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The IMF announced yesterday, 15 December, that it has signed a credit agreement worth US$73m with Paraguay. The 15-month loan programme is intended to support the Paraguayan government's plan for rescuing the economy.

Asunción was quick to hail the significance of the agreement, which is the first Paraguay has signed with the IMF since 1959. Finance minister Dionisio Borda said the deal will allow the government 'to create the necessary conditions to reactivate private and public investments'. According to central bank president Gabriel González, Paraguay will sign agreements worth US$60m with the World Bank and the Inter-American Development Bank in the next couple of days to help it deal with its external debt obligations. Due to a severe shortage of public funds, Paraguay has had to suspend certain external debt payments.

On the whole, the IMF seems to have been impressed by the economic strategy adopted by Paraguay's President Nicanor Duarte, who came to power in August this year. 'Paraguay has set in motion an ambitious programme to stabilise the economy and implement a structural reform process which will spur growth, reduce poverty, and improve government,' said Fund sub-director Shigemitsu Sugisaki. He also praised the way Duarte had 'sought a broad consensus between the political parties and society for the key elements of his reform programme'.

The credit agreement does come with conditions, however. Paraguay will receive US$44m straight away, but further funds will be dependent on Paraguay keeping international currency reserves of at least US$900m, achieving growth of 2.5% and 3.2% in 2004, and bringing inflation down to single digits next year. Sugisaki called on the government to implement broader fiscal reforms, including raising the rate of income tax and increasing the rate and scope of VAT. He also said that a coherent system for fuel costs was necessary.

The political crisis gripping the country took another turn yesterday when congress voted to move from La Paz to another location, probably Sucre, should it become necessary. This is in response to the fears of congressmen that extraparliamentary groups are preparing to storm congress. There was supposed to have been a plot to storm congress last week.
 
The government is vehemently opposed to the legislature's attempt to move. So too are the authorities in La Paz. They say that congress's decision is a slur on them and the security of the region. They called for the president of congress, Hormando Vaca Dí­ez, to resign. President Carlos Mesa, who has been criticised by Vaca Dí­ez for failing to tell congress about the threats it supposedly faced last week, broadcast on national TV last night saying that democracy needed both an executive and a legislature. 

Vaca Dí­ez appeared to back down a bit, late last night, and said that the decision to move congress could be reassessed at the next session, on Tuesday. Separately, congress failed yesterday to pick the one member needed to complete the Corte Electoral. It said that it will try again next Tuesday.

The government announced yesterday that it will relax the ban on US poultry that came into effect on 24 February 2004, following an outbreak of avian flu in Texas. Mexico will now permit mechanically deboned chicken and turkey meat and mechanically deboned turkey thigh parts to enter the country from 39 US states.

Texas, Maine, Virginia, Connecticut, Pennsylvania, North Carolina, West Virginia, California, Delaware, Maryland and New Jersey will not be allowed to export poultry products to Mexico because there is still uncertainty about the safety of the meat originating from these states.

The original ban prohibited imports of eggs, poultry products and live birds from the US. It is estimated that Mexico imported US$104m of chicken and US$141m of turkey from the US last year.

The former President of the Dominican Republic, Leonel Fernández, is almost certain to regain the post at the 16 May elections according to a poll published yesterday.

The survey, conducted between 23-31 March by the Costa Rican company CID, showed Fernández, of the Partido de la Liberación Dominicana (PLD), in the lead with 50% of the vote. Current President Hipólito Mejí­a, of the Partido Revolucionario Dominicano (PRD), trails in second place with just 23% support. Eduardo Estrella, of the Partido Reformista Social Cristiano (PRSC), lies in third with 19% support while 8% of those polled remain undecided.

Mejí­a has recently written off such polls as being wildly inaccurate, in part because they do not take into account the preferences of the expatriate Dominicans who for the first time are allowed to vote in the election. Nonetheless, opinion within the Dominican Republic does not augur well for the president; 61% of those polled by DID said they would never vote for Mejí­a, while 71% said the country was worse off now than when he came to power in August 2000.

Tomorrow is the first anniversary of President Néstor Kirchner's inauguration. His opponents are stepping up their criticism of him, sensing that for the first time he may be vulnerable.

The former Radical president, Raúl Alfonsí­n, was first over the top. He criticised Kirchner for what he said were his authoritarian tendencies, and said that Kirchner was ignoring political parties and had spurned discussions with the opposition.

Alfonsí­n was not completely hostile to Kirchner. He said that the president was right not to have sent troops to Iraq and was right to have kept on with the Mercosur, despite pressure from the US aimed at breaking up than grouping.

Development: Thousands of protesters will descend on the capital Tegucigalpa today (30 June) in the 'Second March for Life'. They will be joined by thousands of teachers. The two groups plan to march on the presidential palace to demand the resignation of president Ricardo Maduro.

Significance: Maduro recently unveiled the existence of a 'destabilising plot', purportedly discovered by Honduran security, on 22 June. He did not identify those involved, but said there was evidence that they intended to infiltrate the 'Second March for Life'. The march, which is promoted by the environmentalist NGO, Movimiento Ambientalista de Olancho (MAO) and the Comité de Familiares de Detenidos Desaparecidos de Honduras (Cofadeh), started out on 24 June from four different cities.

Talks between the government and teachers over salary increases broke down on 16 June. The government said that it could not afford to meet the demands of teachers, which would amount to an additional L2.9bn (US$158m). Maduro has relented slightly, promising to submit the state's financial capacity to pay teachers to independent assessment. Maduro made the offer on television on 29 June. Teachers have dismissed the offer.

Tegucigalpa will be the scene of further protests on 1 and 2 July when the Coordinadora Nacional de Resistencia Popular is arranging demonstrations to demand a halt to privatisation, a reduction in fuel prices and an end to the devaluation of the lempira.

Development: Argentina's president, Néstor Kirchner, wrote off provincial debt worth Arg$108m (US$35m) on 5 August in order to secure support for a fiscal-responsibility reform demanded by the IMF.

Significance: The fiscal-responsibility reform, which will place limits on the public-spending and debt-levels of the provinces, is a key piece of legislation for the government as it tries to sustain its fragile relationship with the IMF. However, the decision to write off the debt of five provinces is being viewed as having a wider ambition than simply ensuring this one reform was passed.

Of the five provinces that had their debt annulled - Buenos Aires (Arg$41.8m), Formosa, Jujuy and Tucumán (Arg$20m each), and Catamarca (Arg$6.2m) - only the latter doesn't have a governor belonging to the ruling Partido Justicialista (PJ or Peronists). In the short-term, the result was that the PJ turned up in high numbers to support the legislation, which was passed in the chamber of deputies by 139 votes in favour to 86 against.

According to the Argentine newspaper, 'La Nación', Kirchner wrote off the debt in order to shore up his ties to the PJ in the medium to long term. The president has launched a major campaign to achieve a political consensus - a mission that has required as much attention to be lavished on his own party as on the opposition due to the fact that many Peronists believe Kirchner has ignored them since coming to power in May last year.

According to the newspaper, the decision to write off the debt will be followed by Kirchner's assuming the leadership of the PJ. This is a move he has previously resisted lest he get bogged down in party politics, but such has been the discontent within the party that the president was increasingly unable to count on their support for his legislation.

Development: Brazil's president, Lula da Silva, announced on 9 September that the state-run oil company Petrobras will invest US$200m in Argentina. The funds will be put towards the San Martí­n pipeline, which runs from Tierra del Fuego to Buenos Aires.

Significance: Confirmation of this investment should ease trade tensions between Argentina and Brazil. The Argentine government has long demanded that Petrobras increase its investments in Argentina, given that it extracts 12% of Argentina's crude oil and 8% of its natural gas.

The investment will not, however, miraculously resolve all Brazilian Argentine trade issues. The Argentine economy minister, Roberto Lavagna, who is currently in Brasí­lia, told the Brazilian government on 9 September that Argentina needs to 'reindustrialise', which means his government cannot allow local manufacturers to be put out of business by cheap Brazilian imports of white goods or cars.

Lavagna and Co are also irked by how little investment comes to Argentina in comparison to what Brazil receives from its foreign investors. Lavagna proposed means by which foreign investment could be distributed more evenly between the two countries, but as one Brazilian minister present at the talks with Lavagna said, 'it is not Brazil's fault that investment isn't going to Argentina'.

Development: On 13 October Foreign Minister Roberto Tovar asked the Taiwanese government to explain as 'quickly as possible' why it deposited money in the Panamanian bank account of former president Miguel Angel Rodrí­guez in 2001 and 2002.

Significance: Rodrí­guez was forced to resign as secretary-general of the OAS on 8 October in order to face charges he received kickbacks in return for lucrative telephone contracts from the French telecoms firm Alcatel. The fact Rodrí­guez received, inexplicably, up to US$400,000 from the Taiwanese government during the last two years of his presidency (1998-2002) damages his credibility yet further.

Rodrí­guez allegedly received two cheques of US$200,000 through a Panamanian firm he had set up called Denisse Investments. The first came from the Taiwanese ministry of foreign affairs and the second from the Taiwanese embassy in Costa Rica. Costa Rican authorities also suspect Rodrí­guez may have received up to US$1m through Denisse Investments from a company called the Friendship Company, also assumed to be Taiwanese.

Politicians from all parties have demanded that President Pacheco seek an immediate explanation from the Taiwanese, and some have even suggested breaking off diplomatic relations with the country. Pacheco is unlikely to do that however; his own electoral campaign received US$500,000 from Taiwanese businessmen.

Development: The US Defense Secretary, Donald Rumsfeld, is attending the Latin American defence summit, which starts in Quito, on 17 November. Figures published on 15 November show that South America spends the least amount of money of any region on defence as a percentage of GDP.

Significance: The continent as whole spends around US$20bn a year, 5.9% of the amount the US invests in defence. The study which uses 2002 figures was published as 'the military balance in South America'. It shows that as a result of cuts in military spending across the region for the past 20 years, the 12 countries that comprise South America spend an average of 2.1% of their GDP on defence. Although this has led some analysts to conclude that South American countries are no longer concerned by the threat of regional conflict, it is worth remembering that these figures are two years old. While the inter-regional comparison remains valid, a number of intra-regional arms races, most notably between Colombia and Venezuela, have rendered some of the report's figures obsolete.

In terms of percentage of GDP, Suriname spends most on defence (5%), followed by Ecuador (3.64%), and Peru (2.3%). The average for the region is 2.14% and just below that are Colombia (2.12%), Chile (2.10%) and Brazil (2.10%). Chile is the region's heaviest spender per capita; around US$90 per person is siphoned off to the military, largely thanks to a Pinochet-era law, yet to be revoked, that directs 10% of the revenue from copper exports to the armed forces.

This means that Chile spends substantially more than its neighbours: Argentina spends US$39 per head, Peru US$32 and Bolivia US$15. However, in 2004 rising tensions between Peru and Chile over maritime boundaries may have altered these figures. Although both countries deny they are becoming embroiled in an arms race, Peru responded to Chile's purchase of four Dutch frigates in March by buying their own four 'Lupo'-class missile-launching frigates from Italy.

Similarly, military spending by Colombia and Venezuela has increased of late, as tensions between the two counties, created by the presence of US forces and Colombian paramilitaries operating in the border area. Although Colombia's figure of US$34 per capita on defence is well below Venezuela's US$43, this does not include the massive amount of military aid that Colombia has received from the US as part of Plan Colombia, the drive to eradicate drug trafficking and guerrilla groups.

Daniel Raimundes, an Argentine general who was one of the contributors to the report, said that the countries of Mercosur and CAN (the Andean community) should 'contemplate forming a military alliance'. He also pointed out that the high cost of maintaining large armies in terms of personnel which is 'one of South America's structural problems'.

The publication of the report coincides with the meeting, on 17 November in Quito, of the defence ministers of 34 countries from across the Americas to talk about threats to continental security from drug trafficking and terrorism. US defence secretary Donald Rumsfeld is currently in Ecuador to seek further cooperation for Plan Colombia.

Development: Newspaper reports on 18 December suggested that President Néstor Kirchner has demanded the resignations of Argentina's ambassador to Cuba, Raúl Taleb, and senior foreign ministry official Eduardo Valdés over the diplomatic row emerging with Cuba.

Significance: If they are fired, Taleb and Valdés will be taking the buck for the spat caused by Hilda Molina's entry into the Argentine embassy last week. Molina, a renowned Cuban dissident, is demanding that she be allowed to visit her family in Buenos Aires - a cause that Kirchner has previously backed.

The president's support only went as far as writing to Cuba's President Castro, however. Kirchner is deeply unhappy at being forced into a position whereby either he has to throw Molina to the mercy of Cuban authorities, which would prove deeply unpopular at home, or he has to cause a major split with Castro by sheltering her in the Argentine embassy.

The only good news for Kirchner is that Molina has not asked for political asylum. However, there is no sign of a deal being struck between the two governments, and Kirchner could well be forced to make a bold step in one direction or the other.

Development: On 31 January the president of the supreme court expressed his "dislike" of the way in which Manuel Contreras, head of Pinochet's secret police (Dina), was arrested on 28 January.

Significance: The president of the court, Marcos Libedensky, avoided criticising directly the presiding magistrate, Alejandro Solí­s, but said that the judiciary should work to ensure this type of incident did not happen again. Contreras, sentenced to 15 years for his part in the "permanent kidnap" of Miguel Angel Sandoval, a member of a leftwing group in 1975, was filmed resisting arrest by a TV crew who had been interviewing the former general at his house. The images of the scuffle were broadcast on Chilean state television, prompting a crowd to gather outside the courts and pelt Contreras with eggs and tomatoes as he arrived.

In April 2003 Contreras had been convicted, along with four other heads of Dina, of the "permanent kidnap" of Sandoval. In a landmark ruling, judge Alejandro Solí­s rejected the defendants' invocation of the amnesty law, which shields members of the armed forces and police from legal action for human-rights violations committed during the period from September 1973 to March 1978. Solí­s employed an argument that has been gaining strength since 1990: kidnapping is an ongoing crime until the victim appears dead or alive and therefore the amnesty law does not apply. In November 2004 the supreme court upheld Solí­s's judgement.

Since his conviction Contreras has turned on his former paymasters. The ex-head of the Dina accused the army, and its commander-in-chief Juan Emilio Cheyre, of "treachery". He also blamed Pinochet for his failure to take responsibility for the actions of his subordinates. "The head of the Dina was the president of the republic. I fulfilled my mission in accordance with the instruction and orders that he gave me. [Pinochet] ought to have presented himself in front of whatever authority and said 'I answer for everything that was done in Chile'," Contreras said. "There is a code of honour, particularly among soldiers, and General Pinochet has not fulfilled his duty." Pinochet has always maintained that the human-rights violations committed during his mandate were the responsibility of over-zealous and unauthorised subordinates.

Meanwhile Solí­s is continuing his investigations into the activities of the Dina. On 31 January he flew to Washington DC in order to interview Michael Townley, a former Dina agent who lives in the US under the witness protection programme, over the murder of General Carlos Prats, an influential figure in the Allende administration, and his wife in Buenos Aires in 1974. Townley, known in the Dina as 'el gringo', was an electronics expert who has admitted to planting and detonating the bomb that blew up Prats's car. Solí­s wishes to question him over the chain of command in Pinochet's secret service.

Development: On 3 March the central bank devalued the bolí­var by 10.7%, increasing the exchange rate from Bs$1,920 to the dollar to Bs$2,150.

Significance: The devaluation will add Bs$8.8tr (US$4.5bn) to the government's coffers, because it will inflate the bolí­var value of the government's main source of revenues, oil exports. The change is equivalent to 3.6% of Venezuela's GDP. Analysts expect the change in the exchange rate to drive up inflation, which was 0.2% in February, the lowest increase since March 1988. The black market rate for the bolí­var is around Bs$2,800 to the dollar.

The central bank's decision comes despite the upsurge in oil prices; the government of the world's fifth-largest oil exporter budgeted on an oil price of US$23 a barrel, when in fact the average price for 2004 was US$37. The government, which restricted foreign currency trading since the end of the strike-cum-lockout in January 2003, last devalued the bolí­var in February 2004. The monthly inflation rate then rose from 1.6% to 2.1% the following month. The government forecasts inflation to come in at 15% this year, compared with 19% in 2004. Independent analysts are less optimistic, some predicting a rate of up to 22%, although the budget deficit, 4.2% last year, should narrow to between 3.5% and 4% of GDP.

In 1999 public expenditure was worth 18.8% of Venezuela's GDP; the budget for 2005 puts it at 30.89%. The finance ministry announced that over the past year the country's internal debt reached US$15bn; with the devaluation of the currency the debt shrinks in dollar terms, down to around US$13.3bn.

Development: At a press conference on 10 April the leaders of the Autodefensas Unidas de Colombia (AUC) warned that if congress approves the government's proposed legal framework for the paramilitary peace process, the AUC will "return to the mountains" to restart their armed struggle.

Significance: Congress is set to decide this week, in sessions due to begin on 12 April, whether to approve the government's framework, the so-called justice and peace legislation. Although the AUC denied it was making an ultimatum, the paramilitary chiefs warned that the peace process is in "a terminal phase" which would be brought to a head if congress did not alter the draft legislation.

The paramilitaries say they don't trust the proposed framework to guarantee their judicial status, meaning that they are worried the bill will be thrown out at a later date. If this happens there is a chance that new legislation could be introduced which is far harder on the paramilitaries. As the proposal stands, paramilitaries who are found guilty of committing crimes against humanity will have to serve eight years in prison at most, while having belonged to a paramilitary group will be treated as a political crime, meaning AUC leaders will be immune from the US's extradition requests on drug-trafficking charges.

The AUC is not the only group unhappy with the legislation. A large number of legislators believe the justice and peace legislation will allow many paramilitary fighters to escape punishment altogether. This is a fear shared by Michael Fruhling, the representative in Colombia of the UN's high commission on human rights, who sent a letter to congress on 8 April saying: "The conversion of paramilitaries into political criminals will open the way for amnesties and pardons to be decreed in their favour, which could lead to the state failing to adhere to its international obligations." Added to this, the International Criminal Court recently announced that it wants to start investigations into human-rights' abuses in Colombia.

The AUC's comments will have been poorly received by the government, which reacted angrily last month when the paramilitaries made their last public comments about the justice and peace legislation. Peace Commissioner Luis Carlos Restrepo, meanwhile, will be particularly embarrassed. Restrepo met the AUC's leaders at Santa Fe de Ralito on 9 April in an attempt to improve relations between the government and the paramilitaries. It was the first time the AUC had agreed to meet Restrepo for weeks, but his intervention clearly made little difference.

Development: On 16 May President Vicente Fox was forced to backtrack on some controversial comments he made as part of a speech criticising US immigration policy.

Significance: Speaking to Texas business people during a meeting in Mexico, Fox defended the role of undocumented Mexican workers in the US by saying, "There is no doubt that Mexicans, filled with dignity, willingness and ability to work are doing jobs that not even blacks want to do there in the US." Fox subsequently expressed his regret that some in the international media had interpreted his comments as racist. The gaffe is unlikely to help Fox's protests against new US controls on immigrants.

Despite Mexican hopes that President George Bush would introduce a temporary worker programme to make it easier for millions of Mexican immigrants who arrived in the US illegally to live and work there, the plan has become bogged down in congress. Relations between the two neighbours have also been soured by plans to extend a fence on the border between California and Mexico, the issuing of tougher rules on obtaining drivers' licenses and the activities of the Minuteman Project, an Arizona based anti-immigrant vigilante group.

Development: On 17 June the first lady, Luisa Durán, defended her husband, President Ricardo Lagos, against allegations of corruption and nepotism.

Significance: The long-running MOP-gate scandal involves the alleged misappropriation of state funds supposedly for use at the Universidad de Chile business school, the ministry of public works (MOP) and the economics institute, but instead diverted to Lagos's electoral campaign in 1999. Lagos's brother-in-law, Hernán Durán, is believed to have profited from the deal. Congress is due to vote on 22 June on whether to create a commission to investigate the scandal.

Speaking on television on 17 June, the first lady accused the Chilean right of attempting to undermine her husband's success. "These are the same people who were with Pinochet […] There's an organised campaign by those who aren't going up in the polls," Durán said.

The opposition Unión Demócrata Independiente (UDI) and Renovación Nacional (RN) have been attacking Lagos for his and his family members' alleged involvement in the scandal. Last week the RN secretary-general Cristián Monckeberg and his cousin, RN deputy Nicolás Monckeberg, unveiled a "nepotism map", which consisted of a list of 15 relatives and friends of Lagos and of other senior officials who work in government. However the next day the RN presidential candidate, Sebastián Piñera publicly slapped down the two cousins.

Meanwhile, on 19 June, the UDI formally elected Joaquí­n Laví­n as its presidential candidate. In his acceptance speech Laví­n outlined his four major goals: create jobs, stop crime, reduce inequality and stop corruption. The UDI candidate also added his voice to those backing an independent inquiry into the allegations against the president.

The latest opinion polls, by TimeResearch, show Laví­n sinking, Piñera rising and Michelle Bachelet, the ruling Concertación candidate, far ahead of the field. Bachelet is on 46%, Piñera 21%, Laví­n 19% and the far left candidate, Tomás Hirsch is on 3%.

Development: Some 1,000 protesters marched through the capital Port-au-Prince on 21 July accusing the government and the UN stabilisation force, Minustah, of failing to improve security in Haiti.

Significance: The catalyst for the protest was the murder of Haitian journalist Jacques Roche, whose funeral was held yesterday. Roche's body was found in a city slum last week, handcuffed, disfigured and riddled with bullets. The funeral was a highly charged affair which evoked memories of the murder of Jean Dominique, a very popular Haitian journalist and political analyst, who was gunned down in the courtyard of his radio station in April 2000. 

The interim government of Gérard Latortue is pointing the finger at former president Jean-Bertrand Aristide for orchestrating the violence in Haiti and the killing of Roche. Speaking at the funeral, the culture minister, Magalie Comeau Denis, said the armed gangs loyal to Aristide killed Roche to disrupt the electoral process. Police imprisoned the catholic priest, Gérard Jean-Juste, a prominent member of Aristide's Fanmi Lavalas party and one of the most popular religious figures in Haiti, yesterday for possible involvement in the killing of Roche. Jean-Juste was also arrested in October 2004 on spurious charges. He was jailed for nearly seven weeks. Jean-Juste's lawyer said that the latest charges are “ridiculous" as his client was out of the country at the time.

Development: The financial markets showed apprehension on 24 August ahead of Rogério Buratti's testimony to the parliamentary commission investigating links between the ruling Partido dos Trabalhadores (PT) and illegal gambling.

Significance: Buratti has accused the finance minister, Antonio Palocci, of having received bribes from a waste-collection company while serving as mayor of Ribeirão Preto between 1993 and 1996 and again in 2000-2001. According to Buratti, who was one of Palocci's assistants at the time, the money was used to pay for the PT's campaigns. Following the allegations the dollar jumped by 2.94% against the Real on 19 August, the biggest increase in 15 months. In a press conference aired on 21 August, Palocci rebuffed the allegations, bringing the dollar down by 2.65% on 22 August. The consensus opinion, however, is that the establishment accepted the minister's excuses in order to shield the economy.

The following day, however, the market bounced again ahead of Buratti's testimony to congress. The fact that Palocci had to make an official declaration saying that he indeed signed a contract with Leão & Leão, the waste-collection company implicated, thereby contradicting what he had previously said, did not help. President Lula da Silva's declaration that "The economy will keep moving forward" was not enough to soothe speculators.

Brazilian investment risk, calculated by JP Morgan Chase, increased 1.46%, closing at 416 points on 23 August, while Brazilian debt bonds fell. The dollar followed the market's unease and jumped 1% against the Real, closing at R$2.409. The São Paulo's stock exchange, the Bovespa, fell 1.8%.

The political turmoil in Brazil prompted Citigroup to downgrade the Bovespa from overweight (above average) to neutral (average). According to Citigroup's chief stock-strategist for Latin America, Geoffrey Dennis, "The market is being complacent with regards to the current political risk" in Brazil. Dennis said that the chances of Lula being impeached increased "from practically nil in June to 30% now". In the event a presidential impeachment process is put forward by congress, Citigroup calculates that the spreads on the Brazilian debt will increase by 200 points, bringing the Bovespa down by 25% in local currency and 45% in dollar terms.

Development: On 27 September President Vicente Fox appointed Eduardo Medina Mora to take over from the late Ramón Martí­n Huerta as minister of public security.

Significance: Until now Medina ran the secret police, the Centro de Investigación y Seguridad Nacional (Cisen), after making his name in business with Desc group, which produces car parts. Eduardo's brother, Manuel, is managing director of the country's biggest bank, Banamex, now owned by Citigroup. Eduardo has been in charge of Cisen since the start of the Fox administration in December 2000.

The Cisen has a reputation for interfering in politics: six months after he took over the running of the agency, Eduardo said that the Cisen had tapped telephone calls made by the main candidates in the 2000 presidential elections. The dark hand of the Cisen also seems to have been active in the attempts to smear the mayor of Mexico City, Andrés Manuel López Obrador, in 2004. López Obrador is the favourite, according to the opinion polls, to succeed Fox.

Fox's cabinet is changing almost by the day. On 26 September Fox's close associate and agriculture minister, Javier Usabiaga, resigned: his departure had been expected because he wants to run for the governorship of Guanajuato in next year's elections. A more surprising resignation came on 27 September when the energy minister, Fernando Elizondo, announced his departure after 15 months in the post. He apparently wants to run for the senate next year.

Development: The president of Peru's national council for decentralisation (CND), Luis Thais, resigned on 31 October. 

Significance: Thais had little option to offer his resignation after the failure of the referendum on the creation of five macro-regions in Peru on 30 October. President Alejandro Toledo has not yet decided whether to accept the resignation of Thais. Toledo had made decentralisation one of the cornerstones of his electoral agenda in 2001 but lost his appetite for the process after the opposition Partido Aprista Peruano (PAP) swept the regional elections in 2002, taking 13 of the 25 regional presidencies. The creation of the macro-regions failed to garner the support of the PAP, which helped to ensure that the referendum failed by encouraging voters to see it as a vote on the government. Any future referendum on the formation of macro-regions will now have to wait until 2009.

The CND has come in for much criticism since it was set up. The government's decision to stack it to ensure it had an automatic majority - it has five representatives versus the four members who represent the regional and local governments- meant that it was unpopular with the regions. Thais himself has never seemed comfortable in the job. He resigned in June 2004 shortly after coming out with the inappropriate remark “Come and visit Puno, the people treat you well there", the day after the lynching of mayor Cirilo Fernando Robles in Ilave, Puno but Toledo kept him on.