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NGOs report on the high toll exacted by land disputes over the past 18 years, and concentration of ownership increased.

Three Brazilian NGOs have come out with a document to counterbalance the adverse publicity the movement of landless peasants, MST, has been receiving in the media. They have focused on what they describe as `the crimes of latifundia'*.

Between January and August this year, they report, 44 peasants have been murdered as a result of land disputes. This comes on top of a toll of 1,280 peasants, lawyers, technical experts, union and religious leaders, killed between 1985 and 2002. `Impunity,' says the report, `is practically the general rule in these cases.' Of the `intellectual authors' of these crimes, it says, 121 were investigated, 14 were put on trial and only 7 were convicted - together with two material authors.

The report also says that in the period surveyed there were 6,300 cases of `arbitrary imprisonment of rural workers', 715 of torture and 19,349 of physical aggression. At the root of this, says the report, is the defence of a system of high concentration of land ownership: `Close to 1% of the owners hold 46% of all the land. Of the 400m hectares registered as private property, only 60m hectares are cultivated.' The rest, it adds, are idle, under-utilised or devoted to cattle ranching. At the other end, 4.8m peasant families are landless.

A telling detail: concentration of land ownership has continued. Between 1992 and 1998 the area covered by farms of more than 2,000 hectares increased by 56m ha. This is three times the 18m ha the Cardoso government expropriated for redistribution to landless peasants. There are now in Brazil 2,200 establishments of more than 10,000ha, as against 4.3m of less than 100ha.

*Relatório sobre os Crimes do Latifúndio, prepared by the Rede Social de Justiça a Direitos Humanos, Comissão Pastoral de Terra and Instituto Carioca de Criminologia.

The President has reached the point at which his reviled predecessor Alberto Fujimori more than doubles his approval rating, and his officials and even policies poll better than him.

One of the few things from which President Alejandro Toledo can draw comfort is the opinion poll finding that a majority of Peruvians (53%) believe he will make it to the end of his term of office. Almost everything else in the most recent survey conducted by Datum is negative.

The President's approval rating, which reached 59% when he took office in July 2001, has fallen to 12%. The public seems to like him less than his government or its policies; prime minister Beatriz Merino has an approval rating of 47%. Most humiliating, fugitive former President Alberto Fujimori's rating is more than twice as high as Toledo's, at 28% — despite the revelations about the extent of corruption in his government.

Fujimori, who has vowed to return to Peruvian politics, also ranks third in voting intentions countrywide, with 14% (after former presidents Alan Garcí­a, who attracts 21%, and Valentí­n Paniagua, with 20%). This can be linked with another finding by Datum: 40% of the respondents declared themselves unsatisfied with Peru's current system of government and in favour of rule by a strong leader.

Add to this that 52% have few hopes that their situation will improve under Toledo, and that 57% fear that Peru could slide into social explosions like those experienced in October by Bolivia. Support for Fujimori is strongest in the poorest strata and highly localised in Lima, where a third of the respondents expressed their preference for him.

Reaction at the top
Among those close to Toledo, a favourite complaint is that the media are almost universally hostile. Recently his controversial wife, Eliane Karp, took journalists to task, asking, `Why have you never mistreated Alan Garcí­a, or asked him questions knowing that he has accumulated an extraordinary fortune? Why don't you ever ask him about his extramarital affairs?' Toledo later apologised for this outburst. In the Datum poll, Karp appears with a disapproval rating of 79%.

Datum director Manuel Torrado says that one of Toledo's handicaps is his perceived inconsistency. Just after the poll was released he provided an example. Toledo's advisers had told him that his frequent trumpeting of economic success indicators clashed with the majority's perception that they are seeing no improvement in their lot. Last week he seemed to have taken the message to heart, proclaiming his disappointment with the scant diffusion of benefits. `We cannot continue,' he said, `with a situation in which macroeconomic statistics are good, but little of that is felt in the citizen's pockets.' He reminded everyone that 54% of Peruvians are living below the poverty line, and 23% in extreme poverty.

This was, however, just a rhetorical flourish before he returned to his previous self-congratulatory line. `We are not happy with what we have achieved,' he said. `At the end of October, employment was 1.7% higher than a year earlier — but we are not happy.' 

He went on to proclaim that poverty in rural areas had been reduced from 46.6% in the last quarter of 2001 to 42.1% in mid-2003, and noted that Peru's GDP will grow this year by 4%, with inflation down at 2.5%.

Outspoken TV journalist Carlos José Guadamuz was shot dead as he arrived at work on 10 February. The event has been described as having had a greater impact than any such incident since the 1978 murder of newspaper editor Pedro Joaquí­n Chamorro, on the orders of the dictator Tachito Somoza. The police claim to have identified Guadamuz's killer, but one of the journalist's sons has accused Sandinista leader Daniel Ortega of being the `principal suspect'.

Guadamuz, 59 when murdered, had as a youth been an active opponent of the Somoza régime. He was in prison with Daniel Ortega for almost eight years, from where he emerged as a staunch Sandinista. Guadamuz became head of the state-owned Voz de Nicaragua and the Sandinista's Radio Ya. In 1996, though, he had a falling out with Ortega, and became one of his strongest critics.

Jointly with Miguel Angel Casco, a former member of the Sandinista directorate, in 2000 Guadamuz filed a suit against Ortega accusing him of having threatened their lives. Apparently, Ortega held Guadamuz's broadcasts responsible for the Sandinistas' declining popularity. It is worth noting, though, that after the murder a judge reopened this dormant suit, to find that it had prescribed. The police say they do not consider Ortega a suspect.

The man held by the police as Guadamuz's killer (he was actually captured by the victim's son as he tried to flee the scene) is William Augusto Hurtado Garcí­a, a former lieutenant in the now defunct DGSE, the Sandinista secret police.

Since Guadamuz was killed, two other journalists have received anonymous death threats: Miguel Mora, editor of Canal 100% Noticias, and Fabián Medina, head of information at the newspaper La Prensa.

The Bolivian military high command appears to have got what it wanted: an immediate escape hatch that will block four officers from being prosecuted in a civilian court, and a longer-term guarantee that their own courts will have precedence over the civilian ones. Though throughout all this politicians have taken to calling each other golpista (coup-monger), the coup itself - against a ruling by the constitutional court [WR-04-18] - has apparently succeeded.

On 13 May the senate approved at full speed a law which expands the jurisdiction of the military courts and establishes that their rulings will be unappealable. At the same time the chief prosecutor's office announced that it was seeking to clarify whether the constitutional-court ruling that triggered the military rebellion had actually overturned the verdict passed earlier by a military tribunal (acquittal of all four accused officers).

The constitutional court did not spell this out. Government legal advisers are saying that, had that been its intention, it would have explicitly voided the previous verdict. That the court did not do so, they say, is a sign that its members were concerned about the principle of double jeopardy.

If this reasoning is upheld, then the short-term problem disappears, and henceforth the military can rest assured that it will be allowed to try its own - until, that is, someone challenges the new law as unconstitutional.

Immunity for US forces
The word in political circles in La Paz is that the US embassy helped broker the solution (at one point apparently persuading the military high command to give up the four officers for the sake of a permanent fix). The embassy is said to have taken advantage of the situation to press for passage of a law that congress had been sitting on: the one shielding US forces from prosecution by the International Criminal Court while posted to Bolivia.

This, too, was rushed through, its passage ensured by the most opportune absence of senator Filemón Escóbar, of the opposition Movimiento al Socialismo (MAS). An indignant Evo Morales (leader of the MAS) said that congress deserved to be burned to the ground for doing this. His reaction struck a chord with the public, sensitised by the news of abuses in the Abu Ghraib prison in Iraq. The result, most certainly unintended, was that attention was diverted from the military rebellion.

As, in the process, the military had publicly professed their subordination to the constitution and the government, most politicians seemed willing to let the matter lie.

Market	Index	26.07.04	02.08.04	Variation (%)
Buenos Aires	Merval	975.42	966.10	-0.96
São Paulo	Bovespa	21591.09	22336.87	3.45
Santiago	IPSA	1497.33	1520.85	1.57
Bogotá	IGBC	3008.59	2953.49	-1.83
San José	BCT	8879.62	8898.04	0.21
Quito & Guayaquil	Interinvest	75.16	75.28	0.16
Mexico	BMV	9907.67	10116.39	2.11
Lima	ISVBL	2813.02	2825.45	0.44
Caracas	BC	25321.11	25611.18	1.15
Source: Daily market reports.

GUATEMALA | Heading for record in remittances. Remittances by Guatemalan expatriates this year could reach a record US$2.6bn, or 25.5% more than last year. This is equivalent to 10% of GDP and almost matches Guatemala's export earnings. The forecast emerges from an extensive survey conducted within Guatemala by the International Organisation for Migrations (OIM), with the support of the government, the Banco Centroamericano de Integración Económica (BCIE) and the Banco de Guatemala.

The survey suggests that on average, each of Guatemala's 1.3m expatriates sends home US$280 - and about 37% of the remittances are going to Guatemala's eight poorest departments. A quarter of the homes surveyed had been receiving funds from abroad regularly for 10 years.

The expatriates also spend about US$150m a year on visits to their relatives at home, and while they are away US$17m a month on keeping in touch by phone and about US$50,000 a month on importing 'nostalgic' goods (mainly Guatemalan foodstuffs).

The central bank has reported that remittances in the first eight months of the year reached US$1.65bn, or 20.6% more than in the same period of 2003.

JAMAICA | Mixed expectations. The Jamaica Conference Board's third-quarter business and consumer-confidence survey, which looks at expectations for July-September, showed businesses confident, but less so than in the second quarter thanks to a slight shrinkage of profits and the negative impact of crime. Consumers, though, showed a brighter picture, with more of them planning to buy homes and cars and go on vacation. The data, it must be noted, came from surveys conducted before Hurricane Ivan.

The first post-Ivan indicators were provided by the Jamaica Hotel and Tourist Association (JHTA), which reported that prospects for the winter tourist-season did not seem to have been greatly affected by the hurricane.

The man who admitted to having been chosen personally by President Lucio Gutiérrez to head the supreme court that emerged from the questionable December vote in congress [WR-04-49] resigned last week - apparently after having taken his job too earnestly. He appears to have been pressured out so as to help clear the way for the return of exiled former president Abdalá Bucaram.

The resignation of Ramón Rodrí­guez, known as Sargento ('Sergeant'), was announced by the man who within minutes had replaced him: Guillermo Castro, a close friend of Bucaram since his youth and a co-founder of his Partido Roldosista Ecuatoriano (PRE). Castro told the press that Rodrí­guez had stepped down 'for health reasons'. Actually, his letter of resignation says it was because he had failed to achieve a consensus over the appointment of the Consejo de la Judicatura, the body that oversees the appointment and performance of judges. Rodrí­guez, taking his cue from President Gutiérrez's repeated promises to make these appointments transparent, had argued strenuously for the names of candidates to be published so that the public could file any objections they may have. He was resisted for two reasons. The most important was that the Consejo is also the body that appoints the chief prosecutor, an official who will play a key role when it comes to lifting the pending court actions against Bucaram.

The second, supporting reason is that such transparency is not popular with the current supreme court, several of whose members would certainly attract objections on the grounds that they are unfit due to pending complaints against them in the supreme court and the Consejo de la Judicatura (one landed a job as a prosecutor only a week after having received her law degree), not to mention their political connections - mostly with the PRE, the ruling Sociedad Patriótica (SP), the Partido Renovador Institucional Acción Nacional (Prian) and the Movimiento Popular Democrático (MPD) - the members of the 'new majority'.

The first week of 'pilot' patrols by the vigilante Minuteman Project (MP) in Arizona has been hard to assess, given the wave of conflicting reports purportedly conveying first-hand knowledge. The Mexican government is looking into allegations of 'improper' arrests by the vigilantes, which is denied by the MP - which, however, has been claiming credit for the detention by the Border Patrol of more than 240 illegal migrants.

MP spokesmen have also claimed that their presence has greatly reduced the influx of migrants, though other sources cited in the US media speak of hundreds of migrants 'hiding in canyons' to avoid the MP patrols and of polleros (people traffickers) hunkering down to await the announced withdrawal of the MP at the end of the month. The wildest claim came from Republican congressman Tom Tancredo, from Colorado; he said last week that the Mexican army has been escorting would-be emigrants away from the areas patrolled by the MP to crossings close to Naco. 

Tancredo, who is chairman of the Congressional Immigration Reform Caucus, also claims that President Vicente Fox 'is threatening to sue any member of the Minuteman who have contact with a Mexican national, threatening to take the US into the International Court of Justice at the Hague over the passage of Prop 200 in Arizona, and is providing transportation to Mexican nationals trying to sneak into the US'. He wants President George Bush Jr to send troops to the border.

Armando Salinas, Mexico's undersecretary of population, migration and religious affairs, says that government assistance to migrants is being provided by the specialised Grupos Beta, who are civilians, coordinated with municipal and state police and with civic organisations. This assistance ranges from warnings about the dangers of an Arizona crossing to legal advice.

Not everyone in Arizona is pleased with the emergence of the MP. In Douglas, which faces the Mexican City of Agua Prieta, businessmen report two developments: a shift of migrants away from MP patrol areas, and a substantial decline in the number of legal Mexican visitors due to fear of the 'migrant hunters'. This, they complain, is very bad for business. Stores in Douglas (population 15,000) sell about 60% of their goods to visitors from Agua Prieta (pop. 130,000).

Douglas is not unique in this respect. According to the Tucson-Mexico Trade Office, in Tucson, which is much farther inland, Mexican visitors spend about US$1m a day. A University of Arizona study conducted in 2001 found that in the state as a whole Mexican visitors spent almost US$1bn annually (which translated into a substantial tax take).

A sinister lateral development was revealed last week in a documentary aired by the Tucson-based KVOA TV-4. A militia group calling itself the Arizona Guard, based in a compound near Douglas, announced that if the MP failed to shut out the migrants, they would do so. Their leader, Casey Nethercott, said, 'When this Minuteman thing is over, if it doesn't work, we're going to come out here and close the border with machineguns.' Nethercott added that the Arizona Guard would be ready to start operating by 4 July. Through Chris Simcox, one of its organisers, the MP said that it would not endorse the use of violence. 'I think,' he said, 'Anytime you go to that length to take the law into your own hands, you're asking for trouble.'

Headlines proclaiming last week that Paraguay had extradited to the US a leader of the Colombian Farc guerrillas came as a surprise to Paraguay-watchers who had heard nothing about any guerrilla leader being captured.  

The news turned out to have been distorted by the DEA, which had promoted the detainee, a prominent Brazilian drug trafficker, upon his extradition. Iván Carlos Mendes Mesquita was arrested in his ranch at Carmelo Peralta, Alto Paraná in November last year by a joint operation of Paraguay's antidrugs agency, the Secretarí­a Nacional Antidrogas (Senad), Paraguayan special forces, the Brazilian federal police and the DEA. The northeastern department of Alto Paraná lies along the border with Brazil.  

An associate of the Colombian trafficker José Marí­a (Chepe) Corredor (who recently escaped from a Venezuelan jail), Mendes Mesquita was involved in the drugs-for-arms trade with the Farc. He was considered an important distributor to Brazil and other South American markets. At the time of his capture US government sources alluded to his having connections with the Farc. The Paraguayan government appeared content with that - even though, at the time, it was keen to find signs of any Farc presence in the country in the wake of the Cecilia Cubas kidnapping. Only after his extradition to the US on 27 June did DEA administrator Karen Tandy describe him as 'a leader of the murderous Fuerzas Armadas Revolucionarias de Colombia (Farc) and a major cocaine supplier to numerous regional drug trafficking organisations'. His extradition, said the DEA, was 'a major victory in an investigation that began in August 2002 to target the drug-trafficking activities of the Farc'.

 

COLOMBIA | GDP growth loses some momentum. In the second quarter Colombia's GDP grew by 4.58%, leaving the first-half total up 5.3%. The main driving forces in the first half were trade (up 10.2%), construction (up 9.2%) and commerce (up 8.98%); mining grew by 3.3%, agriculture by 3.04% and manufacturing by 1.88%. It is worth noting that manufacturing increased its rate of growth in the second quarter, while most others saw it decline.

Finance Minister Alberto Carrasquilla notes that even with the slight slowdown, the first-half rate has been considerably higher than most expectations (which had put the rate somewhere between 4.6% and 4.8%). He says the government will for now maintain its forecast of 4% growth for the year as a whole.

BOLIVIA | Growth decelerates. GDP growth in the second quarter was 3.94%, slightly lower than the 4.01% recorded in the first quarter. This left the six-month figure up 3.97%. Bolivia's population growth rate is 2.3%. Crucial to first-half performance was the 20% increase in the production of hydrocarbons.

INE, the national statistical institute, attributes the slowdown in the second quarter to 'the effect of the social events of May and June' [which led to the resignation of President Carlos Mesa].

VENEZUELA | Oil output to be increased. The government of Venezuela has reported to the OAS that it intends to raise its production of oil from the current 3.3m barrels per day to 5.8m bpd over the coming five years and that it will be investing more than US$56bn in the oil industry, of which US$16bn will go into refining.

President Alfredo Palacio cannot be faulted for want of trying. He summoned congress to an extraordinary session on 3 January to consider his sixth political reform proposal in two months, this time bowing to the congressional demand that he should submit specific proposals of constitutional amendments to be put to a referendum. Like the previous attempts, this one was also rejected.

Palacio had proposed adding to Article 1 of the constitution a clause saying: 'The people of Ecuador are the depositaries of the constituent power. In the exercise of that power a constituent assembly or national convention may be called for the purpose of drafting a new constitution.' In other words Palacio was insisting on his basic idea of creating a 'fully empowered' constituent assembly.

He also proposed an amendment to Article 209, removing from congress the power to appoint the members of the TSE, the supreme electoral tribunal. His text says the TSE will have 'seven titular members and their respective alternates, in representation of the citizenry'.

Eighty of the 100 congressmen turned up for the session and 68 of them turned down Palacio's proposals - on the grounds that they were 'inappropriate' and, for good measure, procedurally faulty. There was chutzpah in some of the individual assessments. Guillermo Landázuri, of Izquierda Democrática (ID), said: 'Clearly the head of state is seeking to make more tense the relations between the executive and the legislative [branches].' He agreed with the view of several colleagues that Palacio's real intent might be to prolong his term beyond its statutory expiry on 15 January 2007 - which would lead to 'extremes of confrontation, insecurity and, eventually, violence'.

Strangely, Juan Guamán of Pachakutik - the indigenous party whose parent organisation, Conaie, has been supporting the call for a constituent assembly - described Palacio's proposal as a 'smokescreen' to divert public attention from the negotiation of a free-trade agreement with the US and its failure to heed the demand for the annulment of Occidental Petroleum's operating contract. According to a tally released on 3 January by Lexis, a legal consultancy firm, the Ecuadorean congress has blocked almost a hundred proposals of constitutional reform over the past seven years.

• Venezuela goes into campaign mode
  Julio Borges, the leader of the opposition party Primero Justicia (PJ) and so far the only declared challenger of Hugo Chávez in the December presidential elections, has gone into full campaign mode. On 4 January he laid into Chávez for announcing a US$30m donation and an energy cooperation agreement involving a gift of US$150m worth of diesel fuel for Bolivia's president-elect Evo Morales. This sum, said Borges, 'could have paid six months' worth of unemployment benefit for 212,000 Venezuelans or scholarships for 318,000 youths, to prevent them from dropping out of school and qualifying them for a better future'.
  
  Chávez has also gone into campaign mode. He has told his party's legislators that they should not rest on their laurels, taking good note of the fact that it was the high rate of abstention predicted in the opinion polls that led the opposition to boycott the recent legislative elections. 'A good revolutionary,' he said, 'should analyse [that high rate of abstention] and act in consequence.'

ARGENTINA | Formal employment on the rise. The number of people employed in the formal economy in February was up 10% on the same month last year; February being the 41st successive month of increasing formal employment. The biggest booster of formal employment over the 12 months to February was the construction industry with an increase of 27.6%. Whether this will continue is open to question since the sector recorded a decline of 0.1% between January and February. In manufacturing formal employment increased by 0.4% between January and February and 8.2% since February 2005.
Labour Minister Carlos Tomada says that it is not only the number of jobs that is increasing, but also the quality. The proportion of salaried workers in the black economy in the last quarter of 2005 had fallen to 45.5% from 48.9% a year earlier.

CHILE | Unemployment still falling. Open unemployment countrywide in the December-February running quarter was 7.3%, down from 7.6% in the previous quarter. Job creation, notes INE, the national statistical office, has been running ahead of the increase in the workforce. Unemployment in the Santiago metropolitan area was 7.6%; the regions with the highest rates were Bí­o Bí­o (9.6%), Tarapacá (8.6%) and Valparaí­so (8.4%).

URUGUAY | Jobless rate is up. The countrywide unemployment rate in the November-January running quarter was 13.4%, or 1.8 points higher than a year earlier. The rate in Montevideo, home to a third of the population, was 12.4%, while that of the interior was 14%.

The Guyanese government has been fending off suggestions that it was somehow complicit in the unclear manoeuvre whereby suspected drug trafficker Shaheed ('Roger') Khan ended up in the hands of US authorities while being ostensibly deported from Suriname to Guyana [WR-06-26]. After having objected publicly to this, it has claimed that it is trying to find out exactly what happened.

On 13 July Roger Luncheon, cabinet secretary and head of the presidential secretariat, told journalists in Georgetown that the Guyanese government, through attorney-general Doodnauth Singh, was seeking information on Khan's removal into US custody. He pleaded inability to provide further details: 'I would hesitate to be categorical because our attorney-general is seeking medical attention overseas. I can't be specific about the way in which that information is being solicited from Suriname or Trinidad and Tobago.' Officials in Paramaribo said they were still awaiting a formal request for information from Guyana.

Khan is wanted for questioning in Guyana in connection with the theft of AK-47 rifles from the Guyana Defence Force's Camp Ayanganna headquarters [WR-06-13], a matter on which Guyana and Suriname have been liaising. Khan is also suspected of being connected with a plot to kill several government officials in Suriname.

When brought before a Brooklyn court after his capture in Trinidad, Khan pleaded not guilty to drug trafficking charges. His lawyers have already twice sought to have him taken back to Suriname, but courts have ruled against this, accepting the government's use of the Foreign Nationals Act and his expulsion under it.

President-elect Felipe Calderón Hinojosa accepted an invitation on 19 October from President George W Bush to visit him in Washington on 9 November.

Calderón will be in Washington two days after the mid-term elections and three weeks before he takes office on 1 December. The list of issues that the White House said that the two leaders would discuss did not include immigration. On 26 October President Bush is due to sign into law a bill mandating the construction of two walls along about a third of the US-Mexico border, despite objections from Mexico.

Calderón's first trip as president-elect was to Central and South America. The first fruit of that brief trip was an offer, on 23 October, by Argentina to sign a strategic alliance agreement next year. The Argentine government said that it wanted to put behind it the tensions created by President Vicente Fox's attendance at the Americas Summit in Argentina in 2005. Fox was insulted by President Hugo Chávez of Venezuela and took umbrage at Argentina. President Néstor Kirchner has invited Calderón to attend the South American summit on 9 December. 

Calderón expects to visit Canada from 25 to 27 October. Currently he is travelling around Mexico in order to explain his plans for government and his 2030 project. This is a long term project designed to raise Mexican living standards.

Kuna chiefs, or sailas, are concerned that drug-trafficking is eroding the social fabric of traditional indigenous community life. Sailas from the Caribbean coastal region of Kuna Yala by the province of Darién, confessed to the anti-drug prosecutor, José Ayú Prado, last week that Kuna youths had taken to stealing some of the cocaine bundles dropped by Colombian drug-traffickers, which float ashore, and selling cocaine on to local gangs to make easy money. They argued that the Kuna Yala region was a transshipment corridor for cocaine smuggled out of Colombia, and appealed for greater police presence.

The Kuna Yala also includes the San Blas Islands, an archipelago of over 360 islands running along the coast, about 10% of which are inhabited by Kuna communities. Drug-traffickers racing along the coast in speed boats will often throw cocaine bundles overboard if they are being chased and come back for them. The sailas claimed that a gang of drug-traffickers recently invaded an island looking for a group of Kuna youths it suspected of stealing these. 

Some of the local media is also speculating that three fires in the last month, which destroyed Kuna villages leaving more than 1,000 villagers homeless - the most recent in the comarca (district) of Wargandí­ on 7 January - might have been retaliatory action from drug gangs. The attorney general's office is investigating the fires. The government and justice minister, Olga Gólcher, said that security would be stepped up in the region. 

Cooperation between Panama and Colombia to tackle drug-trafficking has been improving but relations between the two countries took a knock last week when Colombia decided to impose restrictions on imports from the Colón free zone (CFZ) from 1 March after detecting an increase in contraband. It last resorted to restrictions in 2005, prompting Panama to threaten to go to the WTO.

The formal launch of the candidacy of the main challenger to an incumbent president would normally receive copious coverage in the press. Not so with Roberto Lavagna, the former economy minister of President Néstor Kirchner. Lavagna's inauguration of his Concertación para Una Nación Avanzada (UNA), a coalition comprised of Radicals, dissident Peronists and independents, was all but knocked off the front pages on 11 May by events in Santa Cruz on the same day: Kirchner's native province lost its third governor in the space of a year. 

If the timing of the launch was unfortunate for Lavagna, it did not stop him trying to make his mark. The main thrust of his speech was that the Kirchner administration had become "dangerously populist and authoritarian, because the only thing it wants is to remain at any cost". He dug up every scrap of evidence in his endeavour to prove it, ranging from government manipulation of inflation figures to trampling on the separation of powers and resorting to extensive patronage to hold sway over the provinces.

Ironically, given that Santa Cruz stole the spotlight from him, Lavagna was able to use events in the province to good effect. "Look at the province of Santa Cruz after 15 years of government by the Kirchners. An extractive, paternalist and authoritarian model cannot generate development," he said. Kirchner dismissed the governor, Carlos Sancho, for his mishandling of protests by teachers and replaced him with another stooge, Daniel Peralta.  

Lavagna said that Kirchner would ensure that October's presidential elections were dominated by the three Ps: plata (money) patronage and, if these failed to work, pressure. By contrast, he said his coalition offered "a better alternative". However, while his reference to the three Ps might have sounded good, it was not convincing. Lavagna is, after all, flanked by two veteran caudillos of Argentine politics, former presidents Raúl Alfonsí­n and Eduardo Duhalde.  

Lavagna went on to present himself as the intellectual author of the economic recovery in Argentina and the only man capable of transforming the last few years of high growth into development now. He was critical of the government's clumsy intervention in the ostensibly autonomous national statistics agency, Indec, in February when it replaced the official responsible for calculating the consumer price index (CPI) with someone loyal to the trade secretary, Guillermo Moreno [WR-07-06]. He said that the truth about the economy, especially inflation, was now being "swept under Indec's carpet".  

Lavagna received a boost, in this regard, on 16 May when the prosecutor in charge of administrative investigations, Manuel Garrido, requested that Moreno and his chosen head of the CPI, Beatriz Paglieri, be dismissed on the grounds that they could obstruct the investigation. He spoke of "gimmicks and devices" used to falsify information.  

Garrido might also look into the government's appointment this week of Claudio Comari, an adviser of the piquetero group Movimiento Barrios de Pie, to the position of national director of living conditions. This position had been vacant since February when Clyde Trabucchi resigned over Paglieri's appointment. Indec employees have promised more protests.

Inflation fears
With the economy booming, Lavagna has little choice but to play on fears that the government is concealing the real rate of inflation which is eroding the earnings of hardworking Argentines. "Inflation is a machine that destroys the middle class and creates poverty," he said. He promised to tackle the roots of poverty and to lead a crusade against indigence, which he said the government had not done enough to alleviate.  
If Indec's figures are to be believed, and it should be noted that the CPI is used to calculate the price of the basket of basic consumer goods used to define poverty, Lavagna's criticism is difficult to sustain. Indigence fell from 12.2% at the end of 2005 to 8.7% at the end of last year, while poverty as a whole fell seven points to 26.9%, the equivalent of 6.45m people. This is a dramatic improvement on the peak of 54% reached in the first half of 2003 (when indigence stood at 27.7%) and back down to a pre-crisis level.  

Lavagna is not the only one to take issue with the figures, however. A study by the umbrella trade union Central de Trabajadores Argentinos (CTA) in January, using an updated methodology, found that poverty was 35% in the second half of 2006.

Lavagna's prospects
Kirchner appears to be responding to Lavagna's attack on the poverty front. He quickly announced the launch of a national productive plan which he said (using his favourite soundbite) would "lift Argentina out of hell" by the end of his mandate in December. The plan aims to sustain a more competitive exchange rate and tackle poverty in the northern provinces where, along with the suburbs of Buenos Aires, it is much higher than the national average.

Kirchner will now wait to see how Lavagna fares in the polls in the coming weeks before finally clarifying whether it will be he or his wife, Senator Cristina Fernández running for election. Fernández has been assiduously cultivating her image abroad, with visits to France, Venezuela, Mexico and the US. The lead held by both Kirchner and Fernández in the polls looks unassailable. In addition to the fact he enjoys the support of only one of the three factions within the Unión Cí­vica Radical (UCR), as well as a motley crew of pro-Duhalde Peronists, Lavagna also seems to have problems with his new coalition. Why else did he fail to name a running mate at its launch?  

Santa Cruz
As we go to press, teachers in Santa Cruz are considering an offer made by Governor Peralta to raise their basic salaries from Arg$161 (US$52) to Arg$500 a month in an effort to bring an end to the strike. Passions had run very high in the province. On 12 May Alicia Kirchner, the social development minister and the president's sister, was set upon by more than 300 protesters when she left a restaurant in Rí­o Gallegos, the provincial capital: she was struck, had her hair pulled and was pelted with eggs and flour before being whisked away by police.

• Population below poverty and indigence lines by region
  (% of total population, 2nd half 2006)
  
  Buenos Aires (city)
  Poverty 10.1
  Indigence 2.6
  Buenos Aires (suburbs)
  Poverty 30.2
  Indigence 9.7
  Central-west (Cuyo region)
  Poverty 26.3
  Indigence 7.2
  Northeast
  Poverty 45.7
  Indigence 15.9
  Northwest
  Poverty 39.1
  Indigence 12.6
  Pampas region
  Poverty 22.6
  Indigence 7.8
  Patagonia
  Poverty 15.91
  Indigence 5.7
  Total
  26.9 8.7
  
  Source: Indec.
  

The two main opposition parties in congress, the Partido de la Revolución Democrática, which has the second most seats in congress (125) and the Partido Revolucionario Institucional, which has 105 deputies, seem to have reached an understanding over the government's fiscal reform. If the PRD's usual allies, the Partido del Trabajo and Convergencia, which each have 16 deputies, line up with the PRD-PRI alliance, the opposition will have a majority in the 500-seat lower chamber.

The government appears nonchalant about the alliance; claiming that almost any fiscal reform is better than none, claiming that all it wants to ensure is that its innovatory, Contribución Empresarial de Tasa Unica (Cetu), remains "recognisable". The Cetu, originally pitched at 16%, is a flat rate tax designed to bring at least some of the informal economy into the tax net. Companies and individuals who pay the Cetu can offset it against their income tax. The corporate income tax rate is nominally 28%. Most big Mexican companies pay an average rate of 17%, thanks to tax breaks. 

The government, the economy and the country overall needs tax reform. This is because the country's oil production is falling. Oil taxes, royalties and export receipts provide the government with about 35% of its total income. This oil largesse has meant that Mexico's other taxes are very low by international standards. Mexican officials argue that the Organization for Economic Cooperation and Cevelopment (OECD) figures that put Mexico at the bottom of the ranking of OECD countries' tax rates, is unfair because Mexico's per capita GDP is so much lower than all other OECD members (with the exception of Turkey). 

At the moment, with oil prices close to a nominal record, the ricketiness of the government finances is obscured. If oil prices were to halve, the government would have to cut spending, as it had to in the late 1990s when Mexico was exporting its heavy crude for less than US$10 a barrel. 

On 14 August, the finance minister Agustí­n Carstens agreed that Pemex needed a reform under which it would keep more of its earnings. In return, Pemex would slim its staff. Carstens argued that the changes had to be implemented gently to avoid creating problems with the public finances.

The government's line (that some fiscal reform is better than none) is based on its assumption that there will not be a single fiscal reform but a series of reforms, probably every year of the current government and possibly also running into their successor's term. This is unusual for Mexico. Governments have preferred to try to make major reforms only once or twice in their administrations. It is worth noting that the current Value Added Tax rate of 15% was a "temporary" reform pushed through congress in early 1995 when the mythical economic achievements of President Carlos Salinas de Gortari's administration unravelled into devaluation and near-depression.

The government has persuaded the international financial markets that it will deliver the fiscal reform the country needs to keep its budget more or less balanced and poverty levels falling. The government exaggerated its achievement in getting a technical reform to the public sector pension system (the ISSSTE) through congress. It needs to maintain the illusion of progress, and its ability to manage an opposition-controlled congress, to keep its investment grade rising or at worst stable. Mexico has switched from borrowing in foreign currencies to borrowing on the local markets in pesos, but the buyers of its debt are probably much the same. 

The problem with incremental, rather than step, changes is that they do not make a dramatic difference, so policy-makers often cannot detect whether the changes are being implemented efficiently. Even with step changes the results can be disappointing. President Vicente Fox's highly controversial failed attempt to lower Vat to 10% and extend it to food and medicine would only have increased the country's tax take by three percentage points, in GDP terms. The rise in oil prices has actually delivered far more than the failed tax change would have done. 

Several influential commentators in Mexico argue that the government should have made more of a splash with its fiscal reforms. This, they claim, would have changed the tone of the debate. In particular they wanted the government to have made major changes on the spending side. A prime example of what the government could have done (but has so far has shied away from doing) would be to re-orientate education spending away from the hugely powerful Sindicato Nacional de los Trabajadores de la Educación (SNTE). The government could also have made more of an effort to cut the huge bureaucracy that delivers the social security system. 

An alliance between the two main opposition parties will blunt the scope of the reform further. On 14 August the two main opposition parties in congress agreed on a common strategy over the government's fiscal reform. The announcement of the understanding came after a two hour meeting between members of the lower house's finance committee from the PRD and the PRI.

Estefan Chidiac, the prií­sta chairman of the lower house's finance committee, said that the PRI and PRD deputies had agreed on all the controversial issues, notably the level at which the new CETU, should be pitched. Most businesses want the tax pitched at 12%: if it is any higher, businessmen say, the tax will deter them from creating new jobs. The government says that it is prepared to concede that the Cetu should be levied on net sales after companies have deducted their payroll costs and that ejidos (collective farms) and small farmers should be exempt. 

The ruling Partido Acción Nacional is around 36 seats short of a majority in the 500-seat congress, even with its allies from Elba Esther Gordillo's Alianza Nacional. Gordillo controls the SNTE, through which so much of the education budget is channelled. 

The PAN chairman of the senate finance committee, Gustavo Enrique Madero, said that the PAN would not accept changes to more than 10% of the total reform package. He said that the government would use the budget to compensate for any changes the opposition made to the fiscal reform package. Madero said the government's reform should increase the tax take by three percentage points of GDP, but the country really needed a reform that would increase the tax take by nine percentage points.

PRD complaints: Deputies from the PRD met Ernesto Cordero, the deputy finance minister responsible for spending, on 15 August to complain that the federal government was not providing money that it had budgeted for projects such as hospitals and schools in states controlled by the PRD. Some PRD deputies are threatening to disrupt President Calderón's state of the union address on 1 September if the situation continues. 

TRACKING TRENDS

VENEZUELA | Economy still booming but_ The economy grew by 8.7% in the third quarter compared with 10.2% growth in the same period in 2006. The central bank said the growth was driven by consumer spending, attributed by the central bank to improved access to financing, the continuity of the government's social programmes and higher earnings, although these need to be adjusted for inflation which is running at an annualised rate of 17.2% for the first 10 months of the year. While the non-oil sector grew by 9.7%, however, oil sector GDP contracted by 4.4%. The balance of payments also took a knock. Imports jumped by 36% in the first three quarters of the year compared with the same period in 2006 to US$30.66bn. Exports fell by 2.4% over the same period to US$49.56bn.

MEXICO | Nafta renegotiation. On 27 February the trade minister, Eduardo Sojo, dismissed the notion that the North American Free Trade Agreement (Nafta) would be renegotiated. Sojo was relying on assurances from the US Commerce Secretary Carlos Gutiérrez, who was in Mexico for a Security and Prosperity of North America (SSP) summit. Sojo is ignoring the strong anti-Nafta rhetoric of the most recent TV debate in the US primaries, on 26 February, which involved the two leading contenders for the Democratic Party's presidential nomination, Barack Obama and Hillary Clinton.

Sojo argued that Nafta, which is also unpopular with small farmers and small businesses in Mexico because of the increased competition it brings from the US, helped the Mexican economy to grow by 51% between its start, at the beginning of 1994, and 2007. Sojo also argued that Nafta has created 5m proper (social-security paying) jobs in Mexico and has led to a fivefold increase in Mexican exports to the US and Canada.

Sojo said that he did not want to get involved in the US elections, but commented that North America must look to the future, not the past, and that it needs more integration, not less. The SSP summit drew ministers from the US, Canada and Mexico to the resort of Los Cabos in Baja California Sur to discuss trade and security issues.

MEXICO | Remittances. On 5 March the Banco de México reported that remittances to Mexico fell by 5.9%, year-on-year, in January 2008. This was the biggest year-on-year fall since the central bank started tracking remittances in 1995. It suggests that Mexican workers in the US are being badly affected by the economic slowdown there. A slowdown in remittances will have a major effect on the Mexican economy which is also slowing down. Remittances are Mexico's second biggest source of foreign exchange after oil exports. In January remittances came to US$1.65bn. Businesses in the Estado de México, Guanajuato, Jalisco, Michoacán, Puebla and Veracruz are saying that they are already seeing sales wilt because of the fall in the remittance inflow. These states receive the bulk of the inflow.

In 2007, remittances to Mexico came to US$23.98bn. This was 1% up on 2006. The central bank had been forecasting that remittances would at least hold steady this year. There are around 11m Mexicans working in the US. Almost half of them (around 5m) are illegal migrants. The rise in anti-immigrant feelings in the US and the increased use of immigration authority and police sweeps to catch illegals and send them home is discouraging the flow of remittances, the central bank says.

For the first time, President Hugo Chávez has backed down on a matter portrayed as critical to the country's security in the face of a barrage of criticism that it would have been tantamount to establishing a police state. He acknowledged on 7 June that there had been unacceptable mistakes in the intelligence and counterintelligence law he had enacted by decree only 11 days earlier [WR-08-22] and promised that they would be corrected. One tentative explanation for the volte-face was that criticism had not only come from the opposition, but also from the armed forces.

Criticism had focused mainly on Article 16, which penalised anyone failing to cooperate with the intelligence services — in other words, making it compulsory for everyone to be an informer. All 'natural persons and organised communities', it said, were to be considered 'organs of support' for the intelligence agencies. The government's initial reaction to the criticism was to dismiss it as typical opposition distortion of its intentions. On 2 June, Interior Minister Ramón Rodrí­guez Chací­n delivered a strong defence of the law, describing it as 'essential'.

Five days later, even as he attacked the 'terror campaign' against the law, Chávez acknowledged the core criticism and stated, 'I will not come out and defend what is indefensible.' He first said that it was 'an error of the government' for which he assumed responsibility. Later, though, he blamed the 'errors' on 'insertions' made by advisers who betrayed the nature of the law. On 10 June he announced, 'The law is repealed so another law can be drafted.'

Chávez is still acting on powers to legislate by decree granted to him by the national assembly in January 2007. These powers expire at the end of July. He is clearly not planning a quick fix, as Rodrí­guez Chací­n has suggested: he called on the legislators to take note of all 'constructive criticisms' when they got down to drafting a new law.

On 11 June one of Chávez 's former comrades-in-arms told a television interviewer that the intelligence and counterintelligence law had created an atmosphere of 'tension' within the armed forces. Indeed, he added, 'if [Chávez ] took a step back, it is because something happened in his inner circle.' Retired Lieutenant-Colonel Joel Acosta Chirinos, who accompanied Chávez in his abortive 1992 coup attempt and was a co-founder of his political movement, claimed that he had information that the commander of the army, General Carlos Mata, would soon resign, due to a disagreement with Defence Minister Gustavo Rangel, who recently said that officers who refused to accept Chávez 's socialist project were 'cowards and dunces'.

According to Acosta, Chávez 's control over the armed forces is 'much weaker than a few years ago'. Last November Acosta told a Brazilian newspaper that there was considerable dissatisfaction in the officer corps with Chávez 's constitutional reform proposals (defeated in a referendum a month later). The government, he now says, is afraid that the opposition might make big gains in the regional and municipal elections scheduled for 23 November and would like to find an excuse to postpone them.