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Former President Gustavo Noboa has sought (and been granted) political asylum in the Dominican Republic, to avoid prosecution on a charge of irregularities with government bonds during his tenure of office - which he claims is a politically motivated vendetta hatched by another former President, León Febres Cordero (1984-88).  

The government of President Lucio Gutiérrez has said it will not oppose Noboa's departure - indeed, that he doesn't even need a safeconduct to leave Ecuador (Noboa is taking no chances). Formal charges have not yet been filed against Noboa; the investigation is only just getting under way.

ECONOMIC GROWTH | Private economists see a slowdown. The consensus of private economists regularly surveyed by the central bank is that economic growth this year will only reach 1.73%, rather than the 2.02% they predicted in July. The good news is that they see the rate picking up towards the end of the year: they predict growth of 1.64% in the third quarter and 2.63% in the fourth. In their view, the acceleration will continue, though not very vigorously, into next year, when overall growth will be 3.54%.

EMPLOYMENT | Job losses mount in maquiladora sector. At the end of June, 1.08m people were employed in Mexico's 3,229 maquila plants. As the newspaper Reforma points out, this is more than a quarter of a million fewer than in November 2000, the month before the Fox administration took office. Most of the job losses were in the northern border states: Baja California (-74,485), Chihuahua (-70,811), Sonora (-38,623), Tamaulipas (-22,218) and Nuevo León (-18,105). 

The Consejo Nacional de la Industria Maquiladora de Exportación says this is mainly due to the relocation of assembly industries abroad; many to China, but also to other Latin American countries like Brazil, Costa Rica and Nicaragua.

BLACK ECONOMY | Informal sector produces more than farming. In 2001, Mexico's informal economy produced goods and services worth M$663bn (US$60.8bn), or just over three times as much as agriculture. The figure comes from a guesstimate made by the national statistical institute, Inegi, which also reckons that the profits of the informal sector are equivalent to 17.4% of those of the formal economy. The black economy's labour costs, says Inegi, amount to only 8.5% of total income, as against 20.6% in the formal economy.

Groups initially based on the demands of the unemployed have grown into a constellation with very diverse agendas, emboldened by official inaction.

For five days running, the `micro-centre' of Buenos Aires, where the government buildings and the financial district are located, has been under siege by protesters — and the main roads leading into the capital have been sporadically cut off. The unrest has not been confined to Buenos Aires: over the past week-and-a-half seven provinces witnessed protest actions, some violent.

The protests are being staged by the piqueteros, which started out in the Menem era as small groups of unemployed workers who pressed their claims by establishing pickets blocking main highways, and have grown into a constellation of fairly organised bodies, many of them manipulating the grievances of the jobless for their own purposes. Local piquetero bosses mediate distribution of the Arg$150 (US$51) a month handed out as a subsidy by the government. Many have been accused of using the threat of picketing and roadblocks as a means of extorting concessions from local authorities. A number of piquetero groups have been taken over by activists of the far left.

From diversity to convergence
The most recent wave of piquetero protests did not begin as a coordinated set of actions across the country. In each place particular agendas were being pursued. On 20 November in Salta, protesters raided the premises of two oil companies and set them alight, demanding payment owed them by the government for the shares they had been allotted at the time of the firms' privatisation.

A week later, in Neuquén, riots broke out when the provincial government started re-registering beneficiaries in order to replace the cash handouts with debit cards, as a means of ensuring that the funds reached their intended targets. In clashes with police, about 30 people were injured, three of them by gunfire, which prompted reports, later proven untrue, that the police had used live ammunition.

Buenos Aires city and its environs endured five days running of piquetero protests. First hit was the city centre, by groups demanding more subsidies. Later, on the boundary with Buenos Aires province, one group blocked the access to the capital demanding the creation of 1m jobs, while another surrounded a car factory asking for jobs there. In northeastern Misiones, seasonal plantation workers demanded employment; in central Santa Fe, government employees and neighbourhood associations demanded subsidies for those affected by recent floods; in northwestern Catamarca, government employees and pensioners demanded back pay; in centre-western Mendoza, former oilworkers blocked access to a refinery, seeking more subsidies.

The federal government last month gave the impression that it was going to crack down on the piqueteros, but later adopted a two-track policy, seeking to win over the more moderate groups. This has only goaded the more radical groups into more spectacular action. Now piqueteros of the most diverse extraction have announced that they will be converging on Buenos Ares on 19-20 December to stage a mass protest rally. This has led former interim President Eduardo Duhalde to criticise the government for its `silk glove' approach, which he said only encouraged these groups to become bolder. Duhalde, whose support was crucial to President Néstor Kirchner's electoral victory, had been keeping in the background, rarely commenting on current developments. Analysts have been suggesting that a split may be developing.

The `indefinite mobilisation' called by the umbrella indigenous confederation, Conaie, was called off within less than 48 hours — and talks with the government appear to have been reopened. This on-off approach has bred considerable acrimony between rival indigenous organisations and hints of a split within Conaie.

Not even the killing of a demonstrator (a 60-year-old woman) in the southern province of Azuay provided enough of a rallying point for Conaie's `mobilisation'. Miguel Lluco, former coordinator of Pachakutik, Conaie's political arm, says that two things conspired against the protest campaign. The first was timing: Indians were preparing to celebrate Carnival, an occasion which brings extended families together, and were unwilling to spend it on highway barricades. The second was a discourse lacking precision: a demand for the resignation of President Lucio Gutiérrez without any hint of what should come afterwards.

Feine, the evangelical indigenous federation, has accused Conaie of backroom dealings with interior minister Raúl Baca, trading off the protests for positions in official indigenous agencies. Leonidas Iza, president of Conaie, has confirmed an approach by Baca, to `resume dialogue'. He says a committee is working on a series of demands to submit to him. `We continue on alert,' he says; `if there are no deep changes, there will be more radical actions.'

An agreement between the US and Mexico on migration does not look likely this year; indeed, there are few hopes that President George Bush Jr's temporary-visa scheme will prosper. That appeared to be the consensus of US and Mexican legislators holding their 43rd annual meeting last week in Guadalajara, Jalisco.

Republican congressman Jim Kolbe, who headed the US delegation, openly disagreed with President Bush's statement that the top bilateral concern is security, saying that as far as he was concerned, migration was the main priority. He sounded a generally hopeful note, but Democratic senator Jeff Bingaman, who also put migration at the top of the bilateral agenda, stated baldly that it would be very difficult to get the immigration rules amended this year because it is an electoral year, which `complicates' matters.

There is some irony in this, because Bush's temporary-visa scheme had been criticised as an electioneering move designed to attract the Hispanic vote. And, as we reported last week [WR-04-18], the very announcement of the Bush scheme has triggered an increase in the flow of would-be illegal migrants who have mistakenly believed that it involves an amnesty for those already in the US when the legislation comes into effect. Bingaman ventures that the legislation could come through next year `perhaps'. Some of his colleagues believe that it might even resemble the Bush proposal, if only because this is based on earlier proposals circulating in Congress since last year.

SOCIAL | Rolling back poverty. The number of people living in conditions of extreme poverty in Mexico has been reduced between 2000-02 from 24.2% to 20.3%. This emerged from a study released last week by the World Bank. The number of those living below the standard poverty line, however, fell less: from 53.7% to 51.7%. In other words, more than half of Mexico ´s population is still poor.

World Bank president James Wolfensohn drew attention to the fact that the improvement took place at a time when Mexico ´s economy was performing poorly (a decline of 0.3% in 2001 followed by growth of only 0.9% in 2002). Principal factors in reducing extreme poverty were targeted social programmes such as Oportunidades and Seguro Popular, plus the remittances from expatriate relatives.

As in the rest of Latin America, poverty in Mexico is accompanied by great disparities in income, particularly in rural areas, and social exclusion, which mainly affect indigenous peoples (about 10% of Mexico's population). As many as 44% of Mexico's Indians are among the poorest 20% of the population.

REMITTANCES | Growth stronger than predicted. Remittances by expatriate Mexicans in the first half of the year totalled US$7.88bn, or 25.9% more than in the same period of 2003. At this rate, the predicted annual total of US$15bn will be exceeded. In the whole of last year remittances totalled US$13.27bn, overtaking foreign direct investment as a source of hard-currency inflows.

EMPLOYMENT | Upturn in maquiladora sector. Employment in the maquiladora (assembly) industry in May was 4.1% higher than in the same month of last year. This has raised the total for the first five months of the years 1.2% above the level of the comparable period in 2003. At end May this sector employed 1.1m people, 77% of them working in northern border states. The number of hours they worked increased slightly more than the number of jobs.

The Fox government is very angry with Mexico City's chief prosecutor, Bernardo Bátiz. He has been called 'irresponsible' and his behaviour has been described as 'unacceptable'. His crime: airing part of a hitherto unknown 'corruption video', of the same batch the city authorities say the Fox government made public in March [WR-04-10], allegedly in an attempt to harm the presidential aspirations of mayor Andrés Manuel López Obrador of the opposition Partido de la Revolución Democrática (PRD). This latest video mentions the name of a government minister with presidential aspirations of his own.

On 18 October Bátiz made public a brief excerpt from a videotape of a meeting between now-suspended city legislator René Bejarano and businessman Carlos Ahumada - the same people earlier seen negotiating a bribe. In this excerpt names are named, among them those of interior minister Santiago Creel and former President Carlos Salinas (1988-94). Creel is a leading contender for the presidential nomination of the ruling Partido Acción Nacional (PAN). Salinas, who remains abroad for fear of prosecution, has been cited from the outset by López Obrador as a participant on the alleged government plot against him.

Creel's deputy, undersecretary Felipe González, was entrusted with the government's response. 'It is not acceptable,' he read out from a communiqué, 'that [Bátiz] should make partial and distorted use of information that is evidently part of a court case. Nor is it acceptable that prosecutor Bátiz should attempt to distract attention and taint judicial evidence by exhibiting it publicly in an irresponsible manner.' The communiqué added that Creel had never had any contact with or even known Ahumada. PRD president Leonel Godoy said the video proved that Salinas had indeed been involved in the Ahumada plot (purportedly a 'sting' operation which was secretly recorded). Of the government's response he said, 'It seems that there are many who would not like full corroboration of the conspiracy thesis.'

Though the government is accused of having done secretly what Bátiz did openly, the latter's actions have merited criticism from within the PRD. The party's co-founder and repeatedly defeated presidential candidate, Cuauhtémoc Cárdenas, said he had been puzzled by the release of only a small portion of the video (nine minutes out of a total 105) which was too brief to allow anyone to assess properly what was being shown. Though more subdued, this echoes the government's complaint that Bátiz had exhibited 'partial and distorted' information. It is worth noting that Cárdenas, who likes to be called the 'moral leader' of the PRD, would himself like to be its presidential candidate.

This particular saga may not end here. Still to be unveiled are the recordings of the Cuban government's interrogation of Ahumada when he took refuge there, which the Cubans said had convinced them that the whole episode was politically motivated. This led to a brief downgrading of diplomatic relations by Mexico, lifted after conversations that have remained undisclosed. The Cuban government has consistently ignored Mexican requests to hand over the records of Ahumada's statements. It would not be surprising if these were to surface later in the day.

On Friday 28 January, the eastern department of Santa Cruz plans to announce the formation, in defiance of the constitution, of an autonomous regional government. This might be accompanied by a similar move in the southern department of Tarija, which has called a civic assembly for that day as well.

What prompted the decision not to wait until a constituent assembly considered the matter later in the year was a growing protest over the rise in the price for diesel fuel decreed by the national government, a protest which had briefly merged with another over the water supply in El Alto. 

President Carlos Mesa was able to disentangle the two by agreeing to cancel the contract with the private water company in El Alto, but he failed to defuse the row over fuel prices by reducing the size of the increase. The autonomists in Santa Cruz had already turned the issue into the proverbial last straw, and they opted last weekend for a swift unilateral solution.

This came just after congress had voted to censure four ministers considered responsible for the fuel price increase: presidential chief of staff José Galindo, Horst Grebe (development), Luis Carlos Gemio (finance) and Guillermo Torres (hydrocarbons and mining). 

As is usual practice they submitted their resignations, but Mesa, defying congress, decided to confirm them in their posts. Mesa was apparently feeling stronger after a group formed by 16 congressmen and two senators set themselves up as a new, pro-government bloc.

Mesa has warned the cruceños that they can only pursue autonomy within the bounds established by the constitution - meaning that they must wait for a constituent assembly to provide for it in a constitutional amendment. 

He did not say, however, what he would do if the autonomists went ahead with their rebellion. He has said he is willing to 'dialogue' with them, but only if they lift their 'state of emergency' and suspend their plans to declare themselves autonomous.

Incomplete blueprint
Exactly how the planned autonomous government of Santa Cruz is supposed to work is not clear. Its promoters want an elected prefecto (governor) instead of one appointed by the central government, and a departmental assembly with legislative powers. Beyond that, they say only that the assembly should make the regional administration 'compatible' with the municipal and university autonomies already provided for in the constitution.

The civic leaders of Tarija have not even got that far. Their convening an assembly (cabildo) to coincide with that of Santa Cruz says that the purpose is to support the cruceños' demands for autonomy and devise 'concrete measures' to implement those demands.

Worth recalling: Santa Cruz is Bolivia's biggest department and the one with the fastest economic growth record. It is responsible for most of Bolivia's agricultural exports and some of its hydrocarbons. Tarija has about 85% of the country's known reserves of natural gas.

The government of President Lula da Silva may have two ministers under investigation but his Partido dos Trabalhadores (PT) can boast that not a single one of its legislators has been indicted or is being investigated by the supreme court - no mean feat, given that one out of every six Brazilian legislators is in one or other of those situations.

Brazilian legislators, like their peers in most Latin American countries, used to enjoy broad immunity from prosecution. This ended in 2002, when the rules were changed to allow the supreme court to prosecute them, and government ministers, without having to wait until they complete their terms. Last week Congressoemfoco* ('Congress in Focus'), a non-governmental congressional watchdog published on the internet by the journalist Antônio Vital, produced a tally of the workload this has created for the supreme court.

The court has initiated 185 investigations involving 102 legislators charged with an array of offences ranging from slander to embezzlement, fiscal and electoral crimes, breaches of environmental rules, arson and phonetapping. In 35 of the investigations it has found enough evidence to indict 23 legislators. 

Two of these, congressmen Jackson Barreto and Ronivon Santiago, share the doubtful distinction of heading the league table, with four separate indictments each. Both of them belong to the Partido Progressista (PP), the party of Severino Cavalcanti, the president of the lower chamber who has been giving the Lula administration a hard time.

The party with the largest number of investigated or indicted legislators (six congressmen and three senators) is the Partido do Movimento Democrático Brasileiro (PMDB), Lula's most important ally in congress. Among the indicted pemedebistas is Jader Barbalho, a former president of congress.

The second-runner is the Partido Liberal (PL) led by Vice-President José Alencar, with six congressmen and one senator on the supreme court's worksheet.

• Massacre police investigated for other atrocities. The Rio police have arrested 11 police officers charged with involvement in the 31 March Baixada Fluminense massacre, which claimed 30 lives [WR-05-13]. Police chief Alvaro Lins reported on 15 April that witnesses had identified them as also having been involved in at least 25 other hitherto unsolved killings. One of them has been accused of participation in the killing of six youths, also in the Baixada, in September 2001. Others have been connected with 15 cases of people purportedly killed 'while attempting to escape'.
  
  The March massacre has been portrayed as an 'act of reprisal' by policemen against disciplinary measures imposed by their superiors in police stations of the Baixada, the area embracing eight of Rio's outlying municipalities which have some of the highest rates of violent crime in the country.

* www.congressoemfoco.com.br

MEXICO | Remittance inflows still climbing. Remittances from Mexican expatriates in May reached US$1.88bn, or 17.4% more than in the same month of 2004. This took the accumulated total for the first five months to US$7.53bn, up 18.6% on the same period last year. A straight projection of this rate would put this year's total only 8.7% above last year's US$16.6bn, but it must be kept in mind that there is usually an upswing towards the end of a year. 

Individual expatriates appear to be sending more money home: the average remittance in January-May was US$332.72, 3.3% more than in the same period of 2004. There is also a growing reliance on electronic transfers: they accounted for 88.9% of all remittances in January-May, 21.6% more than last year.

MEXICO | Investing more in machinery and equipment. Gross investment in machinery and equipment in the first four months of the year was up 13.1% on the same period last year, which suggests that industry is gearing up for expansion. Investment in construction, though, was only up 2.4%, which does not augur well for employment levels, though an uptick in April looks encouraging. 

Total gross fixed investment was up 8% year-on-year in January-April. Last year, when gross fixed investment increased by 7.5%, GDP expanded by 4.4%.

 

As this issue is being distributed the Bolivian congress will be resuming its critical debate on how to deal with the constitutional court ruling that demands a redistribution of congressional seats among the various departments [WR-05-39]. After a period of total intransigence there were signs last weekend of willingness to compromise by Santa Cruz and glimmers of a change of heart in the highlands, led by two parties of the left.

Only on 6 October did congressmen from Santa Cruz, the department that stands to gain the most from the reallocation, indicate obliquely that they might accept three additional seats instead of their constitutional entitlement of four. Leaders from the departments destined to lose seats - La Paz, Oruro and Potosí­ - remained adamant that there should be no reallocation before this year's elections. 

They are challenging the constitutional court's ruling, arguing that it came after elections had been called and that there is a constitutional bar against altering the terms of an election after the call is issued. Jurists say this argument is flawed because the constitutional court was ruling on a failure to observe a constitutional provision (adjustment of the number of seats according to shifts in population size) before issuing the call.

The intransigence of these three departments might soften following the stance taken by two leftwing leaders who have a substantial following in the highlands: Alvaro Garcí­a Linera, vice-presidential candidate of the Movimiento al Socialismo (MAS), and Juan del Granado, mayor of La Paz. Both called on 6 October for the highlanders to put the holding of the elections ahead of their regional representation in congress.

The government has come down from the piqued aloofness adopted by President Eduardo Rodrí­guez, who threatened to resign if the elections were delayed and decided to help find a solution. Presidential troubleshooter Jorge Lazarte has been instructed to put together proposals for a 'legal framework' to overcome the impasse. As part of the new strategy Lazarte will be discussing this directly with the 'civic committees' of the departments which would be affected by the reallocation of seats.

Garcí­a Linera's statement represents a more conciliatory approach to the problem than that initially adopted by MAS candidate Evo Morales, who had seen a conspiracy behind an attempt to delay the elections because he was leading in the polls. Clearly, Morales is putting the timely holding of the elections at the top of his list of priorities.

Second on the list, apparently, is heading off attempts to introduce a two-round system - in which he might see most of the rest ganging up against him. The most recent opinion survey, conducted by Equipos Mori and released on 6 October, shows Morales increasing his lead to 33% (from the 26-28% reported by two other polls in September). He is followed by former president Jorge Quiroga (of Poder Democrático y Social, Podemos) with 27%, and much further behind by Samuel Doria Medina (of Unidad Nacional, UN), with 14%.

The current system provides for the election of the president by congress if no candidate attracts more than 50% of the vote - which means that the president is inevitably the result of horse-trading between the parties represented in the legislature. Morales sees this as offering him more of a chance than a run-off.

 

MEXICO | Fixed investment still growing at brisk pace. In the first 10 months of 2005, gross fixed investment was up 7.3% on the same period of 2004. Most of the push came from investment in machinery and equipment, which rose by 11.4%; investment in construction - one of the biggest employers - rose by only 2.8%. Though this pattern of increased fixed investment is usually taken to foreshadow increased output, this has not been the result recently in Mexico. In 2004 gross fixed investment grew by 7.5%, GDP by 4.4%. In 2005, GDP grew by an estimated 3.5%.

MEXICO | Fox promises to catch up on job-creation. President Vicente Fox has set himself a target for his last year in office: a job-creation growth rate of 3.6%, which should translate into 600,000 to 700,000 new jobs. He is also determined, according to his spokesman Rubén Aguilar, to reduce the number of people emigrating, currently about 400,000 a year - though Aguilar did not say by how much. Another last-year target is the construction of about 750,000 subsidised homes. It must be kept in mind that elections are looming.

MEXICO-US | Remittances reach new high. Remittances by Mexican expatriates, mostly from the US, reached US$18.3bn in the first 11 months of 2005, an increase of 20.4% on the comparable period of 2004. On 12 January IMF deputy managing director Agustí­n Carstens warned that Mexico cannot continue to rely on emigration to the US continuing at the current high rate because of the tightening of US immigration policies. He also noted that creating more jobs at home could become more difficult because the international economic climate may worsen as the Federal Reserve and the European Central Bank raise interest rates.

The US has tried hard to undermine the South American subregional trading blocs with both carrot and stick tactics. Until last week the blocs had been showing a remarkable ability to hold together. All of a sudden, last week the two big blocs, Mercosur and the Andean Community (CAN), seemed on the verge of falling apart, wrecked, ironically enough, by the actions of two of their own members who had been among the most vocal advocates of the building-block approach to regional integration: Argentina and Venezuela.

Argentina has taken Mercosur to the brink over its dispute with Uruguay about the construction of two cellulose plants on the river Uruguay. At provincial and national level, the Argentine governments encouraged the action of environmentalist protesters who blocked bridges connecting Argentina and Uruguay (recent verbal requests to call off this action have sounded unconvincing in the light of other government comments).

President Néstor Kirchner has said he will take the dispute to the International Court of Justice at The Hague. Uruguay has protested that Mercosur has a dispute-settlement mechanism of its own and that its members are bound to resort to it before turning elsewhere. 

Indeed, on 7 April it formally called for an urgent meeting of the bloc's governing council, suggesting that it takes place between 18 and 21 April. The request had to go through Argentina, which is currently occupying the rotating presidency of Mercosur. Buenos Aires chose to drag its feet.

This did not work in its favour. On 10 April the World Bank released a study which, while recommending some alterations to the design of the cellulose plants, determined that they pose no environmental threat - the argument raised by Argentine protesters to oppose their establishment. This greatly strengthens Uruguay's case.

When at Uruguayan insistence its request for a council meeting went before a meeting of negotiators in Buenos Aires on 20 April, the delegations of Brazil and Paraguay backed the request. Argentina chose to ignore it and when Uruguayan Foreign Minister Reinaldo Gargano made public the fact that it enjoyed the other members' support, Argentina surprisingly denied this, claiming that this did not emerge from the results of the meeting. 

It went on to argue that support for Uruguay's request would have required full consensus and that this had not been forthcoming.

Last straw?

Uruguay responded by making public the minutes of the Buenos Aires meeting, which proved that what Argentina meant was that it was the only one preventing such a consensus. Gargano warned that not assembling the council would 'harm the institutional framework' of Mercosur. President Tabaré Vázquez complained that 'Mercosur is not working'.

If this is not the proverbial straw that breaks the camel's back, it is close. Economy Minister Danilo Astori said that it was necessary for Uruguay to 'improve the road towards its economic insertion outside the region, proactively seeking mechanisms of trade and investment expansion which will allow Uruguay to develop its full potential'. The circumlocution is a reference to seeking a free-trade agreement with the US, which Astori has been strenuously urging. He is not alone: an opinion survey conducted by Interconsult and released in early April show 58% of respondents in favour of negotiating an FTA with Washington. It also shows 46% in favour of leaving Mercosur and seeking alternatives elsewhere.

Blow to the CAN

It was 19 April when, in a meeting with his peers from Bolivia, Uruguay and Paraguay in Asunción , Venezuelan President Hugo Chávez proclaimed that 'the CAN is dead,' and announced that Venezuela would withdraw from the bloc the following week. By the time he got back to Caracas he had decided to speed up the timetable. Notice of Venezuela's decision to pull out was sent to CAN headquarters on 22 April.

Chávez 's argument is that the CAN was effectively destroyed when Colombia and Peru signed free-trade agreements with the US. Withdrawal, he argued, would allow Venezuela to adopt the necessary protection measures to prevent a massive influx of cheap US goods via Colombia. 'We regret it enormously,' he said, 'but that thing [the CAN] is no longer of any use. It was destroyed by the empire.'

Allan Wagner, secretary-general of the CAN, pleaded for calm. Peruvian President Alejandro Toledo urged Chávez to reconsider, on the grounds that his decision would harm the CAN at a time when it is negotiating a free-trade agreement with the European Union. There were also adverse reactions from among those perceived as eager followers of Chávez 's lead. In Peru, nationalist presidential candidate Ollanta Humala expressed regret at Chávez 's decision. 

In Bolivia, President Evo Morales (who in Asunción had echoed Chávez 's dictum that the CAN was dead) said he disagreed with Venezuela's 'sovereign decision'.

On 24 April Morales took matters a step further. He called for an Andean summit to overcome the crisis created by Chávez 's pullout, suggesting that it might be a good idea for Colombia and Peru to shelve their agreements with the US for now. Chávez responded almost immediately, applauding Morales's initiative, but Colombian President Alvaro Uribe dismissed his proposal to suspend the existing FTAs. His foreign minister, Carolina Barco, has suggested that Colombia might seek Brazil's assistance as a mediator (though Chávez says there is no dispute to mediate).

Prospects for a reconciliation do not look good. When Evo Morales becomes the head of the CAN's presidential council in June (succeeding Chávez ) he may find an organisation just turned 37, but with two fewer members than when it was founded as the Andean Pact in May 1969 (one of the founding members, Chile, withdrew in 1976). On the other hand, the organisation has seen one member, Peru, pull out and later negotiate a phased reincorporation five years later.

TRINIDAD & TOBAGO | Joint oil development agreement with Caracas. The foreign ministry of Trinidad & Tobago announced on 19 July that an agreement will soon be signed with Venezuela on jointly developing oil deposits which straddle their common maritime boundaries. The draft agreement was recently completed by the bilateral steering committee and is now being considered by the energy ministries. It envisages sharing costs and benefits and includes a provision on local content.

The steering committee has also delivered a technical report estimating the volume of natural gas on several points of the common maritime boundary. The progress achieved on this front appears to have overshadowed the recent ructions between the two countries over Venezuela's Petrocaribe initiative.

ANTIGUA & BARBUDA | Oil supply deal signed with Venezuela. Antigua & Barbuda last week formalised its oil supply agreement with Venezuelan state oil company PDVSA, under the Petrocaribe initiative, which offers the possibility of paying in kind as well as preferential credit terms. PDVSA agrees to supply up to 1m barrels of petrol, diesel fuel and fuel oil annually. The value of the contract was not stated.

COSTA RICA | Trade deficit keeps on growing. In the first half of this year, export earnings reached US$4.07bn, up 18% on the same period of 2005. They were outstripped by imports, which grew by 21% to US$5.54bn. This left a trade deficit of US$1.47bn, 33% greater than that of the first half of 2005. In 2005 as a whole, Costa Rica had a trade deficit of US$2.79bn, up 41% on that of 2004.

Components for micro-processors continued to be the main export item this year, followed by bananas and textiles. The leading imports were raw materials for industry and agriculture, followed by construction materials.

Rafael Correa has responded to criticism that he is an anti-system candidate without any clear proposals by launching a new campaign strategy for the second round of elections on 26 November. He is also trying to persuade his rival, the banana magnate Alvaro Noboa, to participate in a televised debate. He said it was Noboa's moral duty to explain his proposals. Noboa, who is pulling clear in the polls, is unlikely to accept. 

Correa presented his Proyecto Socio Paí­s, which focuses on "development, employment and housing", to some 2,000 coordinators of his Alianza PAIS party in Guayaquil on 27 October. He said he would double the human development bond, introduced by the present government in 2003 to benefit 1.2m of Ecuador's most deprived families, from its current level of US$15 and extend it to more people.

Correa also said he would reduce value-added tax (IVA) from 12% to 10% to "reactivate the economy with social justice"; provide micro credits of up to US$5,000 to small businesses, agricultural producers and taxi drivers; and double the US$1,800 loan granted by the state to citizens to buy houses valued at up to US$20,000. With this final promise, Correa appears to be trying to compete with Noboa's ambitious plan to build 300,000 low-cost houses a year.

Correa went on to challenge party activists to conduct a house-to-house campaign to try and overhaul the lead which Noboa has established in the polls: three separate polls released last week put Noboa on between 47% and 53% while Correa languished on between 26% and 34%. Some 22% of voters remain undecided but Correa would need to pick up the majority of these to win if, as was not the case in the first round, the polls are accurate.

While Correa tried to concentrate on what he has to offer rather than denigrating his rival he could not resist the occasional dig. He criticised Noboa's ostentatious presentation of gifts to voters as religious hypocrisy and, more interestingly, accused León Febres Cordero, the leader of the Partido Social Cristiano (PSC), of betraying the party's candidate Cynthia Viteri in the first round by instructing members to support Noboa. Viteri garnered a desperately poor 9.2% of votes.

Correa is also trying to cultivate an image of himself as a moderate with practical ideas to assuage the fears of voters who think he is an acolyte of Venezuela's President Hugo Chávez . With this end in mind he agreed to meet US ambassador Linda Jewell on 26 October. He told reporters that he stressed to Jewell that he wanted positive relations with the US but that "Ecuador's foreign policy will be sovereign". The US forward operating location (FOL) at Manta, which Correa wants to close down, was kept off the agenda.

Noboa deploys wife
Noboa, meanwhile, has begun to use his charismatic wife, Anabella Azí­n, to try and drum up support for him in Quito, Correa's powerbase. On 26 and 27 October Azí­n, who was elected as a deputy for Guayas, told Quiteños that she saw the role of first lady as very important to represent Ecuadorean women, a marked contrast to Correa's determination that the first lady should play a bit part.Noboa, who has hired a Colombian salsa group to spice up his campaign, is resorting to some pretty basic one-upmanship with Correa: he promised to increase the development bond to US$35 (US$5 more than Correa) and to generate more jobs than his rival could.

We either get to work or we will witness the coronation of Hugo I, the first king Venezuelan society will have."

The main leader of Venezuela's opposition, Manuel Rosales.

 

“Those who burned down the palace of justice with money from drug-trafficking simply took off their camouflage, put on a suit and came to congress to give a lecture on morality to the country."

Colombia's President Alvaro Uribe hits out at Senator Gustavo Petro, a former member of the M-19, who is driving the parapolitical investigations.

 

“So the decisions of Honduras are sovereign but those of Nicaragua are not?"

Nicaragua's President Daniel Ortega reacts angrily to the US line on the country's Sam-7 missiles.

Education was the watchword in President Michelle Bachelet's state-of-the-nation address to congress on 21 May. The word cropped up 43 times during Bachelet's (nearly two-hour) speech, significantly more than any other key word. She promised US$650m more spending on education, taking the education budget over US$5bn for the first time. Bachelet may well have had in mind the weeks following her first state-of-the-nation address last May when the teachers' federation, Colegio de Profesores, and secondary school students staged massive nationwide protests at the under funded education system.

"The education that our children receive is not as good as it should be," Bachelet said candidly. "It's not everything that families hope for, and it's not as good as they deserve." Her announcement was applauded by members of the ruling Concertación; some member parties have been critical of the government's fiscal conservatism and publicly appealed for greater social spending. In an effort to duck criticism that she is simply throwing money at the problem, however, Bachelet urged congress to approve an education super-intendancy to oversee the use of financial resources. 

The extra education spending will be funded by amending the fiscal responsibility law, which ensures that the fiscal surplus is kept at 1% of GDP: Bachelet will reduce this to 0.5% from 2008. The economy minister, Andrés Velasco, stressed that the amendment would not herald reckless public spending, it merely acknowledged a change in the financial reality: when the law was introduced, by the Lagos administration, public debt was equivalent to 20% of GDP but now it is down to 2%. 

Transantiago
Bachelet actually began her speech by offering a mea culpa for the poor performance of the Transantiago transport initiative. She insisted that the problem would be resolved, although she offered no new plan beyond confirming the creation of a metropolitan transport authority. She urged congress to approve a US$290m package to tide Transantiago over until the end of the year. She said that fares could not, and would not, go up until the system was fully functional

Bachelet was brave to begin her speech with the issue which is most affecting her popularity  but it did not stop the leader of the opposition Renovación Nacional (RN), Sebastián Piñera, from accusing her of shirking responsibility. "She gives the impression that Transantiago is not the responsibility of her government, the previous government or the Concertación; it is the responsibility of the Martians," he said. He added that more spending, on Transantiago and education, would require more vigilance from the opposition, a reference to the corruption scandal in the state sports agency Chiledeportes which plagued Bachelet last year. 

Elsewhere in her speech Bachelet promised to send to congress a bill allowing the private pension system (AFP) to invest up to 45% of assets outside of Chile. Foreign investment for AFPs is currently capped at 30%. In this way the government hopes to increase the profits of the AFPs so that it can oblige them to decrease high commission and administrative costs, enabling an additional one million Chileans who do not currently receive a pension to be incorporated into the AFP system [WR-06-50]. She wants congress to approve a sweeping pension reform, including a minimum state pension of US$144 a month from June 2008.

 

• The Transantiago effect 
  A poll released by the national pollster La Tercera on the eve of President Michelle Bachelet's state-of-the-nation address clearly shows the damage done to her approval rating by the botched Transantiago transport initiative. Support in Santiago has plummeted compared with the regions:
•                         Approval         Disapproval
  Santiago 
                                    33%             53%
  Regions 
                                   46%             39%
  Total 
                                   40%             46%
  
  

President Lula da Silva lost his second minister of the year last week. The institutional affairs minister, Walfrido Mares Guia, tendered his resignation to Lula after the prosecutor general asked the supreme federal tribunal to investigate alleged electoral corruption in 1998. Lula did not attempt to dissuade Mares Guia from leaving but it is a blow for his government, not least because the ministry of institutional affairs performs an important function for Lula as the bridge between the government and congress. José Múcio Monteiro picks up the portfolio. His main challenge will be persuading congress to approve the tax on financial transactions (CPMF).

Mares Guia belonged to the Partido Trabalhista Brasileiro (PTB), a government-ally. The accusations against him implicate Senator Eduardo Azeredo, a former president of the opposition Partido da Social Democracia Brasileira (PSDB), and a group of 13 other people including Marcos Valério Fernandes. Valério Fernandes was the advertising-PR executive who acted as chief bagman for the mensalão operation, which included procuring campaign funds, financing the debts of the Partido dos Trabalhadores (PT) and bribing legislators from other parties to vote with the government. Details of the scheme emerged in 2005, rocking the Lula administration. 

Mares Guia et al allegedly took part in a network designed to siphon off R$3.5m of public funds (US$2m at current exchange rates) to finance Azeredo's re-election campaign for the governorship of Minas Gerais in 1998. Mares Guia, who served as Azeredo's deputy governor at the time, denies he was even involved in Azeredo's campaign, let alone a corrupt scheme to finance it. Azeredo was the single opposition legislator among 200-or-so people indicted after a long and painstaking investigation into the mensalão web of corruption.

PSDB attacks

A columnist for the Folha de São Paulo, Eliane Castanhede, resorting to a football metaphor, said the Azeredo scandal "levels the game" between the PT and the PSDB. As such it was hardly the optimum time for the PSDB to attack the PT over corruption. That was exactly what it did, however, during a party convention on 23 November to install Senator Sérgio Guerra (Pernambuco) as the new president of the PSDB. Guerra's predecessor, Tasso Jereissatti, led the way. He said that "corruption is the tonic that is sustaining this government; we have the obligation to say enough to this moral crisis."

Former president Fernando Henrique Cardoso also took a star turn, flanked by the two favourites to challenge for the presidency in 2010, the current governor of Minas Gerais, Aécio Neves, and of São Paulo, José Serra. Cardoso addressed the rumours that Lula might seek a third-term in office. "We cannot accept backtracking in our democratic values, the electoral system is established and has defined rules, it cannot be jeopardised," he said, conveniently forgetting the constitutional amendment that allowed him to seek a second term. 

In an interview with the national daily, O Globo, on 25 November, Lula once again denied he had any intention of standing again. "I don't know where this whole story came from," he said. He also highlighted the need for greater public spending to improve the health and education sectors. The PSDB claims that he is merely creating jobs for his supporters rather than improving public services.

 

COSTA RICA | Tough on crime. The government sent congress a package of reforms on 11 March to combat the increased threat of organised crime. It appears to be responding to a report produced earlier this year by a Costa Rican research company, Demoscopia, which claimed to have uncovered evidence that mara gangs are beginning to penetrate into Costa Rica and set up cross-border networks [WR-08-05]. The proposed reforms include tightening up migratory law so that foreigners who commit crimes can be expelled from the country; classifying people trafficking as a crime; and changing the penal code to provide better protection for victims of violent crime and severe penalties for arms possession.

EL SALVADOR | Mining. President Tony Saca revealed his opposition "in principle" this week to granting licences for 26 mining projects. A congressional commission is currently considering reforming the mining law to open up the sector to increased foreign investment. Saca's comments echo those of the Roman Catholic Church, which argues that the cyanide used in gold prospecting would contaminate the water supply and irreparably damage the environment [WR-08-01]. Mining companies are lobbying hard extolling the virtues of "green mining" which they say is possible with new technology.