Heavy Crude, Countering Chavez, and Plan Afghanistan

This is number 2/2007. Our Mara Salvatrucha report is complete. We are pleased to say we were able to include never before published information gathered from transcripts of witness testimony. We will now begin work on Mexico's drug wars, updating a piece I published on October on the possibility of a Mexican Mega Cartel. Please note, some of you did not receive the 1/2007 edition due to a technical error. Please use the blog link below to review that material.

In this edition:

Venezuela has signed a US$3.5 billion oil deal with Japan. Japanese companies Mitsui and Marubeni have signed a contract with Venezuelan energy company PDVSA to import crude over the next 15 years. It is the largest energy deal with an Asian company that I have seen.

As many are aware, Venezuela's heavy crude is not a market favorite, but I've recently learned that this crude is precisely what the market may consume in the future. According to sources in India, state-run Indian Oil Corp. has begun placing orders for heavy crude, to be refined at an Indian refinery. If India is convinced heavy crude is the wave of the future, then I must wonder about China. Sources in Petrobras here in Brazil tell me China talks of building heavy crude refineries. The potential effect is two-fold. One, the United States will soon be one of three major markets able to refine heavy crude. And two, the price for heavy crude will stay high. This has obvious implications for the future of Chavez's regime in Venezuela, the world's leading source of heavy crude oil.

Meanwhile, there is no Latin American leader well positioned to counter Chavez. His ideas roam free across Latino lands, and while we must wait until the next round of presidential elections to see how the region has taken to his 21st Century Socialism, it's clear to me and many of us down here that Bolivarianism will continue to take root as Washington's influence in this region continues to fade.

This year will be one of engagement, according to Tom Shannon, the State Department's top diplomat for Latin America. His recent visit to Brazil, however, appears to have been derailed by the revelations of the former Brazilian ambassador to the United States who claims Brazilian foreign policy is still very much influenced by old-school Socialists. Too bad the US has identified Brazil as the country to counter Chavez. We'll see what the future holds. I've been told by contacts in the Whitehouse that President Bush is "obsessed" with Iraq. So we'll see just how much the US will engage in Latin America.

Meanwhile, William Wood, the former US ambassador to Colombia, will soon become the US ambassador to Afghanistan. One country is the world's leading supplier of cocaine, the other heroin. I'm very concerned that failed US policy in Colombia will be repeated in Afghanistan. There is widespread concern that the so-called Drug War will have a negative impact on Afghanistan's future.

By most accounts USAID, the US government's agency that disperses development aid and implements development policy is in need of some serious attention. I have documented USAID's dismal work in Bolivia. It's work in Colombia has had limited success. A contact who has returned from a development post in Afghanistan recently wrote:

"At the end of December I finished up 15 months in Gardez, Paktya, in SE Afghanistan, overseeing USAID-funded reconstruction projects. I don't think I went in with any starry-eyed notions about the US-led effort there, but seeing first-hand the degree to which it is misguided and insincere was astounding nonetheless."

He continues: "I think there's a depth of cynicism in many of these efforts that is hard to fathom-- the Drug War is one of the clearest examples, I guess. The facts are arrayed against it so clearly-- it's ruled by an orthodox faith that allows for very little questioning, but more that that there's a tremendous inertia of interests-- the machinery of the Drug War already in place that needs it to survive, the various entities raking in the profits from the government contracts, etc. I really wonder how many people in leadership positions who espouse the Drug War religion are actual believers."