Energy-rich Venezuela remains gripped by economic crisis, which, according to the Washington Post’s Juan Forero, “has no easy or fast solution, even if sluggish oil production were ramped up and profligate state spending were cut.” The situation is “unbelievable,” says Jose Guerra, a former Central Bank economist and head of the Central University’s economics department, particularly because [Venezuela] has “one of the biggest reserves of oil in the world, thermal-electrical and hydroelectric sources.”
According to the Post’s portrayal of the Venezuelan economy, the country’s performance stands in contrast to the rest of the region, “where some central banks worry about overheating economies in 2010.” The paper goes on to maintain that the root of the problem lies in Venezuela’s refusal to “embrace globalization.” The IMF recently noted that in Peru, Chile and Brazil, “all of which embrace globalization,” growth could indeed go well beyond 4 percent this year. Among the negative indicators of Venezuela’s economic activity is an oil sector which is “saddled with debt” and is today “pumping 20 percent less crude” than in the 1990s. In addition, there are worries that the country's inflation rate could rise to 35 percent this year.
President Hugo Chavez has acknowledged some elements of his country’s economic struggle but continues to insist that the global economic crisis is “an opportunity to push a new model.” But, say economic critics of the president, a lack of investment in important infrastructure improvements may impede the president’s desires. “If you do not develop your infrastructure -- your hydroelectric generation, your electrical generation -- you're going to have a collapse,” says professor of energy policy, Nelson Hernández.
Hugo Chavez was in Brasilia yesterday, meeting with President Lula da Silva, and declaring the special relationship between the two countries “irreversible,” even as Lula prepares to step down at the end of the year The AP reports that the two pledged to intensify bilateral relations in the coming years – including in the area of state oil cooperation. That issue of deepening relations between state oil companies brings light to another issue, highlighted in a recent Foreign Policy piece: the changing nature of oil exploration in Latin America and beyond. According to FP, “Brazil, generally one of Latin America's most investment-friendly countries, is now boosting the state's role in developing its vast new oil reserves. And it's doing so with help from China, which has recently provided Petrobas with a massive loan, making the old titans of Big Oil [i.e. Western oil companies] increasingly superfluous.” The article argues that the collaboration between state-run oil companies is “completely reshaping the industry” under a “new regulatory model.” The return of a new state-led developmentalism in Latin America? Perhaps.
Finally, on the issue of hydrocarbons, a new brief from the US Institute of Peace examines how oil and gas development in the Peruvian Amazon has contributed to the country’s economic growth, as well as growing opposition by indigenous groups.
To other stories:
· Staying in the realm of economics for a moment, the Inter-American Dialogue has two new pieces up on Bolivia and Venezuela. First, a report that the US and Venezuela held their first cabinet level meeting on energy cooperation since 2004 last week. The two countries pledged to “restart the exchange of technical information that was suspended during the administration of former President George W. Bush” when Oil Minister Rafael Ramirez met with US Energy Secretary Steven Chu. Venezuela’s contribution to the recovery effort in Haiti was also on discussed.
· On Bolivia, a piece looking at Bolivia’s search for new investment to develop its lithium deposits. According to Finance Minister, Luis Arce, the Bolivian government will reward the lithium concession to the company that offers it the best deal for “comprehensive industrialization.” “Private investment is welcome” in Bolivia, Arce has said in the past, “but under new rules of the game.” “We want you exploit lithium but to add value, to industrialize it. We don't want [companies] to come and take out our natural resources; that model is over for Bolivia.” Minister Arce was in Washington last week where he spoke publicly at George Washington University. His talk was impressive, and like some elements of Brazil’s development strategy, harkened back to the old development playbook of the 1950s/1960s CEPAL of Raul Prebisch. This time macroeconomic stability and controlling inflation rank high on the list of developmentalist priorities. For more on the Bolivian economic success story, a recent CEPR report has the numbers.
· A series of reports look at Southcom head, Gen. Douglas Fraser’s, recent comments about rising “threats” in Latin America. First, Stars and Stripes reports that Southcom’s biggest concern across the region is “increasing extremist views,” broadly understood. Fraser offered few specifics about what exactly that means [“I don’t know where it’s going. I just know that if we look at it in other parts of the world it has not been a trend that’s been helpful to the United States”] but one can speculate that Venezuela was on the general’s mind. While downplaying earlier Pentagon reports of new Venezuela-Iranian Revolutionary Guard ties, Fraser turned to other concerns. “I don’t see any arms or any indication of arms coming from Iran [to Venezuela],” Fraser said. “Our concern is their connection to Hezbollah and Hamas.” The Army Times, meanwhile, has a different take. It reports that General Fraser sees the trafficking of “drugs, people and small arms as the greatest threat to the U.S. and its allies” from Latin America. Boz has a bit more analysis on the matter.
· In Mexico, two human rights activists were killed when their aid convoy – delivering food and water to a “blockaded indigenous community” – was attacked by paramilitaries in Oaxaca. According to Al-Jazeera, the attack was on members of the human rights group, VOCAL, who say the violence is “a product of the conditions of institutional violence and impunity that paramilitary groups enjoy in this region.” The community in question, San Juan Copala, is home to members of the Trique indigenous tribe which declared itself autonomous from the Oaxaca state government in 2007 in protest to a policy of discrimination and harassment. The paramilitary group being held responsible for the attack is called Ubisort, which, says the report, “warned earlier this week that it would prevent the convoy from reaching its destination.”
· Also on Mexico, the AP says the Mexican government responded to Amnesty International’s report on migrants with a statement yesterday acknowledging abuses being carried out by organized crime syndicates against Central American northbound travelers. According to the Interior Ministry, “the government has taken some steps to combat abuses and Mexico's legislature is working to repeal Article 67 ‘so that no one can deny or restrict foreigners' access to justice and human rights, whatever their migratory status.’” The AP also looks at the city of Cuernavaca, the unlikely site of recent drug violence. Time examines how Arizona’s new immigration legislation has united Mexicans in opposition. However, some say President Calderón has not gone far enough, requesting that punitive trade measures be slapped on Arizona by the Mexican government. The new Arizona law is also the topic of a new New York Times piece on Mexican and Central American immigration to the US. Finally, more from Mexico’s El Universal on the reform of the country’s National Security Law.
· News today that the Senate Foreign Relations Committee has passed legislation to “strengthen the Organization of American States” by “refocusing the OAS on key mission areas through reform and greater transparency in budgeting, accounting, and hiring.” The bill now goes before the full Senate.
· AQ has a new piece looking at the near-universal praise of the UN’s CICIG work in Guatemala. “The verdict at last week's press conference [in New York] was clear” says AQ: “CICIG should stay on, and its mandate should be broadened so that it has the power to fight organized crime and corruption.”
· Finally, a few opinions. First, Cynthia Arnson of the Wilson Center suggests an agenda for the next Colombian president at Infolatam. “For the first time,” writes Arnson, “a continuation of uribisimo is not in the cards … and recent trends in Colombian public opinion show serious vulnerabilities for the governing coalition.” Among those vulnerabilities, she argues, are rising worries of unemployment, inequality, and corruption. Peter Hakim in América Economía says the US needs regional help if it is to construct a new Cuba policy. He singles out Brazil in particular, writing “if Minister [Celso] Amorim [of Brazil] wants the U.S. to revamp its policy toward Cuba, he should be advising his own and other Latin American governments also to change their approach to Cuba.” And in the Guardian, an interesting look at the social and cultural battles over same-sex marriage and abortion which are being waged behind Mexico’s drug war.
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