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Development: President Néstor Kirchner attempted to quash rumours that he is seriously ill on 16 January.

Significance: Rumours have been circulating for several years about Kirchner's health problems; the latest were based on his taking a longer stay than normal in his home province of Santa Cruz over Christmas and the New Year.

In April 2004 Kirchner was rushed to hospital in Santa Cruz. He was diagnosed with erosive gastroduodenitis, a fairly common ailment in which lesions on the stomach walls can cause internal bleeding. The strain on Kirchner will increase in the second half of his mandate. By dispensing with the services of former economy minister Roberto Lavagna, he has concentrated more work in his own hands; he is also taking a more active role in formulating foreign policy.

During a meeting at the presidential palace Casa Rosada Kirchner said "They want to kill me, they want me to be ill. But thanks to God I am in very good health." Kirchner also took the opportunity to attack the media, accusing some media groups and journalists of "shamelessly lying"; on 28 December he singled out the national daily La Nación, the most critical of the dailies, for criticism.

Kirchner's ranting about the press has started to attract the attention of the foreign media. The Economist magazine reported in its 14-20 January edition that Kirchner has secured a remarkably favourable press "through incentives and veiled threats".

Development: Guatemala will seek more technical and financial support from the US to combat drug-trafficking, the spokesman for the armed forces, Colonel Orlando Archila, said on 20 February.

Significance: The government and the armed forces have been angling for more resources from the US for some time. They claim that Guatemala needs more assistance to deal with the sheer volume of drugs passing through Guatemalan air space and national waters from South America to the US; 80% of the drugs that make it to the US pass through Guatemala, they say. Archila said he would be going to Washington with defence minister General Francisco Bermúdez on 14 March to present the Guatemalan case for more support.

The government recently took to warning that it fears that drug-traffickers will get actively involved in the 2007 elections by offering financial support for candidates in exchange for them tolerating, or even colluding in, their activities. While this would not be a new phenomenon, the opposition argues, it fits in with the government's strategy of persuading the US for more financial backing.

Guatemala recently won the right to host the headquarters of the Centro Regional de Coordinación Contra el Narcotráfico. Representatives of 17 countries in Latin America and the Caribbean, as well as the US, agreed to establish the regional organisation, which will involve information-sharing to combat drug-trafficking.

Development: Today (27 March) the free trade talks between Ecuador and the US enter their final stage, with the sensitive area of agriculture (and in particular, maize) up for discussion.

Significance: The eleven-day protest against the FTA ended on 24 March as internal dissent among the indigenous movement, Conaie, and the government's application of a state of emergency prompted many demonstrators to return home. Opposition to any agreement with the US is still fierce, however, with a majority of Ecuadoreans complaining they do not have enough access to information about the talks.

A survey by the polling firm Cedatos showed that only 13% of Ecuadoreans were fully behind an FTA, with 66% claiming they did not know what the deal would mean for them or the country. Only 34% said they felt they had enough information about a possible agreement. Cedatos also asked 230 small, medium-sized and large firms over the FTA: 69% said they were in favour, 24% were against and 7% had no opinion.

Development: Uruguay's President Tabaré Vázquez said in an interview on 1 May that he is preparing to withdraw Uruguay from being a full member of Mercosur.

Significance: Vázquez has been severely critical of Mercosur in recent months but this is by far the farthest he has gone. Mercosur "is more of a problem than a solution for Uruguay," Vázquez told Uruguayan TV station Canal 10 in an interview he gave from Washington DC. The Uruguayan president said his government will invoke Articles 20 and 21 of the Mercosur constitution (as formalised by the Treaty of Asunción ) in order to become simply an associate member of Mercosur. Vázquez said Uruguay would maintain its free-trade agreement with Mercosur but would have "no other commitment to the bloc".

Vázquez's rejection of Mercosur is in response to his government's ongoing row with Argentina over two paper mills currently under construction in Uruguay. The Uruguayan president was especially critical of Argentina's refusal to address the issue through Mercosur's conflict-resolution mechanisms, especially at a time when Argentina is president of the bloc, and he also slammed the roadblocks that Argentine environmental protesters have mounted on two bridges connecting Argentina and Uruguay.

As of today (2 May), both those bridges will be unblocked. On 1 May the Environmental Assembly of Gualeguaychú voted to lift the 26-day blockade of the General San Martí­n bridge, which connects Gualeguaychú to the Uruguayan town of Fray Bentos. The assembly said that by lifting the blockade it hoped to strengthen Argentina's case if it takes the paper-mills dispute to the International Court of Justice in the Hague.

Development: Patricia Mercado, the presidential candidate for the Partido Alternativa Socialdemócrata y Campesina, said on 5 June that she would not accept a job in Felipe Calderón's cabinet if he offered one.

Significance: Mercado's statement gives a hint about how she will behave in the crucial TV debate tonight, 6 June. She is likely to go after the rightwing candidate, Calderón, from the Partido Acción Nacional, who is running neck and neck with the leftwinger, Andrés Manuel López Obrador. If Mercado, who stands no chance of winning the election, lands some rhetorical blows on Calderón, she will help López Obrador who did not take part in the first TV debate at the end of April.

In the first debate, Mercado stole the show and, her performance was, probably, a factor in the sharp dip in opinion poll support for the longtime frontrunner, López Obrador, in the first half of May. Mercado's PASC, a metropolitan leftwing party (despite its name), made veiled allegations about Calderón's presumed authoritarianism on social policy issues in an interview on 5 June. She said that she would not accept the (big spending) job of minister of social development were Calderón to offer it to her. Most political commentators assume, since President Fox has only appointed women to the post, that the next holder will also be female.

Mercado is liberal on both drugs and sex. She supports legalisation of "soft" drugs such as marijuana, though admitted in a TV interview on 5 June that she would "tick off" her 16 year old daughter if she caught her smoking pot, but added that when she was older her daughter could make her own decisions. On sex, Mercado is in favour of the "morning after pill" an issue which is divisive in the traditionally clerical PAN. Mercado added that wearing a miniskirt was a human right which no-one should curtail. At least one PAN state government has tried to ban miniskirts.

Development: On 10 July the interior minister, Felipe Vega, became the fourth member of cabinet to have his resignation accepted since 7 July.

Significance: Over the weekend, President Alfredo Palacio accepted the resignation of the economy minister, Diego Borja; the minister for foreign trade, Jaoquí­n Zevallos; as well as the ministerial secretary of the presidency, José Modesto Apolo. Borja did not go quietly; forced from office due to a disagreement with the president over the new hydrocarbons law, he claimed Apolo was the real power behind the throne and warned of the dangers of the government succumbing to populist demands for greater social spending.

Vega accused unknown "interest groups" of demanding his resignation but refused to speculate on who they might be. His successor has yet to be named. Roberto Illingworth has taken over from Zevallos at foreign trade. Apolo, who stood down in order to show "President Palacio is the one who is in charge in this country", will be replaced by Rafael Parreño. The new economy minister is Armando Rodas, who on taking office asked that Borja moderate his comments about the government, claiming they were panicking international investors.

Palacio has just under six months left of his mandate, but the elections for his successor will take place on 15 October. This weekend, the second-placed presidential candidate, banana magnate Alvaro Noboa, announced he would not run in this year's elections, having failed in two previous attempts. Rumour has it that his wife, Anabella Azí­n, may run for his Partido Renovador Institucional Acción Nacional in his stead.

Candidates may begin the inscription process on 16 July and have until 15 August to decide if they will run for the positions of councillors, legislators, Andean deputies and president. León Roldós, of the social democratic Réd Etica y Democrática, is the frontrunner, now followed by Cynthia Viteri of the Partido Social Cristiano. It is not clear who will benefit from Noboa's decision to withdraw, but a poll published on 10 July showed it was far too early to make any serious judgements on the election. According to the Cedatos poll, 85% of Ecuadoreans have still not decided who they will vote for.

Former president Lucio Gutiérrez, who is still attempting to have the constitutional court overturn his ban on running in this election, warned on 10 July that losing candidates may challenge the validity of the supreme electoral court (TSE). The TSE is supposed to comprise of seven representatives of the top seven most-voted for parties in the last election, but Gutiérrez's Sociedad Patriótica, which came fifth, has no representative on the court, while the Democracia Popular party (now called Unión Demócrata Cristiana), which came eighth, does have a spokesperson on the tribunal.

Also on 10 July Foreign Minister Francisco Carrión, the most trusted figure in Palacio's administration, returned from a two-day trip to Cuba. Carrión met the Cuban foreign minister, Felipe Pérez Roque and the vice-president Carlos Lage. After the trip Carrión made an ambiguous reference to the Cuba-Bolivian-Venezuelan trade agreement Alternativa Bolivariana para las Americas, saying Ecuador "valued all efforts towards integration" but stressed the Andean Community's importance for Ecuador's future trade plans.

Development: The second biggest party in the legislature, the Unión Cí­vica Radical (UCR), is in danger of breaking up after a faction of the party, Movimiento Radical Federal, swore allegiance to the government of President Néstor Kirchner at a meeting on 12 August. 

Significance: The president of the UCR, Roberto Iglesias, threatened to expel from the party any legislators who failed to attend the UCR national convention in Rosario in two weeks time. Iglesias directed a similar threat at the so-called “K radicals" in June but at a meeting in Buenos Aires on 12 August five of the UCR's six provincial governors endorsed Kirchner's “plural reconstruction", which aims to unite social, labour and political organisations for the 2007 elections. They also said they would not be attending the UCR convention.

The governors of Santiago del Estero, Gerardo Zamora; Rí­o Negro, Miguel Saiz; Corrientes, Arturo Colombi; Catamarca, Eduardo Brizuela del Moral and Mendoza, Julio Cobos, as well as 183 mayors and 409 town councillors, attended the meeting, "Encuentro del Radicalismo que Gobierna". They signed a statement, saying “We do not conceive of the UCR as a mere spectator of the big decisions," adding that Kirchner's pluralist pact was the only way to give Argentines the future that they deserve. Cobos is seen as a possible vice-presidential candidate on Kirchner's ticket in the 2007 elections. Iglesias said that “the gorillas who prefer Kirchner's project, which is worse than that of (former president Carlos) Menem," should leave the party.

Development: President Alvaro Uribe declared on 18 September that his government has neither the financial nor the legal means to ransom a Colombian kidnapped in Afghanistan.

Significance: This is a sudden about-turn by Uribe, who on 16 September ordered the Colombian ambassador to India to pay "whatever ransom was demanded" for Diego Rojas, an employee of the French aid agency Mission d'aide au développement des économies rurales (Madera). Rojas, aged 35, was kidnapped on 9 September by armed men in the eastern province of Wardek.

Opposition politicians, NGOs and the media did not take long to point out that Uribe's determination to secure Rojas' prompt and safe release stood in marked contrast to his attitude towards hostages inside Colombia. There are presently almost 4,000 people being held hostage; some have been held for over five years.

The majority of the hostages are held by the Fuerzas Armadas Revolucionarias de Colombia (Farc), which is either demanding a hefty ransom for the kidnap victims or wants to use them in a prisoner swap with the government. Uribe has refused to help pay ransoms to the Farc and is deeply suspicious of a prisoner swap due to the rebels' demands for the creation of a demilitarised zone where the exchange might take place.

One consequence of the about-turn on Rojas is that tensions between the government and the media will rise. Uribe's side of his telephone call to the Indian ambassador was recorded by Radio Caracol, which was covering the president's appearance at an engagement in Bogotá.

Since Uribe began his second term in August the media appears to be more critical of the government than in the previous four years, most notably when the leading daily, El Tiempo, investigated claims that the military had staged terrorist attacks in Bogotá shortly before Uribe was sworn in. The president accused the newspaper of acting irresponsibly.

Development: The chief of staff of the presidency and a former mines and energy minister, Dilma Rousseff, said on 23 October that the government is planning to build seven new nuclear reactors.

Significance: According to Rousseff, the plan to build the new nuclear plants is geared to "achieve economic efficiency". The proposal is ready to be sent to congress after the presidential run-off election on 29 October. The plan is to build the new reactors by 2025, more than doubling the current nuclear energy contribution to the national grid from 2.5% to 5.6%.

Brazil currently has two nuclear plants, Angra 1 and Angra 2, on the coast some 180km east of Rio de Janeiro. A third plant, Angra 3, could be finished by 2010. According to the president of the Associação Brasileira de Energia Atômica, Edson Kuramoto, Angra 3 would allow Brazil to have its own uranium enrichment facilities. Currently Brazil imports its enriched uranium from The Netherlands.

Nuclear energy is becoming increasingly more important for Brazil. Despite huge investments in hydroelectric power, there is still a 50% possibility of blackouts in the south-east region, Brazil's industrial hub, in 2008 due to increased demand for power. The recent spat with Bolivia over natural gas supply has also prompted the Brazilian government to seek new sources of energy.

Development: The Uruguayan government imposed quotas on 63 products imported from Argentina on 29 November. 

Significance: The Uruguayan decision comes at “a difficult time" for the Mercosur, the South American trading bloc, and will certainly sour the country's relations with Argentina further. According to the Uruguayan government, the quotas are necessary because the 63 products, which range from chocolates to paper rolls, are manufactured in “zones of industrial promotion" in the Argentine provinces of La Rioja, San Luis and Catamarca. In effect, the products receive subsidies from the Argentine government, a fact that “distorts" bilateral trade. 

Uruguay imported US$52.5m worth of the 63 products in the nine months of 2006 through September. The government imposed quantity restrictions and any number above the quota will be taxed as if manufactured outside the Mercosur. Uruguay, together with Paraguay, had complained on several occasions that both Argentina and Brazil subsidise their producers to the detriment of Mercosur's smaller members. The Argentine and the Brazilian governments have recognised on several occasions that “there are trade asymmetries" in the bloc, but have done little, or nothing, to find a solution. Unsurprisingly, Uruguay and Paraguay want to sign free-trade agreements with third parties, which is against the Mercosur's rules. 

The Mercosur has been suffering from paralysis over recent months, despite the entry of Venezuela in the bloc last June. Uruguay and Argentina are confronting each other in the International Court of Justice over the construction of two pulp mills in the Uruguay River, the natural border between the two countries. Argentine protesters have constantly closed the borders, causing losses of US$500m to the Uruguayan economy. The closures were deemed against the Mercosur's principle of the free movement of goods, but the Argentine government did nothing to stop protesters. Now the Uruguayan government has determined the military should guard one of the pulp mills. The Argentine press considered the decision "an act of aggression". 

The Uruguayan government wants Brazil to intervene in the matter, but to no avail so far. The Brazilian government, however, signalled that President Lula da Silva will step in. Lula will go to Montevideo and Buenos Aires on 18 December.

Development: On 13 January Iranian President Mahoud Ahmadinejad arrived in Caracas, the first stop on a brief tour of Latin America.

Significance: This is Ahmadinejad's second trip to Venezuela, but the other countries he is visiting, Nicaragua and Ecuador, have never hosted an Iranian president before. It is his presence in these last two countries which will be a greater source of concern to the US and a source of discomfort to some Latin American leaders. Argentina's President Néstor Kirchner will not now attend the inauguration of Ecuador's Rafael Correa in order to avoid meeting Ahmadinejad. Argentina recently filed an arrest warrant for nine Iranians, including former president Akbar Hashemi Rafsanjani, for their involvement in the bombing of the Jewish mutual aid association Amia in Buenos Aires in 1994.

In Caracas, Ahmadinejad and Chávez announced the creation of US$2bn fund to finance investment in friendly countries to help “liberate them from imperialism". After the meeting between the two, Chávez declared “death to US imperialism" and said that Venezuela and Iran would act as one “to save the price of our prime resource" in the Organization of Petroleum Exporting Countries. Ahmadinejad, meanwhile, praised the Venezuelan people for voting for “such an important person on the global scene, a person as wise as Hugo Chávez ".

In Nicaragua, Ahmadinejad congratulated Ortega on his election victory and insisted that Iran, Venezuela, Nicaragua and other revolutionary countries would work together. “Imperialism doesn't like it when we help each other mutually and when we progress and develop our countries, it does not like to see poverty eradicated," he said, adding that development required three elements; unity, hard work and faith in God. The Iranian president was subsequently presented with the Augusto C. Sandino medal. Today he will travel to Quito for Correa's inauguration.

GUATEMALA: Sugar producers expect a record production of 46m quintals in 2007, the best result in a decade.

NICARAGUA: Nicaragua announced its first ever export of sugar-cane-based ethanol to the European market. The country exported 3m/litres of ethanol worth US$2m.

Development: The prospective transport minister, Alfredo Nascimento, of the allied Partido da República (PR), was accused of corruption on 26 March.

Significance: Nascimento's presence in President Lula da Silva's new cabinet “will be a headache for the government". According to the current affairs magazine IstoÉ, Nascimento is under investigation accused of “offering to free federal funds and positions in public-owned companies" to lure politicians to join the PR and businessmen to finance the party's campaigns.

In effect, these allegations could resurrect the scandal that marred Lula's first term in office, when his party was accused of running corruption schemes in public-owned companies. At the time the PR was known as the Partido Liberal (PL) and several of its congressmen were accused of receiving bribes from Lula's Partido dos Trabalhadores in exchange for their support for the government in congress.

The scandal was so damaging for the government that for some time at the end of 2005 it seemed that Lula's political career would end up with his impeachment by congress. Brazil's vice-president, José Alencar, however, decided to leave the PL and the party was forced to change its name. None accused of involvement in the schemes were ever charged.

The latest news cast doubt on Lula's second administration. Many believed he would be able to get rid of all the corrupt elements that marred his first administration. Last week, however, another allied party, the Partido do Movimento Democrático Brasileiro had to withdraw its nomination for the agricultural ministry because of similar allegations.

Development: On 30 April President Rafael Correa told his immediate family to abandon the idea of setting up a political party with his initials.

Significance: Correa is sensitive to accusations that he is an embryonic caudillo, like President Hugo Chávez in Venezuela. On the other hand, the way the voting system is weighted for the constituent assembly means that Correa's Movimiento Alianza Paí­s (MAP) is unlikely to win more than 60 of the 130 seats in the constituent assembly despite Correa's near-80% opinion poll ratings, hence the attraction of his supporters setting up parallel parties.

Despite Correa's admiration for Chávez he has kept his distance from the Venezuelan: Ecuador has not, for example, signed up to Chávez 's trade bloc, the Alternativa Boliviariana par las Americas (Alba). Nor has Correa followed Chávez and his Alba allies in threatening to withdraw from bits of the World Bank or the IMF even though Correa has difficult relations with both of the Bretton Woods twins. Indeed, on 30 April Correa's finance minister, Ricardo Patiño, said that the government would make the US$31m interest payment due on its 2012 Global Bonds on 15 May.

Correa did not mince words about his brother's and sister's idea of setting up a new party, Revolución Ciudadana en Democracia (RCD). The president's full name is Rafael Correa Deligado, so the new party would share his initials. Correa said that "voters should not be confused by people_who want to set up this ridiculous and absurd party". Correa was speaking only hours after his elder brother, Patricio, announced the formation of the RCD on national TV. Patricio said that RCD would be run by his sister, Pierina Correa, and the party's slogan would be "My family wants change."

Rafael Correa said, slipping into the presidential first person plural, "we are against any cult of personality because it embodies the vices against which we are fighting: caciquismo." He said that he was completely against the notion "that only members of my family can make the changes the country needs; [in fact] they are repeating the disgraceful practices which we reject with all our being. We are democrats, pure and simple; nobody has a personal agenda. We are all in the middle of a historic mission." He added: "No-one in the country can call himself a Correaista: there is no movement, foundation or even a children's playground with the name of the citizen president. To personalise the magic moment the country is living does great damage to our cause."

Correa makes no secret of wanting his supporters to dominate the constituent assembly. The lesson of Bolivia, where President Evo Morales and his supporters failed to win a two-thirds majority which would have allowed them to rewrite the Bolivian constitution as they wished, has not been lost on Correa. Correa made it clear that his party is the Movimiento Alianza Paí­s (MAP). The indigenous movement, Pachakutik, said on 30 April that it was interested in an alliance with the MAP.

The elections for the 130 member constituent assembly are on 30 September. The constituent assembly will have six months to write a new constitution. The new constitution will be the country's 20th. Candidates have to register from 5 May to 18 June. The election system is skewed heavily in favour of small parties, which makes the idea of parallel parties attractive.

So far two of Correa's uncles have set up political parties with a view to running candidates for the constituent assembly and one of them has registered his group with the Tribunal Electoral del Guayas.

Separately, the country's last elected president, Lucio Gutí­errez, said that his brother Gilmar would head the Partido Sociedad Patriótica list for the constituent assembly. Lucio is banned from holding public office until May 2008.

Development: Judges, magistrates and lawyers held a 24-hour strike on 5 June to protest against President Evo Morales, who they accuse of threatening the separation of powers by interfering in the judicial system.

Significance: This is the first strike that the judiciary has held in Bolivia's history, and demonstrates the strength of feeling against Morales. It paralysed the supreme court, the constitutional tribunal, the nine regional courts and the agrarian tribunal. Its organisers accused Morales of trying to create a "totalitarian state" where the independence of the judiciary is subjugated to the will of the executive.

The strike is the culmination of a dispute that began when Morales criticised four members of the five-member constitutional tribunal for deciding to suspend four supreme court judges that Morales had appointed by decree in December. Morales followed this up with a string of verbal attacks, describing the judiciary as the "most corrupt" power in the country which favours the rich and rules in favour of businesses over the state.

The crisis was exacerbated on 29 May when two congressmen from the ruling Movimiento al Socialismo issued a detention order against the four members of the constitutional court for failing to appear at a hearing for the lawsuit which Morales has initiated against them.

Development: General Alberto Müller, who until a fortnight ago was one of President Hugo Chávez 's closest aides, attacked Brazil in an interview on 9 July.

Significance: Müller's declarations to the Brazilian daily O Estado de São Paulo will do little do improve relations between Venezuela and Brazil. Müller accused Brazil and its congress of "attempting to initiate an imperial clash" in South America by delaying Venezuela's entry in the Mercosur, the customs union between Brazil, Argentina, Paraguay and Uruguay. This, he said, was aimed to maintain Brazil's "commercial dominance" in the region.

Müller went on to say that the Brazilian senate's criticism of Chávez 's decision not to renew the broadcast license of an opposition TV station last May, which led to its refusal to ratify Venezuela's membership in the Mercosur, was "an insult, an intromission that only an empire is capable of". Only a few days ago Chávez gave the Brazilian and Paraguayan congresses a three-month deadline to approve Venezuela's membership otherwise he would not join the bloc. Both congresses have already stated they will not bow to Chávez 's ultimatum.

The Brazilian government has not issued any statement regarding Müller's declarations, not least because he is no longer a member of Chávez 's government. Müller, however, has been Chávez 's mentor and his views are believed to be the same held by many chavistas if not Chávez himself. Müller was sacked a few days ago after he declared that Venezuelan armed forces were becoming "politicised and partisan", a claim Chávez denied.

Development: President Alvaro Uribe was warned on 8 August that he may be summoned as a witness in a murder trial.

Significance: A judge in the town of Sincelejo warned the president that he may have to testify in the murder trial of a mayor. What makes the case politically important is that the accused are paramilitaries. President Uribe's popularity has been boosted by his convoluted peace process that has led to over 30,000 paramilitaries disarming.

The case relates to the murder of Eduardo León Dí­az Granados, the mayor of El Roble, in the department of Sucre. Before he was killed, Dí­az Granados publicly told Uribe that paramilitaries were going to kill him. Dí­az Granados met the president at a meeting of the local government, chaired by Uribe, and televised in February 2003. Dí­az Granados was killed on 10 April.

If Uribe does not testify in person he will have to provide written evidence. The prosecution lawyers say that they want to know what Uribe did when the mayor warned him of his fears for his life; to whom Uribe, who was elected president in 2002, gave the orders to protect the mayor; and what was Uribe's connection with the former governor of Sucre, Salvador Arana, who is alleged to have wanted the mayor dead.

Panama: Following the rejection by a US judge on 7 September of an appeal that sought to block the extradition of former Panamanian dictator Manuel Noriega to France, Noriega's lawyers filed an appeal with the US Circuit Court of Appeals in Miami. Such cases can take a year or 18 months to resolve, and on 9 September, the Federal Bureau of Prisons listed Noriega's projected release date as "unknown". Noriega completed his sentence for drug offences in the US on 9 September and was set to be extradited to France where he had been tried in absentia and given a 10-year sentence for money laundering.

Bolivia: On 11 September, Bolivian foreign minister David Choquehuanca announced that Bolivia's new visa requirement for US citizens visiting the South American country will take effect on December 1. The measure was first announced in January by President Evo Morales, who said it was a matter of reciprocity because the United States required Bolivians to have a visa. Choquehuanca said US tourists will be able to obtain the visa at point of entry by paying US$134, a similar amount to what Bolivians pay for a US visa.

Colombia: Diego León Montoya, alias Don Diego, Colombia's most wanted drug trafficker, was arrested by an elite army unit on 10 September. The US welcomed the news not only because it will put an end to his drug-trafficking but also because it suggests that the government is winning its US-backed war against illegal narcotics. Don Diego appears on the FBI's list of most wanted criminals and there is a US$5m reward for his capture. The Colombian government confirmed that he would be extradited to the US, where he is wanted by three federal courts on charges of drug trafficking, money laundering and murder. Defence Minister Juan Manuel Santos suggested that Santos had smuggled at least 1,000 tonnes of cocaine to the US through Mexico and been responsible for some 70% of the cocaine entering the US.

Peru/Panama/Colombia: The US government launched an lobbying campaign on 10 September to encourage Congress to approve Free trade agreements with Peru, Panama and Colombia. "We estimate that passage of the Peru, Colombia and the Panama agreements will increase US agricultural exports by almost US$1.5bn per year by the time the agreements are fully implemented," South Carolina Farm Bureau President David Winkles said on behalf of the American Farm Bureau Federation. US Trade Representative Susan Schwab said that she thought it was possible for Congress to approve all three trade pacts by the end of the year. Most political commentators doubt that there will be a Colombian pact before 2009.

Peru. The free trade agreement between Peru and the US was approved by the congressional finance committee, a joint committee of both houses of congress on 10 September. Max Baucus, (D, Montana) the chairman of the Senate finance committee, said that the agreement meant all the environmental and labour rights concerns that Democrats had raised. Significantly, Thea Lee, policy director for the main trade union organisation, the AFL-CIO, said that the union did not oppose the agreement. The ALF-CIO did oppose free trade agreements with South Korea and Colombia. The Peruvian lobbyists for the treaty hope that it will be voted on by the senate between 18 and 24 September. Ratification would then be in October.

Transport: The US Senate voted by 74 to 24 on 11 September to halt funds for a pilot inspection programme that would have allowed Mexican trucks to use US roads from the start of the next US fiscal year which begins on 1 October. The programme is opposed by trade unionists who argue that Mexican trucks are dangerous. On 9 September, just before the Senate voted, a Mexican truck carrying dynamite collided with another vehicle on a road in northern Mexico. The collision itself did not cause the explosion that killed 34 people and left 150 injured. Most of those killed and injured were bystanders, watching the fire caused by the collision, unaware that one of the vehicles on fire was the truck carrying dynamite. The explosion left a crater three metres deep and 15 metres across. The pilot project in the US Senate was derailed by an amendment from Byron Dorgan (D, North Dakota). In May the House of Representatives approved a similar measure to prevent the pilot project. The senate vote means that the project now has little chance of being implemented. Under the Nafta, road haulage should have been liberalised 10 years ago. Under the current rules, Mexican trucks have to unload on to US trucks 32km from the border (120km in Arizona).
Lawyers say that Mexico could now sue the US under Nafta because it is being discriminated against: Canada the other Nafta signatory, does not face any obstruction to the free movement of its trucks in the US. Mexico could also take reprisals against US companies enjoying the benefits of access to Mexican markets under Nafta.

Development: The Colombian office has confirmed that President Alvaro Uribe wishes Colombia to join the Banco del Sur, which was established by his Venezuelan counterpart Hugo Chávez .

Significance: Uribe's plan to join the Banco del Sur represents a significant attempt to end his country's isolation in Latin America, where Colombia is the US's most powerful ally. Chávez intends the Banco del Sur, which will be based in Caracas, to serve as a development bank for Latin America and replace US-based institutions active in proving financing in the region such as the World Bank and the Interamerican Development Bank (IDB), which he has described as "beacons of imperialism".

Uribe announced his desire to join Banco del Sur on 12 October at a meeting with Chávez in La Guajira after the pair had inaugurated the Ballenas-Maracaibo gas pipeline (a ceremony at which Ecuador's President Rafael Correa was also present). His announcement came less than a week after the bank got the go-ahead on 8 October, when the finance ministers of Argentina, Bolivia Brazil, Ecuador, Paraguay, Uruguay and Venezuela agreed to set up the Banco del Sur at a meeting in Rio de Janeiro.

The Colombian president's official statement stressed that Uribe's desire to join the Banco del Sur "is not a rejection of the World Bank or the IDB but an expression of solidarity and loyalty with the Latin American brotherhood". The statement said that the government would continue to work with these and other financial institutions such as the IMF, "which have treated Colombia well".

Colombia's involvement in the Banco del Sur adds another layer to the already complex relations between Uribe and Chávez . The two get on surprisingly well given the numerous rivalries between their two countries and their obvious ideological differences, but Uribe has previously steered well clear of Chávez 's plans for regional integration on the grounds that the Venezuelan president invariably intends such plans to counter US influence. Uribe's willingness to get involved this time around will improve their relationship further at a time when Chávez 's involvement in the possible prisoner swap between the Colombian government and the Farc is a source of growing concern for Uribe.

Development:President Lula da Silva said on 14 November that the government would lobby governors to have the provisional tax on financial transactions, the CPMF, extended by the senate.

Significance: Lula's declaration reveals the government's fear that the CPMF will not be approved by the senate. Indeed, many senators of government-allied parties vowed to vote against extending the tax to 2011, as the government wants. The CPMF brought the government R$36bn (US$20bn) last year, but expires at the end of the year. Part of its funds is used to pay for the maintenance of local health systems.

Lula told journalists to "ask any governor if they can govern without this money". He went on to say that senators "will have to explain to state governments how they should meet their expenditure without these funds". Lula also called public health employees to lobby governors and mayors, so they can exert pressure on senators to vote in favour of extending the CPMF, which he denies "levies the poor" as many senators believe.

According to Lula's most hardcore detractors, he wants the CPMF money to reward political allies in the mayoral election next year and general elections in 2010. The rumour is that Lula is manoeuvring behind the scenes to run for a third consecutive time that year - at least some of his allies have suggested changing the constitution to allow this.

The vote in the senate, expected before Christmas, however, may be influenced by a new impeachment proceeding against the former president of Brazil's senate, Senator Renan Calheiros, who remains nominally allied to Lula. The vote on whether to impeach Calheiros is likely to take place at the same time of the CPMF vote. Lula will have to play a tricky balancing game: if he gets too close to Calheiros he may lose votes, but if he stays too far away he may lose even more votes.