People First - Social Justice And Economic Integration In South America
By Toni Solo
Of the two basic alternatives for regional integration in South America, one is based on greed and injustice and the
other on cooperation and equity. The first is some variety of "free market" economic policies that sustain growth and
wealth for the elites and deepen inequality for the impoverished majority. That option is favoured by United States and
European corporate and governmental classes and their allies among the local dominant elites, especially in Brazil. The
other alternative is some variety of socialist internationalism that promotes broadly based development through
equitable trade and redistribution of resources. This option is promoted unequivocally by the governments of Cuba,
Venezuela and Bolivia, whose governments signed a Peoples' Trade Treaty at the end of April.
The US and European Union apparently take such setbacks to their strategic designs in their stride. They smugly expect
that sooner or later the recalcitrant Latin American countries whose resources they covet will trip up and once again
throw their natural wealth into the arms of the traditional imperial powers rather than competitors like China. The EU's
Javier Solana has complained about lack of legal protections for European investors (compared to merciless EU barriers
against desperate migrant victims of EU trade policies) while UK Prime Minister Tony Blair has demanded "responsible"
(read "cheap") policies from Latin American oil and gas suppliers. The imperial mindset of the European ruling elite is
as blatantly on display as that of their US corporate and governmental counterparts.
Recent fast moving changes have accentuated the conflict between the two competing visions in Latin America. The
imperialist camp is hoping for some relief in the form of a successful attempt by Colombian narco-paramilitary-president
Alvaro Uribe to secure re-election at the end of May and corruption-tainted former Peruvian president Alan Garcia's
efforts to win another presidential term against the nationalist Ollanta Humala in early June. Those results in turn
will harden contradictions beginning to emerge from conflicting interests and perceptions among regional neighbours. The
processes of South American integration and the criteria by which they operate may soon become more complicated than
ever. A quick review of recent developments may help make sense of an otherwise confusing flurry of events.
Contradictions and conflicts
The Community of Andean Nations is in crisis following secretive rushed negotiations by the Colombian and Peruvian
governments to close "free trade" treaties with the United States. The resulting uncertainty in Colombia has put
regional trade for that country worth US$8bn a year at risk. There is no guarantee the US Congress will ratify the
agreement. Venezuela, Colombia's largest regional trading partner, has withdrawn from CAN in protest at the Peruvian and
Colombian treaties with the US.
Bolivia's President Morales has asked the Peruvian and Colombian governments to reconsider their signing of the "free
trade" treaties. The Colombian deal in particular adversely affects Bolivia's soya industry since Bolivian soya exports
to Colombia would be completely displaced by US-produced soya as a result of the US-Colombia trade deal. Bolivia is
refusing to negotiate a "free trade" treaty with the US. The Peoples' Trade Treaty with Venezuela and Cuba gives
Bolivian goods tariff-free entry to those countries' markets.
Chile and Argentina are at loggerheads over security of gas supplies to Chile from Argentina, which itself depends on
gas supplies from Bolivia. Argentina faces the acute problem that its reserves of gas and oil are likely to run out
within ten years or so. The traditional antipathy betweeen Bolivia and Chile renders low-priced sales of Bolivian gas to
Argentina impossible to justify if Argentinian gas gets sold to Chile at higher prices than Argentina pays for gas from
Bolivia.
Petrobras, the Brazilian quasi-State oil company reacted aggressively to Bolivia's nationalization of its hydrocarbon
resources and its insistence on a hike of US$2 in the unit price of gas. Brazil imports well over half its gas
requirements from Bolivia. Sao Paulo, Brazil's main industrial centre, in particular depends on Bolivian gas for its
energy needs. Brazilian President da Silva had to intervene to mollify Petrobras' executives angry response. Bolivia's
assertion of its right to higher revenues from gas sales echoes internal tensions in Mercosur that have long turned on
Brazil's industrial domination.
Argentinian companies, trying to recover from the country's financial meltdown at the start of the decade, find it
impossible to compete effectively. The resulting resentment adds to that felt by Mercosur's weaker partners, Uruguay and
Paraguay. A further debilitating factor for Mercosur's development is the rancorous dispute between Uruguay and
Argentina over environmental pollution from planned, foreign-owned cellulose plants on the Uruguayan side of the Rio de
la Plata which separates the two countries. Uruguay's President Vasquez has openly suggested that Uruguay might loosen
its ties with Mercosur or even leave it altogether in favour of "free trade" deals with the US and Europe.
Setbacks for US diplomacy
One might have expected US diplomats to make hay gleefully in such a context. But other events have taken place which
complicate State Department attempts to manipulate matters in favour of US corporate interests. In Ecuador last week,
after months of uncertainty the Energy Ministry finally decided to terminate Occidental Petroleum's contracts in the
country. That move effectively finished any hopes President Palacios may have had of successfully completing a "free
trade" deal with the United States. Popular opposition to such a deal prevented the kind of secretive final negotiations
Palcios may have hoped to pull off in imitation of Colombia and Peru to circumvent public scrutiny and accountability
In the event, the government itself found that the wording of treaty terms as presented by the United States had changed
from the versions agreed by Ecuadoran negotiators. That US negotiating ploy - imposing on the other side the work of
unravelling terminology preferential to the US - slowed up final stages of treaty negotiations. Opposition
demonstrations led by indigenous peoples' organizations aroused Ecuadoran opinion and focused attention on the pending
government decision on Occidental's violations of its contract. The Palacios administration will have difficulty
recovering sufficient prestige and momentum to revive trade treaty negotiations with the US before its term ends this
year. Ecuador's presidential elections are scheduled for October, the same month as Brazil's. The US reacted predictably
to Ecuador's annulment of Occidental's contract in the country. Charles Shapiro, deputy assistant Secretary of State for
western hemisphere affairs, was reported as saying the Ecuadoran government's decision seemed to be "a confiscation".
Occidental Petroleum has already filed a claim for over US$1bn in damages against the Ecuadoran government in the
Washington based International Centre for Settlement of Investment Disputes in Washington. The case will be an important
test of the World Bank associated Centre's independence and legitimacy since the Ecuadoran government's decision
reflected widespread condemnation across the Ecuadoran political spectrum of Occidental's failure to honour its
contractual obligations.
Another setback to US regional diplomacy came with Cuba's election to the new UN Human Rights Commission on May 9th with
support from 135 countries. Cuba's election to the commission is a further blow to US efforts to isolate the country.
Cuban international prestige derives mainly from its unrivalled commitment to international cooperation in healthcare
and education. UNICEF recently recognized that Cuba is the only country in Latin America that has eradicated child
malnutrition.(1) The contrast with the widespread child malnutrition in countries closely allied with the US, like
Mexico and Colombia is damning.
Similarly, the recent horrific rape and violence endured by protestors at the hands of Mexican police in Atenco and
violent repression of peaceful protests against Colombia's trade treaty with the US clearly highlight US policy failures
in promoting human rights among its Latin American allies. US diplomats regularly exalt the benefits of its model of
electoral democracy and condemn the failings of Cuba. The practice of their allies in Mexico and Colombia makes such
claims look foolish and cynical.
Trade and integration
Timely efforts by Latin American leaders to resolve their differences have also confounded US efforts to exploit the
region's internal disagreements. In early May the presidents of Venezuela, Bolivia, Argentina and Brazil met in the
Argentinian town of Puerto Iguazu. The meeting produced agreement to address Brazilian and Argentinian concerns about
the implications of Bolivia's gas nationalization.
The bottom line for Bolivia is that it wants to increase the price it receives for its gas and also increase supplies.
For Brazil and Argentina, the principal anxiety is not just price but also security of supply. None of Bolivia's
neighbours deny Bolivia's right to generate sufficient income from gas exports to improve living standards for Bolivia's
people. Just days before that meeting in Puerto Iguazu at the end of April, Bolivia signed the Peoples' Trade Treaty
with Cuba and Venezuela covering trade, technical and scientific cooperation and initiatives on healthcare, education,
culture and sport
That agreement is one of several either already signed or in the process of negotiation as the main competing
alternatives for regional integration try to drive forward their respective visions of economic development. Backed by
the international financial institutions, Brazil's commercial and industrial elite are anxious to push through the IIRSA
regional integration infrastructure scheme which will saddle the region's populations with billions of dollars of debt
in a typical neo-liberal inspired cost-externalization exercise for the benefit of local and foreign corporations. But
the recent vicious insurrectional violence in Sao Paulo demonstrated Brazil is a giant crippled by desperate internal
inequalities and injustice.
While Brazil tries to resolve its social and economic contradictions, Venezuela, apart from seeking trade and
cooperation agreements with almost every country in the region, is pushing for a huge continental gas pipeline as part
of its integration strategy. The relation between Venezuela's integrationist vision for this mega-project and the
Brazilian inspired IIRSA strategy is problematic. The gas pipeline project would link the whole of South America. But
changes of government in the decade or more it will take to build the pipeline render the strategic underpinning and
continuity of the project highly questionable.
Whether the proposed gas pipeline mega-project complements or compromises the corporate benefits promoted by IIRSA is
likely to become as conflictive an issue as energy pricing and supply. Andres Solis Rada the Bolivian Hydrocarbons
Minister has already argued that only State companies should be allowed to participate in the gas pipeline. He suggests
that it would be wrong for foreign investors - who own directly or indirectly 60% of the Brazilian energy giant
Petrobras - to benefit from a project financed by public funds.(2) Bolivia may also decide to diversify its investment
partners by negotiating agreements with China, whose national petroleum company explored the possibility of buying out
BP subsidiary Panamerican Energy's interests in Bolivia at the end of 2005.
Dizzying macro-economic considerations tend to obscure the obvious. Venezuela and Cuba are more likely to be able to
realize their vision of integral economic and social development than Brazil's US and European backed elite because
their governments meet their people's basic needs in an integrated way. Making that a priority enhances the rationality
and coherence of their regional cooperation initiatives. Bolivia, Cuba and Venezuela have shown they are determined to
make steady practical progress in their technical cooperation and trade agreements. Their success in meeting the broad
social, economic and cultural needs of their peoples is likely to contrast ever more sharply with the experiences of
countries like Brazil and Uruguay that remain fatally fascinated by the mirage of "free market" prosperity rippling
somewhere out there on an ever-receding horizon.
NOTES:
1. "UNICEF confirma que Cuba es el único país de América Latina y el Caribe que ha eliminado la desnutrición infantil."
Cira Rodríguez César Prensa Latina 17-05-2006
2. 'El gasoducto del Sur debe ser estatal' Argenpress 12/05/2006
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toni solo is an activist based in Central America - contact via info @ tonisolo.net