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Brazil: Industrial employment rose 1.1% month-on-month in November over October but fell 4.1% year-on-year over November 2008, according to the National Statistics Institute. The month-on-month increase was the best since Janaury 2001. The number of hours worked also rose on a monthly basis (0.9%), however both hours worked real earnings were still down overall on a trend basis (annualised and moving 12-mths). Industrial production is improving on a monthly basis, but remains down overall annually, falling 9.3% in January-November 2009.

Ecuador: The rate of unemployment rate rose to 7.9% in 2009, compared with 7.3% in 2008 and 6.06% in 2007. The government expects a real GDP result of about 1.0% year-on-year for 2009, down from 6.5% in 2008.

Development: On 23 February the vice governor of Brasilí­a federal district, Paulo Octavio, resigned his post amid an ongoing corruption scandal that previously claimed his boss, the (ex) governor José Roberto Arruda.

Significance: Octavia had quickly lost the support of his party, the conservative opposition Democratas (DEM), and local legislators.

The head of the local parliament, Wilson Lima, will now take over on an interim basis. His mandate should run to 1 January 2011, when a new governor is scheduled to take over following the scheduled 3 October 2010 elections. However parliamentarians remain nervous that the federal government led by President Lula da Silva might be forced to intervene to take over the district. In theory, Lula could directly appoint a new governor.

Lima himself has only been in post a few weeks, after his immediate predecessor as legislative head (Leonardo Prudente) had also been caught up in the scandal. On 11 February Arruda was arrested and remains in jail after the supreme federal court refused to release him on a writ of habeas corpus, an unprecedented decision by the normally pliant judiciary. Arruda, Octavio and other officials are accused of taking bribes from local companies in a period dating back to 2004-2006.The scandal has been dubbed 'mensalão do DEM', in reference to the congressional cash-for-votes scandal that almost brought down the government of President Lula da Silva in 2005-2006. Arruda and Octavio have been forced out of the DEM as a result.

Earlier this week the DEM mayor of São Paulo, Gilberto Kassab, was told by a local electoral court that he could lose his mandate for allegedly receiving illegal contributions during his 2008 campaign for office. Kassab remains in his post pending an appeal, which he is confident of winning.

The troubles in the DEM pose a headache for São Paulo's state governor and leading 2010 presidential candidate, José Serra, of the main opposition Partido Social Democracia Brasiliera (PSDB). Kassab, who runs Brazil's largest electoral college, owes his post to his alliance with Serra. The timing couldn't be worse for Serra as he makes up his mind whether to formally declare his candidacy for the October vote and the Lula government has wasted no time in making political capital out of the crisis.

The scandal in the Federal District has also dampened plans for Brasilí­a to celebrate the 50th anniversary of its founding on 21 April.

Development: On 7 April President Alan Garcí­a said that he welcomed the move by the opposition Partido Nacionalista Peruano (PNP) to eject him from office.

Significance: Garcí­a claims that if he were forced to resign by congress, as the PNP wants, he would be able to run again for the presidency in the 2011 elections. Other parties in congress have indicated that they are unlikely to support the PNP motion, so it is unlikely to pass.

“They would be doing me a great favour [if they got the motion approved by congress]," Garcí­a said, jokingly. Garcí­a's Apra party, however, announced that it opposed the PNP's motion to eject Garcí­a from office for “permanent moral incapacity".

Ollanta Humala, the leader of the PNP, said that he was basing his motion on the constitution and the fact that at least 70 people had been killed and 600 injured in social conflicts over the four years Garcí­a has been in office. Most recently, on 4 April, six people were killed when police removed a roadblock in Chala, 620km south of Lima, erected as part of a protest by informal miners. The strike and protests by informal miners ended with an agreement with the government on 7 April.

Development: Although a Pakistani national found with traces of explosives on his hands in the US embassy in Santiago was released on bail on 16 May, Chilean prosecutors are still investigating.

Significance: The prosecutors appear to have dropped earlier terrorism charges against Mohammed Saif Ur Rehman Khan, who was arrested at the US embassy on 10 May with traces of explosives on his hands. They are still investigating for firearms offences.

The authorities claim that Ur Rehman has links with radical groups behind an attempted car bombing on 1 May in Times Square in New York. They want to follow up intelligence that Ur Rehman had been in Britain and had also developed links with local Chilean terrorist groups.

The Chilean Right still shares the view, expressed by the Rodrigo Hinzpeter, the interior minister, that Ur Rehman is not just an ordinary foreigner. He has been banned from leaving the country.

Development: On 24 June, Julio Cobos, Cristina Férnandez's estranged vice president, confirmed that he has his eye set on the Unión Civica Radical (UCR)'s presidential nomination for 2011.

Significance: Cobos, who is currently the acting president while Fernández is in Toronto for the G-20 summit this weekend (26-27 June), gathered his closest supporters and asked them to put together a “programme for government: we are thinking more about Kirchner than Alfonsí­n." His statement was, in some way, intended to play down Ricardo Alfonsí­n's chances of capturing the UCR nomination as the two men begin to prepare the ground for a fierce contest to secure the top spot. The actual vote is in August 2011.

Cobos' decision to announce his bid against Kirchner followed an analysis delivered by the director of a local political analysis group Poliarquí­a, Sergio Berensztein, at a conference hosted by the Consenso para el Desarrollo Argentino (Coda), a think tank established by Cobos in 2009.

According to Berensztein, the electorate doesn't trust the UCR because of the economic failures of the administrations of Raúl Alfonsí­n (1983-1989) and Fernando de la Rúa (1999-2001). Voters also feel that the UCR's possible presidential candidates, Cobos and Ricardo Alfonsí­n, are more interested in battling each other than competing against Kirchner.

Cobos' reaction was to create a “national working group for Cobismo" to work parallel to the party's national committee to promote his candidacy. The group comprises: Gustavo Posse, the mayor of San Isidro; Mario Meoni, the mayor of Juní­n; Oscar Aguad, the leader of the UCR bloc in the lower house of congress; senators Laura Montero, Nito Artaza and Roy Nikisch; and the political leaders Hugo Lesca (Entre Rí­os), Juan Carlos Jaliff (Mendoza) and Jorge Alvarez (Buenos Aires).

Separately, Ricardo Alfonsí­n and his partner in the Acuerdo Cí­vico y Social (ACyS), Elisa Carrió (Coalición Cí­vica), announced plans to travel around the country to drum up support for Alfonsí­n, with an initial political rally taking place in Juní­n (16 July), the city governed by the Cobista, Mario Meoni.

Development: On 3 August the Mercosur summit in San Juan, Argentina, concluded.

Significance: Participating governments hailed the summit as one of the most successful in the organisation's history. The main achievement was the final agreement on a text of a common customs agreement. This has been in negotiation for six years.

The customs agreement settles how duties will be allocated between states on goods that are in transit across one member to another and how double-levying of the common external tariff will be avoided. Presidents of Argentina, Brazil, Paraguay and Uruguay (all full members) were also assisted by the presidents of two associate members, Chile and Bolivia. All six agreed on measures to help Haiti and ways to protect the Guaraní­ aquifer, one of the world's biggest reserves of fresh water.

The Mercosur also called on the Unasur and its president, Rafael Correa and secretary general, Néstor Kirchner, to organise a presidential summit to help to improve relations between Venezuela and Colombia.  

Development: On 9 September, a new study noted that the price of the basic food basket in Venezuela had risen almost 47% over the past year to reach BF2,588.61 a month(approx US$602, on BF4.3/US$), over twice the national minimum monthly wage of BF1,223.89 (US$284).

Significance: Although Venezuelans are fairly inured to entrenched inflation, the high cost of living, along with violent crime, tops the list of voter concerns ahead of the 26 September legislative elections.

Efforts by the government of President Hugo Chávez to attain food sovereignty in Venezuela, including market intervention to fix prices and take state control of both production and the supply chain, don't appear to be bearing much fruit and the country is as heavily dependent on food imports from abroad as ever. The government is now spending heavily on importing key goods from places like Argentina. On 3 September, following a bilateral cooperation meeting, the Argentine foreign ministry said local producers expected to sell US$600m worth of food exports to Venezuela this year.

This year's January devaluation fed into sharp inflation rises in the first half. According to the central bank, accumulated inflation in Venezuela was 19.9% in the first eight months of the year, with food prices rising at much faster rate (38.6% year-on-year in August).

Last week, President Chávez announced that state banks would soon begin to offer new types of credit cards to customers for the purchase of basic food items and other consumer goods in state-run stores. Critics suggested it was a sign of the government's desperation in the face of continued supply problems, amid continued issues with shortages of basic supermarket goods like sugar, coffee and butter.

This week, independent economists cast doubt on the latest economic forecasts issued by the finance minister, Jorge Giordani, who said he expected monthly inflation to tick lower (1.0%-2.0%) over the rest of this year and head well below 30% annually in 2011. He also said the economy had turned a corner and would post positive growth from the third quarter. Orthodox economists have long been sceptical of Giordani, considered a hard-line Marxist. Interestingly, this week he was appointed a director on the board of the nominally independent central bank.

The vice-president, Elí­as Jaua, yesterday announced that the government would increase the prices it pays producers for crops of maize, rice and sunflowers, stressing that the increase would not affect consumers. Producers welcomed the price increase, saying it would help them to reinvest and boost output - someone in the government is clearly familiar with basic market principles.

Development: On 20 October two of the country's big financial groups, Eljuri and Egas, which have been highly critical of President Rafael Correa, announced that they had met the government's deadline for selling their shares in two TV companies.

Significance: The Correa government has not relented in its drive to reform the media and simultaneously reduce the power of the banks in the wake of the controversial police mutiny on 30 September. The government had set midnight on 20 October as the deadline for banks to sell any shares in media companies. The government claims that the banks, controlled by 'the oligarchy', ensure that the media is biased against the government. The deadline was set by a transitory law of the constitution.

Eljuri and Egas had stakes in ETV Telerama and Teleamazonas respectively. It is not clear to whom the groups are selling their shares because only the legal representatives of the TV companies, which are privately owned rather than quoted on the stock market, can release information about shareholders.

Financial institutions were required to file a declaration by midnight yesterday with the banking superintendency that they had shed any stakes in media companies. If they failed to do so, they stood to lose their banking licences. Media companies which still had banks as shareholders, according to the register kept by the Superintendencia de Telecomunicaciones, faced losing the right to broadcast. The media sector is now regulated by the Consejo Nacional de Radio y Televisión (Conartel).  

ETV Telerama refuses to say who has replaced Eljuri as its controlling shareholder, though it's clear that it has met the government's demand. Besides ETV Telerama, Eljuri also owned 13 other broadcasters. It is not clear whether Eljuri has also sold out of these interests. It seems unlikely that Eljuri, a family owned group, has sold its media interests to members of its controlling family. The Eljuri Group's executive chairman is Rebecca Eljuri.

Teleamazonas has released similar information. It is not known who the new shareholders are, but it is public information that Fidel Egas, who has been a prominent critic of President Correa, has sold out. According to the company's news director, Jorge Iván Melo, the controlling stake of 52% is now held by a group of investors from Quito, Guayaquil and Peru. The strong rumour in Quito is that the Peruvian shareholder is América TV, which is part of Grupo Plural. The other 48% of the shares in Teleamazonas are held by 140 employees, who apparently took out loans from Banco Pichincha to acquire the equity.

The government has been heaping the pressure on banks to pull out of the media business since the police rebellion in late September, which the government claimed was an abortive coup. On 13 October the Junta Bancaria withdrew Resolutions 1779 and 1813, which allowed banks to retain 25% of their shares in broadcasters and other media companies. The Junta Bancaria also ruled that no relative of a bank shareholder (to the second degree, i.e. sharing a grandparent) could have an individual stake in a media company. That restriction also extends to people married to second-degree relations.

Development: On 6 December, the US Assistant Secretary of State for Western Hemisphere Affairs, Arturo Valenzuela, gave a press conference in Guatemala in which he said that mano dura (hard-line repressive tactics) were not sufficient to combat crime in Central America.

Significance: Valenzuela's comments could well frustrate Central American leaders, such as El Salvador's left-wing President Mauricio Funes who, having initially underlined the need for a comprehensive response - which would also tackle the social causes of crime and focus on social rehabilitation - have been forced to turn to repressive tactics such as militarizing the police and criminalizing gang membership as an immediate response to spiralling crime.

Valenzuela, who is on a tour of the sub-region to discuss security (with stop-overs in El Salvador and Honduras) instead called for a “comprehensive" response which would also strengthen institutions, combat impunity and provide for a military and police that “respect human rights". However, it should be noted that his criticism of mano dura is nothing new, having made similar remarks during a regional security summit in Panama in May.

Funes has long led regional calls for more assistance from the US, which has acknowledged its role in the regional security crisis through its demand for the drug trade. Most recently in October, during a visit to Washington, Funes put forward a regional security plan for some US$900m to replace the current Merida Initiative for Central America and Mexico (which assigned only US$100m of the US$550m for 2009 to Central America) although this fell on deaf ears. It remains to be seen whether Valenzuela's tour will prove any more fruitful. In his press conference yesterday (6 December), he said that the Barack Obama administration had requested that the US Congress “widens" the Merida Initiative to provide more resources although failed to provide specifics.

Development: On 25 January the ministry of planning and social cooperation (Mideplan) reported that half a million Chileans have fallen below the poverty line since the February 2010 earthquake, bringing the total of those living in poverty to 3m out of a population of 17m.

Significance: The consequences of the earthquake are still being felt by the 500,000 and 70,000 additional people now living in poverty and extreme poverty, respectively. The rise of 3% in poverty, from 16.4% in 2009 to 19.4% in 2010, was anticipated in the wake of the quake. The report is likely to increase pressure on the government to speed up reconstruction, which to date has focused on infrastructure rather than social programmes. Mideplan wants President Sebastián Piñera to approve its proposals which, amongst other things, will up the amount of cash given to poor families.

Key Points:

Mideplan hopes to present its anti-poverty proposal on 31 January. This will include a national database for poverty monitoring.

Minister for Planning Felipe Kast said that Mideplan's has a budget of US$130m to begin implementing the Ingreso Etico Familiar (IEF), a family-based direct subsidy, which will reach 400,000 families from March.

Job creation was outlined as an important counter-poverty measure. On 25 January, the Centro de Microdatos of the University of Chile announced that in the region of Greater Santiago unemployment levels fell to 7.9% in December 2010. During all of 2010, 250,000 jobs were created in the region, most of which were the result of cash in-flows from the reconstruction budget.

Development: On 15 March Bolivia's deputy interior minister Marcos Farfán said that his boss, Sacha Llorenti, had met US representatives to discuss cooperation in order to 'deepen' investigations over the René Sanabria case (the former police general and security advisor accused of narco-trafficking) and more general anti-drug efforts.

Significance: Farfán's remarks suggest that despite President Evo Morales's continued anti-US posturing, which has intensified over the recent Sanabria scandal, cooperation still continues.

Key points:

The Sanabria scandal had dealt a further blow to US-Bolivia relations, effectively frozen since September 2008 with the reciprocal ejection of ambassadors and subsequent expulsion of the US Drugs Enforcement Administration two months later. Morales had maintained “interests of a geopolitical nature" were behind the Sanabria case and stressed as long as he remains president he would not allow the DEA back into the country. His anti-US rhetoric was most recently echoed by Juan Ramón Quintana, the director of the border zone development agency, who this week accused the ejected US ambassador Philip Goldberg, now an assistant secretary of state responsible for intelligence and research, of involvement in the Sanabria scandal.

Farfán's remarks come as senators and deputies from the ruling Movimiento Al Socialismo (MAS) are floating the possibility of expelling the US Agency for International Development (USAID) from Bolivia. In September 2009, in response to the diplomatic crisis, Morales had ordered the closure of all USAID programmes of a “political nature" although he allowed social and productive projects to continue.

Despite the ejection of the DEA, Bolivia continues to cooperate with the US Embassy's Narcotics Affairs Section (NAS) although the US budget for drug assistance in Bolivia continues to drop. The 2012 budget proposal by the Barack Obama administration requests a 50% reduction in antinarcotics funding for Bolivia for 2012 to US$10m. When Morales took office in 2006 the US was providing US$79m in anti-narcotics funding.

Development: On 5 May after a meeting with her German counterpart Christian Wullf, Brazil's President Dilma Rouseff was again critical of developed countries' “expansionary liquidity policies" and reiterated the Brazilian authorities' commitment to resisting inflationary pressures.

Significance:  Reining in inflation is now Rousseff's top priority. There is a slight change of tactics going on at the central bank of Brazil (BCB). First, it acknowledges that inflation, expected to breach the target ceiling of 6.5% year-on-year from April, will not return to target until 2012. Equally, policymakers have also decided that there is no point in battling the strong Real and are instead seeking to use it to tackle inflation via imports of cheaper consumer goods to 'complement'  the internal market. That pits them against domestic industrialists, who are screaming about de-industrialisation. The BCB president Alexandre Tombini yesterday called on consumers to save, not spend, advising them to take advantage of the country's high interest rates.

Key points:

There are fears that policymakers are running out of options after a raft of so-called macro prudential measures since late last year have largely failed to deter speculative capital inflows, stem domestic credit growth, cool inflationary pressures or ease the fierce appreciatory pressure on the Real.  The authorities are now desperately trying to ensure a soft landing for the economy.

Key officials including Finance Minister Guido Mantega,  Development Minister Fernando Pimentel and the head of the national development bank Luciano Coutinho, all believe that there is “nothing to be done" about the strong Real this year, especially given the weak US dollar. Mantega recently told the senate that the government would not permit the overvaluation of the Real but emphasised that “it's not such an exceptional rate, taking into the account the economic fundamentals". Reading between the lines, it seems that although the central bank will continue to intervene as needed in support of the Real (as per its managed float policy), it won't do anything radical and the authorities are willing to let it settle at the 'informal floor' of R$1.60/US$.

Mantega also denied that the government is considering a quarantine on capital inflows, hinting that he sees the IOF (financial transactions) tax on foreign fixed income investment (currently at 6%) as the best defence against hot money.

Figures for the first three months of 2005 suggest the end of international textile quotas at the end of last year has caused a seismic shift in export markets. The upheaval has been so great that the US and EU are seriously considering the reimposition of some quotas on textiles from China, which has been the major beneficiary of the changes. Of the losers, Mexico stands out as one of the countries most affected by China's success.

Over the first quarter China's share of the US import market in three categories (cotton knit shirts and blouses, cotton trousers, and cotton and man-made fibre underwear) surged by between 300% and 1,500%. In February its garment exports to the US leapt by 147% to US$650m. Exports to Europe were up 188% to US$783m. Figures for January were similarly dramatic. Nor was China the only Asian country to benefit from the lifting of tariffs: India posted a 129% rise in exports of cotton knit shirts to the US over the first quarter.

The surge has been at the expense of other countries, most notably Mexico. Mexico has been losing US market share to China for years: Chinese accession to the WTO in 2002 saw its textile exports to the US rise 27% in the first quarter of that year, overtaking Canada to become the biggest source for US textile imports and pushing Mexico into third place. The end of the Multi-Fiber Agreement seems merely to have accelerated this displacement: Mexico, with labour costs around four times higher than those in China, has lost a third of its textile jobs since 2000. Its exports to the US of cotton and man-made-fibre shirts, underwear, bras and dressing gowns all showed double-digit declines over Q1.

China has capitalised on the end of quotas in markets other than the US. In Europe, imports of Chinese pullovers boomed by 534% in the first quarter, with a 413% rise in imports of men's trousers. Its total shipments of apparel rose to US$783m, an increase of 188%. 

China's gains in the first three months of this year have proven sufficiently impressive for both the US and the EU to talk about reimposing trade barriers to Chinese textiles. Trade Commissioner Peter Mandelson confirmed on 25 April that the EU had now received enough data from member states to consider taking action against Chinese exporters. "Although the picture is mixed, in some categories of textile and clothing imports they do give us cause for concern."

On 4 April, the US Committee for the Implementation of Textile Agreements announced that it was to begin safeguard proceedings to establish whether Chinese textile and garment exports were threatening to "disrupt" the US market. "This decision is the first step in a process to determine whether the U.S. market for these products is being disrupted and whether China is playing a role in that disruption," said Commerce Secretary Carlos Gutierrez. The reference to "disruption" is significant: under the terms of China's accession to the World Trade Organisation, WTO members can impose specific safeguard measures (ie quotas) on Chinese textiles and if they determine such shipments are disrupting their markets.

Even if the US and EU impose new restrictions on Chinese textile and garment exports, this is likely to benefit countries like India and Bangladesh more than Mexico. Central American countries such as Honduras and El Salvador are also likely to benefit, but much depends on the nature of the new restrictions the EU or the US decide to impose on China. Beijing has strongly condemned the prospect of such measures, which it describes as "protectionist", but even if the US and EU were to impose some new barriers under WTO rules they could only be temporary.

COFFEE: US to rejoin International Coffee Organization

CUBA: Democrat seeks to amend US government travel restrictions

INTELLECTUAL PROPERTY: US demands Brazil does more to uphold rights

CHILE: Deputies travel to Washington to investigate 'pinocuentas'

BRAZIL: On US blacklist for drug-trafficking countries

GUATEMALA: Wola highlights existence of 'clandestine security groups'

COFFEE
The US formally announced that it intended to rejoin the International Coffee Organization at a special event convened by the US State Department on 15 September. Among the senior US officials attending the event were James Murphy, the Assistant Trade Representative for agriculture, and the Assistant Secretary of State for Economic and Business Affairs, Anthony Wayne. The executive director of the ICO, Néstor Osorio, said that the US decision showed the government's commitment to supporting multilateral cooperation. He said that the US decision will promote sustainability in the coffee industry. The US is the world's largest consumer of coffee and its decision to leave the ICO in 1992 led to an end of the system of coffee quotas and to price volatility.

CUBA
The House of Representatives approved an amendment to relax the government's restrictions on travel to Cuba. These restrictions, introduced in June, had proved very unpopular with Cuban Americans living in Southern Florida. The proposal to relax the controls was made by Jim Davis, a Democrat congressman from Florida. The aim of the proposal is to underline the Democratic Party's electoral appeal in one of the crucial swing states: the latest Zogby poll has the Democrats and the Republicans tieing in Florida which has a potentially decisive 27 votes in the Electoral College which will pick the next US president. Davis's proposal is to allow Cuban-Americans to travel to Cuba once a year rather than once every three years as the Bush government allows. The bill will now go to the senate. President Bush said that he will veto any bill which relaxes the restrictions on travel to Cuba.

INTELLECTUAL PROPERTY
The US is threatening to exclude Brazil from the Generalised System of Preferences (GSP) unless the government does more to uphold US intellectual property rights. Peter Allgeier, the Assistant US Trade Representative responsible for relations with Latin America, said that upholding intellectual property rights was one of the main reasons for his visit to Brazil, which started on 22 September. Brazil exports US$2.5bn worth of products to the US under the GSP, which means that these products do not face tariffs. Allgeier said that the US lost US$750m because of Brazilian piracy. The GSP is up for revision at the end of September. Allgeier stressed that what he wanted to see was Brazil enforcing its laws, not introducing new laws. One issue he wanted to see progress on was the importation of pirated goods from Paraguay. Brazil has recently stopped blank computer disks being shipped across the country to Paraguay.

CHILE
On 20 September six Chilean deputies travelled to the US to investigate first hand the secret accounts that former dictator Augusto Pinochet kept at the Washington-based Riggs bank. In mid July a US senate report discovered that between 1998 and 2002 Pinochet and his wife, Lucia Hiriart, deposited between US$4m and US$8m in various different Riggs bank accounts. According to Juan Pablo Letelier, whose father Orlando Letelier was assassinated by Pinochet's secret police in Washington in 1976, the purpose of the visit is to obtain information about the origin of the money deposited in the accounts and to find out what the US authorities plan to do with the information.

BRAZIL
Brazil was included again in the US State Department blacklist of major drug producing or drug transit countries. The list is sent annually from the US presidency to congress. 'The vast majority of illegal drugs entering the US continue to come from South America and Mexico', the report stated. Apart from Brazil, the list also includes 21 other countries, half of them from Latin America. The report did, however, single out Brazil for its efforts 'to cooperate with its South American neighbours to control their remote borders' from where drugs are smuggled and shipped to the US. The State Department also said Brazil is making an effort to control internal trafficking. Guatemala, Nicaragua and Honduras, who were each included on the list, have already made it clear that they cannot do what the US wants in this area without additional assistance. The Bahamas, Bolivia, Brazil, Colombia, the Dominican Republic, Ecuador, Haiti, Jamaica, Mexico, Panama, Paraguay, Peru and Venezuela were also included on the blacklist.

GUATEMALA
The Washington Office on Latin America (Wola), a non-governmental organisation working for human rights and social justice, presented a report to the UN on 21 September denouncing the existence of 'hidden powers' and 'clandestine security-groups' in Guatemala and the failure of successive governments to address the problem. It also called upon Guatemala's President Oscar Berger to oversee the creation of Ciciacs, the UN-led commission to unmask these groups, something that Berger assured UN Secretary General Kofi Annan that he would do. Wola's report defined 'hidden powers' as 'an informal, amorphous network of powerful individuals' -including current and retired military and government officials- who 'use their positions and contacts in the public and private sectors both to enrich themselves from illegal activities and to protect themselves from prosecution for the crimes they commit'.

The report alleged that 'hidden powers' are often involved in drug-trafficking and organised crime and target victims because they threaten their financial interests or try to pin human rights abuses on them. The 'hidden powers' employ 'clandestine groups'- members of specialised military units or security forces- as 'the foot soldiers of crime […] to carry out acts of violence and intimidation'. Wola even includes a list of names of prominent individuals it believes operates within the hidden-power network: retired Generals José Efraí­n Rí­os Montt, Manuel Antonio Callejas y Callejas, Luis Francisco Ortega Menaldo, Juan Guillermo Oliva Carrera, Luis Felipe Miranda Trejo, and Otto Pérez Molina as well as Colonels Jacobo Esdras Salán Sánchez and Napoleón Rojas Méndez. Wola called on the Berger administration (which until recently included Pérez Molina, who described the report as 'biased, badly informed and malintentioned') to stop stalling on the creation of Ciciacs and to give a freer rein to the human rights ombudsman (PDH). It also appealed to the US government to continue to revoke the visas of all those implicated in drug-trafficking and organised crime.

The report concluded: 'Both illegal armed groups and their sponsors must be investigated, identified and prosecuted if the peace process is to move forward and democracy is to be consolidated in Guatemala. Ridding the country of clandestine groups and hidden powers must be a top priority for the president, for the government of Guatemala, and for civil society.'

Colombia: The Colombian defence minister, Gabriel Silva, completed a three-day visit to Washington DC on 11 February. He was reportedly told that the Obama administration remains firm about cutting military aid to Colombia, as outlined in the 2010 budget proposal, and that the ratification of the US-Colombia free trade agreement, currently frozen in congress, is unlikely to go ahead this year.

Guatemala: On 16 February President Alvaro Colom arrived in Washington DC ahead of a three-day state visit. Following his arrival he met with José Miguel Insulza, the secretary general of the Organization of American States. He was also scheduled to meet the president of the Inter-American Development Bank, Luis Alberto Moreno, after which he will travel to New York to meet Ban Ki-moon, the United Nations secretary general.
On 18 February he will return to Washington DC to meet the US Secretary of State, Hillary Clinton. According to a statement from the Guatemalan presidency Colom and Clinton will discuss issues of security and justice, anti-narcotics efforts, investmentand climate change. Colom is accompanied by his foreign minister, Haroldo Rodas.

Haiti: On 13 February the head of the US Southern Command, General Douglas Fraser, announced that the US had reduced its number of troops in Haiti to 13,000, from the post-quake peak of 20,000. Fraser said that the need for the troops, deployed to provide humanitarian assistance and maintain security, had diminished as international aid and relief efforts had improved and stabilised. He declined to say how long he expected the remaining US troops to stay in Haiti. The US military's control over Port-au-Prince's damaged international airport has also been returned to Haitian control in daylight hours. Commercial flights are due to resume on 19 February.

Mexico: On 17 February, Janet Napolitano, the US secretary of Homeland Security, visited Mexico to discuss improving security at airports. Napolitano met President Felipe Calderón and praised Mexico as a major security partner. On aviation security, Napolitano signed a reciprocal agreement which commits the US to sharing information on all airline passengers with Argentina, Brazil, Chile, Mexico, Panama, the Dominican Republic and the International Civil Aviation Authority.

FRIDAY

COLOMBIA: The Deputy US Trade Representative, Ambassador Susan Schwab, will meet with Colombian government officials and business leaders, along with nine other US congressmen

DOMINICAN REPUBLIC: Tourism Ministers from Central America, Mexico, Puerto Rico, Cuba and the Dominican Republic will attend a conference until 4 November.

CHILE: End of 4th round of negotiations over a trade agreement between Chile and China.

VENEZUELA- Partido Socialista Unido de Venezuela, started by President Hugo Chávez , will have its first congressional meeting.

SUNDAY

GUATEMALA: Presidential run-off will take place between Alvaro Colom of the Unidad de la Esperanza Nacional and Otto Pérez Molina of the Partido Patriota.

BRAZIL -3rd Regional Conference on climate change in Latin America will begin, ending on 8 November.

DOMINICAN REPUBLIC- Tobacco producers from 21 countries will meet to analyse problems within the sector and to seek viable alternatives to new markets.

MONDAY

TRINIDAD AND TOBAGO: General elections will take place to elect a new government.

TUESDAY

MEXICO: Mexico's President Felipe Calderón will begin a five-day tour beginning in Panama before travelling to Colombia, Peru and Chile, where he will attend the Latin American Summit of Heads of State.

Peruvians will soon see whether their immediate future will bring an insurrection led by the defeated nationalist Ollanta Humala, or an attempt by him to bring about what he has called 'the great transformation' by playing within the rules and building upon his very strong position in congress.

Humala's brother Antauro, on trial for the bloody and abortive January 2005 revolt in Andahuaylas, stated in March that if Ollanta were to be defeated, what would follow would be an armed uprising, the protagonists of which would be the followers of the Etnocacerista movement; the 'reservists' who accompanied him in Andahuaylas. The 'reservists', unemployed young men who have done their military service, are the core of the Etnocacerista movement, inspired by the ideology formulated by Ollanta's father, Isaac, and espoused by Antauro.

Ollanta Humala has repeatedly dissociated himself from the Etnocacerista ideology, from his brother's uprising and from his political ideas. Moreover he has made public his distaste for the mass mobilisation tactics upon which Morales built his ascent to power in Bolivia.

However, as has been noted by the former interior minister, Fernando Rospigliosi, this does not prevent many from attributing to Ollanta the ideas advocated by Antauro, and in many cases this has translated into more, not less, support for Ollanta. According to Antauro, Ollanta's profession of democratic orthodoxy is merely 'tactical'.

In the presidential run-off, from the point of view of geographic spread, Ollanta's performance was far more impressive than that of the victor, Alan Garcí­a. Ollanta won in 15 of Peru's 24 departments — mainly in the impoverished central and southern Andean ones where most of Peru's indigenous population lives, and in the jungle areas east of the high Andes, which include the coca-growing areas where the remnants of the Sendero Luminoso guerrillas are still active. In Ayacucho (which fits in both categories) and Apurí­mac (in the second category), support for Ollanta was close to 80%.

In congress, Humala's Unión por el Perú (UPP; the formal suffix 'Partido Nacionalista' has tended to be omitted in the latter stages of the campaign, for obvious tactical reasons) has the biggest bloc, with 45 of the 120 seats. Alan Garcí­a's Partido Aprista Peruano (PAP) has 36; this is 25 seats short of a majority, whereas the UPP is only 16 seats shy. For Garcí­a to muster a working majority he must strike alliances with several political parties, one of which has to be the conservative Unidad Nacional (UN), which has 17 seats. Ollanta could conceivably (given negotiating skills as yet to become manifest) mount an opposition alliance capable of blocking Garcí­a's legislative initiatives.

It is worth recalling that, when questioned during the campaign about how he would cope with the opposite scenario — a hostile opposition majority preventing him from carrying out his programme — Ollanta said he would resort to a constitutional provision allowing the president to dissolve congress and call new elections. Whether Garcí­a would have the inclination or the wherewithal to do likewise is unclear.

There is, of course, the possibility that Ollanta might try a two-track approach, using unrest prompted by 'overzealous' followers as a means of persuading potential partners in congress that, with their support, he would be able to rein them in.

Garcí­a, as his first-round rival Lourdes Flores, of UN, has been emphasising, won the runoff on 'borrowed' votes. His first-round performance, which attracted 24% of the vote, certainly shows him up as the second-best choice and hence facing a legitimacy problem. This need not be fatal: Argentina's Néstor Kirchner won the presidency on a similar proportion of the vote and, after having built up a following of his own in mid-term legislative elections, is now seen as likely to win re-election. Humala attracted just over 30% of the vote in the first round.

The concern that some Andean countries run a serious risk of falling apart has been given greater currency by a study just published in the US journal Foreign Affairs. Written by Michael Shifter, vice-president for policy at the Inter-American Dialogue, it says that the political survival of Peru's Alejandro Toledo, Ecuador's Lucio Gutiérrez and Bolivia's Carlos Mesa is today in doubt.

Shifter, who is also adjunct professor of Latin American Studies at Georgetown University's School of Foreign Service, notes that each of these countries 'is experiencing a measure of disintegration. Instead of coalescing into coherent, functioning states, they are at risk of breaking apart.' He also underlines that though the social and economic problems afflicting these countries are acute, 'the current crisis is at root a political one, and progress will not come without serious reform.'

His catalogue of the ills afflicting the 'southern crescent':

- The countries' institutions are ill-equipped to deal with such developments as increased pressure from marginalised groups.

- Social movements are unable to channel demands in an orderly, coherent fashion.

- Political parties have lost credibility or are simply absent.

- Government agencies are largely unresponsive and rarely coordinate among themselves.

- Trust in political institutions is historically low.

Moreover, says Shifter, 'The relentless denigration of “politics"— though fashionable and perhaps justified — only worsens the problem, doing nothing to help attract reform-minded leaders to government or to reinvigorate calcified institutions. And the election of political neophytes, these countries are learning, does not provide any easy solutions.' In these conditions, he says, 'even positive steps towards stronger democracy have had a destabilising effect.'

A case in point is the efforts made in all three countries to decentralise authority. The problem is that they have done this in the absence of effective institutions and leadership. The result: they 'have tended to accentuate fragmentation rather than improve governance.'

A major factor in all this is the presence of increasingly assertive indigenous majorities or near-majorities. 'Especially in Bolivia and Ecuador,' says Shifter, 'indigenous populations are increasingly visible and politically mobilised. Their heightened expectations and demands — entirely legitimate and long overdue — carry profound democratizing potential. But this promise will be frustrated unless political leaders in these nations are prepared to reform fossilised institutions, including political parties and justice systems — and unless Washington supports such efforts, helping committed reformers and working in concert with other outside actors. Otherwise, potentially positive trends will put unmanageable strains on brittle governance structures. Should they erupt, the social volcanoes in Peru, Ecuador, and Bolivia will spread dislocation, lawlessness, and insecurity in a continent already on edge.'

Labouring this point further, he adds an ominous coda, 'Indigenous political movements present their own problems for weak institutions and national leaders: however legitimate their demands, they usually cannot be met.'

PEOPLE PROFILE is published every Tuesday and describes the professional background of key people emerging in the political and economic scenario.

Who is Raul Abraham Taleb?
Raul Abraham Taleb is the new ambassador to Cuba. From this week, Argentina will once more have a top diplomatic representative on the island. Former President Fernando de la Rúa recalled the previous ambassador to Cuba in 2001 when President Fidel Castro described him as a ‘Yankee bootlicker’.

Why watch him?
Under the presidency of Néstor Kirchner, Argentina is looking to reshape its relationship with the US and the principal countries in the region by means of an independent foreign policy contrary to that of the administration of former President Carlos Menem, who sought ‘carnal relations with the US’. In order to achieve this, he needs to be prepared to strike up relations which might antagonise Washington. Cuba is a case in point. Kirchner is eyeing a rapprochement with Cuba for two reasons: to reaffirm his image as an independent centre-leftist president and to recover a more than US$1.5bn outstanding Cuban debt to Argentina.

Age: He is 54.

Place of birth: Ciudad de Diamante, Entre Rios province, Argentina.

Education:
He has a degree in political science and international relations from the Universidad Católica de Córdoba.

Public life:
Belonged to the Peronist youth movement, along with Argentina’s current foreign minister Rafael Bielsa, in the politically divisive 1970s. He is a key politician in Entre Rios, where Kirchner’s close friend, former governor Jorge Busti represents Kirchner.

Timeline

• 1973-76  Works in the foreign ministry during the third government of Juan Domingo Perón and his wife Isabel Perón.
• 1991  Begins his stint as provincial deputy for Entre Rios, a province to the north of Buenos Aires.
• 1991-99  Presides over the committee of Asuntos Constitucionales de la Cámara Provincial and sits on the education, transport and telecommunications, general legislation and natural resources and environment committees.
• 2003  Jorge Busti proposes him as a candidate for ambassadorial rank in Cuba
• 2003  In October, he is selected as ambassador to Cuba and accompanies foreign minister Rafael Bielsa to the island, the first foreign minister to travel there in 14 years.

Strong points
He is an ambassador with a political, not a diplomatic, profile. He is charged with re-establishing relations with Cuba after years of froideur under former presidents Carlos Menem and de la Rúa. Abraham Taleb will have to strike a balance between overplaying the relationship with Cuba and appearing as a diplomatic dissident on the island. As representative of former governor Busti, he enjoys much political support given the close relations between Busti and President Kirchner.

Weak points
He has no diplomatic experience and has been criticised by the political opposition in Entre Rios and various professional diplomats for his ‘total ignorance’ of international relations.

Prospects
Despite this criticism, Abraham Taleb knows his foreign affairs and knows that he is going to Cuba to fulfil a political role. Kirchner has flirted with Cuba since the day he came to power and is keen to use improved relations with Cuba as evidence of a more independent foreign policy that shows his readiness to disagree with the US in order to pursue his own bilateral relations on his own terms.

Carlos E Pascual, US

Who is he? Pascual is likely to be the US's next ambassador to Mexico.

Why watch him? Although he is a long-serving State Department official, Pascual has never worked on, or in, Latin America. His expertise is in dealing with failing states. This background suggests that foreign policymakers in the Barack Obama administration believe that there is a good chance that Mexico either is, or will become, a failed state.

Date of Birth: 1959.

Education: Pascual was born in Cuba, but left the island with his family in 1961. Graduate of Stanford, Master's from Harvard.

Public life: Pascual joined the State Department straight from Harvard. He has specialised in Eastern Europe and Central Asia and was the US ambassador to Ukraine from 2000 to 2003. In 2006 he joined the Brookings Institution, traditionally a finishing school for Democratic Party foreign policymakers.

Time Line

1980: Graduates from Stanford.

1982: Awarded an MA from the School of Government at Harvard.

1983: Joins State Department

1983-1995: Deputy Administrator for USAID in Europe and Central Asia and representative of USAID in Mozambique, Sudan and South Africa.

1995- 1998: Head of USAID for Europe and Central Asia.

July 1998-January 2000: Adviser to the White House National Security Committee.

2000-2003: US ambassador to Ukraine.

2006: Joins Brookings Institution as vice president and director of its foreign policy studies programme.

Strengths: Pascual is popular with US Latin Americanists. He advocates a return to a more multilateral foreign policy approach and is a prominent advocate of a change in US policy towards Cuba. Although he wants the US to unfreeze relations with Cuba, he also insists that the US should not offer unconditional gestures. He argues that the US should make demands on Havana, particularly to improve human rights and increase democracy, in return for making the changes to US policy that Cuba wants. Unlike many Cuban-Americans, he is neither a strident critic of the Castros nor of President Hugo Chávez of Venezuela, who has propped them up over the past decade.

Weaknesses: The Mexican government has approved his nomination, but there are clearly some people in Mexico who fear that Pascual's lack of professional experience in Mexico and Latin America shows that the Barack Obama administration views Mexico as just another enfeebled state. Mexico-US relations are particularly tricky at the moment, because the US is clearly undecided over whether Mexico is danger of becoming a failed state. The US Secretary of State, Hillary Clinton, virtually said as much on her visit to Mexico on 25 and 26 March. At one point she said that there were no ungovernable areas in Mexico, only to later say that Mexico could not win the war against the drug gangs without the support of the US.

Prospects: Pascual has yet to be formally nominated. He will then have to be approved by the US Senate Foreign Relations Committee and then the full Senate. What he says about US policy on Mexico during his approval procedure will affect US-Mexican relations.