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One of the leaders of the protest movement that drove President Gonzalo Sánchez de Lozada to resign last year has announced a new wave of `mobilisations' aimed at `closing down congress' and carrying out `a constitutional reform that will break up the hegemony of the political parties through the convocation of a constituent assembly.'

Roberto de la Cruz, a journalist and leader of the regional union umbrella (Central Obrera Regional) in El Alto, the dormitory city next to La Paz, says that the government of President Carlos Mesa `has not heeded the message of October' — an allusion to the critical month when the people of El Alto, joined by protesters from other parts of the highlands, descended upon the capital and gave Sánchez de Lozada the final push.

He says that the structures of the parties in the previous ruling coalition `remain intact' and that `the President is still Sánchez de Lozada [who] continues to rule by remote control' from his self-imposed exile in the US. His plans will add to an already busy political year, which will include municipal elections and perhaps a referendum on gas exports and election of a constituent assembly.

ECUADOR | Debt squeeze tightens. The latest external debt figures have added urgency to the Ecuadorean government's pleas for some formula that will allow it to ease a servicing burden that is absorbing half the national budget. At the end of October the total external debt stood at US$16.58bn. This represents an increase of 21% since the beginning of the year, and is not only the highest level on record since Ecuador dollarised its economy; it is 18.2% higher than the pre-dollarisation level of 1999.

The main force behind the increase is private borrowing. Of the October total, US$11.44bn is public debt (up from US$11.41bn in January) and US$5.13bn private (up from US$4.82bn in January). In 1999, the public external debt was US$13.75bn, the private one US$2.53bn.

COLOMBIA | New tax reform bid ahead. Just before 2003 ended, the Colombian congress approved the tax legislation introduced by the government to compensate for the failed referendum on a broader structural reform. This package is expected to raise an extra Col$2bn (just over US$715m) in revenues this year. President Alvaro Uribe, however, has not given up on the broader reform. He is planning to set up in February three `mixed' committees with representatives of the executive and congress to seek a formal `understanding between the congress and the [public] powers' to pursue this and other reforms.

PERU | Future in gold. If current estimates prove correct, Peru will have become by end-2003 the world's sixth-biggest producer of gold, with an output of 170 tonnes (10% more than in 2002). Exports of gold are reckoned to have totalled more than US$2bn: 35% more than in 2002 and equivalent to 23.5% of total export earnings.

This news comes on top of the announcement that Gold Fields, South Africa's second-biggest gold-mining firm, has taken a 92% stake in Peru's Sociedad Mira la Cima, which could end up accounting for 3.5% of Gold Fields' total output (with 147,000 ounces of gold and 65m pounds of copper). This is the South African company's first incursion into Latin America.

One prominent group of forecasters, who have been doing the job for years without losing adepts, has warned that this year brings the risk of international conflict, caused by countries `failing to respect territorial boundaries or usurping natural resources.' They also envisage an increase in crime. Overall, the year will be hallmarked by aggressiveness and harshness.

These predictions are included in the first `letter of the year' to be issued by a group of Cuban babalawos, or priests of santerí­a, the widespread syncretistic religion that combines African beliefs with elements of Catholic Christianity.

The custom of issuing a predictive `letter of the year', or oddun, has been traced back to the late nineteenth century in the province of Matanzas. This started out as a gathering of the most senior babalawos, whose word was respected throughout the island. With the passage of time, though, rivalries between different Afro-Cuban groups has given rise to competing `letters'.

The first one off the mark this year was the Consejo Cubano de Sacerdotes Mayores de Ifa, an assemblage of 16 of the most elder babalawos.

The `letter' is also prescriptive. Among this year's recommendations to Cubans is for fathers to use `rigour' in educating their daughters so they do not turn to prostitution, and for everyone generally to be scrupulous in the observance of the law.

Followers of santerí­a are given maxims to follow. This year they include: `The plant that is cut and transplanted returns to its original trunk.' No interpretation was provided.

There were no surprises in the presidential run-off held in Guatemala on 28 December. The electorate didn't expect them, and only 44% of the voters turned up at the polling stations. Businessman Oscar Berger, candidate of the Gran Alianza Nacional (Gana) coalition, won comfortably with 54% of the vote. Needy of outside support in congress, Berger has already invited his rival, Alvaro Colom of the Unidad Nacional de la Esperanza (UNE), to `lend a hand'.

Gana leaders have been in talks with legislators from the left-of-centre UNE and the conservative Partido de Avanzada Nacional (PAN) with a view to producing a consensual legislative agenda. The starting-point is the share-out of offices in the single-chamber congress. The presidency, it has been agreed, will go to someone from UNE.

Gana has 47 seats in the 158-seat congress. If it can add the 32 of UNE and 17 of PAN, it will have a working majority able to push through ordinary legislation but slightly short of the two thirds needed for special laws of constitutional import. The outgoing Frente Republicano Guatemalteco has 43 seats; the remaining 19 are shared out among other opposition parties.

The cabinet
Berger had made it clear that he would recruit his cabinet chiefly from business and `technocratic' circles. The names that have surfaced so far are:

• Foreign affairs: Jorge Briz, former president of the Cámara de Comercio de Guatemala.
• Economy: Marcio Cuevas, head of the association of non-traditional exporters.
• Finance: Marí­a del Cid, economist, formerly at the IMF.
• Agriculture: Alvaro Aguilar, head of an agro-industrial concern.
• Communications: Eduardo Castillo, architect and entrepreneur.
• Health: Marco Tulio Sosa (who held the post under President Alvaro Arzú, 1996-2000).
• Secretary-general of the presidency: Mario Fuentes, lawyer, business adviser and editorialist.
• Press secretary: Eduardo González, banker, campaign manager.

Other names will emerge over the coming week. Retired General Otto Pérez, a congressman-elect for Gana, has been mentioned for a security position, former Vice-President Luis Flores for the presidency of the Fondo de Inversión Social (FIS), and Carlos Vielman for interior.

The man
Berger, 57, is a relative latecomer to politics. Born into a cattle-ranching family, after obtaining a law degree he first devoted himself to administering the businesses and farms he inherited. He ran successfully for mayor of Guatemala city in 1991 and was reelected for a second term, after which, in 1999, he ran for the presidency as the candidate of the Partido de Avanzada Nacional (PAN). He reached the second round, but was defeated by Alfonso Portillo of the FRG.

Though as mayor he earned himself a reputation as a good administrator, his critics fault him for improvising and vacillating when faced with critical decisions. He is also criticised for his lack of oratorial skills, combined with the occasional faux pas — such as his campaign promise to employ Indian women in government house as cooks and hostesses, which attracted charges of racism and social prejudice.

Why did Cuban President Fidel Castro pay a highly secretive visit to Venezuelan President Hugo Chávez just before Christmas? The agenda was not divulged; not even the venue was revealed — and Chávez gave no hint afterwards. Days later, though, a peculiar turn of phrase in a speech by Castro suggested that they might have been discussing the prospect of a big anti-Chávez push by the US.

Alluding to the US government, Castro said in an address to the Cuban national assembly on 27 December, `I hope they don't make a mistake with the Venezuelans. Nowadays you can never tell how much resistance any foreign intervention in Venezuela would encounter in South America.'

Castro had been talking about statements by US presidential envoy Otto Reich a day earlier, in which he placed Venezuela next to Haiti as the country facing `the most serious political situation' in the region. Reich preempted the verification process currently being conducted by the electoral council in Caracas, saying that the opposition had collected `more than 3m, possibly even 4m valid signatures' endorsing a referendum to revoke Chávez 's mandate — and adding that two-thirds of all Venezuelans want Chávez out.

Reich said that the US was very concerned about the continuous reports about the presence of Cuban agents in Venezuela, and cited reports from `many people in Venezuela' that there are `hundreds if not thousands of persons of military age and appearance from Cuba in Venezuela.' Those with long enough memories will find the style reminiscent of Reich's efforts as head of the US office of `public diplomacy' in support of the Contra campaign against the Sandinistas in Nicaragua.

This was happening against the backdrop of reports in the US press of a `growing split' in the Bush administration over how to assess Chávez and how to treat him. In this scenario Reich is listed among the hawks, who see Chávez as a Castroite menace, together with the Assistant Secretary of State for Western Hemisphere Affairs, Roger Noriega, and his deputy, Dan Fisk. Among the opposing `sceptics' is the current US ambassador to Venezuela, Charles Shapiro, whose tour is about to be ended soon, after only two years in Caracas. Also cited in this camp are the US ambassador to the OAS, John Maisto, and a number of unidentified officials at the Pentagon and intelligence agencies.

The one thing on which the two factions reputedly agree is the high degree of Cuban `infiltration' of Venezuelan intelligence and security bodies, which reportedly led to the US embassy in Caracas severing contacts with Disip, the secret police. This is the theme Reich is now making central to his scenario of impending political breakdown in Venezuela.

The nomination saga in the ruling Partido Revolucionario Democrático (PRD) never ceases to spring surprises. The first primary staged by party president Hatuey Decamps, which duly nominated him, has been voided by the electoral authority. Now a date — 18 January — has been set for another primary, in which President Hipólito Mejí­a would face down three rivals. This, however, may not take place as planned.

Mejí­a's three rivals — Milagros Ortiz, Rafael Suberví­ and Emanuel Esquea — have decided that they will use a different route to determine which of them would be the most likely to attract the popular vote. They will accept the verdict of two independent countrywide opinion polls. They will then register the most favoured as the PRD candidate with the electoral board, the JCE.

There is no guarantee that the JCE will accept this nomination. Indeed, if its ruling on Decamps's primary is anything to go by, the probability is that it would be rejected because it does not comply with the PRD statutes.

In theory, Mejí­a could stay the course and run unopposed in the primary called for 18 January. However, this too could be rejected by the JCE, which had approved the earlier convocation by the four aspirants, but may deem the postponement irregular.

By the time this is sorted out, there will be fewer than four months left until election day, 16 May. Local analysts say that the only one of the PRD aspirants with the necessary apparatus to campaign effectively in that timespan is Mejí­a, because he has the advantage of his office. For now, Leonel Fernández, candidate of the Partido de la Liberación Dominicana (PLD) remains well in the lead in the opinion polls.

It looks as if the municipal elections which the Sandinistas had wanted to postpone will go ahead this year as planned, in November. The Partido Liberal Constitucionalista (PLC) has announced that it will resist any new attempt at postponing them, and the necessary funding has been appropriated in this year's budget.

Until well into December the Sandinistas had been insisting that this funding should be reallocated to social spending, and that the municipal elections be held together with the presidential ones in 2006. Their critics said that the `social' argument was just a smokescreen for the Sandinistas' lack of preparedness for the contest.

Just before the end of the year, however, the Sandinistas came up with a set of proposals to reallocate funds from other parts of the budget for their social agenda. This seems to signal that they are resigned to the elections taking place, and are seeking to put the others — the pro-Alemán and pro-Bolaños Liberals — in a position in which they would appear responsible for not making the funds available. In the meantime, it seems likely that the Sandinistas will temporarily side with the pro-Bolaños Liberals to maintain their current 4:3 shareout of posts in the leadership of the national assembly.

Federal prime minister Denzil Douglas is hoping to head off the latest push by the Nevisian government for independence [WR-03-50] by holding round-table talks between the cabinets of the two jurisdictions and `major social partners and key operatives'. He will be pushing his view that the best answer to Nevisian demands is constitutional reform, not secession.

In his New Year message he stated quite clearly that his preference was for both islands to stay together. `At the same time, however,' he said, `I will not subvert the wishes of our brothers and sisters of Nevis and I certainly would not deny Nevisians whether resident at home or even in St. Kitts, or resident abroad, their constitutional right to pursue a destiny of their own choosing.'

Douglas said a wise man pointed out to him over the festive season that if the politicians were to leave the issue of the relationship between the two islands to the people, contentious issues would be resolved without rancour or discord.

CUBA | Growth in 2003 well over target. Economy minister José Luis Rodrí­guez reports that Cuba's GDP grew last year by 2.6%, more than twice the rate achieved in 2002 and well over the target of 1.5% set at the beginning of the year. Rodrí­guez says that if the calculation were to include the services provided gratis by the state, last year's growth rate would have been 3.8%.

Exports were up 14.1% (with high world prices offsetting the decline of ferronickel output) and imports 13.4%, which kept the trade deficit close to target. Tourism revenues increased by 16% as the number of visitors rose by 12.7% (they are spending more) to 1.9m, just shy of the 2m official target.

NICARAGUA | Financial circumstances eased. Central bank president Mario Alonso has noted that with the write-off of 80% of Nicaragua's external debt under the HIPC scheme, due to take place this month, Nicaragua will start saving about US$200m annually in debt servicing. Further relief will come from the renegotiation of the domestic debt with local banks, under which repayment terms have been stretched from one to ten years. Last year domestic interest rates fell by five percentage points.

Alonso has confirmed that Nicaragua's GDP expanded by 2.3% in 2003.

PANAMA | Improved growth outlook. Economy minister Norberto Delgado expects Panama's GDP to grow this year by 4% to 4.5%, `in spite of the fact that we will be in an electoral period.' He says that when the final figures for 2003 are in they will show that the economy has grown by 3.9% to 4.2% — a significant climb from the rates recorded in the previous two years (0.3% in 2001, 0.8% in 2002).

DOMINICAN REPUBLIC | Dollar rate to rise again. The military-led effort to drive down the exchange rate did succeed on paper: by year-end the dollar was being quoted at RD$35 (short of what the government had promised, though within what the IMF had pressed for). However, it was proving almost impossible to conduct transactions at that rate, as dollars had vanished from the market. Next year's budget has quietly been calculated on the assumption that the rate will climb back up to RD$40, a sign that neither the government nor the IMF believe that the current value can be held.

"We'll become the transnational of the poor."

Ví­ctor González, Mexican pharmacist and presidential hopeful, on taking abroad his network of outlets for generic drugs.


"We expect several doctors to be killed so as to end [the protests] for once and for all."

Mario Dupuy, Haiti's communications secretary.


"I doubt that they [the US] have enough doctors to send to Haiti."

Fidel Castro, President of Cuba, on US criticism of Cuban "infiltration" of Venezuela with volunteer doctors.

LATIN AMERICAN REGIONAL REPORTS: ANDEAN GROUP - NOW AVAILABLE

We focus on the corruption charges that have blighted the administration of Peru's President Alejandro Toledo. Two ministers appointed in the December cabinet reshuffle have already been compelled to step down on influence-peddling charges. We also spotlight the fraught relations between Bolivia and Chile over Bolivia's maritime claims, and between Venezuela and Colombia over the counter-insurgency campaign. Elsewhere, Ecuador's President Lucio Gutiérrez prepares for a grand face-off with indigenous groups and social organisations demanding his resignation, and Colombia's government scores a notable success over the guerrillas. We also provide an overview of the economic performances of each Andean nation in 2003. An annual subscription to Latin American Regional Report: Andean Group (12 issues) is priced at US$225 (Discounted rates available to academics/NGOs). For details, please call LAN on +44 (0)20 7251 0012 or email: [email protected]

Latin American Weekly Report (Online) ISSN 1741-7422. Published weekly (50 issues a year) by 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 © 2004 in all countries. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, electrical, chemical, mechanical, optical, photocopying, recording or otherwise, without the prior written permission of the publishers. REFERENCES: Back references and cross-references in the current series will be made thus: WR-04-01 will indicate Latin American Weekly Report, Issue No.1, 2004.

Exchange rates
Local currency per US$1
COUNTRY	CURRENCY	Year ago	Previous	Current
		03.01.03	19.12.03	02.01.04
Argentina	peso	3.36	2.99	2.95
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.51	7.84	7.86
Brazil	real	3.44	2.92	2.87
Chile	peso	716.00	597.00	588.00
Colombia	peso	2,843.42	2,801.96	2,779.08
Costa Rica	colón	379.11	418.26	418.74
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	20.80	35.13	35.00
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	7.83	8.02	8.03
Honduras	lempira	17.12	17.94	17.97
Mexico	nuevo peso	10.48	11.32	11.17
Nicaragua	córdoba oro	14.83	15.70	15.75
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	7,300.00	5,990.00	6,100.00
Peru	nuevo sol	3.53	3.48	3.48
Uruguay	nuevo peso	29.00	29.75	29.80
Venezuela	bolí­var	1,408.50	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	0.34	11.02	26.41
Chile	INE	0.20	-0.20	-0.30	1.00	2.80
Colombia	Dane	0.22	0.06	0.35	6.13	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	0.07	2.59	2.80
Guatemala	BCG	0.42	0.43	0.45	5.84	6.33
Honduras	BCH	0.40	0.40	0.70	7.20	8.10
Mexico	Bco.Mx.	0.60	0.37	0.83	3.98	5.70
Nicaragua	BCN	0.22	0.39	0.82	6.38	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	-0.30	1.80	1.60
Previous: WR-03-50

The stockmarket in figures
Market	Index	26.12.03	02.01.04	Variation (%)
Buenos Aires	Merval	1044.70	1101.51	5.44
São Paulo	Bovespa	21806.57	22444.71	2.93
Santiago	IPSA	1471.92	1484.60	0.86
Bogotá	IGBC	2331.52	2335.98	0.19
San José	BCT	10902.54	10902.54	0.00
Quito & Guayaquil	Interinvest	67.54	67.54	0.00
Mexico	BMV	8632.13	8818.19	2.16
Lima	ISVBL	2378.91	2493.81	4.83
Caracas	BC	22100.65	22203.95	0.47
Source: Daily market reports.

A week before he was due to arrive in Monterrey for the Summit of the Americas, US President George Bush Jr lifted the freeze imposed on the immigration issue after September 2001, unveiling a proposal that would turn illegal immigrants into legal temporary workers with a chance of opting for permanent residence. President Vicente Fox gave the scheme a tepid welcome, noting that it was `below Mexican expectations'. Many editorialists in the US interpreted it as an attempt to woo the Latino vote in the forthcoming US presidential elections.

Historian Lorenzo Meyer, of the Colegio de México, said that the initiative reminded him of the post-WWII braceros programme, under which more than 2m Mexicans entered the US as temporary agricultural workers. An enduring legacy of that scheme, he says, is the unsolved dispute over contributions docked from the braceros' paypackets that were never reimbursed.

The main components of the Bush `temporary worker' scheme are:

• Illegal immigrants already in the US or would-be immigrants abroad are offered the opportunity to apply for a three-year visa, renewable for an unspecified term or number of times. Those abroad pay nothing, but must show they have a job assured (the employer must prove that there are no takers among US nationals). Those in the US must pay a registration fee and prove that they are employed.
• Workers with temporary visas enjoy the same rights as their US peers. They will be free to move to and from their country of origin for the duration of the visa, and to bring over their dependents if they can prove ability to support them. Upon the expiry of their visas they must return home.
• Incentives will be offered to foreign workers to return to their home countries (such as entitlement to collect retirement pay based on the social security contributions in the US).
• The annual issue of green cards will be increased to enable the implementation of this scheme.

Caveat on intent
Pro-immigration critics within the US note that the Bush scheme is so far just a declaration of intent, not a draft bill to be submitted to congress (which must legislate on the introduction of many of its components). Its transformation into a bill — or proposed amendments to bills already introduced — would be seen as confirmation that this goes beyond an electioneering ploy. The only indication in this direction is that Senate majority leader William Frist personally told President Fox, when in Mexico last week, that the Republican legislators would support Bush's scheme.

It is worth recalling that in mid-2003 three Republican legislators (Jeff Flake, Jim Kolbe and John McCain) introduced a bill establishing a temporary-worker régime, which would allow illegal immigrants in the US to apply for a special new visa that would entitle them to obtain a green card, and would-be immigrants to apply for jobs advertised on the Internet.

Worrying details
A fear expressed by many illegal immigrants is that by registering for the new temporary visa they would be laying themselves open to deportation three years on, if the US authorities chose not to renew their permit. `The devil is in the details,' notes Mexico's former foreign minister, Jorge Castañeda, who had sketched the outline of a similar scheme with US National Security Adviser Condoleezza Rice and US Secretary of State Colin Powell back in September 2001, just before the attacks. Another one of those devilish details is the actual increase planned in the number of green cards to be issued annually.

Mexico is the country most interested in any scheme that may better the lot of illegal immigrants to the US: its nationals are reckoned to account for about 60% of all illegal immigrants, and their remittances have become a major source of hard-currency revenues (in January-November 2003 they surpassed US$12bn, which made them Mexico's second-largest inflow of hard currency, after oil).

One Mexican who praises the Bush scheme as `quite reasonable' is Sergio Sarmiento, a much-read columnist in Reforma, who reminded his readers that Mexico's immigration rules, much stricter than those of the US, have been unable to stanch the throughflow of Central Americans on their way to the US. After Mexico, two Central American countries are the main sources of illegal migration to the US: El Salvador, with an estimated 189,000 entrants in the 1990s, and Guatemala, with 144,000.

The leftist Partido de la Revolución Democrática (PRD) has begun to gear up for its March congress, a crucial event on the road to the 2006 presidential elections which is also focused on the most immediate of its challenges: the gubernatorial contests to be held in 10 of Mexico's 31 states, two of which are currently ruled by the PRD. The party is preparing for a mammoth organisational effort, especially in those districts where its share of the vote is low — and a move is afoot to shake off the unwritten power-sharing agreement between internal factions. The PRD will be working to a tight calendar.

As this report is being written, the PRD leadership is wrapping up a three-day meeting in which it has been discussing the reorganisation of the party, the agenda of the March congress, and party policy towards the relatively independent committees that have already begun to campaign for the presidential candidacy of Andrés Manuel López Obrador, the PRD mayor of Mexico city.

The AMLO project
These committees have been spreading out countrywide, moving into areas where the PRD has not been particularly strong but where the polls show López Obrador commanding considerable support. An example is Jalisco state, where in the last elections the PRD attracted 7% of the vote, but López Obrador is picked by 40% as their choice for President. There is much for them to do: in the July 2003 legislative elections the PRD doubled its representation in congress, but mainly on the strength of the Mexico city vote. Countrywide, it attracted only 19% of the vote.

Hence, though in many of the committees behind the Proyecto 2006: López Obrador PRD activists have been present from the start, in a considerable number the party only joined in after independents had set the ball rolling. The committees are planning a meeting for late January to hammer out a joint action plan.

Some of López Obrador's close collaborators are involved in the work of the committees, but AMLO himself is still playing coy about his candidacy. His official stance is that for now he has his plate full with the challenges of governing Mexico city. Needless to say, he has yet to be officially proposed for the PRD's nomination.

Internal (re)organisation
As this take place, the party leadership will be organising about 1,500 `assemblies' of perredistas in as many municipalities with the purpose of `reaching the highest degree of party organisation so as to confront successfully the challenge of winning the 2006 elections.' The assemblies are scheduled to take place in February.

As part and parcel of this effort, the party will be discussing the adoption of new statutes. Pressure for this comes from a group committed to `put an end to the system of quotas imposed by the existing factions and raise again the party's social project.' Their argument is that the internal factions have been far more preoccupied with obtaining slices of power than with building up a more homogeneous party structure. Among those whose name has been associated with this initiative is party co-founder Cuauhtémoc Cárdenas, thrice the PRD's presidential candidate. The move is also said (by its promoters) to be supported by a majority of PRD legislators and governors.

The toll from the confrontation between government and opposition rose again last week, as both sides rejected pleas from outsiders — Caricom and the French and US governments — to seek a negotiated end to the crisis. An interesting development, among several unclear ones, is that the police has been intervening more decisively to protect opposition demonstrators from pro-Aristide mobs.

Three people were killed and about 30 were reported injured in clashes that occurred around a big opposition march. The circumstances of the killings were unclear, but several local press reports spoke of exchanges of gunfire between the police and pro-Aristide activists. Elsewhere in the country reports surfaced of earlier gunfights between the police and members of the Front de Résistance Artibonite (formerly the Armée Cannibale), and in another unclear incident the director of police's northern department, Jean Etienne Jeanty, was shot dead.

US condemnation
The US State Department, however, seemed to have no doubts about what happened. On Thursday, State spokesman Richard Boucher said, `We're condemning the actions of the Haitian government in response to the political demonstrations that occurred January 7 in Port-au-Prince. Some police officers at these demonstrations collaborated with heavily armed hired gangs to attack the demonstrators.'

The following day US Secretary of State Colin Powell, saying that he was `deeply disturbed' by the developments, said, `We are at present pressing President Aristide to take the opportunity presented by the bishops' proposal that would bring some order to the political process and provide a constitutional way forward so that the people of Haiti can express their will. We are encouraging President Aristide and the opposition to take advantage of the bishops' proposal.' As we have reported [WR-03-50], Aristide, who initially ignored the bishops' proposal, recently offered to take it up, but the opposition turned this down.

Later in the week, the two-day strike organised by the opposition, observed mainly in Port-au-Prince and patchily elsewhere, went off without any major violence. Indeed, at the weekend the opposition marchers again applauded the police for keeping the pro-Aristide counter-demonstrators at bay. Demonstrations are scheduled to continue throughout this week, and the situation of Haiti will be one of the matters before the Summit of the Americas.

Lifeline from Pretoria
The beleaguered Jean-Bertrand Aristide has been thrown a lifeline of sorts by South Africa. On 9 December South African foreign minister Nkosazana Dlamini-Zuma announced that several cooperation agreements would be signed with Haiti — one of them providing for the training of the Haitian police. 

South Africa has set aside US$1.5m to help Haiti, at a time when international donors have suspended aid disbursements as a result of Aristide's non-fulfilment of several political commitments. Otherwise, only emergency aid, such as that provided by the World Food Programme, and NGOs like Oxfam and Caritas, is getting through.

Latin Americans are becoming avid watchers of figures on trade with China — some, like the Mexicans, out of concern that China is not only displacing them from their maquila trade with the US but also entering their own markets with low-priced goods, others because they are seeing China grow as a market for their own exports.

Two-way trade is expanding fast. In the first 11 months of 2003 it reached US$24.3bn, or 49.2% more than in the same period of 2002. Gwandong, the Chinese province with the highest GDP, has seen its trade with Latin America increase over the past four years from US$800m to US$3.7bn. On the other side, the country which experienced the greatest expansion in two-way trade last year is Argentina: up 123.8% to US$2.9bn. The countries which trade most with China are Brazil, Mexico, Chile and Argentina, which jointly account for 73% of two-way trade. According to China's trade ministry, the Chinese exports that increased most last year were high-value-added lines such as mechanical and electronic products. China's imports from Latin America are dominated by primary products such as soya and iron ore.

GROWTH | Clashing outlooks. Mexico's growth outlook is `the best for years', according to Everardo Elizondo, deputy governor of the central bank. The reason for his optimism: `The recovery of the US is already a fact, and the most recent indicators we have show that things are doing better than we had assumed.' He provides an example: November exports of manufactures were up 2%, and those of the maquila (assembly) sector, 4% (in both cases, year-on-year). The central bank's growth forecast for this year is 3.5%.

Imef, the institute of finance executives, is much less optimistic. It reckons that growth in 2003 only reached 1.1%, and that this year it will be about 2.5%. This is the lowest prediction so far. The government published a growth assumption of 3.1% in its document on economic policy criteria for this year.

Data just released show that economic activity last October was running 0.5% higher than a year earlier, with manufacturing down 2.4% and agriculture down 6.9% (the latter largely due to adverse weather conditions).

TOURISM | Revenues hit new record. With arrivals totalling 19m and hotel occupancy up 2%, Mexico's revenues from tourism last year reached a record US$9.3bn. Early reports of activity during the year-end season (23 December-3 January) indicate a good start to 2004. Hotel occupancy rates were high, reaching 93% in the Caribbean resorts of Cancún and the Riviera Maya and 92% in Manzanillo, on the Pacific coast.

EMPLOYMENT | Federal government sheds jobs. President Vicente Fox has announced that the federal government will axe 50,000 jobs this year. This will raise to 200,000 the number of federal jobs lost since the beginning of his administration. 

AGRICULTURE | Output increases across the board. Mexico's agricultural production has been increasing since the Fox administration took office in 2000, according to agriculture minister Javier Usabiaga. The rises have taken place across the board: 15.2% in fruit, 8.1% in grains, 4.4% in fishing, 4.1% in livestock. The comparisons are with the previous three-year period, 1998-2000.

It took more than a week of negotiating, but last weekend the ruling Gran Alianza Nacional (Gana) managed to clinch a `governability' pact with the left-of-centre Unidad Nacional de la Esperanza (UNE) and the conservative Partido de Avanzada Nacional (PAN). In tandem with this, Berger committed himself to supporting the international commission due to investigate the `clandestine groups' operating in Guatemala.

The `governability' pact, which is intended to last for two years, will give Berger a comfortable working majority of 96 seats in the 158-seat, single-chamber congress. The agreement stipulates that the legislative priorities will be:

• Promotion of national unity.
• Making public spending transparent and keeping it austere.
• Adjusting the national budget.
• Instituting a `fiscal pact'.
• Political and electoral reform.
• Ensuring compliance with the peace agreements.

These are vague enough to secure the acquiescence of two forces as dissimilar as UNE and PAN, and their detailed content will take some hammering out. The `governability' pact is fragile: only a couple of days before it was signed, UNE's Alvaro Colom was saying that his bloc would retain its independence in congress, and that he would accept no congressional leadership position. The real driving force behind the pact is the shared determination to keep the outgoing Frente Republicano Guatemalteco (FRG) at bay. 

Berger has tried to allay fears that he might downgrade human rights by appointing Frank La Rue, the well known activist who heads the Centro de Acción Legal en Derechos Humanos (CALDH), to head the presidential human rights commission, and by endorsing the signing, on 7 January, of the agreement with the UN to set up the `investigating committee on illegal security corps and clandestine organisations, to be known by the Spanish acronym Ciciacs. 

Completing the team
On 7 January President-elect Oscar Berger completed the appointment of his cabinet. What follows completes (and in a couple of cases amends) the list we anticipated last week (WR-04-01).

• Defence: General César Augusto Méndez.
• National security commission: General Otto Pérez.
• Interior: Arturo Soto, lawyer, former supreme court justice.
• Peace secretary: Ví­ctor Montejo, anthropologist, specialist in indigenous cultures.
• Finance: Antonieta Bonilla, economist, formerly at the IMF and IDB.
• Economic planning: Hugo Beteta, economist, former executive at several transnational firms.
• Energy & mines: Roberto González, industrialist.
• Culture & sport: Manuel Salazar Tetzagüic, indigenous leader.
• Executive secretary of the presidency: Eduardo González, banker, campaign manager.
• Communications secretary: Rosa Marí­a de Frade, businesswoman.
• Presidential commissioner for state reform: Mario Fuentes, lawyer and editorialist.
• Presidential human rights commission: Frank LaRue, rights activist.
  

In the week leading up to the Summit of the Americas, Chilean diplomats launched an all-out effort to try to keep off the agenda Bolivia's renewed demand for an outlet to the sea [WR-03-47]. They claimed to have obtained sufficient support for this, though at times it seemed that the Chilean strategy had not been worked out fully.

Foreign minister Soledad Alvear was given the go-ahead to implement a strategy that had been devised before Christmas. Its aim was to publicise the many efforts Chile had made over the years to reach some form of agreement, short of ceding sovereignty, with Bolivia. While this may have circulated among foreign ministries, it failed to reach the general public through the media.

Instead, the Chilean media unearthed classified position papers prepared by the foreign and defence ministries which suggested that the governments of Bolivia (to overcome its lack of political support at home) and Peru (to counteract President Alejandro Toledo's low popularity rating) might resort to their `cyclical' custom of reviving claims against Chile: access to the sea in Bolivia's case, revision of maritime boundaries in that of Peru.

This did not cast their neighbours in a very flattering light. Bolivia's President Carlos Mesa pitched in with a statement that blamed Chile's stance for last year's political upheaval in his country. Soledad Alvear hotly rejected this, but added that `Chile is available to continue, as it has been doing, the dialogue with Bolivia.' The response from La Paz was to reveal that since as early as Christmas Mesa had been trying to arrange a meeting with Chilean President Ricardo Lagos, without receiving any kind of reply from Santiago [none had materialised right up to the opening of the summit in Monterrey].

Then Alvear tried a different tack. She publicly chided Mesa for trying to make the dispute multilateral. `Bolivia knows full well,' she said, `that the more it tries to enlist other countries, the harder it will be to have a bilateral dialogue. That signal is not good for Bolivia.'

Trilateral approach?
The next step was a statement by President Lagos that appeared to contradict Chile's insistence that the issue was exclusively bilateral. `If one wants to embark on a serious negotiation with Bolivia, it is necessary to start with Peru.' The response from Peruvian prime minister Carlos Ferrero: `Only if Bolivia's mediterranean situation were to be resolved by a cession through Arica [formerly Bolivian territory] would this issue first require an agreement between Chile and Bolivia. Peru's position in this case would, of course, be harmonious and constructive.' Implicit in this is a restatement of a treaty obligation for Bolivia to seek Peru's acquiescence for any solution affecting Tarapacá, the area Peruvians refer to as `the captive province' since its annexation by Chile in the 1879 war.

A blunter riposte came from former UN secretary-general Javier Pérez de Cuéllar, currently Peru's ambassador to France: `It is unacceptable to suggest that if Bolivia has no access to the sea it is because Peru refuses [Moreover] treaties are not eternal; they can be modified.'

Alvear's phone marathon
Foreign ministry sources tried to explain this as a clever move by Lagos to `shift the pressure onto Peru.' They did not explain how success was to be measured in this endeavour. They were more positive about the success of a telephone marathon conducted by Soledad Alvear, seeking to ensure that her peers in the region would not play along with Bolivia at Monterrey. While Alvear herself simply said she had become convinced that the Bolivian issue would `have no place' in the summit, a foreign ministry official told the Chilean press, off the record, that no `relevant' countries `will be tempted to isolate Chile and support the position of a government whose survival is not a certainty.' Needless to say, that remark did not go down well in La Paz, and diplomats elsewhere remarked on its arrogance.

Pierre Charles, prime minister of Dominica, died on 7 January of heart failure, at the age of 49. He is the second premier to have died on the job: his predecessor Roosevelt Douglas did so in 2000. Charles earned himself a reputation for standing up to the US, opposing its 1983 invasion of Grenada and, more recently, urging an end to the embargo against Cuba and criticising US intervention in Afghanistan. In 2003 he adopted a strict austerity policy, slashing public spending by 15% in a bid to straighten out Dominica's finances. Last year he underwent two successive angioplasties, in Trinidad and the US. Charles has been succeeded by Roosevelt Skerrit, also of the Dominica Labour Party, who had been serving as his education & youth affairs minister. At 31, Skerrit is Dominica's youngest prime minister so far. He has reserved for himself the finance & planning portfolio, and retained Charles Savarin, of the Dominica Freedom Party, as minister for tourism, industry & enterprise development.

DOMINICAN REPUBLIC | Dollar-rate repression collapses. Just over a month after the government launched a military-led drive to bring down the dollar rate to RD$30 (on the grounds that the IMF wanted it below RD$40 before it would approve the standby agreement being negotiated), the central bank admitted the futility of the exercise. Bank governor José Lois Malkun said on 7 January, `Let the market decide the rate. That is the policy of the Central Bank, to not intervene in the market under any circumstance.' On the street, though established exchange operators were posting a rate of RD$35, they had no dollars with which to conduct transactions. In the meantime, a black market developed in which the dollar was changing hands at more than RD$40. By 10 January the dollar was trading openly at RD$44 — close to the peak that had prompted to government to intervene.

GUATEMALA | `Modest growth' subject to stability. The incoming government of Oscar Berger has been warned that it will have to preserve stability if it wants to see the economy grow by 2.6% this year. This, said central bank president Lizardo Sosa, means keeping the fiscal deficit below 2% of GDP and inflation contained between 4% and 6%. Last year, when the bank set the same inflation target, the economy grew by 2.1%, slightly short of the 2.4% the bank had initially predicted.

The structure of Guatemala's economy is undergoing considerable change. Last year the export of cheap labour provided, in the form of remittances, the second-largest inflow of hard currency (US$2.07bn, up 30% on 2002). The leading source of hard currency is non-traditional exports, which brought in US$2.37bn.

HONDURAS | Real per-capita growth this year? The Honduran government is predicting that the economy — unless hindered by natural disasters — will grow this year by 3.2% to 3.5%, which means that it would slightly overtake the country's population growth rate of 2.7%. Last year the economy grew by an estimated 2.5%, which translated into a per-capita decline.

CENTRAL AMERICA | Reviving the customs union drive. In February, Panama will host a meeting of Central American tax and customs authorities who will try to come up with the long-delayed blueprint for a harmonised import-revenue collection and administration system. This is the key piece of the projected Central American customs-union scheme, which should have come into effect on 1 January.