During the first week of August, Latin America was witness to two important tours by presidents with diametrically opposed purposes, undertaken by Luiz Inacio Lula da Silva and Hugo Chavez.

Many observers and analysts prefer to ignore the fact that two of the main figures on the continent set out on tour trails which put into evidence the difficulties with regional integration. Lula visited five countries: Mexico, Honduras, Nicaragua, Panama and Jamaica, with the objective of promoting agro-fuels. On the same dates, Chavez visited Argentina, Uruguay, Ecuador and Bolivia, to sign agreements that promote integration.

Lula’s trip could be called the “second ethanol tour”. The first, we might remember, was undertaken by George W. Bush at the beginning of March of this year, when he came to long-term agreements with Lula to promote agro-fuels. This time round, the President of Brazil travelled to back businessmen from his country in setting up sugar-cane ethanol plants in Central American countries. In Mexico, the first stage of this trip, Lula promoted an agreement between the state company Pemex and the transnational Petrobras for the exploration and exploitation of oil in the waters of the Gulf of Mexico. The agreement is interesting for Petrobras given that the company is a world leader in the extraction of crude oil in deep waters, a technology which the Mexican company does not possess.

The Mexican left reacted strongly. Andres Manuel Lopez Obrador, the victim of electoral fraud in the 2006 elections which benefited the current President Felipe Calderon, warned that Petrobras could be used as a “leading edge” to privatize Pemex, a long-favoured objective of the multi-nationals. “I respect him a lot, but the movement which I represent, a real and true opposition, does not accept that Mexican oil wealth be surrendered to foreigners, under any circumstances”, said Lopez Obrador of the Lula mission, according to the August 6 edition of La Jornada. The Mexican leader said that Petrobras will prospect for oil in the Caribbean and in exchange will stay with a portion of the hydrocarbons found, which involves no risk because we already know where the deposits are. Behind Petrobras, he argues, will come the other multi-nationals.

Concerning agro-fuels, Lula said that he counts on the support of Mexico “in the campaign to establish a world market for cleaner, cheaper and renewable fuels. We have the opportunity to democratize access to new sources of energy multiplying the generation of jobs and diversifying the energy complex”. It is evident that the President of Brazil has paid no heed to the arguments wielded in recent months by Fidel Castro, amongst many others, against those types of energy. In Nicaragua, Lula offered support to Daniel Ortega for that country to become an agro-fuel pioneer in the region. “It is completely inadmissible and a crime to produce ethanol derived from the cultivation of corn”, responded the Nicaraguan.

In Jamaica, Lula inaugurated an ethanol dehydration plant owned by Jamaican and Brazilian investors, and in Honduras and Panama he signed agreements for the development of those fuels from sugar cane. The daily newspaper, Folha de Sao Paulo, on August 5, recalled the underlying motives of Brazil for expanding ethanol in that region. “The interest is in using Central America as a platform for the export of ethanol to the United States; those countries have a free trade agreement with the Americans and have no limit on the export of ethanol”. Brazil provides the technology and the capital, the Central Americans put up the semi-slave labour in the cane-fields, and thus the emerging power manages to open a protected market to which it has enormous difficulties in accessing. Lula’s way of thinking is transparent: “Together we can constitute a world economic power”, he said to the right-wing Felipe Calderon in Mexico.

The Chavez tour was very different. In Argentina he signed an agreement with Nestor Kirchner for the purchase of $500 million in Argentine bonds and committed himself to buying a similar quantity in a few months. This agreement is vital given that after the default of 2001, Argentina does not have access to international credit. In addition, he signed an agreement for the construction of a regasification plant in Bahia Blanca, for liquid gas from Venezuela, since Argentina is suffering a serious energy crisis. In Uruguay he signed a Treaty of Energy Security with Tabare Vasquez, under which the state companies Ancap and Pdvsa will work to double the production capacity of the Uruguayan refinery and a joint company is created to extract crude from the Orinoco Belt, considered the largest reserve in the world. With that, Uruguay is assured of energy supply for the long term.

This time Vasquez and Kirchner agreed. “What other government in the world has made another offer of such magnitude and size?”, said the Uruguayan. “Argentines should and do feel grateful because [Chávez] has always been there when we have needed him”, said a minister very close to Kirchner.

Then in Ecuador, Chavez underwrote with Rafael Correa an investment of 5 billion dollars for the construction of a refinery in the province of Manabi, to process 300 thousand barrels of crude per day, which will be the largest refinery on the Pacific coast. In Bolivia, Chavez and Evo Morales came to an agreement destined to create a bi-national oil company, Petroandina, (with YPFB and Pdvsa), which will have as its first project an investment of 600 million dollars for exploration in Bolivia. With the birth of YPFB-Petroandina, Bolivia will recover its right to explore and exploit its own hydrocarbons.

The difficulties for Venezuela entering into Mercosur were evident during the tour. At this date the parliaments of Argentina and Uruguay have ratified the membership of Chavez’s country in the block. Paraguay and Brazil are delaying it. It is known that the parliament in Brasilia, which has a centre-right majority, does not want to approve the entry, although the government can make its alliances hold sway. In Buenos Aires, Chavez said in a closed meeting, covered by Pagina 12 on August 8, that the frictions between Venezuela and Brazil are not due to a “leadership dispute” but rather to a "confrontation between models for energy development”. Some are working for integration on the basis of sharing oil and gas, and thus assuring energy autonomy; while others strive for integration based on agro-fuels, promoting the policy of the empire.

(Translation: Donald Lee; edited by ALAI).