Andean

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• Peruvian minister threatens to quit

  18 December 2007 Hits: 354

  Development: On 17 December the production minister, Rafael Rey, said he would resign if the prime minister persisted in his plan to reward areas of the country which voted for the government with increased investment.

  Significance: Rey's threat should extract the unpopular government, headed by President Alan Garcí­a, from the hole dug by the prime minister, Jorge del Castillo. On 16 December Del Castillo told a rally at Lurí­n, Lima, that the district would be first in line for spending under the social welfare programme, Crecer, because it had voted for President Alan Garcí­a so strongly in the 2006 presidential election.

  Castillo claimed that the government "had an obligation to the people that backed it and these people [in Lurí­n] have priority over others who said "no I prefer the other option."

  Rey is the leader of the small Renovación party. He told a national radio station, Cadena Peruana de Noticias (CPN), that he would go if what Del Castillo suggested actually happened. He added to the pressure on Del Castillo by admitting that the prime minister's words were not well-chosen, and agreeing that he understood the row they had created. Rey argued that the government would always give priority to the poorest communities in the country.

  The Garcí­a government, despite the economic boom, is facing growing unpopularity. An opinion poll in early December found that 63% of Peruvians disapproved of it. Instituto de Opinión Pública de la Pontificia Universidad Católica found that only 29% of Peruvians supported President Garcí­a.

• MAS prefect resigns in Bolivia

  18 December 2007 Hits: 390

  Development: On 17 December Chuquisaca governor David Sánchez resigned and requested asylum in Peru.

  Significance: A member of the ruling Movimiento al Socialismo (MAS) party, Sánchez' resignation represents a blow of sorts for the government, although it was hardly unexpected given that the governor had fled the region last month amid the disturbances caused by the approval of the preliminary constitution and the polemic over the issue of the capital. As both a representative of MAS (which favoured La Paz as the federal capital) and governor of Chuquisaca (which is pushing for Sucre), Sánchez had been in a difficult situation and had already threatened to resign in August following tension over the capital issue.

  What could prove difficult for the government was his claim that his decision to seek asylum was based on fears of political persecution from the government and organisations allied to the MAS - which the government maintains were part of a smear campaign. Sánchez' resignation letter was read out by opposition senator Roger Pinto, a member of the Christian group to which Sánchez also belonged.

  The letter cited threats from the government and the lack of justice prevailing in the country making it "impossible to establish the facts and encounter the truth". According to national newspaper Bolpress, however, former colleagues of Sánchez had said that the threats came from supporters linked to the "Media Luna" oppositions prefects.

  While the president is authorised by a supreme decree to appoint his successor, Chuquisaca leaders are demanding that the government call elections.

  Separately, local daily El Deber reports that in 2008 there could be as many as eleven referendums in Bolivia over the issues of the new constitution and regional autonomy; of these, four would be national, six, departmental and one regional - representative of the new wave of democracy in the region, most recently evinced in the referendum over constitutional reform called by Hugo Chávez in Venezuela. El Deber estimates that this will cost over US$39.6mn.

• Italians resume business in Venezuela

  18 December 2007 Hits: 369

  Development: The Italian energy company, ENI, resumed business activities in Venezuela, according to an official statement issued on 17 December.

  Significance: The announcement reveals that despite objections to President Hugo Chávez 's energy policies, foreign companies are still finding it profitable to sign deals with Venezuela. Indeed, ENI was one of the companies that did not agree with Chávez 's "nationalisation" of oil operations in 2006. The Italians vowed to take matters to international arbitration after the Venezuelan state energy company Pdvsa took over its operations.

  Venezuela, however, is the fifth largest oil exporter in the world and is currently certifying its reserves - which could turn the country into the holder of the largest crude reserves in the world. With the price of a barrel of oil at almost US$100 in the international market, foreign companies seem to be willing to ditch contractual terms for easier profits. Indeed, most of the foreign companies operating in Venezuela agreed to become minority partners in joint operations with Pdvsa.

  ENI and Pdvsa will form a mixed-capital company, Petrolera Guiria, to explore three oil fields in the east of Venezuela. Pdvsa will hold 64% of the new company's shares.

• Tax reform in Ecuador 'by end of year'

  18 December 2007 Hits: 534

  Development: The constituent assembly said on 17 December that it expected to approve a tax reform by the end of 2007.

  Significance: The constituent assembly wants to get some results on the board before moving on to more controversial issues, such as electoral reform and the reorganisation of congress. The problem is that the government is talking about the constituent assembly approving a new law by the end of year, which will then come into force on 1 January 2008. This is likely to set off a confrontation with congress, which, constitutionally, is the only body with the power to pass laws and which the assembly placed in "indefinite recess" on 29 November.

  One problem that is emerging with the constituent assembly is that its working week is pretty short: members seem to like their long weekends. The assembly rarely gets started much before 5pm on Monday afternoon, and even then the vagaries of air travel in the country mean that some members are still not present. On 17 December, for example, Ximena Bohórquez (from the Honradez Nacional group), wife of the last elected president Lucio Gutiérrez, did not get to Montecristi where the constituent assembly is meeting until 6pm.

  The tax reform proposal, which will be considered by the Mesa de Legislación y Fiscalización, has already required expert advice from the tax service. The committee expects to distribute the proposal to all 130 members of the assembly for their comments. Assembly members then have three days to make comments which are considered by the 10-person committee responsible for that part of the constitution. The president, Rafael Correa, will then be invited to comment, probably on 21 December, when the majority report from the committee is published. The President has 10 days to consider his response to the reform. The government wants the new tax reform approved by the constituent assembly by Saturday, 29 December.