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."

Gang Busters, Unmanned aircraft, and Ruling by Decree

This is number 1/2007. Our Mara Salvatrucha report is nearly complete. We are waiting on a court reporter in Maryland to send over the transcripts of witness testimony that, so far, have not been released to the public. The results for January's monthly survey are in. Once we publish the Mara Salvatrucha report, we will begin work on Mexico's drug wars. You can still find our December report on the FARC's international network here.

In this edition:

The Mara Salvatrucha, the United States' most violent street gang according to the FBI, has received much attention from the press this year. A trend towards greater organization suggests the gang may soon become much more than thugs. And the government's use of racketeering charges to prove organization has for the first time etched in public records evidence of the gang's increased levels of sophistication.

Meanwhile, a continuing resolution passed by the outgoing Congress late last year has catalyzed a hiring freeze at the Drug Enforcement Administration. The DEA has suffered budget cuts, and its operations on the US/Mexico border appear to be on the road towards friction, not cooperation, with the Bureau of Immigration and Customs Enforcement as well as the FBI. These are trying times for the DEA because Washington has put the drug war on hold while it chases after terrorists and democracy in the Middle East.

Mexico, however, has raced forward with its war on drugs. President Felipe Calderon has taken the fight to Mexican organized crime. He's sent troops to Michoacan, Baja California (Tijuana), and other states. Calderon has also begun using extradition to the United States as a tool. Already he's extradited the leader of the Gulf Cartel and as of the last week of January has some 9,000 troops hunting for El Chapo, the leader of the Sinaloa Federation. I'm waiting to see how the criminals fight back...

...Iran will soon open an embassy in Nicaragua. After a three day tour, guided by Venezuelan president Hugo Chavez, Iranian president Mahmoud Ahmadinejad, extended his Latin American contact network to Nicaragua, Ecuador, and Bolivia through meeting the presidents of all three nations. As Iran's presence in Latin America grows, so does unease in Washington.

Chavez will continue to push Washington with rhetoric all year, but an interesting bit of news - beyond the usual Bush-bashing - surfaced recently. The Venezuelan military has quietly said it will work with Iran to develop unmanned aircraft. This announcement could be misinformation; it could also be a test balloon to gauge US response. Either way, closer military ties between Iran and Venezuela do not bode well for Washington. Nor do Venezuela's plans to purchase anti-aircraft missiles from Russia.

We'll certainly hear more from Chavez, who as of 31 January is in position to rule by decree. The region's response to Chavez's constant tinkering (to put it nicely) with Venezuelan democracy is deplorable and indicative of the fact that it is unlikely anyone in the region or Washington can stop him.