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Under threat of economic sanctions from Caricom, President Jean-Bertrand Aristide has sort of agreed to a number of conditions laid down by that organisation after meeting representatives of the opposition. He has also expressed willingness to a Caricom-sponsored meeting with the opposition in Jamaica. So far, though, there is no word regarding the opposition's sine qua non: Aristide's resignation.

Opposition representatives held a two-day session (21-22 January) in the Bahamas with the heads of government of Jamaica, PJ Patterson, Trinidad, Patrick Manning, and Bahamas, Perry Christie. At its end, the Caricom leaders said they had drawn up a list of conditions they expected Aristide to meet (as Manning put it, `to shape up or ship out'). These were: to disband armed gangs, establish rules for political protest, agree with the opposition on the choice of the next prime minister, instal a new electoral council, and call legislative elections soon. If he did not met these conditions, they said, Caricom would have no choice but to impose economic sanctions.

This message was conveyed personally to Aristide on 25 January by Bahamian prime minister Christie. The meeting appeared to go well. Aristide said that he `shared' the main points on the Caricom list and agreed with the proposal of a meeting in Jamaica. Christie, however, left saying, `I'm looking forward to the implementation of the major steps.' Evans Paul, a leader of the opposition Convergence Démocratique, suggested that the exercise was futile: `We don't want to change the prime minister, we want to change Aristide.'

Looking beyond Aristide
There has been more than a hint that the Caricom leaders, like the Haitian opposition, do not really believe that Aristide will pay much more than lip service to the conditions issuing from the Bahamas meeting. At that encounter at least part of the discussion seemed to take for granted the departure of Aristide: when several opposition leaders said an international police force would be needed, their hosts seemed to agree in principle.

From within the UN, meanwhile, came a gust of scepticism about an electoral solution to the Haitian crisis. In a report released in Geneva on 23 January, UN-appointed human rights expert Louis Joinet said, `An early return to peace through elections seems to be unrealistic for as long as the rule of law is being replaced by a state of impunity [...] The fight against impunity and insecurity are linked to the end of the political crisis [...] With or without Aristide, the real issue is the rule of law and the disappearance of the state.'

Two UN special rapporteurs, Ambeyi Ligabo (freedom of opinion & expression) and Asma Jahangir (extrajudicial, summary or arbitrary executions), also came out with expressions of concern about the situation of human rights in Haiti.

The day before Joinet's report was issued, police used tear gas to break up a protest demonstration by opposition university students while allowing some 20,000 pro-Aristide demonstrators to march through Port-au-Prince. In ensuing days there were shootings in Gonaí¯ves (fortunately victimless), Jacmel (5 injured) and Port-de-Paix (25 injured).

If only by their absence, the indigenous organisations demonstrated on 21 January that without them there is no opposition of any substance in Ecuador. The decision by Conaie, the umbrella indigenous body, and Pachakutik, its political arm, to withdraw from a planned `mobilisation' on an anniversary dear to them and to President Lucio Gutiérrez, left only the students out on the streets.

Luis Villací­s, leader of the Frente Popular (FP), which notionally brings together unions, peasants and students, had announced that his organisation would march in Quito regardless, and that members of the Seguro Social Campesino (a largely indigenous organisation) would set up roadblocks on `some' highways. This, he said, was to be the prelude to a broader `uprising' yet to be coordinated with Conaie.

In the event, apart from a symbolic `funeral' of the institutions of government, it was the students who tried to spearhead the protest action, burning tyres at street corners and confronting the police. After TV broadcasts showed some of the students wielding firearms, they turned on the cameras, injuring two television journalists. Also injured in the mêlée were four policemen.

The government claimed a better response for its celebration, a street party combining political speeches and music, close to the Carondelet palace. The occasion was, of course, the fourth anniversary of the ouster of President Jamil Mahuad — the result of an indigenous uprising and `occupation of Quito' combined with the action of military units commanded by Colonel Lucio Gutiérrez. This provided the launching pad for Gutiérrez's political career, in which his indigenous allies of 2000 were to play little more than the role of vote gatherers.

COLOMBIA | Growth expectation ratcheted up. Better-than-expected performance in some areas — commerce, construction, electricity — has led Colombia's planning department to raise the growth forecast for this year from 3.3% to 3.8%. This is expected to be adopted this week as the official target by the national economic and social council, Conpes, which will most probably set the fiscal deficit projection at 2.5% of GDP. It is reckoned that Colombia's GDP grew by 3.4% in 2003. This year the planners expect above-average performance from industry (+4.6%) and agriculture (+4%).

PERU | Oil raises `traditional' export earnings. Thanks to improved world prices, last year Peru's earnings from exports of oil and derivates rose by 39%. This led to a 15.6% increase in all earnings from traditional exports (to US$6.24bn), only a smidgen more than the 15.2% increase (to US$2.62bn) in those from non-traditional exports, led by chemicals (+22.9%), textiles (+21.4%), fish (+19.8%) and metal products (+18.7%). All told, Peru's export earnings of US$8.85bn were up 15.6% on 2002.

BOLIVIA | Gas boosts export revenues. In the fist 11 months of last year Bolivia's export earnings reached US$1.42bn, or 17.3% more than in the same period of 2002. Much of this was due to gas exports to Brazil, which increased by 43%, to US$425m (almost 30% of all export earnings). Manufactures, which grew by a much more modest 5%, brought in US$706m (just under half of all earnings). Mining exports, once the mainstay of Bolivia's economy, grew by 10%, to US$199.9m.

Panama's special bank auditing team, the Unidad de Análisis Financiero (UAF), has turned up a string of accounts that have attracted the attention of Central American authorities investigating high-level corruption in their countries. Among 392 accounts suspected of being conduits for money laundering, they have found a number linked to two former presidents, Arnoldo Alemán of Nicaragua and Alfonso Portillo of Guatemala.

Dalys Terán, director of the UAF, has ordered the information passed on to the chief prosecutor's office, as she believes there is enough prima-facie evidence to connect the accounts with money laundering. There are 40 different accounts that have been associated with Alemán, jointly holding US$10m. Those linked to Portillo are less numerous (14) but far better endowed: US$50m between them.

Corruption has become a headline issue since the Bush administration announced, days ago, that US visas would be denied to anyone found to have been involved in acts of corruption. This roughly coincided with an article on the subject published in the US magazine Newsweek, which listed former Mexican President Carlos Salinas de Gortari together with Alemán and Portillo as prominent examples of `super corruption' in Latin America.

DOMINICAN REPUBLIC | Power blackouts to spread. Those Dominicans who had been given some respite from power blackouts over recent weeks have been warned that this will not last. The power deficit, currently about 300MW is about to increase as fuel rationing hits some of the generating plants. Moreover, two distributors have announced that they will be introducing `a series of programmed cuts' in order to carry out network repairs. The electricity authority recently announced rate increases ranging from 4% to 8.1% for all those consuming more than 200KWh.

NICARAGUA | Hopes of a mining future. After three years of prospecting, the Administración Nacional de Recursos Geográficos (ADGEO) reports that it has found deposits of titanium and chromium (each holding an estimated 200,000 tonnes, in the south of Siuna municipality, some 485 kilometres northeast of Managua. Siuna has produced gold and silver since the beginning of the 20th century. Titanium nowadays fetches about US$380 an ounce, slightly less than gold. The private firm Nica Gold has already filed for a concession to develop the new deposits.

HONDURAS | Remittances expected to go on growing. A study by various private firms predicts that remittances by Honduran expatriates this year will reach US$1.25bn, or 25% more than in 2003. Remittances, which have become the leading source of hard-currency inflows, reach two out of every five Honduran families, according to the study. Most of the money comes from the US, where about 500,000 Hondurans (7% of the population) have gone to live and work.

COSTA RICA | `Regular' firms boost exports. Costa Rica's trade deficit shrank last year by 21%, to US$1.53bn. This was the result of exports growing almost three times faster than imports: they brought in US$6.09bn, 16% more than in 2002, while imports expanded by 6%, to US$7.62bn. Noteworthy is the fact that the most dynamic exporters were those outside the free zones where the assembly industry is concentrated. Medical appliances and pharmaceuticals were the star performers in 2003.

In a week in which Andrés Manuel López Obrador saw his image take its first real drubbing, his Partido de la Revolución Democrática (PRD) agreed to strike alliances with the ruling Partido Acción Nacional (PAN) in a number of gubernatorial contests to halt or, better, reverse the comeback staged by their common adversary, the Partido Revolucionario Institucional (PRI), in last year's legislative elections [WR-03-26].

The deal, for joint action in the states of Chihuahua, Durango, Oaxaca and Zacatecas (four of the 10 holding elections this year) was struck `in principle' by the leaders of both parties, the PAN's Luis Bravo Mena and the PRD's Leonel Godoy. It must still be ratified by the full leaderships of the two parties, against considerable internal opposition.

PAN secretary-general Manuel Espino has acknowledged that there are `differing opinions regarding the celebration of alliances, not only with the PRD but with any other party, because some believe that this could jeopardise the party's identity.' The PAN's deputy leader in the lower chamber of congress, Germán Martí­nez, has already declared himself `against the PAN coalescing with the PRD in any state.'

On the other side, Mario Saucedo, the PRD's secretary for alliances, says, `It is incongruous to propose alliances with a party whose interests are opposed to those of the PRD: the PAN is a neoliberal party that has aggravated poverty. With this kind of alliance we only sow confusion among the PRD's militants and sympathisers.' One thing that even the most pro-alliance members of both parties rule out is any kind of alliance in the presidential contest of 2006.

AMLO's `chauffeur' woes
The PAN and the PRI have been gleefully exploiting the first major embarrassment suffered by Mexico city mayor López Obrador — the man the polls have been presenting as majority choice for next President — at the hands of the media. This started when the press `revealed' that López Obrador was paying his chauffeur, Nicolás Mollinedo Bastar, the princely salary of M$62,000 (US$5,700) a month. The man in question is the mayoralty's logistics coordinator, with the rank (and pay) of an undersecretary; the canard about his being the mayor's chauffeur came from the fact that he occasionally drove López Obrador to work.

Even after this had been made clear, opposition legislators (and even President Vicente Fox) continued to talk about `the chauffeur'. The press also found out that two relatives of Mollinedo were employed by the city (though apparently not by him) and played that up. One columnist added the suggestion that in the state of Tabasco, Mollinedo `had been linked' to car theft and credit-card cloning. López Obrador has aired his wish that the whole thing should soon blow over, `and if that means that the popularity rating falls from 80% to 30%, so be it.'

By the way, Marta Sahagún was among the 965 (out of 1,410) who passed the 400-item written exam required of postulants to a seat on the ruling PAN's national council [WR-04-03]. Also through: her rival Santiago Creel.

The opposition to President Hugo Chávez is threatening to fall apart before it gets around to taking part in the referendum to revoke Chávez 's mandate. Indeed, it is even showing signs of failing confidence in the validation of the signatures it submitted to the CNE, the electoral council — the factor that will determine whether the referendum is held at all.

On 21 January, José Mejí­as, secretary of Primero Justicia, one of the member parties of the opposition Coordinadora Democrática, formally requested that the CNE should abstain from checking the fingerprints accompanying the signed petitions for the referendum. The reason: the vetting would delay validation of the petitions. This stance contrasts with that of the pro-government camp, which is now demanding only that the CNE check a `significant' number of prints (a climbdown from Chávez 's call for `each and every one' to be verified. CNE officials say they just might manage to digitalise the prints and achieve high-speed verification.

Primero Justicia is also a protagonist of an internal row within the Coordinadora. Together with others like Proyecto Venezuela, La Causa Radical and Alianza Bravo Pueblo, it has been pressing for the opposition alliance to grant top priority to the referendum — even if this means not taking part in the state and municipal elections scheduled for 1 August.

Opposing this view is Acción Democrática (AD), the only one of Venezuela's `traditional' parties to have retained a strong representation in congress and an organised presence across most of the country. Its argument is that not contesting the August elections — whose legality nobody challenges — is tantamount to handing over the country to the chavistas. Its secretary-general, Henry Ramos, also suggests that the would-be boycotters are mainly small parties that do not wish to make the sacrifices involved in negotiating single opposition slates in each jurisdiction.

`It is terrible,' he said last week at the installation of AD's new directorate, `that opposition leaders should want to score an own goal arguing that we must avoid the elections, simply because we can't agree on candidacies.' The new AD leadership has proclaimed that the state and municipal elections are very much among its top priorities for this year.

Meanwhile, opposition legislators have physically prevented the celebration of a session to further tighten rules against filibustering and to impose sanctions on those using violence to disrupt sessions. As in October last year, the pro-government majority is threatening to hold future sessions out on the streets or in other locations.

The rebellion in Tlalnepantla, Morelos, did not end with the reinstatement of the `elected' mayor: under pressure from the federal government and congress, the state is setting up a `dialogue table' to seek a negotiated solution with the two parties to the dispute. This came after interior minister Santiago Creel had confirmed that no sign had been found of the `guerrilla training camps' which followers of the reinstated mayor had reported.

The prospect of guerrilla activity so close to the capital (tiny Morelos lies immediately south of the Federal District) had had great influence on the state governor's decision, backed at federal level, to end the rebellion with a massive deployment of security forces on 14 January.

Tlalnepantla's municipal secretary, Edgar Hernández Espinosa, still sticks to the original story: `There were people from outside the municipality; they wanted to turn it into a guerrilla area.' The security cordon established around Tlalnepantla to detain fleeing rebels and keep outsiders out, is known to have turned back — after the event — two small parties of `undesirables': leaders of the `rebel' municipality of San Salvador Atenco (in the adjoining state of Mexico), and of the strike council of the autonomous university, Unam.

The lower chamber of congress set up a commission with members drawn from five political parties to look into the Tlalnepantla episode and report back by 28 January. Morelos governor Sergio Estrada (of the ruling PAN) was summoned to a meeting with Creel on 21 January; upon his return to Cuernavaca, the state capital, he announced the suspension of all arrest warrants issued against Tlalnepantla rebels and the establishment of the `dialogue table' where representatives of reinstated mayor Elí­as Osorio and traditionally chosen mayor Conrado Pacheco will meet, together with some from the state government, a commission of federal legislators and a representative of the federal interior ministry.

The state government is now trying to persuade hundreds of people who fled Tlalnepantla for the bush or neighbouring towns like Tlayacapán and Tepoztlán that it is safe for them to return home.

Tension in the southern state of Chiapas has been rising as a result of developments unrelated to the Zapatistas. Last week state police were deployed in a series of operations to evict squatters from land they had invaded in areas close to the Guatemalan border. In the biggest of these, near Suchiate, close to 500 police were sent to remove 450 squatters; 24 of these were arrested. The Bloque de Organizaciones Independientes de Chiapas (BOICH), a local peasant organisation, says that since the evictions began, 40 of its members have been arrested.

The state government has given instructions that no evictions are to be conducted in the area controlled by the Zapatistas — despite pressure by a number of cattle ranchers for the recovery of lands wrested from them in 1994.

In a separate, still unclear incident in the Montes Azules Biosphere, 20 houses were reported torched in the community of Nuevo San Rafael, a settlement of Chol people displaced from their homes in the municipality of Sabanilla. Navy and police units have blocked the only access, by river, to the area.

The PGR, the chief prosecutor's office, was the latest government agency to jump on the bandwagon of the Ciudad Juárez femicides. Last week it joined the ranks of those who have been trimming this issue down to size [WR-04-01], announcing that it had so far found no evidence to support one of the more truculent theories being bandied about.

Most of the investigations into the Juárez killings have been conducted by the police forces of Chihuahua state, as murder is not a federal offence. The PGR, however, took over 14 cases after a charge was filed last March that those responsible were organised organ traffickers — organised crime being part of the PGR's remit. Earlier this month, signalling the importance it was attaching to the Juárez cases, the PGR announced that it was appointing a special prosecutor to handle them.

On 23 January, though, the PGR issued a communiqué reporting that the organ-trafficking angle was not proving too fruitful. Of the three people arrested early in the investigation, only one has been formally charge — with giving false information to the police. The PGR also reported that another two of the Juárez women listed as disappeared had turned up alive and well in other parts of the country, where they had gone of their own volition.

EMPLOYMENT | Behind the government spin. Open unemployment in Mexico in December reached 2.96%, down from 3.8% in November. President Vicente Fox pounced upon this and proclaimed that Mexico now has `the lowest rate in Latin America [...] lower even than that of the US.' Labour minister Carlos Abascal, in the same vein, compared Mexico's unemployment rate favourably with a `6.2% world average'.

The seasonally adjusted rate shows a much smaller decline, from 3.97% in November to 3.38% in December. The average for 2003, cited by both Fox and Abascal for their comparisons, was 3.25%, up from 2.71% in 2002 -- and the highest rate in the last six years. The official comparisons are misleading, as Mexico counts as unemployed only those who did not work a single hour in the week of the employment survey.

The official statistical institute, Inegi, does provide a more comprehensive set of data that does not cast Mexico in as favourable a light as official rhetoric. Last year averages show that, apart from the 3.25% considered unemployed, 25.8% of the economically active population worked without social security cover (1.4% more that in 2002) and 11.92% earned less than the US$4 minimum daily wage (7% more than in 2002). In 2003, 34,790 jobs were lost in the formal sector, taking the total lost since Fox took office up to 355,476. The best estimates for recovery this year envisage the creation of some 350,000 formal jobs, which would fall just shy of offsetting the losses of the past few years, but would fail to provide for new entrants to the labour market in that period.

TRADE | Oil price helps the balance. Mexico's trade deficit shrank last year by 29%, to US$5.62bn. This was overwhelmingly attributable to the improvement in world oil prices, which boosted oil export earning by 28.7%: non-oil exports increased by only 0.3%, so total exports earnings rose by 2.8%, to US$165.33bn. Export expansion thus outstripped the increase in imports spending, which was up only 1.3% (as a result of the scant domestic economic activity) to US$171bn.

The recently installed prime minister of Dominica, Roosevelt Skerrit, seems to be following in the footsteps of his predecessor, at least as regards maintaining an independent foreign policy. On 21 January he announced that he intended to strengthen ties with Venezuela, which he described as `an important player in our development.'

This comes after private discussions on 17 January with Venezuelan interior minister Lucas Rincón, who travelled to Roseau to represent President Hugo Chávez at Pierre Charles's funeral. On their agenda was forgiveness for Dominica's US$2m bilateral debt, an oil-supply deal and an air access arrangement.

"I hope all new ministers are aware that there are no ministerial policies in this government, but rather policies of the whole government for the country."

Lula da Silva, President of Brazil, announcing changes in his cabinet.


"What we're focused on is [...] discovering their operations, ending their operations, putting them in jail and taking their assets."

David Gaddis, new DEA chief in Bogotá, on paramilitary groups involved in drug trafficking.


"President Kirchner understands better than anyone what needs to be done."

Roger Noriega, US Assistant Secretary of State for the Western Hemisphere, in a reappraisal of Argentina's president.

In this month's Latin American Security & Strategic Review

The special focus of the latest issue of Latin American Security & Strategic Review is US policy. Starting just before Christmas and lasting right up to the Summit of the Americas in Monterrey on 12-13 January, a combination of public and off-the-record statements, and `deep background' briefings, by US officials gave the impression that Washington was determined to recreate a Cold War atmosphere on a hemispheric scale. The core message was that Cuba, allied with Venezuela, have embarked upon a campaign to destabilise democratic governments in the region and foster anti-US sentiment - and that Argentina and Brazil are suspected of tolerating, maybe even sympathising with, their aims_ For details of how to subscribe to the full 20-page report - or to request a free evaluation - please call Subscriptions on +44 (0)20 7251 0012 or email [email protected]

LATIN AMERICAN REGIONAL REPORT: BRAZIL & SOUTHERN CONE - NOW AVAILABLE

We focus on the cabinet reshuffle in Brazil, which sees the perennial mercenaries, the Partido do Movimento Democrático (PMDB), gain two portfolios, and the controversial appointment of a committed Communist, Aldo Rebelo, to President Lula's cabinet. We look at this in the context of Brazil's recent diplomatic rift with the US on foreign policy, trade and visas. This edition also includes a special feature on land reform in Brazil. Land is likely to be a major political issue this year in Brazil, and if last year is anything to go by, it will involve an escalation of land invasions and accompanying violence. In the Southern Cone, we take a look at relations between Argentina and the US; the bribery scandal that has prompted senate reform in Argentina; the geopolitical significance of Mercosur's trade deal with India, and Bolivia's maritime claim from a Chilean perspective. An annual subscription to Latin American Regional Report: Brazil & Southern Cone (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 Intelligence Research Ltd, 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
		28.02.03	23.01.04	30.01.04
Argentina	peso	3.22	2.92	2.94
Barbados	dollar	2.00	2.00	2.00
Belize	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.59	7.88	7.88
Brazil	real	3.56	2.84	2.93
Chile	peso	751.00	577.00	588.00
Colombia	peso	2,956.78	2,743.11	2,741.10
Costa Rica	colón	385.55	421.26	422.14
Cuba	peso	1.00	1.00	1.00
Dominican Rep.	peso	23.85	54.52	50.55
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	7.89	8.14	8.13
Honduras	lempira	17.26	18.00	18.03
Mexico	nuevo peso	11.12	10.96	11.13
Nicaragua	córdoba oro	14.96	15.77	15.78
Panama	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,900.00	6,260.00	6,220.00
Peru	nuevo sol	3.48	3.47	3.49
Uruguay	nuevo peso	29.50	30.00	29.85
Venezuela	bolí­var	1,600.00	1,600.00	1,600.00
Sources: EFE; Bank of America.

Inflation in the region
Country	Source	October	November	December	Last 12m	Jan-Dec 2002
Argentina	Indec	0.60	0.20	0.20	3.70	41.00
Bolivia	INE	1.25	-0.51	0.90	3.94	2.45
Brazil	FGV	0.29	0.34	0.52	9.30	12.53
Chile	INE	-0.20	-0.30	-0.30	1.10	2.80
Colombia	Dane	0.06	0.35	0.61	6.49	6.99
Costa Rica	DGEC	1.17	1.42	1.25	9.87	9.68
Ecuador	Inec	0.01	0.33	-0.04	6.07	9.36
El Salvador	Min.Ec.	0.31	0.07	0.20	2.50	2.80
Guatemala	BCG	0.43	0.45	0.58	5.85	6.33
Honduras	BCH	0.40	0.70	0.30	7.70	8.10
Mexico	Bco.Mx.	0.37	0.83	0.43	3.98	5.70
Nicaragua	BCN	0.39	0.82	0.76	6.48	3.87
Paraguay	BCP	2.10	1.30	0.90	9.30	14.60
Peru	INE	0.05	0.17	0.56	2.48	1.52
Uruguay	DGEC	0.52	0.16	0.65	10.19	25.94
Venezuela	BCV	1.50	1.90	1.80	27.10	31.20
US	DOL	-0.10	-0.30	0.58	5.85	1.60
Previous: WR-04-01

The stockmarket in figures
Market	Index	23.01.04	30.01.04	Variation (%)
Buenos Aires	Merval	1163.60	1140.81	-1.96
São Paulo	Bovespa	23471.00	21851.44	-6.90
Santiago	IPSA	1453.50	1408.86	-3.07
Bogotá	IGBC	2608.75	2772.50	6.28
San José	BCT	10461.34	10367.45	-0.90
Quito & Guayaquil	Interinvest	68.37	65.65	-3.98
Mexico	BMV	9480.24	9428.77	-0.54
Lima	ISVBL	2800.64	2730.00	-2.52
Caracas	BC	27531.46	27956.14	1.54
Source: Daily market reports.

The Andean region `remains on the brink of collapse, an outcome that would pose a serious threat to the US goal of achieving democracy, prosperity, and security in the hemisphere' — after the US had `over the past two decades […] spent billions of dollars and significant manpower to stem the flow of illegal drugs from the region northward; to assist local security forces in the fight against drugs, terror, and insurgency; and to promote free markets, human rights, and democratic consolidation.' This assessment comes from a hefty study commissioned from an independent commission by the Center for Preventive Action of the US-based Council on Foreign Relations (CFR).*

It says that the democracies of the region are at risk, because on top of the problems common to many developing countries, it faces acute `physical insecurity, due in some countries to ongoing or resurgent violent conflict, and in every country to the lack of state control over significant territory and to porous borders that enable the easy movement of drugs, arms, and conflict.' 

The CFR study, Andes 2020, accepts from the outset that an increase in US funding for the region is unlikely, and notes that the Plan Colombia will have run its course by 2005. `In fact,' it says, `more money may not be the solution to the region's problems.' 

The commission charged with preparing the report set itself the task of working out a strategy for after Plan Colombia. It states quite clearly that it is attempting `to redress what the Commission considers to be a major weakness of current US policy, as embodied in Plan Colombia and the Andean Counterdrug Initiative: too great an emphasis on counternarcotics and security issues, and too little emphasis on complementary, comprehensive, regional strategies.'

Three imperatives
Andes 2020 identifies three `imperatives designed to rectify the limitations of current policy':

-The need to diffuse and more equitably distribute political and economic resources and power in each country.

-Greater participation from the broader international community across the range of diplomatic, political, economic, social, security, and humanitarian issues in the region.

-The recognition that regional problems with regional impact require regional approaches, and that greater cooperation among the Andean countries is essential to successfully tackle shared challenges. 

To that latter end, the study says, US policy can be more effectively organised to recognise the regional dimension of the Andean crisis, rather than sticking to a strictly bilateral, country-by-country approach.

Redressing the imbalance
To correct the overriding emphasis on counternarcotics and counterinsurgency objectives, the report recommends adopting a broader policy agenda, incorporating new priorities. Among these are:

-Political reforms to strengthen the rule of law and consolidate democratic institutions through increased accountability and transparency.

In this area the report identifies three strategic objectives for improving governance and security in the region. The first is major investment of financial and political resources in rural areas, with a commitment to strategic rural land reform. The second is increased engagement by the entire international community across the range of diplomatic, political, economic, and humanitarian issues at play in the region. Third is the development, both within the Andes and by the US and the international community, of regional approaches to regional problems.

-Sustainable rural and border development, including strategic land reform.

In this area the commission recommends the imposition and enforcement of property tax; acceleration of land titling and registry; and the enactment of strategic, market-assisted land reform in an accountable and transparent fashion. It also recommends that the Colombian government - with US assistance - halts the ongoing, coercive land grab by leftwing guerrillas, rightwing paramilitaries, and narcotraffickers, and that Colombia's asset forfeiture laws are effectively applied to ill-gotten land gains now in the hands of Colombia's illegal armed groups and drug traffickers.

-Trade and economic development, including increased access to markets and legitimate economic opportunities.

-A multilateral counterdrug policy that also addresses the issue of demand in consuming countries.

The drugs & security angle
The report does not advocate abandoning the counternarcotics and counterinsurgency elements of US policy towards the region. Rather, it states its belief that `the security environment in Colombia and the Andes is sufficiently vulnerable to merit continued US support', but as `one critical element of a broader policy agenda'.

As regards drugs, the commission proposes `a multilateral, multifaceted approach that combines financial incentives, broad international participation, and shared responsibility on both the supply and demand sides of the problem.' A key feature of this approach is the establishment of `a special development fund for drug cultivating countries, administered by the World Bank and sponsored by the major drug-consuming countries.' Among the other recommendations are the following:

-A coordinated regional assistance strategy by international donors.

-Targeted financial sanctions against narcotraffickers, paramilitaries, guerrillas, and their financial supporters.

-Greater human and financial resources to stem Colombia's humanitarian crisis.

On the security front, the report suggests `raising the current cap on the number of US military and contract personnel permitted to conduct training of Colombian armed forces, thereby accelerating their professionalisation.' This is to be complemented by `revising the current fixed ratio of military-to-civilian personnel, in order to offer the commander of the US Southern Command greater flexibility and discretion in directing the use of military and contract resources.'

Going regional
While advocating a regional rather than bilateral approach to the problems of the Andean region, the commission recognises that in many cases there are common problems where a crossborder approach is not viable. For these cases it makes a series of recommendations for actions that can be taken by individual states but are applicable to all of them. These include:

-Strengthening revenue-generating systems by cracking down on tax evasion, broadening the tax base, and moving toward a more progressive tax structure.

-Working together to negotiate an Andean Free Trade Area until the advent of the Free Trade Area of the Americas (FTAA).

-Forming an Andean customs union with reduced intra-regional tariff barriers.

-Taking greater action against the humanitarian crisis spilling over Colombia's borders.

-Expanding security cooperation between armed forces along border areas.

*Andes 2020: A New Strategy for the Challenges of Colombia and the Region. By an independent commission co-chaired by Daniel W Christman and John G Heimann. Published by the Council on Foreign Relations. Available as pdf from: www.cfr.org [This review has drawn from a copy of the proofs, so some references may not appear in the same form in the final version.]

It was already too late when the Ecuadorean military, last week, launched a series of security operations along the border with Colombia and in Nueva Loja, Sucumbí­os. By then there was no trace of the Farc guerrilla unit that had crossed the border and raided the town of Virgen del Carmen.

What the military sweeps did turn up was a substantial haul of arms, explosives, cocaine paste, precursor drugs, as well as uniforms and propaganda material of the Farc; clear confirmation that the area is still very much in use as a safe haven and staging point for the drugs trade and the Colombian armed groups. If the Farc raid added strength to Ecuadorean claims that Colombian control of the border area is inadequate, it also showed that despite the massive deployment of Ecuadorean troops, Quito is not altogether in control either.

The Farc, apparently aiming at this soft spot in the Uribe administration's military offensive, drove home just how vulnerable the whole area is by blowing up a bridge on the highway that carries much of the traffic between Ecuador and Colombia. This strike was fairly deep into Colombia, close to the capital of Putumayo department, where the Colombian army had appeared to roll back the guerrilla presence after the lifting of the demilitarised zone established during the Pastrana administration.

Refugees
Sucumbí­os is also the entry point for Colombians fleeing the conflict. The bulk of the 11,464 applications for refugee status received last year by the Ecuadorean government were filed in Lago Agrio, Sucumbí­os. Colombians account for 98.5% of these applications. The UN's assistant high commissioner for refugees, Kamel Morjane, arrived last week in Ecuador to review the refugee situation; Lago Agrio figures prominently in his itinerary.

Businessmen from the eastern lowlands of Santa Cruz, who have been sounding an almost secessionist note since the highlands-based protests that led President Gonzalo Sánchez de Lozada to resign last year, have been floating an initiative that they believe would render irrelevant the entire debate over whether to export Bolivia's gas — or for that matter, most other products — through Chile or Peru. They want to send it all eastward, to the Atlantic.

They point out that a pipeline is already in place to pump the gas to the Brazilian coast, making that avenue much cheaper than having to build new ducts over the Andes. The Brazilian government has already suggested that Santos would be an excellent terminal. As to other exports, the lowlanders note that Bolivia enjoys access to the Atlantic from Puerto Busch, in the far southeast, through the Hidroví­a Paraguay-Paraná, the riverine network that leads to the River Plate estuary. Sending cargo that way, they say, would cost about US$20 per tonne less that by either Peruvian or Chilean ports — and that goes for shipping to Pacific destinations as well. All it would take, they argue, is to revive the shelved scheme to connect the Yacuiba-Santa Cruz-Puerto Suárez railway with Puerto Busch, at a cost of about US$65m. Until the recent troubles, the US firm operating the Empresa Ferroviaria Oriental, Genesee & Wyoming, had seemed interested in this project.

PERU | Rethinking revenues. Apart from its purely political woes, the government of President Alejandro Toledo may have to find new ways of raising US$1.5bn over the coming five years. The congressional constitutional affairs committee has voted to recommend the repeal of the decree-law which introduced the tax on financial transactions (ITF), the expected source of those funds. The committee says the decree-law infringes the constitution on five separate counts. Though President Toledo announced days ago that he would launch a `crusade' to get the ITF approved, economy minister Jaime Quijandrí­a said just after the committee vote that he was willing to negotiate with the political parties the introduction of new tax measures to replace the ITF, if it is indeed repealed by the full congress. The government says that the tax, which it wants applied at a rate of 0.15%, is crucial to its objective of lowering the fiscal deficit this year from 1.9% of GDP to 1.4%.

VENEZUELA | Bid to revive trade with Colombia. The government of President Hugo Chávez has launched a campaign to revive bilateral trade with Colombia, which had plummeted as a result of customs regulations and exchange controls introduced by Venezuela, as well as by the slump in Venezuelan demand. An effort is being made to pay overdue debts with Colombian exporters (currency allocations have been authorised for 85% of the US$300m-or-so outstanding), and a modern, round-the-clock customs service is being established on land border crossings. The Venezuelan target is to boost two-way trade to US$3bn this year.

ECUADOR | Cooking gas subsidy to remain untouched. Economy minister Mauricio Pozo has risked the ire of the IMF, but probably ensured a modicum of social and political tranquillity, by announcing last week that there will be no increase this year in the price of cooking gas. As our readers know, attempts to eliminate the cooking gas subsidy, which costs the government about US$200m a year, have led to embarrassing climbdowns by a succession of governments. Pozo's rationale is quite simple: economic and financial performance last year was far better than expected, so the government can afford the outlay. He expects much the same to happen this year: he is projecting a GDP growth rate of about 6% and inflation down to 3-4%.

At least five of the six Central American presidents have come out in the past week in favour of a sweeping reform of the Central American parliament, Parlacen, a body created by regional treaty in 1991. This is partly a reaction to what many see as the abuse of the parliamentary immunity enjoyed by former rulers, who are ex-officio members of Parlacen, but in some cases also a more radical questioning of the body's usefulness.

Parlacen has come in for much bad press recently, focused on three different issues. One is the attempt by former Nicaraguan President Arnoldo Alemán, recently convicted on corruption charges [WR-03-48] to shield himself behind his immunity as a member of Parlacen. Another was the discovery that the Honduran César Dí­az had been using Parlacen premises to traffic in drugs. The third was the successful bid by Parlacen president Mario Facussé, of Honduras, to evade prosecution on a charge of illegal land dealings thanks to his immunity. Facussé, supported by a majority of his peers in Parlacen, has rejected a plea from a dozen Honduran fellow-members to resign or take a leave of absence for the duration of the court case.

One proposal that has been making the rounds is that former presidents should no longer automatically occupy a seat in Parlacen. Another — mirrored by initiatives elsewhere in Latin America — is that parliamentary immunity, in Parlacen or national legislatures, should be trimmed back to its original purpose: to protect legislators from prosecution for what they might say or do in pursuance of their legislative duties.

Cost-effectiveness
Some Central American presidents have taken advantage of the general mood to raise a more fundamental question: is Parlacen worth the expense, in a subregion that has two of the poorest countries in Latin America and where the rest constantly face financial straits?

Honduran President Ricardo Maduro says, `I don't think it is worthwhile to go on paying almost a million dollars a year for so much deficiency.' El Salvador's Francisco Flores argues the case in the broader context of regional integration: `As long as Central America is not completely united in the economic arena, one fails to see the usefulness of the other structures of integration.' Nicaragua's Enrique Bolaños agrees on the need for changes, but counsels caution: `We must sit down to work without precipitation, without causing traumas in each of the countries.' Bluntest of all is Panama's Mireya Moscoso: `That thing [Parlacen] must be eliminated. It is a waste of time and money.'

The regional court too?
Maduro has also been arguing that the Central American court of justice (Corte Centroamericana de Justicia, CCJ) should be reviewed as well. Unlike Parlacen, this body has only three subregional members: El Salvador, Honduras and Nicaragua. Maduro wants these three to assess the CCJ's performance so far, and then to share their conclusions with the other isthmian countries and work out what the area needs in the area of regional judicial institutions. Worth recalling: Maduro's peers recently turned down his proposal to introduce a regionally actionable arrest warrant, sidestepping normal extradition procedures.

Almost three years to the day since President Vicente Fox was claiming success in severing the corrupt links between drug traffickers, police and government officials, a turf war between traffickers in the north of the country has led to the discovery of what a top prosecutor describes as `extreme corruption in law enforcement.'

Over the past month, 70 people have been reported killed in a turf war centred on Sinaloa but with ramifications in the neighbouring states of Baja California, Durango, Chihuahua and Sonora. The main adversaries in this war are the Zambada Garcí­a and Arellano Félix `cartels', whose `soldiers' are reputedly led by Oscar Gamboa Mariscal and Ramón Gallardo Campista, respectively.

Military sources say there are at least 80 gangs of gunmen operating in the hills of Sinaloa, who provide `protection' to local marihuana growers and gangs of robbers. Their actions multiply the impact of the `core' contest between the big drug gangs.

Last week, police pursuing an investigation into drug trafficking in Chihuahua came upon a safe house used by the Carrillo Fuentes `cartel'. In the grounds they found a grave with 11 bodies, later determined to have been the victims of reprisal killings against other drug gangs. The inquiry soon came up with another revelation: that the `enforcers' responsible for the murders were members of an antidrugs unit of the local judicial police. Thirteen of them were arrested.

José Luis Vasconcelos, the prosecutor in charge of organised crime at the federal level, said that this discovery pointed to `extreme corruption in the police force [and] law enforcement'; the police were `openly working with organised crime.' Chief federal prosecutor Rafael Macedo de la Concha was at pains to assure the public that the wave of violence in the north has not `overwhelmed the resources' of his office, the PGR, and law enforcement generally.

Countervailing successes
Macedo was able to point to two successes last week that bolstered his claim. One was the disruption of a drug gang led by Juan Pablo Rojas López, which operated in the Mexico city area and was associated with Colombians apparently `linked' to the Farc guerrillas. The group had been under surveillance since October 2002, he said — but this did not sit well with his other claim that it had been handling 2 tonnes of cocaine per month since last February, which made it `the main supplier to the Mexican cartels.' Sources in Mexico suggest that the PGR wrapped up the investigation earlier than planned in order to have something to offset the negative news from the north.

The other success was actually the work of the army, and was more directly connected with the recent events in the north. On 27 January, the military announced that they had arrested Javier Torres Félix, one of the least known bosses in the Zambada Garcí­a gang — according to defence minister Gerardo Clemente Vega, the chief `enforcer' for that group and the man responsible for recruiting corrupt policemen. Torres has been a target on both sides of the border since the joint US-Mexican `Operation Trifecta' that culminated in July 2003.

How much has changed?
In January 2001, in his first month in office, President Fox travelled to Culiacán, capital of Sinaloa, to declare a `war without quarter' against the drug cartels. At the time he said, `We are making a dent in their interests by disrupting the webs of complicity that have been woven within police corporations and with dishonest government employees.' Currently, Macedo explains the continuing drug-related violence as a byproduct of the government's success: he says that as the authorities corner the gangs into ever narrower spaces, they have no choice but to turn on each other to maintain a base for their traffic.

Whether the successes achieved are lasting is open to question. Apart from the antidrug police turned cartel enforcers in Chihuahua, there was apparent evidence of corruption in the recent murders of a deputy prosecutor in Tijuana, and of two agents of the new federal investigations agency, AFI, in the state of Mexico. Also, a 5 January commando-style jailbreak in Michoacán has been attributed to Los Zetas, the gang of former army officers enlisted as enforcers for the Gulf cartel — another prime example of the pull exerted by drugs money on the antidrug cadres.

The wars between cartels have also been raging for some time. Jesús Blancornelas, the journalist who has specialised in the doings of the Arellano Félix cartel, says that in the past few years these wars have claimed at least 6,000 lives. Sinaloa state prosecutor Oscar González Mendivil says that 70% of all homicides in his jurisdiction are related to turf wars between drug traffickers. Last year he tallied 482 killings that fitted that classification.