Southern Pulse Intel Brief, 13 August 2009

I have posted below the Southern Pulse Intel Brief, with permission from the Southern Pulse editors. This intel brief is normally published only for Southern Pulse members, and no longer available on Networked Intelligence, the organization's blog. I hope you find it interesting and informative.

INTEL

Russia and Cuba signed agreements in August 2009 to explore oil in the Gulf of Mexico. As part of this latest effort to deepen ties between the two old friends, Russia has also extended Cuba a US$150 million credit line for construction materials and farm machinery.

Out of India, sugar refining group Shree Renuka Sugars has made public its interest in acquiring a stake in Brazilian sugar and ethanol producer Grupo Moema. Shree Reunka has up to US$100 million available for the acquisition. Moema is also reportedly interested in other sugar refining groups, including Cosan, São Martinho Guarani, Cargill and Bunge.

Finally, we have learned that in Mexico, Army personnel detained Roberto Gaspar Caballero, a 21 year-old resident of Reynosa, Tamaulipas on 5 August 2009 as he attempted to smuggle 20 grenades into the U.S. in his Chevy Suburban via the Reynosa-Pharr port of entry.

ANALYSIS

Russia’s new relationship with Cuba began to take shape in June 2008 when Russian Deputy Prime Minister Igor Sechin made a state visit for formal talks. Sechin returned with a delegation of businessmen and diplomats on 18 September 2008. News of the development of a Russian-Cuban space center later surfaced, and in mid-March 2009, we learned that five Russian companies could begin oil exploration in several Gulf of Mexico blocks owned by Cuba. With this agreement in place, Russia has solidified its position in Cuba as an energy partner for many years to come.

Indian sugar producers have had a tough year. This explains, in part, why the international price of sugar hovers at record highs, and why Brazilian sugar producers have begun to shoulder global demand, raising their international profile. Brazilian sugar production is closely tied to ethanol as both are made from sugar cane. Grupo Moema is but one of many companies that can produce ethanol or sugar, but only a few have attracted international attention. Cosan, which has been negotiation with Shell oil over a minority stake, is another. In the short-term, Brazil’s sugar/ethanol producers will struggle to meet domestic and international demand. The price of sugar, however, will help offset losses over the depressed price of ethanol and limited export markets.

The news of a Reynosa man caught smuggling grenades into the United States reminded us of when an unidentified man threw a grenade into a bar in Pharr, Texas. From 2008 to 2009, there has been a considerable jump in the amount of seized grenades in Mexico, indicating that the use of explosives in armed confrontations will continue to be a normal occurrence. We are watching for improvised explosive devices, however, which would be a serious escalation. On 16 March 2009, Mexican soldiers seized 34 Tovex sausage explosives, 47 meters of explosive fuse, and around ten pounds of granulated explosive from a safe house just south of Sunland Park, New Mexico. Additionally, on 19 and 24 February 2009, 30 kilos and 121 kilos of explosives, were stolen in Mexico. These explosives have yet to turn up.