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TAX REFORM | Alternative proposals multiply. Tax reform proposals rivalling that of the government have emerged from three quarters. The opposition PRI has come up with one which, in order to keep food and medicines exempt from the value-added tax (IVA), proposes creating a new tax on production, intermediation and imports (IPI) at a 10% rate. It also lowers the general IVA rate, but only from 15% to 13% (as against the government's 10%), hypothecating 10 points for the federal government, two for the states and one for the municipalities, and reduces the income tax rate from 32% to 25% for individuals and from 34% to 30% for businesses.

Coparmex, the umbrella employers' confederation, proposes reducing the general IVA rate to 10% (like the government) and extending it to food and medicine, but at the lower rate of 5%.

The senate has suggested raising fiscal revenues, not via new or higher taxation but by strengthening tax collection and curbing evasion, reckoned to be equivalent to half current tax receipts. Tax receipts in Mexico amount to 11% of GDP, one of the lowest rates in the hemisphere.

GROWTH OUTLOOK | Farming & building are driving forces. September economic activity figures continue to show a pattern of weak overall growth, at 1.2% above the same month of 2002. Two sectors, agriculture and construction, showed more than moderate year-on-year expansion (7.6% and 3.9%, respectively), but this was offset by a 1.8% decline in manufacturing.

EMPLOYMENT | Jobless rate remains high. The open unemployment rate in Mexico's 32 biggest cities was 3.63% in October, slightly down from the 3.87% measured the previous month. The countrywide rate in October was 2.8%. The official open unemployment rate excludes anyone who worked even a single hour in the week the survey was conducted. The broader rate of `critical employment conditions' was 10.32% in October.

PUBLIC DEBT | Domestic debt hits record high. At end-September Mexico's domestic public debt reached a record M$851.2bn (US$77.8bn), or 13.4% of GDP — almost one percentage point more than at the end of last year. The external public debt at end-September totalled US$75.9bn, up only US$6.2m since end-2002.

"Not everything we do makes sense all the time."

US Homeland Security Secretary Tom Ridge, addressing concerns about US security measures before a Mexican audience.


"The army is no longer demobilised. The army is mobilised."

Haitian former army sergeant Jean-Baptiste Joseph, after taking control of Hinche.


"I could lose anything, except the right to go around with my head held high, looking my peers in the eye."

Brazilian President Lula da Silva, responding to the corruption scandal affecting his government with an allusion to the best advice he received from his mother.

In this month's Latin American Security & Strategic Review

The special focus of the latest issue of Latin American Security & Strategic Review is the Amazonian region. Brazil, Peru and Colombia have joined forces to contain the spillover from the Colombian conflict, ostensibly concentrating on the spread of the drugs trade. For Brazil, this is a projection of its own strategy to place Amazonia at the centre of its defence efforts. One of the results of the agreement will be the adoption of standardised rules of engagement for the interdiction of unauthorised flights over the region. Elsewhere, France considers sending a `peace force' to Haiti, there is a determined bid to lower tensions between Bolivia and Chile, and in Colombia there is progress on the battlefield but peace efforts have stalled. For more information or to subscribe call +44 (0)20 7251 0012 or send an email to [email protected]

LATIN AMERICAN REGIONAL REPORT: BRAZIL & SOUTHERN CONE - NOW AVAILABLE

The government of President Lula is struggling with its toughest challenge so far. We focus on the campaign-financing scandals which have besmirched the seemingly impeccable reputation of Brazil's ruling Partido dos Trabalhadores (PT). On the economic side, Brazil's central bank held interest rates this month, disappointing businessmen who had hoped that ebbing inflation would prompt a cut. Also, we look at Brazil's latest dalliance with space. In the Southern Cone, Argentina's government looks to have overcome the challenge of the hardline piquetero movement. In Chile, 'Panzer' Insulza prepares to roll out his presidential credentials; Venezuela backs out of Chile's maritime dispute with Bolivia, and, in Paraguay, exiled General Lino Oviedo plots his return. An annual subscription to Latin American Regional Report: Brazil & Southern Cone (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.

President-elect Elí­as Antonio Saca has let it be known that he intends to pick an entirely new cabinet. Indeed, he is planning to create new ministries and more high-level government positions.

In some cases, the novelty will be relative. The man considered most likely to be his chief of staff, Eduardo Zablah, served as economy minister under President Armando Calderón Sol (1994-99). His expected interior minister, René Figueroa, already holds the post, to which he was appointed as part of the transition team.

Other likely appointees: Francisco Laí­nez, a close associate of Saca's, for the foreign ministry; Guillermo López Suárez for the agriculture ministry; congressman Julio Rank for the communications secretariat; and businessman Luis Cardenal for a new tourism ministry. New agencies are to be created to handle expatriates, consumer affairs, and youth affairs.

When Edward Seaga savaged Bruce Golding in the letter announcing his retirement as leader of the Jamaica Labour Party (JLP), he probably intended to hamper his chances as a prospective successor. If anything, the attack seems to have backfired: Golding has emerged as the clear leader of the pack from which the new JLP leader will be selected at the November annual conference.

In his letter of resignation, Seaga criticised Golding for allowing indiscipline within the party and said that he was an ineffective leader [WR-04-26]. Only a few weeks later, in a survey conducted by Don Anderson for the Jamaica Gleaner, Golding emerges as the favourite to succeed Seaga, with 42% of preferences. 

His closest rival, Pearnel Charles, attracted 16.3% support, and only one other prospective contender rated more than single-digit backing: deputy leader Audley Shaw, once seen as Seaga's heir-apparent.

Study in contrasts
That Golding should be in such a position is quite remarkable: he only returned to the JLP in September 2002, just before the general election, after an absence of about seven years, which began with his unsuccessful attempt to build up a party of his own, the National Democratic Movement (NDM).

Pearnel Charles, a former deputy leader of the party, is a very different kind of politician: a grassroots leader who has his strongest support in rural areas and among the older voters (whereas support for Golding is strongest among the higher-income groups), he has a reputation as a party loyalist, remaining within the fold even when the party turned against him.

His toughest challenge was when he, together with others who dared challenge Seaga's leadership in the late 1980s (when the JLP had all 60 seats in parliament), were cast as the 'Gang of Five' and ousted from their positions. Of the five, Douglas Vaz eventually followed Golding into the ill-fated NDM, Karl Samuda defected to the PNP (where his career prospered) and Ed Bartlett made his peace internally. Only Charles stayed on as a fighter within the party - which cost him a beating by pro-Seaga thugs in 1992, an incident which is credited with having cost the JLP the election held in March of the following year.

It is, of course, early days yet, and nobody expects Seaga to bow out quietly without trying to influence his succession. Given Seaga's style, the runup to the party conference can be expected to get nasty. Still, Golding has begun with more backers than all other prospective contenders together: a difficult enough challenge for second-runner Charles, let alone Audley Shaw.

Once again is Ecuador on the verge of removing a president by means that could be described as constitutional, even if the intent does not quite fit the spirit of the constitution. The opposition, for the second time, is shopping around for formal motives to impeach President Lucio Gutiérrez and trying to firm up the necessary votes to remove him when the process gets under way.

Gutiérrez is at his weakest yet, after the regional and mayoral elections saw his Partido Sociedad Patriótica (PSP) barely scraping past the threshold for retaining its registration (5% of the vote). Of the parties that had helped put him in the presidency, three - headed by the indigenous Pachakutik - have long since left the coalition and gone into outright opposition; they are at the forefront of the current drive to unseat him.  

His attempt to boost his strength in congress through an alliance with the Partido Roldosista Ecuatoriano (PRE), which has 15 seats, fell apart because he was unable to deliver on a promise to ensure that its exiled leader, former President Abdalá Bucaram, could return to Ecuador without fear of prosecution on several charges pending.  

He came close: in August Gutiérrez quietly met Bucaram in Panama and worked out a formula whereby he would set up a commission of jurists to sort out the exile's problems. This idea was abandoned as soon as Gutiérrez realised that the opposition could use it as a motive - executive interference with the workings of the judiciary - for impeachment.

Gutiérrez has also managed to lose a potential second line of defence: the judiciary. He has attacked the courts, accusing them of subservience to the biggest opposition party, the conservative Partido Social Cristiano (PSC), and going as far as to say that an irate public might end up setting fire to the courtrooms.  

This not only earned him a rebuke from the supreme court but has become one of the potential motives for impeachment bandied about by the opposition: his talk about people torching courtrooms being construed as an incitement to violence.

The charge on which most seem to agree is that of misuse of public funds, an accusation construed on the basis of his support for PSP candidates in the recent election campaigns by using such official events as the inauguration of public projects for electioneering. Other charges mooted earlier, such as involvement in shady campaign funding practices (including the alleged receipt of funds from a former governor who has just been convicted of drug trafficking), appear to have fallen by the wayside, mainly because the various opposition parties could not agree on which to use.

One well-known jurist, Eduardo López, has stated publicly that the charge of misuse of public funds would not work because it would have to be based on a finding by the comptroller-general's office, which does not exist. He also believes that the incitement charge is too flimsy to stand. Another expert in constitutional law, Mauricio Gándara, holds the opposite view: the charges, he maintains, are sufficient to set the impeachment process in motion. Gándara has also suggested an additional charge: abandonment of his post (based on Gutiérrez's recent assignation with Bucaram).

Challenges to the constitutionality of any charges brought against Gutiérrez would have to be decided by the supreme court, where few justices are predisposed in his favour (either because they were insulted by him or because, as he claimed, they follow the lead given by the PSC).

In any case, precedent suggests that the Ecuadorean congress is not averse to removing presidents on formal charges that would not stand up in a court of law, or even without any at all. Bucaram was voted out of office in 1997 on a charge of mental incapacity which nobody really tried to prove. In 2000, when the military high-command reversed the coup that had unseated President Jamil Mahuad, congress chose not to reinstate Mahuad but to give the job to his vice-president, Gustavo Noboa.

These episodes were quietly accepted by the OAS. Whether this would happen again given the organisation's more militant frame of mind is unclear: its intervention in Nicaragua suggests that it might be less tolerant. On the other hand, Ecuador has a Vice-President, Alfredo Palacio, who has already expressed his willingness to take over should the legislature decide to remove Gutiérrez.

Impeachment, however 'quasi-judicial' its trappings, is an eminently political affair, curbed only by the prospect of public disapproval. The Spanish term for it, juicio polí­tico ('political trial'), makes that abundantly clear. In order to initiate proceedings the accusation need only be endorsed by 25 legislators - which the PSC alone has.  

As Ecuador has a single-chamber legislature, proceedings can be much swifter than in countries with a bicameral one, where usually the lower chamber acts as the prosecutor and the upper one as the judge. If the speed at which bicameral legislatures in Argentina and Paraguay have dealt with the impeachment of supreme-court justices is indicative of a general trend, an action against Gutiérrez could be very fast indeed.

The only obstacle in the way of the impeachers is that they have not yet ensured the full 67 votes needed to remove Gutiérrez from office. Congressional arithmetic in Ecuador is a complex matter. There are 16 parties represented in congress, of which six have only one seat apiece, and eight seats were won on the tickets of coalitions (of which several have fallen apart). The biggest party, the PSC, commands 26 votes.

At the latest reckoning, published by the newspaper Hoy, the pro-impeachment camp had mustered 63 firm votes, including those of the PSC, Pachakutik, Izquierda Democrática and all the parties with more than one seat save the PRIAN (10), which is standing with the government, and the PRE (15), which has not yet decided where it stands - but might just be angry enough with Gutiérrez for failing to ensure Bucaram's safe return to cast its lot with the outright opposition. Gutiérrez has little chance of mustering enough votes to block impeachment; his only hope is that the impeachers should fail to agree.

The government of President Leonel Fernández has stepped up the repatriation of illegal immigrants from Haiti, and is even reported to be refusing to acknowledge work permits issued by the preceding Mejí­a administration. Last week the authorities deported 107 Haitians, raising to 877 the number sent back over the past three months.

Demands for the expulsion of illegal Haitians flared up in November last year, and the army's 10th battalion was deployed on a border-control drive codenamed Operación Vaquero ('Operation Cowboy'), ostensibly meant to target cattle rustlers, but also to prevent the entry of illegal immigrants from Haiti. The senate unanimously passed a resolution calling for the 'cleansing and deportation' of illegal Haitian immigrants and the interior ministry and the migrations directorate started putting together a plan to 'reduce' the presence of Haitians in the country.

NGOs estimate that there may be as many as 500,000 Haitians living illegally in the Dominican Republic. Many have been there for a long time: large-scale migration began in the 1960s, when Dominican sugar plantations sought out Haitian cutters willing to work for very low pay and live in precarious conditions. Many stayed on beyond the sugar harvest, first seeking seasonal rural work in the centre and north of the country, later drifting into the cities to seek work in the construction industry or to eke out a living as street vendors. Outbreaks of hostility against the Haitian illegals have been a periodical occurrence for a long time. The Rí­o Masacre got its name from the 1937 massacre by dictator Rafael Leónidas Trujillo of somewhere between 12,000 and 25,000 Haitians who did not return to their country as speedily as he had ordered.

US preoccupation with security in the wake of the September 2001 attacks may have frozen progress on a comprehensive immigration agreement with Mexico, but it certainly has not halted immigration: it has just made more people cross the border (or extend their stay) illegally. The flow is likely to go on increasing for many years, though the rate of increase may start flagging fairly soon.

In 2000, 355,000 Mexicans migrated to the US; last year the estimated total was 396,000, according to Elena Zúñiga, secretary-general of the Consejo Nacional de la Población (Conapo), which monitors Mexico's demographic development. In the period 1993-97, illegal immigrants were reckoned to account for 48% of the total; last year, their share is though to have risen to 77%.

Zúñiga's figures appear to refer to those who actually made it into the US, since the number of migrants intercepted and sent back last year was 1.6m (40% of whom were captured attempting to cross through the highly risky Arizona desert). The overwhelming majority of those intercepted were Mexicans: those listed in the category known as OTMs (other than Mexicans) numbered only 66,000. What is pushing the migratory flow is the growth of Mexico's population by about 1.5m a year, and the incorporation of about 1m youths annually to a jobs market that has no place for about half of them. This will ebb slowly, as the rate of population growth falls from the current 1.4% to a projected 0.8% by 2015 and 0.4% by 2030. Mexico's population is expected to peak in 2050.

In the meantime, alongside a constant flow of migrants there will be an increase in the number of people of Mexican descent born in the US. These are already estimated by Conapo at 17m. Added to the Mexican immigrants, legal and illegal, this makes a Mexican diaspora of about 27m, according to Zúñiga.

An interesting trend detected recently is the appearance among the migrants of significant number of Mexican indigenous people. Zúñiga says they currently account for 5% to 8% of the total, 'and it is noteworthy that some of them learn to speak English before Spanish'. One of the problems with the migrants intercepted and repatriated was that, delivered back across the border, many traditionally wasted little time in renewing their attempt to enter the US. Last year about 32% of those intercepted in Arizona had tried before. 

Under an agreement reached last year with Mexico, the US has been funding a scheme intended to break this vicious circle through a voluntary repatriation scheme whereby would-be immigrants are flown to Mexico City, then sent on by bus to their home towns. The takeup has been somewhat lower than expected: last year in the summer months about 14,000 people signed on, and so far this year, about 3,800. At this scale, though, the scheme has proven quite efficacious: the rate of recidivism is down to 18%.

However, its high cost - US$1,100 per returnee - is held against it by critics. Leaders of the Minuteman Project in Arizona say it would take billions of dollars for it to work, and then only if backed by strong deterrence: tough prison terms for recidivists, a deep trench along the border and national guard troops deployed in support of the Border Patrol which, they say, cannot cope with its present strength of just under 10,000 personnel on the Mexican border.

 

BRAZIL | Growth momentum wavers. Industrial production in Brazil fell by 2.5% between June and July after four consecutive months of growth. It then picked up slightly, by 1.1% in August. This left the level of this year's output so far running 4.3% higher than in the same period of 2004, but appears to be in line with the forecasts by some industrialists that a slow-down was beginning [WR-05-39]. Officials have been arguing that the small up-turn in August show that what happened in July was 'no more than an adjustment'.

However, the trend was still apparent in September in one of the most important branches of industry, that of motor vehicles. Its output, sales and exports were all lower than in August, by 5.6%, 4.8% and 4.1% respectively. Rogélio Goldfarb, president of Anfavea, the auto industry's association, attributed the decline to the fact that September had two fewer working days than August. 'For now,' he says, ' we don't see a slump, but we are concerned about the possibility that the export process may not be sustainable over the medium and long term.' Exports are running 40.4% higher than a year ago.

CHILE | Mining exports soar on high world prices. Export earnings from mining products will this year reach at least US$20bn, or 25% more than in 2004, according to Sonami, the mining industry's association. In the first eight months they had already brought in US$13.8bn. If the forecast is correct the mining sector will account for about 54% of Chile's expected total export earnings.

This performance is largely riding on the high price for copper. After it increased by 18% since early July, Codelco, the state copper corporation, raised its projection of the average price for this year by US$0.10, to a range of US$1.55-1.60. Sonami predicts that investment in Chilean will to amount to at least US$12.5bn over the coming five years.

 

MEXICO | Hopeful growth assumptions for 2007. In the economic policy assumptions presented by the executive to congress last week, GDP growth next year is put at 3.6%, in a context of zero public deficit, 3% inflation and a current account deficit equivalent to 1.4% of GDP. The executive reckons that the exchange rate will average M$11.18 per US dollar (currently M$11.15) and that the price for Mexico's mix of crude oils will average US$37.5 per barrel.

On the assumption that the US growth rate will decelerate from 3.3% this year to 3% in 2007, the government reckons that the growth rate of Mexican industrial production (the broad category which includes extractive industries and construction as well as manufacturing) will slow down from 3.9% this year to 3.6%.

MEXICO | Upgrading this year's growth forecast. The private economists surveyed by the central bank have raised their GDP growth forecast for this year from 3.5% to 3.75%. They have also lowered their inflation forecast from 3.6% to 3.47% - still almost half a point above the official target of 3%. The economists predict an inflation rate of 3.57% for 2007, whereas the government maintains an assumption of 3% (see above). They see the dollar rate reaching M$11.37 at the end of 2007.

The leaders of the demobilised Autodefensas Unidas de Colombia (AUC), while bewailing the uncertainty in which they have been left by the recent constitutional court ruling on the requisites for obtaining sentencing benefits [WR-06-28], have announced that they remain committed to the peace process. This has happened as the enormity of their crimes begins to be confirmed by the location of secret mass graves.

On 19 July Rodrigo Tovar Pupo (also known by the nom-de-guerre Jorge 40) read out a communiqué announcing the reaffirmation of their commitment to the peace process. It followed a meeting with a team of 20 lawyers assembled at Medellí­n to work out a response to the constitutional court's ruling. An undisclosed number of these lawyers announced that, 'because of the lack of guarantees', they would not be representing the paramilitary.

The relatively mild reaction of the AUC leaders has been explained in terms of their presumed confidence that the government, in drawing up detailed regulations implementing the constitutional court's decision, may take some of the edge off it. Some of the AUC lawyers have suggested arguing that the court's ruling cannot be applied retroactively to those already covered by the justice and peace law. This has been shot down by jurists who have pointed out that nobody has yet been processed under that law: the demobilisation has taken place under a previously promulgated law (No: 782) which contains none of the provisions the paramilitary have been seeking.

The mass graves

The big difficulty with the strict interpretation of the court's ruling is that the former paramilitary will find it hard to get away with crimes deemed heinous, such as massacres. Evidence of these is steadily piling up. Eduardo Pizarro, president of the Comisión Nacional de Reparación y Reconciliación (CNRR), the body devoted to ensuring that victims are paid reparation, said on 17 July that there may be as many as 10,000 bodies in secret mass graves, dug not only by the paramilitary but also by leftwing guerrillas.

Pizarro says there are three categories of victims in these mass graves: those who suffered forced disappearances, kidnap victims who died in captivity, and fighters buried so as to hide the numbers of casualties in combat. He estimates that the first category is the largest, probably accounting for 70% of the total.

The veil of secrecy which hung over these graves is being lifted by former paramilitary fighters seeking to obtain the benefits of the justice and peace law. So far, most of the mass graves have been located in the north, along the Caribbean coast, where the paramilitary conducted an extermination campaign over the past few years, targeting those believed to have been aiding the guerrillas. The graves dug by the guerrillas, said Pizarro, are mainly in the south of the country.

Pizarro has called for the urgent creation of a genetic database, with DNA samples from relatives of known victims and the disappeared, so as to facilitate identification. This will serve two purposes: helping to determine the manner in which they were killed (which will have a direct bearing on court proceedings) and identifying those who will be entitled to reparations under the justice and peace law. Pizarro recently warned that he had been receiving reports that former members of the paramilitary were digging up mass graves in order to remove possible evidence against them.

The Chaco War might be more than 70 years ago but the decision by Bolivia to seal a military agreement with Venezuela has caused sufficient disquiet in Asunción that the 2007 budget for the armed forces will now be increased by G120bn (US$22m), or 28%, to US$103m in response to the new strategic threat ostensibly posed by Bolivia.  

The decision by a bicameral commission to increase the budget for the military will infuriate protesters who took to the streets last year to participate in a "Disarm the budget" campaign. They called for the military's budget to be reduced by 20% to channel more funds into the health and education systems. Instead, it now stands at US$103m, just over half of the total health budget. The extra funds for the military will be used to purchase new equipment, including two Brazilian Tucano light attack aircraft and the repair of two further Tucanos, rapid deployment vehicles and weapons and ammunition.  

Juan Manuel Del Puerto, a deputy for the opposition Partido Patria Querida (PPQ), said that the government was using a "fantastical hypothesis of conflict with Bolivia" to keep the armed forces on side. He also criticised the fact that the budget reform included no plans to downsize or restructure the military to make it more efficient. The NGO, Movimiento Objeción de Conciencia (MOC), argued that the increase was an offence to the Paraguayan people. It said "the real threat (to Paraguay) is having people in government who think in this way."  

Paraguay's main concern is that Venezuela will help Bolivia to construct an advanced military outpost at the Puerto Quijarro river port, 200kms from the border. Bolivia's defence minister, Walker San Miguel, invited his Paraguayan counterpart Roberto González to inspect the current Bolivian military installation at Puerto Quijarro on the Rí­o Paraguay on 27 October. He said Bolivia had no hostile intent it merely wanted to improve the facility in order to provide proper protection for international trade. He did not say as much but it might also be used to crack down on drug-smuggling on the river.

Paraguay has joined Peru in claiming the military agreement with Venezuela would alter the balance of power in the region. It is not yet a fait accompli, however: Bolivia's Senate says it will not ratify the agreement on the grounds that it is too vague (WR-06-41).

ECUADOR | Budget proposal cuts debt payments. President Rafael Correa revealed details of the government's budget proposal last week during a press conference in Guayaquil. International creditors will be concerned. The 2007 budget proposal amounts to US$9.77bn, up 14% on the 2006 budget. However, it sets aside only US$2.7bn for foreign debt payments, equivalent to 28% of the budget. This is down by more than US$1bn on 2006 when external debt payments accounted for 38% of the budget. 

Correa said that the priority was social investment (health and education), which increases by six points to 28% of the budget. He said the government would decide whether or not to pay what it has branded "illegitimate debt" in accordance with the findings of a debt audit, which is currently taking place. The first test of the government's conviction will come on 15 February when a US$135m interest payment to debt-holders is due. Correa said there would be a budget deficit of US$352m. This is further complicated by the government's determination to reduce value added tax (IVA) from 12% to 10% [WR-07-05]. Venezuela has offered a US$1bn loan. The government also announced it was ending its relationship with the IMF by repaying its outstanding US$22m debt. The 2007 budget is very far from a fait accompli, of course, as it must still be approved by congress.

PERU | Austerity. The watchword for President Alan Garcí­a during his national address on 6 February, marking the end of his first six months in power, was "austerity". The choice of this word, which was absent from Garcí­a's vocabulary during his 1985-1990 term in office, was deliberate. He emphasised the 6.7% growth in 2006, inflation of less than 1% and a 20% increase in international reserves to US$18bn since he took office. The main challenge for this year, he said, was to ensure that high growth created more jobs.

ECUADOR | Military deployed to oil installations. President Rafael Correa has ordered the military to protect Ecuador's oil installations. The state-owned oil company, Petroecuador, claims it has lost US$40m since January as the result of theft by "mafias and organised crime". Correa said he was reluctant to resort to militarisation of any sector but he had taken "a political decision to end this anarchy and defend the installations". The military will also be deployed to protect the installations of foreign companies. This will be cautiously welcomed: foreign companies remember how Bolivia's President Evo Morales deployed the army to nationalise the gas industry in May 2006. 

VENEZUELA | Teves replaces RCTV. President Hugo Chávez issued a decree naming the new television channel that will replace Radio Caracas Televisión (RCTV) when its broadcast licence expires on 27 May. The new channel, Fundación Televisora Venezolana Social (Teves), will be funded by the state and the seven-strong board of directors appointed by the ministry of communication and information.Teves will not be responsible for creating programmes itself but rather "structure and design_ independently produced programmes". It is not entirely clear who these independent producers are. RCTV will be permitted to broadcast on cable or satellite. Reporters and members of NGOs supporting RCTV gathered outside the supreme tribunal of justice (TSJ) on 14 May to urge the court to issue a ruling on the suit filed by RCTV before its licence is revoked.

The government has finally launched its national public security and citizenship programme (Pronasci). The programme aims to tackle violence by combining public security policies with social programmes; initially in Brazilian urban sprawls suffering from the highest crime rates. However, so far there has been no talk of expanding the Pronasci to the Brazilian countryside, where violence is also a wide-spread phenomenon. 

According to the justice minister, Tarso Genro, the Pronasci will bring a "paradigm change" in the way violence is tackled in Brazil. So far the Brazilian authorities have preferred to use repression rather than prevention to curb crime. For many public security specialists repression is counterproductive, as it fails to tackle the root of most of the violence in Brazil: the lack of prospects for the young poor population. President Lula da Silva seems to think that too, and the Pronasci reflects this view. Lula, however, made it clear that repression against crime will continue when he asserted that, "We will not stop criminals with flowers" alone. 

The Pronasci envisages investments of R$6.7bn (US$3.2bn) in the next four years. Part of the money will cover a wide-ranging education programme for the younger poor and the police force. This includes the education of young poor to become "community agents" so they can assist government's sanitation programmes in their own neighbourhood and also teach their peers manual and administrative jobs. Also, the Pronasci will fund further education to low-paid police officers and fund housing grants for their families, in order to prevent them being lured into gangs. The Pronasci will also continue the highly successful disarmament programme initiated in 2005 to take firearms off the streets. 

Significantly, the government will invest in the construction of new prisons to rehabilitate inmates. This is especially important, not least because of the reputation of Brazilian prisons for being "schools of crime". Indeed, instead of rehabilitating petty criminals serving their first sentence, contact with gangs inside the prisons can transform them into dangerous delinquents. By the end of the year the government aims to have built 13 new prisons for young offenders. By 2011 it aims to have built 160 new prisons with functioning learning skill centres.

These investments are the prevention face of the Pronasci. The government, however, will also invest on new police equipment and systems to share information on crime more effectively between police operating at federal and local levels. This aims to answer concerns raised by state governments that public security policies at federal and local levels lack integration and funds. 

The government will also keep a permanent 500-man contingent of the Força Nacional de Segurança Públic (FNSP) to be deployed in emergency situations. The FNSP was created in 2004 but its members were lifted from existing local forces. The FNSP is currently deployed in Rio de Janeiro fighting gangs [WR-07-26]. It is assisting local police under the command of governors, who under Brazil's constitution are responsible for public security.

Experts in public security argue that while the Pronasci is right in targeting crime prevention among the young, priority should not be given exclusively to urban areas. The Pronasci will initially be implemented in the 11 most violent urban sprawls in Brazil, including Rio de Janeiro and São Paulo as well as cities in the wealthier southern states and the impoverished northeast. Studies suggest that violence has recently spread to the rural areas because, among other things, cities have become safer due to urban-focused public security policies already adopted by local governments [WR-07-10]. 

• Pronasci's aims
  The national public security and citizenship programme (Pronasci) aims to reduce Brazil's national homicide rate average from the current 29 in 100,000 to 12 in 100,000 in four years. The Pronasci has also made it easier and quicker for local police forces to expel "criminals within". This will allow the courts to take effective action against corrupt police. According to a survey by the Universidade do Estado do Rio de Janeiro, 9.9% of cariocas have been the victim of extortion by a policeman in the last 15 years. 
  

Latin American countries are ahead of target to meet the first Millennium Development Goal (MDG) of halving the proportion of the population living in extreme poverty by 2015, the Economic Commission for Latin America and the Caribbean (Eclac) revealed in its new report, "Social Panorama of Latin America 2007". Indigence fell by 2.2 percentage points, the equivalent of 10m people, in 2006 to 13.4%, or 71m people. The success is owed in large part to sustained per capita GDP growth of more than 3% a year over the last four years - the highest rate since the 1970s. In absolute terms, however, extreme poverty still remains far in excess of the 62m people before the "lost decade" of the 1980s.

The report claimed that the region had gone 87% of the way towards achieving the MDG with two-thirds of the time still remaining. It predicts that indigence will fall to 12.7%, or 69m people, in 2007. It singled out Argentina and Venezuela for praise but there are some clear regional variations and countries such as Bolivia, Honduras, Nicaragua and Paraguay are less than 50% of the way to achieving the goal. Indigence fell by four points in Honduras but remains high at 49.3%; poverty fell 3.3 points to 71.5%. The report encouraged countries that are doing well to concentrate on trying to reduce total poverty, which fell 3.3 points to 36.5% in 2006, by half by 2015.

Eclac warned against complacency and it is easy to see why. It has long claimed that serious poverty reduction requires growth rates of at least 6%. In 2006, only nine countries out of 20 achieved this. Also, the global economic scenario has been benign, with massive demand keeping prices of commodities high, but it looks less encouraging now. Although Latin American economies are more robust, courtesy of greater diversification, than they were in the 1980s, they remain vulnerable to a slowdown. The recent pick-up in inflation across the region does not augur too well for poverty reduction either. And then, of course, there is income inequality, where improvements were far less impressive. In many countries this is intimately bound up with insecurity, the main concern of much of the region's voters when it comes to elections.

The interior minister, Juan Camilo Mouriño, is facing seven counts of corruption. The charges against him have derailed the government's plans to reform the state oil company, Petróleos Mexicanos (Pemex) which has a monopoly over oil exploration and production. On 12 March, after an unnerving silence, President Felipe Calderón Hinojosa, strongly defended, Mouriño, whom he only appointed to his current job in January. The president's endorsement mobilised the ruling Partido Acción Nacional (PAN) into stepping up its defence of Mouriño.

Mouriño argues that he has done nothing wrong. He claims that he signed the controversial contracts with Pemex on behalf of his family's company, Transportes Especializados Invancar, as a private citizen. This defence would be stronger if Mouriño had been not either the president of the congressional energy committee or an adviser to the then energy minister, Felipe Calderón Hinojosa, when the contracts were signed between 2000 and 2004.

The timing of the accusations, just as the government appeared to be creating a swell of support in congress for its energy industry reforms, was an astute move by Andrés Manuel López Obrador, the leader of the Frente Amplio Progresista (FAP) and the man Calderón defeated for the presidency in July 2006. The PAN's initial counter-accusation was that it would agree to a congressional investigation into Mouriño provided the FAP allowed congress also to investigate internal election of the Partido de la Revolución Democrática (PRD) for the party presidency. The PAN's accusation is that López Obardor's strongest supporter, Marcelo Ebrard, the mayor of Mexico City, had channelled public money to López Obrador's preferred candidate for the PRD presidency, Alejandro Encinas.

Both houses of congress have failed to agree to set up investigations into Mouriño. They may do so after the Easter break. Cleverly, the government, has pre-empted congress, at the instigation of Mouriño himself, and set up two investigations, by the Procuradurí­a General de la República and the audit ministry (the Secretarí­a de Función Pública). The problem with both these investigations is that they answer to the president. A congressional investigation would be independent of government, but not politicians.

The president of the lower chamber, Ruth Zavaleta, underlined the strength of the case against Mouriño on 12 March. Although Zavaleta is a member of López Obrador's PRD, she has been abused by the radicals, led by López Obrador. Her offence was to negotiate with government ministers. López Obrador does not consider he was defeated fairly in 2006 and has asserted that he, not Calderón, is the legitimate president of Mexico. He and his supporters claim that any perredista who has dealings with the government is betraying the party and him.

So Zavaleta's strong statement that Mouriño should resign, without waiting for the results of the investigations, is significant. Zavaleta used strong words: "Ethically and morally, in no democratic country can an official with such a question against him carry on." The case against Mouriño is that he signed seven contracts, on behalf of his family's companies, with Pemex. None of these contracts were awarded after an open public tender, and several of them were for substantial (US$200m) amounts of what is, effectively, public money.

Calderón's strong endorsement of Mouriño, also on 12 March, raised the stakes and has made the issue one of party politics. Calderón's statement prompted the PAN, which had been equivocal about the Spanish-born Mouriño, to rally behind him. Typically, the leftwing radicals who have made the running in the case, overplayed their hand by refusing to allow congress, which is considering whether to set up an investigation into Mouriño, to function. This provoked a walkout by the Partido Revolucionario Institucional (PRI) and the PAN. The leftwing FAP needs the support of the PRI if it is to secure a majority in congress against Mouriño.

The FAP, which is dominated by the PRD, the second biggest party in congress, is confident that it has got Mouriño and that he will have to resign, provided the PRI lines up with it. Local political feuds between the PRI and former prií­stas have complicated this putative alliance, however. The main feud is between the PRI and Layda Sansores, a former prií­sta who now sits in congress for the PRD: her father dominated politics in the state of Campeche for a generation. Mouriño's political career, and his family's businesses, are both centred on Campeche.

The problem for Mouriño is that a lot of Mexican politicians are jealous of him and are prepared to believe not only the corruption allegations against him but also the PRD's other line of attack, that he is not a Mexican but a Spaniard. If the PRD can prove this, Mouriño would not, constitutionally, be allowed to serve in the cabinet.

The PRD produced a Spanish legal document on 10 March which apparently shows that Mouriño's father claimed Mexican nationality and had a Mexican passport. Previously even Mouriño had admitted that his father was Spanish, but maintained that his mother was Mexican. The PRD now alleges that the whole family switches between Spanish and Mexican nationality according to which identity suits them best.

President René Préval faces his toughest challenge since taking office in May 2006 after the lower chamber of parliament rejected his second nomination for prime minister, Robert Manuel, last week as emphatically as it had his first, Ericq Pierre, one month earlier. Préval is under pressure to set up a new government under a new prime minister fast. The protesters that organised the food riots that brought down Jacques Edouard Alexis two months ago are getting restless again.

Préval has yet to respond to the snub but the head of the senate, Kelly Bastien, has appealed to him to check the eligibility of any future nominee before submitting them to parliament. The lower chamber rejected Manuel, a close confidante of Préval and a security expert, by 57 votes to 22 on the grounds that he fell short of the relevant residency requirements, having not lived in Haiti for the last five years. Manuel had sought special dispensation because he was forced into exile between 1999 and 2005. Pierre's nomination was blocked on a similarly minor technicality.

Préval's problem is that his party, Lespwa, which forms the core of his ruling coalition, has fractured. Dissident deputies have enlisted in the ranks of a new majority grouping, Concertation des Parlementaires pour le Progrí¨s (CPP), which seems intent on giving Préval a bloody nose. The CPP controls 53 of the 99 seats: Lespwa malcontents contribute 20 seats to the CPP bloc. “By rejecting a second prime minister-designate the majority bloc in the lower chamber is entering into open confrontation with the head of state," the spokesman for the Fusion des Sociaux-démocrates, Micha Gaillard, said. Gaillard added that deputies were indulging in a political show of strength and neglecting the needs of the country (see sidebar).

• Influence of drug gangs

Supporters of Robert Manuel, such as the deputy for Port-au-Prince Jonas Coffi, are speculating that CPP deputies in the lower chamber accepted bribes from drug gangs and criminal groups to vote against Manuel's nomination because of his impressive security profile and out of fear that he would take a tough line on law and order. Deputies who voted against Manuel said they would do the same for “as long as President Préval continues to send his friends here". 

Relations between Honduras and the US are going through a distinctly rocky patch. President Manuel Zelaya agreed to accept the credentials of the new US ambassador to Tegucigalpa, Hugo Llorens, on 19 September, but only after a humiliating delay as Zelaya showed “solidarity" with Bolivia which had expelled its US ambassador a week earlier for allegedly conspiring against the country's government.

Relations are sufficiently strained for the US embassy to feel the need to release a statement insisting that relations are perfectly normal with the occasional disagreements to be expected between friends. Zelaya, meanwhile, maintained that it was precisely the unfriendly response he got from the US and the World Bank when he sought assistance in the face of rising food prices, which prompted him to “seek out (Venezuela's President Hugo) Chávez ", signing up to both PetroCaribe and Alba. “Allies, friends, did not help me when I asked for help," Zelaya said.

The umbrella business association, Cohep, said that snubbing the US could jeopardise the US$3bn of annual remittances from Honduran expatriates in the US, as well as the renewal of Temporary Protected Status for 72,000 Hondurans in the US. The main opposition Partido Nacional (PN) accused Zelaya of needlessly antagonising the country's most important ally and trading partner. The PN formed a “common front" last week with leaders of Hondurans living in the US, as well as business organisations, to protest against Zelaya's anti-US rhetoric and his “leap to the Left". They are planning a nationwide protest march at the weekend. A former president of the Central American parliament (Parlacen), Mario Facussé, went as far as to say the time had come for congress “to replace the President" after his “totally crazy action".

It is against this backdrop that the head of the joint command of the armed forces, General Romeo Vásquez, claimed in the latest edition of the free government weekly Poder Ciudadano (launched last year amid claims by Zelaya that the private press was misrepresenting his government) that the armed forces had been sounded out for its support of a coup. He provided no details on who the alleged conspirators might be, but he said he had passed all of the intelligence on to the defence minister, Arí­stides Mejí­a. Speculation has long been rife in the press that groups wary of Zelaya's foreign policy stance might try and topple him. The opposition argues that the government is merely trying to divert attention away from its failure to address real problems like insecurity, the high cost of living and official corruption. 

• Zelaya on US
  Earlier this month, President Zelaya pointedly said that the US embassy had practically ruled Honduras in the past, but that these days were over. He also revealed that the former US ambassador Charles Ford had approached him weeks after he came to power in January 2006, to request that Honduras grant asylum to Luis Posada Carriles, the anti-Castro activist whose arrest for illegal entry into the US in May 2005 had left the US with a political hot potato [WR-08-36].