[R-G] Latin America's odd couple

[Anthony Fenton]

Copyright 2007 The Calgary Herald, a division of Canwest MediaWorks  
Publication Inc.
All Rights Reserved
The Calgary Herald (Alberta)

August 19, 2007 Sunday
Final Edition

SECTION: THE EDITORIAL PAGE; Pg. A12

LENGTH: 829 words

HEADLINE: Latin America's odd couple

BYLINE: Harry Sterling, For the Calgary Herald

BODY:


The one leader travels around Latin America extolling ethanol as a  
realistic solution to the region's growing energy needs.

The other tours regional neighbours offering to provide petroleum at  
reasonable prices if they sign up with his Energy Security Treaty,  
guaranteeing oil and gas supplies for the foreseeable future. For  
many, it's a tempting offer, though it comes with a catch.

The different approaches taken by Brazilian President, Luis Inacio  
Lula da Silva -- commonly called simply Lula -- and oil-rich  
Venezuela's Hugo Chavez, couldn't be starker. If anything, Lula and  
Chavez have come to represent two quite divergent approaches to  
meeting the seemingly insatiable global appetite for petroleum supplies.

It's an appetite with direct ramifications for Canadian oil and gas  
producers, especially in Alberta's booming oilsands sector which  
reportedly has received more than $36 billion Cdn in investment so  
far with even more investment on the horizon.

Brazil's Lula has taken the lead in promoting sugar cane-based  
ethanol as a way in which to use a renewable natural resource in  
place of non-renewable oil, a shrinking source of energy in many  
traditional producing nations.

In recent weeks, Chavez himself, was actively promoting his  
"Petroleum socialism," visiting Argentina where he and President  
Nestor Kirchner signed a treaty ensuring Argentina ample supplies of  
oil and gas ". . . for the next one hundred years and more."

This was followed by a Venezuelan commitment to help expand Uruguay's  
sole oil refinery and construct a new refinery in Ecuador which would  
produce 300,000 barrels per day.

Accompanied by Kirchner, Chavez next arrived in Bolivia where he and  
Kirchner inked an agreement pledging to assist the populist  
government of President Evo Morales in exporting natural gas.

Chavez has also been extremely active in offering oil deals to  
Caribbean neighbours, including concessionary oil prices for close  
ally, Fidel Castro. But his actions are not simply about oil and gas.  
They're also very much about challenging the traditional predominant  
role of the United States in the Western Hemisphere.

Despite the fact the U.S. remains one of Venezuela's largest export  
markets for its petroleum, Chavez has been presenting himself as an  
alternative to American hegemony and bad-mouthing President George W.  
Bush wherever he goes. He has even embraced such less than democratic  
regimes as Belarus and Iran.

During this month's tour of South American countries, the ex- 
paratrooper persistently denounced Washington for its longstanding  
attempts to dominate the region, purportedly imposing its will by  
invading or intimidating its neighbours.

According to Chavez "The empire of the north is a real assassin, a  
genocidal killer" which acts like a Dracula, sucking up 20 per cent  
of the world's energy supplies even though it only has five per cent  
of the world's population.

Unlike Chavez, Lula da Silva has tried to maintain cordial relations  
with all hemispheric nations, including the United States. He points  
to Brazil's own success in developing a thriving ethanol sector,  
primarily based on sugar cane.

However, despite Lula's moderate non-ideological approach to dealing  
with global energy demands, some question the emphasis placed on the  
ethanol alternative, claiming it could destroy the current system of  
small farm holdings in the hemisphere or drive up the prices of  
agricultural products for consumers, particularly such things as  
corn, now widely used in the U.S. for ethanol production.

Lula's efforts to persuade Bush to lower tariffs on Brazil's sugar  
cane-based ethanol have not been successful so far because many  
American politicians prefer to promote the more expensive corn-based  
ethanol produced by American farmers, whose vote could be crucial  
during elections.

While Lula is extolling the virtues of ethanol to create jobs and  
improve living standards in developing countries, Chavez is using  
dramatically increased revenue from high world oil prices (prices for  
Venezuelan oil exports have increased about eightfold since 1999) to  
advance his ideological goals, especially his attempts to end the  
influence of Washington.

But to achieve his objectives, Chavez needs oil prices to remain  
high. Should the U.S. and other major economies suddenly falter or  
slide into recession, bringing down oil prices, it would have  
immediate global fallout as was demonstrated when Central Banks  
recently had to intervene to shore up financial sectors following  
sell-offs on world stock markets caused by American mortgage failures.

(Analysts believe Alberta's oilsands development itself would remain  
quite viable as long as oil prices per barrel remain above $40 Cdn.)

If there's anything which ultimately could adversely affect Chavez's  
political ambitions it paradoxically would be the very same oil  
resources which have enabled him to promote his ideological goals.

Harry Sterling, a former diplomat, is an Ottawa-based commentator. He  
served in Venezuela.