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ECUADOR | If not recession, then much lower growth. Economy minister Mauricio Pozo shrugs off the statistics that show Ecuador technically in recession and says that GDP will grow this year by 2.5%. His explanation: `We have a period of economic deceleration which is the product of a year of transition, and 2.5% growth is acceptable for a period of this nature.' 

Pozo had been predicting GDP growth of 3% to 3.5%. He has also lowered his growth forecast for next year to 4% — as against the 6% agreed with the IMF.

Public finances are going to get tighter. Pozo sees the primary fiscal surplus reaching 4% rather than the expected 5% this year, and shrinking to 3.6% next year. Half of his US$7.1bn draft budget for next year will go on debt servicing (US$2.4bn) and the government payroll — and the latter is based on the hope that congress will approve labour reform legislation which will allow the government to freeze public-sector salaries next year. Congress has been resisting pressure from the executive to give this bill urgent treatment, with only cursory debate.

A survey of businessmen conducted by Seminarium shows a majority unconvinced that economic recovery will take place next year; they predict 2005 at the earliest. A majority also perceive the current economic situation as worse than a year ago. A strong influence on their mood is the contraction of domestic consumption, signalled by the 4.4% fall in imports of consumer durables in the first half of the year.

PERU | Mining sector keeps the economy growing. Economic activity in Peru in the first seven months of the year was up 4.3% on the same period of 2002. The driving force was the extractive sector (chiefly mining, since the oil industry performed poorly) which was up 8.3% — more than offsetting the decline in another big export sector, fishing (down 18.9%, due to the ban on anchovy). The July figures show both trends continuing: the extractive sector up 11.9%, fishing down 26.2%.

One thing economic growth is not providing is jobs: the open unemployment rate in Lima in June-August was up to 9.3%, as against 8.7% a year earlier.

Lula goes for an assertive, even abrasive, foreign policy, built on a demand to be treated as an equal.

Roger Noriega, the new US Assistant Secretary of State for Western Hemisphere Affairs, blamed Brazil for the collapse of the ministerial-level WTO talks at Cancún. When asked to comment upon this, Brazilian foreign minister Celso Amorim remarked that Noriega was a low-ranking official, and that he would be talking to his boss, Colin Powell, at the opening of the UN General Assembly in New York. The put-down is of a piece with the tone President Lula da Silva wants to impress upon Brazilian foreign policy.

Days ago Lula put it quite emphatically to the latest batch of graduates from the Rio Branco academy for diplomats: `We no longer accept participation in international politics as if we were the wretches of Latin America, a Third World country of no account, a worthless country that has homeless children, a minor country whose people only know how to play soccer and dance samba at Carnival.' Lula says that Brazil has sometimes been treated as an inferior because of the lack of self-esteem it projected: `No interlocutor anywhere respects the other if he hangs his head and acts as a subordinate.' Brazil's diplomats, he says, should demand to be treated as equals.

Beyond Cancún
`After what occurred in Cancún,' he told the budding diplomats, `you will notice that you are watched by our interlocutors from other countries with far greater interest, but also with much greater expectations than hitherto.' Cancún was deliberate — but it was also a negotiating move, not a walkout.

Amorim has made it clear that he is preparing to achieve results at the November WTO meeting in Geneva, because the WTO is still fundamental to the negotiating possibilities of developing countries. `Difficulties and all,' he said, `it is better to have the WTO around.'

Lula has already travelled abroad more in eight months than his predecessor Fernando Henrique Cardoso in his entire term of office. He has braved the displeasure of the US and his Colombian neighbours by offering himself as a mediator in Colombia's internal conflict — and his stance has prevailed to the extent that Colombian President Alvaro Uribe now sounds quite content with Lula's offer of Brazil as a venue for talks between the UN and the Farc guerrillas.

Success on this front was partly due to the fact that Lula followed up his initial offer with a display of military force designed to show Colombia (and other Amazonian neighbours) that he fully intended to contain any spillover of the Colombian conflict, by either guerrillas or drug traffickers. His well-publicised plans to redeploy much of Brazil's military strength towards the Amazonian borders (largely dusted-off plans that been around for some time) also included the message that Brazil was concerned about the resurgence of the Sendero Luminoso guerrillas in Peru.

Indeed, he seems to have gone further than mere gesturing from across the border. According to Brazilian air force sources cited by the magazine IstoÉ, a Brazilian spy plane was sent into Peruvian airspace in early July to help the Peruvian authorities pinpoint the exact whereabouts of the senderistas who had kidnapped 71 pipeline workers [WR-03-27]. 

Equipped with sophisticated electronic gear, including heat sensors as well as SAR radar and radio-monitoring gear, the Embraer 145-FAB R-99B was part of the fleet of the Sistema de Vigilí¢ncia da Amazônia (Sivam), the satellite and aerial surveillance system that covers the Amazonian region. Its participation is credited with having speeded up the arrival of the Peruvian military on the scene.

This operation has not been publicly acknowledged by either Peru or Brazil. The air force officers cited as sources were at pains to underline that it did not involve any breach of Peruvian sovereignty, as the Peruvian government had formally requested assistance.

There has been some disquiet about the prospect of Brazil throwing around its weight (not least in Santiago). The Lula administration is not apologetic. To quote Amorim, `Without wanting to get involved in anyone's internal affairs, Brazil will not flee from its responsibility [...] of being the biggest country in South America.'

Abstention plus spoilt and blank ballots surpassed the `anger vote' that marked the end for Fernando de la Rúa.

Though it is still not clear how many of the votes cast for the ruling Partido Justicialista (PJ) in the recent provincial elections were actually votes for President Néstor Kirchner [WR-03-36], one thing does emerge from an analysis of voting statistics: almost 30% of the electorate did not bother either to endorse or reject him — they simply didn't turn out to vote. Another 7% spoilt their ballots or cast blank votes: a more overt rejection, not just of Kirchner's camp but of all contestants. What some analysts have taken to calling the `negative vote', the sum of those two groups, added up to well over a third of the electorate.

The rejectionist contingent was larger than in the April presidential elections, and even than that in the October 2001 congressional elections, when the so-called voto bronca (anger vote) marked the beginning of the end for the government of President Fernando de la Rúa. Though voting is compulsory in Argentina, the penalty for abstaining is merely nominal and does not act as a deterrent. The simplest explanations on offer are apathy and an abiding mistrust of all parties and politicians. It has also been suggested that democracy is no longer the novelty it was in the early 1980s, after the long years of military rule. Yet another explanation is that, with the PJ so overwhelmingly dominant, there is not much to choose from.

Argentine elections: gauging apathy
Province	Abstention	Blank & spoilt	Total negative
Buenos Aires	32	13	45
Jujuy	34	5	39
Santa Cruz	..	..	36
Metropolitan district	30	5	35
Chaco	..	..	30

As a tactical ploy misfires, the government ends facing two sets of protests in an atmosphere of exacerbated tension.

What appeared to be a government gambit gone wrong turned a peasant protest into a bloody confrontation that claimed at least six lives and left more than two dozen injured. The protest was a second attempt by Felipe Quispe, congressman and leader of the Confederación Sindical Unica de Trabajadores Campesinos de Bolivia (CSUTCB), to press the government into fulfilling a series of promises made three years ago to the peasants. The first attempt, in mid-July, was foiled by determined action on the part of the interior ministry to prevent the protesters from using their preferred tactic, the blocking of the country's main highways [WR-03-29].

This time round, though, clearance of the roadblocks which began to be erected on 15 September was desultory, and protesters were able to restore overnight what had been removed during the day. Traffic from La Paz northwards to the Yungas valleys and south to Titicaca was seriously disrupted: bus services were almost completely interrupted for fear of attack.

The word spread in political circles that the government was deliberately allowing Quispe to recover some of his lost prestige because this would weaken his arch-rival, former presidential candidate and current congressman Evo Morales. Certainly Morales felt compelled to announce protest actions of his own, focusing not so much on the peasant demands as on opposition to the export of Bolivia's natural gas. On 19 September the rallies he organised brought to a standstill much of La Paz, Cochabamba and Oruro. Morales announced that he would follow up with a general strike.

Two days later disaster struck on the other front. Among those trapped by the roadblocks were several hundred tourists, many of them foreigners, who had travelled to Titicaca for a folk festival. For reasons still unclear, the government decided to change tack and send a combined army-police unit to `rescue the tourists'. They were extricated unharmed, but on their way back the soldiers were ambushed, and in the ensuing firefight four peasants and a soldier were killed.

Needless to say, this only strengthened the peasants' determination to press on with their protest, placing both sides in a confrontational mood. With Morales pursuing his own campaign at the same time, the situation, in a stage unforeseen by those who had been seeking a showdown [WR-03-33], may become difficult for the government to handle. Quispe has emerged as still having `mobilisation capability', while Morales, far from having been weakened, has shifted the contest away from Chapare and the coca plantations.

Fox instals new team charged with producing `immediate, tangible' results; meanwhile, the communities get bolder.

President Vicente Fox has begun to respond to the recent shift in the strategy of the Zapatista rebels by signalling that his government is now prepared to start acting on what he describes as `the outrageous poverty in which thousands of indigenous families are still living.' His chosen instrument: a topheavy board for the Comisión Nacional para el Desarrollo de los Pueblos Indí­genas (CDI), which was created last May to take over the functions of the old Instituto Nacional Indigenista (INI).

On 18 September, Fox installed the CDI board, which includes no fewer than 13 of his cabinet ministers, ostensibly as a token that virtually all areas of government will be involved. Heading the CDI is Xóchitl Gálvez, a Ñañhu (or Otomi) who for the past three years had been head of the cabinet's office for the development of indigenous peoples, a post created by Fox.

The CDI is formally a `decentralised' agency, though the heavy representation of government ministers belies the independence that status is supposed to ensure. It will act on the advice of a `consultative council' formed by representatives of Mexico's 62 recognised indigenous peoples, the state governments, the indigenous affairs committees of both chambers of congress, and academic institutions.

Fox charged the CDI board with producing `immediate, tangible and verifiable results to solve the social gap faced by indigenous communities'. It is necessary, he said, to respect `the customs, traditions and forms of organisation of the indigenous communities, as well as to maintain a permanent dialogue with their authorities and representatives — their opinions must be heard and heeded.'

Oficial figures put Mexico's indigenous population at 12m, up from 9.1m in 1995 and 8.7m in 1990. The largest concentrations are in the southeastern and eastern states.

In the field, more assertiveness
Ever since the Zapatistas announced that they were going ahead with the adoption of `autonomous' régimes for the municipalities in their area of influence, and invited other indigenous communities to do likewise [WR-03-31], observers have been on the watch for signs of emulation. Movement on this front is not all that easy to discern, as the indigenous communities have a long tradition of taking matters into their own hands when the authorities fail to deliver. Recently, though, there have been hints that they are getting bolder — and that even the Zapatistas are not immune to the consequences.

In early September, the people of two indigenous communities in the municipality of Chenelho, Chiapas (about 20 kilometres north of San Cristóbal de las Casas), took hostage a truckload of 35 soldiers, in support of their demand that the army repair a road the troops had damaged.

The army has had troops stationed in the area since 1997, when government forces clashed with followers of the Zapatistas. Relations have often been tense; they erupted this month after a convoy of army vehicles, ostensibly searching for marihuana plantations, churned up the road used by the communities of Saclum and Santa Marta.

The outcome? The army admitted responsibility and promised to repair the road, and the return of the hostages was brokered by the mayor of Chenelho and the state's interior minister.

Another incident illustrated the often hostile relations between Zapatista and non-Zapatista indigenous communities. Exactly how it started is unclear, but in early September the Zapatistas ended up holding captive an activist of the Central Independiente de Obreros Agrí­colas y Campesinos (CIOAC-Oficial), a group that broke away from the rebels two years ago. And the CIOAC-Oficial ended up holding two Zapatista milicianos.

This episode was also defused before it escalated, and on 19 September the CIOAC-Oficial handed over its captives to a local rights organisation acting as go-between. Reciprocation by the Zapatistas was expected to follow.

While all this was going on, the federal government's commissioner for peace in Chiapas, Luis Alvarez, was roaming the state, apparently unable to interest the Zapatistas in meeting. Alvarez complained to state legislators that in these circumstances resuming the `peace dialogue' was impossible. The Zapatistas have shown no sign of wanting to return to the negotiating table.

Government and opposition hope that up to six of the nine supreme court justices will agree to step down quietly.

Government and opposition have reached agreement on a formula to `retire' up to six justices of the nine-member supreme court [WR-03-34]. A bill drafted by senator Juan Carlos Ramí­rez Montalbetti, of the opposition Partido Liberal Radical Auténtico (PLRA), holds out the possibility of comfortable `retirement benefits' to those members of the court who wish to take them up. The hope is that this will allow the renewal of the supreme court without resorting to the politically costly procedure of impeaching the justices one by one.

The problem is that under current rules, supreme court justices are guaranteed tenure until they are 75 — and some have already let it be known that they have no intention of retiring earlier, and no fear of impeachment proceedings.

The supreme court is a creature of politics. Under an agreement reached by President Juan Carlos Wasmosy with the opposition in 1995, a share-out of seats was established, but since then the ruling Partido Colorado has increased its share and the opposition line-up has changed. At an all-party meeting last week, the participants say they steered clear of any discussion of party share-outs in the selection of either the justices to be `retired' or their replacements.

Ramí­rez Montalbetti, whose three-article bill was adopted by all, says its purpose `is to make it clear that our main objective is to renew the [supreme] court, and that we are opening a dignified door for its members to retire.'

Not all leading politicians agree with the chosen course of action. The president of the chamber of deputies, Benjamí­n Maciel Pasotti, would rather postpone the whole issue of renewal of the judiciary. His motive: the debates are already taking up time that should be devoted to the economic legislation that congress agreed with President Nicanor Duarte to process at full speed. His opponents on this issue say that that is a red herring, since it was none other than Duarte who introduced the issue.

Four women who held out for seven years won compensation for three generations; the US$570m plant should be onstream by June-July.

After seven long years of litigation, the last four Pehuenche holdout families reached an agreement with Endesa, clearing the way for the commissioning of the US$570m Ralco dam on the Bí­o Bí­o river — once the border with Indian territory. The importance of the event was underlined by the fact that the memoranda of understanding were exchanged in the presence of President Ricardo Lagos.

The last four families, headed by their women, got a good deal. Endesa will give each 77 hectares of land similar to that they are vacating, and Ch$200m (US$294,000). It will also contribute Ch$300m (US$441,000) to set up a foundation to carry out a development programme in benefit of the children and grandchildren of the heads of family. The twelve children of the heads of family will each receive 100 hectares of land. On top of that, Endesa will provide a pension for life to one member of each family (the government will grant another eight, plus 21 scholarships).

The tough stand of the four Pehuenche women thus did not only get them a much better price for their land than that offered to the 95 families that settled back in 1999. It was the same as offered to two brothers who settled at the end of last year — but neither these, nor any of the others, obtained anything for their descendants, nor did they get the government to act as guarantor. Had all been given the same, Endesa would have faced a bill Ch$18.2bn (US$27m) greater. Interestingly, the settlements with the last four were closed after the term had expired for the first 95 to file a suit claiming `enormous prejudice' and demanding equal treatment.

The Ralco hydro complex, after flooding the hitherto contested 3,000ha, should be completed by May next year and come onstream in June or July. It will deliver 570MWh, adding 10% to the current total of the interconnected system.
Endesa's scheme originally envisaged six hydro plants in the Bí­o Bí­o basin. The first, Pangue, is already in operation. The company says it has no word yet on the other four (Quitramán, Huequecura, Aguas Blancas and Ranquil).

BRAZIL | Interest-rate lowering is slowed. The central bank disappointed industrialists, and even some market analysts, when it lowered the benchmark interest rate last week by two percentage points, to 20% — they had expected at least 2.5 points, particularly after the most recent discouraging news on the growth front. Planning minister Guido Mantega has forecast a GDP growth rate of 0.9%, while the government's institute of applied economic research expects only 0.5%. This was the fourth consecutive lowering of the rate from its peak of 26.5%.

The executive is trying to do something about this situation without impinging on the central bank's autonomy. Last week it announced that employees will be able to borrow up to five times their take-home pay at rates to be negotiated between the banks and the unions, and using their salaries as security (repayments will be docked by their employers). Also, finance minister Antônio Palocci announced a line of credit for purchases of household appliances worth up to R$900 (US$300), repayable over 36 months at `minimal' interest rates. Union sources say both measures together would translate into a reduction of interest on consumer credit from about 8% a month to 3%. 

The government's aim is to stimulate family consumption, which in the first half of this year was running 4.7% lower than a year earlier. Retail sales in July fell for the eighth month running, to accumulate an annual 5.4% decline.

ARGENTINA | Recovery decelerating. The second quarter of the year saw the rate of recovery slow down significantly. GDP grew by only 1.6% on the first quarter, leaving first-half GDP 6.6% higher than a year earlier (with year-on-year comparisons, it must be kept in mind that last year Argentina's GDP shrank by 10.6%). 

Economy minister Roberto Lavagna clearly expects (as does the IMF) further deceleration in the second half, leading to GDP growth of 5.5% for the year as a whole. For 2004, the draft budget just drawn up by the executive assumes GDP growth of 4%.

Industrial production has been continuing in the same pattern: in August it was 1.8% up on July, leaving it up 17.5% on the same month of last year.

Education department funds eaten up by 6,500 political appointees who collect their pay but do no work.

Dispensing patronage in the form of government posts is nothing new in Mexico, but the persistence of this practice and its imperviousness to much-heralded reform keeps emerging every so often. The most recent instance, last week, was triggered by the despair of a state minister whose budget was being eaten up by non-working employees.

Daniel Pano Cruz, education minister of the state of Guerrero, announced that his department was facing a severe financial crisis, largely due to the fact that its payroll was inflated by 6,500 employees who collect their salaries without putting in any work. Their combined drain on state resources is of the order of US$30m; Guerrero is one of Mexico's poorer states.

Governor René Juárez, of the opposition Partido Revolucionario Institucional (PRI), says that such appointments stretch back up to 20 years, and that he has actually been making an effort to phase out the aviadores (`aviators', the popular term for nonworking government employees). He portrays himself as one of the few who have had the courage to speak out openly on this issue; in the specific case of the education department, he promised a solution within 18 months.

Juárez was elected four years ago, winning 49:47 over his rival from the leftist Partido de la Revolución Democrática (PRD). The losers claimed that Juárez's victory had owed much to the PRI's handouts of gifts and food parcels from the state's antipoverty scheme just before voting day. The PRI said at the time that the handouts were not illegal.

When General Richard Myers, chairman of the US joint chiefs of staff, turned up in Mexico last week, there was much speculation that he would be sounding out Mexican defence minister Gerardo Clemente Vega on the possibility of Mexico sending troops to help out in Iraq. After all, at the time the Pentagon was busy putting out feelers on this subject to Brazil, Chile and Argentina.

A source close to the visit underlined that the subject was simply not on the agenda, since Washington already knew that Mexico would not respond favourably. Mexico and Chile, on rotation at the UN Security Council, had opposed the US war against Iraq. When sounded out on sending troops now, it refused, but held out the possibility of changing its mind if the UN were running the country. Brazil's defence minister, José Viegas, who admitted that there had been an `indirect' approach from the US, said that Brazilian participation was `improbable'.

Myers's visit to Mexico was described as `social' and primarily designed to `keep military channels open'. Last month Myers had been in Central America to press the case for subregional disarmament.

HARD CURRENCY | Remittances could hit US$11bn this year. Remittances from Mexican emigrants in July totalled US$1.12bn. This is slightly lower than the US$1.14bn recorded in June, but what really matters is that it is the fourth month running in which the total exceeds US$1bn; a run unmatched since records on remittances began to be kept in 1995. The accumulated total for the first seven months of the year is US$7.26bn, almost 30% more than in the same period of 2002, and 26% shy of the total for the whole of last year. At the current rate, this year's total could be in the neighbourhood of US$11bn.

Interesting to note is that this year emigrants have been sending more remittances of smaller amounts of money. This is attributed to the lowering of costs due to the use of electronic transfers (which now account for 85% of the total) and greater competition for the business.

EMPLOYMENT | Jobless rate reaches new height. The open unemployment rate in August reached 3.96%, overtaking the five-year record of 3.52% reported last month. In August last year the rate stood at 2.77%. As our readers know, these low figures reflect the highly restrictive definition of open unemployment in Mexico — still, the evolution of the rate is a clear illustration of the trend. The average open unemployment rate for last year was 2.71%; for 2001, 2.46%.

A better approximation to the true situation of Mexico's jobs market is provided by the rate of `critical occupation conditions', which takes into consideration jobs in the informal sector. This stood at 8.75% in August, up from 8.32% a year earlier.

TEQUILA | Less drunk at home, more abroad. In January-August this year only 11m litres of tequila were sold on the domestic market, down from 36m in the same period of last year. Exports, however, grew by 38%, to 69.5m litres between the same two periods. Overall, the tequila industry has been shrinking steadily since its peak in 1994: production in the first eight months of this year reached 83.5m litres, or 34% less than that of the same period four years ago.

The crisis over the CSS further handicaps the ruling party's candidate, already running third in the polls.

On 18 September President Mireya Moscoso publicly signed a document declaring that she would not privatise the Caja de Seguro Social (CSS, the state's social security fund). This did not deter the union-led opposition from staging another protest march the following day, nor from announcing for this week a general strike — in both cases to oppose the privatisation of the CSS [WR-03-36].

The only hope held out by the opposition on 22 September was that they would call off the strike if Moscoso agreed to talks on an agenda which included granting autonomy to the CSS, reinstating the dismissed director, Juan Jované, and dismissing the CSS board that booted out Jované.

The CSS is in bad shape. It is running a deficit equivalent to more than 0.3% of GDP, which is likely to make the government miss its overall fiscal deficit target of 2% of GDP. All candidates running for the presidency in 2004 have promised to overhaul the CSS, but it is worth noting that even the umbrella private-sector association, Consejo Nacional de la Empresa Privada (Conep), advocates keeping it in state hands.

Electoral repercussions
The crisis triggered by the dismissal of Jované could not have come at a worse time for Moscoso and her Partido Arnulfista (PA). The PA's presidential candidate, former foreign minister José Miguel Alemán, is running a poor third in the opinion polls, attracting only 9.6% of voter preferences. Much of the support he might have counted on has migrated to former President Guillermo Endara, who left the PA to form his own party, Solidaridad. Endara is currently running second, with 28.2%.

Leading the pack is Martí­n Torrijos, of the leftish Partido Revolucionario Democrático (PRD) — son of the late General Omar Torrijos, the man who wielded real power in Panama from 1968 until his death in an airplane crash in 1981. Torrijos Jr is currently attracting 42.5% of voter preferences.

This lineup may yet change: there are still eight months to go to the elections. Indeed, some connoisseurs of Panamanian politics say that the PRD has consistently attracted the support of 35-40% of the electorate — which would mean that it has already peaked — and that just as consistently it has been defeated by the reluctant coming-together of its opponents.

Moscoso and the PA are certainly gambling on this. Last week they began to construct a `broad alliance' by striking a deal with the Movimiento Liberal Republicano Nacionalista (Molirena) and the Partido Liberal Nacional (PLN) to support Alemán for President in exchange for the first and second vice-presidential slots, respectively. They also agreed to field a single candidate in each of the country's four biggest cities: Panama city, San Miguelito, Colón and David. The big question, of course, is if Alemán can out-appeal Endara.

A television report on purported guerrilla training and a sudden emphasis on the ethnic element sound a worrying note.

After a first fatal flareup, protesters and government in Bolivia shied away from violent confrontation, but there were worrying signs that at least someone was trying to push events in the opposite direction. The first of these was a television broadcast on 29 September which purportedly showed Aymara militants and youths in their mid-to-late teens undergoing training in the use of rifles, somewhere in the vicinity of Lake Titicaca, near where the bloody clash of the previous week had taken place.

The organiser of the protests, peasant leader and congressman Felipe Quispe, says this is black propaganda put out by the government. `Those people [on the screen],' he said, `have the appearance, the apparel and the manners of city folk; they are not like us who work on the land.' He also said that the weapons they were handling are `old rifles from the Chaco War [of 1932-35], the same ones the MNR [Movimiento Nacionalista Revolucionario] distributed to the militias in the Revolution of 1952.' The purpose, he claims, is to create the conditions that will justify `massacring the indigenous nation.'

True or not, this meshes with a string of commentaries highlighting the ethnic element in the current protest movements. Support for Quispe, they all note, comes mainly from his own Aymara people, even beyond the peasant members of his Confederación Sindical de Trabajadores Campesinos de Bolivia (CSUTCB): the provincial truckers of La Paz department, who have threatened to block the accesses to the capital with 500 trucks, are `all Aymara'; the federation of butchers in La Paz city, who have threatened to leave the capital without meat, `is dominated by the Aymara'. The rest of the country, beyond the highlands, `does not share the same aims as the Aymara.'

The `encirclement' of La Paz by Quispe's protesters is being depicted as a re-run of the 1772 siege of the city by the legendary indigenous leader Túpaj Katari, whose name was adopted by many of Bolivia's budding indigenous parties - and also by the Ejército Guerrillero Tupaj Katari (EGTK), the armed group to which Quispe once belonged. The allusion is strong: it links the portrayal of the protests as the work of an ethnic minority (it is the second-biggest group, after the Quechua) with a whiff of subversion being plotted on the sidelines. This has the makings of an ugly shift in attitudes.

The seven aspirants in the anti-reelection camp prepare to select a single candidate this week.

The ruling Partido Revolucionario Democrático (PRD) should come a step closer to solving its nomination dilemma this week, when the seven anti-reelection contenders are due to select a single candidate to pit against President Hipólito Mejí­a.

Over the past week the aspirant who was most in the limelight was Rafael (Fello) Subervi Bonilla, minister of tourism — the sector of the economy that has conspicuously continued to perform well. Subervi has challenged Mejí­a to a one-to-one contest, promising that if he does not poll 10% more than the President he will withdraw from the race, and even offer to join Mejí­a's campaign team. He has stated publicly that he is only interested in the presidential nomination, and would not accept contending as anyone's running-mate.

He has also been busy trying to win over members of the Proyecto Presidencial Hipólito (PPH, the group supporting Mejí­a's reelection), offering to take someone from that camp on board as his vice-presidential candidate.

As things stand now, the two favourites in the contest within the anti-reelection camp are Subervi and Vice-President Milagros Ortiz Bosch. The PPH continues to insist that the idea of a `plebiscite' on reelection is a waste of time, and that the party should go directly into internal elections to select its candidate.

Elsewhere in the political arena, former Vice-President Jacinto Peynado has swept away reports that he had finally decided to support his rival Eduardo Estrella, the nominated presidential candidate of the Partido Reformista Social Cristiano (PRSC). He describes Estrella's candidacy as `illegitimate and inorganic', and has been hinting that he might align himself with Leonel Fernández of the Partido de la Liberación Dominicana (PLD), still the frontrunner in the polls.

Prime minister PJ Patterson has publicly committed himself to turning Jamaica into an independent republic during his current term of office. He announced this on 18 September at the conference of his People National Party's youth organisation. Details, he said, would emerge after the PNP's annual conference on 21 September.

He did allude, though, to one crucial preparatory step: `We have to abolish final right of appeal to the [British] Privy Council. The Caribbean Court of Justice is a must; it is going to take place. The financial arrangements are in place. We have insulated it from the risk of political interference and we believe we have judges with a capacity to ensure justice.'

With the PNP youth conference held under the banner of `Integrate or Perish: Regional Integration; the way forward', Patterson joined in the mood of assertiveness that has been spreading throughout much of the region since developing countries refused to come to terms with their developed counterparts at the recent Cancún WTO conference. `Globalisation,' he said, `is embracing us. We have to find the best way of ensuring that we are not engulfed by this embrace, as was reflected by our solidarity in Cancún.'

COSTA RICA | Exports driving the economy. Exports are the most dynamic sector in the Costa Rican economy, having reached US$4.2bn by end-August; 20% more than a year earlier. However, most of the increase has been taking place in free zones and non-traditional sectors, and this has limited the impact of the expansion on the jobs scene, which remains stagnant.

HONDURAS | Call for tariff on Chinese goods. The industrialists' association, Andi, has asked the government to impose a 40% tariff on all imports of Chinese goods, on the grounds that China is engaging in unfair competition through deliberate depreciation of its currency. Andi president Adolfo Facussé says this has been verified by the US government. China has emerged as a strong competitor of Central America for the supply of the US market.

DOMINICAN REPUBLIC | Tourism continues to grow. Tourist arrivals in the Dominican Republic in the first eight months of the year totalled 1.96m, or 22.3% more than in the same period of last year. The trend points upwards: arrivals in August were 30.5% higher than a year earlier. The figures, produced by the Asociación de Desarrollo Juan Dolio-Guayacanes, do not include revenues.

CUBA | Once again, a property register. Private property owners in Cuba will be able to register their holdings once again, after a hiatus of more than 30 years. Actually, the Registro de la Propiedad Mercantil y del Patrimonio was reactivated last year for state-owned holdings, and is now being opened by stages for private owners. The aim is to have a registry office operating in each of Cuba's 169 municipalities by 2006.

In Peru, General Eddy Tomasto Pantigoso, head of the national police's antidrugs unit, reported days ago that his unit had seized 18 tonnes of drugs in the first eight months of the year. This included not only cocaine, but also opium and marihuana. The main intention was to illustrate how well the antidrugs effort was going, but the backdrop was that cocaine cultivation has been increasing since last year, for the first time since the mid-1990s.

Very provisionally, the UNODC has estimated that in the first half of the year the area planted to coca in Peru and Bolivia may have increased by 15,000 hectares — which was put at 21% of the previously estimated total. There have also been increasing reports of cocaine-processing installations turning up in Peru. Taken together, these are indications that the `balloon' or `press-down-pop-up' effect is once again at work, this time as a result of the success achieved in Colombia's coca-eradication campaign.

"Nobody will be able to complain any more about the high cost of money."

Antônio Palocci, Brazilian finance minister, after the central bank had set the benchmark rate at 20%.


"[I] do have a lot of experience, in addition to the diplomatic experience that I've had in both South America and Latin America..."

Retired US General Wesley Clark, announcing that he would be seeking the Democratic Party's presidential nomination.


"[Argentina] is out of intensive care and is now in intermediate care."

Eduardo Duhalde, former interim President of Argentina, after the IMF deal had been announced.

In this month's Latin American Security & Strategic Review The special focus of the latest issue of Latin American Security & Strategic Review is how Chile is rethinking its military role at home and abroad, as the country prepares to finally close the books on the Pinochet era. Still in Chile, we also look at crime prevention and Lagos' plans for a new security ministry, and discuss the implications of the recent arrest of former guerrilla members as they were preparing a bomb attack. Elsewhere in the region, we report on the escalating social conflict facing Brazil's landless peasants, and investigate the reasons behind the sharp downturn in kidnappings in Colombia. In Mexico, meanwhile, impunity appears to be breeding a private security boom, with the sector's annual turnover reaching close to US$10bn and its rate of expansion accelerating_ For details of how to subscribe to the full 20-page report - or to request a free evaluation - please call Subscriptions on +44 (0)20 7251 0012 or email [email protected]

LATIN AMERICAN REGIONAL REPORTS MEXICO & NAFTA - NOW AVAILABLE In this report we argue that the next three weeks will be crucial for the final three years of the Fox government. The omens are not encouraging: the government's feeble grip on congress has been weakened by its defeat in the mid-term elections and its failure to persuade the lower chamber even to debate whether to strip a PRI senator of his immunity. Then there is the strange investigation of the cardinal archbishop of Guadalajara for money laundering. The cardinal's aggressive defence has involved President Fox, though Fox has now distanced himself from what the cardinal said were promises he made. We also look at the (poor) state of the economy. In our Nafta report we analyse Mexico's relations with China; the state of the maquiladora sector and what happened in Cancún.

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		20.09.02	12.09.03	19.09.03
Argentina	peso	3.61	2.93	2.93
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.34	7.76	7.76
Brazil	real	3.40	2.90	2.90
Chile	peso	743.00	673.00	_
Colombia	peso	2,789.46	2,830.09	2,833.90
Costa Rica	colón	368.29	407.02	407.70
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	18.93	32.83	32.46
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	7.77	7.99	7.98
Honduras	lempira	16.85	17.73	17.75
Mexico	nuevo peso	10.37	11.07	10.97
Nicaragua	córdoba oro	14.43	15.45	15.48
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,200.00	6,170.00	6,230.00
Peru	nuevo sol	3.62	3.48	3.48
Uruguay	nuevo peso	29.50	28.40	28.25
Venezuela	bolí­var	1,480.00	1,600.00	1,600.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	June	July	August	Last 12m	Jan-Dec 2002
Argentina	Indec	-0.10	0.40	0.00	4.90	41.00
Bolivia	INE	0.20	0.60	0.64	3.85	2.45
Brazil	FGV	-0.70	-0.20	0.62	22.03	26.41
Chile	INE	0.00	-0.10	0.20	2.90	2.80
Colombia	Dane	-0.05	-0.14	0.31	7.26	6.99
Costa Rica	DGEC	0.67	0.80	0.70	11.70	9.68
Ecuador	Inec	-0.21	0.03	0.06	7.32	9.36
El Salvador	Min.Ec.	-0.10	-0.40	0.30	1.70	2.80
Guatemala	BCG	0.22	0.27	0.28	4.97	6.33
Honduras	BCH	0.30	0.40	0.90	7.90	8.10
Mexico	Bco.Mx.	0.08	0.14	-0.07	5.24	5.70
Nicaragua	BCN	-1.50	-0.08	0.30	4.04	3.87
Paraguay	BCP	-0.47	-0.70	-0.20	9.20	14.60
Peru	INE	-1.50	0.15	0.01	1.89	1.52
Uruguay	DGEC	-0.47	0.50	1.16	14.19	25.94
Venezuela	BCV	0.16	1.80	1.30	30.40	31.20
US	DOL	1.40	0.10	0.40	2.20	1.60
Previous: WR-03-36

The stockmarket in figures
Market	Index	12.09.03	19.09.03	Variation (%)
Buenos Aires	Merval	764.65	781.69	2.23
São Paulo	Bovespa	16421.35	16851.49	2.62
Santiago	IPSA	1364.71	1370.04	0.39
Bogotá	IGBC	2149.08	2171.74	1.05
San José	BCT	11817.78	11804.20	-0.11
Quito & Guayaquil	Interinvest	68.47	69.52	1.53
Mexico	BMV	7712.75	7891.67	2.32
Lima	ISVBL	1962.14	1962.30	0.01
Caracas	BC	16984.26	17641.18	3.87
Source: Daily market reports.