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Well that's not what the author means by illiterate. He uses it as a way of saying that they virtually never read books.

http://en.wikipedia.org/wiki/Functional_illiteracy

I wouldn't be surprised if the word/s the author used in Spanish for illiteracy indicated this distinction, which has then been lost in translation. Maybe.

Agreed. I learned the Russian alphabet in a day - you learn the sounds for each symbol and you're done. It took a long time to speed up, of course, and i had the background of already reading in English, but Spanish isn't Chinese or Japanese (or English for that matter).

A couple dozen letters, but lots and lots of words.

They already know all the words (they speak them) and they don't need to spell (especially when reading).