63 in May 2008 and US$72 in 2009. Tolls are currently US$49 and are set to increase on 1 May this year to US$54 under a price hike implemented in 2005. A public comment period for the toll proposal will last until 12 March.

REGION | IMF and investment. Costa Rica's President Oscar Arias and the managing director of the IMF, Rodrigo de Rato, chaired "the first Central American conference on investment" in San José on 3 February. Arias used the conference to talk up the importance of Cafta-DR, which he is desperately trying to get congress to ratify; de Rato said it was important for Central America to attract more investment by harmonising tax and regulatory regimes across the sub-region as well as improving the quality of education.

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The main opposition party in congress, the Partido de la Revolución Democrática (PRD), concluded its tenth extraordinary party conference on 19 August with a couple of contradictory decisions.

The party is split between radicals loyal to the party's former leader and presidential candidate, Andrés Manuel López Obrador, and pragmatists. The radicals do not recognise President Felipe Calderón Hinojosa's defeat of López Obrador in last year's presidential election. 

The radicals' success came at the end of the congress when the party agreed to prevent President Calderón delivering his first Informe (state-of-the-union address) on 1 September. The pragmatists had won an earlier victory when the party voted to negotiate with Calderón and his government, provided the President sat through the PRD's response to his Informe.

The pragmatists' victory prompted the López Obrador faction (the Frente Polí­tico de Izquierda), which was in a minority in the 1,100 delegate conference, to storm out. The pragmatists have two groups: Nueva Izquierda and Movimiento por la Democracia.

To avoid a complete split and the alienation of the party's main electoral asset, López Obrador, the party's leadership cobbled together the motion that committed the party to preventing Calderón delivering the Informe. This decision leaves the PRD in a hopelessly contradictory position over the Informe. The likely result is that the PRD deputies in congress will decide on what to do over the Informe.

The worry for the government is that the PRD's threat to derail the Informe is real. The PRD's hostility to Calderón made a mess of his inauguration [WR-06-48], so it could easily upset the setpiece of his first Informe. Congress's standing committee claims to have a plan B to allow President Calderón to fulfil his constitutional obligation to deliver the Informe to congress. In 2006 the PRD prevented the outgoing President, Vicente Fox, from delivering his final Informe speech from the rostrum in congress. The likely compromise is that Calderón would deliver a written version of his Informe to congress and then retire from congress. The broadcast of the Informe would be from the presidential palace, Los Pinos. This is what Fox did a year ago. 

An unpopular president delivering his final Informe after a hugely controversial election is very different from a fresh president delivering his first Informe. If Calderón backs down, he could undermine his whole presidency.

• Customs responds
  The Mexican customs service refused to comment on US's head of customs, Ralph Basham's, revelations, but the finance ministry, to which the customs service reports, said that it does share information with the US and even reports details on the number and types of weapons it seizes.

 

• Fox's last "Grito"
  Former president Vicente Fox's humiliation over his final Informe was followed by another over the "Grito", the traditional Independence Day cry which should be delivered at the Zócalo in Mexico City on the evening of 15 September. Fox delivered his last "Grito" where the first was uttered, in Dolores de Hidalgo in Fox's home state of Guanajuato.
  

President Alan Garcí­a wrote an opinion piece in the national daily, El Comercio, this week providing a prescription for Peru's development problems. It caused quite a stir. A month earlier, in another opinion piece in the same paper, he had described the symptoms. He said Peru was suffering from "The Dog and the Manger" syndrome, a reference to the eponymous fable by Aesop in which a dog lying in a manger of hay snaps and growls at the oxen trying to eat the hay. The moral of the fable: do not begrudge others what you cannot enjoy yourself. Garcí­a argued that Peru's potential for growth is enormous but that its development is being impeded by ideological and bureaucratic barriers at every level.

Garcí­a proposes a six-part solution to create "a new State" that would use Peru's wealth as a resource-rich country to spur growth and development. The six solutions are overlapping. They include: taking total control away from the state; stimulating public sector employees to work more efficiently; freeing up state possessions that are not being used, such as idle land to boost agricultural production; and creating new methods to attract investment, such as progressive taxes - specifically, a reduction in profitability tax on businessmen who reinvest in mining. Some of these proposals would require legislation or decrees. 

Garcí­a's solution is a radical departure from his first administration but consistent with the main tenet of his second term: to create a "modern social model" using free trade and investment to redress social inequalities, or neoliberalism with a friendly face. This is the domestic version of his "Pacific Arc" international integration plan [WR-07-37]. 

State control would be supervisory and function like customs at an airport: some cases would be taken aside and looked at. In other words central, regional and municipal government should not need to approve everything. Garcí­a said that despite reforms to the national system of public investment, there was less investment and more delay. He said the problem was a human failing; like the dog in the manger, humans want to exercise their power, here by erecting red tape. He called for the work ethos of the private sector to motivate employees in the public sector: performance-linked pay, for instance.

Garcí­a proposed new legislation limiting analysis of investment projects to three months. "If a bureaucrat wants to exert control, he will need to work harder and faster," Garcí­a concluded. By trying to cut through bureaucracy by relaxing the rules on investment, however, Garcí­a risks attracting low-quality investment that may ultimately prove counter-productive. 

Mixed reaction

Jaime Cáceres, the president of the national business federation, Confiep, was understandably, all for Garcí­a's scheme. He exhorted anyone interested in Peru's development to support the proposals. Others were less enthusiastic. "Garcí­a has taken off his mask," a senior legislator for the opposition Partido Nacionalista Peruano (PNP), Daniel Abugattás, said. "The presidential thought betrays something of fujimorismo". 

The economist Epifanio Baca, of the umbrella group of NGOs Propuesta Ciudadana, which advocates decentralisation and improved transparency to strengthen democracy, offered more constructive criticism in the national daily La República. He argued that Garcí­a put far too much faith in the markets and private investment to provide a solution to all Peru's problems.

Criticism

The economist Epifanio Baca described President Garcí­a's plan for a new State as "a simple, hurried and demagogic way of confronting the problems". He said it had no substance and was "doomed to fail". He reserved particular criticism for the three-month limit on investment proposals to speed up bureaucrats. He said it might suffice for a NS$5m-NS$10m (US$1.65-US$3.3m) project but more time would be required to conduct environmental impact assessments and to assess the quality of the investment for projects of NS$50m-NS$100m.

A two-week visit by an IMF mission to Managua failed to yield much success for the Nicaraguan government. While acknowledging some "progress", the IMF is reportedly unhappy about salary increases, the government's failure to implement reforms in the energy sector and the lack of transparency surrounding the management of Venezuelan funds, with negotiations set to continue over the next few days in Washington.

The IMF left Managua on 7 March after conducting the first review of Nicaragua's economic performance under the Poverty Reduction and Growth Facility (PRGF) Arrangement - which includes a US$112m loan.

The delegation noted some signs of progress, concluding that "economic performance continues to be generally satisfactory and the authorities have made considerable progress in implementing their economic programme". The IMF also praised congress for approving a 2008 budget "consistent with the programme targets, which provides room for much needed spending on social programmes and public investment".

However, the report criticised "delays [that] have arisen in the adoption of key reforms in the energy sector", implicitly referring to the government's failure to approve legislation against the theft of electrical energy known as the "anti-fraud energy law".

The local press also noted that the IMF mission was not best pleased with the government's proposal to increase public health and education workers' pay from 12% to 16%, maintaining that 12% should be the limit.

IMF resistance to raising public sector salaries is nothing new, proving a source of popular resistance to the IMF in the country. On 26 February over 1,000 health workers, teachers and other public sector workers protested outside the central bank where government representatives and the IMF delegation were meeting, condemning IMF intervention in the government's economic decisions.

A further bone of contention between the government and the IMF, according to the weekly publication Confidencial, involved the government's failure to approve legislation which renders transparent funds received from Venezuela, a complaint also upheld by the opposition.

Criticism focuses specifically on the management of the state company Albanisa, created last year when Nicaragua agreed to exclusively buy oil from Venezuela. While 45% of its ownership is in the hands of the Nicaraguan state-owned company, Petronic, and the rest with Venezuela's oil company Pvdsa, its accounts are closed to the public.

For several months, the opposition parties and civil society have been pushing for its funds to be included within the budget in order for deputies to have a say in how the funds freed up by the sale of the oil are spent.

A deputy for the dissident Sandinista party, Movimiento Renovador Sandinista (MRS), Enrique Sáenz, recently announced that the congressional economic committee would be requesting a report from Francisco López, who is simultaneously president of Petronic, vice president of Albanisa and treasurer of the ruling Frente Sandinista de Liberación Nacional (FSLN) on how the money from the sale of Venezuelan oil is being used.

• SAM-7 negotiations

A US government delegation arrived in Managua last week to evaluate Nicaragua's proposal to destroy 651 of its remaining 1,051 SAM-7 anti-aircraft missiles in exchange for "modern medical equipment and medications." The US government has long pressured Nicaragua to destroy the missiles as part of a global effort to eliminate weapons which could fall into the hands of terrorists.

President Cristina Fernández addressed a crowd of some 50,000 people in the Plaza de Mayo on 18 June in a rally held “in defence of democracy" during which she once again railed at leaders of the four farming unions for destabilising the country and called on them to desist from their national protests. This followed a minor concession. A day earlier Fernández agreed to send the tax reforms to the agricultural sector to congress for approval. The farming unions responded by extending protest action until 20 June.

Former president Néstor Kirchner, head of the Partido Justicialista (PJ), organised the rally in support of his wife in the Plaza de Mayo. Kirchner cracked the whip to ensure a big turnout and avoid a repeat of the embarrassment on 25 May when Fernández's rally in Salta was upstaged by a parallel rally held by the farming unions in Rosario. The crowd of 50,000 was mobilised by the urban PJ, Argentina's largest trade union Confederación General del Trabajo and piquetero movements.

Fernández was in combative mood. She said the farming unions were led by “four people whom nobody elected" making decisions for the country which “undermined and interfered in the construction of democracy which states that the representatives of the people chosen in elections should make the decisions. She told the farmers to forge their own party if they wanted to participate in the democratic process. Her tough line looks like a message to the farmers not to push their luck. She made another minor concession on 25 May by announcing a cap on the variable export tax on soya and sunflower seeds only to follow this up by comparing the farming unions with coupsters.

The leaders of the four farming unions met for five hours after Fernández's speech. The result of their deliberations was an extension of protest action until 20 June. Five days earlier they had declared a fourth strike in 95 days of stop-start protests against the government's tax reform after the police broke up a roadblock in Gualeguaychú in the province of Entre Rí­os (famous for its protests against the construction of a pulp mill on the far side of the River Uruguay) and arrested 19 protesters, including the firebrand leader of the provincial farming organisation, Alfredo de Angeli. The 19 protesters were held for seven hours on 14 June before being released.

Upon his release De Angeli addressed a large crowd promising to continue the struggle for another “100 days more if necessary". The arrests triggered widespread roadblocks by farmers in the provinces and the ominous recurrence of cacerolazos. Tens of thousands of Argentines took to the streets of Buenos Aires, Córdoba, Rosario, Santa Fe and other cities to bang pots and pans to protest against the government's intransigence and in support of the farmers.

Involving congress

The protests produced divisions in the government camp, most notably from the “K" Radicals whose main figurehead, Vice-President Julio Cobos, sent an “open letter to the nation" on 15 June in which he urged congress to take an active role in resolving the conflict and to assist the executive in designing “an integrated agricultural policy".

This is exactly what the farming unions have been demanding but attempts to discuss the issue by the opposition have been blocked by the government majority in both chambers of congress. As such it looks like Cobos, who is also president of the senate, acted on his own initiative under pressure from “K" Radical colleagues to distance himself from the government. He said Argentines “do not deserve to be living through such difficult times" and urged the government and the farming unions to recover lost time by getting around the negotiating table again.

The governor of Santa Fe, Hermes Binner of the Partido Socialista, who is habitually moderate in tone, threw his weight behind Cobos but went much further. He said that the current form of government in Argentina (with its excess of “presidencialismo") was coming to an end. “It is necessary to make way for another more participative form of government, such as the parliamentary democracy in Europe," Binner ventured.

The piquetero leader and fervent Kirchnerista, Luis D'Elí­a, said that while there were no longer “military coups in the old style" the farming unions were intent on staging an “economic coup", masterminded by former president Eduardo Duhalde. His accusation seems to rest on the decision by Duhalde, who had mooted standing against Kirchner for the presidency of the PJ earlier this year, to forge a new grouping - Unión Popular (UP) - with anti-K Peronists such as the Rodrí­guez Sáa brothers (see sidebar) and Senator Ramón Puerta. The UP also includes new emerging forces, such as the Peronist governor of Córdoba, Juan Schiaretti, who has been one of the most vocal critics of the government's hardline tactics with the farmers.

Fernández surprisingly backed down on 17 June and accepted Cobos' decision to involve congress. In a speech broadcast on television and radio she said she would send a package to congress in order to imbue the decision her government took on the tax with “greater democratic content". In the light of her fiery discourse at the Plaza de Mayo rally only a day later this patently does not mean the farmers are poised to get what they are demanding: the annulment of the tax increase. The executive is insistent that legislators will not be able to modify the bill containing the tax reforms, simply vote for or against. The government has a majority in both chambers on paper but the opposition will be hoping that the “K" Radicals break ranks and bring a few dissident Peronists with them.

• Kirchner and López Rega

Alberto Rodrí­guez Sáa, the governor of San Luis and a fierce opponent of the government, has been highly critical of the handling of the dispute with the farming unions, particularly what he describes as the “misuse" of the PJ by former president Néstor Kirchner to bolster President Fernández. He described Kirchner as “the new López Rega of Argentine history" in reference to the éminence grise behind Isabel Perón, also known as El Brujo, who formed the Triple A death squad which to all intents and purposes initiated the Dirty War.

• Lugo abroad

Shortly after naming his cabinet, President-elect Lugo embarked on a regional tour. He visited Bolivia to mark the 73rd anniversary of the end of the Chaco war but also to underscore his determination to end years of enmity between Paraguay and Bolivia. He then moved on to Quito and Caracas. Although he stressed that he would not model his government on that of any other country his choice of destinations showed his political and ideological preferences on the international stage.

When Brazil's President Lula da Silva entertained Presidents Evo Morales (Bolivia), Rafael Correa (Ecuador) and Hugo Chávez (Venezuela) in Manaus on 30 September, talks were meant to focus on the construction of an ambitious corridor scheme between Ecuador's port of Manta and Brazil's Amazonian city of Manaus, with onward links to the city of Santa Elena de Uairén in southern Venezuela and Brazil's Atlantic coast - an interoceanic alternative to the Panama Canal. Ultimately, however, it was the international financial crisis which dominated proceedings.

Roads to Manaus are often posited, but it remains largely inaccessible because of the inhospitable terrain. Although all four heads of state expressed a commitment to realising the enterprise, their bleak prognostications for the international financial system implied that not only did they feel that securing funds for the project might prove problematic, but also that financing any other development projects in the near future could be a real challenge.

Chávez conjured up an apocalyptic vision: “I'm in the group that believes this will be worse than the 1929 crash. No country can say it won't be affected." He and Morales said the financial debacle in the US should herald the end of free market capitalism and usher in a new multipolar world. Lula, habitually the moderating influence on both men, eschewed the hyperbole of his Venezuelan peer. He said the emerging markets in Latin America were better prepared to weather the storm than the US. However, he conceded that “the crisis is very serious and so profound that we don't know how big it is." Lula is likely to play a major role in a debate with the new US President on the ideology of economic development; on whether the state or the market should lead development.

One upshot of the financial crisis is that the Banco del Sur, the regional development bank approved nearly a year ago but yet to get off the ground, could finally be activated. Brazil has always been less keen on the idea than Venezuela but, with lines of credit drying up, it is changing its tune. Brazil's foreign minister, Celso Amorim, said the Banco del Sur was a major topic of discussion during the mini summit as an alternative source of development finance, especially for big infrastructure projects like Manta-Manaus. 

Mexico's President Felipe Calderón Hinojosa entertained the US president-elect, Barack Obama, at lunch at the Instituto Cultural de México in Washington DC on 12 January. To the horror of the Mexicans, the Obama team claimed that the key issue in the meeting was Obama's proposal to Calderón to “upgrade" the North American Free Trade Agreement (Nafta). US Mexican watchers argue that Nafta, unchanged since it came into force in 1994, could do with an update, and claim that Obama's appointee as US Trade Representative, Ron Kirk, a former mayor of Dallas, and thus familiar with Nafta and Mexico, may be the man to achieve this.

After initially being taken aback by Obama's move on Nafta, Calderón appears to have accepted the argument that Nafta should not be immutable. After his final meeting in the Oval Office with President George W Bush on 13 January, Calderón said: “We have always been willing to revise aspects [of Nafta]." This suggests that Calderón may be prepared to trade reforms of Nafta, which may penalise Mexican exports to the US, in return for a reform of US immigration laws. Immigration reform should improve the legal status and economic opportunities for Mexican migrants in the US. 

What is interesting is that neither the Obama team nor Calderón's fielded trade experts at their meeting. Calderón was flanked by the foreign minister, Patricia Espinosa, the interior minister, Fernando Francisco Gómez-Mont Urueta, and his finance minister, Agustí­n Carstens. Obama fielded his Chief of Staff Designate, Rahm Emanuel; his National Security Advisor Designate, General Jim Jones; and the White House National Economic Council Director-Designate, Lawrence Summers.

Obama has been consistent about improving Nafta. During the election campaign he promised that when he became president that he “would immediately call the president of Mexico, the president of Canada [sic] to try to amend Nafta because I think that we can get labour agreements in that agreement right now."

Calderón had warned Obama several times, both before and after the election, against tinkering with the Nafta treaty. Calderón's official statement on his meeting with Obama did not mention Obama's proposal to “upgrade" Nafta. Indeed, neither man mentioned Nafta when they made some brief comments to the media after the lunch.

The comment about Obama's ambitions on Nafta came from his official spokesman, Robert Gibbs. He said that Obama had proposed setting up a consultative group of US and Mexican officials to discuss key bilateral issues such as Nafta, energy and infrastructure. A Mexican official accompanying Calderón commented that he did not understand what “upgrade" would mean in practice.

Whether Obama will reopen Nafta is far from certain, but his decision to raise the prospect of doing so shows that, for all his rhetoric, Obama's priority in relations with Latin America is shoring up his domestic support. US trade unions are unhappy about cheap labour competition from Mexico and Obama is appeasing them by threatening to reopen the accord.

Mexico was pleased, however, that Obama met Calderón on what is effectively Mexican soil. Obama's aides were quick to confirm that Mexico's presidential guard was responsible, along with the US Secret Service, for the president-elect's security. This underlines the change from President George W Bush, who upset Chile (and the rest of Latin America) by insisting on bringing his own heavily armed security teams to protect him during a trip to Santiago in 2004.

Since 1980, newly-elected US presidents have developed a habit of making sure that they meet the Mexican president ahead of any other head of state prior to their inauguration. Obama's first foreign trip will be to Canada to meet its prime minister, Stephen Harper.

According to the Mexican version of the meeting, Obama praised Calderón for his leadership in Latin America and said that Mexico was an important ally in the expansion of democracy. This could be construed as praise for Calderón's initiative in repairing Mexico's relations with Cuba, which had been virtually broken off by Calderón's predecessor, Vicente Fox. It may be a hint that Mexico, rather than Brazil, will be the US preferred intermediary with the Castro regime. Calderón himself is due to visit Cuba in March.

The Mexicans also played up Calderón's proposal to Obama that the US should seal a formal alliance to deal with what Calderón called “joint problems" such as security. Calderón's proposal had more than a tinge of desperation: “I think the safer Mexico is, the safer the US will be," he declared. “The idea is that we will have to fight the common problem of organised crime, terrorism and drug trafficking, which is an international problem, together."

Oddly, if security was Mexico's priority issue for Obama, the Mexican delegation included none of the government's numerous security ministers. This may be an indication that Calderón is finally preparing to reshuffle and streamline the security side of his administration. He could argue he needs a new team that can mesh better with Obama's team. Obama has yet to announce who will be running his policies towards Latin America.

One appointee who will have a major bearing on relations with Mexico is Janet Napolitano, the former Democrat governor of Arizona: she will be Obama's Homeland Security Secretary. As Governor of Arizona, Napolitano had decent relations with her counterparts in Sonora. Sonora is a fiefdom of the traditional Partido Revolucionario Institucional (PRI). It is worth noting that of Mexico's six states bordering the US, only Baja California is run by Calderón's Partido Acción Nacional (PAN).

Obama's own comments on the meeting with Calderón were positive. He was, however, non-committal about immigration reform, a key issue from Mexico's point of view. Obama said that the two men had discussed “how we can have a comprehensive and thoughtful strategy that ultimately strengthens both countries." Sceptical Mexicans noted, however, that Obama said nothing about halting construction of the barriers on the US side of the border designed to deter illegal immigrants. Obama did, however, pledge to take more effective action from the US to stem the flow of arms from the US to Mexico.

• Vehicles

The Asociación Mexicana de la Industria Automotriz expects vehicle production in Mexico to fall by 20% in 2009. The main reason for the fall is the collapse of demand for vehicles from the US. In 2008, vehicle production was 4% higher than in 2007 thanks to a 3% jump in exports. In December 2008, exports fell by 20% and total sales fell by 7%.

President Fernando Lugo delivered a speech asking for forgiveness on 24 April at the end of a tumultuous week in which a third woman claimed that he was the father of her child. Lugo said he would not resign and that his political project would continue unabated. Lugo was forced to address the matter publicly after the opposition Partido Colorado (PC) mulled the possibility of impeaching him, which would require a two-thirds majority in congress, and one member of the nominally allied Partido Liberal Radical Auténtico (PLRA) openly called for him to resign.

“I recognise that I have failed the Church, the country, the people and those who expressed confidence in me," Lugo said before attempting to assure an increasingly disillusioned public that he was “the same president that Paraguay voted in to propel a change in the country". Lugo added that he would not allow “these circumstances" to affect the national interest, and that his version of events would “always be the truth".

Lugo made his plea for forgiveness after a third woman, Damiana Hortensia Morán, a divorced 39-year old, claimed he had fathered one of her children. Unlike the two previous women, she is not filing a paternity suit and insists she still loves Lugo, who she described as “a phenomenon". She also claimed that a total of six children would come to light.

Lugo made a vague allusion to “rumours of instability and conspiracy" during his speech. His brother, Pompeyo, was less circumspect in an interview with the Argentine daily La Nación. He said Lugo was the victim of a veiled coup d'etat. Pompeyo, who is interestingly a member of the Lutheran Church and belongs to a dissident wing of the PC, said he knew nothing about Lugo's affairs. He propounded a far-fetched conspiracy theory that “international narco-trafficking, the mafia, and organised crime in Latin America" was orchestrating a plot to blacken Lugo's name to punish him for having clamped down on money-laundering, drug-trafficking and international terrorism.

Cabinet change
Vice-President Federico Franco, at loggerheads with Lugo from the moment he took office in August 2008 and named a cabinet which snubbed his faction of the PLRA, sought to distance himself from any plot. He said there was “no reason" to impeach Lugo and he would not back any attempt to do so. This did not stop a senator from Franco's faction, Alfredo Jaeggli, from publicly urging Lugo to resign in a letter submitted to the presidency and congress, on the grounds that “Your current personal situation has made you lose all credibility."

Relations between Franco and Lugo remain tense. Franco held a combustible meeting with Lugo after he snubbed Franco's faction of the PLRA yet again when naming a new foreign minister this week: Lugo followed up the four cabinet changes he made last week by dispensing with Alejandro Hamed Franco.

The new broom, Héctor Lacognata, only joined Lugo's coalition this month, which suggests he was sounded out about the post when Hamed tendered his resignation in March. Lacognata joined the Partido del Movimiento al Socialismo (P-MAS), which was only represented at cabinet level by its founder, Camilo Soares, the minister for emergency preparedness. Lacognata was one of the founders of the opposition, Partido Patria Querida (PPQ), and a sitting deputy for the party in the Mercosur parliament. He might have more experience of Mercosur than Hamed but he has no diplomatic experience.

• Press field day

The worry for President Lugo is that his popularity will fall as voters juxtapose the lack of progress in his political life with the frenzied activity in his personal life. The local press was singularly unimpressed with Lugo's apology. It quipped that Lugo had not been a very productive president so far but he had certainly been reproductive. The Church's image, meanwhile, has been seriously damaged by headlines ranging from “Less people go to confession" to “Women no longer given permission to go to mass" and “Commission formed to attend Lugo's ladies".

The government of President Daniel Ortega this week revealed it was considering another revision to the budget which, if implemented, would be the third such adjustment this year. The move reflects ongoing pressure from the IMF, with which Nicaragua continues to negotiate in the hope of releasing a further US$35m in loans, as well as unlocking US$40m from the World Bank and US$17m from the Inter-American Development Bank (IDB).

Nicaragua's finance minister, Alberto Guevara, told reporters on 3 August that the government expected revenues, originally set at US$1.18bn, to undershoot by US$24m. This, he said, could lead to further changes to the budget, in line with IMF requirements. He also said that the other two main items on the agenda, with the IMF delegation which is currently in Managua, are strengthening the National Social Security Institute (INSS) and tax reform.

The latter is particularly controversial, given a deal struck in late May between the government and the forum for the private sector, Cosep, in which Ortega essentially agreed not to touch tax legislation over the next two years, leaving in place considerable tax breaks which benefit the big agro-exporters and the main business groups such as Pellas, Promerica and Lafise. The move was a clear attempt by the Ortega administration at keeping big business on side.

The prospect of an agreement with what a government adviser recently dubbed the “International Murder Fund" appears ever more imminent, however, with the announcement by the US on 31 July that it would grant the annual “waiver" to Nicaragua. This relates to US legislation stipulating the withholding of aid from countries where the property of US citizens has been confiscated - as was the case in the 1980s in Nicaragua following the overthrow of the Somoza dictatorship. Considerable doubts had existed as to whether the waiver would be renewed in light of the decision by the US to cut “definitively" US$62m in aid through the Millennium Fund following transparency concerns over municipal elections last November [WR-09-24]. The US embassy in Managua attributed the waiver to the resolution of 44 property disputes over the last year by the Nicaraguan government, which was deemed a sign of “progress". 

• ALN

The decision by the opposition Alianza Liberal Nicaragüense (ALN), the former party of Eduardo Montealegre, to fire its president, Eliseo Núñez Hernández, has rekindled speculation regarding the liberals' future. The move has even fuelled rumours of a deal between Montealegre and the ruling Frente Sandinista de Liberación Nacional (FSLN) whereby the former ALN leader would sabotage the liberals' efforts at mounting a united front in exchange for the ALN presidency (via the FSLN controlled electoral authorities). This would clear the way for President Daniel Ortega to realise his declared objective of ending the ban on presidential re-election through constitutional reform.

Under the informal rule of thumb, Venezuela has officially entered recession for the first time in five years after posting two quarters of negative growth. GDP contracted by 4.5% year-on-year in the third quarter, after falling by 2.4% in the second. The economy and finance minister, Alí­ Rodrí­guez, was compelled to revise his forecast of zero growth for 2009 to a contraction of between 1% and 2.2%. He refused to revise the BsF159bn (US$74.1bn) budget for 2010, sent to the national assembly for approval last month, some 46% of which is destined for social welfare spending. The poor results inevitably raised questions about the sustainability of this spending.

The central bank said GDP had contracted by 2.2% in the first nine months of the year. Rodrí­guez blamed the fall in oil prices and Opec cuts but neither of these are new developments. Oil GDP fell by 9.4% in the third quarter but non-oil GDP also fell - by 3%. Manufacturing fell by 9.2%, retail sales by 11.5% and mining by 18%. There is still no sign of inflation falling either, although Rodrí­guez kept the optimistic goal of 26% for 2009 (four points less than 2008) and forecast 20%-22% in 2010. Unless the economy picks up soon, the government will need to dig deep into reserves to maintain spending before key legislative elections in September. Rodrí­guez is predicting just 0.5% growth in 2010.

• Imports and exports

The current account posted a US$5.06bn surplus in the third quarter, down 70% on the same period last year. The balance of payments surplus was US$2.36bn. Imports fell 29% in the third quarter compared with a year earlier, forcing consumers to tighten their belts. Exports fell by 49% to US$16.37bn. Exports to the US, made up almost entirely of oil, fell by 51% to US$8.24bn in the third quarter compared with a year earlier.

Panama's right-wing president Ricardo Martinelli paid a trip to Israel earlier this month where he distanced himself from the country's traditional policy of neutrality by hailing Israel as the “guardian of the world's capital, Jerusalem". His bold remarks, which unleashed a barrage of criticism from the opposition, follow his government's increasingly unequivocal stance in relation to a foreign conflict closer to home - that between the Colombian government and the guerrilla group Fuerzas Armadas Revolucionarias de Colombia (Farc).

With the defence of the Panama Canal an underlying plank of Panamanian foreign policy, governments have traditionally maintained a neutral stance in relation to foreign conflicts. Martinelli's declaration was consequently slammed by opposition figures such as Juan Carlos Navarro, the former Panama City mayor, of the Partido Revolucionario Democrático (PRD), who noted that “Panama is the custodian of one of the world's main trade routes, so traditionally its foreign policy has been carried with great prudence so as not to involve Panama in the problems of other countries."

Martinelli's ringing endorsement of Israel also follows another recent break with neutrality; on 26 February Panama was one of eight countries (including the US, Canada and Israel) to oppose a UN General Assembly resolution to accept the Goldstone Report, which recommended criminal investigations of both Palestinian rocket attacks on Israeli civilians and attacks on Palestinian civilians by Israeli forces during the 2008-2009 Gaza offensive.

The controversy over Panama's evaporating neutrality in relation to the Israeli-Palestinian conflict echoes that underway in relation to Martinelli's recently declared military alliance with the Colombian government over the Farc - again signifying a shift from past governments [WR-10-07]. The government insists that cooperation is part of a general offensive on crime, but last month a former special prosecutor, Rodrigo Miranda, threatened to take Martinelli to court for involving Panama in the armed conflict under the criminal code, which stipulates a prison sentence of between five and 10 years for conducting “intelligence with a foreign government or its agents [leading to] hostilities or war against Panama" or actions which “favour military operations of another nation against Panama."

The forcible ejection from office this week of an opposition-aligned mayor, by riot police and supporters of the ruling Frente Sandinista de Liberación Nacional (FSLN), the fifth such removal in recent months, suggests that President Daniel Ortega is now targeting municipal government as part of efforts to impose his illegal bid for re-election, ahead of next year's presidential contest.

On 28 June, the one year anniversary of the coup in Honduras (an irony not unnoticed by Ortega's opponents given Ortega's vehement condemnation of the coup), police and FSLN mobs stormed the municipal building of Boaco, the capital of the eponymous region in central Nicaragua, and removed its mayor, Hugo Barquero. At least nine people were injured. A supporter of the Movimiento Vamos con Eduardo (the political outfit of a liberal dissident, Eduardo Montealegre), Barquero told the local press that he had been stripped of his office the previous week, after a dubious resolution was passed by the FSLN-controlled municipality following his refusal to support Ortega's re-election bid. He has been replaced by Juan Obando (a Sandinista) under orders of the FSLN-aligned supreme electoral court (CSE). Notably, of the other mayors ejected at least two were FSLN cardholders who failed to toe the party line (in Carazo and Ciudad Sandino).

Since the start of his current term in January 2007, Ortega has sought to wrest control of municipal government in various ways. First, he created controversial citizen power councils (CPCs), which were initially billed as boosting citizen participation but subsequently transformed into an extension of the executive by presidential decree in November 2007 [WR-07-48]. The municipal elections which took place the following year also saw Ortega accused of behaving undemocratically after he refused to authorise electoral observers and his FSLN won 105 out of 146 town halls amid widespread accusations of fraud. However, the unashamed use of violence against elected mayors on this occasion, which echoes that used against opposition legislators last April [WR-10-17], suggests that Ortega is becoming increasingly ruthless in his bid to retain power.

• CSJ paralysed

The institutional crisis afflicting Nicaragua's supreme court (CSJ) caused by President Daniel Ortega's January decree extending the terms of public officials (and usurping the remit of congress, responsible for making the appointments) is escalating. On 15 June, the term of its opposition-aligned president, Manuel Martí­nez, expired (following that of three other justices), leaving the 16-strong court decapitated. Although a Sandinista CSJ magistrate, Alba Luz Ramos stepped in as interim president, her efforts to convene the court have failed. This crisis is also threatening the seven-member supreme electoral court (CSE) whose magistrates' terms all ended in mid-June.

HAITI | Electoral concerns. At least 12 people died after heavy rains flooded Port-au-Prince over the weekend. This follows 23 rain-related deaths last month in southern Haiti and has fuelled concerns regarding the viability of holding general elections on 28 November. The possibility of “tropical storms ahead of the election" was recently cited as one of two main concerns by Albert Ramdin, the assistant secretary general of the Organization of American States (OAS). His other concern - problems with the registration process due to “limited technical resources" - has also been borne out. With the deadline to register now passed, another OAS official, Ricardo Seitenfus, announced on 13 October that some 4.7m Haitians have been registered to vote (just over half of the total population). Of these, however, more than 6% died in the earthquake.

• Minustah
  The forthcoming elections in Haiti were also cited as a priority by the UN Security Council in its unanimous decision on 14 October to renew the mandate of the UN Stabilisation Mission in Haiti (Minustah) for a seventh straight year. The Minustah comprises a military component of up to 8,940 troops and a police component of up to 4,391 officers.

Remove restrictions on referendums on re-election. Tick. Carry out sweeping reform of the judiciary. Tick. Grant approval for two autonomous 'Model Cities'. Tick. Congress achieved almost as much on one day on 17 February as many constituent assemblies in the region have managed in one year. The comparison is apt because there are real doubts as to whether all of its reforms were constitutional or even democratic.

The constitutional reform to allow referendums would have been massive in itself: former president Manuel Zelaya was ostensibly ousted for no more, even if he did go about it differently. But congress went much further than that. Also pushed through, under the radar, was a judicial reform, which, precisely because it could curb the powers of the supreme court, implicitly threatens this institution not to challenge congress over the referendum issue. The “Model Cities", meanwhile, would hand over sovereignty to two areas of Honduras - a major decision that should have been the subject of broad public debate and the new referendum facility.

Congress voted by a resounding 104 to 11 to approve a constitutional reform, rewriting Article 5, which removes restrictions on plebiscites and referendums, including, crucially, that on presidential re-election. As few as 10 deputies will be able to call a plebiscite or referendum, or 2% of citizens that voted in the last elections. The result of the referendum will be valid if the proposal wins more than 50% support and the turnout is equivalent to 50% of those that voted in the previous general elections. Zelaya noted the irony that the reform that lay behind his ouster had now been approved, but he urged his Frente Nacional de Resistencia Popular (FNRP) to seize the opportunity to win the easily obtainable 2% support for a referendum to be held on a constituent assembly to rewrite the constitution.

The vote ensured that congress met the constitutional imperative that a reform of this type be approved in two successive legislative sessions: it was first approved in the previous session last month [WR-11-03]. Whether the reform of self-described “inalterable articles" in the constitution is in fact constitutional is a moot point. The supreme court has kept a studied silence. Given its objections to Zelaya's attempts to reform the constitution in the same way, this appears odd.

The explanation could lie in another key reform pushed through by congress. Congress voted overwhelmingly to approve a reform to two further constitutional articles, creating a judicial council. This looks like an implicit threat from congress to impeach supreme court justices if they refuse to play ball. A congressional commission will define the composition and powers of the judicial council. One thing is certain: the president of the supreme court will cede to the judicial council the power to appoint and dismiss judges. Congress is already threatening to impeach four supreme court justices for allegedly doctoring documents to justify the dismissal of four local judges, who had criticised the supreme court's justification of Zelaya's ouster. 

The Honduran judiciary has long been heavily politicised: the idea that congress could just approve a bill completely transforming the way the judiciary functions, however, looks anti-democratic. If it is congress that appoints the members of the judicial council, it will gain a decisive control over the judiciary, undermining the concept of the separation of powers.

It is worth noting that the judicial reform Ecuador's President Rafael Correa is seeking to push through in a referendum, which would give his government a decisive say in the appointment of judges to a judicial council (and hence the hiring and firing of judges), has led to extensive press coverage for over a month; and the opposition has forged campaigns denouncing the reform as an unconstitutional power grab that should have gone to a constituent assembly. The Honduran press, by contrast, has singularly failed to hold congress to account, and has raised no objections to the highly questionable judicial reform it has pushed through. This could go to neither a referendum (yet) nor a constituent assembly as there is no recourse to either.

Model cities
The final key piece of legislation to be approved was that concerning Special Regions of Development or Model Cities. These will have their own constitutional statutes, which will need to be drawn up by congress, and secondary legislation. The state will effectively cede sovereignty for a set period of time to whichever investors choose to take up the opportunity. The cities, the size of which was not stipulated in the legislation, would be able to make tax and trade deals with foreign countries.

President Porfirio Lobo is a strong advocate of the plan, arguing that it would result in “unpopulated places" being transformed into cities with all the infrastructure and amenities of developed countries as the stability guaranteed by autonomy would attract foreign direct investment. The government envisages the creation of two “poles of economic development" - one on the northern coast and the other in the south. It is expected to take until 2012 to make all of the requisite constitutional changes to create these model cities (see sidebar).

• Model cities

Juan Orlando Hernández, the president of congress, has travelled to Songdo in South Korea and Hong Kong to see 'Model Cities' in action. Songdo is an international business district of some six square kilometres. It is located near an international airport, and provides luxury housing and retail malls, golf courses, charter schools and hospitals. If this model were replicated in Honduras, aside from the obvious difficulties associated with the infrastructural deficit in the country, Hondurans would be far more likely to end up working in the service sector there than being able to afford to live there and take advantage of the amenities. The city would not be immune either to the country's serious security issues.

President Alvaro Uribe has kept his promise and greatly intensified the war against Colombia's illegal armed groups. He also appears to be succeeding; beyond the body count, which has spiralled upwards, a record number of fighters have withdrawn from the conflict (by capture or defection), and the civilian population has been enjoying the least violent year since 1986.

Facts & figures
The intensity of the war has indeed increased. According to a tally by the Fundación Seguridad y Democracia (FSD), there were 2,312 armed clashes in the first 11 months of the year: 73% more than in 2002. On one plane the result has been deadly: the number of guerrillas and paramilitaries killed has exceeded 2,700; on average, it has been running at more than double the rate of 2002. The toll has also been highly asymmetrical: for each member of the security forces killed, 19 on the other side have fallen. Seen from a different angle, while last year there was one fatality among the security forces for every five engagements, this year the ratio has been 1:16.

On the other side of the equation, the number of incidents classified by the defence ministry as `acts of terrorism' was down by 46.8%, from 1,539 in January-November 2002 to 818 in the same period of this year. Also down, by 50%, was the number of roadblock kidnappings by guerrillas, a practice which included the mass abductions known as pescas milagrosas, literally `miraculous catches [of fish]'.

Indeed, kidnappings in general have declined considerably: according to the government's Fondelibertad, by 23%, from 1,511 last year to 1,160; according to the higher FSD tally, by 28.2%, from 2,986 to 2,145. This has been attributed to the general improvement of security, as has the decline of the homicide rate (a broader category than murder) to 50 per 100,000 inhabitants annually, the lowest figure on record since 1986.

All told, since the beginning of the year 11,686 people have ceased to be combatants: 9,283 guerrillas and paramilitaries have been captured by the security forces, and another 2,403 have downed weapons and turned themselves in, seeking the benefits of the government's `reinsertion' programme. That last figure does not include the 1,015 paramilitaries currently being `demobilised' (855 from the Bloque Cacique Nutibara of Antioquia, 160 from a small `self-defence' group in Cauca) — a subject we shall return to further on.

`Decapitation' strategy?
According to what the US Southern Command has been telling the US press, an important element of Colombia's strategy is the `decapitation' of the guerrilla organisations — and it has been working. `Decapitation' was a DEA favourite at the time of the offensive against the Medellí­n and Cali drug cartels, adopted later by the US military (many will recall its repeated mention in the early phases of the war against Iraq). In connection with Colombia it was mentioned back in May this year by Southcom's director of operations, General Galen Jackman, who cited the killing of three Farc commanders and the capture of three ELN leaders as early fruits.

In early December, Southcom spokesman Steve Lucas, said about the first US-trained commando battalion of the Colombian army, `Their strategy is to integrate operations by gathering appropriate intelligence and use that intelligence to conduct a decapitation strategy. Get the leadership, in other words.' Beyond what Jackman had said in May, the results of this strategy included:

• The October killing of Edgar Gustavo Navarro (El Mocho), deputy commander of the Farc's `Teófilo Forero' front, which operates in Caquetá, considered responsible for a string of kidnappings and the capture of US nationals whose spy plane crashed last February.
  
• The late November capture, in a Farc camp east of Bogotá, of the brother-in-law of one of the Farc's most notorious leaders, Tomás Molina Caracas (El Negro Acacio), whom Washington wants extradited to answer charges of drug trafficking and the murder of three indigenists from the US.
  
• The mid-December killing of Jaime Enrique Correa Torres (Pititico), third-in-command of the Farc's 22nd front, which operates in Cundinamarca, the department that surrounds Bogotá. Also, the probably linked capture in Bogotá of the 22nd front's commander, Wilmer Antonio Marín , considered responsible for the February bombing of the exclusive El Nogal club, and the November murder of Japanese businessman Chikao Muramatsu.

Commanding heights
One thing that is part of publicly acknowledged Colombian strategy is the stationing of newly trained battalions of high-mountain troops in positions commanding the `corridors' along which the Farc has been moving its supplies and `mobile fronts'. In mid-December Uribe inaugurated the third such battalion, a 1,200-strong unit stationed in southwestern Valle de las Papas (San Sebastián, Cauca) at 2,700 metres above sea level, an area which rises up to 4,000 metres commanding the strategically important meeting-point of five departments (Cauca, Huila, Caquetá, Putumayo and Nariño). The two earlier ones were established on the Sumapaz `corridor' running south of Bogotá towards the old demilitarised zone enjoyed by the Farc while negotiating with President Andrés Pastrana, and in the Farallones de Cali, above the southwestern city of cocaine-cartel notoriety.

Uribe has announced the establishment of two more high-mountain battalions, in the centrally located Parque de los Nevados (Quindí­o) and the Sierra Nevada de Santa Marta in the far north, on the Caribbean coast (where the ELN recently kidnapped a group of foreign tourists). Like the one in Cauca, these two locations also overlook economically important coffee-growing areas.

Paramilitary `demobilisation'
One aspect of Uribe's plan that appears to have lost momentum is the `demobilisation' of paramilitary organisations. So far the only sizable one to have downed weapons is the Bloque Cacique Nutibara (BCN) that operates in and around Medellí­n — and is widely suspected of not having surrendered all its weapons or all of its members. This is refuted by the BCN, though its top leader was absent from the disarming of 855 fighters, and the national police have since then attributed one political assassination to the BCN.

One hitch: the special statute offering `alternatives to prison' to surrendering paramilitaries has not yet been approved by congress: the BCN began to demobilise under current `reinsertion' terms, restricted to those not deemed responsible for heinous crimes (delitos atroces). The government recently admitted to having run short of cash for this scheme, due to the unexpectedly high number of applicants (estimated at close to 2,500).

Another apparent problem is that the top leaders of the paramilitary organisations, starting with Carlos Castaño and Salvatore Mancuso, are still angling for guarantees that they will not be extradited to the US to be tried on charges of drug trafficking.