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Perhaps the least of President Lula da Silva's worries right now is the renewal of the attack by his party's radical wing on his economic policies. He is facing two far greater threats that could mark the rest of his mandate: on one hand, the escalation of land seizures by the movement of landless peasants, MST, coupled with announcements of protest campaigns by the unions; on the other, clear signs from his biggest political partner, the Partido do Movimento Democrático Brasileiro (PMDB), that the current state of the alliance is unsatisfactory.

It is this last item that is most critical. Without the PMDB Lula would have found it far more difficult, perhaps impossible, to push through congress the reform legislation introduced in his first year in office. Just as important, the alliance with the PMDB this year is crucial to the plans of the ruling Partido dos Trabalhadores (PT) to extend its influence at municipal level.

Buildup of discontent
A month ago the president of the PMDB, congressman Michel Temer, sounded a note similar to that of the PT radicals by describing the government's economic policies as recessive, and warning that his party might pull out of the alliance if there were no changes. From an entirely different angle, two well-known figures within the PMDB (Luiz Santos and Geddel Vieira), who served in the government of Fernando Henrique Cardoso, have begun to promote Cardoso's comeback, in what has been baptised the `Phoenix project'. Though they have discussed the matter with Cardoso, the former President has told them that he would only throw his hat in to the ring if opinion polls showed substantial support for the idea. The irony in this situation is that the chief complaint of the PT radicals is that Lula's economic policies are essentially a continuation of Cardoso's.

Economic policy is not the PMDB's sole complaint. Social security minister Amir Lando, who holds one of the two portfolios given to the PMDB in late January, has been venting his anger at what he perceives as a downgrading of his ministry's initiatives by Lula. In mid-April the PMDB senators announced that they would no longer automatically align themselves with the rest of the pro-government alliance when issues came to the vote in the upper chamber. This, they said, is because the PT rarely heeds their suggestions. This rebellion falls short of a pullout; the senators say they are remaining within the coalition, but with `greater independence'.

All this could be a bluff. PMDB senator Renán Calheiros has made it clear that what his party really wants is a greater share of power. `The PMDB,' he said last week, `is too big a party to remain within the ruling coalition without a well-defined role. It is not reasonable to think that the PMBD can be kept in the government merely with a few public posts. 'The PMDB appears to have chosen carefully the timing of its bid for a greater say. Lula's popularity rating has been falling fast. A survey recently released by Ibope showed Lula's enjoying a 51% approval rating at the end of March; a 15-point fall since December. There has been a simultaneous increase in the number of respondents who believe the country is heading in the wrong direction, from 36% to 52%.

Ibope attributes this decline to several factors: the campaign-funding scandals in which Lula's right-hand man, chief of staff José Dirceu, has been implicated; and the various effects of Lula's economic policies: a 0.2% contraction of the economy in 2003, a drastic downscaling of Lula's `zero hunger' programme (the centrepiece of his electoral platform), and the resumption of an upward trend in unemployment (the rate rose from 10.9% to 12% in the first quarter of this year).

The land challenge
Also, at this point in time the government does not seem to know how to cope with the wave of land invasions launched by the MST: 150 since the beginning of the year, of which almost two-thirds were in the much-heralded `Red April'. Lula has increased the budget allocation for agrarian reform, but not enough to meet even his reduced target number of settlements. He has also warned about keeping demonstrations and protest actions within the boundaries of the law - but when these have been overstepped, as in the case of the seizure of a working eucalyptus plantation, his officials chose to secure a withdrawal by promising the squatters land elsewhere. Not only the landowners but even the president of the supreme court have said that this is tantamount to encouraging land invasions.

Lula had promised to settle 530,000 families by 2006, when his term ends. Last year, though, settlements fell so far below the target that fulfilling the 2006 objective would have demanded settling 165,000 families a year. This year's target was set at 115,000 families - initially with a budget admitted to be sufficient for less than half of that. Only under the pressure of `Red April' did Lula increase the budget to an amount commensurate with the target, but a full quarter had already been lost, in which only 9,000 families were settled. It is this pattern of non-fulfilment that has triggered the escalation of seizures by the MST. Right now the government faces the prospect of having to settle about 12,000 families a month if it is to meet its target - in the knowledge that even this will not satisfy the MST.

As congress rushed to toughen legislation in response to public outrage over the recent Blumberg kidnapping (WR-04-14), and a new security minister in the province of Buenos Aires unveiled yet another plan to purge its police force of criminal elements, investigators delivered a highly embarrassing shock to the government. They found evidence of collusion in the Blumberg abduction, not of the provincial force but of the federal police - right up to the recently appointed chief of the new antikidnap division.

Police involvement in the crime had been denounced from the outset by the father of the victim. Hence, scepticism greeted the news that within days of the kidnapping police had arrested four suspects. Yet this trail led prosecutor Jorge Sica to order the arrest, on 8 April, of Daniel Gravinia, a deputy commissioner in the federal police, on a charge of having repeatedly hidden evidence on the case. A week later, an arrest warrant was executed on federal police commissioner Juan José Schettino, chief of that force's antikidnap unit, the División Antisecuestros.

That 180-strong unit was created last November, as the showpiece of the Kirchner administration's determination to stamp out kidnapping countrywide. It was intended to enjoy `total autonomy', and deploy its officers anywhere in the country should an investigating magistrate in charge of a kidnap case deem it necessary. Schettino was picked because of his reputation as a first-class investigator, enhanced by the fact that only days before the creation of the new division he had led a team that solved a high-profile kidnapping of a businessman, who was rescued unharmed. Now Schettino is also charged with having deliberately withheld evidence on the Blumberg kidnapping.

New broom in Buenos Aires
That the Blumberg investigation should have led to the federal police is being attributed in some quarters to `quiet assistance' by the force whose involvement everyone had been taken for granted: the Buenos Aires provincial police. This 41,000-strong force - the biggest in the country - is in for another overhaul at the hand of the new provincial security minister, former federal justice minister León Arslanián, best known for having presided in 1985 over the court that tried and sentenced former junta leaders (and perhaps least known to have briefly been provincial security minister in 1999).

Arslanián, drawing on his previous experience, has already unveiled a three-year reorganisation plan for the force. Its centrepiece is the creation of a special, highly autonomous unit, expected to have about 2,000 officers, devoted exclusively to security in the 31 municipalities of the Greater Buenos Aires area. Also envisaged is a specialised antikidnap unit. The minister wants to replace the current seniority-based promotion system with one based on merit and academic qualifications, and to abolish the military-style two-tier rank system.

One controversial item in the plan is to enlist the cooperation of the armed forces - but it has proven the one most swiftly taken up by the federal government. An agreement has already been signed between the federal and provincial governments whereby the army will provide `logistical' support. This is a legal nicety: the constitution bars the armed forces from engaging in any other kind of action in matters related to internal security.

What tasks are deemed `logistical' is a matter of interpretation. Arslanián has said that he would like to use military premises as temporary prisons, until such time as the current overcrowding of the prison system is solved. Arslanián believes that one of the factors fostering police involvement in criminal activity is their `promiscuous cohabitation' with criminals in police stations, whose cells are currently holding about three times as many people as they were designed for. One of the points he makes is that the police are not trained to care for prisoners - but then neither are the soldiers.

Legal deterrence
Congress has already rushed through the passage of a law raising the penalties for the possession, manufacture and bearing of firearms and is following up with the acceleration of a number of delayed bills covering such matters as extra controls on the sale of prepaid mobile phones and easing restrictions on investigators.

This is a pattern that predates the Kirchner government (and, indeed, is common to several countries in Latin America): `headline' crimes trigger public outrage, officialdom responds by legislating stiffer penalties and creating new police units. One of Kirchner's first acts as President was to send justice minister Gustavo Béliz to congress to urge rapid approval of an antikidnap law - which was basically about stiffening penalties in the hope that this would act as a deterrent. It has not.  

As one jurist has noted, since 1921 the penal code has mandated life imprisonment for a number of heinous crimes, without any visible effect on crime rates. One member of Kirchner's cabinet, interior minister Aní­bal Fernández, has warned the public that the new legislation will not automatically reverse the trends in criminality. `Stiffening the penalties so quickly,' he said, `leads society to believe that the solutions begin tomorrow. One must be prudent and not lie to the people.'

The Spiniak paedophilia scandal has taken a heavy toll on the political fortunes of Chile's right. Most significantly, it has removed Joaquí­n Laví­n from his pedestal as the comfortable leader in the opinion polls. His attempt to salvage the situation by persuading the leaders of both rightwing parties to step down appears to have foundered, as the outgoing leader of Renovación Nacional (RN), Sebastián Piñera, has succeeded in getting his candidate, former senator Sergio Diez, elected as his replacement.

Most analysts agree that this conspires against the efforts of Laví­n, of the Unión Demócrata Independiente (UDI), and Andrés Allamand of RN, to broker a reconciliation between the partners of the Alianza por Chile. Particularly galling to the UDI was the prominence, in the RN victory celebrations, of congresswoman Pí­a Guzmán, the person who implicated fellow rightwing legislators in the `Spiniak ring' [WR-04-10]. So far, none of her charges have stuck, but neither has the UDI's attempt prospered to remove her parliamentary immunity to try her for libel.

The latest opinion survey by Ipsos shows Laví­n with 35% of voting preferences, against 54% for Chile's rising star, Socialist defence minister Michelle Bachelet. The survey also sees Laví­n losing 46:42 to of someone who has two things in common with Bachelet: a cabinet position in the Concertación government and her sex - Christian Democrat foreign minister Soledad Alvear. The only rival over which Laví­n is seen winning (50:32) is the Christian Democrat former President Eduardo Frei (1994-2000).

ARGENTINA | Strong first-quarter growth. Argentina's economy grew at an annual rate of 10% in the first quarter, economy minister Roberto Lavagna reported last week. This, however, has not led to any upward revision of the official projection for the year as a whole, which is 5.5%.
The economy ministry also reported that in 2003 about 60% of the jobs lost in the previous two years were recovered: 304,000 new jobs were created, against 533,000 lost in 2001-02. In January this year (last available data) there were 4.7m workers in formal employment, or 229,000 fewer that in the same month of 2003. The sectors employing more people than three years ago are foodstuffs (up 7,000) fishing and transport (each up by 5,000) and mining (up 4,000). Though construction recorded the highest rate of job creation, it still employs 42,000 fewer people than in early 2001.

BRAZIL | More slight easing on money front. The central bank last week lowered the benchmark interest rate by a quarter of a percentage point, to 16%. This is the lowest rate since March 2001; though most market analysts say it is what they had expected, industrialists and unions have decried the reduction as insufficient to spur reactivation.

URUGUAY | Robust expansion predicted. Uruguay's GDP will grow this year by about 9%, predicts the economics institute of the state university. This, it says, will not be adversely affected by the fact that it is an electoral year. Last year GDP grew by 2.5%. The institute estimates a 30% increase in investment (versus an 11% fall in 2003), and growth of 15% in exports and 18% in imports (as against 4.1% and 1.5%, respectively, last year). It sees the open unemployment rate falling from 17% to 13.5% over the year.

US President George W Bush's Fair and Secure Immigration Reform, announced last January, is unlikely to enjoy congressional approval this year, according to the Council on Hemispheric Affairs (Coha). In a brief study recently released*, Coha says that neither Bush nor his rival John Kerry have felt it electorally convenient to put real political muscle behind any concrete initiative on immigration.

The core of the Bush plan is to issue a once-renewable three-year visa for all illegal immigrants resident in the US and those wishing to work in the US. They would become legal participants in a temporary labour scheme lasting at most six years, after which they would technically have to return to their country of origin, though the idea would be to allow most to apply for green cards and become permanent residents.

Reservations on many sides
This plan, notes Coha, is `less than ideal for the estimated 8 to 11 million illegal immigrants already in the country, of which more than half are Latinos'. The reason: `Immigrants who will have worked hard in this country for six years (in many cases, having been illegal residents here for many years previously), will now have to face at least the theoretical prospect of being forced to return to a homeland which their children may never have seen.'

Coha notes that in a recent poll conducted by Bendixen and Associates, it was found that while a majority of Hispanic respondents liked the plan at first, opposition nearly doubled when those polled were told that most workers risked the prospect of having to return to their home countries after the expiry of the three- or six-year visas.

Nor, says Coha, does the Bush scheme appeal to many conservative Republicans who describe it as an `amnesty' programme because `it strays from the current policy, at least in theory, that illegal immigrants and candidates are to be immediately deported'.

From the opposite end of the spectrum, Hispanic organisations in the US have argued that the plan could face the same problems as previous guest-worker programmes that failed to provide more green cards to satisfy the high demand of those who eventually wanted to obtain citizenship. This prompted Democratic candidate John Kerry to state that he would support an amendment allowing residents to `earn' citizenship. However, says Coha, `in true Kerry fashion, and similar to the prevailing conduct of the current administration which originally authored it, the provocative issue is now on the back burner'.

There are others who have opposed the Bush programme on the grounds that `it would fundamentally reward illegal immigration and harm those who have either completed the steps for legal immigration or are awaiting their visas - basically, those who played by the rules'.

The 'homeland security' angle
Finally, says Coha, `many Republicans have been hesitant to support Bush's agenda of substantially liberalising US immigration policy in post-9/11 America, citing the nation's desire for an increase in homeland security where safety must come before major immigration reform'.

Actually, the Coha analysis says, `through tactful phrasing, Bush has managed to disguise a beef-up of visa regulation as an extension of the temporary workers' quota. In this way, he will be able to appeal both to Latinos desperate for a way to gain entry into the US, and to those many Americans gravely concerned about terrorists and the porosity of US borders'. In a congressional hearing on 1 April, the commissioner of US Customs and Border Protection, Robert Bonner, praised the President for the proposal on the grounds that it will give his department `greater control over our borders'.

Coha finds the main motive for the Bush initiative in electoral considerations. `When initially released,' it notes, `the proposal was calculated to be politically well-received by a relatively neglected minority at a crucial moment for the future of the Bush presidency. A recent example of this stepped-up state of urgency was the concession that Bush offered up several weeks ago when [Mexican] President [Vicente] Fox visited his Texas ranch. Bush used that occasion to announce that border controls would be eased between the US and Mexico, including the discontinuation of fingerprinting and the photographing of Mexican nationals crossing the border for even short trips (over two-thirds of all Latino illegal immigrants are Mexican)'.

Still, says Coha, `while some of Bush's more cynical detractors accuse him of revisiting his connections with the Latino community only when the need to secure its votes is high on his agenda, many other critics, with considerable justification, argue that the immigration initiatives proposed by Bush have just enough substance to placate the Latin bloc's leadership in order for it to endorse his relatively shallow initiative'.

That bloc, composed mainly of Mexicans, Puerto Ricans and Cubans (but now also including growing communities of Salvadoreans, Guatemalans, Haitians and Dominicans), `has proven to be an increasingly important swing vote in previous close elections.'

[As to Mexico, the Coha analysis says that `Fox's intense motivation for border reforms stems from his need to appease disgruntled Mexican voters after failing to fulfil his campaign promise to create more jobs.']

Pessimism in congress
The overriding impression in congressional circles is that the Bush administration is simply not following through on the immigration proposal. Republican senator John McCain recently stated that the matter had been dropped because it was `politically too hot.' McCain is one of three Republican legislators from Arizona (the other two are senator Jon Kyl and congressman Jeff Flake) who in June 2003 submitted a proposal on which the Bush scheme was built.  

When the senate's foreign relations committee held a hearing on US-Mexico in late March, Democratic senator Chris Dodd said `there's nothing worse than raising expectations, getting people all excited about a proposal that's not going to be taken very seriously.'

The President's own party, says Coha, is severely divided on the question, with a number of Republican senators recently criticising him for introducing the legislation without the necessary follow-through. Ultimately, `the lack of muscle behind the pending initiative has cast grave doubt over the possibility of it being able to pass the legislative hurdles before the end of the year.'

* Immigration, the Upcoming Presidential Race and the Latino Vote. [Available from www.coha.org].

Haiti now has the broad outline of a political calendar, endorsed by the US. It has been told by US Secretary of State Colin Powell that it does not need an army, but should concentrate on rebuilding a national police - with the US staying on until that task is completed. Meanwhile, UN secretary-general Kofi Annan has floated a proposal for Mercosur to lead the longer-term peacekeeping force due to take over in June.

Prime minister Gérard Latortue announced, in the presence of visiting US Secretary of State Colin Powell, that all political parties, including Aristide's Fanmi Lavalas (FL), had agreed to set aside the constitutional provision mandating elections within 90 days of a President's resignation. They all concurred that it would be unfeasible to conduct the elections before next year. The plan, said Latortue, was for an elected government to take office no later than 7 February 2006. Powell implicitly endorsed the plan.

The first step towards implementing it, however, has already hit a snag. While eight organisations have already submitted their nominations for a new provisional electoral council (CEP), the FL refused to do so until the government guaranteed greater security for its members. In a letter to FL leader Yvon Feuillé, Latortue adopted a hard line: he gave the party until this week to submit a nomination, on pain of forfeiting its representation. The CEP will have the unenviable task of preparing the logistics for the elections, starting with a thorough revision of the electoral rolls.

It is not all that certain that Latortue will carry out his threat: he is under heavy pressure from abroad, including the US, to be evenhanded, which can only be achieved by assuring the FL of a place at the table. The FL, on the other hand, is well aware that, given Aristide's claim that his resignation was coerced, its participation is vital to give legitimacy to the current administration and its works.

Washington vs army rebirth
Colin Powell had another, very explicit message, which he conveyed in a radio broadcast: `Right now we need the police to be rebuilt. We don't need an army now; we need a police force and I hope that will be the first priority [...] It's up to the Haitian people to decide what kind of institution they need, but any discussion of an army, I think, should come much later, after there have been elections and after an elected government is in place. Let's focus on the police force right now - that is what the Haitian people need: a professional, confident, equipped police force.' This directly contradicts the demand by those among the anti-Aristide rebels who were formerly in the army that it should be recreated. Latortue, who has alluded to the rebels as `freedom fighters', favours establishing a commission to discuss the matter. His interior & security minister, retired General Hérard Abraham, leans towards the recreation of the army and has made public displays of sympathy towards rebel leader Guy Philippe.

Philippe himself is not particular: his position is that the institutional frame does not matter all that much; that the rebels could just as well be recruited into the police, as long as they end up as part of the security establishment. It must not be forgotten that Philippe was briefly a soldier, but made a successful career as an officer in the police force set up by the US after Aristide was reinstated in 1994.

The US appears committed to concentrating on the police force but not too keen on incorporating the rebels. On 14 April, in an address to the American Enterprise Institute, the assistant secretary of state for the western hemisphere, Roger Noriega, said, `I think there's a recognition that we need to maintain a presence for a period of time until the Haitian National Police is stood up. And that process will take at least, I would think, nine to 12 months, to get people identified [...] Participating in a rebel group, for example, would not necessarily disqualify a person but it wouldn't automatically move him into the security force. That's not an acceptable formula.'

Lopsided security
Human-rights organisations have been airing their worries about the new government allowing the rebel groups to remain armed, while exclusively going after supporters of the ousted government. The presence of the foreign troops is still thin-to-nonexistent in much of the country, and the police has yet to return even to all of the main cities. Security in much of Haiti is de facto in the hands of the rebels groups, and some of these are quite open about their dedication to tracking down and arresting members of the pro-Aristide `enforcement' gangs known as chimí¨res.  

In some cases they go beyond arresting them. Yvonne Terlingen, leader of a delegation from Amnesty International that recently spent two weeks in Haiti, reports that in recent weeks, at least a dozen former Aristide supporters have been slain, most of them shot execution-style with their hands tied behind their back. She also says that the government has been targeting members and supporters of the Aristide government, and has `failed in any way to act against the numbers of human-rights violators who have become associated with [the government].'

Indeed, the government has arrested former interior minister Jocelerme Privert on a charge of masterminding the killing of opponents of the régime, particularly the massacre during the recapture of Saint-Marc from the rebels. It has also banned 61 former officials, including former prime minister Yvon Neptune, from leaving the country, pending the outcome of investigations.

The police force has been undergoing a big purge. The government has dismissed more than 150 members of the force, including the second-most-senior officer, inspector general-in-chief Evans Sainturn; the director of the administrative police, Rudy Berthomieux; and two former directors of the western department.  

In many cases they have been charged with abandoning their posts; some with abuses of office; and an undisclosed number for involvement in drug trafficking. Two high-ranking officials of the judicial police, Mario André Sol and Jeannot François (both now in the US), face disciplinary procedures for disobeying orders.

UN peacekeepers: Annan's plan
The US view of the UN force which is to replace the current interim one led by the US and France is not the only one around. UN secretary-general Kofi Annan has prepared a working paper that envisages a contingent of 5,000 peacekeepers, to remain in Haiti for up to 10 years, and led by Mercosur. This appears to be a variant, or further elaboration, on the idea of Brazil leading the force, one which would also draw on the 52-year experience of peacekeeping veteran Uruguay, which currently has about 1,800 troops deployed in the Congo and about as many again in UN operations elsewhere. There is a (slight) catch: Mercosur, for all its political aspirations, is still basically a trade bloc.

When about 5,000 Zapatistas converged from their various communities on the central Chiapas municipality of Zinacantán on 10 April, their intention was to make a show of force - albeit a peaceful one - in support of demands for the restoration of power and water supplies cut off by the local authorities. The event ended in a clash that left 21 injured, and accusations on both sides that the stage was being set for a renewal of hostilities.

The local pro-government press had charged the atmosphere with comments about `military preparations' by the Zapatistas. These contributed by taking part, not as members of Zapatista `autonomous communities' but of the Ejército Zapatista de Liberación Nacional (EZLN), the armed wing that since July last year, as part of the new Zapatista strategy [RM-03-08], was meant to be taking a back seat. To complete the impression, the Zapatistas turned up with their faces masked by balaclavas and big kerchiefs.

The clash, though, did not take place until the demonstrators had begun to disperse. The precise trigger was unknown, but verbal confrontation between Zapatistas and local police (some in plain clothes) soon degenerated into a battle with stones, clubs and machetes. It ended after gunfire broke out. The injured were seven Zapatistas, eight plainclothes auxiliary policemen and eight unidentified persons. The local government is controlled by the leftist Partido de la Revolución Democrática (PRD).

GROWTH OUTLOOK | Encouraging first-quarter signs. President Vicente Fox reported last week that Mexico's GDP in the first quarter was up more than 3% on the same period last year. Cherry-picking the best figures for the period, he noted that the maquila (assembly) sector in February was up 8.5% on a year earlier, agriculture was up by 5% and construction by 5.5%. In March, he said, 84,000 new jobs were created, taking the total since January to 210,000.

Fox was addressing the industrialists' association of Nuevo León state. His hosts noted that recovery had a long way to go, since over the past three years exports had stagnated and industrial production had fallen by 6.4%. They said that competition from China had shaved four points off Mexico's GDP, through the loss of market share in the US, the increase of the bilateral trade-balance with China and the diversion of investment.

EXPORTS | Foodstuffs buck the trend. Exports of foodstuff to the US in 2003 reached US$7.1bn, 13.2% more than in 2002 and a new record. The agriculture ministry attributes this performance to the greater degree of integration achieved by industrial plants as a consequence of Nafta. Since 1993 (the year before Nafta came into effect) the volume of Mexico's exports of foodstuffs increased by 77.2%, to 2,400 tonnes. Exports of vegetables have doubled in that period; last year they earned US$2.1bn.

A telling detail: of the US$97.6bn in foreign direct investment received by Mexico since the launch of Nafta, only US$265m, or 2.5%, went into agriculture - which suggests that very little of Mexico's agricultural potential is being tapped. Last year the government, under pressure from peasants and small farmers, instituted a special programme of investment and finance for rural activities. So far, however, congress has failed to reach agreement on how to distribute the funds appropriated, so they remain undisbursed.

With less than half a month to go to Panama's 2 May elections, Martí­n Torrijos of the left-of-centre Partido Revolucionario Democrático (PRD) retains a solid lead over his nearest rival, former President Guillermo Endara, who is running under the banner of the Partido Solidaridad (PS). With the lineup virtually unchanged since the beginning of the year, the only novelty has been a call by parties to the left of the PRD and some unions to cast blank or spoilt ballots as a protest against `the lack of real choice'.

Torrijos, son of the late General Omar Torrijos, has been recording between 40% and 48% in the polls, maintaining a lead of 19-20 points over Endara. The right-of-centre vote is split between Endara, former foreign minister Miguel Alemán (of the ruling Partido Arnulfista, PA) and Ricardo Martinelli (of Cambio Democrático, CD), who have jointly been attracting between 18% and 29% of voter preferences - theoretically just about enough to match Torrijos, which could lead to an interesting lineup if the mix is replicated in congress.

The leftwingers calling a curse on all these houses include the Movimiento Popular Unificado (MPU), Camino Alternativo, Movimiento de Liberación Nacional (MLN), the construction workers' union (Suntracs), the umbrella labour group Conusi, and two student unions. In the past these would have been considered part of the PRD's constituency.

CENTRAL AMERICA | Remittance growth continues. Guatemala's central bank reports that remittances by expatriates in the first quarter of the year reached US$606.4m, or 29% more than in the same period of last year (a welcome development, seeing that in the same period export earnings were down 6.4%, to US$734.5m). El Salvador's central bank reports a first-quarter remittances inflow of US$560m, or 20.4% more than a year earlier (March's US$218.4m was a monthly record).

CARIBBEAN | Exception to world travel slump. Year-end estimates for 2003 show that, while tourism worldwide was shrinking by 1.2%, arrivals to the Caribbean increased by 7%, taking the total slightly above that for 2000, just before the slump caused by the September 2001 attacks on the US. Neither the Sars epidemic nor the war in Iraq affected the industry adversely. Winter arrivals were higher than in both preceding years; summer arrivals in 2003 were lower than in 2001 but higher than in 2002. Industry sources say the upward trend will continue into the next winter season.

JAMAICA | `Good place to do business'. Jamaica has made it to the World Bank's list of the world's ten best places to do business. It is the only developing country in that league. The World Bank survey focuses on the procedures involved in doing business rather than perceptions of business climate. The decisive factor in Jamaica's ranking was the modernisation of five business-related state entities in 1996-2003.

CUBA | Recovering from hurricanes. Cuba's citrus harvest last year increased by 21% to 673,000 tonnes, and this has already begun to translate into higher export earnings (last year witnessed the first exports of frozen orange juice and diversification of markets, adding Japan and other Caribbean countries to the trade previously concentrated in Europe). The partial recovery came after a hurricane in 2001-02 halved production, which had peaked at 858,200t in 2000.

President Ricardo Lagos announced last week that he will `soon' promote the resumption of a debate in congress on `constitutional recognition of the indigenous peoples', with a view to holding a vote on the matter before the end of the year.

Acting on recommendations of a commission headed by former President Patricio Aylwin, he also announced the creation of a `council of the people' to represent all of Chile's ethnic groups, and an under-secretariat of indigenous affairs to coordinate government action in this field. In the 2002 census, 692,000 people - 4.6% of the population - identified themselves as members of Chile's eight indigenous ethnic groups (Atacama, Aymara, Colla, Kawáshkar, Mapuche, Quechua, Rapa Nui and Yámana).

“If we keep up this resistance effort, this will last six months, and by then this government will have ended."

Gerardo Blyde, Venezuelan opposition congressman, on the filibuster delaying a law to amend the composition of the supreme court.


“We have to take into consideration that [Louis Jodel Chamblain] helped rid Haiti of two dictators: Duvalier and Aristide."

Bernard Gousse, Haiti's justice minister, on the possibility of a pardon for the former paramilitary, now rebel leader, sentenced in absentia to life imprisonment for murdering one of Gousse's predecessors.


“Illegal immigration cannot be rewarded with amnesty."

Jim Oberweis, Republican aspirant to a seat in the US senate, on his reasons for opposing Bush's immigration plan.

Conference announcement: LNG as a driver for development 28-30 June 2004 Port of Spain, Trinidad & Tobago For further information, please contact: Kate McHugh, CWC Associates Ltd Tel: +44 (0)20 7089 4154, Email: [email protected] Or visit: www.thecwcgroup.com

Inflation in the region
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		04.04.03	02.04.04	16.04.04
Argentina	peso	2.93	2.87	2.82
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	_	7.92	7.92
Brazil	real	3.22	2.89	2.90
Chile	peso	723.00	608.00	556.93
Colombia	peso	2,951.35	2,671.34	2,619.59
Costa Rica	colón	389.61	428.73	429.41
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	24.39	44.06	44.12
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	7.95	8.10	8.06
Honduras	lempira	180.50	180.50	180.50
Mexico	nuevo peso	28.00	_	_
Nicaragua	córdoba oro	17.37	18.20	18.23
Panama	balboa	48.70	_	_
Paraguay	guaraní­	10.80	11.25	11.26
Peru	nuevo sol	15.04	15.90	15.83
Uruguay	nuevo peso	1.00	1.00	1.00
Venezuela	bolí­var	6,920.00	5,840.00	5,690.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	January	February	March	Last 12m	Jan-Dec 2003
Argentina	Indec	0.40	0.10	0.60	2.30	3.70
Bolivia	INE	0.62	0.19	-0.27	4.25	3.94
Brazil	FGV	0.76	0.61	0.93	4.94	26.41
Chile	INE	-0.20	0.00	0.40	-0.70	1.10
Colombia	Dane	0.89	1.20	0.98	6.21	6.49
Costa Rica	DGEC	1.70	1.29	0.46	11.34	9.87
Ecuador	Inec	0.41	0.69	0.70	3.98	6.07
El Salvador	Min.Ec.	1.11	0.44	0.64	2.99	2.50
Guatemala	BCG	1.53	0.74	0.72	6.57	5.85
Honduras	BCH	0.90	1.10	0.40	7.20	8.10
Mexico	Bco.Mx.	0.62	0.60	0.34	4.23	3.98
Nicaragua	BCN	1.59	1.24	1.24	6.92	6.48
Paraguay	BCP	0.30	0.10	0.50	3.00	9.30
Peru	INE	2.19	1.09	0.46	2.80	2.48
Uruguay	DGEC	2.19	0.02	0.02	9.07	10.19
Venezuela	BCV	2.50	1.60	2.10	23.60	27.10
US	DOL	0.50	0.50	0.60	1.70	1.60
Previous: WR-04-14

The stockmarket in figures
Market	Index	02.04.04	19.04.04	Variation (%)
Buenos Aires	Merval	1197.54	1166.52	-2.59
São Paulo	Bovespa	22948.95	21597.79	-5.89
Santiago	IPSA	1488.92	1458.13	-2.07
Bogotá	IGBC	3393.72	3378.16	-0.46
San José	BCT	9710.34	9878.40	1.73
Quito & Guayaquil	Interinvest	65.85	70.26	6.70
Mexico	BMV	10713.54	10690.30	-0.22
Lima	ISVBL	3074.23	3007.55	-2.17
Caracas	BC	27112.93	26225.15	-3.27
Source: Daily market reports.

Right now, with just under half his term still to run, President Vicente Fox is looking very much like a lame duck - the big question is whether he is suffering from a temporary or permanent limp. Both main opposition parties have formally announced that they will no longer cooperate with Fox's government, one because it feels targeted by a dirty tricks campaign, the other because it feels gratuitously insulted. In practice, this means that there is little hope of movement on Fox's proposed tax and energy reforms.

The leftist Partido de la Revolución Democrática (PRD) was the first to sever links, on the grounds that the federal government had been orchestrating and manipulating corruption scandals in the federal capital in order to damage the reputation of the mayor, Andrés Manuel López Obrador, the man the polls show as having the best chances to become Mexico's next President [WR-04-08].

The once-corporatist Partido Revolucionario Institucional (PRI) followed suit, angry at having many of its congressmen described publicly as `electoral delinquents' by a legislator of the ruling Partido Acción Nacional (PAN), with the government endorsing the claim rather than apologising.

The gibe followed from the decision by the federal electoral authority, IFE, to impose fines totalling US$37m on all 11 parties that contested the mid-term legislative elections last July for breaches of campaign-financing rules. PAN congressman Juan Molinar produced a list of all PRI constituencies where funding levels were exceeded, and described the candidates elected there as `electoral delinquents.'

Oddly, this was the moment chosen by Fox to submit to congress a bill stiffening the penalties for breaches of campaign-funding legislation. Among the breaches most-harshly punished is the receipt of funds from abroad - precisely what Fox's own presidential campaign has been accused of. Last year the IFE fined the PAN US$48.2m, and the PRI US$88.5m, for having breached the funding rules in the presidential contest of 2000.

The bill was duly entered into a committee's agenda, largely without comment. But the mood in congress was most eloquently expressed when all five opposition parties voted to refuse Fox permission to accept an award - a medal for `agricultural merit' - conferred upon him by the UN's Food and Agriculture Organisation (FAO). Fox said, `this type of attitude explains, to a large extent, why we have not been able to advance towards the solution of the many problems we face as a country'.

López Obrador in the polls
If there was indeed a conspiracy by the federal government to erode voter support for López Obrador, it did not work. A survey conducted by Parametrí­a actually shows his standing improving among the electorate. After having dipped to 28% of preferences in April, he rose again in March to 38%. Close behind him, with 33%, is PRI president Roberto Madrazo.  

In the straight popularity stakes that arise from personal approval ratings, López Obrador leads with 47%. This time the one next in line is Fox's wife, Marta Sahagún, with 36%.

For the second time in four months the leader of a remnant of Sendero Luminoso guerrillas known as `Camarada Artemio' has issued an ultimatum to the government to find `a political solution [to] the internal war' or face a resumption of hostilities. Whereas last time he chose Britain's Channel Four, this time a masked `Artemio' issued his message via Américas Televisión and Radioprogramas del Perú (RPP).

`Artemio', tentatively identified either as Filomeno Cerrón Cardoso or as Julio Flores, emerged as the highest-ranking senderista leader still at large after the capture of Oscar Ramí­rez Durand in 1999. He has rejected the peace offered by the jailed founder of Sendero, Abimael Guzmán, in 1993. Police believe he commands a force of about 300 which roams the jungle valleys in the departments of Juní­n and Ayacucho.

The government, through its interior and defence ministers, has not been as dismissive of `Artemio's' announcement as it has of previous reports of senderista activity - largely because it has been playing on it to deal with the protest movement recently launched by organised coca growers. Interestingly, cocalero leader Guillermo Mendoza has been claiming that the `Artemio' broadcast was staged by the government to tar the farmers as `terrorists' (`Artemio' had come out in support of the coca-growers' protest).

The antiterrorist police reported on 19 April that it had arrested Rodrigo Loayza Cárdenas, described as the person in charge of procuring supplies and providing transport for the senderistas in the Ene-Apurí­mac valleys.

When Mexico city mayor Andrés Manuel López Obrador publicly accused the federal government of having sat on information about a corruption case until it could do the most political damage to him, he waved a sheaf of documents to prove his case. Among these was a report provided to Mexico's finance ministry by the US Treasury's Financial Crimes Enforcement Network, at the former's request, on the US gambling sprees of Gustavo Ponce, until recently finance secretary of the Mexico city government.

Information that Ponce appeared to be spending more than he earned was not passed on to the city government, but to the federal chief prosecutor's office, the PGR, which was building up a case against Ponce on a charge of illicit enrichment. López Obrador's argument is that this was a deliberate, politically inspired ploy, and he saw this theory as corroborated by the leaking to the television station Televisa of details of the investigation, including video footage of Ponce at the gaming table.

López Obrador's action had almost immediate international repercussions. The director of the Financial Crimes Enforcement Network, William Fox, wrote to his Mexican counterparts on 21 April announcing that information-sharing was suspended until the US Treasury `receives the appropriate assurances that all such sensitive information will be protected from unauthorized disclosure'.

President Vicente Fox promptly blamed López Obrador for the suspension of the agreement, noting that it affected investigations into drug trafficking, money laundering and fraud. López Obrador immediately riposted that the blame, in any case, should fall on those who leaked the documents, hinting that this was either the PGR or the finance ministry. Chief prosecutor Rafael Macedo rushed to state that his agency was not responsible.

Unanswered yet is why the information on Ponce's wrongdoing was withheld from the city government, and whether the investigation itself was a proper one under the terms of the bilateral agreement with the US, or whether this has been stretched for political purposes.

Nafta's Commission for Environmental Cooperation (CEC) has cleared the Mexican government of having failed to observe its own environmental legislation by refusing to act on complaints against two companies, Ecolimpio de México and Transporte J Guadalupe Jiménez. The charge against the companies in question was that of inadequate management of hazardous waste.

The suit, interestingly, was not brought by environmental activists from the US but by a group of Mexican citizens, who claimed that Profepa, the federal environmental prosecution service, had ignored complaints against the two companies. The adverse ruling was handed down after the complainants amended a first version of their suit, which was deemed inadequate.

The main ground for rejection was that the complainants had failed to clarify whether the charge was made in order to enforce the law or to harass a rival company. It was noted that the legal representative of the complainants, Francisco Garza Vara, had been described as the owner of a firm, Garlok Industrial, which seemed to be in the same line of business as Ecolimpio. This fact, said the CEC's secretary, made it impossible to determine if the suit met the requirements of the Nafta environmental cooperation agreement.

A second Zapatista community in the southern state of Chiapas has become embroiled in a conflict over the interruption of their water supply. The incident is similar to the one that ended in a violent clash in Zinacantán only days ago [WR-04-15]. As this began to unfold, further information has started casting the Zinacantán incident in a different light.

The new dispute has surfaced in Motozintla, near the Guatemalan border. Local Zapatistas have filed a criminal complaint against the mayor, accusing him of having ordered the destruction of pipes connecting them to the municipal water supply. This is alleged to have happened last year; the mayor's office denies the charge.

A similar problem moved Zapatistas around Zinacantán to descend upon the main town on 10 April, where they claim they were ambushed. Locals, however, say the problem arose because the Zapatistas had refused to contribute their share to the upkeep of the municipal water system - and they add that the Zapatistas had been trying to expand their `autonomous municipalities' at the expense of other, non-Zapatista, indigenous communities.

This kind of friction is not new. Indeed, when the Zapatistas adopted their new strategy last year they admitted that their relations with non-Zapatista Indians had to be improved and made non-confrontational. That seems to have changed, as well as the decision to keep the Zapatista 'army' (the EZLN) in the background, except when under attack. Ominously, on 19 April the Zapatista `good governance junta' of La Realidad issued a statement saying that `nothing has changed' in the conditions that led them to rise in arms in January 1994.

GROWTH | Moderate upturn this year. The IMF estimates that, after three years of stagnation, the Mexican economy will growth this year by a modest 3.3%, and will maintain that rate in 2005. It sees the upturn led mainly by an increase in exports fuelled by industrial growth in the US.

EMPLOYMENT | Jobless rate slightly down. The open unemployment rate in Mexico's 32 main cities in March was 3.86%, down from 3.92% in February, when an upturn spread apprehension that it might be about to climb back to the peaks of 2003. Despite this, the average rate for the first quarter, also 3.86%, remained substantially higher that the 2.79% recorded a year earlier.

The official Mexican unemployment rate is highly restrictive: the figures should be taken more as an indication of trends than of the number of unemployed.

REMITTANCES | Inflow still growing. Exporting labour continues to be one of Mexico's most profitable activities. Remittances by expatriates working in the US in the first two months of the year reached US$1.98bn, or 10.6% more than in the comparable period of 2003. The government had been predicting an inflow of US$15bn or more this year, an increase of 13% on 2003. At the current rate, though, the total would be closer to US$12bn, or almost 10% less than last year. The rate, of course, could increase if the growth of the US economy remains strong. The IDB has calculated that remittances by expatriates benefit about 25% of Mexico's population. Recipients devote about 78% of what they receive to current outlays. The bulk of the remittances goes to four states: Guanajuato, Jalisco, Michoacán and Zacatecas.

In only two months President Hipólito Mejí­a has moved up in the opinion polls from third to second place. With less than a month to go to voting day (16 May) the question is if this rise from behind will suffice to overtake frontrunner Leonel Fernández, who right now still enjoys enough support for a first-round victory. Some local analysts suspect that Mejí­a's followers are already working on a sinister `Plan B' in case this does not happen.

The most recent Gallup poll, published on 21 April in Diario Libre, shows Fernández still in the lead with 55%, but down from the 63% he had registered in February. Mejí­a, for his part, polled 27%, sharply up from the 14.6% he enjoyed two months earlier. He even gained 1.7 points among the wealthiest voters.

A close look at the poll shows support for Mejí­a rising in February-April from 14.9% to 28.5% among the poorest voters, and from 12.6% to 21.6% in the middle classes. Fernández, on the other hand, saw his backing shrink from 62.9% to 53.5% among the poor and from 66.1% to 60.1% in the middle classes; his only substantial gain was among the wealthiest, from 58.5% to 66%.

Mejí­a's success among the poorest has been attributed to a brazen clientelistic spree: he has been distributing titles to state-owned land and promising motorcycles and other such benefits. It is also true, though, that he has managed to neutralise most of the internal opposition he earlier faced from rivals within the PRD.

Fears of dirty tricks
What is worrying many is a series of actions and statements by PRD leaders suggesting that a desperate Fernández might resort to violence to ensure his victory. Voters are being reminded that last December Fernández had announced, `the PRD is leaving, one way or another' (`por las buenas o por las malas').

The PRD has also sent a formal warning letter to the electoral board, the JCE, to the effect that it might come under attack on election day, and urging the board to take measures to avoid a repetition of incidents such as those of 1982 and 1986. In the first of these, after the PRSC had violently protested the announcement that Salvador Jorge Blanco of the PRD had won, a grenade carried by a PRD bodyguard went off in front of the JCE, killing five. In 1986 a shootout in front of the board's premises left several dead. In neither case, though, did the violence determine the political outcome.

PRD spokesman Tomás Hernández Alberto has publicly warned the PLD against resorting to violence. He says the PRD's private data shows that, contrary to what Fernández has been saying, the two candidates are now neck-and-neck.

One theory is that all this is intended to build up an atmosphere in which, if Mejí­a appears unable to catch up with Fernández, it can be credibly claimed that Fernández is plotting to take power by force - which would trigger a preventive reaction by the Mejí­a government, relying on the support the President has been cultivating among the military chiefs.