Monthly Archives: May 2012

COHA – The Latin American Left: A Work in Progress

This analysis was prepared by Dr. W. John Green, Associate Director of and Senior Research Fellow at the Council on Hemispheric Affairs

May 23, 2012

When Argentine President Cristina Fernández de Kirchner recently expropriated the Spanish oil company YPF, condemnation quickly blared out from the usual quarters. In a subsequent piece for the Washington Post, Juan Forero declared that the Latin American “radical left” is at a “crossroads,” and rounded up a posse of commentators to articulate some fairly predictable claims. Arturo Porzecanski, an Uruguayan economist at American University, asserted that “Populism is running out of gas in Latin America.” Michael Shifter of the Inter-American Dialogue characterized policies in Argentina, Venezuela, and Ecuador as attempts to scrape the bottom of the populist/leftist policy barrel, and as signs that such movements are “in disarray.”  Rather than standing at a simple crossroads, however, the Latin American Left most recently finds itself deep within a labyrinth of winding policy paths, and has set out to explore many of them simultaneously.

In the early 1990s, the lords of policy dwelling in the capitals of the Western Hemisphere declared a “consensus” about how to correct what Teddy Roosevelt might have called “chronic wrong-doing” in Latin America. These grandiose sins included populist and leftist politics, government interference in the sacred marketplace, and the economic nationalism of import substitution industrialization, among others. Such policies, it was argued, resulted in political and social instability, inflation, and reactionary military regimes. This new general understanding, known as the “Washington Consensus,” championed neoliberal market “reforms” (a euphemism for privatization), and repeatedly insisted on the superiority of free trade policies. The neoliberal champions of the market also defended a bloodless and “institutionalized” version of democracy to provide “good governance.”  The discussion was supposed to be over forever, amen.

Yet as George Philip and Francisco Panizza note in their new book, The Triumph of Politics: The Return of the Left in Venezuela, Bolivia and Ecuador, “fundamental ideological debate has returned to the region” since the 1998 election of President Hugo Chávez in Venezuela. Chávez, along with Presidents Evo Morales of Bolivia and Rafael Correa of Ecuador, who each self-identify as “twenty-first century socialists,” present a “left-wing” critique of the Consensus.  Their competing agenda is based on a blend of old, supposedly discredited ideas and practices, and new ideas and tactics that “together form a distinctive political brew.” While Philip and Panizza acknowledge other electoral successes on the Latin American Left over the last decade, their subjects represent “a particular kind of left,” more “personalist” and less “institutional.” Other leftist leaders, such as Luiz Inácio Lula da Silva of Brazil and José “Pepe” Mujica of Uruguay, are “bridge-builders” who “have sought to construct broad political alliances and promote inclusive politics by working in the system rather than against it.” In contrast, Chávez, Morales, and Correa are “trench-diggers” who work to “de-legitimize traditional parties as self-serving partycracies” whose leaders are “corrupt defenders of oligarchic interests.”

The key point is that the Latin American Left these days is a diverse place. For the Washington policy establishment, as it looks to Latin America, there is a “good” Left, (the “bridge builders,”) a “bad” Left (the “trench diggers,”) and a “worst” Left, represented by the brothers Castro in Cuba, with their low-rent authoritarianism and clunky command economy, widely recognized even on the Left as a policy dead end. Whether one points to Lula in Brazil, Mujica in Uruguay, Ollanta Humala in Peru, the Kirschners in Argentina, Chávez in Venezuela, Morales in Bolivia, Correa in Ecuador, or even prominent leftist also-rans like Andrés Manuel López Obrador in Mexico and Antanas Mockus in Colombia, the democratically elected leftist leaders in Latin America are all seeking solutions to the long-term problems of poverty and economic inequality.

It is also important to remember that this general policy discussion is now taking place in the context of continued world economic fragility and a global slump. The U.S. economy presently languishes in neutral, technically no longer in recession, but with intolerably high unemployment rates. European leaders seem unable to face their own devastating rates of unemployment in Greece, Spain, Italy, and Ireland, while growth in China, India, and Brazil slows. Yet big portions of the U.S. and European policy elite refuse to recognize this overall crisis of “really existing” capitalism. Incidentally, historians will point out, Cassandra-like, that we have been here before, when the neoclassical economic order of the late nineteenth and early twentieth centuries collapsed in the late 1920s. Then, as now, defenders of classical economics refused to acknowledge the devastating effects of austerity politics, and the world capitalist economy was only saved by the stimulus of World War II. It is no surprise, therefore, that some U.S. commentators on Latin America continue to thunder and rumble about the folly and sins of all who refuse to bow down to the crushing, self-serving logic of the Washington Consensus, reminiscent of late Byzantine emperors whose power did not extend beyond the walls of Constantinople. In many ways, it can be likened to a zombie policy, perpetuated in part by Washington’s general disinterest in all things Latin American since 9/11. Outside Washington, however, the world moves on.  The Left around the globe continues to struggle to come up with viable solutions to the excesses of the market economy, especially the concentration of wealth.  The fact that they have yet to solve such problems does nothing to mitigate another fact: the neoclassical/neoliberal economic orthodoxy which has dominated policy discussions since the 1980s now crumbles around us.

Certainly, many of the current leaders on the Latin American Left have reenacted some of the more unsavory populist shenanigans of days gone by, including presidentialism, unsustainable reliance on oil and gas revenues, and a lack of infrastructure investment (though the last, of course, is one of Washington’s failings as well.) Their existence has contributed to the polarization of politics (though such polarization stops short of violent counterrevolution). They can also be accused, at times, of an overreliance on plebiscite governance, thin respect for constitutional norms and institutions, and attempts to intimidate the media. But the continued electoral strength of the Latin American Left belies the assertion that it is “running out of gas.”  Indeed, there are other reasons that populist and leftist movements keep reoccurring, beyond charisma and personalism. These include the ongoing problems of social and economic inequality, grinding poverty, and stagnant middle classes instinctively aware of the expanding wealth at the top of the social ladder. A lot of ideas are in play, old and new, in different countries. Expropriations like that of Fernández de Kirchner in Argentina are popular because they underscore the leftist sensitivity to demands for social justice that has so often animated populist movements in Latin America. In this vein, Philip and Panizza’s robust study avoids the hyperventilation that often accompanies discussions of Chávez, Morales, Correa, and their ideological brethren. They demonstrate that what these leaders really signify is a competing model of democracy, which certainly has its warts, but represents more than mere revamped populist caudillismo. They also capture some of the worthy spirit of political and economic experimentation currently being conducted within the Latin American Left.

One thing is clear: the region will not be coming back into the neoliberal fold anytime soon.  Increasing levels of democracy make social “injustice” harder to sustain; the political fix is harder to maintain and enforce. Leaving aside the somewhat unlikely return of military governments and overt repression (Honduras is an outlier here, though Guatemala and El Salvador are also problem cases for the idea of a solid block of Latin American democracies), the experiments will continue. People around the world still very much want to construct more sustainable and democratic economic systems, where markets and private property, whatever their imperfections, can adapt and coexist with the moral sensibilities of social and economic justice.

What remains unclear is exactly what the U.S. role will be. As American influence continues to contract in Latin America, there will be new opportunities for policy experimentation in Washington. But whether such experimentation will mean renewed attempts at maintaining hemispheric hegemony, a resurrection of long-forgotten “good neighbor” policies, continued neglect mixed with more failed drug policies, or something completely new and creative, is hard to say.

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Washington Times – China-Peru military ties growing stronger

By Kelly Hearn – Special to The Washington Times

Sunday, May 27, 2012

LIMA, Peru — Trade between China and Peru, a key U.S. ally in the regional drug war, is at an all-time high. Now the Chinese security apparatus is getting in on the action.

Military officials from Beijing increasingly are making high-level visits, pushing initiatives to protect Chinese nationals and companies here, and, in some cases, undermining U.S. arms deals in order to sell their own weapons to this resource-rich Andean nation.

Last month, for example, the Peruvian Defense Ministry canceled a $114 million contract with a consortium that included U.S. defense manufacturer Northrop Grumman after a Chinese company convinced officials the project did not meet technical specifications.

Peruvian officials in February awarded the contract to the TRIAD consortium consisting of Israel’s Rafael Advanced Defense Systems, the Polish Bumar Group and Northrop Group to provide an air defense system.

Russia’s Rosoboronexport and a consortium of Chinese defense manufacturers also bid for the contract.

TRIAD won, but the state-owned China Precision Machinery Import Export Corp. (CPMIEC) asserted enough pressure to derail the multimillion-dollar deal, according to Defensa.com, a trade magazine that cited unnamed Peruvian officials.

“This contract cancelation shows that the Chinese contractors are becoming more sophisticated players in the Latin America arms market,” said R. Evan Ellis, an assistant professor at National Defense University in Washington. “They are applying tactics such as legal protests against winning bids, long used by sophisticated Western defense contractors in procurement battles over major weapon systems.”

Asked about CPMIEC’s role in derailing the TRIAD contract, Rafaelspokesman Rudoy Ravit said it would be “inappropriate to respond or comment at this time.”

Northrop Grumman spokeswoman referred questions to the Peruvian Defense Ministry. A person answering the phones in the ministry’s press office said that, because of an ongoing change in defense ministers, no press representatives were available to take questions.

Anti-U.S. army leaders

Defense industry experts here say Russia is the largest overall vendor, but CPMIEC is one of several Chinese companies well-known to local defense officials.

In 2009, CPMIEC sold the Peruvian army a batch of portable air defense systems, according to contracts obtained in 2010 by the Peruvian newspaper La Republica.

Two other state-owned Chinese companies — China North Industries Corp., known as Norinco, and Poly Technologies — helped China sell $34 million worth of arms and equipment to Peru, making it the country’s largest vendor that year.

The contracts show that the Peruvian army negotiated the purchase of a batch of MBT 2000 Chinese-made tanks valued at $1.4 billion and meant to replace T55 Soviet-built tanks acquired during Peru’s military dictatorship

But the sale, according to an expert who monitors Chinese defense issues in Latin America, never materialized because a Ukrainian contractor either could not produce needed parts for the tanks or fell under pressure from Russia not to do so.

Luis Giacoma, a former instructor at the Peruvian army’s and navy’s intelligence schools, said the army is more politically powerful and more anti-U.S. than the other military branches. He also said China’s increasing investment and trade influence are likely leading to increased pressure on Peru’s defense officials to look hard at Beijing’s military offerings.

“The navy and air force tend to favor relations with the U.S.,” he said, “but the army leadership is vehemently anti-U.S. and favors links with China and Russia.”

Peruvian President Ollanta Humala, a populist leader whose father is a communist activist, is a former army colonel. In November, his then-defense minister, Daniel Mora, signed an memorandum of understanding with Guo Boxiong, vice chairman of China’s Central Military Commission.

“The current bilateral relations between China and Peru are at one of the best moments in history,”Gen. Guo said to reporters during the meeting in Lima. “We emphasize the development of relations between the two states and between both armed forces.”

Increasing investments

Gen. Guo said the countries’ militaries have deepened ties with “frequent high level visits.”

Mr. Mora, now a congressman, said he doesn’t think Peruvian officials will start favoring Chinese arms makers because of the communist nation’s growing economic influence.

“Chinese armaments have not had particular prestige internationally,” he said, “but they are improving on them and are eager to put their products out to the world just like any other country.”

Since a free-trade agreement between the two countries took effect in 2010, China has replaced the U.S. as Peru’s largest export market. It also has become Peru’s largest investor in mining projects, some of which have provoked angry protests from indigenous groups complaining of social and environmental exploitation.

Mr. Giacoma said that in one meeting last year at the Peruvian army’s headquarters, some 17 Chinese intelligence officials met with their Peruvian counterparts.

“I’ve been told they discussed Chinese arms sales and plans on how to ensure the security of Chinese workers and investments,” he said.

Mr. Ellis said in an email that the growing physical presence of Chinese companies in the region “will force [China] to confront challenges that others doing business there have long faced: management-labor relations, negotiations with local governments, opposition by environmentalists and local communities, and physical security, among others.”

He noted Colombia, where Chinese officials are working with their security counterparts to secure the release of Chinese oil workers kidnapped in June. He also cited a case in Honduras, where the government is using the armed forces to provide security for the Chinese company Sinohydro, which is building the Patuca III hydroelectric project.

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Insights from the Field – Defense Matters

The Brazilian Chamber of Deputies approved a special tax regime, known as Retid, for its defense industry on February 16th. The Retid suspends taxes charged on medium-to-large scale manufacturers of goods and service for the strategic defense industry. Eligible companies must be accredited by the defense ministry and prove that at least 70% of their income comes from the strategic defense sector. The reduction will be valid for five years and is intended to promote the development of goods and services for defense, serve the needs of Brazil´s armed forces and promote defense exports.

Shortly after a fire destroyed Brazil´s Antarctic Base in February, the Chilean government is forging ahead with plans to build up its own military presence on the icy continent. The multibillion-dollar Chilean plan entails bolstering defense capabilities and fomenting tourism in Antarctica. President Piñera has announced a program to construct new Antarctic scientific research stations, the location of some will be chosen directly by the Chilean Ministry of Defense.

For original article, see Insights from the Field.

COHA – The Potential of Cuba’s Search for Oil

This analysis was prepared by Elena Maffei, Research Associate at the Council on Hemispheric Affairs

The recent discovery of offshore oilfields in the Gulf of Mexico has given Havana new hopes of establishing rich deposits of its own, thereby decreasing Cuba’s present dependence on foreign energy sources.

Fidel Castro began to look for new energy suppliers immediately upon coming to power in 1959, and he soon found one. The Soviet Union was Cuba’s largest supplier of energy resources during the Cold War, but Moscow’s collapse in the early 1990s, coupled with the longstanding American embargo, drove the Cuban economy into a deep depression. Havana, in response, has begun implementing market-based reforms, including intensifying efforts to open the country to tourism,[1] as well as encourage strategic partnerships with other Latin American countries, most notably Venezuela.[2]

In 2011, Cuba produced about 55,000 onshore barrels of oil per day, mostly from the northern province of Matanzas, refining it at the island’s four refineries (in Cabaiguán, Cienfuegos, La Habana, and Santiago de Cuba). Consumer needs, however, call for over 170,000 barrels per day, making the island a net importer of oil.[3] Currently, the bulk of these imports come from Venezuela, which meets two-thirds of Cuba’s daily requirements thanks to an energy agreement the two countries signed in October 2000. Cuba has become a crucial partner for Venezuelan President Hugo Chavez, as reflected in both countries’ membership in the risingAlianza Bolivariana para Amèrica Latina (ALBA) trade bloc.

In early 2012, a deepwater drilling rig was built in China by an Italian company, Saipem, which is owned by the oil and gas multinational Eni, and then leased to Spain’s Repsol. The Spanish company began offshore oil exploration 22 miles north of Havana, in the Jaguey block of the Cuban Exclusive Economic Zone (EEZ), as early as 2004, and is hoping to find between 5 and 9 billion barrels in that area.[4] Yet Repsol will hardly be the only foreign company operating in Cuban territory, as it will be working in just six blocks within the EEZ, and will be doing so in cooperation with Norway’s Statoil-Hydro and India’s Ongc. 22 other blocks, meanwhile, have been awarded to other foreign companies, including Petronas (Malaysia), PetroVietnam (Vietnam), Gazprom (Russia), Sonagol (Angola), PDVSA (Venezuela), and CNOOC (China).[5] While each is eager to hit black gold in the region, it would take three to five years of drilling before real production could begin even if the deposits live up to expectations.[6]

The United States, which is not taking part in the drilling because of its embargo against Cuba, could nevertheless not be more interested. Washington, alarmed by the drilling site’s location just 60 miles from Florida’s coast, has been expressing its concerns about the potential environmental risks posed by the explorations, and has commissioned a panel of environmental and energy experts to discuss possible solutions to any potential disaster in the region. According to William K. Reilly, former head of the Environmental Protection Agency under George H.W. Bush, “the Cuban approach to this is responsible and appropriate to the risk they are undertaking.”[7] But should an accident similar to the BP disaster of 2010 occur, the absence of a bilateral oil spill agreement between the U.S. and Cuba, in conjunction with strict American regulations freezing the transfer of technology between the two countries, would threaten American interests in the region, as well as pose a real environmental danger to the entire Gulf of Mexico. The matter is further complicated by the fact that offshore explorations are not taking place in U.S. territorial waters, within Washington’s legal reach, and are therefore not governed by the Clean Water and Oil Pollution Acts. Thus, any U.S. effort to take control of the situation in the event of an oil spill would be much more difficult, and would be bound to cause a diplomatic incident. Clearly, Washington must begin to consider a possible adjustment or elimination of the restrictions imposed upon the Caribbean country, and ask itself whether the embargo truly still represents American interests.

Economically, it must not be forgotten that if the investigations of Repsol and others reveal that there is a considerable amount of oil in the Cuban EEZ, Cuba could be transformed from an oil-importing country to one of Latin America’s largest oil producers almost overnight. Such a stark transition would undoubtedly affect relations between Havana, Caracas, and Washington, as well as completely change the geopolitical equilibrium of the region, possibly producing explosive results.

Another crucial issue is the conflict between the Argentine and Spanish governments over Argentine President Cristina Fernández de Kirchner’s nationalization of YPF, a now-former Repsol subsidiary. On April 19th, the Castro administration announced its support for the takeover, stating that Argentina has the right to exercise permanent sovereignty over its natural resources. Such a controversial declaration, even if coherent once one takes into account Argentina’s alliance with Havana, could end up being a risky and counterproductive step for Cuba.

A potential geopolitical turning point for the region, the discovery of oilfields in the Cuban EEZ could represent Havana’s ticket to the further liberalization of Cuban institutions, an escape from poverty and underdevelopment, and the end of Washington’s disdain for their Caribbean neighbor. Still, the Cuban position on the Argentinian YPF seizure could prove problematic, and Havana would do well to reformulate its position in order to ease tensions with the Spanish oil company. At the same time, however, if the United States is interested in benefiting from this discovery and in staving off a potential ecological disaster mere miles from its southern coast, then it, too, must work to ease tension and adapt to the post-Cold War world.

To view sources, please click here.

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Prospect – The Falkland’s New Boss

Brazilian Subs Could Change South Atlantic Military Balance

Imagine, for a moment, the Admiralty’s nightmare scenario: in the not-too-distant future, a nearly bankrupt Argentine government invades the oil-rich Falkland Islands. For the second time in half a century,Las Malvinas—the islands of Latin America regarded as a stolen piece of Argentina—spark a war meant to divert public attention from the Argentine government’s economic failings.

With twenty-first century budget cuts biting hard, Britain has no aircraft carrier. Argentina retired its own carrier in the late 1960s. Yet, unlike 1982, when Margaret Thatcher dispatched a flotilla to retake the islands, this time the South Atlantic is anything but empty. It’s home to a Brazilian carrier, the São Paulo, along with a fleet of nuclear-powered attack submarines being built in partnership with Argentina.

In effect, these weapons give Brazil the ability to impose an updated version of the Monroe Doctrine on regional waters. Call it the “Lula Doctrine.”

With its new confidence and military ambition, Brazil is a vocal advocate of Argentina’s claim on Las Malvinas. While few can imagine Britain and Brazil ever coming to blows, signs of a very different reality for Britain are starting to take shape.

Brazilian President Dilma Rousseff may seem an unlikely champion of a military buildup. Four decades ago, the Brazilian military dictatorship tortured her when she was a young guerrilla fighting their rule.

Yet, starting under Lula and slowly accelerating, Brazil has significantly expanded its military power—particularly its naval power, and Rousseff has kept the pace. This will change the dynamics of the southern Atlantic significantly, creating a true Brazilian “zone of exclusion” extending deep into the ocean above the oil riches recently discovered there.

But it also means that, for the United States and Europe, accustomed to dictating events on the high seas—particularly in the Atlantic—some important facts will change, especially with regard to the long-running Falklands/Malvinas dispute.

Brazil’s 2009 decision to build a fleet of five nuclear attack subs took Western military experts by surprise. Expected to start entering service in 2016, the submarines promise to dramatically alter the balance of power in the South Atlantic.

Lula, who led the push for the nuclear sub program, said before leaving office that the subs were “a necessity for a country that not only has the maritime coast that we have but also has the petroleum riches that were recently discovered in the deep sea pre-salt layer.”

The last time this scenario played out, Britain won the day and the United States backed its European ally—even privately offering to lend it one of America’s huge aircraft carriers (an offer turned down because of the complexities of operating one on such short notice).

In 1982, when the Argentine junta led by General Leopoldo Galtieri invaded the islands, Britain mustered a small but potent fleet of aircraft carriers, submarines, and surface ships to support a Royal Marine landing force that retook the islands. The retaking of the Falklands became emblematic of Thatcher’s determination that Britain not sink to third-class status. Yet it also left a deep scar on the Latin American psyche.

Brazil and other Latin American countries backed Argentina during the war but, mired in a regional debt crisis, had little diplomatic clout even fewer military options. This humiliation has left a lasting imprint, in particular, the sinking of the Argentine light cruiser General Belgrano, a hulking relic of World War II, by the nuclear attack sub RNS Conqueror. The loss of her 323 sailors is to many in Latin America what the Alamo is to Texans.

Until recently, experts regarded the Falkland Islands as an unlikely place for further trouble. But the discovery of oil in the North Falklands Basin in 2007 changed this. As a result of Argentina’s near-perpetual state of bankruptcy and Brazil’s new assertiveness on the world stage, sensitivities over the disputed islands have risen.

In January 2011, for instance, Brazil refused a small British warship, HMS Clyde, permission to dock in Rio de Janeiro. Neighboring Uruguay turned away the British destroyer HMS Gloucester in 2010.

In Britain, meanwhile, the commander of the 1982 Falklands fleet, Admiral Sir John Woodward, has complained publicly that current defense cuts likely would leave the Falklands helpless in the face of a new Argentine invasion, leading to political pressure to reinforce the British garrison.

But Brazil’s submarines change the naval balance of power in the region even more dramatically than Britain’s own defense woes. British strategists worry that Brazil may now demand that foreign powers simply steer clear of its backyard as the United States did in the nineteenth and twentieth centuries.

Brazilian officials have been careful not to portray the subs as a response to any outside threat as they continue to support Argentina’s Malvinas claim in international bodies. But it is just one of dozens of ways in which the relative decline of US power, and the more precipitous retreat of its European partner, will change the world. Gentle giant or not, Brazil’s backyard will have to be respected.

Michael Moran is editor-in-chief of Renaissance Insights, the in-house think tank of the global investment bank Renaissance Capital, and author of The Reckoning: Debt, Democracy and the Future of American Power, just released in the UK by Palgrave Macmillan.

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The Daily Beast – Iran Woos Bolivia For Influence In Latin America

by Ilan Berman

May 20, 2012 4:45 AM EDT 

Iran is believed to be funding a defense academy in Bolivia, and that’s just one way Tehran is deepening ties with its new Latin ally. Ilan Berman on the budding relationship.

One of the most dangerous places in the Western Hemisphere is the city of Warnes, Bolivia, which lies a few kilometers outside the country’s industrial capital of Santa Cruz. There, set back in an open field off a bustling highway, is the new regional defense school of the Bolivarian Alliance of the Americas, or ALBA—the eight-member economic and geopolitical bloc founded by Venezuela’s Hugo Chavez and Cuba’s Fidel Castro nearly a decade ago.

Since its launch last spring, the school has become the object of fevered speculation throughout the region concerning its potential role in the indoctrination and training to some of the most radical elements in the Americas. But perhaps the most tangible, and troubling, aspect of the facility is the role now being played there by the Islamic Republic of Iran.

Iran, itself an observer nation in ALBA, is believed to have provided at least some of the seed money for the academy, and no less senior a figure than its Defense Minister, Ahmad Vahidi, presided over the facility’s formal inauguration last May. Latin American officials now estimate that between 50 and 300 “trainers” from Iran’s feared clerical army, the Revolutionary Guards, are present in Bolivia—with at least some said to be providing indoctrination at the facility.

Iran’s involvement in the ALBA school serves as a microcosm of the Iranian-Bolivian relationship writ large. Since 2007, when Iranian president Mahmoud Ahmadinejad first visited Bolivia, the ties between Tehran and La Paz have deepened dramatically.

Bolivia, for example, is fast emerging as a source of strategic resources for the Islamic Republic. Iran is now rumored to be mining for uranium in no fewer than 11 locations outside of Santa Cruz, close to where the ALBA school is located. Not coincidentally, rumor also has it that the now-infamous Tehran-Caracas air route operated jointly by Conviasa, Venezuela’s national airline, and Iran’s state airline, Iran Air, could be extended to Santa Cruz in the near future—a sure sign of Iranian interest in the area. Additionally, a series of cooperation agreements concluded in 2010 between La Paz and Tehran have made Iran a “partner” in the mining and exploitation of Bolivia’s lithium, a key strategic mineral with applications for nuclear weapons development.

Significantly, the extent of this activity—and of Bolivia’s strategic resource wealth writ large—remains shrouded in mystery. That is because while the mineral deposits of Venezuela, Iran’s most prominent partner in the region, are comparatively well-known, those of Bolivia are not. This, according to regional observers, makes Bolivia a “black box” in terms of its resource potential—and consequently its future importance to the Iranian regime.

What is clear is that, at least for the moment, the Islamic Republic has placed considerable value on its burgeoning ties to Bolivia. In exchange for access from the Morales government, Iran has proffered hundreds of millions of dollars in loans to the Bolivian government, agreed to $1 billion-worth of joint commercial and industrial projects, and offered to sell warplanes and helicopters to the Bolivian military. (To date, however, most of these economic overtures have not materialized.)

Iran’s diplomatic presence in Bolivia has also deepened, with signs that its embassy in La Paz is being expanded under the watchful eye of Bolivia’s federal police. Bolivia has also become a prominent destination for Iran’s latest public diplomacy effort, HispanTV. The television channel, a Spanish-language analogue to the regime’s influential English-language PressTV, was formallylaunched with considerable fanfare by Iranian president Mahmoud Ahmadinejad earlier this year.

Iran is now a partner in the mining and exploitation of Bolivia’s lithium—a key strategic mineral with applications for nuclear weapons development.

Significantly, these contacts could be just the beginning. Over the past several years, Venezuela has served as Iran’s most stalwart ally in the Americas—and its gateway into the region. As part of those ties, Tehran and Caracas have made common cause on everything from Iran’s nuclear ambitions to a shared opposition to American influence. But that partnership is now in considerable flux.

In a speech last July, Venezuelan strongman Hugo Chavez officially confirmed what many had already suspected; that he was suffering from an aggressive form of cancer. Although Chavez has struggled to continue governance as normal since then, it is widely understood that his condition is increasingly grave. With Venezuela slated for presidential elections this October, the illness—and Chavez’ lack of a clear-cut political successor—has raised real questions about the future of his regime, and of the radical “Bolivarian” revolution that over the past decade has made ideological bedfellows of Tehran and Caracas.

In response, the Iranian regime is stepping up its engagement with other allies in Latin America, as demonstrated by Ahmadinejad’s very public four-country tour of the region this past January. And because of the sympathetic nature of its regime, as well as its presumed resource wealth, Bolivia figures prominently in Tehran’s calculus. Indeed, regional experts now estimate that Bolivia could end up becoming as significant as Venezuela for Iran, both as a source of strategic resources for its widening nuclear program and as a hub for the Iranian regime’s expanding asymmetric activities in the Americas.

So far, U.S. officials have paid little attention to Iran’s engagement with Bolivia, preferring to see it as both nascent and disorganized. It may still be. But there is no mistaking the fact that Iran’s radical regime sees the anti-American government of Evo Morales as a natural strategic partner—and that it is actively seeking to increase its activities there. It is equally clear, moreover, that Morales has been receptive to Tehran’s overtures, and has aided and abetted Iran’s entry into his country. The results already have strengthened Iran’s foothold in the Western Hemisphere, and given it access to potentially significant assistance for its nuclear program.

In the process, they also have presented a challenge to U.S. policy. Policymakers in Washington, preoccupied with curbing Iran’s nuclear ambitions, have not yet formulated a serious strategy to contest and dilute Iran’s growing global influence, or its presence in the Americas. But Tehran’s burgeoning ties to La Paz increasingly have made clear that, if they hope to comprehensively isolate the Iranian regime, they will need to do so—and soon.

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The Miami Herald – U.S. parties’ next clash: Who Lost Latin America?

BY ANDRES OPPENHEIMER

AOPPENHEIMER@MIAMIHERALD.COM

Posted on Saturday, 05.12.12

If President Barack Obama and presumptive Republican nominee Mitt Romney spend any time talking about Latin America during the campaign for the November elections, I can already see the thrust of their discussion — who lost Latin America?

Republican foreign policy-makers, such as House Foreign Relations Committee chairwoman Ileana Ross-Lehtinen and Senate foreign relations committee member Marco Rubio, are already stepping up their criticism of Obama for what they see as a rapid decline of U.S. economic and political influence in Latin America.

But are they right? And are the solutions they offer, including more forceful stands against anti-democratic governments in the region, the right ones?

Recent studies by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) leave little doubt that the United States has lost market-share in Latin America, especially in South America.

Consider:

•  U.S. foreign investments in Latin America, which were by far the largest in the region a few decades ago, amounted to 18 percent of the region’s total foreign investments in 2011. By comparison, the 27-member European Union represented 40 percent of all foreign investments in the region.

The United States remains the largest single investor in the region, followed by Spain with 14 percent of foreign investments, ECLAC says.

• When it comes to trade, the share of Latin America’s overall imports that are made in the U.S.A. fell from 55 percent to 32 percent over the past decade. Similarly, the share of Latin America’s overall exports that are going to the United States fell from 61 percent to 42 percent over the past decade.

• While the United States used to have a “strategic vision” toward the region when it proposed plans such as the Alliance for Progress or the Free Trade Area of the Americas in past decades, no equivalent to these ambitious initiatives exists today.

Critics add that, politically, the United Sates has lost ground as well. During last month’s Summit of the Americas where Obama met with regional heads of state and government, they failed to agree on a final statement because of differences over Cuba and Argentina’s claims to the Falkland/Malvinas islands.

In addition, critics point out that Latin American countries have recently created new regional institutions, such as the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean States (CELAC). While these groups may end up being empty shells, they were created to exclude the United States from regional decisions.

Roberta Jacobson, the new U.S. State Department head of Western Hemisphere affairs, told me in an interview that, contrary to what critics say, polls show that the U.S. image — and that of Obama’s — in the region “is very high these days,” and Latin American tourism to the United States “has exploded” to new highs.

“It’s not that we are losing influence in Latin America, but that there are other actors, such as China, which are conducting trade with the region,” Jacobson said. “That’s something that can be beneficial not only to Latin America, but also to the United States.”

In a speech at Miami’s Center for Hemispheric Policy on Friday, Jacobson added that during the Obama administration, U.S. exports to the Americas have soared by more than $200 billion to $650 billion, and today comprise 42 percent of overall U.S. exports.

With the recently approved U.S. free trade agreements with Colombia and Panama, the United States has now trade agreements with 12 countries in the region. The United States seeks “the collective success of this hemisphere,” she said.

My opinion: Washington has lost some of its former economic clout in Latin America, but that started under former President George. W. Bush, and is not an irreversible tragedy.

It’s something largely due to China’s seemingly endless appetite for South America’s commodities, a phenomenon that is likely to diminish in coming years as China’s economy slows, and South American countries become disenchanted with becoming raw material-dependent economies.

We will expand in coming columns over whether Obama or Romney offer the best policies toward Latin America. But, when it comes to the future U.S. role in Latin America, it seems that it will be something like that of today’s Germany in Europe.

As Latin America’s commodity-based radical populist fad of the past decade begins to unravel, Washington will no longer be an almighty superpower, but a big first among equals.

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