All Categories

Paraguay's farmers marched last week through the streets of Asunción to demand that the government take a second look at its package of fiscal and administrative reform legislation — and particularly its intention to extend the scope of the value-added tax to agricultural produce. This, they say, will threaten the survival of small farms and cooperatives.

About 6,000 turned up for the march, drawn from member organisations of the Coordinadora Agrí­cola de Paraguay (CAP), the Asociación de Productores de Soja (APS) and the Confederación Paraguaya de Cooperativas (CPC). CAP president Héctor Cristaldo, who led the highway-blocking rural protests during the government of Luis González Macchi, says that the new tax measures `will penalise 268,000 producers with fewer than 20 hectares and a turnover of less than US$1,500 a year.' The CPC notes that similar norms `finished off more than 4,000 cooperatives in Argentina.'

Olaf von Brandenstein, president of APS, says that farmers across the board are united against the application of the IVA to unprocessed farm produce, and the proposed mechanisms to estimate income and withhold tax liabilities. The organisers of the march hope that they will have made an impression on the congressmen who return from their recess this week, and have the fiscal reform package awaiting their attention.

ARGENTINA | Industrial recovery continues. Industrial activity in December was 3.2% higher than in November and 12% up on a year earlier. Since the trough of the recent crisis, in March 2002, industrial output has increased by 31%. It is worth noting that annual increases are now being calculated from higher baselines than until recently: the monthly industrial index, EMI, has already recovered much of the fall that took place between mid-2001 and early 2002. At present, industrial production is 7% lower than in June 1988, the most recent pre-crisis peak.

ARGENTINA | Import surge signals reactivation. Imports in January reached close to US$1.6bn, about twice as much as a year earlier. Even with exports, at US$2.28bn, running 5% higher than in January 2003, this halved the trade surplus, to US$680m. The import bracket registering the highest rate of increase over the year, 433%, was that of capital goods. Imports of intermediate products, following the upturn in industrial output, rose by 39%; those of consumer goods, by 111%.

BRAZIL | Worse than predicted. Brazil's GDP actually contracted, by 0.2%, last year -- the worst performance since 1992. This translates into a 1.5% shrinkage of per-capita GDP. The main depressing factor was a 3.3% fall in household consumption. Also down were services (-1%) and industry (-0.1%). The latter was the result of an 8.6% fall in construction — bad for jobs — not fully offset by increases in all other industrial subsectors. Unemployment has increased slightly, from 10.9% in December to 11.7% in January. Of the 2.4m jobless, 47.5% are in São Paulo. The central bank, a week after deciding to halt the reduction of interest rates, let it be known that its main worry is inflation, and that `preliminary data for February suggest that inflation this month will also be significantly higher than anticipated.' This has been read as a signal that the rate will be held unchanged at least for another month — which will keep the brakes on reactivation.

"In countries like China they have first-world infrastructure [...] In Mexico we're backward; we need more public resources."

Guillermo Ortiz, governor of the Banco de México


"Let's bet on who will last longer, George W Bush: you in the White House or me in Miraflores Palace."

Hugo Chávez , President of Venezuela.


"One's positive actions today do not erase the past."

Evans Paul, Haitian opposition leader, on some of the armed rebels who helped unseat President Jean-Bertrand Aristide.

LATIN AMERICAN REGIONAL REPORT: ANDEAN GROUP - NOW AVAILABLE

This month's Andean Group report focuses on Venezuela. It looks increasingly likely that there will be no referendum on whether President Hugo Chávez should remain in office. There are two reasons for this. One is that the opposition, almost certainly, did not gather enough valid signatures on the petitions it circulated at the end of November. The other is that the tortuous process of validating the signatures is overrunning. If the referendum is not held before August, there will be no referendum, even if the petitions are valid. Instead, the hardline chavista vice- president, José Rangel, will step up to the presidency. We also look at Venezuela's relations with Guyana, following a visit by President Chávez , and at the state of the economy. Elsewhere, we analyse Peru's cabinet reshuffle and the results of Colombian President Uribe's trip to Europe. 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]

In the latest issue of Latin American Economy & Business

We assess the latest developments in all of the major economies. We also take a detailed look at the decision by Brazil's competition authority, Cade, to unpick Nestlé's takeover of Garoto, a chocolate maker. We examine the way Nestlé is lobbying, and the pressure it can bring to bear, to get the decision overturned. In our commodities coverage we look at the economic effect of the surge in base metal prices on producing countries, principally Chile and Peru. We also analyse the outlook for other key export commodities produced by the region.

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.

Jean-Bertrand Aristide is gone. Nominally in his place, as a constitutional fig-leaf, is former supreme court president Boniface Alexandre. Behind that façade is a foreign military `stabilisation' force and a political opposition that hasn't yet agreed on how to make the transition into government, let alone deal with everyone's biggest problem: how to deal with rebel leader Guy Philippe.

The international media has seen the events in Haiti chiefly through the prism of foreign intervention; first the quest for a political solution by Caricom, then — as armed rebellion changed the nature of the Haitian crisis — the spell of US dithering which ended when France decided, on 25 February, that there was an `immediate' need for a `civilian peace force' and began to seek UN Security Council backing for that initiative. (France's true diplomatic feat was to adapt to Washington's late change of heart and provide just the right amount of face-saving `cover' to allow the US to assume a `leading' role.)

The real reason for intervention was not so much that Haiti might descend into chaos, triggering a migration wave to rival that of the early 1990s, but to prevent the leaders of the armed rebellion from taking office. A political agreement between government and opposition was out of the question because the latter conditioned everything to Aristide's departure. Aristide, for his part, refused to stand down — but was clearly incapable of holding back the rebellion as his police force disintegrated and he was left with little more than his assortment of chimí¨res, the violent gangs of Lavalas `enforcers'.

Intervention opposed
Foreign intervention was not everyone's choice. Moreover, some of those who opposed it were taking a stand on principle (and also in fear of setting a precedent for political crises elsewhere in the region). Explicitly set against removing Aristide from the outset was Caricom. The Rio Group — an assemblage of 17 Latin American countries that grew out of the quest for negotiated solutions to the Central American wars of the 1980s — stated its opposition to such a step on 26 February, just as US Secretary of State Colin Powell was starting to urge Aristide to consider resigning.

Perhaps the best illustration of why intervention fosters apprehension in the region was provided by Venezuelan President Hugo Chávez , when in the face of renewed opposition street protests in his own country, he said, `[I warn] those who pretend to apply to Venezuela the Haitian formula, that Venezuela is not Haiti, and that Chávez is not Aristide.' Hence the renewal of Latin American expressions of support for the institutional formula Venezuela has embarked upon.

This mood has certainly not been dispelled by Aristide's departure, particularly after Aristide has begun to claim that he did not go willingly, but had been `kidnapped' by the US and sent into exile. This the US has vehemently denied, but even some of its friends in Caricom have begun to talk about `grey areas'  that demand clarification. Leaving aside the charged term `kidnapping', there are points where Aristide's and Washington's versions coincide. The message sent by the US to Aristide was that he could not be protected from the rebellion, and that his only option was to leave. A letter of resignation was drafted for him and given to him to sign. He was then flown out of the country and Alexandre was summoned to take over.

All of this may be in the past, but may well return to haunt those involved once the initial elation of régime change fades away. Immediately ahead, in the meantime, lies a formidable challenge.

The constitutional fig-leaf
The first problem is that it will be hard to maintain the constitutional fig-leaf provided by Alexandre's elevation to the presidency. The constitution demands that he be ratified in his position by congress, but there is no congress, since the mandates of the old legislature ran out at a time when the opposition was bent on boycotting any attempt to hold elections.  

The constitution also demands that new elections be held within 90 days, a near-impossible task which entails installing a new electoral authority, purging the electoral rolls, registering parties and candidates, and organising the logistics for voting — all this in the same timespan that has been allotted to the foreign `stabilisation force' to ensure that the situation is safe enough to bring in a UN peace force.

The transition plan prepared by `the international community' envisages the establishment of a first three-member commission, composed of representatives of Aristide's Lavalas movement, the opposition, and the foreign overseers. This commission must in turn select a bigger one which must pick a prime minister and a cabinet, organise a complete overhaul of the police, and disarm both the rebels and the chimí¨res. It must not be forgotten that this plan was accepted only by Aristide, not by the opposition — which explains why the first meetings to set up a new government have been inconclusive. Among other things, there is no great appetite for sharing power with Lavalas.

The Philippe factor
Beyond the formalities there is a new reality, created by the armed rebellion — or rather, by the final phase of the armed rebellion, directed by Guy Philippe and carried out largely by former members of the army that Aristide disbanded, at the urging of the US, in 1995. Though some of the initial moves by the US intervention force appeared to be a race to prevent Philippe from taking power, he made a big show of not even trying. When he and his force drove into Port-au-Prince on 1 March, he did not go to the presidential palace, but instead set up shop in the police headquarters across the road.

This was in keeping with an earlier announcement that the rebellion was over, and that his force would help to maintain public order, then disarm when a `solution' had been agreed. Indeed, small groups of Philippe's force had begun to patrol areas of the capital, together with the police, some time before the first US Marine contingent began to be deployed. He also said that he had no intention to enter politics, as it would not be in Haiti's best interests for `a military man' to do that at this point in time.

Philippe made doubly sure to protect the district of Pétionville, where the leaders of the political opposition were meeting to discuss the formation of a new government. He was granted an audience, and he made only one request: the recreation of the Haitian army.

This was not received unsympathetically by the opposition leaders. André Apaid, leader of the Groupe 184 of business and civic associations, has openly admitted that the opposition owes Philippe a debt. `Without the armed rebellion,' he said on 2 March, `the process would have been longer.' Evans Paul, the former mayor of Port-au-Prince who fronts the umbrella Convergence Démocratique — the party-political opposition — says that one of the transition government's main tasks will be ensuring public safety, and that a commission would be considering the idea of reinstating the army.

While the political opposition to Aristide emphasised that it had nothing to do with the old Armée Cannibale that began the revolt in Gonaí¯ves, and many openly expressed their loathing for Louis-Jodel Chamblain, the former deputy leader of Fraph, a paramilitary group that acted as a death squad during the period of military rule, they have tended to see Philippe in a different light.

Philippe started out in the army (and underwent part of his training in Ecuador), then joined the US-trained police after the disbanding of the military. He rose in the ranks of the police to become chief in Cap Haí¯tien. His sins are to have taken part in two attempts to stage coups against Aristide — the reason for his flight into exile in the neighbouring Dominican Republic.  

The politicians have also noted that under his leadership the rebellion was kept relatively `clean': most of the bloodshed was attributable to the pro-Aristide chimí¨res. Many credit him, rather than the foreign intervention force, with having calmed Port-au-Prince in record time.

Another consideration of a different nature which cannot have eluded the politicians is that Philippe's entry to the capital attracted huge welcoming crowds — larger, some estimate, than any of the politicians could muster — that have continued to mill around his headquarters.

Foreign forces & disarmament
The foreign presence will begin to be felt this week, as the US and French marines spread out from their initial bases (the French about to be reinforced by a contingent of legionnaires from Guyane). Up to now these military forces do not appear to have been ordered to disarm Philippe's men; technically, that should be a decision for the transition government.  

However, Colin Powell has stated that the US would not like to see some of those involved in the armed rebellion re-entering Haitian public life. It remains to be seen if this will translate into specific vetoes, and what kind of distinctions might be made between the various components of the rebel forces. Then there will be the question of whether the `stabilisation force' will be able to stretch itself enough to main public order generally and chase after the rebels who are slated for disarmament.

The last time round, in 1994, it soon became apparent that the new police force the US and others were training would have no choice but to recruit a fair number of its members from among the former military, overruling objections on grounds of their previous records. A similar situation is observable just across the water in Guatemala — and neither case has been deemed a success. It will be interesting to see if any lessons have been learnt in the meantime.

The pro-Aristide camp
One last element in this picture, hardly ever mentioned in analyses of the Haitian crisis, is the pro-Aristide camp, which as recently as a few weeks ago was still able to call out into the streets sizable crowds. This constituency will not vanish overnight. Indeed, given Aristide's insistence that he did not resign but was forced out of office, it may turn belligerent. If the anti-Aristide camp does not find a way to accommodate them in the transition régime, and ensure them the ability to compete for power come the return to elected rule, the cycle might well start all over again.

Paridades
Moneda local por US$1
PAIS -	MONEDA-	Año previo	Previo	Actual
		07.03.03	27.02.04	05.03.04
Argentina	peso	3.19	2.94	2.95
Barbados	dollar	2.00	2.00	2.00
Belice	dollar	2.00	2.00	2.00
Bolivia	boliviano	7.60	7.89	7.91
Brasil	real	3.50	2.93	2.87
Chile	peso	757.00	594.00	595.00
Colombia	peso	2,960.17	2,685.89	2,676.92
Costa Rica	colón	386.31	425.08	425.82
Cuba	peso	1.00	1.00	1.00
Rep. Dominicana	peso	22.99	_	49.27
Ecuador	dollar	1.00	1.00	1.00
El Salvador	colón	8.75	8.75	8.75
Granada	EC dollar	2.70	2.70	2.70
Guatemala	quetzal	7.85	8.12	8.10
Honduras	lempira	17.29	18.09	18.11
México	nuevo peso	11.21	11.14	11.03
Nicaragua	córdoba oro	14.97	15.86	15.88
Panamá	balboa	1.00	1.00	1.00
Paraguay	guaraní­	6,850.00	6,015.00	5,980.00
Perú	nuevo sol	3.48	3.48	3.48
Uruguay	nuevo peso	29.50	29.90	30.00
Venezuela	bolí­var	1,600.00	1,920.00	1,920.00
Fuentes: EFE; Bank of America

Inflación en la región
Paí­s	Fuente	December	January	February	Last 12m	Jan-Dec 2003
Argentina	Indec	0.20	0.40	0.10	2.30	3.70
Bolivia	INE	0.90	0.62	0.19	4.59	3.94
Brasil	FGV	0.52	0.76	_	7.71	12.53
Chile	INE	-0.30	-0.20	0.00	0.00	1.10
Colombia	Dane	0.61	0.89	1.20	6.28	6.49
Costa Rica	DGEC	1.25	1.70	1.29	11.55	9.87
Ecuador	Inec	-0.04	0.41	0.69	3.84	6.07
El Salvador	Min.Ec.	0.20	1.11	_	2.43	2.50
Guatemala	BCG	0.58	1.53	_	6.21	5.85
Honduras	BCH	0.30	0.90	_	6.90	8.10
México	Bco.Mx	0.43	0.62	_	4.20	5.70
Nicaragua	BCN	0.76	1.59	_	7.16	6.48
Paraguay	BCP	0.90	0.30	0.10	3.80	9.30
Perú	INE	0.56	2.19	1.09	3.43	10.19
Uruguay	DGEC	0.65	2.19	0.02	9.07	10.19
Venezuela	BCV	1.80	2.50	1.60	21.90	27.10
EU	DOL	0.58	0.50	_	1.90	1.60
Previo: IL-04-09

Las bolsas de la región en números,
Mercado	Indice	27.02.04	05.03.04	Variation (%)
Buenos Aires	Merval	1183.14	1157.56	-2.16
São Paulo	Bovespa	21755.02	22872.94	5.14
Santiago	IPSA	1543.08	1540.53	-0.17
Bogotá	IGBC	3089.75	3062.73	-0.87
San José	BCT	10288.42	10288.21	0.00
Quito & Guayaquil	Interinvest	68.29	68.35	0.09
México	BMV	9991.80	10195.03	2.03
Lima	ISVBL	2748.11	2770.10	0.80
Caracas	BC	27484.76	28217.94	2.67
Fuente: Informes diarios

Thanks to a manoeuvre carried out with the assistance of its new allies, the ruling Partido dos Trabalhadores (PT) has blocked the establishment of a congressional commission of inquiry (CPI) into its suspect campaign funding practices. By focusing most of the blame on one official who has already been dismissed, and the rest on an alleged opposition smear campaign, the government appears to believe that the matter has been laid to rest. This may not be the case.

More than the required number of senators (a third of the body), signed the petition to establish a CPI. This included two from the PT: Eduardo Suplicy and Serys Shlessarenko. However, the PT and its allies, including the heavyweight Partido do Movimento Democrático Brasileiro (PMDB), came up with a ploy to abort the initiative: they refused to appoint their representatives on the commission. Technically, this could be easily overcome: the president of the senate could appoint members of his choosing. However, senate president José Sarney (a former President of Brazil and current ally of Lula's) has announced that he will not do that.

CPI camp bounces back
This caused only momentary shock among the promoters of what has come to be known as the CPI dos bingos. Minority leader Efraim Moraes, of the Partido da Frente Liberal (PFL), has served notice that he will take the matter before the senate's constitution & justice committee -- and, if needs be, before the federal supreme court. His argument (shared at the other end of the ideological spectrum by Heloí­sa Helena, co-founder of the PT, recently expelled for her opposition to President Lula da Silva's economic policy) is that the establishment of a CPI is a constitutional right, entitlement to which is gained by mustering the endorsement of a third of the chamber.

The custom of party leaders nominating representatives is not constitutionally mandated, it is just intended to help ensure proportionality within the CPI. If the party leaders refuse to appoint anyone, all they are doing is renouncing a customary prerogative. Moreover, the argument continues, the president of the senate lacks the power to refuse a constitutional right.

The government's manoeuvre in the senate has drawn criticism from within its own camp. Senator Alvaro Dias, of the Partido Socialista Brasileiro (PSB), said, `It would have been better for the government to face up to an investigation with transparency. Now there are no longer any doubts that there is a niche of corruption in the fourth floor of the Planalto palace.' His colleague Pedro Simon, of the PMDB, said, `Not even in the period of the military dictatorship did we see so great a spontaneous humiliation before power.'

The ruling party's main justification for opposing the CPI, adopted by the PMDB too, is that the working of the commission would interfere with the normal conduct of business and have an adverse effect on the economy. Senator Jefferson Peres, of the opposition Partido Democrático Trabalhista (PDT), has dug up an article penned four years ago by José Dirceu — now presidential chief of staff and ultimate target of the funding allegations — to attack the Cardoso government for blocking CPIs with much the same rationale.

The PT's script
The government's argument is that there are already sufficient investigations under way — by the federal police, the state prosecutions service, state police forces and the legislature of Rio de Janeiro. It appears to be banking on these inquiries taking their time. Meanwhile, its own public portrayal of the whole business is to confine it to the Diniz affair [WR-04-07], pretending not to notice the older one brought to light by the murder of Celso Daniel [WR-04-05], and similar incidents in different states. A communiqué issued by the PT leadership draws only one lesson from all this: that it should take greater care to vet those appointed to advisory positions in government.

That same communiqué says that what is happening is that the Lula government has become the target of a systematic smear campaign `orchestrated by sectors of the opposition and the media' and designed to destroy the `ethical patrimony' built up by the PT over its 25-year history. The reason for this campaign is the `strategic' October municipal elections: `In order to attract more votes, the opposition parties are seeking to take advantage of the political moment to tarnish the image of the PT in the moral and ethical arenas.' This campaign, says the PT, `is translated into a wave of empty allegations, unfounded rumours and unproven insinuations, and is therefore unacceptable.' Dirceu rounds off the official stance by admitting only to having misjudged Diniz's character: `I made a mistake and I can admit it. But I did nothing illegal. I'm not going to leave the government. I have no connection with this case. I took no part in it, I didn't support it, I had no knowledge [of it].'

The public does not seem convinced of his innocence. A survey published by the Folha de São Paulo shows 67% in favour of him resigning his post.

Political cost
Even without taking into consideration the ultimate outcome of the CPI petition, some think that the government has made a serious mistake by relying on its allies of the centre and right of the political spectrum to carry out the blocking manoeuvre. Political analyst Antônio Vital says it has become a hostage of its allies: `The government showed its weakness and has come to depend even more on parties that have only belatedly become allies, and whose main interest is to increase their bureaucratic quota [meaning their share of government positions].'

Evidence fails to materialise

For a moment last week it looked as if the ruling PT might have to retract its claims about the opposition mounting a campaign based on unfounded allegations. Senator Almeida Lima, of the opposition Partido Democrático Trabalhista (PDT) surprised everyone by announcing that he would produce evidence proving that presidential chief of staff José Dirceu and his congressional pointman, Waldomiro Diniz (the only government casualty of the funding scandal so far), were actually business partners, apart from longtime friends and flatmates. On 2 February, when he took the floor, he came up only with an allusion to a federal police report on shady dealings in the Rio de Janeiro state lottery when Diniz was in charge. That the report existed was no news, and all that could be built upon it was the fact that Dirceu had not taken any action against Diniz after it was published late last year. For that matter, no action was taken either against prominent members of Lula’s first cabinet who have been implicated in episodes similar to the Diniz affair [WR-04-08]. So far, the only thing resembling a `smoking gun' is testimony in the Celso Daniel murder investigation, as yet uncorroborated, that identifies Dirceu as the recipient of slush-fund monies.

Politically damaging videos have kept on turning up in Mexico. Last week it was the turn of two officials of the Mexico city government, one filmed receiving money from a businessman, the other gambling and spending beyond his apparent means in Las Vegas. The presumed real target of these exposés was their boss, city mayor Andrés Manuel López Obrador, of the leftist Partido de la Revolución Democrática (PRD), who appears in the polls as the leading presidential candidate for 2006.

The first videotape showed Gustavo Ponce, the city's finance secretary, making heavy bets in Las Vegas. Accompanying copies of bills and receipts suggested a spending spree beyond his US$6,300 monthly salary. Ponce has been dismissed from his post and has gone into hiding. Mexico city prosecutors say they want to question him about some US$3m that have gone missing. The second tape shows René Bejarano, erstwhile private secretary to López Obrador, currently president of the Mexico city legislative assembly. It shows him receiving US$45,000, ostensibly as a campaign donation, from the businessman Carlos Ahumada, head of a construction firm, owner of two football teams and the newspaper El Independiente. Ahumada had landed several lucrative public works contracts from former Mexico city mayor (and former PRD leader) Rosario Robles. Recently, after auditors discovered irregularities (such as payments for work not done), Ahumada was barred from receiving any more city contracts.

Puzzle for investigators
Bejarano says he was only receiving the money for a PRD candidate, Leticia Robles, and that he assumed it had been duly registered. Robles says she never received the money (and may sue Bejarano for defamation), and the electoral authority says it does not figure in the records filed by the PRD. Moreover, on 20 February Ahumada filed a suit against Mexico city officials for extortion — but did not name names or provide evidence.

Investigators will have a field day sorting this matter out. Bejarano has taken leave of absence and renounced his parliamentary immunity to face any charges that may arise. Rosario Robles has been preventively suspended from the PRD leadership as evidence surfaced that raised questions about her dealings with Ahumada. Mexico city prosecutors say they are investigating Ahumada's connections with three corruption cases.

Roberto Madrazo, president of the opposition Partido Revolucionario Institucional (PRI), has chosen to blame the Fox administration for carrying out `a strategy of media scandal and disrespect for the judiciary.' Careful not to appear exculpating those who have been exposed recently, he says that the PRI has no intention of `defending the indefensible', but equally will not take advantage of the situation `to make firewood from the fallen tree'. 

López Obrador points his finger in the same direction, with a twist. He says the `exposés' are the handiwork of a rightwing cabal, coordinated by the federal executive and by former President Carlos Salinas de Gortari. He says he has information that more videos will surface: `Let's see if the TV programmes tell us which are still to come.'

President Nicanor Duarte's reputation as a determined reformer and anticorruption campaigner took some dents last week when he brought back into his cabinet a man forced out last October for his part in a corruption scandal which is still being investigated. Former interior minister Roberto González has returned to replace defence minister Carlos Romero Pereira, who resigned after a public spat with the military.

González, known as a close associate of the President, had been forced out because he had ordered the handover of an intercepted consignment of smuggled compact disks to its putative owner, who is currently in jail facing prosecution. At the time his departure was portrayed as an eloquent demonstration of Duarte's commitment to stamping out corruption, regardless of who falls. He was not, however, sent into the wilderness. He was appointed to a top post at the Entidad Binacional Yacyretá, which administers the Paraguayan-Argentine hydro complex of that name. Now, presidential chief of staff Aní­bal Saucedo says that González is `a qualified, honest person' and that Duarte had never doubted his honesty: he had only replaced him at the interior ministry because he had committed a `political error'.

The departed defence minister, Carlos Romero Pereira, had irritated many high-ranking military officers — and particularly General José Kanazawa, commander of the armed forces — with his abrasive, outspoken style. Last week he publicly blamed the high command for an explosion at a navy base days earlier. He said, `If the armed forces, as has been demanded many times, had had an up-to-date inventory [of its materiel], the explosion would not have occurred.' Just as publicly, Kanazawa retorted, `The minister can say what he likes: I know what the rules are in the barracks.' Duarte did not back disciplinary action against the general, so Romero Pereira resigned.

The leftist Encuentro Progresista-Frente Amplio (EP-FA), favourite to win the October presidential elections, has an eclectic approach to `reform'. It intends to overhaul the tax and pension systems, but will retain state monopolies in electricity, water supply, telephony and oil. It will also place its policy emphasis on production, not on `trying to turn Uruguay into a financial market.'

These policy pronouncements came last week from senator Rodolfo Nin Novoa, who is the running-mate of Tabaré Vázquez, the presidential aspirant almost certain to sweep the party's internal elections on 27 June.

The rationale for retaining the four big state monopolies (UTE, OSE, Antel and Ancap) is simple: the size of Uruguay's economy does not offer too many opportunities for competition in the provision of basic services. Opening these up to the private sector will only mean, says Nin Novoa, the establishment of private monopolies — `and when these conditions are present, I prefer a public monopoly to a private one.'

On the tax front, the emphasis will be on `taxing income and not the level of activity or consumption, as at present.' Implementation, he says, will depend on the conditions prevailing when the new government takes office in March 2005.

Things are not looking too good for conservative congresswoman Marí­a Pí­a Guzmán, hailed as a heroine by defenders of women's and children's welfare (and reviled by many of her fellow politicians) for having proclaimed to the world that several legislators were involved in a paedophile ring whose discovery was making headlines. Publication last week of testimony from the investigation shows Guzmán admitting to have had little more than rumours to back her allegations.

Guzmán, of the conservative Renovación Nacional (RN), made her first allegations last October, weeks after the arrest of businessman Claudio Spiniak on charges of running a child prostitution ring. She implicated two legislators of the rightwing opposition and one Christian Democrat in the ring — on the strength of one phone call, which her interlocutor has said was about rumours, not proven facts.

Since then Guzmán has pointed publicly, but not consistently, to the involvement of up to 10 people, between politicians and entertainment `celebrities'. Most recently she had narrowed the field down to two senators of the Unión Demócrata Independiente (UDI), Jovino Novoa and Carlos Bombal. They are seeking to sue her for defamation; the prosecutor in charge of the case has said he is preparing to seek the lifting of her parliamentary immunity. The scandal has led to much acrimony between the two big opposition parties, RN and UDI.

ARGENTINA | Exports sustaining auto industry. Production of motor vehicles in Argentina in February was up 17.6% on the previous month (and 42.8% on a year earlier). This expansion, however, is being sustained mainly by exports, up 42.6% in the month, to 10,250 units (equivalent to 72% of what was produced in the month). This said, in the first two months of this year exports were 6.9% lower than in the same period of 2003. 

ARGENTINA | Oil down, gas up. Oil production last year reached 43.1m cubic metres, a 2.3% decline on 2002. Exports of oil totalled 113.3m cu m, down 15%. 
Contrasting with this, gas production increased by 10.5%, to 50.7bn cu m, and exports by 15%, to 6.75bn cu m. [One cubic metre of oil equals 6.29 barrels.]

BRAZIL | Car production & sales down. Car production in the first two months of the year was 4.5% lower than in the same period of 2003; sales (at home and abroad) were down 7.9%. Export earnings, though, were up by 53% on 2003. The car manufacturers' association, Anfavea, expects exports to save the day this year. Indeed, it has raised its export-earnings forecast from US$5.8bn to US$6bn. The industry is using only 57% of installed capacity.

BRAZIL | High hopes for farm sector. This year's harvest of grains, legumes and oilseeds is expected to reach 132.9m tonnes, a new record 8% higher than last year's mark, according to the official statistical institute, Ibge. Production of soya will increase by 44.3%, to 58.9mt. Cotton output is expected to rise by 34%.

CHILE | Foreign investment slumps. Foreign investment in Chile last year totalled US$2.46bn, 35.5% less that in 2002 and the lowest level since 1993. Mining attracted 30% of the total -- the biggest sectoral slice. Worth noting: the figure for 2002 was much influenced by the sale of the Disputada mine, which accounted for 29% of the annual total (and ended up being repatriated).

Exempting some Mexican visitors to the US from being fingerprinted and photographed was intended as the tangible achievement of the Fox-Bush patching-up meeting at the latter's ranch on 5-6 March. The impact, however, was somewhat deadened by two successive retreats by the US security establishment.

The idea was to grant this exemption to holders of the so-called `laser' visas: Mexicans who have undergone background vetting and intend to spend no more than 72 hours in the US, straying no further than 40 kilometres from the border in Texas, California and New Mexico, or 120km in Arizona. It was to have been announced before a congressional committee on the day of Fox's arrival, by Asa Hutchinson, undersecretary of Homeland Security for border & transportation. At the last minute, though, Hutchinson got the message that some security problems had yet to be sorted out, so all he was able to say was that the initiative was under consideration.

These appeared to have been overcome during the presidential encounter. On 6 March at the press conference in Bush's Crawford ranch, Fox said, `We have received with great pleasure the news [of the exemption] which is now confirmed and will come into effect from today. With this measure the photograph and fingerprint are no longer required for this limited three-day crossing.' Bush was vaguer about this, saying only that Fox had raised the issue of the border-crossing cards and the professional visas, and that this was a sign that `progress' was being made.

The reason for Bush's equivocation soon became apparent. At the White House, Sean McCormack, spokesman for the National Security Council, admitted that the initiative was not yet ready for implementation. `We are committed to it,' he said, `but we still have to solve some of the final details.'

OIL & GAS | Pemex gushes over new record. Last week the state oil company Pemex reported that its net earnings of hard currency last year had come close to US$15bn, the highest such figure since 1985. Much of this was due to improved world oil prices, but an 8% increase in export volume, to 1.84m barrels per day, also played an important part. Production of oil reached 3.37m bpd, the highest level ever.

[Pemex's exports actually brought in about US$17bn, but the company had to spend some US$2bn on imports of fuels needed to cover about 25% of domestic consumption.]

There was also good news on the natural gas front. Production reached 4.5bn cubic feet per day, reversing the downward trend of the previous four years. Also, 41 new deposits were discovered, raising the rate of reserves replenishment to 45%, way above the 25% of the past decade.

MERCHANT MARINE | Investment way below requirements. This year about US$150m will be invested by Mexico to acquire 10 new merchant ships. This does not even begin to cover the needs of a merchant marine whose 280 ships have an average age of 25 years (far higher than the optimum of 15-20 years). According to Javier Villegas, president of Cameintram, the maritime transport chamber, the merchant marine would need about US$1bn to modernise its fleet.

The leading client of Mexico's merchant marine, by the way, is Pemex.

As this issue is being completed, the `committee of wise men' selected last week will be unveiling the name of Haiti's new interim prime minister. This is happening against the backdrop of a violent reminder that the pro-Aristide camp is still a force to be reckoned with — all the more now that Jean-Bertrand Aristide has called upon them to mount `peaceful resistance' against `the occupation'. Meanwhile, rebel leader Guy Philippe continues to command attention.

On 7 March, the largest ever demonstration of the anti-Aristide camp in Port-au-Prince was broken up when snipers, assumed to belong to pro-Aristide chimí¨res, opened fire on the crowd, killing four and injuring a score. This marked the first occasion on which US Marines became engaged in a firefight, responding to the attack (which did not prevent them, and their French counterparts, from coming under heavy criticism for having failed to ensure the safety of the capital's downtown area).

The Guy Philippe factor
Prominent among the marchers had been rebel leader Guy Philippe, who was also highly visible in media coverage of the aftermath, visiting the injured and comforting the relatives of the dead. Philippe had been very much in the news throughout the week, as he and the occupation forces sought to position themselves vis-í -vis each other.

Under US pressure, Philippe withdrew from the police building where he had set up his headquarters, and scaled down the participation of his forces in security patrols. He then announced that his forces would disarm — only to follow that up with a qualifier: that this would happen after the chimí¨res had downed their weapons.

Neither the US (on the ground and in Washington) nor the international press appeared capable or willing to make any distinctions between the various strands of the rebel forces. Thus, revenge killings by former chimí¨res were lumped together with the reported fears of the return of the death squads under Louis Jodel Chamblain, and with Philippe's manoeuvres to reestablish the Haitian army (with himself at its head).

At one point the visiting chief of the US Southern Command, General James Hill, told the press that special forces were out searching for Philippe, `looking for him to lay down his arms.' Hill pointedly added, `There is no need for a Haitian army. I was here when President Aristide disbanded it, and that was the correct thing to do at the time.' It is US policy to seek the disbanding of conventional armies throughout the Caribbean Basin, and their replacement by highly mobile forces with police functions.

Roger Noriega, the US Assistant Secretary of State for the Western Hemisphere, told members of Congress in Washington, `[Philippe] is not in control of anything but a ragtag band of people [...] I think he will probably want to make himself scarce.' State Department spokesman Richard Boucher expanded on the official line: `There is an orderly and constitutional political process under way in Haiti. That process needs to be respected by all Haitians, but we're glad to see the violence is decreasing. But the rebels have no role to play in this process, and they need to lay down their arms and go home.'

Until the middle of last week, the US Marine commander in Haiti, Colonel David Berger, was telling the press that he had received no orders to disarm `the rebels' — and there was certainly no move to arrest Philippe when he paraded in full view in the illfated demonstration of 7 March. 

Interim President Boniface Alexandre declared a state of emergency, but followed this up by urging, rather than ordering, armed groups to lay down their weapons. Alexandre also appointed a new chief of police: Léon Charles, until now commander of the coast guard, probably the officer who has worked most closely with the US in the areas of migration and antinarcotics operations. It is well known that leaders of the anti-Aristide camp are in two minds about Philippe: some sympathise with his proposal to reestablish the army, while others are wary of opening the door to the rehabilitation of such representatives of the military régime's worst abuses, such as Chamblain.

Alleged drugs connection
In Washington, officials briefed the press to the effect that a key target of the US intervention in Haiti will be the drugs trade. Some went as far as to say that it had become the most important conduit in the Caribbean for US-bound drugs (though this did not quite tally with the picture painted in the State Department's International Narcotics Control Strategy Report (INCSR) released last week — or in the four previous ones). This was followed by the off-the-record `revelation' that Guy Philippe had been cited in DEA reports about drug trafficking and police corruption in Haiti — harking back to the time when he commanded the national police in Cap Haí¯tien.

It is worth noting that only days earlier officials drew the attention of the press to claims made by a Haitian drug trafficker implicating the Aristide government in drug trafficking (which does appear as a constant theme in the INCSRs). The `Philippe connection' is likely to resurface.

Caricom & South African rescue bid
The US-French intervention in Haiti has not attracted much applause in the Caribbean. Caricom has said its members will not take part in the UN force meant to take over from the current `stabilisation' force in three months' time. The reason is that the Caribbean organisation does not believe that Aristide resigned of his own free will, but was forced out by the US. Jamaican prime minister PJ Patterson, president of Caricom, said last week, `The unconstitutional removal of any leader cannot be condoned. What has happened represents a very dangerous precedent not only for Haiti but for all democratically elected leaders and governments throughout the world.'

It has now emerged that Caricom played an important role in a last-ditch attempt to help Aristide hold on to power by quashing the rebellion. On 23 February Aristide wrote to Caricom and, invoking the Caricom Prior Action Plan, requested help to equip the national police to cope with the worsening situation. Patterson immediately relayed the request to South African President Thabo Mbeki (the only foreign head of state to have attended Haiti's bicentennial celebrations). On 28 February, a South African military transport aircraft flew to the Caribbean, loaded with assault rifles, ammunition, teargas grenades and bulletproof vests for Haiti. It stopped to refuel at Kingston, and never made the final leg of its journey, as the Aristide government collapsed only hours later.

Jamaica's foreign ministry confirmed this on 6 March, a day after the South African government refuted press reports that erroneously claimed that an aircraft sent by Johannesburg was in Haiti.

The `governability pact' struck between the ruling Gran Alianza Nacional (Gana), and two other parties — Unidad Nacional de la Esperanza (UNE) and Partido de Avanzada Nacional (PAN) — appears threatened by the recent discovery that the latter two had secretly received campaign funds from the previous government.

The secret donations were discovered by investigators looking into the diversion of public funds by former comptroller-general Oscar Dubón Palma. They found that about US$440,000 had been transferred by Dubón to an NGO called Amigos en Acción, and from there to the campaign coffers of the UNE and PAN.

Alvaro Colom, former presidential candidate of UNE, has admitted receiving US$200,000 from the NGO, but says that he was unaware of its ultimate origin. The authorities have arrested Guillermo Ruano, a UNE leader who had actually handled the donation. Arrests have also been issued against a PAN leader, Rina Sanchinelli, and five executives of Amigos en Acción, all of whom appear to have gone into hiding.

A crucial pact
While some prominent figures of the two parties accused of receiving tainted money have protested that they are being subjected to a `political lynching', their leaders in congress say that the `governability pact' will hold unless their leaders, UNE's Colom and PAN's Leonel López Rodas, are prosecuted, or it is discovered that members of the ruling alliance were behind the launching of the `witch hunt'.

What nobody seems to be examining is whether Dubón acted on his own or on behalf of higher-ups in the previous administration, of the Frente Republicano Guatemalteco (FRG) — and what was the motivation behind supporting the UNE and PAN.

Maintaining the `governability pact' is crucial to President Oscar Berger. Gana has only 47 seats in the 158-seat, single-chamber congress. The alliance with the UNE (28 seats) and PAN (17) provides it with a working majority for ordinary legislation (but still falls short of the two-thirds needed for special laws and constitutional amendments).

The biggest threat to the pact lies in the Berger government's stated commitment to respect the independence of the judiciary, which should rule out any interference with the direction the investigations take.

Caught & sought
Former comptroller-general Dubón is under arrest awaiting prosecution, after an attempt to take refuge abroad was thwarted by the Nicaraguan authorities last week. Still at large is Marco Tulio Abadí­o, former head of SAT, the tax-collection agency, who is charged with having diverted about US$5-6m of public funds into personal accounts. He had flown to the US two weeks before investigators announced their findings. Worth noting is that no arrest warrant has yet been issued against former President Alvaro Portillo, who has been accused of laundering public funds through Panamanian accounts. It appears that the number of accounts Panamanian authorities have been able to link to Portillo have been narrowed down to a small handful. Portillo has been in Mexico since mid-February, and Guatemalan security supremo Otto Pérez says he has received assurances from the Mexican authorities that he will not be granted safe haven if formal corruption charges are filed against him.

With only 16 days to go to the election, the Salvadorean congress rushed through an amendment to the electoral legislation designed to neutralise the advantage enjoyed by the ruling Alianza Republicana Nacionalista (Arena) in the supreme electoral tribunal, TSE. All recent opinion polls point to a comfortable victory on 21 March for Arena candidate Elí­as Antonio (Tony) Saca.

The legislation passed by congress allows the TSE to take decisions by simple majority (three out of five votes) rather than by a `qualified' one (four out of five) as hitherto. The amendment was passed by the requisite two-thirds' majority — all opposition votes: the Frente Farabundo Martí­ para la Liberación Nacional (FMLN), which has 31 seats, plus 25 from other parties.

The reason for the change was the opposition's belief that the government had stacked the cards in its favour with the appointment of Sergio Mena Méndez as president of the TSE. This gave Arena a veto power under the `qualified majority' rule. The Arena members of the TSE have urged President Francisco Flores to veto the amendment — but the opposition clearly has the strength to overturn that.

The most recent opinion survey, conducted by CID-Gallup, shows Tony Saca in the lead with 54% of voter preferences — enough to win outright in the first round. The FMLN's Schafik Handal follows with 34%. This is the only one of the four most recent polls to suggest a first-round victory, but all of them show Saca enjoying a similar lead. If Saca does not get one vote more than 50% on 21 March, a run-off must be held on 2 May.

An interesting detail: all polls show the FMLN rated more highly than Handal, which appears to confirm the view held by many analysts that its chances have waned chiefly because of its choice of candidate. Also important, though, is the remarkable surge in the popularity of outgoing President Flores: it stands at 59%, the highest rating since just after the 2001 earthquakes.

NICARAGUA | Paris Club debt write-off. The Paris Club of bilateral debtors has agreed to write off US$902m of Nicaragua's bilateral debt (though individual creditors might raise that total by an additional US$142m). Since the end of 1999 Nicaragua's Paris Club debt has been reduced by 96% (about US$1.26bn), and its service has fallen from US$37m to US$1.5m a year. At the end of last year, Nicaragua's external debt stood at US$6.7bn.

CARIBBEAN | Graduating out of preferences. Two Caribbean countries — Antigua & Barbuda and Barbados — are about to pay the price of economic success. The US government has announced that as a result of being re-designated `high-income' countries, from 1 January 2006 they will lose their entitlement to the benefits granted to developing countries under the generalised system of preferences.

DOMINICAN REPUBLIC | Free zones recover. In the first nine months of last year, activity in the Dominican Republic's free zones expanded by 4.7% on the same period of 2002, offsetting a fair share of the 9.1% decline recorded in the previous year. The national council for free zones, CNZFE, reports that over the past three years, 288 new companies have set up shop in these zones, generating some US$197m in extra export earnings.

Repression of protests against rising prices and power blackouts is taking a huge toll on human rights in the Dominican Republic, according to Amnesty International. In a report just released, Dominican Republic: Human Rights Recession, AI says that `security forces are responding with unlawful killings of demonstrators and bystanders, arbitrary arrests of activists and excessive use of force.'

Amnesty's US director, William Schulz, says, `While the US remains focused on the brutal turmoil in Haiti, human rights violations are escalating just across the border due to the insidious problem of impunity. Although widespread abuses by Dominican security forces, including extrajudicial executions, have long been documented, rarely are the perpetrators of these crimes brought to justice.'

"For a representative democracy it is bad to have such promiscuity between the Planalto palace and congress in order to prevent the legislature from carrying out its noblest task: to supervise the executive."

Senator Heloí­sa Helena, former member of the ruling PT, on government manoeuvres to block a congressional inquiry.


"We shall be a government with big ears, with the eyes of an owl and with a very small mouth, to speak as little as possible."

Senator Rodolfo Nin Novoa, vice-presidential aspirant of Uruguay's leftist EP-FA.


"There is an orderly and constitutional political process under way in Haiti [...] The rebels have no role to play in this process, and they need to lay down their arms and go home."

Richard Boucher, spokesman of the US State Department.

LATIN AMERICAN SPECIAL REPORT Who is competing for power in Latin America

Five countries are scheduled to elect new governments this year: El Salvador, Panama, the Dominican Republic and Uruguay. The latter is expected by many analysts to mark the leftist Frente Amplio's first real opportunity to outvote both of Uruguay's traditional parties together, and make it to the presidency. In El Salvador and Panama leftwing parties (FMLN and PRD) are hoping to do likewise, but their chances are not as clearcut; indeed, for the FMLN they seem to have been decreasing. In the Dominican Republic, after a most unusual nomination process, the fear of fraud hangs over the elections themselves. This latest Special Report from Latin American Newsletters goes beyond the scheduled elections to examine the situation in three special cases: Venezuela (where President Hugo Chávez 's tenure of office is at stake), Haiti (where the departure of President Jean-Bertrand Aristide creates new uncertainties) and Bolivia (where newly rewritten electoral rules will be tested in a referendum and municipal elections). Latin American Special Reports are published bi-monthly in electronic format. The annual subscription fee is US$485/ £345 or reports may also be purchased individually, priced at US$130/ £90 each. For further information, including details of our reduced academic rates, please call +44 (0)20 7251 0012 or email [email protected].

LATIN AMERICAN REGIONAL REPORT: MEXICO & NAFTA - NOW AVAILABLE

In this month's Mexico and Nafta we take a close look at the scandals that have enveloped Andrés Manuel López Obrador, the mayor of Mexico City and the leading candidate for the presidency in 2006. We analyse the accusations and assess whether they will, as their proponents hope, destroy AMLO. In our Nafta coverage we look at the scanty results of the latest summit between President Bush and President Fox. We also look at the state of the maquiladora industry and Mexico's trade negotiations with Japan and its trade with China. An annual subscription to Latin American Regional Report: Mexico & Nafta (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.

After nine days of violent protests, mainly in the more affluent districts of Caracas, the cooler minds in the Venezuelan opposition have decided that they will at least consider the opportunity to `repair' 1.1m suspect signatures endorsing the petition for a referendum to revoke President Hugo Chávez 's mandate. This opens the possibility that the referendum might go ahead, but does not make an opposition victory at all certain.

The toll of the protests makes grim reading: nine dead from gunshot wounds, 110 injured (64% by bullets or buckshot) and more than 300 arrested. Casualties were highest in Caracas, and particularly in the opposition-ruled municipalities of Chacao and Baruta in the east of the city — middle- and upper-class neighbourhoods — where most of the protests and clashes with the national guard took place. The poorer districts considered the heartland of the pro-Chávez camp remained largely untouched by the unrest.

As the incidents died down, without having sparked anything like the atmosphere of the December-January street protests, the opposition emerged divided into three groups. The more radical Bloque Democrático, which broke away from the umbrella Coordinadora Democrática (CD), is advocating continued `active and widespread civil disobedience', urging the rest of the opposition to stand by its decision to have nothing more to do with the CNE, the electoral authority.

A group of parties affiliated with the CD (La Causa Radical, Proyecto Venezuela, Alianza Bravo Pueblo and Primero Justicia) insists on exacting from the CNE a `rectification' (meaning the recognition of all suspect petitions as valid) and adamantly refuses to enter any negotiations. They say it is `a time to act', but do not spell out precisely what that means.

Finally, the rest of the CD, with the `traditional' parties (Acción Democrática and Copei) at its core, has agreed to scrutinise the evidence provided by the CNE and decide on further action in consequence. This is not a matter that lends itself to simplification. The CNE has ruled that just under 460,000 of the signed petitions are invalid (which nobody is seriously disputing). It has also declared valid just over 1.8m -- or just under 600,000 short of what the opposition needs for the referendum to go ahead.

Then there are the 1.1m `doubtful' petitions. Of these, 876,017 are on sheets where everything but the signatures has been entered by single hands, in breach of the rules which demanded that each petitioner should personally enter all details. A majority of the CNE board suspects that the signatures may not be genuine, but instead of throwing them out, together with another 233,573 displaying assorted `irregularities', it is offering the petitioners the opportunity to ratify their intention to endorse the referendum call.

Some CD leaders have been equivocating about `discrepancies' in the CNE count of valid and doubtful votes, suggesting that the organisation has deliberately `lost' about 44,000 valid signatures as a further obstructionist ploy. Actually, the CNE documentation makes it clear that though that number of petitions is still being audited, it is already counting them as valid.

Most accounts of what has been happening in Venezuela with the CNE's handling of the referendum petition fail to note that the international observers of the OAS and the Carter Center have said that the electoral authority was justified in wanting to verify suspect petition sheets. They have disagreed with the verification method chosen by the CNE, suggesting that a sampling procedure might be better. Both organisations continue to act as observers.

`Authoritarian drift'
This last week the customary comment from the US was delivered by General James Hill, chief of the US Southern Command. He said, `I'm very concerned about what I see in Venezuela. [It is] troublesome that [it] is moving in a direction of authoritarianism.' He also told an interviewer from El Universal that US residents on Margarita island had been reporting an increase, over the past couple of years, of the number of Arabs and young Muslims. This placed Margarita, together with the Triborder area (straddling Paraguay, Brazil and Argentina) among the areas with the greatest amount of Islamic terrorist activity. This theme keeps recurring among US officials, despite admissions, also by US officials, that no such activity has been detected (beyond financial remittances to Hamas in Lebanon, ancestral home of most Latin American Arabs).