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.

Brazil's Iron Lady has cancer

I have said many times now that Brazil has a bright future. And on 25 April it just got a little brighter for Lula's team.

With Obama in office, the realities of Brazil's increasing power and presence in South America, and the very real possibility that Brazil will not ask for financial help from the IMF or anyone else to help weather the global economic slow-down, President Lula will leave his hand picked successor everything she needs to carry Brazil into its new role as a regional leader and global energy provider.

Dilma Rousseff, currently serving as Lula's chief of staff, has a decent chance of winning, but now, it looks like her chances just got better because she has cancer.

On 22 April, she found out that a swollen lymph node was malignant. On 24 April, she told her boss, President Lula, and on the 25th, both stood on a stage in Manaus and brought the news to Brazil.

Lula had weighed his chances.

First, Dilma's doctor caught the cancer very early. According to one expert here, she has over 90% chance of complete recovery.

Second, right now, Dilma runs some 30 points behind Jose Serra, the "other" candidate for Brazil's presidency (elections in 2010). But she's already at 11%, well ahead of her initial polling results at 3%. And we're not even close to the campaign, which will begin around May, 2010.

Third, many here agree that Dilma's greatest political weakness is two fold. One, she's never run for political office. Two, her "iron-lady" reputation, might not resonate well with Lula's supporters who are used to his warm smile, teddy bear presence, and well practiced charisma.

By getting out in front of Brazilian media, putting out details of Dilma's cancer, her recovery prognosis, and her intentions to "nao se entrega", or not give up, Lula and his team has dealt a political master stroke.

As Dilma passes through her four month treatment, Lula's press office will release some photos of her suffering, and maybe even one of her bald. The bottom line effect is to make her more human.

Dilma is already known as a tough lady who's been through a lot. She was tortured, was an armed guerrilla fighter, has been through divorce, among other hardships. Add cancer to that list, and Dilma has a great portfolio of drama in her past - something Brazilians love.

The other important factor is that Dilma has never been out in front of a campaign. She's relying completely on various members of her party, the PT, to help her on a regional and local level.

Until the news of her cancer came out - and more importantly, the news that Lula stood behind her 100% - many members of the PT were skeptical, and didn't want to openly support her candidacy.

Now, as more and more PT members, as well as the members of other parties, begin to voice support for Dilma - support for her to get well, initially - she will be seen by Brazilian media and possibly the rest of the world as a "consolidated candidate," and Lula can enter 2010 with Dilma recovered, with a more solid backing, and ready to win over the Brazilian voting public with her cancer story.

Normally, cancer is a cause for worry, sadness, and sorrow. Not in Brazil. Dilma's cancer is (almost) cause for celebration in Lula's camp. With out it, Dilma's chances of winning were slim to none. With it, she's got a much better chance of winning, and beating out Jose Serra, a very strong candidate.

The Monroe Doctrine: Circling the Drain

Many of the legacies left by George W. Bush will focus on the War on Terror and Iraq. In Latin America, however, his legacy will be one that always remembers how Latin America was lost on his watch. As President Bush closes out his final months in office, many in Washington lament that the Monroe Doctrine, the foundation of Washington’s soft power in Latin America, is circling the drain and nearly dead.

Iran, China and Russia are certainly helping it along, but they would be in no position to do so if the present White House had simply lived up to what President Bush promised in his first presidential campaign: closer ties with Latin America. If anything, however, President Bush has distanced himself farther from Latin America than any president in recent history, creating a vacuum that has been steadily filled by patron nations not motivated by Washington’s best interests.

On 22 September Russian Naval cruiser, Peter the Great, set sail with two other ships for Venezuela where they will take part in naval exercises in the Caribbean. Russian bombers recently left Venezuela after a number of training missions off the Venezuelan coast, and a long time Russian spy, now Deputy Prime Minister, Igor Sechin recently made his rounds through Cuba, Venezuela, and Nicaragua at the head of a large delegation of diplomats and business leaders.

The Russians are courting Bolivia, offering helicopters to help combat organized crime and drug traffickers. Meanwhile, Bolivia has announced it will move its Middle Eastern embassy from Egypt to Iran, a county now hard wired to Venezuela with at least one weekly flight.

A runway built by the US military in Manta, Ecuador, may soon be used to receive regular flights from China, and there are talks to open an international deep water port in Manta, making Ecuador a primary link between South America and growing business interests out of China.

Hutchinson-Wampoa, the company that controls ports on both sides of the Panama Canal has shown considerable interest in building in operating the Manta port, as well as a deep water port in northern Mexico.

The Chinese Development Bank, a financial institution that conducts some US$400 billion in annual loans, grants, and other programs, will invest US$100 million in Chile, where the national mining company, Codelco, will soon open another copper mine just to meet Chinese demand.

Over the past four years, we have watched the president of Iran receive a warm welcome in Nicaragua, Bolivia, Venezuela, and Ecuador, when the US president was all but forced off stage at the Summit of the Americas in Argentina and embarrassed by a negative public reception in Guatemala at the tail end of his obligatory Latin American tour in 2007.

The US State Department declared in January 2008 that this would be the year of engagement. So far, there has been little more than a cursory glance at Latin America, with most of the attention coming recently when Bolivia, then Venezuela, sent the US ambassador packing.

The International Monetary Fund has been lambasted as a bunch of Washington cronies. The State Department's Human Rights report and yearly review of cooperation in the so-called War on Drugs is significantly watered down in an environment where the region’s new patron states don’t place a high value on protecting human rights or preventing drugs from entering the United States.

Any influence the United States may still retain over the region has all but eroded. And since Thomas Shannon, the State Department’s top diplomat in Latin America, visited China in 2004, it has been all but formally acknowledged that China has a “seat at the table” when any Latin America enters serious discussions over trade, military support, or foreign direct investment.

Looking ahead, President Bush will hand his successor two ongoing conflicts in Afghanistan and Iraq as well as the so-called wars on terrorism and drugs. By many accounts, the new president will inherit four “wars”. Three of the four wars are over an ocean and half a world away. And the war that potentially has the most impact on Americans' daily lives has received the least amount of attention and funding.

What may affect Americans the most in the coming presidential term and beyond is likely not the threat of nuclear war or a terrorist attack but losing the support and respect of a region that since 1823, when the Monroe Doctrine was first signed, has been for better and for worse, the sole purview of the United States.

In the last eight years, Washington’s backyard has become littered with a number of interests that range from hostile to indifferent towards the United States. For many Latin American nations, the upshot is choice, an option to trade with other countries aside from the US and the EU. They are new patrons who don’t care about human rights standards. They do not force Latin governments to give their soldiers immunity from prosecution at the International Criminal Court

Moving forward, many countries in Latin America, specifically Brazil, Ecuador, Chile, Argentina, and Mexico, may see winning combinations and synergies emerge from budding relationships with at least China and Russia. Iran is a distant, yet significant regional player.

The big loser will be the United States. US diplomatic pressure and geopolitical voice will increasingly fall on deaf ears. A region that was once very close has perhaps forever stepped away. It is unlikely future leaders in the White House will repair broken relations or revive one of the region’s oldest unspoken laws.

One Brazilian diplomat recently told Southern Pulse, “In the past, the door for talks with the United States on any issue had to remain open. We had no choice. Now we can close it if we want. And in the future, it may rarely, if ever, open again if China and Russia have their way.”