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Development: On 18 September Iranian President Mahmoud Ahmadinejad concluded his two-day visit to Venezuela.

Significance: The visit concluded with a joint press conference in which Ahmadinejad and President Hugo Chávez advocated a reform of the UN Security Council. As well as signing cooperation agreements in a number of areas, including the energy sector, the two presidents supported each other's ambitions: Ahmadinejad's for nuclear technology and Chávez 's for a non-permanent seat on the UN Security Council. Both men head to the UN General Assembly in New York today (19 September).

During his visit the Iranian president signed 29 cooperation agreements related to oil, gas, iron, steel, infrastructure, cement and medical supplies. The two countries set up a binational fund, worth US$2bn, to finance factories to produce tractors, cars and bikes. A separate project will link Pequiven, the Venezuelan state owned petrochemical company, and Iran's National Petrochemical company, to form VenIran Petrochemical company. It will be based in the eastern state of Sucre, and by 2010 it should produce 1.6m tons of chemical products.

The two presidents also travelled to an oil field in the Orinoco tarbelt, where they watched the first joint operation, to perforate a well, carried out by Venezuela's Pdvsa and Iran's Petropars. The tarbelt contains around 236bn barrels of oil or, as Chávez said, "oil for two centuries and more".
Current technology can only exploit about 20% of the reserves. Chávez also acknowledged the work of foreign oil companies, even the US ones, that are extracting the oil, and who have recently obeyed the new law upping the tax on their profits from 34% to 50%. "Here we do not exclude anybody, but we are no longer a [US] colony," he said.

Chávez once again defended Iran's right for peaceful nuclear technology, but both presidents rubbished claims that Venezuela was supplying the Islamic Republic with uranium. In return Ahmadinejad has promised to support Venezuela's bid for the UN Security Council, and Chávez is now confident he has the two-thirds majority in the General Assembly required to win the two-year seat. However, the UN vote is secret, and there is a strong possibility that many of the countries that have committed to supporting Venezuela might consider themselves free to change their minds.

Development: President George W Bush announced that he would sign the congressional bill to build 1,126km of walls along the border with Mexico on 26 October.

Significance: Mexico is still objecting to the walls and is threatening to involve the United Nations. On 23 October, the president of the UN's Human Rights Council (UNHRC), Luis Alfonso de Alba, who also heads the Mexican delegation, said that the walls were “strictly speaking a violation of human rights." He said that Mexico wanted to uphold the human right of free movement of persons. The US is an observer on the UNHRC, which replaced the Human Rights Commission earlier this year. 

The walls are politically symbolic. President Bush's announcement followed an application from the leaders of the Republican party in both houses of congress. The congressional leaders emphasised that the walls were the product of a “Republican congress". The mid-term elections in the US are on 7 November and the Republicans are lagging badly in the opinion polls.

Development: The opposition to President Evo Morales suffered another blow when it emerged on 29 November that some of the members of the constituent assembly had also switched sides.

Significance: There are clear signs that the political opposition to President Evo Morales is weakening because it has been outmanoeuvred. The question is whether the hardline opponents of Morales will now switch to extra-parliamentary action to thwart the government. Fernando Messmer, a leader of the main opposition party, Podemos, in the lower house of congress, said that the opposition would still try to overturn what the government has done legally, but he was not optimistic: the Podemos leader, Jorge Quiroga, called on the people to take part in “peaceful and democratic" protests against the government. The opposition has called for a strike on 8 December. 

On 28 November one elected senator and two suplentes (standby senators who take over when the elected senator is indisposed or resigns) allowed the government to get three crucial bits of legislation through congress: land reform; the new energy contracts and the military alliance with Venezuela. The government was cunning in linking the three: the opposition, broadly, approves of the energy contracts so it cannot get the other two bits of legislation annulled without endangering the energy contracts.

On 28 November 10 opposition or independent constituent assembly members defected to the government. Government supporters in congress say that more opposition senators and deputies will come over to it in the next few days. In the constituent assembly the steadiness of the government support means, following the 28 November vote, that new constitutional articles can be approved by a simple majority unless in three successive votes a third of the constituent assembly votes against a proposal: then the proposed change goes to a national referendum.

Development: President Alan Garcí­a announced that he was prepared to change the constitution in order to hold a referendum on introducing the death penalty for terrorists and paedophiles, an idea which was rejected by congress on 11 January.

Significance: Garcí­a's determination to re-introduce the death penalty at any cost can be at least partially explained by the fact that passing the legislation would probably necessitate Peru's withdrawal from the Inter-American Court of Human Rights (CIDH). This would be in Garcí­a's interest, as a case which implicates him and vice-president Luis Giampetri in the extrajudicial killings of 200 terrorism suspects in 1986 is underway at the CIDH. Garcí­a recently protested against a CIDH ruling which ordered the Peruvian state to pay US$20m to relatives of 41 imprisoned Sendero Luminoso members killed in a prison riot during the presidency of Alberto Fujimori (1990-2000). 

Putting the death penalty bill to a public referendum is complicated by the fact that article 32 of the constitution forbids referenda when the purpose is to "reduce fundamental rights". Lourdes Flores, the leader of the conservative Unidad Nacional, said "Peru is not a nation where the president imposes his will as he wishes. That is called an autocracy."

The fujimorista Alianza para el Futuro was the only party, along with the ruling Apra party, to support Garcí­a's bill in congress. On 14 January, congressman Santiago Fujimori, the son of former president Alberto Fujimori, announced that his party would also support a referendum on the death penalty.

Development: Official results for the recent vote in Corrientes announced on 19 February showed clear support for the province's governor, Arturo Colombi, and his plans to run for re-election.

Significance: Some 55% of voters in Corrientes went to the polls on 18 February to elect a constituent assembly, which will be responsible for altering the provincial constitution. Colombi's party, the Frente de Todos para la Reforma, won 53% of the vote (which it had called) and will thus enjoy a clear majority in the 39-seat assembly. As a result, the assembly will almost certainly endorse Colombi's plans to reform the constitution to allow him to stand for a second term in 2009.

The result was good news for President Néstor Kirchner, who supported Colombi and his plans for re-election. Despite his overwhelming popularity in Argentina as a whole, provincial elections have not all gone Kirchner's way in recent months; most notably in Misiones last October when the existing governor, Carlos Rovira, was defeated when he tried to do something similar to Colombi. But whereas Rovira was seeking indefinite re-election, Colombi wants the constitution to be changed to allow governors to serve two terms and no more.

Development: Brazil's outgoing development minister, Luiz Fernando Furlan, went on a final visit to Uruguay on 26 March to announce a series of investments in the country. 

Significance: The Brazilian government is fulfilling its promise and is actively working to end trade asymmetries between Brazil and Uruguay. Last month Brazil's president, Lula da Silva, visited his Uruguayan counterpart, Tabaré Vázquez, in Montevideo and promised to tackle the issue and also to step up Brazilian investment in Uruguay. The two countries are partners in the Mercosur, the customs union to which Argentina, Paraguay and Venezuela are also members. Uruguay, however, has been unhappy with the bloc for the past two years. 

According to Furlan, “Brazil is growing [economically] and the Lula government wants to share this positive moment with neighbouring countries". Furlan renewed the two countries' automobile accord, which allows Uruguay to sell three times more vehicles to Brazil than the number it imports from its larger neighbour. The Brazilian state-controlled oil company, Petrobras, also announced it will build a gas plant in Uruguay in partnership with the Uruguayan state-owned ANCAP, which would help to curb Uruguay's dependency on Brazil's energy. 

The Brazilian government will also foot the bill for other infrastructure projects, including the construction of bridges between the two countries. Brazilian private companies also announced investments: Camargo Correia will build a cement plant in Paysandú and Banco Itaú will start operations in Uruguay. The Brazilian and Uruguayan government also signalled their willingness to increase their partnership in the production of biofuels. 

Furlan's visit took place as Uruguay's celebrates an international conference to debate the government's economic, trade and financial policies. Vázquez called on large countries to “end subsidies to agriculture". Uruguay's main exports are commodities and subsidies hurt the country's economy. In January Uruguay posted a trade deficit of over US$500m last year. Once again Vázquez denied rumours that Uruguay would abandon Mercosur. However, he said that Uruguay wants “an open regionalism and more trade flexibility". Significantly, Vázquez said Uruguay would not “give up its sovereignty and would seek new markets [for its products] beyond Mercosur".

Development: The navy announced on 30 April that it has seized 25 tonnes of cocaine on the Pacific coast.

Significance: This is the biggest haul of cocaine the Colombian authorities have ever captured, easily outstripping the previous largest seizure of 15.1 tonnes in May 2005. The navy found the drugs loaded onto five go-fast boats in the municipality of Pizarro on the coast of the western department of Chocó.

Authorities believe that the drugs were being shipped by the Fuerzas Armadas Revolucionarias de Colombia (Farc) and traffickers from Norte del Valle. The seizure represents a loss of some US$500m to the finances of the guerrillas and the druglords. No arrests were made where the boats were found.

Development: On 4 June the US Secretary of State, Condoleezza Rice, called for the Organization of American States (OAS) to investigate Venezuela for a possible breach of the OAS charter.

Significance: The confrontation between the US and Venezuela over the cancellation of RCTV's broadcast licence dominated proceedings at the OAS annual meeting in Panama which should have been focused on energy issues. No other OAS member followed the US's lead.

Jorge Valero, Venezuela's ambassador to the OAS, said that his government had won a diplomatic victory because of absence of the RCTV issue from the final communiqué of the OAS's XXXVII general assembly. This was either because the US failed to push the issue when the communiqué was being drafted or because it could not get support from the rest of OAS members to push the RCTV issue. Rice was reduced to bringing up the issue of RCTV in her plenary speech.

Rice made a bold bid for a bipartisan approach to the RCTV issue by pointing out that it was the US Senate, not the administration, that had called on the OAS to address the Venezuelan government's decision to end RCTV's licence to broadcast. She added that she and President Bush agreed with the Senate, and she urged José Miguel Insulza, the OAS Secretary-General, to go to Venezuela to consult in good faith with all interested parties and to present a full report to the OAS foreign ministers through the Permanent Council.

The Venezuelan foreign minister, Nicolás Maduro, immediately objected to Rice's call. He said that it was an unwarranted interference in the affairs of a member country and claimed that the US was again trying to destabilise a democratically elected government.

The US, under Bush and Rice, has tried to dismiss President Hugo Chávez 's undeniable commitment to democratic elections by claiming that regular elections are not as important as the more subjective quality of “ruling democratically". What this means is far from clear.

Rice claimed that disagreeing with a government should certainly not be a crime in any democracy. Here, Rice appears to have let her rhetoric run away with her argument: RCTV has not been charged with any crime. It has simply not had its licence to broadcast extended. The channel's licence to broadcast expired on 27 May.

It is hard to see how democracy is served when a leading broadcaster calls, persistently, for the violent overthrow of the democratically elected government in the country where that broadcaster operates. That is the position in Venezuela with RCTV. RCTV's supporters admit that it supported the attempted coup against President Hugo Chávez in 2002.

Arguably it is President Chávez 's failure to prosecute people for their involvement in the 2002 coup that has created the problem. The coup's supporters do not admit that they did anything wrong.

This makes a contrast with President Chávez and his supporters who went to jail when their attempted coup failed in 1992. Chávez was in jail for two years before being pardoned by President Rafael Caldera. None of the leaders of the anti-Chávez plot in 2002 have submitted themselves to the courts, as Chávez did.

He is the president of the Brazilian senate. He comes from the Partido do Movimento Democrático Brasileiro (PMDB), Brazil's largest but most unprincipled political party.

Why watch him? Calheiros is currently under investigation for the misappropriation of public funds. He allegedly used these to feed and house a lover, journalist Mônica Veloso, with whom he had an extramarital daughter. He is also accused of granting parliamentary exemptions to construction companies.

Born: 16 September 1955

Place of birth: Murici (Alagoas)

Educated: Calheiros studied law at the Universidade Federal da Alagoas (UFAL).

Public Life: Calheiros was justice minister under ex-President Fernando Collor de Mello. Collor resigned just was he was impeached for corruption. Collor returned to the senate in last year's elections. Calheiros has also been president of the Conselho Nacional de Segurança Pública. As president of the senate and the national congress, he is currently at the apex of his political career. It is worth noting that both of Calheiros's brothers have held seats in the chamber of deputies: one was a communist.

Timeline:

1978: Alagoas state deputy.
1982: Federal deputy.
1984-5: PMDB's vice-leader.
1986: Alagoas state PMDB leader.
1992-4: Vice-president of state-owned Petroquisa.
1994: Senator for Alagoas state.
1998-9: Nominated for Justice portfolio.
2002: Re-elected Senator.
2005: President of the Federal Senate.
2005-2007: President of the National Congress.
2007: Re-elected president of the Senate.

Strengths: Calheiros is an experienced and wily politician. He was the youngest ever justice minister and was still a student when he was elected state deputy for the Movimento Democrático Brasileiro (MDB) in 1978. In 2005, the Departamento Intersindical de Assessoria Parlamentar (DIAP) identified him as the most influential Brazilian parliamentarian.

Weaknesses: Calheiros is facing an investigation that could be very damaging to his political career if the allegations are proved. He provided Veloso and their three-year-old daughter over US$8,500 per month in cash that covered their maintenance and rent on a four-bedroom flat in Brasilia. His salary as a senator is only just over US$6,500 gross. Initial investigation into his other source of income - the sale of livestock - show signs of fraud and a discrepancy of over US$300,000.

Prospects: The senate ethics' council believes that it will reach a resolution in mid-September. However, the council will need at least another 45 days to reach the final stage of the process, in which the tripartite commission of senators' vote on their report. If found guilty of "breaking parliamentary decorum", Calheiros will have to stand down from his current position.

Development: The presidents of Costa Rica, Oscar Arias, and of Panama, Martí­n Torrijos, will sign a free-trade agreement (FTA) between the two countries today (8 August) in San José.

Significance: The FTA will "give more dynamism to bilateral trade and investment between the neighbouring nations", officials said. Last year bilateral trade reached US$370m. Panama exported US$287m worth of goods to Costa Rica and Costa Rica exported US$182m to Panama, making this the most lucrative trade relationship between Central American nations. The FTA could increase bilateral trade to up to US$2bn annually, said Arias, who pointed that 80% of agricultural products and 93% of industrial goods will be traded "without any tariff". However, the agreement must be ratified by the congresses of both countries to be fully implemented.

The Costa Rica-Panama FTA hides profound differences between the two countries. Costa Rica recently ditched Taiwan to establish diplomatic relations, and thus improve trade, with China. Panama continues to favour Taiwan. Also, the Panamanian government and congress signed and ratified an FTA with the US in record time last month. Costa Rica, meanwhile, has still to ratify its entry in the Cafta-DR free-trade zone area with the US. The issue will be taken to a referendum in October. The latest opinion polls suggest that 51% of Costa Ricans are in favour of the agreement with 42% against it.

While in Costa Rica Torrijos will participate in the 20-anniversary celebrations of the Esquipulas agreement, which was brokered by Arias. The agreement ended years of armed conflicts in Central America. All Central American leaders confirmed their attendance in the event, apart from the Nicaraguan President, Daniel Ortega. According to an official statement, Ortega is busy entertaining Brazil's President Lula da Silva. Arias and Ortega, however, are not on speaking terms: they have not met since both signed the Esquipulas agreement in 1987.

Development: On 12 September, the senate approved a wide-ranging electoral reform.

Significance: The reform, which cuts campaigns and limits election spending, opens the way to a congressional deal on fiscal reform. The only opponents to the electoral reform were the Partido Verde Ecologista (which is essentially a family clan party); Convergencia and one senator from the Partido Revolucionario Institucional, who had close links to the broadcasting industry. The broadcasting industry will lose out, because political parties will face limits on their media spending.

Political parties will now be allowed to spend on M$40m on elections, rather than the M$270m they can spend now. The state will match what each party raises for congressional and presidential campaigns. The reform also calls for a new Instituto Federal Electoral.

In the lower chamber, the governing Partido Acción Nacional, backed by the PRI, overrode the leftwing Frente Amplio Progresista and pushed through an agreement in the finance committee to increase fuel prices, initially by two centavos a month for the next 18 months. This will increase the price of fuel by 5.5% by mid-2009. The FAP has yet to decide whether to heed the call by its leader, Andrés Manuel López Obrador, and prevent a full congress debating the fuel price increase.

Development: On 14 October the Procuradurí­a General de la República questioned Felipe Zamora Álvarez, the customs administrator at Altamira, Tamaulipas.

Significance: The authorities believe that Zamora Álvarez was involved in the shipment of almost 12 tons of cocaine (worth around US$400m on US streets) seized on 6 October. The seizure was the biggest ever in Mexico. At least 25 policemen and customs officials have been arrested as a result of the seizure.

Separately, President Felipe Calderón said that a total of 10,000 people have been arrested in the past nine months on suspicion of involvement in the drug trade.

Development: President Rafael Correa started his cabinet reshuffle on 14 November.

Significance: Correa accepted the resignation of his whole cabinet a month ago, to underline the supremacy of the constituent assembly, but did nothing about confirming or replacing ministers. The two ministers he dropped on 14 November were the environment minister, who had been censured by congress in mid-September, and the culture minister. The more important changes are likely to come after President Correa returns from his trip to Asia.

The highlight of this trip will be Ecuador's readmission to the Organization of Petroleum Exporting Countries (Opec) on 17 and 18 November in Riyadh. Correa will then continue on to visit Beijing, Shanghai and Thailand.

Correa's innovation on 14 November was to create a new ministry of justice which will be headed by Gustavo Jhalk.

The constituent assembly, which will rewrite the constitution, is scheduled to open on 29 November.

ARGENTINA: Unemployment fell to 7.1% of the working population in November, according to data released by the presidency. The official statistics agency had announced last month that the unemployment rate for the third quarter of 2007 was 8.1% of the working population, well bellow the 10.2% rate registered in the same period in 2006.

VENEZUELA: Unemployment fell to 6.3% of the working population in November, 2.5 percentage points lower than the same month last year, according to official statistics.

Development: Genaro Garcí­a Luna, the minister for public security, claimed on 30 January that the drug gangs had lost US$90bn since the government started its offensives against them in December 2006.

Significance: The claim is staggering: the figure is equivalent to 9% of Mexico's GDP or about a third of what the federal government spends in a year. It is the first time that the government has claimed to be doing such damage to the three main drug gangs (Arellano Félix; Sinaloa and Golfo) operating in Mexico. Even President Felipe Calderón Hinojosa has tended to argue in public that the war against the gangs will be long, hard, expensive and bloody.

Garcí­a Luna was speaking in Washington at the start of a four day trip. He is scheduled to meet senior members of President George W Bush's cabinet and US police and intelligence service officials.

He has already met Thomas Shannon, the US Assistant Secretary of State for Western Hemispheric Affairs to discuss progress of the US's Iniciativa Mérida. This is supposed to deliver US$500m a year in military and anti-drug aid to Mexico, but has yet to be approved by the US congress.

Garcí­a Luna admitted that the gangsters were trying to "intimidate" the Mexican government in an effort to get the government to call off the offensives, which are now running in 10 of Mexico's 32 states. He said that the government would not even take a pace back. This is despite a death toll that appears to be rising endlessly.

In fact, a more detailed analysis of the figures suggests that in the second quarter of 2007 the death toll fell significantly, but since October 2007 it has accelerated again. In 2007 the average was around 180 gang killings a month. January 2008 will exceed that: in the first 25 days there had been 201 killings, so the total for the month is likely to have topped 250.

According to figures from Garcí­a Luna's own ministry, the Secretarí­a de Seguridad Pública (SSP) in the first 12 months of the Calderón government (December 2006 to November 2007) there was a 14.2% increase in drug-related killings to 2,561. The government's argument is that the rise in killings is the result of the pressure the government is putting on the gangs.

One persuasive theory as to why the gangs have become more lethal is that their business has developed from being simply wholesale-drug smuggling into the US into a more lucrative retailing and manufacturing operation. The gangs now sell drugs in Mexico and at least two of them are significant manufacturers of methamphetamines, which are increasingly popular in the US.

Development: On 4 March President Rafael Correa met Presidents Lula da Silva of Brazil and Alan Garcí­a of Peru to rally support against Colombia.

Significance: Correa has repeatedly asserted that Ecuador's complaint against Colombia is more than just a bilateral dispute. He is partway through a whistle-stop tour of Peru, Brazil, Venezuela, Panama which culminates at the Rio Gorup summit in the Dominican Republic. Correa will be visiting Nicaragua on 6 March in a last-minute addition to his tour.

Correa's choice of countries and the timing of his visit to each is important. It is particularly significant that Correa visited his Peruvian counterpart, President Alan Garcí­a, first. Historically the two countries have had tense relations. Garcí­a is also one of Colombian President Álvaro Uribe's main allies in the region and, like Uribe, has problems with President Hugo Chávez of Venezuela.

So it is alarming for Colombia, then, that Garcí­a sided with Correa. Garcí­a asked Colombia to "extend its apologies to the Ecuadorean people and government," and added that "if [the Colombian military incursion] had occurred in Peru, I would say that it would have been unacceptable." Garcí­a also said, however, that no country should shelter guerrillas and other 'subversives' in their national territory.

Garcí­a asked Venezuela to refrain from adding fuel to the fire, saying that no third party's interference could be constructive in finding a solution to the dispute, which must be agreed between Ecuador and Colombia only.

Correa then travelled to Brasí­lia to meet President Lula da Silva. As he had done in Lima, Correa summoned a press conference within minutes of arriving, where he considerably upped the tone of his rhetoric, asserting that "we have had to remove dead bodies from the border [after Colombia's raid], luckily none of them were Ecuadoreans, because otherwise right now we would be at war."

President Lula claims to still be confident of finding a peaceable outcome to the situation through diplomatic negotiations, but Correa's words are becoming more, not less, belligerent. He wants Colombia not only to apologise for the incursion but also publicly retract its accusations that the Ecuadorean government has links with the Farc. "We are a small country," he stated at the press conference in Brasí­lia, "but we will defend ourselves with our own means_ Our sovereignty is non-negotiable."

Development: On 8 April Senator Humberto Builes Correa was arrested on the orders of the public prosecutors office due to his alleged links to paramilitaries.

Significance: The parapolitical scandal is fast reaching catastrophic proportions. Builes Correa, of the Cambio Radical party, is the seventh congressman elected in 2006 who has either been arrested or handed themselves in over the past fortnight.

There are currently 29 congressmen behind bars out of a total of 51 legislators (some 20% of congress) who are under investigation for their links to paramilitary groups. The majority of those implicated belong to rightwing parties who support President Alvaro Uribe but only one of the major parties - the leftwing Polo Democrático Alternativo - is not affected.

Unsurprisingly, congress has ground to a halt as a result of the scandal. The government's legislative agenda has stalled accordingly, yet President Uribe has ruled out the possibility of a new congressional election which might revive congress and prevent it from losing further legitimacy.

Instead, the senate will meet today to discuss reforms intended to purge congress of criminal legislators. Under these measures a party whose representative is convicted of links to illegal groups will lose the seat in congress; at present parties are replacing legislators brought down by the scandal with other people on their party list. If more than 50% of a party's legislators are convicted it will lose its representation entirely.

There are a couple of problems with the proposal. First, in its present form the reform will apply only to congressmen elected at the next legislative election, scheduled for 2010. Secondly, there is no guarantee that congress will get its act together sufficiently to pass the legislation, crucial though it is to its own legitimacy.

Development: On 13 May the government ordered 2,723 more soldiers, marines and federal policemen to the state of Sinaloa where there have seen a spate of gang-related killings in the past week.

Significance: The upsurge in violence in Mexico may have the fortuitous side-effect of encouraging US Congress to approve the controversial US military aid package, the Iniciativa Mérida, in its full form. On 13 May the chairman of the House of Representatives foreign relations committee tabled an amendment to the Iniciativa Mérida legislation that would increase the annual budget for military aid to Mexico to US$1.7bn.

The Mexican government's deployment of more forces in Sinaloa falls under the Culiacán-Navolato operation. The defence minister,r General Guillermo Galván Galván, said that the move showed that the government was not giving up in its fight against organised crime. The government argues that the bulk of the killings in the state are the result of gang warfare: to date this year 270 people have been killed in the state. At least 24 of them were law officers.

Galván added that the deployment did not represent a further militarisation of Mexico's law enforcement. He stressed that the military were only helping the civil power and “in no way were embarking upon a militarisation of national life nor of public policies."

Development: The two opposition parties in congress, which together control a majority in the legislature, said on 18 June that they had an understanding about the shape of the reform of the state oil company, Petróleos Mexicanos.

Significance: An agreement and alliance between the leftwing Partido de la Revolución Democrática (PRD) and the Partido Revolucionario Institucional (PRI) would be bad news for the government of President Felipe Calderón Hinojosa. Calderón had been counting on the PRI, the third-biggest party in congress, to get the reform through congress. The PRI and the PRD were careful, however, to note that their discussions stopped well short of a full agreement. This suggests that the PRI wants to force more concessions from the government.

The Pemex reform is the government's key piece of legislation for 2008. Congress has been debating the issues and the PRD has pushed for a national referendum on the reforms. So far only Mexico City, Guerrero and Michoacán - which are all controlled by the PRD - have agreed to hold referendums on the reform. The PRD opposes the government's proposals.

On 18 June the interim president of the PRD, Guadalupe Acosta, met Jesús Murillo Káram, a PRI senator and secretary-general of the PRI, to discuss whether their parties should join forces against the government's proposal in congress and launch a counter-proposal. Acosta admits that the PRD needs the PRI senate votes to defeat the government's proposal: the PRI is the third-biggest party in the lower house and the second-biggest party in the senate.

Acosta and Murillo are a powerful combination. They marshalled their parties behind the electoral reform law, passed last year, which purged (as the PRD saw it) the Instituto Federal Electoral and, controversially, centralised the purchasing of TV and radio advertising in elections.

The centralisation means that only political parties, rather than single issue lobbies, can broadcast political advertising during elections. This change probably benefits both the PRI and the PRD and undermines the Partido Acción Nacional, to which President Calderón belongs.