Can Latin nations build on 2004 gains?

"China leaves mark on Latin America."

"Colombia turns up heat on rebels in its 40-year war."

"Venezuela's Chávez staves off ouster."

These were some of the headlines in the region for 2004, and those same players should dominate the news this year. Here's what we'll be watching:

Momentum in Colombia's civil war

2004 was a banner year for progress in Colombia's 40-year civil war, a conflict that claims the lives of some 3,000 people each year.

Since taking office in mid-2002, President Alvaro Uribe has extradited nearly 200 suspected drug traffickers to the United States, added tens of thousands of troops and police, and begun demobilizing right-wing paramilitary groups. About 6,600 guerrillas and paramilitary fighters were either killed or demobilized in 2004, more than double the number in 2002. Drug seizures and coca eradication are at all-time highs, and violent crime and kidnappings are down. In November, President Bush promised to push the US Congress to add $900 million a year to the $3.3 billion spent since 2000 by Washington on Plan Colombia, a major antidrug and antiguerrilla program.

With the refunding of Plan Colombia, the country could turn the corner on the drug war in 2005, says Michael Shifter of the InterAmerican Dialogue in Washington. Mr. Uribe's hand was strengthened last year with Colombia's congress amending the constitution to allow him to run again in 2006, and the prospects for a broader peace deal are high - but not guaranteed.

What to watch:

• Accords between the government and the AUC - the coalition of right-wing militias - call for the removal of the AUC's 20,000 paramilitary members from combat by the end of the year. So far, 20 percent have been demobilized, but the AUC says it wants more guarantees, including money and jobs, before disarming further. Negotiations are expected to continue through the year, with a target of 2006 for complete demobilization.

• The National Liberation Army (ELN), the smaller of the country's two leftist guerrilla groups, has indicated it may be willing to talk about a peace agreement. So far, the government has rejected any proposal that doesn't begin with the ELN laying down its weapons.

Latin economies on the upswing

After a decade in which Latin America struggled with financial crises, all of the region's economies grew in 2004. The average increase was 5.5 percent, the highest in 25 years. It "exceeded the most optimistic forecasts," according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).

Thanks to a reduction of red tape in domestic markets, more investment from giants like the US and - increasingly - China, and high commodity prices, growth is expected to continue this year, though more slowly.

What to watch:

• The Free Trade Area of the Americas (FTAA) - a single market stretching from Alaska to Argentina - was supposed to go into effect on Jan. 1, but talks have stalled. A meeting of the hemisphere's biggest economies will take place early this year to try to revive them, though no date has been set. Brazil's foreign minister told the Associated Press that an FTAA "light" could happen in 2006. Meanwhile, the Central America Free Trade Agreement is still to be ratified by the US Congress. Several smaller bilateral trade agreements are sprouting up to fill the vacuum: The US is in negotiations with Peru, Colombia, and Ecuador - and hoping to start talks with Bolivia.

• According to ECLAC, China's trade volume with Brazil, Argentina, and Chile alone reached $14.6 billion last year. That figure may climb this year. China just signed a deal with Venezuela that will supply China with 120,000 barrels of oil a month. Chinese companies intend to invest $350 million in 15 oil fields in eastern Venezuela and $60 million in natural-gas projects, according to the Associated Press.

• Lower oil prices, which have slid to just above $40 a barrel from an earlier high of $55, could hurt Venezuela, Ecuador, and Mexico.

A battle of which 'left' will prevail

If the past two years saw the rise of the left in South America, this year could determine what brand of leftism takes hold. On one side is Hugo Chávez, the fiery Venezuelan president who won a controversial recall vote in August. Now he has packed the courts with loyalists, is flush with cash from oil, and has visions of exporting his "revolution for the poor" to the rest of the continent.

On the other is what's been called the "mature" left - represented by leaders like Brazil's Luiz Inacio Lula da Silva and Argentina's Nestor Kirchner. Both men came to office in 2003 with unvarnished far-left credentials but have governed, to varying degrees, from the center. Which type will win out?

What to watch:

• The region will be in campaign mode this year, with elections slated for Mexico, Peru, and Bolivia in 2006. Bolivia could be a bellweather: Interim President Carlos Mesa is following in the footsteps of Messrs. da Silva and Kirchner, but he has to watch his left flank: Former coca grower Evo Morales is popular among the poor and indigenous.

• Other countries appear to be tearing a page from Mr. Chávez's playbook. The frontrunner in Mexico's 2006 elections, Andres Manuel Lopez Obrador, relies heavily on his populist and anti-US rhetoric. In Ecuador, the president just fired most of the Supreme Court. And in Nicaragua, observers say a fragile democracy could meet its end in the coming weeks through a nondemocratic uprising.

Immigration at the forefront

An estimated 3 million Mexicans tried to sneak across the border into the US last year, according to the State Department. Some 10 million Mexicans are already in the country illegally. President Bush wants to find a way to let them stay through a guest-worker program. Mr. Bush's plan, which he has pledged to push through Congress this year, would allow illegal immigrants to apply for three-year renewable work visas - after which they could petition for permanent legal status. The workers would have access to a database of jobs not filled by US citizens, and they could cross the border legally once they secured work. Mexican President Vicente Fox has applauded the plan.

But Mr. Bush is looking at a hard fight in Congress with representatives of border states - many of whom are from his own party. In late November, conservatives temporarily stalled intelligence-reform legislation, in part because it didn't include certain strict immigration proposals.

What to watch:

In Arizona, where many residents say they're under siege from illegal immigration, voters passed Proposition 200 in November, effectively denying government benefits to illegal aliens. Arizona argued that it could not shoulder free medical care and other services to illegal immigrants, or the added crime. Conservatives hope to put similar initiatives on the ballot in Colorado, Georgia, and California. No dates have been set.

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