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Presentational ploy aims at stealing thunder both from President Fox and from the hardliners within the party.

The leadership of the opposition Partido Revolucionario Institucional (PRI) has scored a presentational coup over the government by announcing its new policy regarding reform of the electricity sector. This was as much directed towards the general public as to the PRI's own membership; in this arena the aim was to steal a march on the hardline legislators led by senator Manuel Bartlett [WR-03-39].

The components of the policy package were hardly startling. Its main elements:

• The PRI will not support any change involving amendment or reform of the constitutional provisions reserving the energy sector to the state.
  
• Neither of the two state power utilities, CFE and Luz y Fuerza, will be privatised.
  
• A measure of private participation will be authorised, under a new legal framework designed to provide certainty for all participants, public and private. Private participation will not be allowed to become dominant (though its maximum market share remains unspecified).
  
• The government retains the right to set electricity rates.
  
• Detailed negotiation of energy reform legislation is left up to the PRI blocs in congress.

Political sequel
Considering that the government had already publicly eschewed privatisation and declared that any reform of the electricity sector should preserve the commanding role of the state, it came as no surprise that President Vicente Fox publicly praised the PRI for its policy statement. He did so in an address to the G-20*, whose meeting he was hosting in Morelia; there he put in the context of how Mexico was advancing towards reform. His office also released a communiqué with the appropriate excerpts, for domestic consumption. The President, it said, had `expressed his recognition for the advances achieved by the Partido Revolucionario Institucional in favour of [the] reforms.'

The policy statement was issued by the party's national political council, and is not binding on the party's legislators; hence the very political move of `entrusting' the detailed negotiations to them. It is clearly an attempt by party leader Elba Esther Gordillo and chairman Roberto Madrazo to head off Bartlett and his camp, by sounding suitably nationalistic but stopping well short of such moves as seeking to reverse in the courts the private participation already granted.

The provision in the policy statement that refers to a reformed legal framework is meant to signal intent to eradicate the manoeuvring with the current private generation arrangements that last year provoked an intervention by the supreme court. The existing régime allows industrial firms to generate their own power and sell any excess to the CFE for general distribution; what had been happening was that the own-use generation was being used as a fig leaf for far greater generation for general distribution via the CFE.

Insisting on tax reform
The government is still trying to win over legislative support for its tax reform proposals, and particularly the provision for extension of the value-added tax (IVA) to previously exempt activities and products, at a single, lower rate.

Revenues undersecretary Rubén Aguirre has been arguing in congress that the current régime is expensive to collect: this year it will cost M$124.3bn (US$11.3bn), or 1.89% of GDP. There are currently three special rate categories for the IVA: zero, exempt, and `frontier'. The government wants all of them unified at a single rate of 10%, down from the current standard rate of 15%.

Aguirre accepted the feasibility of keeping the 10 most-consumed products exempt, but noted that this would entail a revenue loss of M$20.1bn (US$1.8bn) or 0.3% of GDP.

*Not to be confused with the remnant of the G-22 of Cancún fame. Members of the G-20, created in 1999, are Argentina, Australia, Brazil, Britain, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, and the US. 

In local elections, voters shun the two traditional parties; Bogotá gets its first leftwing mayor, union leader Lucho Garzón, compared by many to Brazil's Lula da Silva.

If President Alvaro Uribe had a Plan B to deal with the failure of his cherished reform referendum, he kept it well hidden — but is likely to unveil it within the next few days. Nobody thought he was in earnest when he predicted that `governability' would founder if the referendum failed. The Colombian electorate's verdict on 26 October, give or take a detail, was that Uribe's reform proposals were not worth the bother of turning out to vote.

In the two most populous cities, Bogotá and Cali, abstention reached 57% and 64%, respectively. At the time of writing the final count had not yet emerged; the provisional figures available did not show a single one of the 15 questions attracting the threshold 6.2m votes required to validate the outcome (though a few were quite close). The best summing-up was the statement attributed by the magazine Semana to Uribe at a social gathering the day after the vote: `Wife, let's leave, because this has sunk.'

On 26 October, when regional and local elections were held, the electorate delivered another verdict: they want change, but don't expect it from the two traditional parties, the Liberals and Conservatives. Together, these two barely won half the governorships. The main cities went to third parties, some of them way out of the mainstream.

The result which attracted most attention was the mayoral race in Bogotá, which went to Luis Eduardo (Lucho) Garzón, of the leftwing Polo Democrático Independiente (PDI). He is the first leftwinger to win the Bogotá mayoralty, considered the second most important elected post in the country. The illegitimate child of a maid who as a teenager worked as a caddie in Bogotá's most exclusive golf club, rose to prominence later as a union leader, in a career which culminated in his election as leader of the Confederación Unitaria de Trabajadores (CUT), one of the largest umbrella labour organisations.

Local commentators have already begun to liken him to Brazil's Lula da Silva. Indeed, after his election he began to adopt a statesmanlike mien, reassuring Uribe, `President, don't let them sell you the tale that we are the bogeymen. Be sure that we will work together.' For the benefit of his followers he added, `Some cohabitations are possible because both parties benefit.' Garzón has consistently opposed Uribe's `democratic security' policy and his belligerent approach to Colombia's internal conflict.

US congresswoman Nancy Pelosi sees congressional approval possible, but progress only one step at a time.

Hopes for the resumption of negotiations on an agreement regarding Mexico's migrants to the US were re-stoked last week with the arrival of a five-strong delegation of US legislators, led by the leader of the Democratic bloc in the House, Nancy Pelosi.

Pelosi told the Mexican press that she was optimistic about the prospects for congressional approval of a proposal to legalise the immigration status of about 1.5m Mexicans working in the US. She did caution, however, that it would be unwise to expect too much too soon; the issue, she said, required a step-by-step approach. The delegation was at pains to dispel Mexican fears that the mood in the US had been soured by their country's stance on the war against Iraq.

Achieving a migrations agreement was one of President Vicente Fox's main campaign promises. Negotiations on the matter were launched in early 2001, and the rapport between Fox and US President George Bush Jr had fueled hopes that progress could be made. Then the September attacks on New York and Washington intervened, and the matter was shelved, with border security taking over from immigration as the top priority in the US.

Eyes on November meeting
Hopes for a resumption of talks have been dampened by the recent failure of Fox and Bush to re-engage: no meeting at the time of the UN General Assembly; only a few minutes together on the sidelines of the Apec conference [WR-03-41].

Under the current calendar, migrants should be near the top of the agenda at a binational meeting scheduled for November in Washington, but given Pelosi's caveat, expectations of early results are not running too high.

The southern state of Chiapas provided last week what appeared to be a reminder that religious confrontation is as much a potential source of violence as the Zapatista rebellion or the spread of organised crime linked to drug- and people-trafficking. 

The body of Mariano Dí­az Méndez, an indigenous Pentecostal pastor, was found inside his car in a ditch on the road from San Cristóbal de las Casas to San Juan Chamula. He had been shot dead, and it was instantly noted that San Juan Chamula was a predominantly Catholic town with a history of violence towards Protestants generally, that has claimed several lives over the past few decades.

Forensic examination of the body was prevented by local townspeople, who by tradition oppose any interference with corpses, including autopsies. They took the pastor's body from the police by force.

This has left unanswered a question raised by sources close to the state investigators, as a result of the discovery, close to the body of Dí­az Méndez, of two cartridge casings from an assault rifle. This is not a weapon customarily associated with religious feuds, but is the favourite for `executions' by organised crime in the area, as seen in the recent spate of killing in the border area of Chiapas — so the suggestion has been made that this may not have been a religiously motivated crime at all.

GROWTH OUTLOOK | Slight downturn in August. Recovery has not yet arrived. Economic activity in August, as measured by the Igae index (which foreshadows GDP), was down 0.6% on July. The only broad sector to register an increase was services (up 0.6%), while industry was down 2.9% and agriculture 1.6%.

Industry's poor performance was attributable to the 4.7% slump in manufacturing, which offset gains in construction (2.4%), mining (0.7%), and electricity, gas & water (0.9%).

President Vicente Fox last week told businessmen that the government has been concentrating its efforts on the domestic market, through what he described as the biggest package of public and private investment in decades. This, he said, had already begun to translate into the construction of 500,000 homes this year, to be followed by 750,000 in 2004.

CREDIT | Consumers lead upturn in bank lending. Manuel Medina, president of the bankers' association, ABM, reports that over the last 15 months bank lending to the private sector has increased by 11%. This has been an uneven expansion, as consumer credit grew by 30%, while loans to companies did so by only 8%. He noted that mortgage lending had started growing for the first time since 1994 —a a modest 2.4% in August, which fits it with the increases in construction cited above.

Guillermo Prieto, president of the Bolsa, maintains that the figures for bank lending to companies do not convey an accurate overall picture, since the stockmarket has become the main means of securing financing for companies. He said that seven out of every 10 financing operations were conducted through the Bolsa.

When a group of Venezuelan pro-government legislators produced a much-heralded video purportedly showing the CIA training members of the opposition in shady techniques, it was a disappointment. A six-minute edited clip showed three unidentified men proferring, in Spanish, advice on surveillance and making allusions to contacts with an embassy, also unidentified. The existence of this tape had been making the rounds in official statements for weeks, and was linked with President Hugo Chávez 's decision to call off his trip to attend the UN General Assembly.

The US embassy in Caracas has said the tape shows an event at a private security firm, not a clandestine CIA training session.`Accusations that the Central Intelligence Agency is conspiring against the Venezuelan government don't have any foundation,' it said.

"President, don't let them sell you the tale that we are the bogeymen. Be sure that we will work together."

Lucho Garzón, Bogotá's first-ever leftwing mayor, just after his election, to President Alvaro Uribe.


"We are not in favour of not exporting [gas], but of selling when we have recovered legal ownership and we can process the gas."

Evo Morales, leader of Bolivia's coca growers, on the issue on which President Gonzalo Sánchez de Lozada was forced out.


"A few received too much and the many, too little."

Ricardo Henriques, Brazilian social welfare official, on shortcomings that led to revamping Lula's `Zero Hunger' plan.

LATIN AMERICAN REGIONAL REPORTS: BRAZIL & SOUTHERN CONE- NOW AVAILABLE

We focus on the dispute rankling between Brazil and the US over the hemispheric trade agreement, the FTAA. Also on Brazil, the UN presents a damning report on human rights violations; the economy seems to be living up to the government's expectations, and Linux brings Brazil's government together with IBM. In the Southern Cone, we focus on two pressing issues facing Argentina's President Néstor Kirchner: reform of the supreme court, and sorting out the utility companies. In Paraguay, President Nicanor Duarte's anti-corruption campaign claims his interior minister's scalp, and in Chile the Roman Catholic church is in crisis over the impending divorce law. We also profile Uruguay, 'the grumpy dwarf' and its objections to the FTAA. For more information or to subscribe call +44 (0)20 7251 0012 or send an email to [email protected]

In this month's Latin American Security & Strategic Review

The special focus of the latest issue of Latin American Security & Strategic Review is Brazil's `assertive' bid to change the power balance: President Lula arrived in the Planalto palace with the declared intention of turning Brazil into a leading actor in the international arena, motivated primarily by the need to defend Brazil's interests, but reaching beyond that to seeking a realignment of power relations on a global scale. Elsewhere in the region, heads roll in Argentina as the crackdown on corruption within the Buenos Aires provincial police spreads throughout the upper echelons of the force. Meanwhile, in Chile it is revealed that the majority of the public are living in fear, while in Venezuela there is uproar over a magazine article portraying Chávez as aiding terrorists_ For details of how to subscribe to the full 20-page report - or to request a free evaluation - please call Subscriptions on +44 (0)20 7251 0012 or email [email protected]

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		25.10.02	17.10.03	24.10.03
Argentina	peso	3.57	2.87	2.86
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.40	_	7.78
Brazil	real	3.73	2.86	2.87
Chile	peso	736.00	650.00	638.00
Colombia	peso	2,747.45	2,867.92	2,872.65
Costa Rica	colón	371.93	411.10	411.82
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	20.13	35.37	35.84
Ecuador	dollar	1.00	1.00	1.00
El Salvador	colón	8.75	8.75	8.75
Grenada	EC dollar	2.70	2.70	2.70
Guatemala	quetzal	7.72	8.07	8.13
Honduras	lempira	16.95	17.81	17.82
Mexico	nuevo peso	10.06	11.30	11.23
Nicaragua	córdoba oro	14.66	15.55	15.55
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,510.00	6,220.00	6,200.00
Peru	nuevo sol	3.61	3.48	3.48
Uruguay	nuevo peso	28.00	28.80	29.05
Venezuela	bolí­var	1,440.00	1,600.00	1,600.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	July	August	September	Last 12m	Jan-Dec 2002
Argentina	Indec	0.40	0.00	0.00	3.50	41.00
Bolivia	INE	0.60	0.64	0.23	3.62	2.45
Brazil	FGV	-0.20	0.62	1.05	20.13	26.41
Chile	INE	-0.10	0.20	0.20	2.20	2.80
Colombia	Dane	-0.14	0.31	0.22	7.11	6.99
Costa Rica	DGEC	0.80	0.70	0.13	8.36	9.68
Ecuador	Inec	0.03	0.06	0.73	7.54	9.36
El Salvador	Min.Ec.	-0.40	0.30	0.10	2.10	2.80
Guatemala	BCG	0.27	0.28	0.42	5.68	6.33
Honduras	BCH	0.40	0.90	0.40	7.90	8.10
Mexico	Bco.Mx.	0.14	-0.07	0.60	4.04	5.70
Nicaragua	BCN	-0.08	0.30	0.22	4.97	3.87
Paraguay	BCP	-0.70	-0.20	0.20	8.10	14.60
Peru	INE	0.15	0.01	0.56	1.89	1.52
Uruguay	DGEC	0.50	1.16	0.80	11.63	25.94
Venezuela	BCV	1.80	1.30	1.30	26.60	31.20
US	DOL	0.10	0.40	0.30	2.30	1.60
Previous: WR-03-41

The stockmarket in figures
Market	Index	17.10.03	24.10.03	Variation (%)
Buenos Aires	Merval	877.84	923.73	5.23
São Paulo	Bovespa	17790.71	17813.91	0.13
Santiago	IPSA	1560.32	1551.21	-0.58
Bogotá	IGBC	2130.10	2172.94	2.01
San José	BCT	12681.40	12892.83	1.67
Quito & Guayaquil	Interinvest	67.46	71.68	6.26
Mexico	BMV	7859.82	7842.86	-0.22
Lima	ISVBL	2090.26	2084.69	-0.27
Caracas	BC	18628.24	20273.32	8.83
Source: Daily market reports.

Eight-day visit will be followed a month later by a tour of Arab countries: trade as well as political linkage on the agenda.

President Lula da Silva has embarked on what his foreign policy advisers call `the reopening of the African chapter' — an allusion to the period just prior to the independence of Portugal's African colonies when Brazil presented itself as a `bridge' country for them: black, Portuguese-speaking, developing and in command of intermediate technologies which would fit local requirements better than what the developed nations had on offer. At the time, Brazil was competing in the African arena with another Latin American country seeking a `bridging' role: Cuba.

From 2 to 10 November Lula will be visiting five African countries: São Tomé & Prí­ncipe, Angola, Mozambique, Namibia and South Africa — the first three, former Portuguese colonies; the latter, a partner in the G-22 at the Cancún WTO talks [WR-03-36]. There is an unabashed mercantile flavour to the tour: accompanying the President are 160 Brazilian businessmen interested in trading with or investing in Africa. Also invited are businessmen from other Mercosul countries.

Brazil last year exported to Africa goods worth US$2.3bn, almost 4% of its total exports. Its imports from Africa totalled US$3.6bn: balancing the resulting US$1.3bn trade deficit is a declared Brazilian policy objective. As put by Adalberto Camargo, president of the Afro-Brazilian chamber of commerce, `The African continent has a market of 800m people who eat, drink and work. This is a considerable number of buyers.' If trade with the 53 African countries were balanced, he adds, that continent would be `an ideal partner'.

Accompanying the commercial drive is a political appeal. Lula says, `The strengthening of relations with Africa is, for Brazil, a political, moral and ethical obligation. Brazil is the second-biggest black nation in the world, after Nigeria, and the government is determined to reflect this circumstance in its actions abroad.' Pedro Motta, director of Itamaraty's Africa department, says that Brazil will offer its cooperation in areas like medicine, particularly the eradication of AIDS and other contagious diseases, and in the effort to roll back poverty.

A month after the African tour, Lula will be taking off again across the Atlantic. From 2 to 10 December he will be visiting six Arab nations: Syria, Lebanon, Saudi Arabia, the Emirates, Egypt and Libya. Trade and other links already exist with this group. Egypt is a G-22 partner, and Brazil has large communities of Syrian and Lebanese origin.

About-face on the FTAA?

Brazil appears to be performing a U-turn on the Free Trade Area of the Americas (FTAA). Addressing the congress of the Socialist International in São Paulo, Marco Aurelio Garcia — Lula's chief foreign policy advisor — said the FTAA could be ready on time, in a tailored-down format. `We believe in a more modest FTAA, an FTAA lite, for January 2005,' he said, `leaving complex matters for future negotiations.'

The ruling party retains an own quorum in the senate and may gain it in the chamber of deputies; the UCR is the second force.

The electoral marathon faced by President Néstor Kirchner since he took office in May is into its last month, with contests still to be held in six provinces — all electing deputies for the lower chamber of congress, four of them also electing senators. At this point in time, the ruling Partido Justicialista (PJ) has comfortably retained its own quorum in the senate (a position it has enjoyed for two decades), and is within reach of achieving the same position in the chamber of deputies.

Despite upsets in three of the four senatorial contests held in late October, the PJ is likely to emerge with about the same number of seats as now (40); only 37 are needed to form a quorum. In the lower chamber it already has 122 seats secured; seven more are required to make up the quorum there, and the PJ is considered likely to retain all the seats to be renewed over the coming month — except in the province of San Luis, where the breakaway Movimiento Nacional y Popular created by former President Adolfo Rodrí­guez Saá has a stronger chance of winning.

All this only confirms one of the known features of Argentina's new political scene: that the PJ is the dominant force. What it does not yet say is how the internal alignments of the PJ will develop — in other words, how many of the legislators Kirchner can count as his own, if and when he has to face down other well-established PJ power brokers, such as former President Eduardo Duhalde.

Survival of the UCR
The unexpected outcome of the electoral marathon is that the opposition Unión Cí­vica Radical (UCR), which had appeared virtually wiped out in the last presidential elections, has survived as the second-biggest force in congress. That it would retain a presence was a given, as only a third of the legislature was being renewed, but it actually emerged from the provincial contests with more support than many had imagined possible.

In the senate, it will end up with at least the same number of seats as before — or perhaps even one more, if the Frente de Todos coalition in the province of Corrientes gets a seat for that district. It will make up for the loss of a seat to the breakaway `independent Radical' bloc formed by Rodolfo Terragno because the new senator for La Pampa will return the seat to the fold.

In the lower chamber, though the UCR has lost more than a dozen seats, it has a guaranteed 44, and may win as many as four more in the elections still to be held.

The third force in congress may be the `Interbloque Federal', a coalition of various blocs of provincial congressmen. The strongest of these are the Unidad Federalista, led by Luis Patti, and the Movimiento Popular Neuquino (MPN), which have already agreed to work together and, if possible, reconstitute the broader alliance of provincial parties.

The lower chamber has 257 seats; the senate, 72. After the October 2001 elections, the PJ had 116 seats in the former and 40 in the latter, whereas the UCR had 71 and 24, respectively. No party has a blocking one-third of the vote in the chamber of deputies; it remains to be seen if the UCR retains that strength in the senate.

The militant protesters say the government is trying to break up their movement: there is some truth in this.

President Néstor Kirchner last week decided to soften his stance towards the piquetero movement, after floating, then ditching, a plan to create a special unarmed police brigade to disperse the roadblocks which are the piqueteros' main weapon. Though the government portrayed this as a shift from repression to dissuasion, the more radical piquetero organisations succeeded in depicting it as the second step in a repressive campaign that began with the order to prosecute those who had trapped the labour minister in his office (WR-03-42).

Underlining that the government has not dropped the charges related to that incident, nor has it agreed to their principal demand — an extension of the subsidies distributed among the unemployed — these piquetero groups announced that they would muster a crowd of 100,000 to protest in front of the Casa Rosada on 4 November.

The more radical piqueteros accuse the government of planning to break up their movement and dealing instead with the unions. There is an element of truth in this. Pressure by the piquetero organisations was the main force behind the official `heads of household' subsidy programme, which hands out Arg$150 (about US$52) a month to each of 2m households. The funds are allocated by local piquetero bosses, who have each built up their own clientele. The government's refusal to countenance any broadening of this programme is intended to prevent further growth of the clientelistic power enjoyed by the piqueteros.

Wielding power
The other manifestation of piquetero power is their ability to disrupt economic activity through their trademark roadblocks. Between 1997, when the movement first appeared, and last September, the constellation of piquetero groups is known to have staged 5,637 roadblocks. The peak year was 2002, with 2,336 roadblocks. In the first nine months of this year there were 961.

There is also an ideological element to the phenomenon. Rodrigo Conti, a journalist who has been monitoring the piquetero movement's development since its inception, and has recently published a book (Piqueteros: una mirada histórica), says, `This entire movement is linked to some political line, usually a leftwing one [...] I see a political future for the movement.' He emphasises that, `save some leaders, those who take part in the piquetes [roadblocks] are the excluded, who are suffering misery and hunger.'

That many have a motive to protest is quite evident: Argentina's open unemployment rate is 15.7%; 54.7% of the population live under the poverty line, and just under half of these are deemed to be indigent.

President Kirchner has held meetings with some piquetero organisations and made a show of granting requests linked to such initiatives as the creation of worker cooperatives to rescue failed businesses. His officials have even said they will study a demand for a lower value-added tax rate for such ventures. His strategy is presented as a response to the fact that there is among the unemployed `a sector more willing than others to work, to understand that the dynamics have changed and there is a state that is providing answers to their problems.'

It is not altogether certain that next year's presidential elections in Uruguay will be the first occasion of a leftwing victory, but they will feature at least one novelty: the first time a woman competes for the presidential nomination of a major party. Cristina Maeso, a 54-year-old lawyer, last week formally announced that she was in the running for the opposition Blanco party's nomination.

Maeso had been very active in the run-up to the 1989 elections, when Blanco candidate Luis Alberto Lacalle won. Later, though, she went back to practicing law. She returned to become leader of a faction called Basta y Vamos (`Enough — Let's Go!') and now presents herself as the standardbearer for Uruguay's women (52% of the population) who, she says, `are waiting for the opportunity to pull the country out if the crisis.' The elections are just under a year away.

URUGUAY | `Debt write-off needed'. Eclac economist Ricardo ffrench-Davis last week told the weekly newspaper Búsqueda that Uruguay will have to seek a considerable debt write-off. `Repaying 100% of Uruguay's external debt,' he said, `is not a viable proposition, since the productivity of the country's assets is lower than the interest rate agreed [with those who took up the `voluntary' restructuring offered back in May].' Opposition leader Tabaré Vázquez has been maintaining the same thing since the restructuring was proposed.

BRAZIL | `Potential to grow by 3%'. Central bank president Henrique Meirelles told a bicameral congressional committee last week that, with inflation under control and fiscal stability guaranteed, the country now has the `capacity to grow by 3% or more in 2003' and by higher rates thereafter. He did, of course, acknowledge that as a result of this year's problems, the economy will only grow by 0.6%. Without providing any figures, he told legislators that `signs of reactivation can already be perceived in several sectors' — sooner, he claimed, than the experts had expected — and they will soon become clearer and spread to all sectors of the economy.

Vice-President José Alencar, addressing a different committee, said that as long as interest rates were not reduced more aggressively, `there may be growth, but not the growth that Brazil needs.'

CHILE | Industry perks up, job scene flat. Industrial output in Chile in September was up 5.8% year-on-year; sales were up 3.8%. This took the 12-month averages to 3.5% and 3.1%, respectively. The breakdown of the September figures shows production of capital goods up a remarkable 71.3% — a sign of companies gearing up for expansion — while that of intermediate goods was up only 3.1% (which suggests that expansion will not be immediate).

INE's national unemployment rate for July-September was 9.4%, unchanged from the previous running quarter and only 0.3% lower than a year earlier. It calculates the rate for Santiago at 9.2%, or 0.8 points more than a year earlier. 

The economics school of the Universidad de Chile calculates the rate for Santiago at 13.4%, which is slightly down on both the previous running quarter (-0.2 points) and a year earlier (-0.3 points). Dean Joseph Ramos says, `The slight improvement reflects a still modest recovery of the Chilean economy and as we move on to the last quarter and 2004, a further fall in unemployment can be expected. So far, though, expectations are above results.'

PRD rails at what it sees as a PAN-PRI agreement to control the body which will oversee the next presidential contest.

The man the polls keep showing as the favourite for Mexico's next presidential elections, Mexico city mayor Manuel Andrés López Obrador, believes that the progress made so far towards turning the country into a fully working democracy has been dealt a very serious blow. What prompted him was the selection last week of new authorities for the Instituto Federal Electoral (IFE), the autonomous electoral authority that has so far piloted Mexico's democratisation to almost universal acclaim — save for a spate of irritation from all quarters about recent rulings.

The appointments require approval by a two-thirds' majority in congress. When disagreement over the new IFE council dragged out sessions almost to the moment when the old mandates would expire, a deal was struck between the ruling Partido Acción Nacional (PAN) and the opposition Partido Revolucionario Institucional (PRI), with the small Partido Verde Ecologista (PVEM) tagging along. On 1 November the three mustered the necessary votes to appoint a new council headed by Luis Carlos Ugalde Martí­nez, an academic at the prestigious Centro de Investigación y Docencia Económica (Cide).

`Agreement between cliques'
Excluded from the deal, and hence from representation, were the leftist Partido de la Revolución Democrática (PRD) — López Obrador's party — and the farther-left Partido del Trabajo (PT). López Obrador's verdict: `This is an act of regression in the country's political life. It is not possible that through an agreement between cliques we should pick councillors with partisan interests. It is shameful.'

This found echoes in the media, ranging from the sedately concerned to the vitriolic. El Universal said, `The doubt arises whether [the IFE] might end up dominated by those parties, demolishing any possible improvement in the reliability of the electoral system.' La Jornada ran as its frontpage headline, `Assault on the IFE'. Inside, it gave prominence to a PRD statement saying that `there was a conspiracy to take over the arbiter of the 2006 elections.'

A hard act to follow
The IFE was created in 1990, in response to public outrage over the PRI's conduct of the 1998 elections, when the count was suddenly interrupted due to, as put by interior minister Manuel Bartlett, a failure of the computing system. When it was resumed it showed a suspect, and decisive, advantage for PRI candidate Carlos Salinas de Gortari over his PRD rival, Cuauhtémoc Cárdenas.

Under the chairmanship of José Woldenberg, the IFE guaranteed the transparency of a string of elections that spelt the end of the PRI's seven decades of political hegemony. The main landmarks of this process were, in 1997, the PRI's loss of an absolute majority in congress, and the PRD's emergence as the majority in Mexico city, and in 2000, the first defeat of the PRI in presidential elections, to the benefit of the PAN's Vicente Fox. Whatever the grounds for the suspicions being voiced now, the new IFE will find itself operating under very close scrutiny.

A look at some of the hard facts underlying a grim phenomenon on its way to becoming a major urban myth.

The case of the women's murders in and around Ciudad Juárez has become internationalised, with the publication of a report by Amnesty International (AI), a visit by US legislators (organised by three lobby groups), and the preview in the British press of a forthcoming book by a Mexican American journalist which purports to identify the killers. The AI report, Intolerable Killings, puts the number of murders at 270 since 1993, which is closer to the 290 reported by the special prosecutor for murders of women than the 320 counted by the leading local NGO campaigning on the issue, Nuestras Hijas de Regreso a Casa (NHRC), let alone the 370-400 or more which has become the media standard. The special monitoring commission set up by the Mexican congress has been working with a figure of 258 murders.

Size of the problem
The rate of women's murders in the Juárez area is high, but it is not the highest in the country. That dubious privilege belongs to the state of Mexico, which sports a female murder rate of 5.3 per 100,000: the state of Chihuahua, where Juárez is located, has a rate of 4.7 per 100,000. 

At the statewide rate, therefore, it would not be surprising if Juárez, with a population of 1m, reported up to 47 murders of women a year, rather than the average of 27 which emerge from AI's tally. That last figure is only slightly higher than the national rate of 2.6 per 100,000. The rates cited, which refer to 2001, come from a recently published Mexican health ministry study, Muertes por violencia en las mujeres de México.

It is worth noting that the Juárez murders of women have been taking place against a backdrop of high overall violence. In the same 10 years since 1993, almost 1,600 men have been killed; 460 of these cases have been attributed to turf wars between drug traffickers (Juárez is the headquarters of the `cartel' founded and led by Amado Carrillo Fuentes until his death in 1997, and now led by his brother Vicente).

Are the killings connected?
AI points to patterns that suggest a connection between many of the Juárez murders of women. These refer to the cases in which sexual abuse was evident (about a third of the victims had been raped; many had been mutilated). As with other NGOs, it complains that the Mexican authorities deny the existence of connecting patterns. This is not quite the case. The office of the special prosecutor for women's murders believes that 76 of its 290 cases may be the work of serial killers; a proportion not unlike the 95 out of 290 cited by NHRC.

The Mexican-American journalist Diana Washington Valdez, of El Paso Times, has written a book, Harvest of Women (to be published in 2004), based on her five years of research into the killings. She claims to have learnt that at least 100 of the Juárez women were killed as a `blood sport' by six wealthy businessmen (five from Juárez and one from Tijuana) who remain `untouchable' because of their political connections.

Not all the Juárez cases have remained unsolved. Of the 258 being followed by congress, up to a month ago 90 had been closed, 51 were in the hands of the judiciary — and investigations were still under way in 108 cases.

Group kidnapping and `boycott' threats are interpreted as part of ruling FRG's strategy to derail next week's elections.

The re-emergence of the former civilian self-defence patrols (PACs, in the Spanish abbreviation) as violent protagonists on the Guatemalan political scene has heightened concern about what may happen come election day, 9 November.

Last week these groups kidnapped three journalists in La Libertad, 308 kilometres northeast of Guatemala city, and held them hostage in support of their demand for disbursement of the compensation promised them last year by President Alfonso Portillo. The PACs, press-ganged into service among indigenous communities, were used by the military in their bloody counter-insurgency campaign of the 1980s. It soon became known that the hostages had been bound and beaten, and that their lives had been threatened.

The government made a show of dispatching a 400-strong contingent of soldiers and members of the police special forces (FEP), but it was reported that they were `unable to act due to the hostility of the paramilitaries.' A commission appointed by Vice-President Francisco Reyes was rushed to La Libertad to negotiate. When the commissioners promised that the first disbursement of the overdue compensation would be made on 6 November — three days before the elections — the hostages were released, after having spent 50 hours in captivity.

Suspicious circumstances
The episode has been met with considerable scepticism by opposition politicians and NGOs. Suspicions have been voiced about several features: that the abduction took place during a rally of the ruling Frente Republicano Guatemalteco (FRG); the timing of the proffered solution, which the government could easily have carried out earlier; and the fact that no mention was made of legal proceedings against the kidnappers.

Many have suggested that the whole thing may have been staged by the government, to set the scene for the disruption of the elections and the rigging of results in favour of the FRG candidate, former dictator Efraí­n Rí­os Montt (currently running a poor third in the opinion polls).

This view has been reinforced by news that the PACs of the northwestern department of San Marcos had issued warnings that they would `boycott' the elections if the promised disbursement of compensation packages did not materialise. They spelt out that, for them, a boycott entailed preventing others from voting. The threats were delivered to 16 electoral boards in San Marcos.

Frank La Rue, who heads the Centro de Acción Legal para los Derechos Humanos (CALDH), an NGO, has claimed publicly that these threats are part of the FRG's strategy to derail the elections.

In the elections set for 9 November, Guatemalans are due to vote for a new President and Vice-President, 158 members of the single-chamber congress, 20 members of the Central American Parliament, and 331 municipal governments.

The post-11 September shift towards border security that derailed US-Mexico discussions on a migrations agreement does not appear to have been very successful in its own terms -- if this is measured in terms of the number of terrorists caught on their way into the US.

The US government increased the number of officials from various agencies monitoring entry from Mexico by over 11%, to 4,873. Border Patrol staffing was raised by almost 12%, to 9,500. About US$8.6bn was devoted in the last financial year to border protection. Coordination with the Mexican authorities was established.

The known results: entry was denied to an undisclosed number (in the hundreds) of nationals of `high-interest' countries, with no indication if any of these were suspected of being terrorists. The Mexican authorities say they have not arrested a single suspected terrorist, and have not been informed of any such arrests on the US side. The US agencies involved in border protection refuse to provide any information on the subject on grounds of national security.

GROWTH OUTLOOK | Bank lowers forecast, again. The Banco de México last week lowered its economic growth forecast for this year to 1.5%. This is the third reappraisal this year; after an early downgrade from 3% to 2.4%, in July it had trimmed this to `around 2%'. The bank's research director, Manuel Ramos, says that the `base scenario' for next year is of growth between 3% and 3.5%. The latest lowering comes despite signs of improvement in the US economy. These, the bank notes, did not extend to manufacturing, the sector which most directly impinges on the Mexican economy.

EMPLOYMENT | Downturn continues in manufacturing. Employment in Mexico's manufacturing sector in August was down 4.3% year-on-year, which left the decline for the first eight months at 3.6%. All branches of manufacturing registered job losses. Worst of all were metal products (-9.1%), textiles & apparel (-6.9%) and wood products (-5.5%).

In the maquila (assembly) sector, most closely linked to the US economy, employment in August was down 4% in the year, taking the eight-month total down 0.3%. Worst declines: footwear & leather (-26.1%), toys & sport goods (-17.9%), textiles (-14.2%).

REMITTANCES | Year's total to exceed forecast. Remittances from Mexican expatriates, mostly in the US, will this year reach US$14.5bn, or US$1.5bn more than the Banco de México forecast. The prediction comes in a report which notes than about 18% of Mexico's adult population, some 11m people, receive remittances from relatives working abroad -- and that there is practically no town in Mexico where someone is not a recipient. The data was presented at a forum organised by the IDB's Multilateral Investment Fund (MIF).

In the first nine months of this year remittances have totalled US$9bn, not far below the US$9.8bn registered for the whole of 2002. The report ventures that within five years remittances could reach an annual US$20bn. One of the factors encouraging this projection is the imminent lowering of remittance costs which will accompany the introduction of the ACH automatic transfer system, and the development of Bansefi's `popular banking' network.

The ruling Arena seems to be heading for its fourth successive term in power — but all will depend on who is in the run-off.

With the presidential elections now five months away, predictions that the leftwing Frente Farabundo Martí­ para la Liberación Nacional (FMLN) might build on its success in congress and carry the day, are fading away. Three recent opinion polls put the candidate of the ruling Alianza Republicana Nacionalista (Arena), Antonio Saca, well in the lead, and rising, with a share of voter preferences ranging from 36% to 48%.

The three — by the Universidad Centroamericana, CID-Gallup and Vox Latina — also show the FMLN's Handal slipping to a range of 15-28%, and note the rise of Héctor Silva, the former mayor of San Salvador who is running as candidate of an alliance between the Christian Democrats (PDC) and the left-of-centre Centro Democrático Unido (CDU). Support for Silva is show ranging from 13% to 16.7%. That last reading, by the UCA, actually puts Silva ahead of Handal, given 14.6% in the same poll.

Arena's Saca is a 38-year-old radio broadcasting entrepreneur. The big question is who he will be facing when it comes to a run-off: he stands a far better chance against Handal. Arena has already won the presidency three times in a row since 1989.

Top three contenders
Voter preferences, %
Candidate/party	UCA	CID-Gallup	Vox Latina
Antonio Saca (Arena)	48.0	43	35.7
Schafik Handal (FMLN)	14.6	24	28.0
Héctor Silva (PDC-CDU)	16.7	13	14.3

Elections show voters wanting to counterbalance Uribe; tax blitz may help new Bogotá mayor enhance distinctions.

President Alvaro Uribe's Plan B is only now beginning to take shape, in the wake of the collapse of the bolder fiscal reform proposals he had included in the referendum that flopped just over a week ago. He has provided the bare outlines of a `fiscal package' he will be sending to congress, and the first reactions to it can only come as a godsend to the newly elected leftwing mayor of Bogotá, Lucho Garzón.

Uribe said the package will include a `prudent tax' on assets, a higher rate of income tax or forced savings via `long-term bonds with low interest rates' for the wealthier Colombians, a withholding tax on transfers and royalties, a `progressive social tax' on higher pensions, and an increase in the rate of the value-added tax (IVA) which would spare `the heart of the basic basket of essential goods'.

He will also seek an agreement with regional and local governments to cut public spending, and has instructed the finance ministry to discuss with the central bank the opening of negotiations with creditors on `mechanisms to lower the debt service and extend the [repayment] terms, without causing upsets' — in other words, a cautious restructuring of the public debt.

Helping position Garzón
Unsurprisingly, the unions are sceptical about the impact on the cost of living and employment, and business associations are worrying about the impact on economic recovery (see Tracking Trends, page 5). This apprehension contrasts markedly with the reactions to Lucho Garzón's first act as mayor-elect: the announcement that he will declare a state of `social emergency' in Bogotá's five most impoverished neighbourhoods.

Upon learning of his victory, Garzón's first inclination was to reassure Uribe that he would not be adopting a confrontational style as the holder of the country's second most prestigious elected post. In his first public speech his catchphrase was, `They don't have to fear us.'

One prominent political analyst, Fernando Cepeda, a former diplomat and interior minister now in academia, says this is because the main objective of Garzón's Polo Democrático Independiente (PDI) is to earn respect as an alternative to the presidency, and with that in mind it would be `foolish' to seek confrontation with an Uribe who still enjoys a personal approval rating of 75%.

Others, like political scientist Fernando Giraldo, note that the fate of the referendum and the recent elections — particularly the rise of the left — indicate that a distinction should be drawn between Uribe's personal standing and the popularity of his policies and government. He reads the election results as an attempt by the voters to counteract Uribe's rightwing leanings with the presence of leftists, and to return attention to social issues that have been overshadowed by Uribe's emphasis on security matters. In a sense, he suggests, it was Uribe who, for the first time, made it possible for the left to envisage actually gaining power.

Looking ahead
Garzón's election as mayor of Bogotá was not an isolated incident. The left also won the mayoralty of Cali and two departmental governorships (Nariño and Cauca). The most enthusiastic of his supporters can already see him running for the presidency in three year's time — a prospect enhanced by another consequence of the failed referendum: Uribe's inability to seek reelection.

Garzón would not be the only PDI politician in the running: there is also senator Antonio Navarro Wolff, awaiting a lucky break after a string of failed attempts. Still, it is Garzón who holds the position with the highest profile, and good performance in the management of Bogotá would certainly boost his chances.

The new mayor is likely to start playing more on those aspects of his discourse that differentiate him from Uribe: he has already described the President's economic strategy as unfortunate, and has underlined that in Uribe's policy of `democratic security' the emphasis should be on `democratic'; the citizen should be above the soldier.