WASHINGTONA few months ago, Brazil was happy to let Hugo Chavez wreck the Free Trade Area of the Americas pact (FTAA) promoted by the United States and some Latin American countries. Chavez is now wrecking Brazils own plan for South American integration (ultimately compatible with the FTAA) and replacing it with Bolivarian megalomania. Brazilian President Luiz Inacio Lula da Silvas reaction has been to display a mind-boggling lack of leadership.
In 1999, Brazilian statesman Roberto de Oliveira Campos said that Russia and Brazil were similar in that Russia was a superpower that discovered it was a Third World nation while Brazil was an emerging power that never emerges. President Lula could turn Brazil into an emerging nation that submerges if he doesnt heed his constituents, who are clamoring for him to step up to the plate.
Until Chavez messed things up, Brazils planinspired by the Baron of Rio Branco, the statesman who settled his nations borders a century ago without a single warwas to unite the Atlantic and the Pacific (to which Brazil has no direct access) through a South American Community of Nations vaguely mirroring the European Union. The plan includes building about $50 billion worth of infrastructure funded by the Brazilian Development Bank. A number of corridors uniting the two coasts would pass through Bolivia, located between the Atlantic and the Pacific extremes. That is one reason (another is the dependency of Sao Paulos electricity on Bolivian natural gas) why Brazil has a big presence in Bolivias economy.
However, Bolivian President Evo Morales recently nationalized his countrys hydrocarbons in a move directly orchestrated by Chavez. Petrobras, Brazils energy giant and a big investor with $2 billion worth of assets in Bolivia, was the most important victim. Three days before, Chavez, Morales and Fidel Castro had signed a trade pact as part of the Bolivarian Alternative for the Americas (ALBA) that Chavez is pushing as a counter to free markets (it consists so far of Venezuela selling cheap diesel fuel to Bolivia in exchange for soybeans).
This was a slap in the face of Brazils integrationist plans. Brazil had recently invited Venezuela to participate in the South American Common Market, the nucleus around which Brazils plan for further South American integration revolves. To make matters worse, Chavez has been getting close to Argentinaa country run by another populist presidentthrough the purchase of that nations sovereign bonds, knowing full well that Buenos Aires is in a permanent state of tension with Brazil simply because Brazil has gotten its economy relatively in shape and has a trade surplus with Argentina.
The man to stop Chavez is not President Bush, who would only play into the Venezuelans hands if he took him on, but Lula, who comes from the left, is a major player in the region (his country accounts for half of South Americas GDP) and is under direct challenge from Caracas. There is currently a battle for the soul of Latin Americas left, like the one that took place in Europe in the 1980s. The vegetarian left is somewhat sympathetic to free markets and believes in democracy. The carnivorous left promotes populist, authoritarian regimes. Lula is the natural leader of the vegetarians. Chavez has replaced Castro as the leader of the carnivores. In between, a number of small nations need Brazilian leadership in order to better resist the siren song of Chavezs petro-diplomacy.
Brazils integration plan is a desirable goal, but the absence of Brazilian leadership means Chavezs plan is the only one standing. A few weeks ago, President Lula told me, I want to make it clear that I do not have any type of ideological resistance against FTAA. I have explained the Brazilian position to President Bush and he has understood it. What is important today is to unblock negotiations at the World Trade Organization. So why is Chavezs alternative to hemisphere-wide free trade the only plan visible in South America?
I recently took up these matters with a number of Brazilians in Sao Paulo. The best observation I came across was made by Rubens Barbosa, a former Brazilian ambassador to the U.S.: Chavezs nationalist populism means his actions are at the roots of the current process of disintegration. ... The logic of South American integration was always, from Brazils point of view, the Brazil-Buenos Aires axis. Today, we see the Venezuela-Buenos Aires axis consolidating itself. The last 20 years of diplomacy have been affected.
Alvaro Vargas Llosa is Senior Fellow of The Center on Global Prosperity at The Independent Institute. He is a native of Peru and received his B.S.C. in international history from the London School of Economics. His Independent Institute books include Global Crossings: Immigration, Civilization, and America, Lessons From the Poor: Triumph of the Entrepreneurial Spirit, The Che Guevara Myth and the Future of Liberty, and Liberty for Latin America.
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