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Development: On 18 May the US secretary of state, Hillary Clinton, all but accused Brazil and Turkey of naivety over their 17 May agreement with Iran.

Significance: The US also secured the support of China and Russia, which have previously had reservations, for a draft resolution at the UN security council mandating sanctions against Iran. Critics of President Lula da Silva's foreign policy, and his efforts to mediate in Iran's dispute with the international community over the scope of its nuclear ambitions, immediately claimed that Lula and Brazil had been shown to be out of their depth. This is probably a misreading of a highly complicated situation.

It is worth noting that the state department was very precise in its detailed comments on US policy in the security council over Brazil's and Turkey's involvement. The US appears to have secured the agreement of China and Russia for a new security council resolution before Brazil, Turkey and Iran reached their agreement. But the state department was very careful to say that the sanctions resolution (which, significantly, barely cover financial transactions and makes no mention of energy deals) would not be submitted to a vote before Iran had responded to the International Atomic Energy Agency (IAEA), as the Brazil-Turkey agreement stipulated, in the next week or so.

What is clear is that Brazil, perhaps more than Turkey, was aware that the US was pushing Russia and China to agree to a new security council resolution before Lula's trip to Tehran. Brazil may have realised that the US had to talk tough in order to keep the Israelis from over-reacting to the apparent deal negotiated by Brazil and Turkey. It is also worth noting that Turkish banks have a major role in handling foreign trade deals with Iran.

Development: Today (28 June) it's one year since the coup d'etat against the former Honduran president Manuel Zelaya.

Significance: The rump of Zelaya's supporters, grouped under the umbrella opposition movement, Frente Nacional de la Resistencia, will mark the anniversary with protests in Tegucigalpa in favour of a “refounding" of Honduras via a constituent assembly to overhaul the 1981 Magna Carta. The Frente has spent several months collecting signatures in support of such a petition. The US-backed President Porfirio Lobo will travel to Panama for a meeting of the Central American Integration System (SICA), as talks continue to readmit Honduras into regional forums.

The main protagonists in the coup have resurfaced in the past week, most notably Roberto Micheletti, who assumed power as de facto president following the coup. Yesterday he said he was “worried" that Honduras had still not “recovered harmony" and that there was still “an atmosphere of uncertainty in the country".

The already violent country has been plagued by a rise in violent acts - including apparent political violence - since the coup and the Lobo government appears unable to deal with it, adding to the external pressure on the administration. Indeed, Lobo recently denounced an apparent plot by right wing reactionaries (among which the Frente and others would bracket Micheletti) to destabilise his government. Some on the Left think this is nothing more than another cynical ploy by Lobo (himself long a member of the ruling elite and a supporter of Zelaya's removal) to bolster external support and win over the majority of regional governments that still refuse to recognise the legitimacy of his November 2009 election under the de facto administration.

From his exile in the Dominican Republic yesterday, Zelaya said he “regretted nothing" and claimed that Honduras had posted “its best indicators in 30 years" during his three-year tenure from 2006. Brazil and others have made Zelaya's return to Honduras a key condition of any decision to recognise the Lobo administration. Zelaya reiterated that he will not return to the country until the conservative supreme court and the attorney general's office, both instrumental in his removal, lift pending criminal charges against him. Referring to Lobo's allegations of a plot against him, Zelaya quipped, “If Lobo can't even guarantee his own security, then how can he guarantee mine?"

Development: On the 4 August the long-awaited Yasuní­-ITT fund was created by members of the Ecuadorean government, the head of UN Development Programme, and indigenous groups.

Significance: The fund's establishment was the main precondition for countries, such as France, who had been interested in investing in the innovative project designed to preserve Amazonia from oil production. The Yasuní­ Ishpingo-Tambococha-Tiputini (ITT) plan A would see Ecuador paid to keep the oil where it is in the Yasuní­ national park in the northern Ecuadorean Amazon.

President Rafael Correa, who first officially proposed this project on 5 June 2007, has distanced himself from it over claims that the international community is dictating terms. He did not attend the signing, but rather sent as his representatives, Vice President Lenin Moreno; national heritage minister Marí­a Fernanda Espinosa; the minister for foreign affairs, Ricardo Patiño and the minister for finance, Patricio Rivera.

The project requires international contributions of US$3.6bn over 13 years - estimated to be half the value of the oil, if it was extracted. The amount of oil that Yasuní­ holds and therefore the size of the fund are under question. So far estimates range from an optimistic 920m barrels down to 400m barrels; the latest government figure is 846m barrels, but again this is an estimate.

Interest on the money paid into the fund will be used for direct conservation of the park and 43 other reserves, as well as health, education and renewable energy projects.

Espinosa said that US$100m was required by February 2012. Patiño added that if this target was not achieved then Ecuador would have to revert to Yasuní­-ITT plan B - and extract the oil.

The Yasuní­ biosphere comprises 982,000 hectares of rainforest and wetlands. According to ecological studies each hectare of the park holds 655 species - making it one of the most diverse places on the planet. The worry is that exploiting this park, also home to three self-isolated indigenous tribes, will damage the ecosystem, as has happened elsewhere in Ecuador.

Development: On 12 September, Susana Villarán, leader of the leftish Fuerza Social party, overtook front-runner Lourdes Flores, leader of the Partido Popular Cristiano (PPC), in the opinion polls for the race for Lima mayor.

Significance: The results of a poll, produced by Peruvian pollsters Ipsos-Apoyo and commissioned by the local TV channel, TV América , were aired on Sunday night by its popular investigative journalism weekly show, Cu4rto Poder . Lourdes Flores, was bumped from the top spot, the first time she has been overtaken during the 2010 campaign for mayor. Susana Villarán is in first place with 33% of voting intentions, to Flores's 31%. Villarán, who leapt from 4% in July to 27% at the beginning of September, has been able to take advantage of the removal of Alex Kouri, former candidate for Cambio Radical, from the race.

The municipal elections are still 20 days away, but the competition has intensified between the two front-runners. According to the poll, Humberto Lay, a pastor and leader of the Restauración Nacional party, lags far behind in third place with 8%.

Flores blamed a campaign against her for her slippage from around 34% in the previous Ipsos-Apoyo poll. She forecast, rather desperately, that the presidential hopeful and leader of the Partido Nationalista, Ollanta Humala's public backing of Villarán would handicap Fuerza Social, and put off voters.

Separately, President Alan Garcí­a also announced on Sunday (12 September) that his cabinet re-shuffle, the first full-scale reshuffle since his election in 2006, would be completed by tomorrow (14 September). Prime Minister Javier Velásquez Quesquén was the first to resign. Possible replacements include: transport minister, Enrique Cornejo; Fernando Barrios, head of EsSalud and Rosario Fernández, former minister for justice.

It is customary that when the prime minister resigns the entire cabinet goes too. This gives ministers put themselves forward for the presidential elections which take place on 10 April 2011. The ruling party, Alianza Popular Revolucionaria Americana (Apra), will hold its presidential primaries in October. All public officials wanting to run must resign by 10 October, six months before the presidential election.

Development: On 24 October, Cristian Favale, suspected of being the material author of the murder of Mariano Ferreyra, a 23 year-old Partido Obrero (PO) militant shot dead during a confrontation between trade unionists on 20 October, turned himself in to the federal police (PFA).

Significance: Favale's decision to post on Facebook photographs of himself with the economy minister, Amado Boudou, and the minister of education, Alberto Sileoni, guarantees that this incident will escalate. It will almost certainly give the rival factions of the ruling Partido Justicialista (PJ, Peronists) plenty of mud to sling at each other as political manoeuvring gets underway ahead of the 2011 elections.

The Facebook photos don't necessarily prove Favale's association with the administration of President Cristina Fernández. However, it opened the door to such accusations, after the government itself sought to explicitly link the former president Eduardo Duhalde (2002-2003) to last week's fatal trade union confrontation. It accused him of links to José Pedraza, the secretary general of the Unión Ferroviaria (UF), and to an alleged destabilization plot by the Buenos Aires provincial police (PPBA). This alleged 'plot' was made public by Dante López Forresi, a known pro-government blogger, who posted a year-old newspaper article about a meeting between Pedraza and Duhalde, claiming it was recent.

The incident has prompted fierce mudslinging from all corners. First, the ruling Frente para la Victoria (FPV) tried to equate last week's episode with the deaths of Maximiliano Kostecki and Darí­o Santillán, killed by the PPBA in June 2002, an event that forced Duhalde to bring forward the presidential election that year.

In response, the Peronistas Federales, led by Duhalde, are pointing up the connections between the FPV and the UF, not least the fact that the UF (and Pedraza) belong to the Central de Trabajadores del Transporte, headed by the government loyalist, Hugo Moyano.

Thirdly, Daniel Scioli, the governor of the province of Buenos Aires, immediately distanced the provincial police force from any responsibility, arguing that the federal police failed to act. Scioli thus threw the ball back in the government's court and also signalled that he is fence sitting in the internal Peronist jostling for 2011.

Finally, the non-Peronist opposition will use the episode to capitalise on the murky trade union connections that dominate Peronism. The opposition says that if elected in 2011 it will push forward its proposed legislation to create an anti-corruption committee to investigate the trade union movement, with Moyano a key target.

Development: On 7 December Gustavo Madero, the newly elected president of the ruling Partido Acción Nacional (PAN), told the senate that the dominant political party in the country, the opposition Partido Revolucionario Institucional (PRI), would not win the presidency in 2012.

Significance: Madero, a senator from Chihuahua, is committed to giving up his seat in the senate in January to commit himself full time to party politics. His strong statement is designed to rally the PAN and annoy the PRI. Madero declared that PRI hopes of winning the presidency were a “wild fantasy" ('sueño guajiro').

More importantly, Madero said that the PAN would go into alliance with its ideological enemy, the left-wing Partido de la Revolución Democrática (PRD), in both the Estado de México and Nayarit. These two states are PRI bastions and will hold scheduled gubernatorial elections in 2011.

If the PAN-PRD 'Stop the PRI' alliances hold together and are successful in 2011, there is a chance of the two parties backing a reformist unity presidential candidate, possibly Marcelo Ebrard, the mayor of Mexico City, who is tacking towards the centre. Ebrard had previously been a strong supporter of the defeated radical left-wing candidate for the presidency in 2006, Andrés Manuel López Obrador.

Development: On 27 January Haiti's provisional electoral council (CEP) said that it had yet to receive confirmation from President René Préval's Inité party that its presidential candidate, Jude Célestin, had withdrawn.

Significance: Célestin is refusing to go quietly. His show of resistance is exposing divisions within the ruling coalition and is likely to prompt further pressure from the international community which wants him out of the run-off.

Key points:

According to Inité officials, only Célestin can legally drop out of the race. He is reportedly refusing to sign documents to do so, however. Joseph Lambert, the national coordinator for the Inité said that Célestin intends to pursue legal channels to prove that he has the right to take part in the second round by challenging the findings of the Organization of American States (OAS) report on the election which recommended reversing the CEP's preliminary results to leave Célestin third behind a popular musician, Michel Martelly.

Célestin's rejection of the OAS findings is shared by the Inité. On 26 January Inité issued a statement in which it agreed to “see him withdraw his candidacy for president_even though we are certain he received the necessary number of votes and was therefore through to the second round. ..Inité understands the game very well. Because Inité does not want the people to suffer even more, it chose not to provoke the international community over the election."

Both Célestin and Inité have a point. The OAS report included only 8% of the tally sheets, representing 16% of total votes. The report gave Martelly an even narrower lead over Célestin than the CEP had granted Célestin over Martelly (0.3 of a percentage point vs. 0.64%). Despite accepting that irregularities took place, the OAS failed to justify its recommendation that the CEP simply reverse the placement of the second and third candidates without a full recount.

Development: On 17 March Colombia announced that it had intercepted a major shipment of military equipment, apparently from Venezuela, to the Fuerzas Armadas Revolucionarias de Colombia (Farc).

Significance: Although the Colombian army reported that most of the material was manufactured by the Venezuelan state military supplier, Cavim, the Colombian authorities have stopped short of accusing Venezuela of supporting the Farc - instead they have asked for Venezuela's help.
 
Key points:

The Colombians stopped a truck which was carrying 195 uniforms, a tonne of plastic explosives, 41,000 rounds (mostly for AK-47s), 7,000 detonators, 5km of fuse-wire and 17 US-made rifles. The uniforms were those of the Venezuela National Guard.

The truck was found 5km inside Colombia at Mata Azul, in Arauca. Oddly, the truck was found abandoned, although the Colombians also claim that the seizure was the result of intelligence. So, it's unclear who exactly was responsible for the shipment.

Admiral Edgar Cely, the commander of Colombia's armed forces, suggested that the shipment was part of the Farc's plans to commemorate the third anniversary of the death of its founder, Pedro Marín , (alias 'Tirofijo') on 26 March.

Development: On 7 May, the Uruguayan press reported that the state-owned oil company, Ancap, is looking into the possibility of participating in the regional gas market through an association with Brazil's Petrobras.

Significance: A partnership between the two state companies would close the gap in the regional gas supply and distribution markets and lead to greater regional energy integration. The plans would tie in with a Uruguayan and Argentine bi-national investment project to develop a floating re-gasification plant on the River Plate that would distribute gas to both countries.

Key points:

Entering into the gas distribution market has been identified as Ancap's main development strategy. The move comes as the Uruguayan government is intent on adopting strategies that will enable it to coordinate the country's energy policies.

Petrobras has presence in Uruguay's gas market through its 66% stake in Montevideo Gas, which supplies 200,000 cubic metres of natural gas to 45,000 customers in the Montevideo area. Moreover, Petrobras is believed to have recently agreed the purchase of the remaining 34% from Pan American Energy, an Argentine firm.

Ancap's interest in establishing the partnership is to help run the local gas company and work with the Brazilian giant to build gas distribution pipelines, presumably from Brazil, that would connect to the planned re-gasification plant to ensure its supply. Ancap's president, Raúl Fernando Sendic, has revealed that both companies signed a confidentiality agreement on 3 May to analyse Montevideo Gas's business development plans.

The president of Petrobras, José Sergio Gabrielli de Azevedo, attended the regional hydrocarbon and bio fuels' association meeting (Arpel) in Punta del Este, Uruguay, in March and it is believed he informally proposed the partnership to President Mujica on that occasion. It is rumoured President Mujica approved of it as long as Petrobras ensured that the troubled Montevideo Gas doesn't face bankruptcy.       

Uruguay expects that with the construction of the re-gasification plant, local gas consumption will triple. Uruguay's national energy director, Ramón Méndez, has already declared that adjudication of the re-gasification plant construction and its management contract to a private sector partner and the establishment of a formal partnership with Petrobras could be announced by year's end.

This edition of LAAR focuses on developments in China's policy towards both the US and Latin America. Potentially, the bid by the China National Offshore Oil Corporation for Unocal signals a major change in Chinese financial policy. Instead of funding the US current-account deficit by buying US Treasury bonds, the Chinese may now start buying US companies. 

This change could have major implications for global interest rates: arguably Chinese and Asian purchases of US Treasury bonds have kept long term US interest rates lower than they would otherwise be. This has enabled the US economy to keep on borrowing and growing.

It is significant that Unocal is an oil company. The US has started to fret about the strategic implications of China's need for more raw materials to feed its manufacturing industry. Some US policymakers fear that Latin America could become the site of a competition between the US and China for these raw materials, notably metals and energy. 

What is not (yet) clear is how this competition will play out: in this edition we analyse an interesting paper, published by the US Army War College arguing that Chinese competition may even complement US policy and encourage political stability in Latin America. 

Latin America is not just a passive site for these geopolitical ambitions. Brazil and Mexico, in particular, are developing their policies towards China in different ways. As we report inside, Brazil's alliance with China has been dented by China's support of US policy on the UN. 

Both countries oppose the expansion of the number of permanent seats at UN Security Council. This means no permanent seat for Brazil. China is not against Brazil getting a seat but it does not want Japan to have one. This development has given new importance to the historically strong links between Brazil and Japan which had been withering over the past 15 years or so. 

Mexico on the other hand is trying to engage more with China. Policymakers here are concerned by the economic challenge China poses, both as regards Mexican exports to the US and Chinese exports to Mexico. Inside we analyse the changes in Mexico's policy towards China. 

We round out our coverage by reporting on Guatemala's attempt to court China without upsetting its long-term ally, Taiwan. Guatemala's initiative is being closely watched by other Taiwanese allies, such as the Dominican Republic, which also want to increase their trade with China.

ARGENTINA: Bielsa meets Powell

VENEZUELA: NED faces investigation

IMMIGRATION: Repatriation of undocumented Mexicans on the rise

PANAMA: Sixth round of FTA talks produce no result

CUBA: US unimpressed by massive military exercise

ARGENTINA
The Argentine foreign minister, Rafael Bielsa, met outgoing US secretary of state Colin Powell on 14 December to discuss a number of common concerns, such as the war on terrorism, international peacekeeping missions and nuclear non-proliferation. After the lunchtime meeting Bielsa said that the US continued to support Argentina's economic policies, including its stance towards the IMF. The US has backed Argentina's reforms since the 2001 crash, although their relations have suffered since then due to Buenos's Aires more-friendly attitude to Cuba. The two men also discussed Argentina's presidency of the UN Security Council, which starts in January, a month which will include both the Iraqi and Palestinian elections.

VENEZUELA
The US congress announced on 7 December that it would launch an investigation into the National Endowment for Democracy. The Venezuelan government accuses the NED of financing the opposition to President Hugo Chávez inside the country. The decision to launch the investigation was taken by the commerce, justice and state appropriations sub-committee of the House of Representatives. The NED is a private foundation with close links to the Republican Party. It receives government money via the State Department. The Venezuelan government believes that the NED has allocated US$20m to opposition supporters in the country. The government claims that some of these recipients supported the attempted coup against President Hugo Chávez in April 2002.

IMMIGRATION
Rafael Sandoval, head of civil defence in Nuevo Laredo, said that the US had already repatriated 64,000 undocumented Mexicans through town this year. He said that he expected 70,000 undocumented migrants to be repatriated in 2004. In 2003 54,000 undocumented migrants were repatriated through Nuevo Laredo. He said that in recent weeks there had been none of the usual end of year tail- off in repatriations. He said that 200 people were still being expelled from the US every day. The general view is that around 300,000 Mexicans try to cross illegally into the US every year.

PANAMA
The US and Panama concluded a sixth round of trade negotiations on 10 December. The official line from US trade negotiators is that excellent progress is being made and very few differences remain to be resolved. The problem is these differences seem to be the same from round to round and will again dominate talks during the seventh round of negotiations in January 2005. They are also not quite as 'selective' as Regina Vargo, assistant US trade representative for the Americas, claims. No agreement was reached on market access for sensitive agricultural products, such as poultry, pork, beef, dairy, corn and rice. Panama is also sensitive about potatoes and onions while the US is concerned about protecting its sugar industry. Unsurprisingly, government procurement issues relating to the Panama Canal Authority are highly sensitive. This looks more than likely to be excluded from any eventual agreement. There is no firm deadline for the end of negotiations but Vargo is confident they will be wrapped up in the next round.

CUBA
The US dismissed Cuba's decision to hold a week of military exercises - Bastión 2004 - from 13 December. 'I would say two things about (the military exercises),' US State Department spokesman, Richard Boucher said during his daily press briefing on 13 December. 'One is, the United States has repeatedly called for a peaceful transition to democracy in Cuba. We think that's what the Cuban people deserve and we think they deserve it in a peaceful fashion. Second of all, exercises is just, I'd say, one or more of the many things that the Cuban Government does to try to distract people from the problems that they face in their daily lives.' Boucher was also asked whether the US had any intention to invade Cuba. (Cuba's defence minister, Raúl Castro, is saying that the exercises are being carried out to prepare for a US invasion that Cuba expects during President George Bush's second term). 'I've always said that we support a peaceful change in Cuba. I'll stick to that,' Boucher said.

Argentina: On 10 May, the Argentine media published the contents of a letter sent by US President Barack Obama to his Argentine counterpart, Cristina Fernández. The missive was delivered by the US ambassador to Argentina, Vilma Martí­nez, to Argentina's foreign minister, Jorge Taiana, on 7 May, four days after the former president - and Fernández's husband- Néstor Kirchner (2003-2007) was sworn in as first secretary general of the Union of South American Nations (Unasur). This may be interpreted as an indication of the US's recognition of the Kirchners' regional importance as a “power couple" able to liaise between Washington and other countries in the region, namely Venezuela, with whom the Argentines have strong ties and Washington has little rapport. The letter thanked President Fernández for attending the Nuclear Security Summit hosted by Obama in Washington DC on 12-13 April. Obama hailed Argentina's “decision to join the Global Initiative to Fight Nuclear Terrorism and to cooperate with the United Sates' Megaports Program", adding that to this end “your regional leadership is invaluable". The US leader asked Fernández “to approach your neighbours, in particular_those we could not invite to the Summit, to request them to participate in this vision achieved at the Nuclear Security Summit in Washington." Obama also thanked Argentina for “its kind offer" to host “the next sherpas meeting" for the next summit in May 2011.

Colombia: On 11 May, Foreign Minister Jaime Bermúdez announced that, as of the third quarter of 2010, the US Peace Corps (USPC) would return to Colombia. The USPC will return after an absence of 29 years. The announcement indicates a high level of trust on the part of US authorities with regard to the ability of Colombian security forces to assure the safety of the volunteers. The USPC was absent from Colombia during the worst periods of guerrilla and paramilitary violence.  According to Bermúdez the first group of 20 volunteers will arrive before the year-end to assist in agricultural training programmes, HIV prevention and counselling services, and to teach English as a second language.

Colombia/Panama: On 12 May in Washington DC at the 40th Conference of the Council of the Americas, the US secretary of state, Hillary Clinton, said that the US government led by President Barack Obama remained committed to the Free Trade Agreements with Colombia and Panama, but admitted that the “political winds" in the US are not blowing their favour. The US congress has refused to ratify the agreements. Clinton said the FTAs would benefit US workers and called on the private sector for more support to get the deals approved.  The assistant secretary for Western Hemisphere Affairs at the state department, Arturo Valenzuela, also commented that “there is absolutely no doubt that we should focus on trade, as its critical in a globalized world". Both officials also called for greater cooperation between the US and its regional partners on security, anti-drugs and anti-poverty initiatives.

Guatemala: The US migration authorities deported 8,061 illegal Guatemalan immigrants during the first four months of 2010, 11.8% less than in the same period the previous year. Between 1.5m and 1.7m Guatemalans are currently living in the US, of which an estimated 60% are illegal. A total of 27,222 illegal Guatemalans were deported in 2009, less than the 28,051 registered the previous year.

Mexico: On 10 May, the Mexican daily Reforma reported that the main faction of the Sinaloa gang had access to secret US and Mexican information until at least 29 May 2009. The news is another blow for the public security minister (SSP), Genaro Garcí­a Luna, who is at odds with both the defence minister, General Guillermo Galván Galván, and the interior minister, Fernando Gómez Mont. Reforma reported that on 29 May 2009 the army recovered secret SSP and US Drug Enforcement Administration (DEA) documents after stopping a Hummer in Culiacán, the capital of Sinaloa. According to Reforma, the army said that the documents found were on a “highly restricted" circulation list and gave details of army, navy and Procuradurí­a General de la República operations against drug gangs. The information also contained details about what the Mexican authorities knew about the links between fishing vessels, which pick up drug consignments off the Pacific coast, and drug traffickers. The article concluded that the Sinaloa gang's counter-intelligence was so good that until May 2009 it could anticipate the government's moves against it.

FRIDAY

PERU: Peru's economy minister Luis Carranza will continue his visit to Spain before travelling to the UK on 17 and 18 February to take part in a seminar run by the Andean Development Corporation (CAF).

PARAGUAY: Foreign minister Rubén Ramí­rez will continue his visit to Spain (until 17 February).

PERU: International tourism fair (until 17 February).

SUNDAY

BRAZIL: President of the United Nations General Assembly, Srgjan Kerim, will pay an official visit to Brazil.

MEXICO: Municipal elections will take place in the state of Hidalgo.

MONDAY

BOLIVIA: Six members of the US congress will visit Bolivia to discuss the Andean Trade Promotion and Drug Eradication Act (Atpdea).

As news spread that the ruling Partido dos Trabalhadores (PT) is planning to define the crime of terrorism in the penal code, prompted by the two recent waves of attacks by the prison-based PCC gang in São Paulo, the gang staged a new series of pinprick raids and warned that it might unleash violent actions 'of hitherto unseen proportions'. This has strengthened the arguments of those who have been demanding legal instruments to strike back.

The authorities of São Paulo had been warned by police intelligence that the PCC (Primeiro Comando da Capital) was planning a series of actions, including the kidnapping of a public figure, on 30 August, eve of the gang's anniversary. When the government ordered the immediate transfer of 76 inmates from the Presidente Bernardes prison to that of Avaré, orders went out from the gang leaders to bring forward the attacks, targeting banks and the police.

These took place on 28-29 August. It was a victimless, small-scale 'offensive' in which cash dispensers were torched and shots were fired from moving vehicles at police vehicles and premises. Simultaneously, leaflets were distributed throughout São Paulo (dozens of teenagers were hired for the task), in which the PCC warned of a new, much larger wave of violence if the authorities did not take action to end 'ill treatment' of inmates in the state's prisons.

As the latest PCC raids were getting under way, the newspaper Folha de São Paulo revealed that the ruling PT was considering a package of public security policy proposals, among which was the definition of the offence of terrorism and the establishment of stiff penalties for it. The initiative, party sources confirmed, was prompted by the PCC raids in May and July, which left claimed some 200 lives.

The text (still provisional) cited by the newspaper includes among its proposals 'the categorisation of terrorist offences, the adoption of measures to increase the protection of secret information, and the categorisation of criminal organisation [as an offence]'.

The sociologist José Vicente Tavares, who heads the team working on the public security proposals, told Folha, 'Much of the discussion on this was a reaction to the events in São Paulo: many people believe that what happened there was terrorism.' In fact, a number of personalities, among them retired Major André Luí­s Woloszyn, a strategic intelligence expert at the Escola Nacional de Guerra (the national war college), have been publicly advocating that actions such as those carried out by the PCC should be legally considered terrorism.

The constitution repudiates terrorism and considers it an offence whose perpetrators cannot be granted bail. Woloszyn, however, argues that this is not enough: what is needed is a clear categorisation of the offence, a definition which makes it clear what is terrorism and what is not. 'Otherwise,' he says, 'terrorism does not exist.'

At present, the only legal provision for the punishment of terrorism is contained in the 1983 national security law. Article 20 classifies as a criminal offence punishable with prison terms of three to ten years 'the practice of [...] acts of terrorism for reasons of political dissent or to obtain funds destined to support clandestine or subversive organisations.' At least four draft laws attempting to define terrorism have been floating around for some time in congress.

The Argentine government admits that it has little idea who was responsible for a series of bombings on 17 November that targeted three Western banks in Buenos Aires. One person was killed and a policeman wounded in what was a coordinated attack timed to coincide with morning rush hour in the capital.

With the notable exceptions of the attacks in the mid 90s against the Israeli embassy in Buenos Aires and the AMIA Jewish mutual association, Argentina has been untroubled by terrorism for the last 20 years. These attacks were on nothing like the same scale, using homemade devices of relatively small power. However, the fact they were intended to kill means the perpetrators were not just trying to unsettle the government.

Banks are a familiar target for attacks by radical groups, but on the rare occasions when explosives have been used, they have exploded in the middle of the night and have been accompanied by pamphlets proclaiming the aims and grievances of whoever was responsible. This time the timing implied lethal intent, and no group has claimed responsibility.

The interior minister, Aní­bal Fernández, has suggested that 'unemployed workers' carried out the attack but he admitted that the government has 'no precise idea who was responsible'. If it was, as Fernández seems to be suggesting, the work of hardline piqueteros who have decided to escalate their campaign, then the government has good cause for concern. However, another possibility is no less worrying; namely, that elements of Argentina's security forces - much purged under President Kirchner - have decided to get even with the government.

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

Who is Frank La Rue?
He is the new human rights minister in Guatemala. He is also a candidate for the Nobel Peace Prize in 2004 and one of the most globally renowned human rights activists. He spent some time in exile from Guatemala and endured hard times with his family. 

Why watch him?
He has the opportunity to salve some of the wounds Guatemala has suffered from its bloody political past. The new minister for human rights was responsible for the international committee investigating the genocide of more than 200,000 Guatemalans under the military dictatorship in 1999. He is widely respected both at home and abroad. He will work in tandem with a new UN-appointed commission, Comisión de Investigación de Cuerpos Ilegales y Aparatos Clandestinos de Seguridad (Ciciacs), to investigate, arrest, and prosecute those linked to 'illegal and clandestine security organisations' under the Guatemalan justice system. 

Education: 
He was born technically blind. He studied law at the Universidad de San Carlos de Guatemala, becoming an exemplar for those afflicted by the disability. 

Public life: 
In 1990, during his exile, he founded the Centro para la Acción Legal en Derechos Humanos (CALDH), with the aim of bringing massive and systematic abuse of human rights before the Inter-American Court of Human Rights (IACHR) as a way of breaking the silence and impunity in Guatemala. He also started a movement to defend truth and justice for victims of rights violations. 

Timeline:

1975: Joins trade union movement as an advisor to the national workers' union (CNT), which was then the largest union of its kind in Guatemala.
1980: On 21 June 1980, a paramilitary group forced its way into the CNT headquarters, kidnapping 27 CNT leaders. They were never seen again. La Rue was compelled to work underground. 
1980: Works with the Peace and Justice Commission of the Roman Catholic Church as the person responsible for education programmes.
1981: Armed men send out a clear message to La Rue by doing the rounds of his relatives' houses. He flees the country along with his family. 
1982: Dedicates his life to the defence of human rights with a team of exiled Guatemalans, including Nobel Peace Prize winner Rigoberta Menchú. He begins to lobby the UN System for Resolutions on Human Rights in Guatemala.
1993: After the failure of the attempted coup d'état of President Jorge Serrano, La Rue decides to return to the country after 12 years in exile.
1994: CALDH moves from Washington to Guatemala and becomes one of the most important institutions for the defence of human rights in the country. 
2004: He is named minister of human rights by President-elect Oscar Berger.

Strong points: 
He has great stature domestically and internationally as a human rights activist. He has an unparalleled chance to make a real difference to crack down on the perpetrators of human rights violations. He has the full backing of a committed new government and will work with an international body, the UN, to bring culprits to justice. 

Weak points: 
The powerful Guatemalan armed forces and death squads seem immune to human rights organisations. Despite the killings, kidnappings and shootings, it seems to take a lot to pass laws aimed at cracking down on clandestine security groups in Guatemala. 

Prospects: 
The Berger administration, unlike its predecessors, seems determined to make strides on the human rights front. The appointment of La Rue is a clear indication of this. However, the armed forces are traditionally untouchable. Flagrant violations of human rights are such that it is difficult to be more than guardedly optimistic about his success in shedding light on many of the human rights violations.

Who is he? Micheletti is president of the ruling Partido Liberal (PL) and, until 28 June, was president of congress.

Why watch him? On 28 June congress named Micheletti acting President of Honduras, after Manuel Zelaya was ousted in a military coup and forced into exile. Micheletti's appointment owed to his erstwhile position as president of congress after Vice President Elvin Santos resigned in December 2008 to run as PL presidential candidate. Despite hailing from the same party as Zelaya, Micheletti, a member of the conservative elite, is a political rival. Differences between the two emerged over Zelaya's unexpected swing to the Left last year and his alignment with the regional radical movement led by Venezuela's Hugo Chávez .

Micheletti was one of the main actors in the coup, which stemmed from the resistance of the Right to Zelaya's ambitions for constitutional reform. It feared that Zelaya sought to end the current ban on presidential re-election (continuismo) and thereby perpetuate himself in power beyond January 2010, when he is due to step down.

Micheletti - who led calls for congress to remove Zelaya on the grounds that he  was “unfit" to govern and had violated the constitution - insists that his appointment is legal and that the general elections planned for 29 November will go ahead, after which he will step down. It remains to be seen whether the international community, which has widely and unequivocally condemned the military coup, the first in Central America in more than 15 years, are won over by this argument.

Born: 13 August 1948, El Progreso, Yoro.

Education: Micheletti has a degree in law from Mexico's Universidad Autónoma de Monterrey and the Universidad Nacional Autónoma de Honduras.

Public life: Born to Italian immigrants, Micheletti trained as a young cadet in the Academia Militar de Tegucigalpa and served as a member of the presidential guard under the liberal administration of Ramón Villeda Morales (1957-1963), the first civilian government after a period of military rule. However, following a coup d'etat led by Col. Osvaldo López Arellano in 1963, he was forced to leave the country. He travelled to Mexico, where he continued his education, and then to the US. With the reinstatement of civilian law in 1980, Micheletti returned to Honduras and was a member of the constituent assembly responsible for drawing up the 1982 constitution.

A businessman, with interests in the transport sector and a former managing director of the state telecommunications company, Hondutel, Micheletti is a stalwart of the PL, one of the two traditional parties of the Honduras oligarchy (along with the opposition Partido Nacional) which have long dominated the country's political system. He has been active in the party for nearly thirty years; he served as PL national deputy for the Yoro region in 1980-2006 and has held various prominent posts, including secretary general and party president. He ran unsuccessfully as pre-presidential candidate in the 28 November 2008 PL primaries, incurring an unexpected (and strong) defeat against Mauricio Villeda Bermúdez, a political surrogate for Micheletti's main rival, Vice President Elvin Santos, after Santos was deemed “ineligible" to run in a controversial ruling by the supreme electoral court (TSE).

Micheletti's defeat was interpreted as a vote against Zelaya by the party's Right, after Zelaya opted to join the Venezuelan-led trade initiative, Alba, in August last year; Zelaya had agreed to back Micheletti's candidacy in return for Micheletti guaranteeing his faction's support for Alba in congress.

The truce between the two politicians did not last; Micheletti led the opposition to Zelaya's proposal to call a constituent assembly, fanning fears of continuismo and then called for congress to censure Zelaya in light of his insistence in pressing ahead with what the state institutions ruled was an illegal (non-binding) referendum on Sunday (28 June) on whether to hold elections for a constituent assembly to reform the 1982 Constitution alongside general elections on 29 November.

Timeline:

1963: Leaves Honduras for Mexico after the coup d'etat ousting Ramón Villeda Morales.

1980: Returns to Honduras where he serves as a member of the constituent assembly responsible for drawing up the 1982 constitution.

1980-2006: PL congressman for the Yoro department.

1980-2005: President of the board of directors of the Tranportes Union Progreseña SA (Tupsa).

1991-1994: PL general secretary.

1994-1998: First secretary of congress.

1998-2002: Managing director of state telecommunications company, Hondutel.

1999-2005: President of the board of directors of Transportes Sula de Lujo (Transul)

2002-2006: Leader of the PL bench in congress.

2006-2010: President of congress.

November 2008: Loses PL primaries to Mauricio Villeda Bermúdez by 32%-52%.

March 2009: Named president of the PL leadership committee.

May 2009: Claims there is a plot to assassinate him because of his opposition to Zelaya's plans for a referendum on constitutional reform.

28 June 2009: Appointed acting President of Honduras by congress after Zelaya is ousted in a military coup.

Strengths: Having served nearly 30 years in the PL, Micheletti is considered one of the most powerful figures in the ruling party (along with Elvin Santos and the former president Carlos Flores Facussé [1998-2002]). This power translates beyond the realm of party politics given the weak and politicised nature of Honduras's institutions - one example is the supreme electoral court (TSE) ruling against Elvin Santos in the November party primaries, which many attributed to an under-the-table deal between Micheletti and Zelaya.

As regards his current power struggle with Zelaya, Micheletti has the backing of congress, the judiciary, and even the Church - including influential archbishop of Tegucigalpa, Óscar Andrés Rodrí­guez, traditionally a mediatory influence in Honduras. There is some substance to Micheletti's claims that Zelaya was acting unconstitutionally, given his intent on pushing ahead with a reform deemed illegal by congress and judiciary.

Weaknesses: The November PL primaries revealed that Micheletti lacked widespread support from the PL, and it remains to be seen whether his leadership in the current crisis will unite the divided party.

The fact that he (along with the other coupsters) evidently felt so threatened by the prospect of the non-binding vote suggests that it had popular backing, which also raises questions over his claims to be acting democratically.

Crucially, in terms of his current situation, while he has the support of the country's institutions, Micheletti is completely isolated internationally; his mandate has not been recognised by a single country and a host of international organisations such as the US-dominated Organisation of American States (OAS); the Rio Group, and the European Union to name but a few, have lined up to unequivocally condemn the coup and call for Zelaya's reinstatement.

Prospects: Micheletti's prospects hinge on whether he is able to secure international backing for his administration, which is highly unlikely.

It is also unclear what impact this international response will have domestically. While it remains tense in the capital, calls by the leaders of the Alba countries such as Venezuela's Chávez and Bolivia's Evo Morales for the “people to rise up and demand the return of their president" have yet to result in action. To date, it has been a bloodless coup.

Ultimately the political fate of Micheletti - who has so far shown himself determined to go it alone, convinced of the legitimacy of his mandate - will be determined by his ability to negotiate a resolution with the main intermediary, the OAS.

A string of official assessments has been drawing attention to shortcomings in the oversight of US anti-drugs efforts. There are mechanisms lacking to evaluate results in such areas as the use of private contractors handling more than US$3bn and the drive to curb the outflow of proceeds from the drugs trade.

On 8 June a report released by the US Senate Subcommittee on Contracting Oversight noted that the government did not have in place a 'standardised system' to assess the performance of the private firms that it has been contracting to implement its anti-drug cooperation programmes in Latin America. The report shows that use of private contractors has increased by 32% between 2005 and 2009, a period in which the State and Defense departments paid them US$3.1bn for their services - aerial spraying of coca plantations, training of local police forces and provision of logistical support to intelligence services are the main duties they performed.

Five companies have accounted for almost 60% of the funds disbursed in 2005-09: Arin, Dyncorp, ITT, Lockheed Martin and Raytheon. The biggest recipient has been Dyncorp, with 36% of the total.

The absence of an evaluation mechanism had already been noted in May this year by the Government Accountability Office (GAO) in a broader assessment of the government's anti-drugs efforts. An earlier GAO report, issued in March, had homed in on shortcomings of the programme launched by the US Customs and Border Protection (CBP) in March 2009 to intercept bulk cash shipments, presumably drug-trafficking proceeds, to Mexico and Canada - the former accounting for an estimated 67% of the total.

Between March 2009 and February this year, the CBP managed to intercept US$67m, of which 97% was seized on the south-western border of the US. The National Drug Intelligence Center (NDIC) had estimated the annual outflow of cash through the south-western border at somewhere between US$18bn and US$39bn.

In October last year the GAO recommended that the CBP adopt a performance measure for this programme, which it did in February this year. However, the GAO reckoned that the system 'does not measure the degree to which the program is effectively stemming the flow of bulk cash, weapons, and other goods that result from criminal activities.'

In another development, the NDIC issued, in March this year, an alert based on intelligence showing that Mexican drug cartels had managed to set up shop in at least 1,286 cities in the US. In 143 cases, it said, operations were directly controlled by the Mexican cartels. The alert says that family members of mid- and low-ranking cartel members had been settling inside the US, particularly along the south-western border.

According to the NDIC, the number of cities in which Mexican cartels are known to have a presence are: Sinaloa, 75; Gulf & Zetas, 37; Juárez, 33; Beltrán Leyva, 30; La Familia Michoacana (LFM), 27; and Tijuana, 21. The information is clearly outdated, as at least four of the cartels cited have suffered splits.

The NDIC alert was brought to the attention of a political forum in Washington on 13 April by Roberta Jacobson, Acting Deputy Assistant Secretary of State for Western Hemisphere Affairs. The text, circulated to embassies and border entry points in early April, said: 'We worry that violence will span to the US as the cartels continue to battle for control of drug trafficking routes from Mexico to the United States, and also the control drug trafficking inside the US.'

Development: On 8 July the minister for transport, Jorge Luis Sierra, announced on Radio Rebelde, an official radio station, that Raúl Castro's government will allow taxi drivers to apply for licences for the first time since October 1999.

Significance: This is the latest in a series of economic and social reforms which Raúl Castro has implemented since he adopted full presidential powers on 24 February this year. Although it may be good news for taxi drivers, most of whom have been forced to operate illegally since new licence applications were suspended in 1999, in effect this is not going to improve freedom of movement for Cubans, who will not be able to choose the route of the taxi.

Sierra said the new approved taxi routes will be granted mainly in rural areas to fill in the gaps in the service offered by local bus services. "We will give [the taxi driver] the fuel, fix the tariff to be charged, and fix the route and schedule. It is as if it were a public bus for the rural areas," he said. Licences will be granted to taxi drivers in urban areas only for routes not currently covered by existing bus routes, according to sources from the transport ministry.

It remains to be seen whether this latest reform will do anything to improve the quality of service received by Cubans on the ground, however. The government has been developing an investment plan of US$2bn over the past two years to improve the disastrous state of the country's public transport service, hard hit by the "Special Period" of the 1990s after the fall of the Soviet Union.

Development: On 5 May after a meeting with her German counterpart Christian Wullf, Brazil's President Dilma Rouseff was again critical of developed countries' "expansionary liquidity policies" and reiterated the Brazilian authorities' commitment to resisting inflationary pressures.

Significance:  Reining in inflation is now Rousseff's top priority. There is a slight change of tactics going on at the central bank of Brazil (BCB). First, it acknowledges that inflation, expected to breach the target ceiling of 6.5% year-on-year from April, will not return to target until 2012. Equally, policymakers have also decided that there is no point in battling the strong Real and are instead seeking to use it to tackle inflation via imports of cheaper consumer goods to ‘complement'  the internal market. That pits them against domestic industrialists, who are screaming about de-industrialisation. The BCB president Alexandre Tombini yesterday called on consumers to save, not spend, advising them to take advantage of the country's high interest rates.

Key points:

• There are fears that policymakers are running out of options after a raft of so-called macro prudential measures since late last year have largely failed to deter speculative capital inflows, stem domestic credit growth, cool inflationary pressures or ease the fierce appreciatory pressure on the Real.  The authorities are now desperately trying to ensure a soft landing for the economy.

• Key officials including Finance Minister Guido Mantega,  Development Minister Fernando Pimentel and the head of the national development bank Luciano Coutinho, all believe that there is "nothing to be done" about the strong Real this year, especially given the weak US dollar. Mantega recently told the senate that the government would not permit the overvaluation of the Real but emphasised that "it's not such an exceptional rate, taking into the account the economic fundamentals". Reading between the lines, it seems that although the central bank will continue to intervene as needed in support of the Real (as per its managed float policy), it won't do anything radical and the authorities are willing to let it settle at the ‘informal floor' of R$1.60/US$.

• Mantega also denied that the government is considering a quarantine on capital inflows, hinting that he sees the IOF (financial transactions) tax on foreign fixed income investment (currently at 6%) as the best defence against hot money.