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Development: On 6 April President Evo Morales swore in María Cecilia Chacón to replace Rubén Saavedra Soto as Bolivia's defence minister. Soto was reassigned to head up the newly created Dirección Nacional de Reivindicación Marítima (DNRM), a committee set up to put together Bolivia's legal case against Chile in its claim for sovereign access to the Pacific Ocean.

Significance: Chacón is Bolivia's first female defence minister and her appointment has been hailed as a major step forward for gender equity, even though there have been plenty of female defence ministers in the region. Though Morales pledged a commitment to gender parity, announcing a "fifty-fifty" cabinet upon taking office for the second time in January 2010, he was criticised for failing to assign any of the significant portfolios (defence, interior, foreign affairs or economy) to women.

Key points:

• Chacón is a lawyer, who has held various posts in the government (notably in the foreign affairs and water ministries). She was hailed as an "intelligent choice" by a range of actors including Marcelo Antezana, a former head of the military and current senator for the opposition Plan Progreso para Bolivia-Convergencia Nacional (PPB-CN).

• Chacón said her main challenge is the modernization of the armed forces. The 2009 constitution broadened the role of the military. The key change allows it to assist in police roles, such as combating drug-trafficking and smuggling. 

As Lucio Gutiérrez attempts to tighten his grip on his coalition government, one of his key ministers resigns to protest Sociedad Patriótica's high-handedness. 

Just as President Gutiérrez was issuing orders barring all officials from criticising dollarisation and mandating that all official publications should bear his effigy, interior minister Mario Canessa announced his resignation. He cited personal reasons but let it be known that he objected to the President's party, Sociedad Patriótica (PSP), imposing their own choice, Fabián Villaroel, as his undersecretary. 

The post had been vacant since Virgilio Hernández, of Pachakutik, resigned three weeks ago, also protesting the PSP's overbearing manners. Canessa had wanted his replacement to come from Pachakutik.

New man at State tells Kirchner he must define a `coherent and predictable' economic plan.

If anyone was wondering what the Bush administration was going to do next regarding Cuba, the uncertainty has been removed by the top Latin America official at the State Department, the recently appointed Roger Noriega. It is currently analysing options to determine its ability to `promote democratic change' on the island. According to Noriega, President George Bush has made explicit commitments to support change in Cuba and it is now his [Noriega's] job to see those commitments implemented. At present his task is one of preparing an `inventory' to pinpoint `concrete, specific objectives' deemed achievable.

For this purpose, he says, State is working in consultation with other parts of government, including the congressional representatives of south Florida, which is home to a large Cuban exile community renowned for its hostility to the Castro régime.

The effort also has a diplomatic dimension which Noriega appears to have set in motion. When passing through Buenos Aires last week he said the US hoped Argentina might assume a `leadership role' in defending human rights in Cuba - with more than a hint that President Néstor Kirchner is not quite there yet. Said Noriega, `We want to continue our discreet dialogue with the [Argentine] government and its representative before the OAS over how we can work together and constructively to prepare the transition [in Cuba] after the dictatorship.'

There was another strand to Noriega's statements in Buenos Aires: US backing for Argentina's effort to reach a new agreement with the IMF. Noriega was a little less positive than his colleagues at the US Treasury. While reaffirming that the US was supporting the negotiations, he said that Argentina should come up with a better definition and explanation of its economic plan, which should be `coherent and predictable'. In his view, he said, Argentina's problems are `structural and political rather than economic.'

By the way, the US ambassador in Brazil, Donna Hrinak, has just stated that there is no evidence of terrorists in the `Triborder' area where Brazil meets Paraguay and Argentina, and that most of the remittances of funds from there to the Middle East are made 'for noble purposes and with legal aims.' This will not be news to our readers, but may raise eyebrows among Hrinak's colleagues in the US military who insist on the opposite. For more on this see our Special Report Latin America and the US `War on Terror'(SR-03-02).

JAMAICA | Growth outlook. GDP growth has been slowing down: in the third quarter, GDP was 1.2% up on the same period last year, paring down the increase over the first nine months to 2.1%. The deceleration resulted from a 0.9% decline in the goods-producing sector weighing down the 2.3% expansion in services. And that decline was largely up to the 5.9% slump in manufacturing: mining and quarrying was up 4.9%, agriculture 4%. Expansion in services was led by finance & insurance (5.9%) and electricity & water (4.9%). The planning institute, PIOJ, is expecting a slightly higher GDP growth rate of 1.8% in the last quarter.

DOMINICAN REPUBLIC | Oil at last? Conflicting reports have surfaced regarding Murfin Dominicana's search for oil in the southern Cibao region of the Dominican Republic. One, on 19 November, says that three of 14 wells drilled show commercially exploitable deposits. Another, from Murfin Drilling Company, says more testing is yet needed. Once before, the illfated President Antonio Guzmán (1978-82) announced a find that did not materialise.

GUATEMALA | Korean pullout threat. Korean maquiladoras (assembly plants) may start pulling out of Guatemala as a result of the latest salary increase decreed by the government, which takes minimum pay up to US$177 a month (versus US$60 in Nicaragua, US$40 in Haiti). The warning came from Bong Chung Park, vice-president of the Asociación de Maquilas Coreanas. Korean assembly plants give employment to about 72% of the 138,000 workers in Guatemala's maquila sector.

COSTA RICA | Investment patterns shifting. Foreign direct investment (FDI) has been shying away from tourism: this year it is expected to attract only US$54.5m, down from US$111.5m in 2001, and below the US$56m a year average that other services have been receiving over the past couple of years. The latter's share of total FDI has increased from 1% in 1998 to an estimated 12% this year. The main target for FDI in Costa Rica continues to be the industrial sector, expected to account for 62% of the total this year.

As Marta Sahagún embarks on a new gambit — ostensibly withdrawing from the `party-political' fray — the latest opinion poll shows her still running a distant second to Mexico city mayor Andrés Manuel López Obrador, of the leftist Partido de la Revolución Democrática (PRD). This is when people are asked about individual candidates; when the pollsters delve into party preferences, they find little difference between the big three.

The survey, conducted by Indemerc, shows López Obrador still way in the lead with 57.3% of voter preferences, followed by Sahagún with 38%. A sizable gap further down is Roberto Madrazo, president of the Partido Revolucionario Institucional (PRI), with 26.4%. Fourth appears the other aspirant of the ruling Partido Acción Nacional (PAN), interior minister Santiago Creel, with 22.1%. Worth mentioning is the fact that Elba Esther Gordillo, the PRI's secretary-general and former congressional leader, almost falls of the scale, ranking 29th among the 30 potential candidates listed by Indemerc.

This year's contests
Two reasons make it relevant to focus on the public standing of the political parties. One is that none of the individual potential candidates listed by the pollsters have yet been formally nominated by their parties. The other is that party strengths will count in this year's electoral contests.

Ten states will be choosing new governors in 2004. Of these, seven are currently ruled by the PRI, two by the PRD, and one by the PAN. [Actually, other states will also be holding minor — not gubernatorial — elections: Yucatán, Baja California Norte, Chiapas and Michoacán.]

The gubernatorial contests will come in four lots, the later ones feeding to some extent on the results of the earlier ones. First, in July, come Chihuahua (PRI), Durango (PRI) and Zacatecas (PRD). Next, in August, come Aguascalientes (PAN), Oaxaca (PRI) and Chiapas (PRD-PAN-PT-PVEM). Tamaulipas (PRI) stands alone in October. In November: Puebla (PRI), Sinaloa (PRI) and Tlaxcala (PRD-PT). If past performance is a good guide, these will be party hard-core elections, with low overall turnouts.

What the Indemerc poll shows is that preferences for the three main parties are `a virtual tie', with only the slightest of advantages for the PRI. The party with most to prove is the PRD, which is widely seen as really strong only in Mexico city. Elsewhere, it rules alone in three of Mexico's 31 states, and in coalitions with others in another four — while the PAN runs six states on its own and two in coalitions (with the PRD, actually).

Sahagún's new tack
On 16 February, a week after having announced that she intended to run for the presidency, Marta Sahagún's office put out a communiqué informing that she had decided to withdraw from `party-political work' and concentrate on the `social' pursuits of her charity Vamos México and on supporting the `national project' of her husband, President Vicente Fox.

The communiqué also said that in the light of this decision she would no longer be seeking a seat on the national council of the PAN, for which she had recently sat a set of examinations that she passed with flying colours. Her joining the council had been seen as a first step towards seeking the PAN's presidential nomination; the other aspirants, Santiago Creel prominent among them, had taken the same step.

What the communiqué did not say is that Sahagún was giving up her presidential aspirations. The text says, `Señora Sahagún has indicated that for now she will not devote a single minute of her time to engage in party-political work' [our emphasis]. This move may have been designed to take at least some of the heat off her husband, in that he will be able to claim that he is not using his position to promote her candidacy (for now).  

It does, however, mean taking distance from the forum in which much of the PAN's policy will be debated and alliances will be forged, but in this regard also the communiqué hints at what her line may be. `Over and above the confusions and expressions that provoke divisions,' she is quoted as saying, `is unity.' In other words, she will build up a broad constituency on the strength of her social pursuits, and in the name of that constituency present herself as the standard-bearer of `unity'.

That President Lula da Silva's drinking habits were a `national concern', as claimed by a foreign correspondent, came as news to most Brazilians. What did become a widespread, if not national, concern, was Lula's intemperate reaction to the report: using residual legislation from the period of military rule, he ordered the journalist expelled - only to back down after three days on the grounds that the journalist had issued a `rectification', which he hadn't.

On 9 May the New York Times published an article by its correspondent in Brazil, Larry Rohter, entitled: `Brazilian Leader's Tippling Becomes National Concern.' It was a typical Rohter piece, lightweight, notably short on current firsthand evidence, and strong on speculation and innuendo - some of which may have been relayed by others to Rohter. The initial reaction in most of the Brazilian media and political milieu was of indignation. That Lula enjoys his occasional tipple is no secret: he drinks quite openly in public, making no visible attempt to cut back, as he does with his smoking. The absence of quoted sources in the Rohter story was explained by a columnist in O Globo: `There is no firsthand account of anyone who has seen Lula drunk.'

This mood did not last. Lula instructed the justice ministry to revoke Rohter's visa, invoking immigration legislation introduced in 1980 by the military government of the day. This not only provoked a White House reaction (usual when US journalists are involved in such episodes), but also triggered an angry, disbelieving reaction in Brazil. O Estado de São Paulo called the decision `a monumental stupidity'.

Rohter got a court injunction staying the expulsion order. Lula's aides let it be known that the order would be rescinded if Rohter retracted his claims and apologised. Three lawyers were involved in drafting a letter in which Rohter said that it had not been his intention to offend Lula, and suggesting that something had got lost in the translation into Portuguese, making the article sound worse than it was (a claim that does not stand up to examination). Rohter stood by the substance of his report. His newspaper insisted that it was `accurate'.

Nonetheless, Lula decided to interpret this as a `rectification', and lifted the expulsion order.
One of the reasons offered by Lula for his reaction was that on his future travels abroad his hosts would be wondering if they were entertaining an unreliable alcoholic. His problem now is that they will wonder what might provoke him into such an overreaction.

President Nicanor Duarte approaches the end of his first year in office with much of the initial goodwill towards him dissipated and under heavy attack from the Catholic hierarchy for having misspent public resources, rewarded negligence and failed to match with deeds the good intentions he'd voiced.

An opinion survey commissioned from COIN by the newspaper Ultima Hora shows only 22.9% of respondents rating Duarte's performance as good or excellent. The biggest segment, 42%, rate it as merely 'middling', while 35% consider it bad or very bad. The pollsters note that those who approve of Duarte's performance 'are unable to provide concrete examples of positive aspects [and in the main confine themselves to citing] statements of good intentions'. This stands in contrast with earlier acclaim for Duarte's much-heralded anticorruption drive and his promotion of a purge of the supreme court last February.

Shortly before the survey was published, the Catholic bishops' conference issued a withering communiqué warning of a 'sombre outlook' for the country. 'We note ambiguities,' the bishops say, 'in contradictory measures and duplicitous discourses of our authorities, in negligence rewarded with new public posts, in insulting portrayals and in the squandering of public resources by the powers of the state.' They did not spell out in detail to what they were alluding, but most Paraguayans will have had no trouble relating the episcopal enumeration to specific episodes of the past year.

“We are working well with many people of the [ruling] PJ, but let it be known that we draw the line at the corporate mafias of old Argentine politics which specialise in winning elections."

Luis D'Elí­a, leader of Argentina's biggest piquetero organisation.

“I know how justice is administered in the [supreme] court dominated by the caudillos, but perhaps God will illuminate the magistrates or those giving them instructions so they will realise the gravity of this situation."

Fernando Zelaya, legal adviser to the Nicaraguan presidency, on the current attempt to remove President Enrique Bolaños from office.

“Two years ago we managed to put in office a President and 11 congressmen, but now we barely have two or three mayors in not very representative cities."

Patricio Ortiz, leader of the ruling PSP, on his party's electoral form.

President Vicente Fox has managed to raise the profile of the Zapatista rebels by proclaiming, during a visit to the southern state of Chiapas, that their movement 'is practically receding into the past'. Inevitably, this brought back memories of his fateful pre-inaugural remark that he would sort out the Zapatista rebellion 'in 15 minutes', which elicited from politicians and commentators the conclusion that he was ill-informed or had lost touch with reality.

Actually Fox's statements, made on 11 January, were part of an electorally-aimed paean to the achievements of Chiapas governor Pablo Salazar (a PRD man elected as the candidate of an alliance supported by Fox's PAN). It included such hype as, 'This is the new Chiapas that is becoming known throughout the world: a new face, a new image, a new recognition of a free, democratic and responsible citizenry for an efficacious democratic government.'

But what made the headlines was his dismissal of the Zapatistas, which compelled Fox to attempt a clarification. On 13 January he told a radio interviewer, 'What I said is clear: that the armed option of Zapatismo is practically relegated to the past and that Chiapas now has a new image.' He added that his attitude towards the Zapatistas was of 'total openness', through what he described as a special office for attention to this issue. Alluding to the commissioner in charge of that office, he said, 'Don Luis Héctor Alvarez is constantly in Chiapas. There he is, working on dialogue.'

He did not dwell on the fact that Alvarez has not managed to meet with Zapatista leader Marcos once since his appointment three years ago. Nor did Fox acknowledge that 30 'autonomous' municipalities in Chiapas are overtly under Zapatista control. His depiction of a peaceful, progressive Chiapas, moreover, was somewhat dimmed by his admission that within its boundaries there are 13 areas officially recognised as 'red zones' ( focos rojos), where the risk of violent land disputes is very high.

Felipe Arizmendi, bishop of San Cristóbal de las Casas, the diocese where the Zapatista rebellion erupted in 1994, has described Fox's remarks as 'inaccurate and provocative'. Zapatismo, he said on 16 January, 'is not dead, it is not a thing of the past. We can see that because the Zapatistas themselves are seeking alternatives for a more just society, an education more adequate for the various cultures, and a more community-oriented organisation in line with their traditions'.

The bishop sounded a note of concern. Most Zapatista leaders, he said, 'are peaceful people, honourable people, but there are also some people who want to return to armed action, and statements of this nature are provocative, and hence worrying'. Bishop Arizmendi does not subscribe to the rosy Zapatista view of their social experiment in Chiapas. 'Not all is success.' he said, 'There are problems, difficulties. Many indigenous people do not agree with [the Zapatistas]. There is a dual juridical framework [Indian customs and national law] in the communities, and this creates problems.'

He says that he has seen some improvement over the 14 years he has spent in Chiapas, but that for many, misery still prevailed: 'When there is still so much marginalisation in the communities, so many people who lack even an aspirin to treat themselves, there is clearly still much to do, and it is too early to claim victory.'

Prime Minister Roosevelt Skerrit announced on 5 April that Dominica will hold its next general elections on 5 May. He had reportedly been holding them back for the spat with the opposition United Workers' Party (UWP) over his China policy to die down, and for confirmation that, after a three-year recession, Dominica's economy grew last year by 3.5%.

Skerrit has been in office since 6 January last year, when he succeeded Pierre Charles, who died of a heart attack. In October 2000 Charles had succeeded Rosie Douglas, in power since the 2000 elections, who also died of a heart attack. Shortly after taking office last year, Skerrit established diplomatic relations with China, ending the island's long association with Taiwan.

In January this year the UWP provoked a protest from the Chinese ambassador for having publicly paraded the Taiwanese flag, then took advantage of the reaction, portraying it as an interference with the democratic rights of the Dominicans.

The ruling Dominica Labour Party (DLP) holds 10 of the 21 elected seats in the House of Assembly, just one more than the UWP. The DLP has reached an agreement with the Dominica Freedom Party (DFP, two seats), whereby the former withdraws its candidate from one constituency in favour of the latter, and the DFP reciprocates in two constituencies.

Curaçao and Sint Eustatius held referendums on 8 April on their future status. In the former, 68% opted for withdrawing from the Netherlands Antilles and becoming an autonomous state (status aparte) within the kingdom of the Netherlands. Curaçao, with 192,000 inhabitants, is the most important island in the Netherlands Antilles. In Sint Eustatius (pop. 3,000), 76% voted for no change. Sint Maarten chose status aparte in May 2000.

It was a traumatic week for the government of President Lula da Silva. More revelations of corruption touched a minister in his cabinet and an ally meant to have become a cabinet minister. Reluctantly, the leader of the ruling Partido dos Trabalhadores (PT), José Genoino, was persuaded to resign. Even as the public began to believe that Lula himself at least knew about the shady dealings of his party, the government mounted a new drive in congress to block the merger of the three parliamentary commissions of inquiry into corruption.

What was meant to be the news of the week was the consolidation of Lula's alliance with the governista faction of the Partido do Movimento Democrático Brasileiro (PMDB) by including more ministers from that party. On 6 July the PMDB got three ministries: energy & mines (entrusted to Silas Rondeau Cavalcante Silva), health (to José Saraiva Felipe) and communications (to Hélio Calixto da Costa). There should have been four, but the candidate, José Borba, had to be dropped after he was named as one of the recipients of PT handouts.

It was announced that on his return from the G8 meeting in Scotland, Lula would announce new cabinet appointments. This plan was upset by two new revelations. First, that a firm previously owned by Communications Secretary Luiz Gushiken, one of Lula's campaign managers in 2002, had increased its turnover tenfold since the PT came to power. Second, that one José Adalberto Vieira had been arrested at São Paulo airport with US$85,000 in reais in his briefcase, and another US$100,000 in greenbacks secreted in his underwear. Vieira is an advisor to PT congressman José Nobre Guimarães, whose brother is José Genoino, leader of the PT. 

Everyone involved said there was no connection, but the following morning Genoino resigned as president of the PT. The party's national directorate immediately appointed Education Minister Tarso Genro as his successor, creating another vacancy in the cabinet. Genro has ordered an audit of the PT's finances.

As Genoino was being replaced, the order went out from the presidency that all efforts should be made to prevent the success of a motion to merge all three CPIs (parliamentary commissions of inquiry) dealing with corruption - 'bingos', post office and vote-buying - into a 'super-CPI'. Proposed by an oppositionist PMDB senator, the motion was backed by the PSDB, and also by Delcí­dio Amaral, the PT leader who heads the post office CPI. The PT's strategy is to keep the CPIs separate in the hope that there will not be enough legislators and staff to run them all.

Coming on top of past attempts to block the formation of CPIs, this is unlikely to do the government's image much good. A survey conducted by Ipsos-Opinion for the newsmagazine Veja already shows a majority of respondents convinced that Lula knew about the corruption (39% believing that he knew but did nothing, 16% that he was personally involved). A majority of 54% also believe that the top leadership of the PT is involved. The proportion of respondents still considering the PT 'honest' (36%) has been overtaken by those who believe the contrary (48%). This is precisely what 21 PT legislators said they feared when they wrote an open letter last week 'in defence of party principles'.

 

MEXICO | Record surplus in the oil trade balance. High world oil prices were the main (but not the only) factor that boosted Mexico's export earnings from oil and oil products to US$19.9bn in the first eight months of the year. This, set against imports of oil products and natural gas, resulted in a surplus of US$14.7bn in the country's oil balance; 26% greater than last year's and the highest on record.

Pemex's earnings from export of crude oil totalled US$17.8bn, or 34.7% more than in the comparable period of last year. In refined oil products Mexico had a deficit of US$2.4bn, on exports of US$1.85bn; in petrochemicals a surplus of US$161m on exports of US$221.5m.

Apart from the high world oil prices, the other factor contributing (somewhat) to the high oil-balance surplus was the 14.8% shrinkage of the bill for imports of natural gas, which saved US$140m.

MEXICO | More visitors spending more. In the first eight months of the year Mexico received 13.4m visitors, 10.5% more than in the same period of last year. The earnings from tourism in that spell reached US$7.4bn, an increase of 16% on 2004. This rate is unlikely to be maintained as September and October are usually the low point of the tourism year, but Tourism Minister Rodolfo Elizondo reckons that the annual earnings will be at least 10% higher than last year's. He says that the recent impact of hurricanes in the Baja California peninsula and the south and southeast of the country are unlikely to act as a deterrent.

If US ambassador Paul Trivelli is to be taken at his word, the US has changed its policy towards Nicaragua. On 6 January he said he was not pressing for the formation of a coalition that would prevent a Sandinista victory in the November presidential elections. Doing precisely that had been one of Washington's chief aims since Oliver Garza was sent to pave the way for Trivelli's arrival [WR-05-33], clearly manifested as recently as last August in Managua by Deputy Secretary of State Robert Zoellick [WR-05-40].

Trivelli's statement may have been prompted by the counsel offered that same day by Sandinista leader Daniel Ortega: 'I would advise the US not to meddle. Leave it to us Nicaraguans to sort out our problems,' he said in a TV programme. 'The insistence of the US ambassador's officials on wanting to decide who should be the candidate of a certain political party, and that the [FSLN] should not be allowed to win, is absurd.'

Ambassador Trivelli had held a meeting earlier in the week with the presidential aspirants of three Liberal factions, but said that this had been to learn about their positions regarding the electoral process.

Ortega recalled the 'catastrophic' intervention of US ambassador Barbara Moore in 2004, when she pressed President Enrique Bolaños to break his entente with the Sandinistas and support the election of a Liberal to the presidency of the national assembly - hinting that something similar might be afoot regarding the assembly leadership elections scheduled for 9 January.

Agreement has already been reached that the next assembly leadership should include representatives of all parties, but the Sandinistas want René Núñez to retain the presidency - to continue blocking Liberal attempts to pass a law granting amnesty to their leader, convicted former president Arnoldo Alemán - and the Liberals want Enrique Quiñónez to replace him. The outcome should be known as this issue goes to press.

BOLIVIA | Hydrocarbons 'nationalisation' expected soon. Though President Evo Morales has publicly stated that he has given himself until 12 July to unveil the nationalisation of the oil & gas sector, Hydrocarbons Minister Andrés Soliz has been hinting that he might move as soon as this week, issuing the new rules by means of a supreme executive decree (no further legislation is deemed necessary, as he would be acting in compliance with the existing hydrocarbons law).

Morales has reiterated that nationalisation does not entail expropriation. He and other officials have indicated that it will mean greater control of the sector by the refloated state oil company, YPFB.

ECUADOR | Partial veto of new oil law. On 7 April President Alfredo Palacio vetoed part of the recently approved law which taxes the oil companies' windfall profits from high world oil prices [WR-06-14]. He has vetoed the provision that sets the state's share of the windfall profits at 60% and sent the bill back to congress with a proposed amendment, setting the take at 50%. The veto and amendment can be approved by simple majority; overruling the veto requires a two-thirds majority.

COLOMBIA | Ranchers want longer-lasting 'war tax'. The Federación Nacional de Ganaderos de Colombia (Fedegan), the cattle-ranchers' umbrella association, has come out against President Alvaro Uribe's proposed new one-off 'war tax' [WR-06-14] because they feel it does not go far enough. Fedegan wants a more permanent war tax. Its president, Félix Lafaurie, said on 3 April: 'It makes no sense to levy the war tax only once, when the problem of the outlaw armed groups has not yet been eradicated.'

The government of Uruguay has come up with a proposal to defuse the bilateral dispute with Argentina over the construction of two cellulose plants on the Uruguay river, which both sides have taken to international arbitration in different venues. It has suggested joint monitoring of the construction and management of the plants, with a view to detecting early and halting any possible pollution.

The Uruguayan foreign minister, Reinaldo Gargano, took this proposal with him to the Mercosur summit last week in Córdoba, Argentina, announcing that this was 'the most that Uruguay can offer'. The full proposal includes designating the existing bilateral Comisión Administradora del Rí­o Uruguay (Caru) as the primary negotiating forum on the issue, with ministerial and presidential instances above it. He made the proposal public on 20 July.

That same day his Argentine counterpart, Jorge Taiana, dismissed the proposal as 'a completely secondary thing which makes little sense because it does not address the core problem, which is what we have discussed previously'. He said Uruguay had consistently refused to discuss the location, installation and technology of the plants, 'which is what they were obliged to do under the Uruguay River Statute'.

Gargano insisted on a pragmatic approach, saying that under his proposal, 'if at any stage it is found that the plants are polluting, construction will be halted, and when we say stop, they will stop'.

Disregarding Taiana's public statements, upon his return to Uruguay Gargano proclaimed that Uruguay had 'taken the first step towards restoring dialogue' and that the exchange of opinions would henceforth take place between the foreign ministries. He said: 'What has been agreed is that there will be conversations on this matter, and that they can be summarised with the phrase "dialogue always", words of President Kirchner that have been recorded.' President Tabaré Vázquez has refused to be drawn on the matter, save to lament that 'third parties should solve problems between brothers'.

Financial squeeze tactic

President Kirchner may have advocated 'dialogue always', but in the meantime he has chosen to escalate the confrontation. On 14 July he called publicly on the 'international financial system' to withhold investment in the two projects. On 19 July the foreign minister, Taiana, sent a letter to the president of the World Bank, Paul Wolfowitz, asking him to suspend financing for the projects. The World Bank has conducted environmental assessments which lean more towards the Uruguayan view than to that of Argentina.

The Argentine government has failed to make a prima facie case for its claim that the plants pose an imminent danger to riverine life forms, and the International Court of Justice has refused to grant it an injunction to halt work on the projects - while leaving open the possibility of ordering a halt if a pollution risk is confirmed at a later date [WR-06-28].

It was the environmental campaigners who first started calling for banks to starve the projects of funding, arguing that at the very least they presented a risk of being halted. As happened earlier with the protests that interrupted cross border traffic on the bridges over the Uruguay river, the government followed the protesters' lead.

Venezuela's quest for a non-permanent seat on the UN Security Council looks certain to end in defeat. After 35 rounds of voting failed to produce a two-thirds majority for either Venezuela or Guatemala in the UN assembly, balloting was postponed until 25 October. 

President Hugo Chávez is trying to put a positive gloss on the inconclusive vote. He claims Venezuela fulfilled its main objective: to prevent the US from getting Guatemala on to the Council. The US could, of course, invoke the same rationale to claim a win. Neither Venezuela nor Guatemala are prepared to withdraw their candidacies yet but it looks like Argentina will be replaced by a compromise candidate, such as Uruguay or Costa Rica, when it vacates its seat in December. 

Perhaps conscious that his foray into international diplomacy was less than successful Chávez turned his attention to the domestic political scene. On 22 October he urged supporters to persuade voters planning to abstain (an estimated 20%) to enlist in the Bolivarian ranks. Interestingly, five presidential candidates - Lourdes Santander, Angel Blanco, Enoés Sánchez, José Chávez and Abaddes Vásquez - withdrew from the race last week and pledged their allegiance to Chávez . The main opposition candidate, Manuel Rosales, dismissed the development as a ploy by the government to make it look more popular than it is. "What are their names? Even their families don't know who they are," he quipped.

Uruguay's President Tabaré Vázquez has accepted a requirement from the Argentine government for future negotiations over the pulp-mill dispute: he agreed not to construct any new pulp mills along the banks of the Uruguay River. Vázquez's acceptance of this demand seems to indicate that the two countries are closer to resuming negotiations over the acrimonious issue. Representatives from the two governments will hold talks at the end of February or the beginning of March in Madrid, according to Juan Antonio Yáñez-Barnuevo, the ambassador for the Spanish Crown who is acting as a mediator in the dispute.

The main question now is whether the Spanish have also managed to convince Argentina to comply with Uruguay's demands. Vázquez was keen to stress that the "talks" should not be misconstrued as "negotiations". He is adamant that he will only resume full negotiations when his Argentine counterpart, Néstor Kirchner, breaks up all of the bridge blockades being carried out by protestors from the Gualeguaychú assembly and guarantees that they will not be repeated in the future. Furthermore Uruguay does not accept Argentina's demand to relocate the Botnia pulp mill. Time is running out, as the mill is expected to be up and running before the end of the year, making its relocation unfeasible.

Kirchner has so far demonstrated a marked reluctance to deal with Argentine protesters and this is very unlikely to change in an electoral year. It is, however, too late now to convince Argentine protesters to accept the Uruguayan position. If anything, the protesters are becoming more adventurous. They have threatened to block the Buquebús ferry terminals in Buenos Aires and, as this breakthrough announcement was being made, a handful of them dared to bring their protest to Montevideo. They tried to hand out leaflets but had to be escorted to safety by the police to avoid being attacked by a crowd of angry locals.

Both sides are trying to sound upbeat. Uruguay's foreign minister, Reinaldo Gargano, said "I am optimistic, I was always optimistic and I am optimistic now." Argentina's cabinet chief, Alberto Fernández, said that Argentina had always been ready to talk to find a solution to the dispute. The dispute has seriously undermined Mercosur, whose supranational institutions were found wanting. It has certainly contributed to Uruguay's disenchantment with Mercosur and might even have prompted it to seek a trade and investment framework agreement (Tifa) with the US, which was signed late last month [WR-07-05].

Mercosur partners disagree
Brazil and Argentina, the two largest partners in Mercosur, disagree over granting concessions to industrial goods and services from developed nations. The Brazilian government is one of the driving forces behind the Doha global trade negotiations and seems willing to give such concessions in exchange for the developed nations opening their agricultural markets. The disagreement puts new strain on Mercosur's Common External Tariff.

MEXICO | Unemployment up. Open unemployment in Mexico rose to over 4% in the first quarter of 2007. In the first quarter of 2006 the rate was 3.5%. The figure means that there are 1.7m Mexicans who have not had even one hour of paid employment in the week of the survey by the official statistical agency, Inegi. In addition, another 10% of the workforce (or 3.3m people) are underemployed. 

MEXICO | Industrial output. Industrial output in March was up by 0.2% on March 2006. The problem is that key economic motors are spluttering: manufacturing output was down by 0.5%, year-on-year and oil output was down by 2.5%. In 2006 industrial output rose by 5%.

After months of speculation since his decisive electoral triumph in December 2006, Venezuela's President Hugo Chávez finally presented the details of his proposed constitutional reform last week. The reform, drawn up under the enabling law he passed at the turn of the year, which granted the executive full powers to legislate in key areas, is designed to enshrine the concept of 21st century socialism into a new constitution by 2008. Chávez presented the constitutional reform to the 167-seat national assembly, which unanimously approved it in the first of three readings on 21 August. It will then be presented to the Venezuelan people in the form of a referendum.

Most of the foreign press focused on Chávez 's decision to alter the constitution to enable him to be "re-elected indefinitely". This is inaccurate. Chávez proposed scrapping the six-year presidential term for a seven-year term and to allow unlimited re-election; this is not the same as "indefinite" re-election which clearly implies doing away with elections altogether. While this particular reform cannot really be described as "increasing authoritarianism", as his detractors claim, this charge could be levelled against some of the other proposed reforms, especially the "new geometry of power".

The main aspect of the "new geometry of power" consists of the appointment of a number of vice-presidents who would represent the central government in the regions, where they would be based [WR-07-30]. Chávez stressed that "regionalism is dogma that impedes change, [and] we cannot accept situations that create caudillos pretending to be the presidents of their own little republics." He dressed up the appointment of vice-presidents as a sign of the government's determination to spearhead development in the regions and to coordinate regional projects more effectively. This is a generous interpretation of their role. They look more like quasi viceroys, or Chávez 's own caudillos, appointed to increase centralised control over the regions. This is especially true in areas like Zulia, which are in the hands of the opposition. 

The "new geometry of power" will include "maritime regions, federal territories, federal municipalities and federal districts" within the existing states. Chávez said this change was rendered necessary to remove "the old oligarchic, exploiter hegemony; the old society". It is still not entirely clear how the "new geometry of power" will fit into the current power structure, other than under-cutting the role of governors and mayors. Complicating this still further, the social missions will be incorporated into the constitution. One or more municipalities will be able to establish "functional districts", where the social missions would "function" as alternative administrations. 

Politicising military?
The "new geometry of power" would also empower Chávez to declare "special military regions" anywhere in the country for "strategic defence purposes". This requires greater clarification. What Chávez did make very clear, however, was that the reference to the armed forces in the constitution would need to be redefined. 

The article in the current constitution states that, "the national armed forces constitute an essentially professional institution - politically unaligned - organised by the state to guarantee the independence and sovereignty of the nation". It will now take on a more distinctly political hue. "The Bolivarian armed forces constitute an essentially patriotic, popular and anti-imperialist body organised by the state to guarantee the independence and sovereignty of the nation." 

In the economic sphere, Chávez decided to remove "any vestige of autonomy" from the central bank. "The international reserves of the republic will be handled by the central bank, under the direction of the president who is the administrator of the public finances," Chávez said. 

Chávez , who proposed amending a total of 33 out of 350 articles, less than 10% of the 1999 constitution, said that the reforms would spur the transition to "a new society", which would deal the final "death blow" to capitalism. "Tomorrow our great battle begins. They are going to launch a campaign tomorrow to try and distort the text and the spirit of the proposal." While the political opposition immediately registered its resolve to fight for a "no" vote in the referendum, there was (notably) no impromptu reaction from the US, to whom Chávez 's comment was also aimed. 

Adroit tactics
Chávez included one proposal in the reform package which looks calculated purely to win the "yes" vote in the eventual referendum: the reduction of the working day from eight hours to six hours. He said that the reason behind this decision was to allow workers sufficient time for "integral and moral development of their personality". 

He said it would also lead to greater employment (unemployment currently stands at 8%) and reduce the size of the informal economy (an optimistic assessment) by requiring businesses to recruit more staff to operate new shifts. 

Understandably the proposal did not go down well with the private sector. The umbrella business organisation, Fedecámaras, gave no immediate response to the proposal but other business leaders raised concerns about the length of the proposed new workday, which will almost certainly entail greater costs for companies. 

There is a clear ulterior motive behind this populist gesture, which is politically very astute. It will get firm backing when it comes to the referendum. This might be more important than it at first seems. Chávez 's popularity has taken a bit of a jolt since he refused to renew the broadcasting licence of Radio Caracas Televisión (RCTV), and the opposition, which took some heart from the creditable performance of Manuel Rosales in the presidential elections, will be lobbying hard for a "no" vote. 

Rosales, the leader of the opposition party Un Nuevo Tiempo, described the reform as a "constitutional coup attempt" against which he promised to "go from town to town in order to "mobilise the population". "A constitutional reform is not needed," he added. "What the people want is that they obey this constitution." 

• Property
  President Chávez also proposed redefining the word "property". There will now be five different types of property: public, social, collective, mixed and private. The final of these designations, "private", will not be sacrosanct. Instead, Chávez appealed to the national assembly to strengthen state powers of expropriation for public use, especially in the event of land being considered "idle" or "non-productive".
  

On 18 November between 150 and 200 supporters of Andrés Manuel López Obrador, the leftwing candidate defeated by Felipe Calderón Hinojosa in the presidential elections in 2006, rioted in Mexico's main cathedral, on the Zócalo in Mexico City. The Roman Catholic Church responded by closing the cathedral: the municipal government, which supports López Obrador, which supports retorted that the Church did not have the right to do this because the cathedral was a national monument.

The incident is the latest and most serious in a series of increasingly rancorous disputes between the Roman Catholic Church and the progressive Left. The Roman Catholic Church in Mexico is socially and economically conservative, close to the ruling Partido Acción Nacional. The PAN, traditionally, has been dominated by pious, nationalistic, provincial businessmen.

The Roman Catholic Church only recovered the rights it lost after the anti-clericalists triumphed in the Cristiada civil war (1926 to 1929) under President Carlos Salinas de Gortari (1988 to 1994). Famously, Plutarco Elí­as Calles, the Mexican president who detonated the Cristiada, which cost thousands of lives in western and central Mexico, dismissed the Church as always being on the side of the oppressors. Calles's reform, which triggered the Cristiada, was to bring the Church under government control by registering priests.

An echo of the deep-seated anti-clericalism personified by Calles was heard earlier this year when the Church claimed that Miguel Hidalgo, the priest who launched the Mexican Independence movement with his famous grito, had confessed (and therefore had not died an excommunicate) before being executed by the Spanish Royalists in 1811. The Left had claimed that Hidalgo and the other clerical leaders of the independence movement had been excommunicated and tortured by the Inquisition and that the Church had been hostile both to the Independence movement and the constitutional settlement produced by the Mexican Revolution.

s a result of the Salinas rapprochement with the Roman Catholic Church priests have started to take a bigger part in national life. They are still, constitutionally, prevented from taking part in politics. Gallingly for priests, they are not allowed into state schools.

Anti-clericalists allege that the Roman Catholic Church has close links with the drug trade. In 1993 the cardinal archbishop of Guadalajara, Juan Jesús Posadas Ocampo, was gunned down at Guadalajara airport. A government inquiry concluded that the cardinal was caught in a shootout between rival cocaine gangs and was mistakenly identified as a drug baron. No one was ever imprisoned for the murder. The case was reopened in 2001 and new leads emerged, including testimony from a childhood friend of Posadas. He says Posadas told him he was summoned to President Carlos Salinas' residence and threatened just weeks before his death. Subsequently it also emerged that two of the Arellano Félix brothers, who then ran the Cartel de Tijuana gang, one of the two involved in the shoot-out which killed Posadas Ocampo, visited the papal nuncio in Mexico City soon after the shooting. The papal nuncio did not turn them in.

The current tension between the Roman Catholic Church and Left is centred in Mexico City. The mayor of Mexico City, Marcelo Ebrard, is the only significant politician still following the López Obrador line that he was cheated of victory in the 2006 presidential election. Ebrard is having nothing to do with the federal government and is introducing a string of radical social policies. 

The Ebrard initiative the Roman Catholic Church objects to most is liberalising abortion. State governments, rather than the national government, make the law on abortion. Mexico City wants to allow abortion on demand up to 12 weeks after conception. The Roman Catholic Church and the Right are challenging this law in the supreme court. To the fury of the Left, the Comisión Nacional de Derechos Humanos, which is headed by a pious Catholic, José Luis Soberanes Fernández, is supporting the anti-liberalisation line.

Abortion liberalisation is Ebrard's most controversial policy but he is also espousing big government policies which frighten the Right. The Right argues that government has to be kept as small as possible because it is inherently inefficient and corrupt. Ebrard and the modern Left argue that governments have to do more if poverty levels are to fall. Arguably, Ebrard's most important scheme is to pay bright children to attend extra classes in Mexico City's public schools. 

The 18 November riot could have been prevented by the Mexico City police. They knew that López Obrador radicals were gathering in the Zócalo to celebrate the first anniversary of López Obrador's (self-proclaimed) legitimate government on 19 November, the public holiday to commemorate the Revolution. The local press reported that 90,000 Obradoristas assembled. 

The riot was triggered by what the Obradoristas claim was "a provocative interruption" (in fact a nine minute peal of the cathedral's bells) to one of their rallies. The Obradoristas said that they were unable to hear what Rosario Ibarra, a senator from López Obrador's Partido de la Revolución Democrática (PRD), was saying to them. Their reaction was to rush into the cathedral shouting pro-López Obrador slogans, frightening the congregation (mostly women and children) who were waiting for midday Mass. The municipal police, deployed around the cathedral, did nothing to stop the demonstrators entering.

The archdiocese of Mexico City responded to the riot by saying that it would close the cathedral to the public. Ebrard retorted that the Roman Catholic Church could not do that since the cathedral was an historic monument. 

Ebrard was the only important perredista in the Zócalo on 18 November. This fact illustrates how divided the bulk of the party is with the radical anti-government line advocated by López Obrador. The split in the PRD became more manifest on 20 November when Lázaro Cárdenas Batel, the governor of Michoacán, called on López Obrador to disassociate himself from the protests in Mexico City against the Roman Catholic Church.

Cárdenas, and his father Cuauhtémoc, who founded the PRD, come from the wing of the party that is opposed to the radical, anti-government and anti-Church action taken by López Obrador and his supporters. If López Obrador fails to respond to Cárdenas's call, the party will move away from him; if López Obrador does respond he will be admitting, first, that his supporters were out-of-order and second that the Cárdenas family is again the dominant faction in the PRD. 

In the 2006 election, Cuauhtémoc, despite being the PRD's presidential candidate in the three previous elections, barely endorsed López Obrador and did not campaign for him. Lázaro Cárdenas's position in the party has been strengthened by the PRD's victory in the gubernatorial election in Michoacán. This is the party's only substantial electoral victory in 2007. 

Oil

• It is also significant that Lázaro Cárdenas did not endorse López Obrador's campaign to protect the oil industry. It was Cárdenas's grandfather, also Lázaro, who nationalised the industry in 1938. Lázaro Cárdenas, a revolutionary general, was the most radical president since the Revolution.

GDP growth

• The economy grew by 3.7% during the third quarter, year-on-year. Compared with the second quarter, the rate of growth was 0.9%. The figure was a bit better than most independent economists had expected: the consensus was for 3.5% growth in the third quarter. The result is likely to mean that GDP growth this year will be well over 3%. In 2006 the economy grew by 4.6%.