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Development: On 22 March the Under Secretary for Political Affairs at the US State Department, Nicholas Burns, made clear his annoyance with the Argentine government for allowing an anti-US rally to take place in Buenos Aires earlier this month.

Significance: Until now the US government has, at least in public, kept a guarded silence over its views on Venezuelan President Hugo Chávez 's activities during President George W Bush's visit to Latin America earlier this month. Burns's outburst, over a Chávez -led rally in Argentina that coincided with Bush's arrival in neighbouring Uruguay, showed his disappointment at the downturn in US relations with the Argentine government which Burns and his colleague at the State Department, Tom Shannon, had tried to improve with an official visit in February.

Burns's comments, made during a speech to the Council of the Americas in Washington, were aimed at the Argentine ambassador to the US, José Octavio Bordon. “I regret that this event was staged in Buenos Aires on the same day that our president was in Montevideo." This was the event at which Chávez made his infamous comment about Bush being a “political cadaver". Addressing Bordón, who was sitting in the front row, Burns said, “I'm sorry, ambassador_I don't think it was the right thing and I'm sorry to say it ambassador, but this is how our government feels."

For the usually mild-mannered Burns, this was an unusual outburst, and one which both Bordón and the US ambassador to Argentina, Anthony Wayne, had worked hard to prevent to stop the already tense relations between the two countries deteriorating further. What is interesting is that no US officials have made equivalent comments about the Venezuelan government, which they clearly consider beyond the pale. The US had hoped, however, that Argentina, along with Brazil, could become a moderate regional leader. Burns added, “We would like a more consistent, friendly relationship with Argentina. But it takes two countries to achieve that." 

The Argentine foreign minister, Jorge Taiana, said that Burns's declarations were “surprising and unacceptable". Bordón responded to the criticism more equitably, thanking Burns for his criticism and for his praise of Argentina's management of the AMIA bombings and nuclear non-proliferation. He then claimed that the Chávez -led rally was organised by non-governmental organisations and had nothing to do with the Argentine government, although it is likely that President Néstor Kirchner must have at least given his tacit approval for it to go ahead.

COLOMBIA: The number of foreign tourists has increased 20.6% in the first quarter of 2007 on the same period last year, to 266,731 people.

REGION: Chile is the most attractive Latin American country for foreign investors according to a study conducted by the World Economic Forum on Latin America . Brazil follows in second place and Colombia in third. Peru ranked 4, Mexico 5, Uruguay 6, El Salvador 7, Guatemala 8, and Argentina 9. The least attractive countries for foreign investors are Venezuela, which came in 10th place, followed by Bolivia. The bottom of the list, however, was the Dominican Republic. The study is based on eight pillars which include macroeconomic environment, legal framework, political risk and infrastructure.

URUGUAY: Uruguay posted a trade deficit of US$120m in the first two months of 2007, despite the fact that imports grew more slowly than exports in the period: 9.1% to 12.2%.

Development: Chile's supreme court will receive its final legal advice on 7 June as to whether to extradite former president Alberto Fujimori back to Peru.

Significance: Although the recommendation from Mónica Maldonaldo, the supreme court's top legal adviser, is not binding, her view of the legal position is likely to carry major weight with the judge in charge of the case, Orlando Alvarez. It will be a shock to human rights lawyers (and to Peru) if Maldonaldo refuses to recommend Fujimori's extradition.

Maldonaldo admitted on 3 June that her opinion had been delayed because of her illness. Originally, the supreme court should have made its decision on 23 April. She said that she had been off work of 25 days but now everything was sorted out and she expected to publish her opinion on 7 June.

Fujimori arrived in Chile on 5 November 2005; immediately Peru asked for him to be extradited to face human rights and corruption charges. Alvarez has five days to make a decision after receiving Maldonaldo's report. Alvarez's decision can be appealed: appeals on extraditions tend to be heard quickly.

ARGENTINA: Inflation-linked bonds fell to their highest yield since last September, suggesting that investors do not believe the June inflation figure. The official estimate for inflation in June was 0.4%, well below what independent economists had expected.

PERU: The central bank raised interest rates by 0.25% to 4.75%. This was the first move since May 2006.

Development: On 6 August Argentina's national statistics institute (Indec) announced that monthly inflation was 0.5% in July, while annual inflation was 8.6% the same month, down from 8.8% the previous month and 10.6% a year earlier.

Significance: The official index is lower than was projected by economists and consumer associations, who believe the monthly inflation rate last month to have exceeded 1%. Some analysts have suggested that inflation might have reached 1.3%.

This has once again raised doubts over the reliability of the inflation figures. The credibility of Indec has been severely questioned in recent months, with investigations underway over accusations of data tampering involving the consumer price index.

The resurgence of doubts over the reliability of Indec figures follows the appointment of Miguel Peirano as economy minister. Peirano took over from Felisa Miceli on 16 July.

Development: Finance Minister Danilo Astori announced on 10 September a series of anti-inflationary measures.

Significance: The 12-month inflation rate stood at 8.22% in August, following a 1.73% month-on-month increase. The 12-month rate is well above the government's 2007 inflation target of between 4.5% and 6.5%. After a meeting with President Tabaré Vázquez, Astori decided to enforce anti-inflation measures. These include lifting some food import duties, reducing electricity prices by 4.3%, fuel prices by 2% and the cost telephone lines by 6.5%.

The measures are expected to cost the government some US$90m. Astori, however, said that most of the outlay would be "compensated" by the fall of the US dollar, which made imports cheaper, especially purchases of oil. Uruguay imports all of the oil it consumes. According to Astori, the measures will start to have an impact this month but will be mostly felt at the beginning of next year. Next year's inflation target is between 4% and 6%.

Also on 10 September the supreme court ratified proceedings against former dictator Juan Marí­a Bordaberry. The charges against him - 10 counts of aggravated homicide of leftwing dissidents during his unelected tenure in power from 1973 to 1976 - were accepted and his defence has no right to appeal.

Bordaberry was charged in December last year and has been kept under house arrest. His foreign minister, Juan Blanco, has also been charged.

Development: Venezuela's President, Hugo Chávez will inaugurate today (12 October) the first section of his ambitious energy network for South America.

Significance: The 225km-long gas pipeline Chávez will inaugurate together with his Colombian and Ecuadorean counterparts, Alvaro Uribe and Rafael Correa, will take Colombian gas from the Ballenas field to Venezuelan refineries. The pipeline was financed by the Venezuelan government and is the first to enter operation in a series of envisaged pipelines that Chávez hopes will unite South America into a single energy network.

Chávez is promoting two more gas pipelines, the so-called Transandino and the Gasoducto del Sur. The first links Venezuela to other Andean nations and the second links Venezuela to Brazil and Argentina. Chávez had complained that the idea for the Gasoducto del Sur had been "abandoned" by "those who would benefit the most". He was referring particularly to Brazil. However, Chávez met Brazil's President, Lula da Silva, in late September and it seems Lula is again keen on the idea.

Uribe told journalists earlier this week that the gas pipeline "is vital" especially because it could help to convince Chávez to bring Venezuela back to the Andean Community, which he left in 2006 because of Colombia's and Peru's decision to seek a free trade agreement with the US. After leaving the CAN Chávez signed Venezuela's membership in the Mercosur, but problems with the Brazilian senate have prevented ratification.

Development: On 13 November President Alvaro Uribe condemned the "temerity" of the Farc's attempt to infiltrate the senior ranks of the armed forces.

Significance: The government has been rocked by recent revelations that Marilú Ramí­rez Baquero, a member of the Farc's network in Bogotá, was accepted onto a course for colonels aiming to become generals in 2005. Ramí­rez was arrested last month along with five fellow guerrillas on charges of orchestrating the bomb attack on the Escuela Superior de Guerra in October 2006. This is the same school where she attended (as a civilian) the training course.

There is considerable speculation that other members of the guerrilla group have sought to infiltrate high-ranking positions in the military and other areas of the government. This is the second such scandal this year, after it emerged that drug traffickers had bought off some of the most senior officers in the Colombian navy.

Vice-President Francisco Santos admitted on 13 October that two former generals had recommended Ramí­rez to take part in the course at the military college. Santos refused to name the generals, saying that they "form part of an investigation".

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

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

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

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

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

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

Development: On 29 January Defence Minister Wellington Sandoval said that Ecuador would not join the defensive alliance proposed by President Hugo Chávez of Venezuela.

Significance: Ecuador's snub emboldened Bolivia also to keep its distance from the Chávez proposal. Both Ecuador and Bolivia are keen on persuading the US to renew their Andean Trade Promotion and Drug Eradication Act (Atpdea) privileges which allow their exports easy access to the US. The Atpdea extension expires in February.

Sandoval admitted that "obviously the final decision [on whether to join the alliance] is President [Rafael] Correa's and we will respect it, but I'm sure that the president will keep to our current policy of peace and the right to self-determination."

In La Paz Bolivia's defence minister, Wálker San Miguel, said that the government was still considering what to do. Bolivia is one of Chávez 's closest allies and a member of the Alternativa Bolivariana para las Américas.

Significance: Colom said that Espada's declaration was based on a misunderstanding and that he "had not meant to say what he had said". Colom's statement shows the confusion over the role of the military in the country; Espada had said on 27 February that ideally the size of the army would increase over the next 25 years from its current 15,000 members to 30,000 in order to combat drug trafficking and organised crime.
Some politicians and critics had heavily condemned the move, warning that increasing the size of the military would weaken the role of the police and would constitute a "step backwards" for the country.
However this announcement had in turn followed claims by Colom at the start of the month that the army would "gradually" cease to play a role in civilian security matters. This does not square with his appointment of his interior minister who has close connections with the army.

Electoral mud-slinging in Paraguay

The campaigns for the coming presidential elections of 20 April have been branded by sectors of the political opposition as "dirty". The ruling Partido Colorado - which has been in power for 61 years - has been running a slander campaign against opposition candidate, Fernando Lugo. He was portrayed in one of their posters wearing military camouflage gear under the label: "Ambassador for the Farc in Paraguay" in reference to the Colombian guerrilla group, Fuerzas Armadas Revolucionarias de Colombia (Farc).

Development: On 12 May the State Department cited the killing of three senior policeman last week as a reason for the US congress to approve the US$1.5bn military aid package to Mexico.

Significance: The State Department and US politicians are becoming seriously concerned about the increase in killings by drug gangs in Mexico. John McCain, the senator from Arizona who has won the Republican presidential nomination, sees the aid package as a way of bolstering his support with Mexican-American voters, who are an important, (some US political analysts say the most important) constituency in the US electorate. Around 65% of the 10m Hispanic voters in the US have links to Mexico.

These voters' links to Mexico mean that they know all about the violence in their homeland. This year's death toll from gang killings in Mexico already stands at 1,186 and in the murder blackspots, such as the state Sinaloa on Mexico's west coast, the death toll is running 20% ahead of last year's. So far 270 people, mostly gangsters but also 24 policeman, have been killed in the state. It is one of the main battlegrounds between the country's two main gangs, the Sinaloa gang and the Golfo gang.

Republicans say that the House of Representatives has been delaying a vote on the package of US military aid to Mexico, known as the Iniciativa Mérida. The senate appropriations committee now says that it will vote on the package on 15 May. The House of Representatives foreign affairs committee is due to vote on the package on 14 May. The Iniciativa Mérida money is part of a supplementary spending package which also includes more money for US military operations in Iraq and Afghanistan.

US senators have already fiddled with the package, cutting the amount allocated to Mexico and increasing the money going to Central America. Eliot Engel, (D, NY), the chairman of the western hemisphere subcommittee in the House, said that this cut was disappointing because it would mean that Mexico would receive only US$300m rather than the US$500m President George W Bush had promised for 2008.  Engel said that he would work with senators to try to find a compromise that would ensure Mexico got the money it expected.

McCain is also trying to make political capital out of the Democrat-controlled congress's failure to approve the Iniciativa Mérida package as well as its consistent hostility to a free trade deal with Colombia. Randy Sheunemann, McCain's foreign policy adviser, told Andrés Oppenheimer, an influential columnist on the Miami Herald, whose column is syndicated across Latin America, that the Democrats “were incredibly irresponsible to consider reducing [Iniciativa Mérida] aid funds. This is only the most recent example of the way in which the Democrats are undermining our allies across the world."

What Mexico wants, in particular, from the Inciativa Mérida package is the eight transport helicopters the US is offering. Mexico is also pleased that, under the Iniciativa Mérida, the US will start to do something to halt the flow of guns and weapons across the border to gangs in Mexico.

Democrats in the US congress, just like some nationalist Mexican politicians, are uneasy about the heavy military component of the Iniciativa Mérida. Last week important Democrat lobbies, such as organised labour, argued that the Democrats in congress should oppose the Iniciativa because of human rights shortcomings in Mexico.

Although the government of President Felipe Calderón Hinojosa has stressed that no US troops will be deployed in Mexico as a result of the Iniciativa, his critics claim that the US aid is the first step towards a Mexican version of the Plan Colombia under which the US aided Colombia's President Alvaro Uribe to drive back the Fuerzas Armadas Revolucionarias de Colombia to the margins of the country.

President Calderón has consistently said that his government has been forced to use the Mexican army to try to drive the gangsters from areas which they controlled. The problem facing Calderón is that the rising death toll (the country is on course for 3,000 drug related killings in 2008 up from 2,275 in 2007) and, in the past week, the assassination of key policeman, notably Edgar Millán Gómez, the head of regional security, suggests that Mexican forces are not winning.  

Who is he? Berrocal is a former interior minister.

Why watch him? Having left government by 'mutual agreement' on 30 March 2008 after making allegations about Costa Rican political links to the Fuerzas Armadas Revolucionarias de Colombia (Farc), Berrocal has announced his intention to run as a pre-presidential candidate for the Partido Liberación Nacional (PLN) in the 2010 presidential election.

Born: 1945, Costa Rica

Education: Graduated as a lawyer.

Public Life: Having become involved in politics at an early age, Berrocal served as president of the Universidad de Costa Rica (UCR) student union, at which point he had already joined the PLN. An expert in international law with an extensive career in public service, Berrocal has been a close associate of various presidents of Costa Rica, including current President Oscar Arias who credited him with a key role in his party's modernising project for the country. Between 1974 and 1978 he served as Costa Rican ambassador to the former Soviet Union and between 1982 and 1985 he occupied the Ministry of the Presidency. He also served as Costa Rican ambassador to the United Nations (1994-8) and represented Costa Rica at the UN Security Council between 1997 and 1998.  His incendiary allegations that the Farc had forged links with “political sectors" within the country followed criticisms he had made regarding the state of the country's security which he deemed inadequate and under-funded in the face of the current threats of drug-trafficking and organised crime. On 30 March he left the government following a political storm caused by the Farc allegations and on 7 June he announced his intentions to stand as PLN pre-candidate.

Time Line:
Student years: Leader of the UCR student union.

1974-1978: Costa Rican ambassador to the former Soviet Union.

1982-1984: Minister of the Presidency.

1994-1998: Various posts over the period including: Costa Rican ambassador to the United Nations; President of the UN Security Council (December 1997).

May 2006-March 2008: Interior Minister.

30 March 2008: Left government post by mutual consent.

7 June 2008: Announces intentions to stand as PLN pre-presidential candidate for the 2010 presidential elections.

Weaknesses: A controversial and outspoken figure during his two years as interior minister for his criticism of government policies combating crime and traditional hospitality to refugees, Berrocal's allegations about the Farc lost him considerable support both among the government and opposition. All concerned denied the claims and demanded evidence. Upon submitting his evidence to the legislative committee, he was further attacked for failing to provide specific details such as names of politicians involved. His decision to step aside for “state reasons", the day before he was scheduled to appear before congress to reveal the extent of the Farc penetration, also undermined his credibility further; opposition parties decried the move as a political manoeuvre, designed to ensure that the fragile cross-party support for the controversial Cafta-DR (the free trade agreement between Central America, the Dominican Republic and the US) remained intact.

Strengths: Having accrued considerable political experience both in the domestic and international sphere, Berrocal has been credited with playing a leading role alongside Arias in coordinating Costa Rica's government plan.
   During his 22 months as interior minister, he had many successes, impounding 65 tonnes of cocaine, US$14m of drug money and dismantling 50 drug-distribution networks. An indication of just how successful he had been was that last July police foiled a plan to murder him and Rodrigo Arias by five Colombian sicarios, who had been offered US$150,000 by the Colombian Norte del Valle cartel to carry out the hits.

Prospects: In his declarations to the local press regarding his intention to stand as PLN pre-candidate, Berrocal affirmed that he is in agreement with the ideas being implemented by the current administration and that, while in favour of elements of social democracy, he would promote a model of state modernisation and liberalisation.
   However, it is unlikely that Berrocal will be able to secure the support of the PLN given that Arias has already reportedly thrown his weight behind current vice president and justice minister Laura Chinchilla although she has yet to formalise her intention to stand. The other main competitor, who similarly has yet to officially declare his candidacy, is San Jose mayor, Johnny Araya; a survey by the CID-Gallup institute taken in April showed Araya with 51% approval rating while Chinchilla had 47%.

Development: On 19 July President Hugo Chávez of Venezuela criticised Barack Obama, the Democratic party candidate for the US presidency.

Significance: Chávez 's criticism hit Obama on a nerve. As a first term senator, Obama has little experience of foreign affairs. Chávez pointed out that Obama's claim last week to use a “carrot and stick" in US policy towards Latin America was naí¯ve.

“The gentleman [Obama] says that he is going to overhaul US policy to Latin America. [Then] look at what he says: we're going to use the carrot and the stick... Sir, go and study what is happening in Latin America. It is a revolution." Chávez noted that Obama said that he wanted to talk to Venezuela and Cuba, but Chávez said that this would be impossible unless there was a basis of mutual respect.

Chávez is off on another world tour. On 21 July he is due in Moscow where he will meet the new Russian president, Dmitri Medvedev, and discuss arms purchases. Venezuela is interested, the Russians say, in between 10 and 20 Tor-M1 ground-to-air missile systems. Russia sold similar systems to Iran in 2005.

Separately, Isvestiya , a Russia newspaper, reported that Russia is considering deploying military jets in Cuba in retaliation for the construction of a US missile defence shield in former Russian satellites in Eastern Europe. The newspaper's source stressed that no decision had been taken but that the discussion of the option was serious and detailed.

Development: A landmark security summit held in Mexico City on 21 August agreed on 75 measures to combat crime.

Significance: As requested by the Mexican public, all levels of government have adopted a united front against crime. The security package was agreed unanimously by those present at the meeting, who included President Felipe Calderón; the mayor of Mexico City, Marcelo Ebrard; 32 state governors and various congressmen, as well as representatives from the security forces and the judiciary.

A surprisingly high number of measures were approved in the summit, which took place in the presidential palace and lasted three hours. The 75-point agenda, entitled the “national agreement for security, justice, and legality', commits virtually every institution to contribute to the war against crime via the pact, which will be implemented over the next three years.

 As well as being numerous, the measures are also radical. Calderón promised a purge of the police, which is frequently linked to organized crime. The president stressed the need for “policemen who look after honest citizens and not criminals; who fight crime rather than become accomplices". Judicial institutions can also expect a shake-up as a result of the new agreement.

In addition, the government established measures against money laundering as well as setting a two year deadline within which customs officials should be able to demonstrate a reduction in the amount of weapons and precursor chemicals for drugs production entering the country.

Perhaps the most ambitious aspect of the agreement is the plan to create a data base for mobile phones within the next six months. The idea is that the authorities will be able to use the information immediately to track down criminals who use phones during their crimes.

The security pact pays special attention to kidnappers in an attempt to stem a sharp rise in abductions this year. A national strategy against kidnapping will be developed over the next six months, special offices will be created to combat kidnapping, and within two years two maximum-security prisons will be built with areas designated especially for kidnappers to ensure that they are not able to recruit inmates convicted of different offences to their gangs.

Monitoring will also be a key aspect of the new agreement, with the authorities to meet again in a month and then two months after that to assess the initial progress. Within three months a civilian body will be established to make sure the terms of the agreement are being adhered to.

There will be intense pressure on Calderón for this deal to make an impact, especially after the ineffectiveness of his war against drug gangs which he undertook shortly after taking office in December 2006. Alejandro Martí­, the businessman whose son Fernando Martí­ was recently kidnapped and murdered, said that if the authorities cannot stem crime then they ought to resign because otherwise they are “receiving a wage for doing nothing".

Alejandro Martí­ is not an easy man to ignore: it was the public outrage over his son's horrific treatment that was the catalyst for the historic meeting rather than the daily reports of appalling violence committed by drug gangs in the north and west of the country.

Ebrard, Mexico City's mayor and a fierce opponent of Calderón, was the only public official to accept Martí­'s challenge. However, he also claimed that implementing security measures in the capital would require US$1.2bn worth of funding next year alone. Given that this money is unlikely to be forthcoming, Ebrard will be able to argue that the federal government never gave him a chance of succeeding.

Development: An opinion poll published by Poliarquí­a on 24 September showed that President Cristina Fernández de Kirchner has an approval rating of 28%.

Significance: The survey confirms that support for Fernández has levelled off after a rapid decline during her first six months in office. Nonetheless, she is more disliked than liked: 34% of respondents think she is doing a bad job while 36% think she is neither good nor bad.

Support for Fernández slumped because of her handling of the rural dispute. Since her government's defeat to the farmers, Fernández has made some wise decisions. She has been better at explaining the government's decisions and she has sidelined her bellicose predecessor (and husband) Néstor Kirchner. Although she did not purge her cabinet in the wake of the rural dispute as many people expected her to, she has ensured that unpopular members of her administration adopt a lower profile.

Fernández's recent attempts to restore faith in the Argentine economy by paying off her country's debt to the Paris Club and reviving the bond swap might also have shored up her support. On the downside, however, her government is being curiously silent about the accusation (which has emerged via a court in the US) that Venezuela's President Hugo Chávez provided at least US$5m to her presidential campaign last year.

Development: On 27 October leading Cuban dissident and head of the pro-democracy “Varela Project" movement, Oswaldo Payá, slammed the Venezuelan and Spanish governments for being complicit with the authoritarian Castro government in Cuba, despite its human rights failings.

Significance: The growing chorus of criticism from leading Cuban dissidents against the increasing rapprochement between Spain and Cuba, and between Cuba and the European Union (EU), will sound an uncomfortable off-note for high-level EU representatives, who have just signed an agreement with the government of President Raúl Castro to restore full diplomatic and political relations (suspended since 2003 due to human rights abuses on the island). The EU has also promised millions of Euros in short-term hurricane aid and long-term economic assistance to Cuba.

On 24 October, Oswaldo Payá and a number of other members of the opposition re-launched the “Varela Project", a petition requesting a referendum in Cuba to demand more civil, human and political rights. On the same day, the Venezuelan foreign minister, Nicolás Maduro, and his Spanish counterpart, Miguel Angel Moratinos, gave a press conference in which Maduro said that the project was not “taken seriously" in Cuba or Latin America, and questioned its credibility. Moratinos refused to comment but reiterated the Spanish government's commitment to working with the Cuban authorities through dialogue.

Payá responded three days later by condemning the Spanish government's tacit endorsement of the Castrist regime through its refusal to criticise its human rights abuses and the repression of Cuban dissidents and political prisoners. “These ministers have offended tens of thousands of Cubans," said Payá, “who have signed a petition for a referendum, which is also a demand for the fundamental rights which the Cuban government denies its citizens".

Development: On 30 November governor of Santiago del Estero, Gerardo Zamora, was re-elected with over 84.1% of the vote.

Significance:  The result is good news for the government: Gerardo Zamora is one of the few “K-radicals" - dissident members of the Unión Cí­vica Radical (UCR), who back the government - to still support President Cristina Fernández. His re-election in the northern province comes as no surprise and was strongly backed by the government machine. Zamora's closest rival, running for the opposition party Fuerza de Unidad Popular, garnered only 5.23% of the vote.

Interior Minister Florencio Randazzo travelled to Santiago del Estero yesterday (30 November) “to represent the national government." He heralded the result as a “triumph" for the government's Plural Concertación, the electoral alliance with the dissident radicals which helped Fernández take power in 2007:  “Two years ago we decided that the political project represented by former president Néstor Kirchner should be consolidated with a broad plural base and we found an unconditional ally in Zamora," said Randazzo.

Development: President Rafael Correa celebrates two years in office, today, 15 January.

Significance: Correa came to office promising “radical and rapid" change. This is the year when the changes are likely to become apparent. The first elections (congressional, presidential and municipal) under the new constitution are due on 26 April. Correa is almost certain to be re-elected president and, crucially, is likely to have a workable majority in congress. The cost of putting on the elections is budgeted at US$91m.

Correa claims that his support is running at over 80% in Quito and even 67% in Guayaquil, the country's business centre where doubts about Correa's vision of 21st Century Socialism are strongest. An opinion poll, by Informe Confidencial and distributed by the presidency, claimed that Correa's support in Guayaquil was 67%. This is unlikely however given that a (narrow) majority of Guayaquileños voted against the new constitution in the referendum on 28 September 2008.

A more recent reliable poll is probably Cedatos's which found that Ecuadoreans back Correa though they have doubts about him. According to Cedatos, 70% of voters say that they approve of Correa's administration (down from 73% when he took office), but only 50% approve of his attitude and only 61% trust him.

Correa's big problem is that the economic wind, which has been behind his government for the past two years, has turned. For the past two years, Correa has been able to spend and invest because oil revenues have been huge. International oil prices, which provide the government with about 60% of its revenues, hit a record of US$147 a barrel in July 2008 but have been sliding since. Despite this change, according to independent economists, the government's spending jumped from US$9.77bn in 2007 to US$13.2bn in 2008. In 2008 the country's total exports in the first 11 months topped US$17bn for the first time ever.

The business sector and the rightwing opposition argue that the government raided “rainy-day" funds even when the oil price was rising. They claim that the Fondo de Ahorro y Contingencia was raided for US$700m in 2007 and that in 2008 another US$2bn was switched from the “rainy-day" fund into current spending. The Fondo replenishes itself when oil prices are above what the government has budgeted and should only be used when oil prices are below what the government budgets.

The Right argues that the government has little to show for all this increased spending. GDP growth in 2007 was disappointing at 2.5% in 2007, well below the 4.3% the government had forecast. Growth in 2008, however, was probably at least 5% and the central bank is forecasting respectable 3.15% growth for 2009.

The government's economic strategy is to eliminate what it calls unnecessary imports (anything from scent and luxury cars to apples, which can be grown locally) while trying to keeping export receipts at more or less their current levels. The country is currently running a non-oil trade deficit of over US$6.9bn, which Correa argues, must come down. The easiest way to get the trade books into a better balance is to cut imports.

Where Correa has made some progress is increasing tax collection. Local businesses had become used to evading most taxes, but in 2007 the tax service collected US$5.36bn (14.7% more than in 2006). In 2008 it did even better, collecting just over US$6bn.