On October 7, Costa Ricans narrowly voted to approve CAFTA. The outcome was a victory for President Óscar Arias, who lobbied hard for CAFTA ever since the courts ruled in April to put the treaty to a vote. It also confounded hopes among the treaty's opponents for a last minute upset. For months, most polls showed that voters would overwhelmingly approve the treaty – until a secret memo by Vice-President Kevin Casas calling for a “campaign of fear” was leaked to the press. Polls showed that public opinion had suddenly turned. But just three days before the referendum, US Trade Representative Susan Schwab said that the US would not renegotiate the treaty if Costa Rica were to reject it, and further claimed that Costa Rica was at risk of losing US trade preferences. The treaty's opponents argue that these comments swung public opinion back in the treaty's favor.

On September 27 the Executive presented Congress with the final proposal for the 2008 budget. The proposed budget, already approved by the Cabinet Council, totals US$8.3 billion, an 11.4% increase over the 2007 budget, and putatively dedicates half of the government's resources to social ends. But analyst Rolando Gordón warns that despite the social emphasis, the benefits are not reaching the whole population due to the widespread mismanagement of funds.

By Sharon Pringle

Translated by James Wilson

Two weeks ago, Salvadoran President Elías Antonio Saca delivered a forceful speech during the United Nations yearly conference in New York, calling for help from the international community to fight youth gangs, which he described as “one of the main threats to development and democracy". Saca's plea for help found a swift response - a few days later the US Justice Department announced that it would work with the Salvadoran police to create a transnational police force to crack down on gang violence adding that the FBI would speed up the creation of a digital fingerprint database to make it easier for the authorities to identify criminals. The US authorities have thus endorsed Saca's hard-line stance on crime and his insistence that youth gangs are to blame for the increase in drug trafficking and violent crime in Salvador. However, according to a recent report by the Washington Office on Latin America (WOLA), by arguing that gangs are a threat to international security, the State is legitimating the re-emergence of death squads responsible for the extrajudicial killing of gang members and other “undesirables”.

The Honduran government has made little progress in recent years in terms of reducing child poverty. This is hardly surprising say analysts, since state-sponsored child welfare institutions are largely ineffective and resources are squandered due to endemic corruption and financial mismanagement. The Zelaya administration tried to improve efficiency and cut down on red tape by unifying the country's three main child welfare bodies under a single National Institute for Child Welfare (INPI). However, labor unions fought against the initiative tooth and nail and threatened to lift the lid on government corruption if Zelaya went ahead. This blackmail strategy worked and the initiative was shelved and forgotten.

By Nicolás Masci

Translated by Louisa Reynolds

The construction the Xalalá hydroelectric dam has finally begun, more than three decades after the project was first proposed. In March 2008, interested firms will forward their financial and technical proposals, to be assessed by the new administration. But since the government first started exploring the idea of constructing the Xalalá dam in 1976, nearby communities have become increasingly opposed to it. It remains to be seen if grassroots social organizations can win the battle against elite interests.

By Luis Solano

Translated by Matthew Brooke