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Barbados has decided to seek `compulsory and binding' UN arbitration for a fishing-rights dispute with Trinidad & Tobago which arose from a maritime delimitation treaty the latter signed with Venezuela in 1990. In the meantime, Barbados is enlarging the list of Trinidadian products that are subject to a retaliatory licensing régime. The government has said that it will drop the licensing régime as soon as there is an agreement on UN arbitration.

Former President Alfonso Portillo left Guatemala shortly after the constitutional court stripped him and his former Vice-President, Francisco Reyes, of parliamentary immunity from prosecution, which they enjoyed ex-officio as members of the Central American parliament, Parlacen. Whether flight, as claimed in the Guatemalan press, or a previously arranged trip, he beat by hours an injunction sought by chief prosecutor Carlos de León.

Portillo and Reyes are charged with money laundering and misuse of public funds. The immunity shield was lifted as the result of a private lawsuit seeking a ruling that the treaty creating Parlacen in 1991 was unconstitutional. Several Central American presidents want to review the issue of Parlacen immunity, after the Alemán and Portillo cases showed how it could be abused.

Portillo, presumed to have driven to El Salvador and then flown on to Mexico, also faces a privately promoted prosecution for the violent incidents of last July provoked by followers of the then-ruling Frente Republicano Guatemalteco (FRG), in which a journalist died.

CUBA | `Black' economy spreads. The audit & control ministry reports that more than a third of the 5,917 inspections of state companies conducted last year revealed some kind of irregularity -- the most frequent being the diversion of `sensitive' goods to the black market. This, said minister Lina Pedraza, had been encouraged by sloppy identification of the origin or destiny of goods and inefficient internal auditing.

The 316,000 inspections of sales outlets conducted by the finance ministry showed up 35% of them (mainly in catering and the markets for farm produce) engaging in `price violations'. The most frequent offence was the imposition of a surcharge (which the public calls a multa, or fine), but there was also a high incidence of cheating on weights and measures. An interesting detail: violations were just as frequent in the dollar shops as in those conducting their business in pesos.

CUBA | Putting nickel back on its feet. Last year nickel exports brought in about US$100m, confirming it as one of the leading sources of hard currency — but this was largely the result of improved world prices, since the lack of proper upkeep meant that one of the three main plants was producing well below capacity. This translated into a 4.7% fall in overall output, to about 71,000 tonnes. Following rehabilitation work at the René Ramos Latour plant, the government is now predicting for this year a return to about 76,000t.

GUATEMALA | Concern about `China factor'. The Guatemalan authorities are concerned about China, not only because it has become a powerful competitor abroad, but because its products are `flooding' the domestic market, harming local industries. Imports from China have increased over the past eight years from US$5m to US$276m, and Guatemala has been unable to offset this with exports of its own to China. The bilateral trade balance last year showed a deficit of US$196m for Guatemala. 

The sectors most affected by competition from Chinese imports are footwear, plastics and apparel. In the footwear sector a large number of closures, mainly among artisan shops, have been reported.

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		28.02.03	20.02.04	27.02.04
Argentina	peso	3.22	2.96	2.94
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.59	7.88	7.89
Brazil	real	3.56	2.95	2.93
Chile	peso	751.00	590.00	594.00
Colombia	peso	2,956.78	2,693.91	2,685.89
Costa Rica	colón	385.55	424.28	425.08
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	23.85	50.31	_
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	7.89	8.12	8.12
Honduras	lempira	17.26	18.07	18.09
Mexico	nuevo peso	11.12	11.03	11.14
Nicaragua	córdoba oro	14.96	15.86	15.86
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,900.00	6,030.00	6,015.00
Peru	nuevo sol	3.48	3.48	3.48
Uruguay	nuevo peso	29.50	29.85	29.90
Venezuela	bolí­var	1,600.00	1,920.00	1,920.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	November	December	January	Last 12m	Jan-Dec 2003
Argentina	Indec	0.20	0.20	0.40	2.70	3.70
Bolivia	INE	-0.51	0.90	0.62	4.17	3.94
Brazil	FGV	0.34	0.52	0.76	7.71	12.53
Chile	INE	-0.30	-0.30	-0.20	0.80	1.10
Colombia	Dane	0.35	0.61	0.89	6.19	6.49
Costa Rica	DGEC	1.42	1.25	1.70	11.02	9.87
Ecuador	Inec	0.33	-0.04	0.41	3.92	6.07
El Salvador	Min.Ec.	0.07	0.20	1.11	2.43	2.50
Guatemala	BCG	0.45	0.58	1.53	6.21	5.85
Honduras	BCH	0.70	0.30	0.90	6.90	8.10
Mexico	Bco.Mx.	0.83	0.43	0.62	4.20	5.70
Nicaragua	BCN	0.82	0.76	1.59	7.16	6.48
Paraguay	BCP	1.30	0.90	0.30	5.50	9.30
Peru	INE	0.17	0.56	2.19	10.39	10.19
Uruguay	DGEC	0.16	0.65	2.19	10.39	10.19
Venezuela	BCV	1.90	1.80	2.50	26.10	27.10
US	DOL	-0.30	0.58	0.50	1.90	1.60
Previous: WR-04-08

The stockmarket in figures
Market	Index	20.02.04	27.02.04	Variation (%)
Buenos Aires	Merval	1145.94	1183.14	3.25
São Paulo	Bovespa	21336.91	21755.02	1.96
Santiago	IPSA	1504.79	1543.08	2.54
Bogotá	IGBC	3180.28	3089.75	-2.85
San José	BCT	10187.74	10288.42	0.99
Quito & Guayaquil	Interinvest	68.68	68.29	-0.57
Mexico	BMV	9888.73	9991.80	1.04
Lima	ISVBL	2721.44	2748.11	0.98
Caracas	BC	27865.86	27484.76	-1.37
Source: Daily market reports.

Venezuela's opposition has decided not to recognise any longer the authority of the CNE, the electoral council, and has called on its supporters to launch a campaign of `peaceful resistance'. This has already, through a succession of daily demonstrations and clashes with the national guard, left a toll of three dead and more than 50 injured, many by gunfire. The opposition says it is responding to a government bid to deny the people their right to vote President Hugo Chávez out of office; the government says the opposition is once again trying to overthrow the government by force.

What triggered this return to open confrontation on the streets was the CNE's decision to question 148,000 referendum petition forms with about 1.4m entries, in which personal details had been clearly entered by a single hand, in breach of the rules, or where the details did not tally with the electoral register, or with smudged thumbprints.

The CNE did not throw out these petition forms, instead it started arranging what it called a `repair' procedure: the establishment of 1,000 public stations where during five days the signatories of questioned forms can ratify (or rectify) their signatures. This has been tentatively scheduled for 18-22 March; during the previous fortnight the CNE will publish the names of the doubtful petitioners. On this could hang the fate of the referendum to revoke Chávez 's mandate; given the number of suspect petitions (on top of those already invalidated for undisputed reasons), the rejection of a large proportion would almost certainly leave the opposition without sufficient endorsements for the CNE to call the referendum.

Facts & stances
It is important at this point to note that the international observers of the OAS and the Carter Center have agreed that the CNE was justified in querying and seeking to verify the suspect forms. `The OAS and The Carter Center,' they said in a communiqué, `consider the concern legitimate in that it is necessary to determine whether one person signed for another, clearly violating the rules.' They did differ, though, on the procedure: the observers suggested that verifying a statistically significant sample would be a better option than seeking the ratification of all. 

[CNE member Jorge Rodrí­guez said this might prove even more `onerous and punishing' for the opposition: a pilot sampling of thumbprints commissioned by the CNE had turned up 33% illegible prints — of which just over a third were `fraudster's prints', impressed without enough of a field to make a comparison with official records.]

It is also important to note that on this matter the CNE board divided along party lines, with the appointees of the government camp going for the `repair' option and those picked by the opposition rejecting it. The tie-breaker, CNE president Francisco Carrasquero, sided with the former. Worth recalling: the CNE board was selected by the supreme court, after the opposition blocked selection by the national assembly, whose job it should have been. On the CNE board, those representing the opposition say that the others are using `technicalities' to rule out the Chávez referendum petition.

External players
The Group of Friends (formed by the governments of Brazil, Chile, Mexico, Spain and the US) has endorsed the CNE's decision to verify the suspect petition forms. In a communiqué issued on 26 February it said, `The Group of Friends trusts that the verification of the signatures' authenticity will be conducted transparently, so that the expression of the voters' will prevails, according to the law and the regulations in force.'

One member of that group, the US, has been running another stance in tandem with that one: that what is important is to ensure that the voters' will is respected, over and above `excessive technical considerations' [State Department spokesman Richard Boucher], and that the way `to resolve the political polarisation [is] through a transparent and internationally monitored presidential recall referendum' [White House spokesman Scott McClellan]. 

This implies three things: that the US knows the will of the Venezuelan voters, that it deems excessive the technical considerations based on the rules in force, and that it has already concluded, before verification, that there are sufficient signatures to warrant a recall referendum.

The European Union has taken a position almost indistinguishable from that of the US.

President Chávez , while denouncing that another coup attempt is being gestated, and that the US has a hand in this, has said that if the `repair' process validates enough signatures on the petition forms, he will not oppose the celebration of the referendum, and will abide by its results.

What is not at all clear is if the opposition will take part in the `repair' process. There are two possible reasons for it not to do so. One is a conviction that the CNE, acting on behalf of the government, will reject the referendum petition, or that the government will find other means of blocking or delaying it. Some diplomats have already been briefing foreign journalists that the `repair' process is to be interpreted as a delaying tactic. The other reason is the knowledge that there are not enough valid signatures to support the referendum petition. This is the explanation preferred by the government camp.

Worrying signs
The weekend brought two worrying signs. One is that Acción Democrática (AD), the `traditional' opposition party most committed to fighting the government in the electoral arena, is openly endorsing the decision of the umbrella opposition alliance, the Coordinadora Democrática, to take to the streets. AD secretary-general Henry Ramos said, `The people are out on the streets because the government is trying to rob them of their democratic rights.'

The other is that there has been a falling out between the CNE and the Carter Center. On 1 March, CNE president Carrasquero told the press that the Carter Center was leaving the country. The Carter Center's representative, Jennifer McCoy, said that the mission would stay in Venezuela. Precisely what lay behind this was not immediately clear. Only a day earlier, the Carter Center and the OAS had issued another appeal to all parties to calm down and give the CNE `space' to act. However, over the preceding week foreign journalists had been told on more than one occasion that the two international observer teams were on the verge of leaving.

It is clear that the departure of even one of the observer missions would greatly reduce the credibility of the CNE and the Chávez government. As with almost everything else in this crisis, though, there is more than one possible departure scenario.

Farc guerrilla units conducted coordinated attacks last week in the centre-south department of Neiva, inflicting heavy casualties on the army and staging high-profile kidnappings in the heart of Neiva, the departmental capital. An indignant President Alvaro Uribe reacted with a purge of high-ranking military and police officers in the area, accusing them of negligence.

On 24 February, close to midnight, the city of Neiva suffered a blackout. Under cover of darkness, groups of men wearing army uniforms raided two apartment buildings. They made off with a cattle rancher and two businessmen, after engaging a police patrol that arrived on the scene. The raiders, later identified as Farc guerrillas, left behind a list showing that they had targeted 18 people in those buildings for kidnapping.

At about the same time, another Farc unit descended upon the small town of Santa Marí­a, engaging troops of an artillery battalion stationed there in a five-hour battle. The guerrillas used high-powered grenades and their trademark `mortar shells' made with gas canisters packed with explosives. By the time the attackers withdrew the military had suffered 11 fatalities (among them an officer and an NCO) and four injured, and four of the guerrillas had been killed.

The very next day President Uribe ordered the dismissal of General Héctor Martí­nez Espinel, commander of the ninth army brigade stationed in Neiva (who had already earned himself a reprimand from Uribe last year), and of the departmental director of the DAS (secret police), Captain Joaquí­n Espinosa. Also dismissed were the national director of the army's antikidnap groups, Colonel Jaime Calderón; the commander of those groups in Neiva, Major Yesid Peña; and intelligence coordinator Pedro Luis Moreno.

What had particularly incensed Uribe was the news that several weeks earlier one of the police antikidnap units had received intelligence that a kidnap operation of the kind conducted in Neiva was being prepared — and that this had not been acted upon. This was all the more galling in that the kidnapping was a carbon copy of one carried out in July 2001, when 16 people were snatched from a building in Neiva. Several of them are still being held hostage by the Farc.

Police are now looking at the possibility that urban cadres of the Farc may have engineered the power failure and infiltrated the security firm guarding the targeted buildings.

Sobering the claims
The episode was particularly embarrassing for Uribe, as days after the event he had to host an important visitor: US Marine General Peter Pace, vice-chairman of the US Joint Chiefs of Staff, who was meant to be shown, on the ground, the progress Colombia had been making in its internal war. Pace managed not to sound too condescending when he predicted that there would be more kidnappings and guerrilla attacks `as they recognise that your elected officials are getting stronger and stronger in the war against terrorism.'

One result of last week's setback has been a sobering of the government's tally of successes. The claim that under Uribe the security forces have killed or captured more than 10,000 members of illegal armed groups is no longer being used to suggest that these groups' estimated combined strength has been reduced by about a third. Account is now openly taken of their continuing recruitment effort, and the main claim is that the Farc has suffered a net loss of 15% of its strength.

Mexico's fourth-largest political party, the environmentalist PVEM, has become embroiled in a high-profile scandal after the broadcasting of a video showing its president, senator Jorge Emilio González, angling for a bribe to influence the approval of tourism and land-development permits in Cancún. González, sidestepping the evidence, has counterattacked accusing the government of conducting a campaign against his party.

The video, secretly taped by PVEM defector Santiago León, shows González, el Niño Verde, discussing the permits with two purported representatives of Canadian businessmen. The planned developments were in Cancún, a municipality under PVEM control in the far-eastern state of Quintana Roo. Broadcast on 23 February by Televisa, it clearly shows González asking how much money he would get, insisting on clarifying that the two fingers held up in response meant US$2m [he was answered in the affirmative; US$1m up front, the rest upon issue of the permits], and loudly saying, `Good!'

González first dismissed the tape as a montage, then admitted that the meeting had taken place, but as a `sting' operation meant to expose corrupt developers [which he never did], then saying that he never made any move to collect the bribe offered, and finally by blaming the interior ministry for violating his privacy as part of a revenge campaign against the PVEM. The fact that the permits have not been issued has been interpreted as a sign that the meeting was indeed a set-up — in which the person `stung' was González. That, though, is not the only explanation making the rounds.

A colourful party
González inherited the leadership of the Partido Verde Ecologista Mexicano (PVEM) from his father, Jorge González Torres, who founded it in 1990. Its environmentalist credentials have not given it a very cuddly image; criticism of its autocratic leadership earned it a reprimand from the electoral authority, which ordered the PVEM to amend its statutes to give members a greater say. Its promotion of a referendum to introduce the death penalty earned it the barbed comment that it was the only party that wanted to save animals and kill humans.

For the elections of 2000, the PVEM struck an alliance with the now-ruling Partido Acción Nacional (PAN). It has since broken away and sidled up to the opposition Partido Revolucionario Institucional (PRI), with which it coalesced for the legislative elections of 2003 and will jointly contest the gubernatorial elections in Chihuahua and Veracruz this year.

PRI leaders have been wavering between expressing support for González and the PVEM, and postponing their final say until better information is available on the Cancún affair. The PVEM leader has won the support of Zacatecas governor Ricardo Monreal, of the leftist Partido de la Revolución Democrática (PRD) — but basically because Monreal sees a good opportunity to join in an attack on the presumed misdeed of interior minister Santiago Creel. The chief prosecutor's office, the PGR, is looking into the evidence to see if there are grounds for a criminal prosecution. González, meanwhile, has filed a complaint against the government before the national human rights c ommission.

The congress of coca growers held in Lima on 18-20 February did not act as the `cover' or trigger for a `Bolivian-type' uprising, as interior minister Fernando Rospigliosi had predicted. One of its features, though, did make an impact on the local media: the exhibition of new coca-based products that are already being marketed.

The most ambitious of these is the `energy' beverage called K-drink produced by the Spanish firm Kokka Royal Food & Drink, which was launched on the Spanish and Peruvian markets in early February in 300-millilitre containers selling at US$0.70 apiece. It appeals to the youth and sports market, though on the latter it may be challenged because of the coca content.

At home, businesswoman Rosario Lazo, from Arequipa, uses coca for the sweets known as cocamelos (a play on the generic term for sweets, caramelos). In Cusco, the K'uychiwasi association is adding coca to a wide range of products: flour, chocolate, cakes, shampoo, toothpaste and cosmetic creams. One big problem with all these initiatives is scale: the Cusco enterprise, for instance, only uses 15 kilos of coca a month, bought from Enaco, the state-owned coca marketing enterprise (which boasts of having Coca-Cola among its clients).

Released at the time of the congress: a study by the Universidad Agraria de Lima that punctures the myth about a `weaponised' strain of Fusarium Oxysporum being used secretly as an instrument of coca-bush eradication. It only found `normal levels' of the fungus in the main coca-producing areas of Peru.

COLOMBIA | Best results since '97. Final GDP figures for 2003 show a growth rate of 3.64%, the highest in six years and 1.64 points above what the government had projected. The national statistical institute, Dane, noted that if illegal (drug) crops are excluded from the calculation, the growth rate rises to 3.96%. The figures are encouraging after two years of growth rates below 2%. However, President Alvaro Uribe has been saying that Colombia needs higher rates of growth to reduce unemployment and pull people out of poverty. This is aimed at the ultra-cautious central bank, which until 20 February had held its `intervention' rate unchanged for 10 consecutive months.

BOLIVIA | Gas leads export expansion. After decades of export earnings stuck at about US$1.2bn a year, in 2003 Bolivia saw them increase to a record US$1.57bn. The biggest boost came from exports of natural gas, which expanded by 43%, to US$381m (despite Brazil taking much less than had been expected). This has made gas the premier export product, overtaking soya, which last year brought in US$336.5m (up 7.6%). Third came zinc, with US$123m (barely above the previous year). At a lower level, another item to experience rapid expansion in 2003 was fuels, which earned US$95.4m (up 46%).

PERU | Last IMF test cleared. Last week the IMF announced that Peru had passed the fourth and last performance review under its 2-year US$380m standby agreement (which has not been drawn upon). Deputy managing director Agustí­n Carstens, amid fulsome praise for Peru's achievements, suggested that `work should continue to broaden the consensus for the elimination of regional and sectoral tax exemptions, and the impact of the financial transaction tax will need to be monitored closely.' Among the aspects of Peru's strategy singled out for praise was the government's effort to `de-dollarise' the economy.

Either the money wasn't available or the arguments of indigenous communities and environmentalists were persuasive: the main state-owned power utility has decided not to go ahead with big dams planned for the southern state of Chiapas. The decision might have gone completely unnoticed had it not been for an inquiry by Felipe Arizmendi, bishop of San Cristóbal de las Casas.

Bishop Arizmendi announced last week that he had received a letter from Alfredo Elí­as Ayub, director of the Comisión Federal de Electricidad (CFE), stating that `no dam will be built in the state of Chiapas', at least between now and 2012. Ayub says that `after examining our programmes we have been able to ascertain that neither the Usumacinta river storage project, nor that of Istantún, have been included in the electricity sector's programme of works and investment.'

Chiapas, dotted with hydroelectric installations, has had abundant experience of their impact in terms of land lost to farming, environmental damage to areas now protected and loss of archaeological sites. Most affected have been the indigenous communities and small farmers of the state, who have on several occasions mounted protest campaigns against plans for further hydroelectric works. Bishop Arizmendi had taken up these concerns personally with the former energy minister, Ernesto Martens (one of the two ministers replaced in the mini-reshuffle of last September). Since then, officialdom had gone silent on the matter, and the state of play had only come to light when Arizmendi was moved to make a direct inquiry.

INVESTMENT | Talking up the slump in FDI. Last year the inflow of foreign direct investment (FDI) to Mexico fell by 25.7%, to US$10.7bn, the lowest level in seven years. As part of the Fox administration's current effort to persuade Mexicans that the glass is half-full rather than half-empty, the economy ministry has been highlighting that the FDI figures don't look so bad when seen in an international context. Last year's inflow, it notes, was the highest in Latin America, and marked the second time in three years in which Mexico overtook Brazil. In the broader developing world, it says, only two jurisdictions attracted more FDI than Mexico: mainland China (US$57bn) and Hong Kong (US$14.3bn).

Of all the FDI brackets last year, the one which shrank the most was that of new investments (-64%), which accounted for a quarter of the total inflow.

Central bank governor Guillermo Ortiz doesn't share the government's sanguine approach: he says the loss of investments over the past few years is worrying, and that it is necessary to increase strategic public investment in order to encourage private investment.

EMPLOYMENT | Job losses in industry confirmed. Inegi's latest figures show that employment in manufacturing last year shrank by 3.9% — with the December total standing 4.1% lower than a year earlier. The data contain two features that do not bode well for Mexican productivity: the number of hours worked last year in manufacturing fell slightly more than the number of jobs lost, while average pay increased. In the maquila (assembly) subsector, employment last year contracted by only 0.8%, but the figures showed up the price paid for keeping one's job: more hours worked and a fall in average pay.

However inaccurate opinion polls may be, those conducted in the Dominican Republic seem to be showing a very clear trend: voter preferences are clearly tilted towards former President Leonel Fernández, and away from reelection bent President Hipólito Mejí­a. The latest Gallup poll, mirroring one produced in January by Penn Schoen, shows Fernández headed for a comfortable first-round victory — if the election is clean. It also shows a substantial majority convinced that there will be fraud.

The Gallup poll shows Fernández, of the Partido de la Liberación Dominicana (PLD), leading with 63.1% of voter preferences, followed by Eduardo Estrella of the Partido Reformista Social Cristiano (PRSC), with 14.9%, and by Mejí­a with 14.6%. It confirms what many commentators have been saying over the past few months, namely, that the internal squabbling in the PRSC and the ruling Partido Revolucionario Democrático (PRD) has driven many of their followers into the Fernández camp. Of those who previously voted for the PRSC, 18.4% now back the PLD candidate; of those who voted for the PRD, 11.5% have switched allegiance.

Vote-rigging fears & facts
Of all the people interviewed by Gallup, 65% are convinced that preparations are underway to commit fraud in the elections. The proportion rises to 73.6% among Fernández supporters, reaches 66.5% among Estrella's — and even among Mejí­a supporters reaches 29.1%. This is aggravated by the fact that almost 54% do not believe that the electoral board, the JCE, can be trusted to organise fair elections (61% believe that the JCE adjudged incorrectly in the PRD nomination saga). Many political commentators, and not only those who lean towards the PLD and the PRSC, portray the JCE as heavily influenced by the PPH, the faction that has been behind Mejí­a's reelection drive.

The JCE itself admits that it is dealing with quite an array of embedded `irregularities', such as double or even triple voter registration and electoral rolls in bad need of a purge. Rafael Dí­az Vásquez, the judge who presides over the JCE's administrative panel, says that there is a five-year backlog of uncorrected problems.

The PLD, unsurprisingly, has been calling for a comprehensive audit of the electoral rolls, but it is hard to see this happening in time for the 16 May elections. What has been suggested as an alternative is close scrutiny of all the voters registered since the last elections (which is tantamount to testing for role fiddling by the Mejí­a government). Piecemeal scrutiny has led to party observers and JCE staff agreeing to remove from the rolls some 25,000 people who had registered more than once. Up to October last year, 16,600 such cases had been detected; the remaining 8,400 or so have been spotted in the last three months — and more are expected to appear.

Mejí­a, meanwhile, dismisses all talk of impending fraud and insists that he will swing around the voters with a straightforward appeal based on his record as a problem-solver. Fernández is counterattacking with the message that most of the problems now faced by Dominicans were actually created by Mejí­a.

It happens every time elections appear on the Chilean horizon, but on every occasion the squabbling over candidacies within the ruling Concertación alliance raises anew the prospect of the main partners falling out. The opening round has President Ricardo Lagos appearing at odds with his own party over the candidate for the mayoralty of Santiago.

Chile will be holding municipal elections in October this year. They will be unusual in that for the first time mayors will be picked separately from the town councillors, in another step away from the system inherited from the Pinochet years, designed to protect the right from being overwhelmed.

Since the last presidential contest, when the Concertación came in only a whisker ahead of the rightwing Alianza por Chile, there appears to be no need for any such protection. The change, apart from defensible on its own merits, will create a testing ground for individuals aiming at higher office later on. And the mayoralty of Santiago is an important stepping-stone: that was the platform on which Joaquí­n Laví­n, of the Unión Demócrata Independiente (UDI) mounted his near-miss presidential bid in 1999.

The Christian Democratic party (DC), `senior' partner in the Concertación, wants the coalition to field one of its own, Marcelo Trivelli. The Partido por la Democracia (PPD), President Lagos's party, prefers its own man, former congressman Jorge Schaulson. One problem is that, despite official denials, the word is out that the presidency is backing Trivelli.

Primaries as a solution?
The PPD says this can be easily solved, by holding primary elections within the Concertación as a whole. The DC doesn't like the idea — and officials at the Moneda palace are not keen on it either. The Socialists (PS) are divided on the issue. Senator Carlos Ominami, who is in charge of municipal affairs at the PS, and therefore point man for this year's elections, favours the celebration of primaries. This option is reportedly backed by most of the PS. But it is not favoured by PS secretary-general Arturo Barrios, and several of the top party leaders share his position.

Some PPD leaders have been threatening not to back the PS candidate for the presidential nomination in 2006 if the PS does not agree to holding primaries now. Others, like congressman Guido Girardi, have been telling presidency officials that the party will not enter the Concertación pact for the municipal elections if primaries are not held. The PPD is particularly keen on the Santiago mayoralty because none of the 28 local governments it controls are in the top league. Moreover, it has no visible presidential aspirant.

As of last week the member parties of the Concertación had reached agreement on the slates of candidates for 309 municipalities. They are hoping to close deals on the remainder by mid-March, so they can then get on with organising the campaigns. In the last municipal elections, held in 2000, the Concertación won 1,205 of the 2,124 municipal posts contested, as against 849 won by the Alianza por Chile.

President Oscar Berger has fired chief prosecutor Carlos de León on grounds of `inefficiency'. The official had come under heavy criticism for allegedly sitting on the investigation of corruption charges against former President Alfonso Portillo.

De León was selected for the job by Portillo, from among three names submitted by a commission of jurists, in mid-2002. Berger has been after him since the moment he took office on 14 January. A week ago he decided to bring things to a head by ordering de León to submit a report on the handling of three cases. The chief prosecutor refused, on the grounds that his office was autonomous; he sought an injunction from the constitutional court endorsing his stance, but was refused. At that point, Berger announced his dismissal. Almost immediately, Berger appointed in his stead Juan Luis Florido, another one of the three submitted to Portillo in 2002 — and a congressman of Berger's Gran Alianza Nacional (Gana).

As this was unfolding, a judge ordered the arrest of former chief tax collector Marco Tulio Abadí­o, on a charge of diverting some US$5m of public funds. Abadí­o had flown away to the US days earlier. According to the press, part of the money (US$1.5m) was used to finance the campaign of Alvaro Colom, presidential candidate of the Unidad Nacional de la Esperanza (UNE). Colom says the party is checking its accounts.

CENTRAL AMERICA | Tourism boom expected to continue. The Central American Tourism Agency (Cata) predicts that this year tourist arrivals in Central America will increase by 9%, to 5.6m. In 2003 the subregion received 5.1m visitors, an increase of 13.1% on 2002. The WTO had noted in its review of last year that Central America was the only area registering clear growth in tourism.

PANAMA | Health `privatisation' resisted. Panama's medical association, the AMN, has launched a campaign against the health ministry's `transformation' drive, on the grounds that it has started handing out concessions to NGOs and private firms for the provision of healthcare in indigenous areas and those of difficult access. The `transformation' drive, which is being financed with loans from the IDB and the World Bank, is being portrayed by the AMN as `privatisation by stealth.'

COSTA RICA | Belt-tightening threatened. The government has been threatening huge spending cuts if congress does not quickly approve the tax reform legislation it has submitted. Finance minister Alberto Dent Zeledón says that the government has already committed 119% of its expected revenues, and that every month that passes without the approval of new taxes translates into a shortfall of US$34.5m. He says he will have to cut about US$179m from projected spending, of which US$57.5m would come from the public works budget — a key instrument in the effort to reverse the slowdown in growth.

DOMINICAN REPUBLIC | Power supply improving. Power generation had increased by the end of last week to the point that it was covering about 65% of normal consumption. The system was receiving 1,139MW in the off-peak period and 1,512MW in peak hours. An additional 220MW were expected to come onstream during the weekend.

For all the Chilean complaints about its neighbour's disregard for diplomatic proprieties, both Peru and Bolivia have been discovering that getting stroppy with Santiago pays off. The Peruvians are now back in the bilateral defence cooperation loop, and the Bolivians have managed to get Chile to budge (a little) on an ancient dispute.

Peru's very public complaints about the `strategic imbalance' Chile was creating with its defence replenishment purchases has prompted the Chileans to renew regular meetings on defence matters that defence minister Michelle Bachelet had quietly frozen some time ago. The bilateral security and defence committee has already been scheduled to meet in March, and a `2+2' meeting (of both countries' foreign and defence ministers) has been pencilled in for April. `This,' Bachelet said, `is the best way to clear up all these issues and render transparent, across a table, what we're spending on defence.'

In La Paz, foreign minister Juan Ignacio Siles has been celebrating a Chilean proposal to submit to technical appraisal the possibility of paying royalties to Bolivia for the use of waters from the Silala river. At issue is Bolivia's claim that the Silala is not actually a river, but the result of channelling to Chile (a work of just under a century ago) the waters from springs in the southern Bolivian department of Potosí­. Chile has always insisted that it is a river, and an international one to boot, so no payments are due.

Reconciliation traffic, it must be noted, is not flowing only in one direction. On 1 March, Siles said in an interview that Bolivia would be proposing to Chile a formula of `functional sovereignty' over a corridor in the north of Arica to pump Bolivian gas to the Pacific. He said he hadn't yet officially told the Chileans.

As usual, it was what happened on the sidelines of an international gathering that really mattered. In the case of the 12th summit of the Group of 15, held in Caracas last week, it was a decision by Brazil and Argentina to work out a joint strategy to negotiate with the international financial organisations.

This takes a step further the already tight cooperation between the two countries, who most recently agreed to incorporate diplomats from the other side in their delegations to the UN Security Council, when it is their turn to occupy a non-permanent seat.

Presidents Lula da Silva and Néstor Kirchner will be meeting on 10 March in São Paulo, with a team of aides, to advance more on the new initiative. Argentine foreign minister Rafael Bielsa explained the rationale as follows: `It is not possible that we should go to international forums with different opinions, when the more developed countries unify their positions.' 

His Brazilian peer, Celso Amorim (who noted that the March meeting will also be devoted to bilateral trade issues and joint infrastructure schemes), said, `Brazil's position is one of dialogue with the developed world, but to the extent that we improve solidarity among ourselves — the developing nations — our relations with those [developed] countries will improve too.'

President Ricardo Maduro recently said he was tired of seeing Honduras appear among the world's most corrupt nations in the Transparency International ranking, and invited that organisation to propose solutions. That was only days before his security minister, Oscar Alvarez, dismissed a police commissioner who had blown the whistle on police involvement in the murder of suspected criminals and gang members.

Marí­a Luisa Borja was removed last September from her post as director of internal affairs of the Policí­a Nacional Preventiva and shunted to an obscure, invented niche as `technical adviser'. Refusing on grounds that this did not fit her rank and seniority, she appealed the decision. Minister Alvarez did not wait on the outcome of the appeal, and last week fired Borja on grounds of `unjustified abandonment of the service'. Borja is filing a complaint before the Inter-American Human Rights commission.

Anyone skimming through pro-Chávez online media last week would have found what appeared to be visual confirmation that the `Chávez -Lula-Kirchner axis' heralded as the new force of change by the Venezuelan president was alive and well. Photographs showed the three, all smiles, held together in a two-way hug by Chávez . For Lula, this photo-op engineering was the last straw: he spent the rest of his stay making it abundantly clear that he was taking distance from his Venezuelan peer.

Lula and Kirchner were in Caracas attending the 12th summit of the Group of 15 [developing nations]. Lula's first gesture of displeasure with his host was his decision not to address the opening session of the summit on 27 February — an occasion hallmarked by a vintage Chávez denunciation of the developed countries. The next step was left to Brazilian foreign minister Celso Amorim. Asked about Chávez 's address, he said, `President Chávez 's speech is President Chávez 's; he did not deliver a consensus speech. Each one has his own way of expressing himself.'

The final act was Lula's decision to cut short his stay in Caracas, skipping the formal closing dinner offered by Chávez to all visiting heads of state and government. The official excuse was that he had to rush back to visit his Vice-President, José Alencar, who had just undergone surgery. His flight, though, did not take him to São Paulo, where Alencar was hospitalised, but straight to Brasí­lia — and spin doctors soon made sure that the leading newspapers carried the real reasons behind Lula's early departure.

Some Venezuelan opposition sources tried to portray Lula's actions as signalling a dissociation from Chávez due to the internal political situation. In Brasí­lia this is dismissed by noting that it was from the Brazilian capital that a communiqué from the `Group of Friends' was issued last week, endorsing the stance of Venezuela's electoral authority, not that of the opposition.

The government and its allies are doing their best to convey the impression that the PT funding scandal has been contained, and that the authorities are dealing adequately with it. The opposition insists that only a congressional commission of inquiry (CPI) will suffice, and accuses the government of seeking to block it.

`The government,' says senator Jorge Bornhausen, president of the Partido da Frente Liberal, `is contradicting itself and trying to set a new agenda to prevent congress from installing a CPI — but it is the opposition's job, on behalf of society and acting responsibly, to investigate the acts that the government insists on trying to hide.' The PFL's senatorial leader, José Agripino, ventured that a gathering planned by the PT to show public support for chief of staff José Dirceu would `leave the government the size of Waldomiro [Diniz].' The event was called off for fear that that might indeed be the case.

On the opposite side of the ideological divide, Força Sindical (FS), one of the umbrella labour confederations, has announced that it will press Lula to reverse his decision to shut down Brazil's 1,100 bingo parlours [WR-04-08]. The reason: 320,000 jobs would be lost.