Sunday, April 30, 2006

Venezuela, Brazil, Bolivia and Argentina Move Ahead on Integration

Caracas, Venezuela, April 28, 2006—Venezuelan President Hugo Chavez and his Brazilian and Argentine counterparts held a one-day summit in Sao Paulo Wednesday to discuss various topics relating to the integration of South America, while Bolivia’s President Evo Morales announced that he will be signing a People’s Trade Agreement with Cuba and Venezuela in Havana on Saturday.

The focus of Wednesday's summit on integration was the celebrated "Great Southern Gas Pipeline." Presidents Hugo Chavez, Luiz Inácio Lula Da Silva, and Néstor Kirchner have agreed to push ahead with plans for the 10,000 km (6,215 miles) pipeline, which will run from Venezuela to Argentina.

If created, this pipeline would be the largest in the world, more than doubling the immense Druzhba pipeline which pumps oil 4,000 KM from Southeastern Russian into Western Europe.

Chavez declared at the meeting that the pipeline could create a million jobs. Cost estimates run between $20 and $25 Billion, and the project could take at least 8 years (2009- 2017) to complete.

Many possible routes are being evaluated, but nearly all run through the Amazon, which has caused consternation among environmentalists, who fear that the pipeline could wreak environmental havoc on the pristine region, and open the fragile habitat up to development.

At a March lecture on the pipeline at the Venezuelan College of Engineers in Caracas, Petroleum Engineer, Nelson Hernandez called the pipeline “a dream” and raised various similar concerns. Along with the environmental impact, Hernandez asked serious questions regarding the administration, construction, material acquisition, regulation, feasibility, financing, and dispute resolution for the pipeline, which is being planned to run through at least three countries.

Citing the fact that “information on a 5,000 mile long pipeline does not exist,” Hernandez raised concerns that the immense length of the pipeline would out-price Venezuelan petroleum. According to his studies, oil prices are no longer economically competitive once the petroleum has to travel over 3,500 miles. “It’s got to go a long way to get to the market,” he added. “In the Amazon, there is nothing!”

However at Wednesday’s Summit, Chavez denied the potential high cost of transporting the petroleum, and added that, “If Venezuela was motivated by economic interest alone, we would not be discussing this here in Sao Paulo, but in Washington.”

Chavez declared enthusiastically at the Summit “We will have our gas pipeline… Venezuela has 5% of the world's petroleum reserves and 80% of the natural gas in South America.” According to unofficial statistics including previously undeclared crude reserves, Venezuela could have the largest petroleum reserves in the world. Chavez added that the pipeline is an essential element in the region’s independence and development.

At the Summit, Chavez announced that they had “agreed to open the project to all of the South American countries.” Chavez also declared that "the presence of Bolivia is a priority…. They have the second biggest reserves of oil and gas in South America." Chavez affirmed that he would speak with Bolivian President Evo Morales about joining the project, when he meets with him on Saturday.

But even with the recent close relations between Bolivia and Venezuela, Bolivia’s involvement in the project might result difficult. In a BBC interview last week, the Bolivian Vice-minister of Hydrocarbons, Julio Gómez called the proposed pipeline “ridiculous.”

Gómez declared that the idea for the pipeline did not originate with Chavez or Venezuela but with the private oil industry. He also assured that with the environmental impact alone resulting from a pipeline of this magnitude, “the nations of the whole world will react unfavorably to this project.”

The pipeline aside, Bolivian President Evo Morales announced plans Wednesday to sign into effect a “People’s Trade Agreement” (TPC) with Venezuela and Cuba on Saturday.

The TPC is considered to be the first step towards Chavez’ Bolivarian Alternative for the Americas (ALBA), a proposed alternative regional trading bloc to counter the US promoted Free Trade Area of the Americas (ALCA).

Morales’ decision comes in the footsteps of Peru and Colombia’s declarations not to renounce their recently signed Free Trade Agreements* (FTAs) with the United States, which provoked Venezuela’s announcement to leave the Community of Andean Nations. In response, Morales declared yesterday, “It is time to look the other way” and announced his trip to Havana to sign the integration agreements with Venezuela and Cuba.

According to the Prensa Latina, the specifics of the agreement will be worked out this weekend where each nation will identify its most important products, volumes, prices and “the mechanisms of commercialization.” Morales has mentioned the possibility of exporting products to Cuba and Venezuela without paying import taxes.

Chavez announced last night that Venezuela would buy all of the Bolivian Soy that will no longer be purchased by Colombia because of its recent FTAs with the United States. Cuba has also expressed interest in purchasing quinoa from the Andean nation and both Venezuela and Cuba are interested in purchasing Coca for legal consumption.

*In addition to Peru and Colombia’s recent FTAs with the United States, a majority of Central American countries have also ratified the Central American Free Trade Agreement (CAFTA) with the U.S. CAFTA went in to affect in El Salvador on March 1st of this year. Such Free Trade Agreements have received considerable criticism from human rights and environmental organizations for failing to demand human rights, labor and environmental laws, and for largely benefiting big business at the expense of the local community. Since the North American Free Trade Agreement was signed in 1994, over 1.5 million Mexican campesinos have lost their land as a direct result, causing inflated levels of migration towards the North.