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BRAZIL | Growth outlook worsens. Economic growth forecasts in Brazil are about to be revised downwards in the light of the poor performance revealed by third-quarter figures. In July-September the economy grew by a mere 0.4%, which, while inching the country out of recession, left GDP at the end of the first nine months 0.3% lower than in the same period of last year. What growth there was in QIII resulted mainly from industry expanding by 2.7%, and exports by 0.8%, only just offsetting a decline of 6.7% in agriculture (the only sector significantly above last year in the first nine months).

Current official growth forecasts range from 0.4% (finance ministry) to 0.8% (planning ministry), with the central bank venturing 0.5% — already set to be the lowest in four years. Central bank president Henrique Meirelles believes the economy could grow by at least 3% next year, but says that in order to maintain that rhythm (low in terms of what is needed to create jobs and roll back poverty), Brazil will have to improve its infrastructure.

ARGENTINA | Growth outlook improves. Economy minister Roberto Lavagna says he has been pleasantly surprised by evidence that the Argentine economy will grow this year by 7.3%. He does not expect this rate to be maintained: next year's budget has been calculated on a GDP growth assumption of 4%. `Argentina,' Lavagna said last week, `will be all right in four years' time. No matter how much we may want to shorten the timespan, it won't happen earlier.'

CHILE | Jobless rate shrinks. In August-October Chile's open unemployment rate inched downwards by 0.6 points, to 8.8% — the lowest level for this quarter in the last five years. Labour minister Ricardo Solari says this means the year could end with a rate lower than the projected 8.5%; at least two well-known private economists are expecting it to reach between 7.1% and 7.3% at year-end.  

Finance minister Nicolás Eyzaguirre, however, is projecting a rate of about 8% for the end of next year: he says the only way to bring it down more is with higher economic growth.

Congress resists approving reforms shunned in October; first paramilitary demobilisation raises serious doubts.

For all his continuing high approval rating, President Alvaro Uribe is in trouble on two fronts. First, the extent of his defeat in the 25 October reform referendum [WR-03-42] is being highlighted by the legislature's resistance to approving even a modified version of the reform package. Second, the first major demobilisation of paramilitary fighters has heightened apprehension about the real terms on which this part of the peace process has been agreed.

When a pared-down version of Uribe's reform proposals came before the senate a few days ago, the first vote ended in a draw. Congress president Germán Vargas called another vote, but the opposition senators walked out, and the legislation only attracted 44 votes — seven short of what was needed for passage. This has foiled the plan to have the bill pushed through the lower chamber before the end of the current period of sessions on 16 December. Interior & justice minister Sabas Pretelt de la Vega says the government will try again when the senate reconvenes in March next year.

The `structural reform of the state' bill that the senate failed to approve included nine of the 15 proposals put to the popular vote in October — those that appeared to have attracted most support. So far, only one of the proposals appears to have attracted more than the threshold 6.2m votes (adding those for, against and spoilt) to be taken into consideration: the one that would ban from holding public office anyone convicted of corrupt acts. Even this, more than a month after the event, is subject to an unresolved challenge.

Two others appear to have come close to the threshold: the one eliminating the appointment of alternate office holders in state corporations, and the one capping pensions. Whatever the final verdict on these, the fact that the core reform proposals failed to make the grade has tilted the balance against Uribe — who now must do what he can in the remainder of his single term of office.

A very opaque surrender
On 25 November, the first contingent of paramilitary fighters, 855 members of the Bloque Cacique Nutibara (BCN) that operates in and around Medellí­n, laid down their weapons in a public ceremony marking the beginning of their demobilisation. While the government celebrated the occasion, others highlighted several details that raised questions about the event. The first was that the BCN fighters handed over only about 200 weapons (an assortment of assault rifles, shotguns and pistols) — fewer than one for every four fighters, which in one of the most heavily armed countries in the world does not seem convincing.

Next was the fact that BCN leader Diego Fernando Murillo (aka Don Berna and Adolfo Paz) appeared at the handover ceremony only in a videotape recording played on a giant screen. Murillo is frequently cited in the Colombian press as a drug baron who runs an outfit known as La Oficina (`The Office') from a base in Envigado. AUC leader Carlos Castaño has claimed that his organisation has severed all contact with drug traffickers, but he shared the screen with Murillo at the BCN ceremony.

Murillo's absence from the big event may have to do with the third detail: that the bill offering `alternatives to prison' to demobilised fighters [WR-03-34] is still working its way through congress, and the government has not responded to the demand from paramilitary leaders that they be granted immunity from extradition, or even arrest while negotiating the demobilisation of their organisations. The demobilisation of the BCN is taking place under older legislation, which lacks many of the incentives negotiated with the umbrella paramilitary organisation, Autodefensas Unidas de Colombia (AUC).

A fourth detail is that, according to a string of firsthand reports from Medellí­n — most comprehensively compiled by the newspaper El Colombiano — a number of gangs operating under the wing of the BCN are still very much in evidence in certain districts of Medellí­n. The BCN has been active in 12 districts of Medellí­n and several nearby towns, where it meted out its own brand of vigilante justice.

The city's security director, Isaac Gaviria, says he cannot rule out that some AUC `factions' may still be active in his jurisdiction. His boss, government secretary Jorge León Sánchez, says that the BCN claims that its entire force was the 855 who surrendered their weapons — but adds that he will investigate the reports that say otherwise. The official line in the making is that the gangs still in existence were not actually `part' of the BCN.

`Demobilisation' tally
Defence minister Jorge Alberto Uribe announced on 27 November that with a surrender that had just taken place on the Caribbean coast, the government had achieved the target of reaching 3,000 defections from the illegal armed groups set for the end of this year. This tally clearly does not include the 855 BCN fighters, probably because their demobilisation is not yet deemed complete. A feature to note is that officials have dropped the term `deserter' in favour of `demobilised', which conflates individual defections with the negotiated disbanding of whole groups.

Prior to Minister Uribe's statement, the latest official count put the number of fighters who have laid down their arms so far at 2,282 — of which 1,746 from the Fuerzas Armadas Revolucionarias de Colombia (Farc), 516 from the Ejército de Liberación Nacional (ELN), 627 from the AUC, and 123 from smaller groups. Since President Uribe took office in August last year, 735 fighters have surrendered.

Six ministers resign, while reports surface that associate Vice-President Palacio with alleged drug trafficker César Fernández.

President Lucio Gutiérrez had been hoping to postpone reshuffling his cabinet until the end of the year, when all ministers routinely submit their resignations; in this manner the departures due to the current campaign financing scandal could be subsumed in a broader `oxygenation' which his officials had already been heralding. However, increasing pressure from the scandal, portrayed by the government as yet another plot, has forced him to show that he is taking action right away.

After presidential spokesman Marcelo Cevallos announced that the entire cabinet would resign last week, six resignations materialised — those of: Mauricio Pozo (economy & finance), Carlos Polit (social welfare), Ernesto Gutiérrez (health), Ermel Fiallo (housing), Martha Vallejo (labour) and Ottón Morán (education). This was unpersuasively presented as `a decision, not of the President but of the cabinet.' No explanation was offered as to why the other nine ministers had not resigned as well.

Gutiérrez has been sounding out representatives of political parties on the prospects for a coalition of sorts, but so far there do not appear to have been any takers. On another front, reports surfaced that Vice-President Alfredo Palacio had once proposed suspected drug trafficker César Fernández for an official position (which did not materialise). Unlike Gutiérrez, Palacio readily admitted to knowing Fernández, back in a time when nobody associated him with the drugs trade — but he denied being his friend.

The Vice-President has been summoned to testify before the congressional committee of constitutional affairs on the exact nature of his relationship with Fernández. The head of that committee, Luis Fernando Torres, has said, `The Vice-President could be the buoy that saves the President, or the scapegoat.' Former President Sixto Durán Ballén, under whom Palacio served as health minister, said, `What the government is trying to do is to make Doctor Palacio, another exceptional man, pay the bill.'

Palacio himself, who claims to have warned Gutiérrez that the scandal was being mismanaged, has been speaking darkly about a `conspiracy' against him. The Vice-President is not a member of Gutiérrez's Sociedad Patriótica party (PSP).

The money trail
Another congressional body, the oversight committee, has requested from the banking superintendency details of banking transactions by 64 people linked to the government, in an attempt to sort out the allegations about irregularities in the PSP's campaign funding. The money trail is likely to turn up something: PSP congressman Renán Borbúa (a cousin of the President) has publicly admitted that in some cases receipts for contributions were not issued. This, though, is not the same as confirming the allegations about the PSP having received drug-tainted money.

For the affair to force Gutiérrez out of office, it would have to be proven that he knowingly took money from someone involved in the drugs trade, which means that the allegations against Fernández must be proven first. The original source on the alleged Fernández contribution, said to be a PSP member, claimed that he had warned Gutiérrez against accepting it.

The outcome of Bolivia's political crisis may be more political parties rather than fewer, as initially predicted by many local analysts. Samuel Doria Medina, who three weeks ago left the Movimiento de la Izquierda Revolucionaria (MIR), long his political home, wants to create his own new party, aimed at winning the middle ground between Evo Morales on the left and former President Jorge Quiroga on the right. 

It seems that Quiroga is also thinking about creating a new party as the vehicle for his call to rally a big force against Morales. After touring the country since his return from the US, Quiroga is said to have concluded that his party, Acción Democrática Nacionalista (ADN) is a liability.

The counterpoint to this is that Evo Morales is actively seeking to lose his image as a radical firebrand, and adopt a more statesmanlike persona, committed to preserving democracy. This, some suggest, may reflect the fact that his powerbase among the Chapare coca growers has been eroded by the displacement of the drug crop to other parts of the country.

The debate over `indigenous fundamentalism' has been stirred up in Ecuador by the newspaper El Universo, the biggest in the country, which has picked up incendiary statements by Peruvian novelist and former presidential candidate Mario Vargas Llosa had made at a seminar in Bogotá in early October.

In the indigenous organisations, said Vargas Llosa, there is `a deeply disturbing element that appeals to the lower instincts, the worst instincts, of the individual, like mistrust towards others, towards anyone who is different [...] The indigenous movements of the 1920s, which seemed to have been left in the past, lie behind phenomena like Mr. Evo Morales in Bolivia. We have also seen them operating in Ecuador, and generating real political and social disorder.' The spirit of the tribe, he added, `never disappears, even in those societies that have advanced further along the path of civilisation.'

Unsurprisingly, this triggered an angry response from Ecuadorean indigenous leader Leonidas Iza. `Vargas Llosa's thinking is stuck in the past: he believes that indigenous people should continue to be marginalised.' Former indigenous minister Luis Macas added, `Vargas Llosa is in favour of an exclusive, elitist power, similar to that proposed by US President George Bush, in a unipolar world.'

COLOMBIA | Growth rate inches upward. By end-September the Colombian economy was running 3.31% higher than in the comparable period of 2002, lifted by the 3.97% year-on-year expansion recorded in the third quarter. The latter figure, as President Alvaro Uribe has been repeating, includes the government's guesstimate of the contribution made by drug crops, which, as a result of the massive eradication drive, is reckoned to have depressed total agricultural output. `If drugs hadn't been included,' says Uribe, `[the QIII rate] would be 4% or more.'

The greatest y-o-y improvement in the third quarter was recorded in the extractive sector: 21.5%, largely due to coal. Other well-above-average rates were recorded in construction (9.65%) and financial services (6%). Agriculture was up by 4.24%, manufacturing by 3.4%.

COLOMBIA | Slow improvement on jobs front. Open unemployment in Colombia was 13.6% in October, a smidgen down from the 13.9% recorded in September. The rates for the country's biggest 13 cities, home to 48% of the population, were 15.4% and 16.1% respectively. Underemployment in October was 32.8% countrywide, 33% in the main cities. While these overall figures are not all that impressive, the breakdown of the change that has taken place over the year to October is encouraging: the number of people in work increased by 900,000 at the same time as the number of unemployed shrank by 120,000.

VENEZUELA | Big reduction claimed in unemployment rate. According to President Hugo Chávez , open unemployment in Venezuela had come down to 16.7% at the end of October, after having peaked at 20.7% as a result of the opposition's two-month strike-lockout. This takes the rate back to where it was a year ago, he noted. The improvement has taken place against the backdrop of a 14.7% contraction of the economy in January-September. The latest official figure to be published put the unemployment rate at 17.8% at the end of August.

Move to unseat secretary-general Elba Esther Gordillo as congressional bloc leader for appearing too supportive of Fox's reform proposals.

A new crisis has erupted in the opposition Partido Revolucionario Institucional (PRI) as a result of a rebellion by just over half of its congressmen against their leader, Elba Esther Gordillo, who is also the party's secretary-general. The rebels say they are acting in opposition to Gordillo's support for the government's tax reform proposals; the elbistas say it is a manoeuvre by party president Roberto Madrazo to clear the way for his presidential bid in 2006 — and note that Madrazo had publicly accused Gordillo of agreeing with the government's plan.

Madrazo and Gordillo have long been adversaries, but they had joined forces against a common rival, the so-called `popular' faction of the party that advocates rolling back the `pro-market' policies of the `technocrats'. Most of the 120 congressmen (out of a total of 222) who rebelled against Gordillo last week come from the `popular' ranks.

As things stand right now, the PRI's national political committee has delegated to Madrazo the task of convening a formal meeting to elect a new bloc leader (or `coordinator', as the PRI designates that post). This will take a few days. Gordillo is entitled to run in that contest, though her chances do not look too good, and there are those who say that she should also be ousted from her position as secretary-general of the party.

This does not mean that Gordillo is wholly bereft of support. As leader of the 1m-strong teachers' union, SNTE (which boasts of being the biggest in Latin America), she has a powerbase of her own, which is more than many prominent members of the PRI can claim. Moreover, the divide revealed by last week's rebellion suggests that she could claim the allegiance of at least 100 legislators — enough to threaten that she might make the accusations against her a reality by siding with the government in the vote over the tax reform.

Only rarely has the PRI, in such circumstances, taken matters to the point of actual schism. The usual pattern is compromise. One that has been suggested is to leave Gordillo's deputy, Roberto Campa, as bloc leader in the lower chamber, and Gordillo as secretary-general.

The mood outside
What could conspire against a compromise is that the `popular' camp feels simultaneously constrained and emboldened by the growing public mood against the reforms proposed by the government. This was made manifest in the mass rally staged in Mexico city on 27 November (with an attendance of 150,000 according to the organisers, 80,000 according to the city authorities — in either case one of the biggest on record). 

The event was convened by the electricity workers' union to demonstrate opposition to the privatisation of the power sector — something that nobody is actually proposing. It mushroomed with the participation of rural workers and other unions to become an expression of opposition to all government economic policy.

Though held in the capital, this was not an event of the capital, even less of its mayor, Andrés Manuel López Obrador, of the leftist Partido de la Revolución Democrática (PRD). The huge crowd was drawn from all parts of the country, and the most visible PRD presence was that of López Obrador's predecessor, party founder Cuauhtémoc Cárdenas.

In the wake of the demonstration, several leaders of participating groups floated the possibility of calling a nationwide general strike if the government should go ahead with its reform proposals. Out on the streets, the fine detail of alternatives to these proposals is irrelevant; even explicit promises not to privatise the power sector are disregarded. In this atmosphere, the PRI's `popular' camp is very unlikely to go along with anything that might be portrayed as a disguised version of the government's schemes.

As the first arrest warrant is issued in Acapulco, a key witness to local `dirty war' crimes is found murdered.

Many celebrated the recent supreme court ruling on `disappearances' [WR-03-44] as finally providing an opportunity for Mexico to come to terms with a long-buried past of gross human rights violations. Last week, Mexicans were shocked into realising that some of that past is still very present.

On 25 November a judge in Acapulco issued the first arrest warrant in a `disappearance' case, against the former chief of the judicial police in the state of Guerrero, Isidro Galeana Abarca, for his part in the 1974 abduction of Professor Jacob Nájera Hernández. The very following day one of the witnesses of `dirty war' crimes in the state was found shot dead on a road outside Atoyac de Alvarez. His body showed signs of torture.

The victim, Horacio Barrientos, had been arrested by the army in the 1970s, and, after having been tortured, was taken out to roadblocks to `finger' members and sympathisers of local groups such as the Partido de los Pobres and the Brigada Campesina de Ajusticiamiento. Barrientos, who had later joined Afadem, the association of victims' relatives, was among those who had testified before the special prosecutor for social and political movements of the past, Ignacio Carrillo. Prosecutor Carrillo said after his murder that he had contributed names and details of events that had helped guide investigations into the `dirty war'. Other members of Afadem say that they fear all of those who have filed complaints about `dirty war' crimes are now at risk.

Document reveals atrocities
Two days after Barrientos's murder, Carrillo's office released a document dating back to 1974 recently discovered in the national archive. A memo from the federal security department, DFS (now defunct) provides gruesome details about the practices of security forces under General Salvador Rangel Medina, commander of the army garrison at Acapulco. This included not only torture to obtain information but also execution by forcing prisoners to drink petrol and then setting them alight. The memo also notes that the disfigured bodies of victims left by the roadside caused `unease' among the public. It reveals that these bodies were buried in a common grave in Acapulco — a thread investigators are likely to pursue. Guerrero was perhaps the state hardest hit by repression during the 1970s and 1980s. NGOs say that at least 600 people were made to `disappear'.

Eagerness to show movement, if not results, in the Juárez murder cases [WR-03-46] is turning into a turf war between government agencies — most notably between the government of Chihuahua state and the federal chief prosecutor's office, the PGR. The latter has already claimed jurisdiction over 14 cases, maintaining that they may involve federal crimes.

Last week chief prosecutor Rafael Macedo, at a regular grilling by another two bodies that claim a stake in the affair — the justice and human rights commissions of the chamber of deputies — announced that he was considering taking over another 11 cases, on the same grounds. The cases in the PGR's hands are those in which investigations have suggested links between the murders of women and drug traffickers, people traffickers, pornographers, organ traffickers and satanic sects.

Macedo complains that the state government is less than fully cooperative when it comes to handing over its own findings; the state authorities say the PGR is infringing upon state jurisdiction. Sitting somewhere in between is the new federal commissioner, Guadalupe Morfí­n [WR-03-41], who has been promised full access to the investigations by the state government, but has been barred from seeing the PGR's dossiers on the grounds that she is not a prosecutor.

GROWTH OUTLOOK | OECD sees rate `too slow'. The OECD, the club of `big economies' of which Mexico is the only Latin American member, expects Mexico's economic growth rate this year to be about 1.5%, rising to 3.6% in 2004 and 4.2% in 2005. It says its current long-term growth potential of about 4% is `too slow for a country with low levels of income and productivity and high rates of population growth, and too slow to narrow the gap with other OECD countries.' It should aim for a rate of 6%, says the organisation.

The OECD notes that `the wide-ranging structural reforms of the last fifteen years, including the entry into Nafta, have not yet led to an unambiguous rise in labour productivity growth.' To achieve the needed increase, it says Mexico must overcome several constraints, most notably the poor education and skill level of its workforce, the country's inadequate physical infrastructure and its low level of tax revenues.

EMPLOYMENT | Decline continues in manufacturing. Employment in the manufacturing sector in September was 4.3% lower than a year earlier, pushing the nine-month total down 3.7% year-on-year. The corresponding declines in the maquiladora (assembly) industries were 2.2% and 0.5%. By branch, the nine-month declines were strongest in metal products (-8.5%), apparel (-7.4%) and wood products (-5.9%).

REMITTANCES | Record in September. Remittances by Mexicans working in the US reached US$1.65bn in September, the highest figure for that month since records began to be kept in 1995. This has taken the total in the first nine months to US$9.94bn, 36% more than in the same period of last year — actually, 1.2% more than in the whole of 2002. 

Remittances in January-September, equivalent to 79% of oil export earnings, were Mexico's second source of hard-currency inflows, ahead of tourism and foreign direct investment.

Reprisal for a judge ordering Alemán back into house arrest, a decision which Washington considered politically motivated.

The US has become more deeply embroiled in internal Nicaraguan politics as a result of a judge's decision to send former President Arnoldo Alemán from jail back into house arrest — a decision the US State Department publicly said `appears to have been politically motivated.' Washington then followed up by suspending US$49m in aid to the Nicaraguan judiciary.

On 26 November judge Juana Méndez, invoking Alemán's precarious state of health, ordered him placed under house arrest at his El Chile farm, 26 kilometres south of Managua. Alemán, charged in August 2002 with misuse and diversion of public funds, money-laundering and fraud, had been initially placed under house arrest in December. In August this year judge Méndez ordered him moved to a cell at the headquarters of the DIC, the police's directorate of criminal investigations.

President Enrique Bolaños said this was `a day of mourning for the judiciary', suggesting that this was just the kind of thing that would be prevented by the judicial career bill that he has been promoting as a means of guaranteeing professionalism and fairness in the judiciary. Then the US stepped in. The State Department picked up Bolaños's cue and hinted that the judicial career bill was a condition for Nicaragua's entitlement to debt relief under the HIPC scheme [WR-03-41].

The decisions handed down by judge Méndez, often described as `a Sandinista judge', have not been consistently beneficial to Alemán. A few days ago she turned down his defence's request to dismiss charges on the grounds that in Nicaraguan law, money-laundering is a crime typified as solely linked to drug-trafficking cases. Just before returning Alemán to house arrest she also turned down a defence request for an extension of the deadline for submitting evidence, declaring that the case was now up for sentencing (over which she has no set time limit).

The political angle
The `political manipulation' inferred by the US is based on the fact that, three days before the judge's decision, the Sandinistas had called on Alemán to join them in opposing Washington's interference in Nicaraguan politics. That a political understanding was reached became evident before the week was out, when Sandinistas and the pro-Alemán core of the Partido Liberal Constitucionalista (PLC) introduced a bill postponing the municipal elections due next year, rescheduling them to coincide with the general elections of 2006.

The two blocs also announced plans to reform the electoral law and to introduce a quasi-parliamentarian system of government, curtailing the powers of the presidency. All these pieces of legislation, which involve amending the constitution, require a two-thirds' majority; the Sandinistas plus the PLC comfortably exceed that.

Political motivation has also been discerned in the supreme court's reaction to US intervention in the Alemán case. Particularly incensed by the US communiqué's allusion to the Nicaraguan judiciary as `corrupt and politicised', the court demanded that the State Department and the US embassy in Managua `show the respect and reciprocal treatment that is customary between civilised and democratic nations.' The 16-member court, as a result of an agreement reached last year, is formed by equal numbers of justices appointed by the PLC and the Sandinistas. It is, however, worth noting that the statement on the US intervention was signed by only 10 of the justices.

For all their influence, the Sandinistas and the PLC are not quite holding the government to ransom. After much toing and froing, last week they approved two of the three laws agreed with the IMF to underpin the application for HIPC treatment: one on public indebtedness and one on the régime for the civil service. The third law in the IMF package — the one on next year's budget — is not being held up, but is certain to include amendments to spending allocations introduced by the Sandinistas. The word is out that Bolaños may veto the changes, but if the Sandinista-PLC entente holds, the veto may be overturned.

New twist in Alemán case
The Alemán case is still likely to cause ructions before the sentences are handed down. The Managua state prosecutor, Mayra Paiz, last week unexpectedly filed applications for the charges to be dismissed. Echoing the rejected argument floated by Alemán's defence, Paiz says that a charge of money-laundering is inapplicable to cases that do not deal with the proceeds of drug trafficking. As to the misuse and diversion of public funds, she argues that there is no corpus delicti: no audit has been conducted to determine the amount allegedly siphoned off by Alemán. (The charge sheet produced by the chief prosecutor's office is vague on this, saying that the state lost at least US$10m, but that the full sum could reach US$100m.)

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		29.11.02	21.11.03	28.11.03
Argentina	peso	3.55	2.90	2.99
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.45	7.80	7.81
Brazil	real	3.66	2.92	2.94
Chile	peso	706.00	630.00	623.00
Colombia	peso	2,762.84	2,831.15	2,839.07
Costa Rica	colón	375.77	414.98	415.90
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	21.29	40.95	43.81
Ecuador	dollar	1.00	1.00	1.00
El Salvador	colón	8.75	8.75	8.75
Grenada	EC dollar	2.70	2.70	2.70
Guatemala	quetzal	7.60	8.06	8.09
Honduras	lempira	17.04	17.90	17.90
Mexico	nuevo peso	10.24	11.28	11.46
Nicaragua	córdoba oro	14.59	15.65	15.65
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	7,000.00	6,160.00	6,090.00
Peru	nuevo sol	3.59	3.48	3.48
Uruguay	nuevo peso	28.25	29.65	29.35
Venezuela	bolí­var	1,333.50	1,600.00	1,600.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	August	September	October	Last 12m	Jan-Dec 2002
Argentina	Indec	0.00	0.00	0.60	3.90	41.00
Bolivia	INE	0.64	0.23	1.25	4.35	2.45
Brazil	FGV	0.62	1.05	0.29	13.98	26.41
Chile	INE	0.20	0.20	-0.20	1.20	2.80
Colombia	Dane	0.31	0.22	0.06	6.58	6.99
Costa Rica	DGEC	0.70	0.13	1.17	8.91	9.68
Ecuador	Inec	0.06	0.73	0.01	6.86	9.36
El Salvador	Min.Ec.	0.30	0.10	0.31	2.30	2.80
Guatemala	BCG	0.28	0.42	0.43	5.84	6.33
Honduras	BCH	0.90	0.40	0.40	7.20	8.10
Mexico	Bco.Mx.	-0.07	0.60	0.37	3.96	5.70
Nicaragua	BCN	0.30	0.22	0.39	5.29	3.87
Paraguay	BCP	-0.20	0.20	2.10	9.90	14.60
Peru	INE	0.01	0.56	0.05	1.30	1.52
Uruguay	DGEC	1.16	0.80	0.52	11.14	25.94
Venezuela	BCV	1.30	1.30	1.50	25.70	31.20
US	DOL	0.40	0.30	-0.10	2.00	1.60
Previous: WR-03-46

The stockmarket in figures
Market	Index	21.11.03	28.11.03	Variation (%)
Buenos Aires	Merval	945.02	996.56	5.45
São Paulo	Bovespa	19248.39	21083.97	9.54
Santiago	IPSA	1414.19	1458.34	3.12
Bogotá	IGBC	2230.71	2224.59	-0.27
San José	BCT	12201.32	12102.11	-0.81
Quito & Guayaquil	Interinvest	67.56	67.51	-0.07
Mexico	BMV	8335.12	8554.48	2.63
Lima	ISVBL	2116.22	2151.18	1.65
Caracas	BC	20925.96	21397.36	2.25
Source: Daily market reports.

A week of death threats, attempted assassination, opposition-government clashes and the occupation of OAS premises.

Violence on all fronts has escalated over the past week in Haiti, claiming at least two lives and leaving scores injured in incidents in Cap-Haí¯tien, Gonaí¯ves and Port-au-Prince. The most gruesome was the 26 November discovery in the capital of a severed head, next to a communiqué with death threats against 70 opposition leaders and journalists. That same day members of the opposition Groupe 184 occupied the premises of the OAS, in a gesture intended to secure the release of two of its members, both prominent industrialists, arrested on 14 November.

The next day in northern Cap-Haí¯tien an attempt was made on the life of Jean-Robert Lalane, owner of Radio Maxima and one of the leaders of the Front de l'Opposition du Nord (FRON), which since September has been demonstrating to demand the resignation of President Jean-Bertrand Aristide. 

On 28 November students and members of the Front de Résistance Artibonite (formerly the Armée Cannibale) demonstrated in the central-western city of Gonaí¯ves, commemorating the 1985 killing of three students which triggered the unrest that unseated Jean-Claude Duvalier. They were met with gunfire, which killed a bystander and injured many. A simultaneous rally in the capital was met by a stone-throwing counter-demonstration and police firing their guns into the air. An unknown number of arrests and injuries was reported.

On 27 November Keith Mitchell won — only just — an unprecedented third term as prime minister. The ruling New National Party (NNP) won eight of the 15 seats in the House of Representatives, as against seven for the National Democratic Congress (NDC).

Mitchell portrayed his victory as the result of a vote for `continuity', a description which would have fit the previous election, in 1999, when the NNP took all 15 seats (this was later reduced to 14 when one of its legislators defected to the United Labour Party, which has now been left without representation). It would be far more accurate to says that much of the electorate has swung back to the NDC because Mitchell's management of the economy did not live up to his promises: GDP contracted by 3.4% in 2001 and grew by less than 1% in 2002, while unemployment, which Mitchell had reduced to 14% in his first term, has climbed back up to 21%.

Attention in Grenada will now focus on the release of the delayed report by the Truth and Reconciliation Commission, set up two years ago, on the October 1983 murder of prime minister Maurice Bishop, the culmination of a string of events that triggered the island's invasion by the US.

PANAMA | Improved growth outlook. This week the economy ministry is expected to announce that GDP growth in the third quarter reached 4.1%, and that it is consequently raising its projection for the year as a whole from 2.8% to 4.3%. This outlook is not shared by all. The specialised publication Latin Source puts QIII growth at 3.2%; the Cámara de Comercio and the consulting firm Arden & Price say the rate for the year will be only 2.7%. Cámara de Comercio president Raúl Delvalle notes that growth rates of 3-4% are insufficient to bring down unemployment.

The commerce & industry ministry's investment promotion unit is predicting that foreign investment this year could well exceed US$1bn — after figures for the first half showed a total of US$565m, almost 10 times the level recorded in the same period of 2002. Just under half of the January-June figure was reinvestment by firms operating in the country; the overall increase was largely due to improved performance by general-licence banks, which are classed as foreign investment.

EL SALVADOR | Remittances partly cover trade gap. Salvadorean exports earnings in the first 10 months of the year were up 5.7%, to US$2.64bn, but imports grew more than twice as fast, by 12% to US$4.82bn. This left a deficit of US$2.18bn, which was 78% covered by the remittances made by expatriates, that totalled US$1.72bn. If remittances continue to grow at the 5.7% rate registered up to end-October, they will surpass US$3.2bn this year; if the trade deficit continues to grow at just over 20%, it will reach US$2.6bn by year-end.

JAMAICA | Bauxite-alumina sector perking up. Total bauxite production in the first 10 months of the year was 3.6% up on the same period of 2002, with an upswing in the tail: October output was up 4.9% year-on-year. The 10-month total is the result of a 5.4% increase in alumina production, set against a decline of 0.2% in that of crude bauxite. Development minister Paul Robertson has forecast for the year as a whole a 2.7% increase in crude bauxite and one of 4.6% in alumina, translating into earnings above US$760m.

An old scandal may be coming back to haunt, if not former President Carlos Menem, at least some of his close collaborators. A report by court-appointed experts has concluded that the 1995 explosions that destroyed an arms factory killing seven and leaving more than 300 injured had been set off deliberately.

This is likely to expand the suits for criminal negligence currently underway, by reviving the claims that the explosions were meant to disguise the disappearance of weapons and munitions that had been illegally exported to Ecuador and Croatia. Menem was briefly arrested while the arms-smuggling case was investigated, but was later released for lack of evidence. Other high-ranking officials of his government were also charged in this case.

"Whoever does not see Mexico as a marvellous country would do better to find a fatherland elsewhere."

Carlos Abascal, Mexico's labour minister, remarking on claims that the US still sees Mexico as its `backyard'.


"I'm still dreaming of bathing someday on a Bolivian beach."

Hugo Chávez , President of Venezuela, rubbing in the remark that caused a diplomatic row with Chile.

"How long has Lula been in office? I'd like to see what Lula's situation is in four or five years' time."

José Vicente Rangel, Vice-President of Venezuela, predicting `irrational' opposition to Lula's reforms.

LATIN AMERICAN REGIONAL REPORTS: ANDEAN GROUP - NOW AVAILABLE

This week's regional report looks at the range of political challenges facing the region's governments. In Colombia, the government is still reeling from the failure of the country to support its referendum, called to slash public spending. In Peru, President Alejandro Toledo is facing rising popular disgust with his inept and corruption-ridden administration. In Venezuela, President Hugo Chávez and his opponents have both circulated petitions aimed at forcing recall referendums on their opponents. In Ecuador, the government is trying to face down accusations that the Vice-President took US$30,000 from a suspected drug trafficker and then pushed his benefactor into a big regional job. In Bolivia, the interim President Carlos Mesa is trying to extend the lull which has followed the fall of President Gonzalo Sánchez de Lozada. An annual subscription to Andean Group Report (12 issues) is priced at US$225 (Discounted rates available to academics/NGOs). For details, please call LAN on +44 (0)20 7251 0012 or email: [email protected]

In the latest issue of Latin American Economy & Business

November's Economy & Business takes a detailed look at what happened at the Free Trade Area of the Americas meeting in Miami. We nominate winners and losers and also forecast what is likely to happen next. In addition to our regular detailed coverage of all the economies, we also report on Mexico's renewed, and controversial, privatisation programme. Our commodities coverage focuses on natural gas and projects in both North America and South America. SPECIAL INTRODUCTORY OFFER The regular price of an annual subscription to Latin American Economy & Business is US$765/ £545 (Academic/NGO rate: US$495/ £350), which comprises 12 issues plus quarterly statistical updates and forecasts. However, first-time subscribers to the publication can SAVE 15% on orders received by 22 December 2003. For details, contact [email protected] or call +44 (0)20 7251 0012.

Latin American Weekly Report (Online) ISSN 1741-7422. Published weekly (50 issues a year) by Latin American Newsletters, 61 Old Street, London EC1V 9HW, UK. Telephone +44 (0)20 7251 0012, Fax +44 (0)20 7253 8193, Email: [email protected]. Website: www.latinnews.com EDITOR: Eduardo Crawley, [email protected]. Subscription rates will be sent on request. COPYRIGHT © 2003 in all countries. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, electrical, chemical, mechanical, optical, photocopying, recording or otherwise, without the prior written permission of the publishers. REFERENCES: Back references and cross-references in the current series will be made thus: WR-03-01 will indicate Latin American Weekly Report, Issue No.1, 2003.

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		06.12.02	28.11.03	05.12.03
Argentina	peso	3.50	2.99	2.98
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.46	7.81	7.82
Brazil	real	3.75	2.94	2.93
Chile	peso	706.00	623.00	610.00
Colombia	peso	2,789.22	2,839.07	2,815.37
Costa Rica	colón	376.58	415.90	416.60
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	23.25	43.81	39.98
Ecuador	dollar	1.00	1.00	1.00
El Salvador	colón	8.75	8.75	8.75
Grenada	EC dollar	2.70	2.70	2.70
Guatemala	quetzal	7.59	8.09	8.06
Honduras	lempira	17.06	17.90	17.92
Mexico	nuevo peso	10.33	11.46	11.28
Nicaragua	córdoba oro	14.61	15.65	15.65
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	7,180.00	6,090.00	6,060.00
Peru	nuevo sol	3.55	3.48	3.48
Uruguay	nuevo peso	28.25	29.35	29.60
Venezuela	bolí­var	_	1,600.00	1,600.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	September	October	November	Last 12m	Jan-Dec 2002
Argentina	Indec	0.00	0.60	0.20	3.60	41.00
Bolivia	INE	0.23	1.25	-0.51	3.26	2.45
Brazil	FGV	1.05	0.29	_	13.98	26.41
Chile	INE	0.20	-0.20	-0.30	1.00	2.80
Colombia	Dane	0.22	0.06	_	6.58	6.99
Costa Rica	DGEC	0.13	1.17	1.42	9.33	9.68
Ecuador	Inec	0.73	0.01	0.33	6.48	9.36
El Salvador	Min.Ec.	0.10	0.31	_	2.30	2.80
Guatemala	BCG	0.42	0.43	_	5.84	6.33
Honduras	BCH	0.40	0.40	_	7.20	8.10
Mexico	Bco.Mx.	0.60	0.37	_	3.96	5.70
Nicaragua	BCN	0.22	0.39	_	5.29	3.87
Paraguay	BCP	0.20	2.10	1.30	9.90	14.60
Peru	INE	0.56	0.05	0.17	1.88	1.52
Uruguay	DGEC	0.80	0.52	0.16	10.84	25.94
Venezuela	BCV	1.30	1.50	1.90	26.10	31.20
US	DOL	0.30	-0.10	_	2.00	1.60
Previous: WR-03-47

The stockmarket in figures
Market	Index	28.11.03	05.12.03	Variation (%)
Buenos Aires	Merval	996.56	1027.27	3.08
São Paulo	Bovespa	21083.97	20879.81	-0.97
Santiago	IPSA	1458.34	1485.62	1.87
Bogotá	IGBC	2224.59	2211.63	-0.58
San José	BCT	12102.11	12075.58	-0.22
Quito & Guayaquil	Interinvest	67.51	67.39	-0.18
Mexico	BMV	8554.48	8489.54	-0.76
Lima	ISVBL	2151.18	2246.38	4.43
Caracas	BC	21397.36	22045.13	3.03
Source: Daily market reports.

On one front at least, President Lucio Gutiérrez can breathe more easily. On 2 December, President George Bush's special regional envoy, Otto Reich, turned up in Quito to deliver a public endorsement of Gutiérrez — a sign that, contrary to what happened to Colombian President Ernesto Samper (1976-98), the US has decided to consider him innocent of narco connections unless otherwise proven. Samper had his US visa cancelled and his country `decertified', even though the Colombian congress cleared him of charges of having received narco contributions to his campaign fund.

At home, the outlook is very different. A survey conducted by the polling firm Market shows as many as 46% of respondents calling for Gutiérrez to resign. Those consulted were split almost equally (36:33) between those who believed and disbelieved that Gutiérrez personally had links with drug traffickers, but 57% believe it is highly probable that persons close to the President have such links. It is worth noting that another polling firm, Cedatos, had earlier shown only 22% calling for Gutiérrez to resign, but virtually no commentator in Quito failed to note that Polibio Córdova, until recently director of Cedatos, is now an adviser to Gutiérrez.

Opposition front
A new opposition front has been taking shape, bringing together the left-of-centre Izquierda Democrática (ID) and the farther-left Movimiento Popular Democrático (MPD) with the indigenous Pachakutik and the Coordinadora de Movimientos Sociales, which represents an array of unions and civic organisations. They are intending to stage this week an `occupation of Quito' to protest against `the misgovernment of President Lucio Gutiérrez, who has been corrupt, neoliberal and fascist.'

This coalition has also announced that grassroots consultations will ensue, to decide, on 20 December, whether to launch an `uprising'. The terminology is deliberate: it was an `uprising' and an `occupation of Quito' that propelled Gutiérrez onto the political stage in 2001.

In the meantime, a congressional committee has continued to question witnesses in an attempt to determine the truth behind allegations that the Gutiérrez campaign received a campaign contribution from César Fernández, a former governor of Manabí­ and failed businessman who last October was caught in flagrante delicto by antinarcotics police. The inquiry has been hampered by the fact that all but 3% of the contributions to Gutiérrez's Sociedad Patriótica party (PSP) were made in cash, accompanied only by an affidavit that they were legal.

Also complicating matters is the series of contradictory statements about when the investigation leading to the arrest of César Fernández began. At first the police said it had been going on for almost a year (one source traced its origins to Operation Trifecta in Mexico in July 2002) — which means during last year's electoral campaign. Later statements give it a six-month span, which would mean that it began after Gutiérrez had taken office. The implications are obvious: if the latter is true, there would have been no reason to suspect Fernández's contribution (beyond wondering about his financial recovery).

Signatures have been collected by opposition and pro-government camps to endorse mandate-revocation referendums. There follows now a waiting period, which could last a month, while the electoral council, the CNE, checks whether the signatures are genuine and sufficient in number (that is, at least 20% of the electorate).

It is already clear that it will not be a quiet wait. The opposition has claimed that it collected 3.6m signatures for the referendum on President Hugo Chávez 's permanence in office; the government has counterclaimed that only about 1.9m of these are genuine, the rest fraudulent.

Chávez , as usual in major confrontations, has gone into bluster mode, openly challenging the verdict of the OAS observers that there had been no significant irregularities in the signature collection process, and warning that he will demand evidence that each and every signature collected by the opposition has been verified. This is a blatant attempt to browbeat the CNE, not unlike previous attempts to cow the supreme court, the national assembly and the central bank. If previous experience is anything to go by, Chávez will end up accepting whatever the CNE decides: he has always abided by adverse decisions in the past.

Technically, both sides are in breach of a CNE injunction to refrain from announcing outcomes of the signature collection process until its own official results have been published.

A spot of psephology
Of course, if the opposition, as the government claims, has only managed to collect 1.9m valid signatures, there will be no referendum. But local psephologists have pointed out that Chávez has little to worry about even if all 3.6m signatures collected by the opposition are declared valid.

This is because the mandate revocation process includes a second hurdle: in the referendum itself, an incumbent's mandate can only be revoked if the votes against him exceed those he attracted when first elected. In Chávez 's case, this means that they must exceed 3.75m.

Theoretically, the opposition could try to add another 150,000 to its cause in the three months or so remaining until the referendum is held. However, many commentators say that the opposition has already achieved as much as it can. [Interesting to note: after these calculations began to circulate in Caracas, the pro-opposition media began to say that the anti-Chávez signatures had reached 3.8m.]

The opposition has also collected signatures endorsing referendums against 36 pro-government legislators. The government has done likewise against 37 opposition legislators (of whom 17 are former chavistas). The government majority in the national assembly is so slim that the opposition doesn't need to succeed in more than a third of its referendums to tilt the balance of power decisively in its favour.

Should the CNE's verdict go against the opposition, the formal prospect is for Chávez to remain in power until his current term expires at the end of 2006. He has already stated his intention of seeking reelection and ruling until 2013. Chávez was first elected in 1999, then reelected under the new constitution, which allows him to serve two successive terms, in 2000.