Thursday, February 10, 2005

Feb 10/05 - On a fine article by the FT's Richard Lapper "Bonhomie fails to mask signs of S American divide"

PMBComment: Richard Lapper, the FT’s seasoned Latin American editor, manages to vividly convey the intricacies of Chavez’s dealings with his purported allies. But after six years, it is not only Lula that is short of patience and humor when dealing with him and his multi-polar antics (term used here to describe both Hugo’s stated foreign policy preference and obvious mental disorder). As he travels the world in search of allies for his much trumpeted - and must-have-to-survive - confrontation with the US or more precisely with George W. Bush, Hugo Chavez has turned into an odd mix of compulsive shopper and inexhaustible benefactor. Not to mention grand meddler in the affairs of others.

With reckless financial abandon, but impeccable capitalist opportunism, Chavez has awarded massive public works contracts to immense Brazilian firms without anything even resembling a botched tender: he has sold fuel oil to Argentina under the same terms he gives Cuba (although Castro’s himalayan debt with PDVSA is one big reason that company remains un-audited and un-auditable); he has committed to order a frigate from a bust Spanish shipyard to the obvious joy of the odd new team in Madrid; has tempted the Russians with wholesale purchases of weapon systems and sweetheart oil, gas and mineral “deals” for the Kremlin’s preferred oligarchs; has taken delivery on a surprising array of Israeli made - but insurgency favorites - RPGs and surface to air missiles; has committed to build a cement plant with Iranian technology (Cemex/Holderbank/Lafarge beware); has dared to dream a Bolivarian solution to China’s insatiable energy needs; and to accomplish the latter, had offered Colombia to build a pipeline to reach a pacific coast port until Panama offered a better route. And the list goes on and on and on.

What Hugo Chavez and his commission hungry cadres have not yet fully understood is that one thing is to open you checkbook, or your market, and the other is to gain durable allies for a far-fetched clash with what he calls simply “the empire”. Even with his well earned reputation as a charlatan, by confusing customers, moneymen and leeches with hardened and committed allies, Mr. Chavez might very well misconstrue his next moves, and that is precisely why the world ignores or appeases him at its own peril. I sure hope that in addition to Lula, his colleagues Putin, Jintao, Zapatero, Fox, Lagos, and Kirchner keep this top of mind. PMB

PS: while the list above was not meant to be exhaustive, I should have mentioned his landmark deal to buy animated cartoon programming from Iranian state television.

Financial Times

Bonhomie fails to mask signs of S American divide
By Richard Lapper
Published: February 10 2005 21:30 | Last updated: February 10 2005 21:30

When Brazil's Luiz Inácio Lula da Silva and Venezuela's Hugo Chávez meet in Caracas on Sunday, there will be much backslapping and bonhomie. This will be the sixth time that Latin America's two most important leftwing presidents have met since Mr Lula da Silva's election just over two years ago.

Both men are popular and confident. Their economies are growing and they will celebrate this meeting by agreeing a grandiose “strategic alliance”. There will be talk of joint developments in such areas as oil, gas, coal and telecommunications. Roads and bridges needed to cross the brushland terrain that separates the countries will be on the agenda.

But behind the scenes, there are likely to be signs of a growing political divide. While Mr Chávez's brand of populist government has become ever more radical since his referendum victory last August, Mr Lula da Silva has stuck closely to a more moderate, social-democrat agenda. Already Mr Chávez has irritated Brasília by criticising Mr Lula da Silva's cautious economic policies and by championing the cause of his leftwing critics, such as the Landless Movement. Rubens Barbosa, a former Brazilian diplomat and a now a consultant in São Paulo, says Mr Chávez “has a very intrusive style”.

At last month's World Social Forum in Porto Alegre, Brazil, the leaders received contrasting receptions from the anti-capitalist activists: Mr Chávez was lauded as a hero, while Mr Lula da Silva was booed. But Brazil's president received a much warmer response from bankers, businessmen and political leaders at the World Economic Forum in Davos, Switzerland, which he visited shortly afterwards.

“Chávez and Lula are light years away from each other,” says Christopher Garman, political analyst at São Paulo-based Tendencias. Alberto Garrido, a Caracas-based analyst, adds, “Chávez is a bit of a headache for Lula, because he has become the new leftwing leader and a point of reference for the radical left in the region.”

Although both leaders were elected with wide mandates for change Mr Chávez in 1998, Mr Lula da Silva in 2002 Mr Chávez has been far more confrontational. While Mr Lula has sought to negotiate with political opponents, Mr Chávez delights in bruising battles. Flush with oil wealth, Mr Chávez has pursued flexible and sometimes aggressive macroeconomic policies, spending freely in such politically sensitive areas as social policy. By contrast, Mr Lula da Silva has tightened fiscal policy and pursued a rigorously orthodox monetary policy.

These differences have been particularly marked on the international stage. Much given to rhetoric and constant allusions to Simón Bolivar, who led Latin America's 19th century independence struggle, the Venezuelan leader has sometimes appeared to be crusading against US power and influence in the region.

Ever more anti-American after the US administration hastily recognised a military government that briefly deposed him in April 2002, Mr Chávez has sought to break Venezuela's historic economic dependence on the US. Economic ties with Fidel Castro, Cuba's president, and with such countries as Iran, Russia and China, have been strengthened, and Mr Chávez has begun to diversify sales of oil his country's most valuable export away from the US market.

The Venezuelan leader tends to characterise regional politics in Manichean, anti-American terms, even claiming that Venezuela, Brazil, Cuba and Argentina--where he enjoys good relations with President Néstor Kirchner--form “an axis of power” that contrasts with a pro-US western bloc that stretches from Mexico, through Ecuador, Colombia, Peru and down to Chile.

“Our strategy has to be to break the US axis and forge South American unity,” Mr Chávez told a recent meeting of newly elected pro-Chávez governors. Brazilian officials are sharply dismissive of this approach. True, Mr Lula da Silva, too, has been keen to forge new relationships with his South American neighbours and the emerging powers of China, India and Russia. And he has come under fire from the business groups for giving insufficient importance to Brazil's trade with the US. But pragmatism rather than ideology has informed the Brazilian policy.

Mr Lula da Silva has maintained good relations with President George W. Bush. Indeed, diplomats from Brazil and the US led a successful international effort to persuade Mr Chávez to accept opposition demands for a recall referendum last year, which Mr Chávez eventually won. “In Brazil there is a debate over emphasis. In Venezuela it's about rejection of the US,” says Mr Garman.

On Sunday and Monday, before Mr Lula da Silva travels to Guyana and Surinam later in the week, both leaders will paper over the cracks. For Brazil, Venezuela is an important market exports topped $1bn (€780m, £530m) in the first nine months of 2004 and a source of contracts for large energy and construction companies. But on present trends at least, tensions seem likely to grow.