lamay

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 trade agreements. 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 Palacios 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 the 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 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.

As 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.