Sao Paulo, Brazil – It wasn’t long ago that South America’s leftist leaders were sharing bear-hugs and talking about forming something like the European Union, with a pipeline network to solve energy problems, a unified parliament, and a currency good from Colombia’s Caribbean beaches to Argentina’s frosty southern coast.
Bolivian President Evo Morales changed all that: He abruptly took over his country’s 53 foreign-owned natural gas installations and installed white-helmeted military police with semiautomatic rifles to guard the continent’s second-largest gas reserves.
The nationalization evokes comparisons to decades past when Latin American regimes ruled with brute military force. It also has created a serious rift between the region’s center-left governments and the hard-left administrations of Morales and his mentor, the socialist Venezuelan President Hugo Chavez.
“South America is back to its unstable ways, big time,” said Gary Hufbauer, a senior fellow at the Institute for International Economics in Washington, D.C.
The takeover threatens to cause energy shortages and price hikes that could seriously damage the economies of Bolivia’s biggest customers, Argentina and Brazil.
As Latin American leaders prepare to fly to Vienna for an annual summit Friday with their European counterparts, the energy crisis looms largest amid regional divisions unseen in South America since the 1980s era of lingering dictatorships and budding democracies.
The Andean community and Mercosur economic blocs appear to be falling apart as Colombia and Peru clinch free trade deals with the United States, and Paraguay and Uruguay consider similar alliances.
Bolivia and Venezuela lashed back by joining with communist Cuba in a trade pact promising a socialist version of regional cooperation.
Bolivia also alleged that its gas was being diverted from Argentina to Chile, playing on old border grudges and possibly reversing a warming trend in Bolivian-Chilean relations. Argentina and Uruguay are escalating their battle over potential pollution from pulp mills on their shared river.
“Call it regional disintegration,” said David Fleischer, a political scientist at the University of Brasilia. “It all converged in the months of April and May, and we don’t know how it’s going to play out.” Less than two years ago, Brazilian President Luiz Inacio Lula da Silva formed a “South American Community of Nations” aimed at putting the region on a path toward political and economic integration. He had a fellow left-of-center ally in Argentine President Nestor Kirchner, and like-minded leaders were soon elected in Bolivia, Chile and Uruguay.
These presidents have downplayed trade disputes as the growing pains of a region still focused on unification. But when Morales surrounded Bolivia’s gas fields and refineries with soldiers last week, a political fracture emerged that may be hard to repair.
Brazil, Latin America’s largest economy, gets half of its natural gas from the Andean country, using it for industrial power generation, cooking and to fuel cars. In the nation’s industrial heart of Sao Paulo, the figure is closer to 80 percent.
Argentina, Bolivia’s second largest gas buyer, faces higher prices for drivers in a country with the world’s highest number of vehicles running on compressed natural gas.
Brazil is bitterly resisting calls by Morales for a 60 percent price hike, which could fuel inflation and take Brazil off its solid course of slow, sustainable growth. Higher gas prices also could adversely affect Argentina’s strong economic recovery from a 2002 economic meltdown.
Bolivia’s gas takeover followed months of nervous anticipation and campaign promises by Morales to secure more gas profits he said were being “looted” by foreign companies.
But the troops were sent in without warning in an “adolescent” move, according to Brazilian Foreign Minister Celso Amorim, who is now trying to put out a political firestorm just as Silva prepares to run for re-election.
In testimony before Congress, Amorim tried to undo the impression that Silva seemed complacent at a hastily called summit last week in Argentina that did little to resolve the gas impasse.
Speaking in private to avoid “a radicalization” of Bolivia, Silva told Morales frankly that the takeover was no way for nations that respect each other to work together, Amorim said.
Amid suspicions that Chavez helped Morales engineer the abrupt takeover – which Venezuela denies – Silva also privately rebuked Chavez, saying the move puts in doubt the continental natural gas pipeline project and other South American integration efforts, Amorim said.
The action now moves to Bolivia’s capital of La Paz, where Brazilian Oil Minister Silas Rondeau headed Wednesday to begin negotiations over Bolivia’s demands, which include a majority stake in the Bolivian operations of Petroleo Brasileiro SA, Brazil’s state-owned oil company.
Spanish officials are holding separate talks in Bolivia over the Bolivian operations of the Spanish Argentine petroleum company Repsol YPF SA. And Argentina is negotiating the price of gas it buys from Bolivia.
Petrobras is the biggest foreign producer in Bolivia, where the gas industry was privatized in the 1990s. Morales wants the company to cede control over the entire chain of production to Bolivia’s state-owned oil firm – much like his political soul mate Chavez ordered foreign petroleum companies to do in Venezuela.
Many Brazilians believe this new hard-left Latin alliance is getting the better of Silva, at least for now.
“That hurts!” screams the headline of the influential Veja news magazine, showing a photograph of Silva with an oily boot print drawn on his rear end, presumably delivered by former army paratrooper Chavez.
The headline continues: “Lula dozed off as the ‘great leader’ of Latin America and woke up as yet another court jester of Venezuela’s Hugo Chavez, who plotted the robbery of Brazil’s Bolivian assets.”
