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The number of Latin Americans migrating illegally to Spain on one-way tickets increased dramatically in 2002. More than 500,000 Latin Americans travelled to Spain as tourists in 2002 and fewer than 20% of them returned home, according to Spain's interior ministry. 

A total of 561,690 Latin Americans, the majority from Argentina and Ecuador, entered Spain last year, with just 88,986 of them returning. Some 128,312 one-way tickets were purchased by Argentines, with a mere 18,742 returning. 

Interior minister Angel Acebes said the phenomenon might be explained by the fact that many of the Latin Americans visited Spain on business and returned from other countries in Europe. Police sources disagree: they reckon the majority stay in Spain and many of these have taken up illegal residence. The increase in Argentines, they say, could be explained by last year's economic and financial crisis. 

The Spanish government has tightened the law on aliens to include an obligation on the part of airlines to report passengers who do not have return tickets.

CONCESSIONS ON PENSION REFORM 'STILL UNSATISFACTORY' 

So Lula da Silva's government did, after all, have to retreat on some of the provisions of its draft pensions reform. Despite the affectation of dismay by a chorus of 'market-shapers', it was well-known from the outset that the government expected to have to negotiate some things away. What is yet unclear, amid all the hubbub, is what the concessions add up to, how they affect the main purpose of the reform -and, indeed, if the concessions seen so far are not to be followed by others. 

The planned reform is a large, complex piece of legislation, and virtually nobody has produced detailed arithmetic on each of its components. 

What does seem to emerge from the events of the past week-and-a-half is evidence suggesting that the government miscalculated, perhaps driven by the loud encouragement received from the 'markets' and opinion-poll results showing widespread public approval for the reform. 

As the two main labour organisations, Central Unica dos Trabalhadores (CUT) and Força Sindical (FS), chose to negotiate rather than engage in industrial action, the government felt confident that the strike called by the more radical government employees would fail. 

It did not. Support actually grew throughout the week, peaking at close to 50% of the public-sector workforce. Moreover, there was a clear threat that the judiciary -from law clerks to judges- might join in as well, bringing the court system to a halt. 

The concessions. Many analysts say that it was that last threat that most influenced the government's midweek climbdown. Among the things it conceded were: 

To maintain parity of pay adjustment between active officials and their retired counterparts. 

To maintain the equivalence of pensions at the last salary earned for all those earning up to R$1,058 (US$370) a month. Pensions above that level would make a contribution to social security funds. 

Exemption of the judiciary from the pension ceiling of R$2,400 (US$840) imposed on their peers in the executive and legislative branches. 

The modified government proposal kept entitlement requirements for age (60 for men, 55 for women), years of contribution to social security (35 and 30, respectively) and years of public service (10). 

Unsatisfied. As the weekend arrived, though, it became clear that not all the strikers were satisfied. The leader of the confederation of public employees, José Domingues Godoi Filho, said the amendments 'are far from what we wanted'. He vowed to continue the strike action indefinitely until the government abandoned its 'intransigence'. 

The main sticking-points are: retirement age, the ceiling on pensions, and the mandatory contributions by higher-earning pensioners. 

Most irksome for the government: on 21 July the union representing the country's 15,000 judges and court officials decided to join the strike. They have their own unsatisfied claims: full retirement benefits for future judges and maintenance of the current indexing system for judges' pay. 

The deputy leader of the ruling Partido dos Trabalhadores (PT) in the lower chamber, Luiz Carlos da Silva, known as Professor Luizinho, remained conciliatory, saying that the government was never shut off from dialogue. Another key government whip in the lower chamber, Beto Albuquerque, was more outspoken, saying that the government would not respond to threats. 

Currently, the pension reform is at the committee stage in the lower chamber: formal discussions on the reform are scheduled to start on 23 July and the voting to begin before the end of the week. The reform is not expected, in the best of cases, to get through both chambers of congress until October.

PUBLIC PERCEPTIONS MATCH REALITY, SAYS SURVEY 

The government of President Ricardo Lagos does not seem to know what to do about the undeniable fact that Chileans are becoming increasingly anxious about personal security. Over the past month it has twice trotted out interior minister (and Vice-President) José Miguel Insulza to deal publicly with security information that would normally have been handled far lower on the bureaucratic pecking order. 

He first appeared to present official crime statistics which at first sight appeared to justify public concern: they showed that in the first quarter of this year the number of reported armed robberies was 36.2% higher than in the same period of last year (and virtually unchanged from the last quarter of 2002). 

In the Metropolitan Region (Santiago and its environs), where the largest number of armed robberies take place, the increase was 25%. 

This category of crime has grown faster than others: the broader category of 'crimes of greater social connotation' (which also includes homicide, assault, rape, domestic violence and burglary) registered an increase of 11.02% over January-March 2002. 

Emphasis was placed, not on the increase over the past year, but on the fact that a plateau seemed to have been reached in the last quarter of 2002. This was portrayed as reflecting greater control of the situation by the authorities. 

And if over the year the number of reported crimes had increased, the official line went, that was because the public, more confident of an appropriate government response, was reporting more. 

It is crime that has risen. The notion that increased reporting, not increased crime, was at the root of media-inflated perceptions, took a hard knock last week, with the publication of a survey conducted by Fundación Paz Ciudadana and Adimark. This showed that over the past year the proportion of crimes reported has remained constant, so the rise in reports does reflect an increase in crimes committed. On average, 44% of all robberies, with or without violence, are reported. 

Corroborating this impression is the fact that the proportion of families with at least one victim of robbery or attempted robbery has been increasing steadily -from 30.6% in October 2001 to 36.9% in November 2002, to 38.2% in June this year. 

Also sharply up is the proportion of respondents who said they lived in great fear of becoming victims of a crime. This now stands at 14.3%, the highest level since May 2000. For the first time, also, the rate in the interior (14.7%) is higher than that of Santiago (13.5%). 

Insulza, apart from quibbling with details, opined that these figures showed no real worsening of the situation since the previous survey of the same kind. 

Longterm trend. A study conducted by the Instituto Libertad y Desarrollo (ILD), a private think-tank, says that since 1997 the number of crimes 'of greater social connotation' in Chile have increased by 65% (with holdups rising by 232.6%). A parallel calculation shows per capita spending on security rising by 67.7% over the past eight years, which suggests that the outlays have been ineffective. 

The study says that private spending on security has increased faster than that of the public sector, which would make it the most ineffective. Undersecretary of the interior Jorge Correa has disputed this conclusion, pointing out that the study failed to compute some public-sector projects like the Plan Comuna Segura, which would raise the relative weight of government spending. 

Also questionable is the methodology used by the ILD to calculate the 'cost' of crime, which includes such things as the time spent locking up homes and cars, and the cost to criminals of spending time in jail.

President Lula da Silva has returned from a politically successful trip to Europe, only to find problems at home: compelling evidence that the economy is in danger of tipping into recession; growing support for the public sector workers' strike against the pension reform, and simmering problems over land reform. So far, people are not blaming President Lula for the problems but his government. 

This could be about to change. The opposition Partido da Social Democracia Brasileira (PSDB, the party of Lula's predecessor), is trying to tar Lula. It jibes that Lula only travels, and does not have time to rule. The trip to Europe was the President's seventh foreign trip since he took office on 1 January. The PSDB calls Lula's first six months 'disappointing, incoherent, muddled and confused.' It argues that Lula has done little but talk a good game, and claims that the Zero Hunger programme, launched with much fanfare, has only reached 110,000 families and that 40% of the R$98m (US$34m) spent on the project has gone on publicity and other ancillary services. 

The big problem for Lula and his government is the stuttering performance of the economy. In the first six months of the new government 550,000 people have lost their jobs. The main reason for this is the government's determination to allow the central bank to squeeze inflation out of the system. The central bank has kept interest rates high (they are still at 26%, when last month inflation was negative to the tune of 0.15%). The high interest rate policy has brought the domestic economy (apart from agriculture) to a juddering halt. The car industry is working at half capacity, yet inventories are already equivalent to two months of sales. Even used car sales are collapsing: they were down by 15% in the first half of the year. 

The government argues that it had to establish its economic credentials by allowing the central bank to beat inflation. This policy has paid off: the international capital markets are now open to Brazil again -at a high cost: in São Paulo unemployment is 19.6% and, according to Fiesp, has worsened in the last month.

FOUR MORE CHARGES ADDED TO ORIGINAL TEN 

Formal impeachment charges against supreme court justice Eduardo Moliné O'Connor may be heard as early as mid-August, according to sources close to the lower chamber's impeachment committee -which last week added four new accusations to the 10 previously filed against Moliné. 

The original charge sheet was identical to that prepared against former supreme court president Julio Nazareno, who resigned before the impeachment proceedings proper could get under way. 

Unlike Nazareno, Moliné has decided to fight. He has already submitted a 200-page rebuttal of the original charges, and is expected to do likewise with the new batch. 

Moliné, well-known as a leader of the local tennis association, was appointed to the supreme court by President Carlos Menem, a tennis enthusiast, in 1990 -despite the fact that he had had no previous experience on the bench. 

'Automatic majority'. Together with Nazareno and three other justices -Antonio Boggiano, Adolfo Vázquez and Guillermo López- he made up what was known as the 'automatic majority' Menem enjoyed in the supreme court; his government's last line of defence against charges of corruption and unfavourable lower-court decisions. 

The headline charge against Moliné (and the others) involves the so-called Meller case, in which the 'automatic majority' affirmed the validity of a contract that had been nullified by two official spending watchdogs and ordered the state to pay the equivalent of US$137m -almost five times the original value of the contract. 

Next steps. Once the charges are put before the full chamber of deputies, the next step is a vote on whether to submit a formal accusation, which requires a two-thirds' majority to pass. In the current political environment, this is likely to be achieved. 

The accusation must then be presented to the senate, which sits as judge. 

Once the outcome of the Moliné impeachment is known, the strategy for dealing with the rest of the 'automatic majority' will be drawn up.

The major anti-crime drive launched in the province of Buenos Aires (WR-03-27) is not only directed against the criminals out on the streets, but also against those within the provincial police force. 

The anticorruption division of the province's supreme court has requested the assistance of the FBI to track down bank accounts allegedly held by former police chief Alberto Sobrado in the US and the Bahamas. 

Sobrado had been relieved of his post in early July, a day after the local magazine Veintitrés published a report claiming that he had US$333,000 stashed away in an undeclared Bahamian bank account. When confronted by his boss, provincial security minister Juan Pablo Cafiero, Sobrado said that the money was a family legacy. 

Unconvinced, Cafiero dismissed him and took personal charge of the provincial police force -just as the media had started airing accusations against another senior police officer, Commissioner Aní­bal Degastaldi. He was said to have undisclosed interests in a chain of restaurants in and around Buenos Aires city. 

Degastaldi has been suspended from his duties as head of investigations in the city of Quilmes 'so that he may answer the charges made against him.' 

Government sources in La Plata, the provincial capital, say that this is just the beginning. Cafiero, they say, has ordered a close look into the financial affairs of about 50 senior police officers.

Finance secretary Guillermo Nielsen has embarked this week on a nine-day world tour during which he will meet organisations representing the majority of Argentina's private creditors who hold the bonds that are up for restructuring. 

Unfortunately for the finance secretary, it looks unlikely that he will have an easy time during his trip, which will take him to Japan, Germany, Italy, and the US. 

Argentina's creditors, it seems, are hardening their resolve, and they are unlikely to accept finance minister Roberto Lavagna's line last week that 'bondholders must be prepared for the fact that, as happened with those who had money saved in Argentina's banks, they have to take some kind of loss.' 

At best, it would appear that the creditors will tolerate lower interest repayments, but at this stage there is no talk of them relenting on their demands that Argentina repay in its entirety the US$50bn principal owed to bondholders. 

The interest on that defaulted debt is currently estimated at about US$26bn. 

This was the opinion of Italian and German holders of Argentine bonds interviewed by the newspaper Clarí­n over the weekend. 

The Italian group said that they would consider accepting smaller interest repayments if private creditors received the same terms as institutional investors and multilateral organisations. 

The group also said that it would consider accepting bonds linked to economic performance. 

Both the Italian and the German bondholders, who together are owed some US$22.4bn, welcomed the IMF's involvement in the issue but said that they would be very surprised if Argentina, even with the lender's assistance, would be able to come up with some kind of proposal by September. 

These signs of bondholder resistance have emerged just as official data is indicating a slowdown in the country's economic recovery. Though official forecasts take this into consideration, the impact on the public mood is expected to be negative.

Economic activity in Argentina in May was up only 0.4% from April, which was in turn 0.4% above March's performance. Although marginally up on March's 0.3% expansion, this is well below the 1.4% month-on-month growth seen in February. The May result left the level of activity in the first five months 6.1% higher than in the same period of 2002. 

With industry on the decline throughout the second quarter, it is now just a question of how long the agricultural, construction, and services sectors can continue to drive Argentina's economy. Fernando Cerro, a director at the statistics institute, Indec, says that if activity remains at its current level he expects the economy to grow by 4.9% for the full year -a prediction in line with the government's forecast of 4.5%-5.0% expansion. 

Meanwhile, according to a document leaked to the newspaper Clarí­n over the weekend, the Argentine government is formulating the budget for next year based on an assumption of 4.5% economic growth. 

The budget, which will be announced in September, will also assume inflation of 10%, an exchange rate of Arg$2.72 to the US dollar, and a primary fiscal surplus equivalent to 2.5% of GDP. 

This latter figure is especially significant, given that the IMF at present wants a surplus of 3.0% and is expected to push for a surplus of 3.5%-4.0% during its coming visit. 

As it is, Buenos Aires will struggle to meet its own target if the IMF forces it to remove lucrative taxes on exports. This duty earned US$4.7bn for the government during the first half of 2003, and together with a tax on the current account, was worth 21% of total revenues for the period. 

A source in the treasury told the newspaper La Nación that the government was considering reducing the export tax in three stages next year. 

Industrial output in Argentina in June was 0.3% lower than in May. This was the third consecutive month of declining production. The blame is being put on the relative strength of the peso.

Chile's finance minister, Nicolás Eyzaguirre, is backing away from his officials' assertions that economic growth this year will be at least 4%. He says that the Chilean economy has been affected by the slowdown in the US and China and will be affected by the virtual recession in Brazil. With this in mind, he expects the economy to grow this year by between 3% and 4%. This is in line with what the central bank has been forecasting. 

Eyzaguirre adds that the better the US did, the more likely Chile is to approach the top of the range -but as there are few signs of the US economy picking up pace, growth in Chile is likely to be around 3.5% this year.

INTERNAL STRIFE PLUS SKILFUL GOVERNMENT MOVES 

Bolivia's movement of landless peasants, known by the initials MST like its powerful Brazilian counterpart, appears to have been dealt a double blow -by skilful government manoeuvring and by internal factionalism. 

Last week a rebel faction, in defiance of the agreement reached between MST leader Angel Durán and the government (WR-03-27), moved a contingent of 200 peasants into a farm in the eastern department of Santa Cruz -only to leave without much resistance when the local authorities sent in a combined force of some 500 police and soldiers to evict them. 

Their leader, Florencio Orco, proclaimed that the peasants were 'determined to continue their struggle for a piece of land.' 

Durán's position has been battered by the publication of a report showing that his family was among the 80 who, a decade ago, benefited from the distribution of 70,000 hectares of land in his native Chaco region. His defence: it was poor land with no road access. 

The government, meanwhile, played up its decision to accelerate the distribution of half a million hectares of state-owned land. 

Land scenario. Durán's excuse highlighted one of the problems faced by his movement: that the availability of land and its endowments vary from one region to the next. In his own Chaco (where, as Che Guevara discovered 35 years ago) there are very few peasants, the semi-arid landscape is not easy to cultivate; it is mostly used for extensive cattle-ranching. 

In the country's fertile valleys almost all the available land was distributed among the peasants by the 1953 agrarian reform -at a time when 65% of Bolivia's population was rural (now it is only 35%, which somewhat eases the relative demand for land). 

The situation is similar for the good farmland in the high plateau, close to Lake Titicaca. Much of the rest of the Altiplano, towards the south, has been abandoned following the disappearance of lakes Poopó, Uru-uru and Coipasa. 

This leaves the plains as the only remaining large reserve of available land. Anyone willing to meet environmental standards (or to promise to do so), and to pay taxes, can apply to the government for a land grant there. 

Landless peasants are at a disadvantage there, vis-í -vis entrepreneurs with some money, and demand from the latter is likely to grow with the opening of the highway from La Paz to the Amazonian region. Only a well-planned government effort could conceivably ensure that the current landless peasants get their share.

The IMF has completed the first review of Bolivia's performance under the one-year, US$121m standby arrangement approved in April, and authorised the release of a US$15m tranche. 

The Fund's executive board also approved Bolivia's request for waivers of the non-observance of certain performance criteria and of the applicability, until 17 July, of quantitative performance criteria for end-June 2003. 

The IMF's first deputy managing director, Anne Krueger, said, 'Performance under Bolivia's economic programme supported by the standby arrangement so far has been encouraging. Despite the difficult political and social environment, the economic situation remains under control, there are some signs of recovery in the agricultural and manufacturing sectors, bank deposits are almost back to end-2002 levels, and inflation remains subdued.' She also noted, 'Effective utilisation of Bolivia's abundant natural gas resources is crucial to ensure favourable longer-term growth prospects. The government is working to develop public support for proceeding with the LNG export project in a way that maximises the project's contribution to realising Bolivia's growth potential.'

Another 'showdown' between President Lucio Gutiérrez and his indigenous coalition partners of the Pachakutik party (PK) came and went last weekend (WR-03-27). By all accounts the PK representatives said little while Gutiérrez laid down the law: henceforth any official criticising the government in public will be dismissed. PK coordinator Miguel Lluco left the meeting announcing that they would be staying on board (but admitting that opinions within the party remained divided). 

One participant, Virgilio Hernández (who recently resigned as under-secretary of the interior), said that Gutiérrez had been 'offensive', accusing foreign minister Nina Pacari of having 'briefed' journalists against his own party, Sociedad Patriótica (PSP), and calling congressmen Antonio Posso and Rodrigo Garcí­a 'traitors' for having opposed an alliance with the conservative Partido Social Cristiano (PSC) in the legislature. Hernández and Posso are among the most vocal proponents of PK's withdrawal from the ruling coalition. 

For now, Gutiérrez has not openly stated any intention of seeking a permanent deal with the PSC, which many see as the one thing that would persuade the PK to leave.

Paraguay has announced that it is unable to pay some US$33m in debt-servicing obligations that have fallen due since the beginning of the year. 

Finance minister Alcides Jiménez blames this on delays in the payment of royalties by the binational Yacyretá and Itaipú hydro power plants.

After a five-month period of silence, the leader of the Zapatista rebels, 'Subcomandante Marcos', has announced a big shift in the movement's strategy, pre-empting the reform of indigenous rights legislation in congress. 

In a series of communiqués issued between 21 and 30 July, Marcos spelt out the new Zapatista strategy. Its main points, beyond the rhetoric: 

-The Zapatistas reaffirm that 'resistance is their main form of struggle'. Paramilitary organisations continuing to act against them will be met with force. Contacts with the government and political parties will be suspended. 

-The 30 'autonomous' indigenous municipalities will adopt the form of government envisaged in the San Andrés Larraí­nzar agreements of 1996, which formed the basis of the indigenous rights legislation drafted by the congressional peace commission, Cocopa ? which was later substantially changed in the legislation and constitutional amendments actually passed by congress in 2001. 

-The administration of the 'autonomous' municipalities will be coordinated by five juntas de buen gobierno ('good governance boards'). These will certify the authenticity of any person or initiative claiming to be Zapatista. 

-Organisationally, the Ejército Zapatista de Liberación Nacional (EZLN, armed core of the movement) will be dissociated from the 'autonomous' municipalities. Anyone holding municipal office will have to resign their position in the EZLN. 

-The 'autonomous' municipalities will sever relations with 'paternalistic' NGOs which impose their own pet projects. Aid sent to specific persons or communities will be rejected; the Zapatistas will decide how monies will be used, ensuring that 10% of any donation is shared between the municipalities. 

-The cultural centres known as Aguascalientes, which served as the Zapatistas' point of physical contact with the outside world, will be shut down. New contact points to be known as Caracoles ('snails') will replace them. 

-In addition to their website, the Zapatistas will communicate through a new shortwave radio station, Radio Insurgente, which will broadcast on 5.9 megahertz (but has contingency plans to evade any government attempt at jamming). 

Piqued parties raise legality issue 

Leaders of the three biggest political parties, clearly piqued by Marcos's dismissal of their contribution to the indigenous cause, criticised his policies as unconstitutional and threatening the rule of law. The ruling Partido Acción Nacional (PAN) has been strongest in its condemnation of the new Zapatista strategy, with some leaders warning that failure to curb the spread of indigenous autonomy in Chiapas might cause the example to spread to other parts of Mexico. 

At the other end of the spectrum, the left-of-centre Partido de la Revolución Democrática (PRD) said that the communiqués should be taken as a 'call to attention' underlining the amount of unfinished business regarding the indigenous communities. Sitting somewhere in the middle, the Partido Revolucionario Institucional (PRI) acknowledged that the circumstances which gave rise to the Zapatista uprising in 1994 are still present. 

Even church leaders who are generally sympathetic to the indigenous grievances raised questions about the legality of the policy shift. Bishop Felipe Arizmendi of San Cristóbal de las Casas, in Chiapas, said that the changes announced by Marcos are 'licit', but must be pursued 'within the framework of legality'. 

The most prominent politician to break with the pack was the governor of Chiapas, Pablo Salazar, a former PRI senator and member of Cocopa who won the last elections as candidate of a broad civic coalition, promising to reverse local legislation that clashed with the San Andrés agreements. Alluding to the 'good governance committees' announced by Marcos, he stated that he saw nothing illegal in people associating to improve their condition. 

What next 

The Zapatistas' case has been strengthened by the recent verdict of the UN rapporteur on indigenous rights, Rodolfo Stavenhagen (doyen of Mexico's indigenists), who said Mexico cannot end the uprising in Chiapas or halt rights abuses against Indians unless the constitutional provisions on indigenous rights are strengthened. 

The government has been most unusually tightlipped about the whole thing - probably waiting to see exactly what it entails in practice. The most likely next step, once the new congress is installed in a month's time, is the reactivation of Cocopa, or some similar body, and a new push to reform the indigenous legislation. The launch of the new régime for the 'autonomous' municipalities and Radio Insurgente has been scheduled for 8-10 August, when a party will be held in Oventic.

For the third time in two weeks, the Colombian government raised its estimate of the revenue shortfall it will be facing next year: it is now put at Col$3.7tn (US$1.28bn). 

The announcement came as ministers from the treasury met with business leaders to discuss what measures might be taken to cover the gap, which threatens to lift Colombia's fiscal deficit over the 2.1% of GDP target prescribed by the IMF. 

The businessmen will, for the most part, have been reassured by the meeting as finance minister Alberto Carrasquilla ruled out raising the level of income tax, introducing a new capital gains tax, or the issuance of compulsory bonds. And the two groups were largely in agreement over the government's plan, confirmed yesterday, not only to bring forward from 2005 to 2004 a two-point increase in value-added tax (VAT), but also to raise the rate from 7% to 10% on various components of the basic food basket such as coffee, rice, and chocolate. 

The private sector was, however, less impressed by the plans to tax pensions, and more generally by the fact that the government is manifestly not in full control of public finances. President Alvaro Uribe caused the initial shock on 4 July when he announced that Colombia was facing a revenue gap of Col$2.5tn next year - an unpleasant surprise compounded by Carrasquilla's admission on 13 July that the shortfall could be as high as Col$3.3tn. Following yesterday's further revision, some businessmen were calling yesterday for the government to undertake an extensive revision of the fiscal process. 

The government sees the 2% VAT rise bringing an extra Col$700bn to the coffers and the 3% rise a further Col$500bn. It expects the tax on pensions to earn Col$800bn, the balancing of the books between social security and private pension funds to produce Col$800bn, and the nationwide reform programme to save somewhere between Col$500bn and Col$1tn.

DRUG GANGS 'MAKING GUATEMALAN BORDER A NO-GO AREA' 

Businessmen and politicians in the southern state of Chiapas say the authorities are focusing so hard on intercepting the flow of US-bound illegal migrants that they are failing to contain a wave of drug-related violence that threatens to turn the border into a no-go area. Two legislators have called on the federal government to send troops to control the situation. 

The alarm was sounded last week by the local delegate of the Cámara Nacional de Comercio (Conaco), Héctor de la O Santana, after the discovery in Ciudad Hidalgo, next to the Guatemalan border, of two bodies bearing the signs of an execution-type killing had taken the toll since the beginning of the year to 37. 

'If this is allowed to continue,' he said, 'the message we'll be sending abroad is that Chiapas is no-man's land, and what is now happening on the border can contaminate the entire state.' 

The police are closely monitoring the border, but chiefly for illegal migrants -which is undoubtedly a major problem. The local authorities reported last week that they had managed to intercept more than 500 over the previous weekend. 

This is not on the scale of what has been happening along Mexico's northern border (WR-03-20), but the situation in Chiapas has added peculiarities of its own. 

Beyond the migrants. By midweek the death toll in Chiapas had risen to 38. Though some of the killings have been associated with the people-traffickers known as polleros, most of them are attributed to turf wars between rival gangs of drug-traffickers. Chiapas is the entry point on the overland drugs route to the US. 

Blas Zamora and Vitaliano López, congressmen of the opposition Partido Revolucionario Institucional (PRI), note that Chiapas ranks 17th among Mexico's 32 states when it comes to counting 'common' violent crimes, but rises to 13th place when the focus turns to kidnappings and other offences attributed to organised crime. 

The gangs of traffickers operating in several municipalities in Chiapas, they say, are armed with AK-47 assault rifles. 'In the police corporations,' they add, 'we detect indifference and even dissembling -which leads one to suspect that there are acts of corruption.' 

The combination of these two factors is what has led them to ask the federal government to send troops to strengthen security in the border area. There are troops in the field not far away, devoted to patrolling the areas of Chiapas under control of the largely dormant Zapatista rebels. 

Across the border. On the other side of the border, the Guatemalan military are facing demands to deal with another, different set of internal security problems. Two weeks ago the government ordered 400 army troops into the streets of the capital, to strengthen a police force apparently overwhelmed by a wave of criminal and political violence. 

It did not make much of a difference. In the days after the deployment of the military another five people were killed (some close to where the soldiers were patrolling), and the emergency services received more than 80 calls from people injured in violent incidents. 

And that was in the capital. In different parts of the interior another four killings were reported; as in Guatemala city, most are attributed to gang wars -but in one case the victim was a congressional candidate of the opposition Partido de Avanzada Nacional (PAN), Ramiro Garcí­a. 

He was the tenth politician to have been murdered in less than a month. Of the others, six belonged to the Alianza Nueva Nación (ANN), a coalition that includes the former URNG guerrillas, and three to the Unidad Nacional de la Esperanza (UNE).

ON STRICT READING, 'BAN CAN'T BE RETROACTIVE' 

Even after the independent members of the constitutional court placed them under the full glare of publicity, the pro-government majority decided to reverse the twice-issued ruling of their predecessor and allow retired General Efraí­n Rí­os Montt to register as a candidate for the presidency. 

It was bound to arouse widespread indignation among opposition politicians, human rights organisations and representatives of some international bodies -but the ruling was based on a strict reading of the constitution.

Article 186 bars from running for the presidency or vice-presidency anyone involved in a government arising out of a breach of the constitution -such as a coup. 

Rí­os Montt fitted the bill. Called out of retirement by the generals who had staged a coup in March 1982, he served as President until August 1983, when he was removed by the same generals. The constitution imposing the ban, though, only came into effect three years later. 

What Rí­os Montt's lawyers have argued is that no law can be applied retroactively. On two previous occasions, the constitutional court preferred to overlook this; this time it did not. 

As one prominent Guatemalan jurist (who heartily dislikes the latest ruling) told us, this loophole was the result of the manner in which Guatemala's peace agreements were negotiated -with great care not to cause more than the 'necessary' irritation to the still-powerful military. 

This approach precluded using Guatemala's existing legislation to try and convict the previous military rulers (on a range of offences, including violation of the constitution). Had this been done, they would have been barred from seeking elective office, and not just the highest (there are nowadays at least 17 former military men seeking election to congressional and municipal posts). 

Range of objections. Presidential candidate Alvaro Colom, running under the banner of the Unión Nacional de la Esperanza (UNE), says that the court's ruling is the result of 'juridical manipulation' -hence 'Rí­os Montt's candidacy is illegal, and if it is not reversed, we will be facing a technical coup d'etat.' A former president of the constitutional court, Conchita Mazariegos, said, 'It is a blow against the rule of law and the institutions. I had though that what would prevail was good sense and respect for the constitution, but [...] that did not happen.' 

Alvaro Castellanos, dean of the law school at the Jesuit-run Universidad Rafael Landí­var, suggests that the electoral tribunal could yet 'refuse to register him [...] based on Article 156 of the constitution, which says that no official can accept illegal orders.' 

The UN's special rapporteur on the independence of judges and lawyers, Dato Param Cumaraswamy, fumed, 'This latest decision flies in the face not only of previous decisions of the constitutional court but also of the specific recommendations I made after my mission to Guatemala in 1999.' 

One of those recommendations of 1999 was that 'All personalities who were known to have committed human rights violations during the armed conflict should be removed from public office and from the military. In any event, those with such a record should not be elected, appointed or recruited for any public office in the future.' 

Much ado about nothing? What seems to have escaped notice in all the hubbub about the court ruling is that Rí­os Montt's chances of getting elected are looking very dim. A survey released as the court was deliberating showed that the frontrunner by far was the businessman Oscar Berger, of the Gran Alianza Nacional (GAN), with 39.4%. Rí­os Montt came a poor third, with 3.8%.

Mexico's finance minister, Francisco Gil, admitted last week that his 3% economic growth target for this year will prove difficult to meet. Most independent analysts reckon that 2% growth is more likely, and the central bank is forecasting 1.8%. Gil said that the problem was the sluggish growth in the US: the Federal Reserve has just clipped its growth forecast by 0.75 points, to between 2.5% and 2.75%, for this year. 

The slow rate of growth has led labour minister Carlos Abascal to admit that the country is unlikely to create the 300,000 jobs it had hoped for. 

Since President Vicente Fox took office, the workforce has increased by 3%, to 40.3m people: the number of unemployed has risen from 612,000 to 890,000. 

Despite the problems, the government says that it is doing better than other countries in coping with the slowdown in the US. This is moot: Costa Rica, just to take one example, is actually growing quite lustily (around 5%) despite the fact that 50% of its exports go to the US. Over 85% of Mexico's exports go to the US. 

The US government has imposed anti-dumping duties (of up to 119%) on Mexican and Brazilian steel wire. The US Department of Commerce claimed that Mexico and Brazil, and three other countries, were exporting the wire to the US at prices that were lower than those in their domestic markets. Mexican steel wire faces 77% duty; Brazil must pay the higher rates. 

The Department also claims that a Mexican company, Cablesa, increased exports of steel wire to the US before the decision: as a result all its US customers will have to pay retrospective duties on all their purchases from Cablesa after 1 April. 

Mexico exported 27,005t of steel wire to the US in 2002 and 9,592t in the first four months of this year. 

The US decision on steel wire came on the same day that the World Trade Organization (WTO) ruled that US anti-dumping duties on another 10 steel products, imposed last year, were unjustified and illegal.

Costa Rica's central bank has authorised the floating of a US$60m bond issue in compliance with a demand made by striking workers of the state-owned telecommunications monopoly, Instituto Costarricense de Electricidad (ICE), in late May (WR-03-21). A further US$40m of bonds were issued in the heat of the strike on 23 May. 

The government was initially reluctant to agree to the bond issue because some of the ICE's financial statements were deemed to be inaccurate. 

Economy minister Jorge Walter Bolaños resigned from his post over the matter. The central bank agreed to the issue after the ICE promised to cut its projected deficit this year by US$50m, to US$58m, and to erase the deficit altogether by 2004. 

Local commentators have argued that the bond demand was merely a cover story and that ICE directors promoted a strike by the workforce to show the government its willingness to flex its muscles ahead of the final stages of the US-Central American Free Trade Agreement (US-Cafta). 

It is no secret that the US has brought pressure to bear on the Pacheco administration to free up the telecommunications market under the Cafta.

Panama's merchant navy (a huge flag-of-convenience fleet) could well disappear as a result of pressure from the OECD to impose income tax on commercial activities by ships flying the Panamanian flag, regardless of where these activities are carried out. 

The dire prediction was made by the newspaper El Panamá América, which says that this would do away with the incentive to register ships in Panama. 

It notes that more than 10,000 ships currently fly the Panamanian flag, and contribute about US$80m annually to the economy.