Chavez: Seeking to Integrate Latin America on His Terms

Venezuelan President Hugo Chavez and his Bolivian counterpart Evo Morales confer as they sign compromise letters and credit certificates in a ceremony at the presidential palace in La Paz, Bolivia. Bolivia and Venezuela also signed a series of energy-related agreements that include Cuba, as part of the People's Trade Treaty, an alternative to the Free Trade Agreement with the U.S. (Photo: Javier Mamani / AFP-Getty Images)

As the elusive dream of Latin American integration seems more and more an inevitability — and a necessity — Venezuelan President Hugo Chavez is showing signs that he intends not only to lead that process of integration, but wishes to cast it in his own socialist, anti-imperialist, and energy-centered image.

The manner in which Bolivia nationalized its gas industry earlier this year, with the military guarding installations in conjunction with the refusal to reimburse affected companies for past investment, is suggestive of such intentions.

"This was a collective decision from the revolutionary energy triangle," said political analyst Alberto Garrido, referring to the Cuba-Venezuela-Bolivia axis. "[Brazilian President] Lula thought he could use Chavez as a battering ram against the U.S., but after the nationalization he understood what Chavez is up to."

Bolivian President Evo Morales made the historic nationalization announcement just days after meeting with Chavez and Cuban President Fidel Castro in Havana, Cuba.

Garrido suggested that an integration process led by Brazil, the region's largest economy and a sleeping giant, wouldn't be good enough for Chavez. Brazil talks tough, but only Chavez has challenged the U.S. aggressively.

For Ricardo Sucre, a legal and political studies professor at the Central University of Venezuela (UCV), Chavez isn't as interested in economic integration, á la the European Union, as much as he wants Latin American political integration that helps to bring the U.S. to its knees.

"Everything has to be seen through the U.S. prism," said Sucre. "It's about being able to impose punishment" through Venezuela's control of oil and gas exports.

So while many analysts jumped on Chavez for raising Brazil's ire in the wake of the Bolivian nationalization, Garrido and Sucre saw the decision as a clear indication that Chavez's talk of regional integration was meant as an energy-based challenge to U.S. hegemony.

Unsuccessful Moves

Not all of Chavez's moves have succeeded, as his incursions into Mexican, and especially Peruvian, electoral politics have hurt his preferred candidates. Chavez's favored candidate in Peru, Ollanta Humala, lost the presidential run-off election earlier this month at least partially because many Peruvians resented Chavez meddling in their affairs. Still, analysts have said that Chavez will not be deterred from his long-term integration plan no matter what the region's electoral results turn out to be.

"Polarization brings him political gains," said Margarita Lopez Maya, a historian and UCV professor. "That's his game, and he's most effective this way even if sometimes he makes mistakes."

Boosted by record-high oil prices, Chavez has been sharing Venezuela's largesse with other countries in the region, making many friends but quite a few enemies as well. Venezuela has signed agreements with many of its neighbors, offering oil on preferential terms. But Chavez's oil-based agreements don't simply intend to buy support and allegiance, analysts posit, but go much further.

Energy as a Weapon

"Energy is the atomic bomb of poor countries," said Sucre. "It's an instrument of power for challenging U.S. hegemony."

Echoing Sucre, Garrido sees Chavez as desiring to take Latin America into a 'brave new world.' "We're dealing with a new paradigm of power, and it has to do with energy," he said.

Besides shoring up support in the Organization of American States (OAS), or pressuring its neighbors to not cooperate with the U.S. in other ways, some experts view Chavez as intent on using energy as a weapon against the energy-starved U.S.

Indeed, most of Chavez's new agreements with countries in the region are based on oil and gas. Whether it's financing oil exports to its Caribbean neighbors, joint ventures with Brazilian and Argentine oil companies, investing $1.5 billion in Bolivia's oil and gas industry, or planning an unprecedented gas pipeline stretching approximately 6,200 miles through South America, Chavez is flexing Venezuela's energy-based muscle to gain influence — and thus power — in the region.

Not everyone suspects that either Bolivia's nationalization, or Chavez's oil and gas agreements around the region are part of a plan to influence Venezuela's neighbors and challenge the U.S.

Mazhar Al-Shereidah, a UCV professor in the Oil Economics graduate program, suggested that Chavez's rhetoric is not being seen in the light of reason. "Venezuelan oil's real value is getting blown out of proportion," he argued.

Basing Latin American integration efforts on energy, considering its scarcity and concomitant high costs, "makes sense" to Al-Shereidah. While acknowledging oil's potential as an "instrument of power," he regarded Chavez's use of oil as practical, noting that Europe itself used steel to promote its own integration after World War II.

"Electricity creates common markets," said Al-Shereidah. "Energy [based] integration reinforces political ties because it takes political will."

Regional Rifts?

Yet energy can also create rifts between allies. In the aftermath of the Bolivian gas nationalization, which brought Venezuela head-to-head with powerful Brazil, an important Mercosur ally, Lula came to wonder about the ambitious pipeline and other integration projects.

But Chavez doesn't seem too concerned about upsetting Brazil, or anyone else, by his use of Venezuela's oil and the income it garners, suggest experts. That explains Venezuela's exit from both the Andean Community and the G-3 alliance with Mexico and Colombia.

Pavel Rondon, Venezuela's Vice Foreign Minister for Latin America and the Caribbean, claimed that the moves were meant to preserve his country's — and the region's — sovereignty rather than out of the desire to punish neighbors for cooperating with the U.S.

Rondon asserted that bilateral trade agreements between Colombia and Peru, respectively, with the U.S. undermined Andean Community rules and violated the sovereignty of its member nations.

"Free trade accords modify the way the Andean Community functions," said Rondon. "These agreements are incompatible with integration."

Specifically, Rondon referred to U.S. government-subsidized soy and corn devastating both Bolivian soy and Venezuelan corn markets. By hurting such exports, in his view, the bilateral agreements violate national sovereignty by assuming a level playing field that doesn't exist. As a result, Venezuela's plans to develop into a corn-exporter have been undermined.

"Free trade accords don't take into account the differences between countries," said Rondon. "It's a hidden way of applying the FTAA [Free Trade Area of the Americas] through partial FTAAs."

These bilateral agreements don't preclude close ties with Colombia, a close trading partner, but necessarily limit alliances like the Andean Community, said Rondon. He added that Venezuela respects each nation's right to sign such accords, but in doing so they must promote autonomy and sovereignty.

Choosing Sides

Yet this tricky position seems unsustainable as the lure of trade with the U.S., the planet's largest economy, clashes with the desire for Venezuelan energy.

"As Chavez's project develops, these ambivalent countries will have less and less movement to maneuver," said Garrido. In other words, they will have to choose between U.S. trade and Venezuelan energy.

Venezuela's bid to fill a vacant U.N. Security Council seat, which the U.S. wants Guatemala to take, may intensify this conflict. But regardless of Chavez's rhetoric, said Al-Shereidah, "one thing is wanting something and another is being able to do it."

Some analysts claim that Chavez, like many observers, may confuse the signing of agreements for support of the Bolivarian integration project when the affected countries are merely shopping for the best deal available.

"Everyone is looking for the best conditions," said Lopez Maya. "Countries have assumed the need to integrate."

Chavez appears to be counting on an imminent energy crisis and an energy-desperate world to enact Latin American integration on his terms. In his favor, Venezuela boasts the Western Hemisphere's — and perhaps the world's — largest oil reserves at 235 billion barrels (according to the Venezuelan government), a terrific temptation for both Latin American countries and the U.S.

According to Garrido, Chavez is already using the energy factor to woo his neighbors away from the U.S. Eventually, something will have to give.

"You can't be on good terms with God and the Devil," said Garrido.

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