All Categories

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

Who is Soledad Alvear Valenzuela?
She is the foreign minister of Chile. A socialist, she is one of the most popular politicians in the country and a likely runner in the presidential elections due in 2006. She is one of only two women in the current cabinet: the other is Michelle Bachelet, the defence minister. Alvear sprung to prominence in the Gulf War earlier this year, when Chile, a temporary member of the UN Security Council, surprised many by opposing US policy in the war.

Why watch her?
She has charisma and is one of President Ricardo Lagos's favourite ministers. Opinion polls show that she is seen as a potential president. She is the great hope of the fraying Concertación alliance between Socialists and Christian Democrats, which has ruled Chile since democracy returned in 1989. Her first hurdle is the internal elections in which she will come up against first other Socialists and then rivals from the Christian Democrats. Then she will have to defeat the resurgent right.

The file

Born: 17 September 1950

Place of birth: Santiago, Chile

Education:
She is a lawyer. She graduated from the Universidad de Chile. She did a postgraduate degree in Development Science at Instituto Latinoamericano de Estudios Sociales (ILADES), whose qualifications are recognised by the Catholic University of Louvain in Belgium.

Public life:
She is married to Gutenberg Martínez, and has three children: Claudia, Carlos and Gutenberg. She was justice minister from 1994 to 2000, during the administration of President Eduardo Frei.

Timeline

1990-1994: In the government of President Patricio Aylwin, she was minister/director of the national women's service. She founded the organisation and drew up the equal opportunities' policy.
1994- 2000: She was minister of justice under President Frei (1994-2000). In this job she launched an overhaul of the whole Chilean justice system.
1999-2000: In the second round of the presidential election campaign, she ran Ricardo Lagos's ultimately successful campaign. She took a lot of the credit for pulling the campaign around after Lagos failed to win outright in the first round.
2000: She became foreign minister in March 2000. The main tenets of the country's foreign policy on her watch have been: a strong Latin American bias; enthusiasm for freer trade; respect for multilateral organisations, and international cooperation.
2003: She was responsible for negotiating a free-trade agreement with the (almost insignificant) European Free Trade Association. This was signed in June.
2003: In June Chile finally signed the long-awaited FTA with the US and Nafta.

Strong points:
She is the country's first female foreign minister. This achievement has elevated her above a lot of criticism and increased her support. She has benefited from the pragmatic foreign policy which has allowed the Lagos government to sign free-trade deals with the US, Nafta, New Zealand, Korea, and the EU. Soledad Alvear also represents a younger face of Concertación.

Weak points:
Although she personally has not made many mistakes, she will have to overcome the high level of public disapproval with the Lagos government. The fight for the presidential nomination is also likely to be tough, both internally and against a revitalised right. She is likely to have her work cut out to defeat the right, which is now stronger than it was in 2000, when it ran Lagos so close.

Prospects:
The elections in 2006 still seem some way off, but Alvear will have to establish herself as a candidate in 2004. Currently, she is scoring approval ratings of around 80%. This puts her in a strong position to see off the almost certain candidate from the centre-right and former mayor of Santiago, Joaquín Lavin.

Who is he? Roux, a corporate lawyer by profession, has been appointed the new Minister of Canal Affairs by the president-elect, Ricardo Martinelli, who handily won the 4 May elections (with 60% of the vote). The incoming government will take office on 1 July, with a comfortable working majority in congress.

Why watch him? Roux will oversee the completion (by 2014) of a five-year US$5.2bn project to expand the Panama Canal, to allow it to cope with the new 'Super Tankers' transporting goods to and from Asia to the rest of the world. The project is enormous: it represents nearly a quarter of Panama's US$23bn GDP and the massive construction works alone will help sustain positive real growth in the local economy at a time when its Central American neighbours are suffering sharp downturns on the back of the global economic crisis. Inevitably, such a massive and heavily politicised national development project has been plagued by allegations of corruption at both the public and private level.

Notably, Ricardo Martinelli was himself previously Canal Affairs minister under the Mireya Moscoso administration (1999-2004), but under the incumbent Martí­n Torrijos government the ministry was all but eliminated, on the argument that its functions were duplicated by the Panama Canal Authority (ACP). As minister, Roux will chair the ACP board of directors. It is not clear whether he will exercise more power than the outgoing minister.

Date of Birth: 8 January 1965, Panama.

Education:
1986: Bachelor of Science (BS) in Marketing, Babson College, US.
1992: Juris Doctor (JD) in Law, University of Miami, US.
2001: Masters (MA) in Mercantile Law, Universidad Santa Maria la Antigua, Panama.
2007: Masters in Business Administration (MBA), Kellogg University, US.
 
Public Life:   An independent, Roux has not held public office before. Prior to his appointment, he had carved out a very successful career as a corporate lawyer at the local firm Morgan & Morgan, founded in 1923 and currently Panama's largest law firm. Roux began as an associate at the firm in 1994, and was made a partner in September 2002.

Time Line:
1992-1994: Associate at De Obaldí­a y Garcí­a de Paredes, Panama, where he first began advising national and international clients.

November 1994- May 2009: Morgan & Morgan - Roux steadily worked his way up the ladder, gaining valuable experience on all aspects of corporate law, particularly project financing and banking, adding an MBA to his CV along the way.

Morgan & Morgan has dedicated legal teams in fields including banking and securities law, business and corporate law, environmental law, estate planning, government contracts, immigration law, insurance and reinsurance law, intellectual property law, labour and employment law, litigation, mergers and acquisitions, project finance, ship finance and registration, shipping and admiralty litigation and tax law.

The firm website cites several recognitions for Roux:
Chambers Global 2008 - Leading Individual "General Business Law" (M&A, Project Finance and Government Contracts).
IFLR 1000 2008 - Leading Lawyer "Corporate Law".
Which Lawyer? Yearbook 2008 - Recognized Individual "Corporate/M&A".
Which Lawyer? Yearbook 2008 - Recommended Individual "Dispute Resolution".

Strengths: An experienced lawyer with intimate knowledge of national and international corporate business practices, on paper Roux looks imminently qualified for the position and likely has the private and public sector contacts to go with his impressive career. He also appears to have managerial skills. In a review of Panama-based corporate/M&A law firms, the respected Chambers Guide (Latin America) points to Roux's experience of large international corporate negotiations and cites sources as saying: “He really knows how the Americans do business; he's accessible, results-oriented and definitely one of the best".

Weaknesses: Roux's strengths are also his weaknesses: having previously represented local and regional banks in their deals to finance the Panama Canal expansion, he will now sit on the other side of the table from his old clients. Critics of the massive Canal expansion project have long claimed that one of the problems with the project is that it has too many conflicts of interest at play. Roux has already rebuffed such claims, asserting that he has now taken leave of absence from his firm and stressing that as minister he will not sit in on any discussions involving his old clients. How workable (or transparent) this half-way house position will be in practice is debatable.

Prospects: Little is known of this young lawyer, who has been personally plucked by Martinelli from the private sector to head of one of the most important government portfolios although with his new appointment, this is all set to change; the importance of his position and his career history with links to companies directly involved in the Canal expansion project, suggest he will be under immense scrutiny. Panama does not have a great reputation on corruption. Transparency International scored the country 3.2 (out of 10) in its 2007 global corruption survey, slightly up on 2006.

Colombia has taken advantage of the 10 May G-8 meeting in Paris on the global drugs trade to present itself as a pioneer in the antidrugs effort with an experience that has given it valuable know-how it can share with the rest of the world. For the Europeans, its main message was that Colombia had been responsible for a significant reduction in the flow of cocaine to Europe, having lost its position as the world's greatest producer.

Defence Minister Rodrigo Rivera arrived in Paris for the G-8 meeting with the claim that at present ‘less than 5% of the drugs reaching Europe' comes from Colombia, which over the past three years has been annually reducing the area devoted to coca cultivation by 13% and by 12% the production of cocaine (by which he probably meant the estimated potential production of the drug). He also noted that up to 18,000 Colombians are serving sentences for criminal activities related to the drugs trade and that Colombia had granted the extradition of 185 of its nationals wanted abroad to answer drug-trafficking charges. This unprecedented achievement, he said, had made Colombia ‘an example to the world' in the fight against drug-trafficking.

His audience was not entirely convinced. Less than a week earlier they had seen a report circulated by Europol which spoke of the rising flow of cocaine into Europe from Mexico, which in turn gets it from Colombia. ‘Over the past year', says the report, ‘there has been a notable increase in the traffic of cocaine through Mexico towards Spain and Portugal.' It also says that the drug traffickers targeting the European market most used the Colombia-Galicia route.

The report says that ‘the Colombian criminal groups continue to play a key role in the supply of cocaine to European traffickers,' and points out that they have become established in the Iberian Peninsula and the Canary islands. It also notes that criminals from the Dominican Republic are becoming increasingly involved in the Europe-bound trade. The proceeds of the cocaine flow into Europe, says Europol, help finance the activities of Colombia's Fuerzas Armadas Revolucionarias de Colombia (Farc) guerrillas. The latest UN figures on coca cultivation and potential cocaine production still show Colombia as the leading producer.

In Madrid, Rivera said that he had discussed with his Spanish peer, Carme Chacón, the importance of the West African route for the supply of cocaine to some European countries. ‘Colombia,' he said, ‘has intelligence about this which it has been sharing, through Interpol, with the authorities of interested countries [and] with a dozen African countries that have gone to Bogotá to learn what the Colombian authorities have done in recent years.'

The participants in the G-8 meeting, which included 14 countries involved in the drugs trade in some capacity, agreed on a draft ‘action plan that focuses mainly on improving intelligence sharing and maritime cooperation. However, the matter that attracted most media coverage was the proposal by French President Nicolas Sarkozy to set up a global fund to finance antidrug operations, drawn from the assets confiscated from drug-trafficking organisations, to the administered by the UNODC (which operates under severe financial constraints).

Colombia was among those who most warmly welcomed Sarkozy's scheme. Bolivia did so as well, noting that it expected to be among the recipients given its own paucity of resources. Brazil's reaction was distinctly cooler. ‘We have nothing against the creation of such a fund,' said Justice Minister Eduardo Cardozo, ‘but now we must analyse the proposal and discuss it.'

Development: On 30 June in Panama City, Panama, the Colombian and Panamanian foreign ministers, María Angela Holguín and Juan Carlos Varela respectively, signed an accord to improve bilateral cooperation against transnational crime.

Significance: Colombia and Panama's bilateral relations are good, but Panama's decision (in November 2010) to grant political asylum to a former director of the Colombian intelligence agency (DAS), María del Pilar Hurtado, remains a bone of contention. In addition to joint border efforts against criminal activity, Colombia has also committed to training and advising Panamanian security forces in an attempt to prevent narco-trafficking-related violence from spreading further into the isthmus. 

Key points:

• Current and former officers from Colombia's national police and the DAS will help their Panamanian counterparts in counter-narcotics and organised crime operations. "The strong relationship that exists between Panama and Colombia with regards to security, commerce and cooperation, I am sure will help us and will allow both countries to collaborate with the rest of Central America and the Caribbean to build a much safer region, with more prosperity and economic development", said Varela.

• The foreign ministers sent a joint letter to the Andean Development Corporation (CAF) asking for non-refundable resources to finance socio-economic development in the proximity of the shared border.

• On 1 August, Panama's trade minister, Roberto Henríquez, and his Colombian counterpart, Sergio Díaz-Granados, will meet in an effort to end the deadlock that brought bilateral free trade agreement (FTA) talks to a halt, during the fifth round, last October. 

• Holguín announced that Colombia will file an extradition request for Hurtado, but added that "we will be respectful of the decision Panama makes and the bilateral relationship will not be affected". Varela was unequivocal: "the president [Ricardo Martinelli] made a decision, and we stated our position and that is the position of the country", he said.

Development: On 7 April, the Paraguayan press reported that President Fernando Lugo had presented a ministerial re-organisation plan to the parties that make up his ruling coalition.

Significance: Lugo's broad based ruling coalition has been consistently weakening since he took office in 2008, and political differences between the various members have resulted not only in political gridlock in congress, but also in a cut throat competition for representation in government.

In particular, the centre-right Partido Liberal Radical Auténtico (PLRA), the main coalition member, has bitterly complained that it is severely underrepresented in the cabinet in comparison to the array of smaller and less influential left-wing coalition members. Prominent PLRA party members have argued that Lugo's appointments answer to a politically biased party quota system, a claim the government has repeatedly denied. 

Key points:
 
• According to the press reports, under President Lugo's "executive power structure innovation project", the number of ministries will increase from 10 to 18 through the division of certain portfolios, the fusion of others and the creation some new ones.

• Although details are scant, the ministry of ‘Hacienda' (which oversees finance and economics) will likely be split in two, with the creation of a new economy ministry. The same goes for the ministry of education and culture. Conversely, the ministry of agriculture and livestock is to be incorporated into a broader new ministry of rural development.

• President Lugo and his aides apparently presented the proposal to PLRA leaders late last night (6 April), before showing it to the rest of the coalition. The government has not yet confirmed the changes, which President Lugo said was the result of extensive discussion with over one hundred national organisations, private institutions and political parties". 

Abimael Guzmán is not leading the Sendero Luminoso guerrillas from his prison cell, according to interior minister Fernando Rospigliosi, the hardliner recently reappointed by President Alejandro Toledo.  

Claims that the 'historic' leader of Sendero Luminoso (SL) has been masterminding the recent upsurge of guerrilla activity are 'absolute nonsense', said interior minister Fernando Rospigliosi last week. As we have reported, these claims have come from high-ranking officers of the police's antiterrorist directorate, Dircote (WR-03-27). The police reports to the interior ministry, so heads can be expected to roll.  

Indeed, they have already started rolling. On 1 August Rospigliosi dismissed the director-general of the national police, General Eduardo Pérez Rocha - who weeks ago had publicly criticised the commission charged with modernising the police force, a body created by Rospigliosi when he was first interior minister. Pérez Rocha's replacement, General Gustavo Carrión Zavala, dutifully proclaimed during his swearing-in ceremony that he would pursue the reform plans devised by Rospigliosi.  

No contact with armed remnant of SL

Rospigliosi says that the only armed group of senderistas is the one operating in the jungle valley of the Ene and Apurí­mac rivers, and that it does not take orders from Guzmán. Moreover, he says, there have been no meetings of SL leaders in the Callao naval base prison where Guzmán has been held since the days of President Alberto Fujimori. The closest thing to such a meeting took place during the interim administration of Valentí­n Paniagua, when a group of senderista prisoners (none of them leaders) were taken to Guzmán's prison to verify that he was still alive.  

The minister has also dismissed the suggestion that there was anything suspicious about the secret meetings between former justice ministry adviser Javier Ciurlizza and SL leaders in the Callao prison in late 2000 and early 2001. The fact that these meetings had taken place was only acknowledged much later, when recordings of the discussions were leaked to the press. Ciurlizza claims that he had only been seeking to prevent a senderista hunger strike in the Yanamayo prison, in Puno, which had been the scene of a major riot in the Fujimori era.  

Conflicting evidence?  

For all of Rospigliosi's disclaimers, almost at the same time he was speaking, the prison service reported that it had applied sanctions to Guzmán, his companion Elena Iparaguirre and two imprisoned leaders of the Movimiento Revolucionario Túpac Amaru (MRTA), for having staged protests - the former against 'calumnies' in the press, the latter for not having been allowed 'special visitors'.  

The sanctions included a 15-day suspension of correspondence rights and visits from anyone except the prisoners' lawyers - which implies that under normal circumstances they are quite able to maintain contact with the outside world.  

Reputation for toughness  

Rospigliosi has vowed to move swiftly and energetically to stamp out terrorism. An erstwhile leftwinger best known previously as a political commentator, he adopted a tough line when he became Toledo's first interior minister. After senderistas set off a car bomb that killed 10 just before the arrival of US President George Bush Jr in March last year, Rospigliosi took advantage of the public mood to push through congress security legislation which, inter alia, authorised police wiretaps and postal intercepts without court orders and penalised the staging of demonstrations that 'interfere' with the free flow of traffic with prison terms of up to six years. Unsurprisingly, this attracted much criticism from human rights organisations.  

He earned himself the enmity of regional social organisations when he sought to quash the widespread protests against the privatisation of power utilities. The police action he ordered only exacerbated the situation, and when the government caved in and shelved the divestments, Rospigliosi resigned. He later became head of the state intelligence agency, CNI, but held the post briefly, resigning at the same time as his successor at the interior ministry, over resistance to his plans to reform the national police.

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		30.08.02	22.08.03	29.08.03
Argentina	peso	3.59	2.98	2.98
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.30	7.74	7.75
Brazil	real	3.03	2.98	2.97
Chile	peso	713.00	_	700.00
Colombia	peso	2,713.68	2,853.76	2,846.45
Costa Rica	colón	366.02	404.76	405.47
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	_	34.08	34.24
Ecuador	dollar	1.00	1.00	1.00
El Salvador	colón	8.75	8.75	8.75
Grenada	EC dollar	2.70	2.70	2.70
Guatemala	quetzal	7.80	_	7.94
Honduras	lempira	16.78	17.67	17.69
Mexico	nuevo peso	10.03	10.92	11.13
Nicaragua	córdoba oro	_	15.40	15.40
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,180.00	_	6,260.00
Peru	nuevo sol	_	3.48	3.48
Uruguay	nuevo peso	29.75	28.50	28.80
Venezuela	bolí­var	1,416.50	1,600.00	1,600.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	May	June	July	Last 12m	Jan-Dec 2002
Argentina	Indec	-0.40	-0.10	0.40	7.30	41.00
Bolivia	INE	0.02	0.20	0.60	3.42	2.45
Brazil	FGV	-0.67	-0.70	-0.20	24.14	26.41
Chile	INE	-0.40	0.00	-0.10	3.10	2.80
Colombia	Dane	0.49	-0.05	-0.14	7.04	6.99
Costa Rica	DGEC	0.52	0.67	0.80	9.49	9.68
Ecuador	Inec	0.17	-0.21	0.03	7.73	9.36
El Salvador	Min.Ec.	-0.10	-0.10	-0.40	1.00	2.80
Guatemala	BCG	0.25	0.22	0.27	4.65	6.33
Honduras	BCH	0.10	0.30	0.40	6.70	8.10
Mexico	Bco.Mx.	-0.32	0.08	0.14	4.13	5.70
Paraguay	BCP	-1.20	-1.50	-0.70	12.00	14.60
Peru	INE	-0.05	-0.47	0.15	1.98	1.52
Uruguay	DGEC	0.37	0.16	0.50	19.46	25.94
Venezuela	BCV	2.30	1.40	1.80	31.90	31.20
US	DOL	0.20	0.10	0.10	2.10	1.60

The stockmarket in figures
Market	Index	22.08.03	29.08.03	Variation (%)
Buenos Aires	Merval	683.87	713.33	4.31
São Paulo	Bovespa	14613.03	15174.49	3.84
Santiago	IPSA	1367.35	1369.62	0.17
Bogotá	IGBC	2109.59	2081.65	-1.32
San José	BCT	11630.46	11870.72	2.07
Quito & Guayaquil	Interinvest	69.51	69.51	0.00
Mexico	BMV	7493.73	7591.42	1.30
Lima	ISVBL	1892.59	1896.82	0.22
Caracas	BC	14433.20	14497.20	0.44
Source: Daily market reports.

A study by the Carnegie Endowment for International Peace provides hints for negotiators entering the FTAA end-run.

The season of Nafta assessments is upon us, now that the North American partnership is about to celebrate its 10th anniversary, and the conclusions will be studied carefully by those embarking upon the decisive final phase of the FTAA talks.

A study by the Washington-based Carnegie Endowment for International Peace (CEIP) has come up with a largely negative (the authors prefer `muddled') balance sheet, underlining that Nafta had failed to create enough jobs in Mexico (and hence to curb illegal immigration into the US), had harmed Mexico's small farmers, and had had only small effects on employment in the US. It notes that `unprecedented growth in trade, increasing productivity and a surge in both portfolio and foreign direct investment have led to an increase of 500,000 jobs in manufacturing from 1994 to 2002' — but that this has been offset by the loss of 1.3m jobs in farming.

The one thing nobody is denying is that Nafta boosted US-Mexican trade beyond all expectations. Much of the increase on the Mexican side, however, came from the maquiladora (assembly) plants strung out next to the US border, and these have proven highly susceptible to downturns in the US economy. In 2001, just before recession struck, 1.3m jobs had been created in the maquiladoras; in the subsequent downturn, more than 400,000 of them disappeared. CEIP's Sandra Polaski, who headed the economic research unit at Nafta's labour secretariat in the late 1990s, says that `a magnifying glass' is needed to detect job increases.

The CEIP study clashes with another conducted last year by the World Bank, which concludes that Nafta has brought `significant economic and social benefits to the Mexican economy' — particularly in helping it overcome the Tequila crisis of 1994-95. The main drift of the World Bank study is that Mexico would have been worse off without Nafta. The CEIP study does not quite contradict this, but comes close. Polaski prefers to say, `Mexico would have been better off with a better Nafta.'

Lessons for FTA negotiators
The CEIP study draws some lessons from Mexico's experience for the other countries about to strike free-trade agreements with the US. They are told to seek:

• A more gradual tariff-reduction calendar for such basic products as maize, rice and beans, which are not only the main staples but also the livelihood of small farmers. This would give them more time to prepare for competition with the bigger (and subsidised) US agricultural concerns. (Countries should avoid over-eagerness such as Mexico's decision to speed up tariff reductions on US maize, which had a devastating impact on small Mexican farmers.)
• A degree of preference for domestic industrial inputs over imported goods, so that more jobs may be created.
• Financial assistance for the retraining of those displaced by competition from abroad.
  

"It would be an enormous irresponsibility."

Marta Sahagún, wife of Mexican President Vicente Fox, on deciding now whether she will run for President in 2006 (said a few hours before she announced that she would, indeed, run).


"I'm prepared to do this for a time. This could be a very good year."  

Pedro-Pablo Kuczynski, Peru's economy & finance minister, on having been reappointed to his old job.


"We gave him this job. Now we want this job back."

Guy Philippe, former police chief of Cap Haí¯tien, who recently joined the Haitian rebels, on President Jean-Bertrand Aristide.

LATIN AMERICAN REGIONAL REPORT: CARIBBEAN & CENTRAL AMERICA - NOW AVAILABLE

We focus on the violent insurgency that is threatening to sweep away Haiti's President Jean-Bertrand Aristide. With no coherent international response to the rebel uprising in the north and centre of Haiti, Aristide's political future is very much in the balance. Elsewhere in the Caribbean, Dominican President Hipólito Mejí­a outmanoeuvres his rivals to win the candidacy for the ruling PRD; Cuba appoints a military colonel to shake up the tourism ministry; Guyana's government's efforts to improve Indian rights are overshadowed by death squad revelations, and Trinidad's leaders discuss constitutional reform. We also preview elections in Antigua & Barbuda. In Central America, we look ahead to elections in El Salvador and Panama and assess the early days of the Berger administration in Guatemala. An annual subscription to Latin American Regional Report: Caribbean & Central America (12 issues) is priced at US$225 (Discounted rates available to academics/NGOs). For details, please call LAN on +44 (0)20 7251 0012 or email: [email protected]

Latin American Weekly Report (Online) ISSN 1741-7422. Published weekly (50 issues a year) by Intelligence Research Ltd, 61 Old Street, London EC1V 9HW, UK. Telephone +44 (0)20 7251 0012, Fax +44 (0)20 7253 8193, Email: [email protected]. Website: www.latinnews.com EDITOR: Eduardo Crawley, [email protected]. Subscription rates will be sent on request. COPYRIGHT © 2004 in all countries. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, electrical, chemical, mechanical, optical, photocopying, recording or otherwise, without the prior written permission of the publishers. REFERENCES: Back references and cross-references in the current series will be made thus: WR-04-01 will indicate Latin American Weekly Report, Issue No.1, 2004.

Lula has weightier things to worry about than a New York Times article. His 23 May trip to China, which he has been portraying as a big effort to promote integration between that country and Latin America, has been preceded by a big snafu that will undoubtedly affect Chinese perceptions. On 12 May the Chinese government announced that it was suspending imports of soya from a number of Brazilian firms, after a big shipment was found to contain potentially hazardous chemicals.

Soya is a big item in bilateral trade, which has been rising rapidly (US$4bn in 2002, US$6.6bn in 2003), and making Brazil China's biggest trading partner in Latin America. China and India are the weightiest developing-world partners of Brazil in the G-20, a forum to coordinate international trade negotiations.

CHILE | Unemployment still rising. The politically sensitive unemployment rate has inched upwards again in April-June, to 9.6% - 0.2 points above the previous running quarter, and 0.5 points higher than a year earlier. From the point of view of pubic perceptions, it has come dangerously close to the 'psychological threshold' of 10%. Indeed, in Santiago - home to a third of the workforce - it has just overshot that mark, reaching 10.1% (1.1 points up on last year). Also above that crucial level are the rates of Valparaí­so (11.9%), Atacama (11.4%) and Coquimbo (10.7%).

ARGENTINA-BRAZIL | Sorting out differences. Argentina has lifted restrictions on imports of Brazilian cookers and fridges following an agreement between businessmen of both countries to adopt a quota system. It is expected that the same will happen soon with washers. Remaining in place is a 21.5% duty on television sets imported from the Manaus free zone. In the first five months of this year Argentina's imports of Brazilian cookers and household appliances had more than doubled. Those of Manaus TV sets had shot up to 8,358 units, not much less than the 9,152 imported in the whole of 2003.

BRAZIL | Interest rates may rise. The central bank's monetary committee, Copom, served notice last week that, with inflation threatening to overshoot this year's target, it may have to raise the benchmark interest rate- or, in bankspeak, to 'adopt a more active posture'. For now it is keeping the Selic rate at 16%. In the first half of the year inflation reached 3.48%, taking the 12-month total to end-June up to 6.06%. The target for 2004 is 5.5%, give or take 2.5 points.

The bank's announcement comes in the wake of an ultimatum issued by the umbrella labour confederation CUT, giving the government until September to introduce substantial cuts in the interest rate.

Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		02.01.04	8.10.04	15.10.04
Argentina	peso	2.95	2.97	2.98
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.86	8.01	8.02
Brazil	real	2.87	2.82	2.85
Chile	peso	588.00	595.00	609.00
Colombia	peso	2,779.08	2,601.70	2,549.01
Costa Rica	colón	418.74	448.71	449.61
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	35.00	33.17	32.79
Ecuador	dollar	1.00	1.00	1.00
El Salvador	colón	8.75	8.75	8.75
Grenada	EC dollar	2.70	2.70	2.70
Guatemala	quetzal	8.03	7.87	7.84
Guyana	dollar	180.50	_	_
Haiti	gourde	28.00	_	_
Honduras	lempira	17.97	18.58	18.60
Jamaica	dollar	48.70	_	_
Mexico	nuevo peso	11.17	11.20	11.40
Nicaragua	córdoba oro	15.75	16.22	16.23
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,100.00	5,935.00	6,000.00
Peru	nuevo sol	3.48	3.34	3.31
Suriname	guilder	2,178.50	_	_
Trinidad & Tobago	dollar	6.07	_	_
Uruguay	nuevo peso	29.80	27.10	27.10
Venezuela	bolí­var	1,600.00	1,917.60	1,917.60
Sources: EFE; Bank of America.

For a very short while last week it looked as if resorting to international pressure had worked in favour of President Enrique Bolaños. A warning from the permanent council of the OAS was followed almost immediately by an agreement between Bolaños and Sandinista leader Daniel Ortega to subject to a consensus the controversial constitutional reforms curtailing presidential powers [WR-04-45]. Former president Arnoldo Alemán, currently in jail, later endorsed the deal - and the very next day the opposition reneged on it and ratified the reforms in the assembly.

Bolaños, through ambassador Carmen Marina Gutiérrez, had asked the permanent council of the OAS to maintain 'a state of alert for democracy' in Nicaragua. This was not quite the invocation of the OAS Democratic Charter which Bolaños had announced: the phrasing reflected the wishes of leading OAS members that the charter should not be brought into play, at least not yet.

The deal with Ortega was solemnised on 12 January with the presence of two 'guarantors' Cardinal Miguel Obando y Bravo, the archbishop of Managua, and Jorge Chedieck, resident UN coordinator. The archbishop also sent an envoy, Monsignor Eddy Montenegro, to persuade Alemán to endorse it, which he did that very same day.

The agreement was mainly a commitment by all parties to initiate a 'national dialogue' to be based on two opposition pledges: one, explicit support for Bolaños to serve out the rest of his term; the other, making the application of the constitutional reforms approved last year subject to a consensus between the executive and the legislature. This, it is stated, was to be stipulated in a clause 'of constitutional status' attached to the reforms.

Celebrations were cut short the next day, when the Sandinista-Liberal entente in the assembly went ahead and ratified the reforms - without the conditioning clause. 

When the government protested that this was a blatant breach of the agreement, the president of the assembly, René Núñez (FSLN), promised to make 'some stylistic amendments' so that the application of one particular reform - the assembly's power to remove a minister via a vote of censure - would remain subject to reaching a consensus with the executive. He made no mention of the most sweeping reform, which allows the assembly to overturn presidential vetoes by simple majority.

It soon became apparent that Bolaños's negotiator, chief of staff Ernesto Leal, had been ambushed: he had, after all, agreed to a text subjecting the application of the reforms, not their ratification, to a consensus.

In the ensuing confusion, all parties to the dispute -Bolaños, Ortega and both FSLN and PLC legislators - held a meeting on 14 January at which they announced that 'all doubts have been clarified' and that, consequently, they were 'willing' to launch on18 January the 'national dialogue'. 

The government apparently settled for accepting the ratification of reforms if five aspects are made subject to a future consensus. It also accepted that Alemán should be included in the 'national dialogue'.

HONDURAS | Modest growth expected. The central bank announced last week that GDP growth this year is expected to be somewhere between 4% and 4.5%. With population growth running at 2.4%, this will translate into per capita growth of at most 2%. The bank reckons that remittances by expatriates, a prime source of hard currency, will grow by 18%, and that exports will do so by 6.2%. Despite the reported impact of changed world trade rules on textile exports, the maquiladora (re-export) industry is expected to increase its output by 10%.

DOMINICAN REPUBLIC | Tourism still leads. Revenues from tourism last year reached US$3.4bn, or 5% more than in 2003. This keeps tourism comfortably in its position as the country's main source of hard currency. Tourism accounts for 24% of GDP. In 2004 the Dominican Republic received 3.5m tourists, or 29% of the Caribbean total. 

DOMINICAN REPUBLIC | Fuel price rises trigger protests. On 8 April the government of President Leonel Fernández again increased fuel prices, as it has been doing now for seven weeks running. This has triggered a wave of protests throughout the country, adding to those which were already being staged against the continuing electricity blackouts, of 10 hours or more a day. Unions have warned that they might call a general strike. The Dominican Republic is wholly dependent on imported oil, and the increases reflect price movements on the world market.

Five days of traffic halted by roadblocks on all main highways and escalating protest actions led by local authorities in the western coastal province of Manabí­ led the government of President Alfredo Palacio to opt for concession rather than risk a potentially risky confrontation. This involved sidelining his interior minister, Mauricio Gándara, and entrusting the solution to Economy Minister Rafael Correa.

Manabí­ was only one of the provinces up in arms against perceived government neglect or non-fulfilment of provinces. Roadblocks had also gone up last week in the northern Andean province of Imbabura and the northeastern Amazonian one of Sucumbí­os. All were demanding government investment in physical and social infrastructure. Gándara, claiming that assurances had already been given that everything possible within the budget would be done, called the protest actions a 'threat to peace'. The one in Manabí­, he said, was just 'a whim' - which got him declared persona non grata in the province.

Led by Patricia Briones, mayor of Portoviejo, the provincial capital, the protesters of Manabí­ took over the local airport on 7 July, bringing air traffic to a halt. They then threatened to march upon Manta and do likewise with the military airbase there, where the US has been granted facilities for aerial anti-drug surveillance of Colombia. At this, the government despatched Correa to Portoviejo, where he promptly signed an agreement to invest US$75m in public works and to rebuild the province's road network. 

Towards the end of the week indigenous groups were threatening to halt oil drilling if their demands were not met as promptly.

 

GUATEMALA | Remittances almost hit US$3bn. Final central bank figures for 2005 show remittances from the US reaching US$2.99bn, an increase of 17% over 2004. This makes remittances equivalent to about 10% of Guatemala's GDP; they are the country's second-largest source of hard currency, after exports, which last year brought in an estimated US$3.6bn. Their expansion has been nothing less than spectacular: over the past 10 years they have grown eightfold. The central bank is projecting a 14% increase in the volume of remittances this year, but this depends on the intensity of US action against illegal immigrants, who make up about 60% of the 1.2m Guatemalan expatriates living there.

CUBA | Sugar season begins on hopeful note. The authorities expect this year's sugar harvest, which began on 6 January, to yield more than last year's despite the fact that 40 of the mills that operated in 2005 have been decommissioned, as part of the continuing drive to leave only the efficient ones in operation. Since 2002, when this drive began, 40% of the mills have been shut down. Last year's harvest is unofficially reckoned to have yielded between 1.3m and 1.5m tonnes of sugar, one of the lowest on record. Much of the decline was attributed to the severe drought the island had been suffering. Cuba's peak sugar production was 8.5mt, achieved in 1970.

SOUTHERN CONE | Gas supply vulnerabilities surface. Brazil was forced last week to impose rationing on the use of natural gas after a combination of adverse weather conditions and regional politics interrupted the supply from Bolivia's second-largest gas deposit, San Antonio, in the southern department of Tarija. Argentina was formally warned by the Bolivian government that it might also see its supplies cut back. The problems began when, as a result of heavy rainfall, a pipeline operated by Petrobrás sprang a leak on 2 April. Repair work was prevented by roadblocks set up by people from Gran Chaco province demanding that boundaries be redrawn so as to give them jurisdiction over Bolivia's largest gas deposit, Margarita (currently in O'Connor province).

The San Antonio deposit can pump about 10m cubic metres of natural gas per day. Currently Brazil imports 24m cmd and Argentina 4m cmd. The rupture of the pipeline cut supplies to Brazil by about 7m cmd. Data on the reduction in supplies to Argentina was not available. On 8 April the Brazilian ministry of mines and energy announced cuts in the use of natural gas; 72% for power plants, 51% for Petrobrás refineries, and 12 % for domestic consumers in the southern and southeastern regions.

The roadblocks were lifted on 9 April after the central government intervened in the boundary dispute, promising to rule on the matter within 30 days. This allowed repair work to begin.

This incident did not go unnoticed in Chile, which on 6 April had received public assurances from the Argentine government that its future supplies of natural gas from Argentina would not suffer any cutbacks such as those of two years ago. The assurance was less than convincing as Argentina restated that its top priority remained the satisfaction of domestic demand. The most the energy secretary, Daniel Cameron, could promise was that, in a serious emergency, the Argentine government would 'resort to all means available so that our sister republic of Chile should suffer the least inconveniences'.

BRAZIL | Grains harvest estimate lowered again. On 6 April the national statistical institute, Ibge, downgraded its estimate of the forthcoming grains harvest to 121.9m tonnes, almost 5mt less than it had calculated at the beginning of the year. It noted that the harvest would still be 8.46% higher than last year's and would not set a new record, falling below the 123.6mt of 2003. Drought in Bahia, Minas Gerais and Mato Grosso do Sul has been the chief cause of the shortfall, although higher yields will compensate for the 2.5% decrease in the area sown to grains this year.

BRAZIL | Industrial output perks up. Industrial production in February was up 1.2% on January and 5.4% on January last year - the latter being the best such performance since July 2005. Leading the February upswing were durable consumer goods, up 6% on January, while semi-durables and non-durables rose by only 1.7% and capital goods by 1.5%. One somewhat discouraging result was that production of intermediate goods, an indicator of future production intentions, was down 0.6% in February.

CHILE | Caution on this year's growth. Finance Minister Andrés Velasco told the senate last week that GDP will grow by 5.8% this year. This is not only considerably lower than last year's 6.3%, but also slightly below the 6% which private economists have been forecasting. 

URUGUAY | Deceleration expected this year. Finance Minister Danilo Astori stated last week that available data 'allow us to anticipate that we are close to seeing 5% growth in 2006'. Uruguay's GDP grew last year by 6.6% after the post-recession rebound of 12% in 2004.

The story that the US is intent upon establishing a military base in Paraguay [WR-05-27] has been revived by an assemblage of social organisations who gathered last week in the 'Social Forum of the Triple Border'. The new version says that Washington's aim is to control the region's biggest fresh water deposit, the Guaraní­ aquifer.

Close to 2,000 members of about 40 social organisations of the region congregated in Ciudad del Este, Paraguay, on 22 July to denounce what they described as the militarisation of the area by the US. Their specific target, according to the local branch of the Servicio Paz y Justicia (Serpaj) is the presence of US military medical teams conducting inoculation campaigns.

Serpaj's Orlando Castillo told the press: 'Thanks to an international observation mission in Paraguay, we have confirmed the presence of members of the US army in Chaco, Concepción and San Pedro. We have received reports about the medical assistance these soldiers are providing within the framework of a sanitation campaign, so we are demanding an investigation into the kind of medication that is being administered to the population.'

A central theme discussed at the forum was the 'attempt by Washington to take over [the] Guaraní­ aquifer'. The latter, spread under parts of Paraguay, Argentina, Brazil and Uruguay, is 'the world's most important fresh water deposit, capable of supplying 6bn people over 200 years'. The notion that the US wishes to take over this resource has been popularised by the Argentine film Sed, Invasión Gota a Gota ('Thirst, Invasion Drop by Drop'), by Mausi Martí­nez.

Apart from Serpaj, the most important organisations taking part in the Ciudad del Este forum were the Central de Trabajadores de Argentina (CTA), Movimiento por la Paz y la Solidaridad (Argentina), Sindicato de Periodistas del Paraguay (SPP), Mesa Coordinadora de Organizaciones Campesinas (MCNOC, Paraguay) and Rede Brasileira pela Integração dos Povos (Rebrip, Brazil).