Brazil: Still Against Honduras

Brazil's Minister of Foreign Affairs, Celso Amorim, spoke out against Honduras on 16 February, claiming that elections should not be used to "wash" coup d'etats.

His remarks underline Brazil's continued chagrin over the forced removal of Zelaya, and I'm interested to see how Brazil's stand against Honduran President Lobo will play out across the region. As the US moves to support the Central American country, Brazil may find itself standing alone in the region. So far, however, many countries have yet to show support.

Chavez, CTD?

When I worked as an emergency medical technician many years ago, we used a short-hand lingo to describe the status of victims. We used "CTD" to describe someone who didn't have long to live. Their lives, like the water in a bathtub soon to disappear down the pipes, was "circling the drain."

With all the recent protests and such in Venezuela, I've fielded a few questions here and there concerning Chavez's chances for political survival. I have to say, they still look pretty good. Students continue to protest, and they have solid grievances, from the closure of television stations to energy and water shortages, and violence. In Caracas alone, some 34 people died from 29 to 31 January.

And on 1 February, a group of former Chavez supporters published their call for him to resign. This group, known as the Polo Consitutional "urged" the ruler to resign.

Yet on the same day, Chavez opened government coffers once again to solve his problems. He has announced a US$1 billion fund for investments in Venezuela's energy infrastructure, announcing a raft of projects designed to fill the gap between the country's energy demand and stagnant supplies, focused mostly on the Guri damn hydroelectric plant.

Ahead of the September legislative elections, we've seen Chavez stumble but he has a long way to go before he falls. The recent currency devaluation doubled the amount of money he has available to spend inside Venezuela. And as the price for oil remains relatively high, Chavez continues to collect foreign exchange. We're watching a long list of items, however, to see where and when support for the embattled president will begin to deteriorate. At the top of the list is food and water. Inflation, security, and jobs round out the top four.

Chavez has his work cut out for him, but there's plenty of time before the elections. As one local journalist said, Chavez will shoot for 70% control of the National Assembly, but even if he wins 60% he'll still be happy and solidly in control of the country's legislative agenda and output.

Iran and Venezuela: The 2009 Dosado

This Southern Pulse Intel Brief, dated 24 September 2009, is republished here with permission from the Southern Pulse editors.

--

In a recent interview with conservative French newspaper Le Fiargo, Venezuelan President Hugo Chavez thanked Iranian President Mahmoud Ahmadinejad for the technology transfer required to develop a nuclear energy program in Venezuela. The agreement, Chavez claims, was signed in early September, and serves as a capstone for the tightening of relations between the two countries over the course of 2009.

While visiting Ahmadinejad on his eighth trip to Iran during the week of 5 September, Chavez reportedly followed up on 186 separate agreements formed between the two countries since 2005. A 10-year strategic alliance was proposed, as well as joint plans for the construction of a oil refinery in Syria with an expected capacity of processing 150,000 barrels of oil a day.

Venezuela has also agreed to sell Iran 20,000 barrels of gasoline a day beginning in October 2009, but Chavez declined to disclose the duration of the US$800 million agreement. To further support Iran’s energy needs, PDVSA has also agreed to establish operations at Iran’s South Pars 12 gas field, with estimated reserves of some 12.6 billion cubic meters of natural gas

Iran has reciprocated with the announcement that its government will validate educational qualifications and academic titles awarded in 47 Venezuelan universities.

The September meeting comes only five months after Chavez’s last visit to Tehran in the first week of April, when he travelled with a selected group of Venezuelan businessmen. They were on hand to witness the inauguration of a joint Venezuelan-Iranian development bank, reportedly capitalized with US$200 million, with half to be provided by each government. Iranian Kourahs Parvizian will become the president of the bank, while Venezuelan Nelson Ortega will become the vice president.

While in Tehran, Chavez also called into a Venezuela Television show, Contragolpe, to describe plans for a joint Venezuelan-Iranian mining company to formalize five years of mining operations shared with Iran in Venezuela. Chavez noted that the new mining company would focus on six minerals and some precious stones, including diamonds.

Later in April, the Iranian Defense Minister Mostafa Mohammad Majjar landed in Caracas for a short trip to sign a series of “unspecified agreements.” Presumably, these agreements facilitated the 29 April signature of a memorandum of understanding between the Venezuelan and Iranian armed forces.

Within the remaining months of 2009, Venezuela and Iran are likely to expand on their peaceful nuclear initiative, one that France has already flagged as a violation of UN Security Council resolution 1737.

Welcoming 2008

In the first week of the new year, there are a number of items that are worth our collective attention but too little space here to cover all of them. We'll make our way through them slowly, perhaps elucidating more on the blog, while reserving the more interesting points for this weekly newsletter.

Today I'll focus on what seems to be some of the more interesting issues at hand but want to begin with a quick mention of a radio show called Focus 580 with an NPR station out of Illinois. The host and I talked about the US and Mexico, the drug trade, and who supplies versus who demands. You can find it here about halfway down on the left.

The US Dept. of Justice has finally made public its position that Mexico has become the number one supplier of methamphetamine to the United States. It's about five years behind the ball with that one. Known as "ice" or simply "meth" this drug is probably the most damaging in terms of public health costs and the most addictive, next to heroine, in terms of how many heavy users it creates. The fact that Mexico has been for years the number one supplier is again testimony to how organized Mexican narco traffickers are when it comes to managing their US distribution networks - so much so that they managed to identify a new trend in drug demand inside the US and take over the supply chain, one that was once solely inside the US and mostly in California.

Another interesting revelation, as some members of the Southern Pulse network have mentioned, is the nature of Mexican drug traffickers and how it is changing. The Tijuana Cartel, as we have pointed out in the past, has become more of a black market financial institution as it's muscle and strong-arm presence within Mexican drug trafficking has diminished. The question is whether or not the TJ Cartel will give up their control of that border crossing into the United States. Might they "lease" it to the highest bidder?

Both the Sinaloa and Gulf Cartels have long been involved in politics on a local level, pressuring specific candidates to get out of the race, killing others who have won, and on a more popular level, sponsoring marches against the "military occupation" of certain towns and small villages in northern Mexico. We're researching this trend in preparation for a forthcoming report on Drug Trafficking in Mexico, our third. We will let you know when it is ready, hopefully by the end of the month.

Is it true that Guatemalan president Alvaro Colom will take orders from organized crime? This is an answer we will try to find over the duration of his first hundred days in office, to kick off soon. Elsewhere in Central America, ten people have died in the past 24 hours in El Salvador, most of them when gunmen separated themselves from a crowd watching a soccer game when they began shooting, apparently at random. What will it take to subdue the violence there? We think part of the problem is US deportation policies and a lack of information sharing between the US and its Central American colleagues.

Finally, how will South America take shape in 2008? Will Brazilian president Lula re-assert his regional leadership as Chavez begins to look toward cleaning his own house? Already we've seen Lula working to bring Bolivia, Ecuador, and Peru closer. And it's clear Brazil and Colombia are friendly. Argentina is up in the air. Could it be that President Cristina allows Venezuela to buy her support as her husband did?

2007 Wrap Up and a peek at 2008

As this will be our last newsletter of 2007, we wanted to review briefly some of the year’s highlights and then take a peek into 2008.

Highlighted themes in 2007 include Chavez’s reach for more power and the resulting international friction between himself and Lula in Brazil. Bolivia has struggled with a Constituent Assembly. Truth telling in Colombia has unveiled a host of close ties between politicians and paramilitaries, but nothing yet has touched President Uribe.

Ecuador is flirting with China and the idea of a new port in Manta, where the US currently operates a military Forward Operating Location. And Kirchner succeeded in placing his wife in the president’s seat in Argentina.

Political violence in Guatemala underlines the strengthening grip of organized crime on that country’s political class. And ongoing violence in Mexico, as well as violence across the border into the United States, has prompted the discussion and now debate over the Merida Initiative.

In 2008, many of these ongoing themes will evolve and likely come to a head. We’re most interested in observing how the Merida Initiative is actually implemented. Will private contractors such as Blackwater USA or Dyncorp actually be used? Could increased pressure on drug trafficking organizations in Mexico lead to a spill over effect into Central America?

The last thing Guatemala needs is more Mexican criminals. Already, President-elect Colom has his hands full. His first 100 days will undoubtedly be marked by attempts from Guatemalan organized crime to show him – overtly or covertly – just how much they control wide swaths of his country.

We’re also interested to see how the humanitarian exchange process plays out in Colombia. Might Betancourt see freedom? We hear that Uribe invited Lula to mediate a humanitarian exchange process during President Cristina Fernández de Kirchner’s inauguration. For Lula it would be an opportunity to show the region and the world that he can succeed where Chavez has failed – a perfect maneuver for what appears to be an indirect approach to usurp Chavez from his regional leadership role.It is one he has purchased, not earned.

What will happen when the Venezuelan Bolivar drops two zeros (or three for that matter) in January? This slight change in the Venezuelan currency is certainly more cosmetic than economically sensible, as is the recently adjusted Venezuelan hour. It doesn’t make much sense to move the clock by half an hour, does it? Inside Venezuela a galvanized opposition has some momentum. In 2008, we will see how and where this momentum is used. May we see Chavez’s political core crumble? Not likely, but it will be interesting to see if the military takes a more active role in checking the president.

Can Morales hold his country together? The recent declaration of autonomy from the low-lands provinces seems serious enough, but Morales has – as of this printing – not sent in any troops to force order or obedience. He took the time to travel to the MercoSur meeting, so he cannot be too worried about the apparent mess at home.

Lula recently visited with promise of more Petrobras investment. He also told Morales to have “patience, patience, and more patience” with the opposition. Sometimes all it takes are a few words. Lula will likely work to bring Bolivia back into the Brazilian sphere of influence, further asserting his regional leadership role over Chavez.

Meanwhile, inside Brazil, we will be watching two important issues. First, the aviation crisis is still not resolved. How will Lula manage to keep Brazil’s skies safe? Might there be another accident? We’ve seen on many occasions reports of near misses in Brazilian media that some how doesn’t make it to the international scene. Just as important is Lula’s recent loss in the Brazilian Congress over the CPMF tax – one that taxes the movement of money through Brazilian banks. The bottom line is Lula’s administration will have roughly US$ 20 billion less to spend on social programs to pass along to state and municipal budgets in 2008.

Internationally this loss could hurt Brazil’s investment grade, we’re told by the Financial Times and sources in Brasilia, but what does it mean for the Brazilian economy in the long run?

Overall, 2008 promises to be another interesting year in Latin America. For now, and through the end of 2007, we will simply observe...

Hitting the highlights after a long absence

This is number 6/2007. My apologies for the long absence. We are back. I will endeavor to produce this newsletter once a month at the very least. Since March, I have been working with a European company, Riskline, covering political risk and security in the region. We also have a developing blog. It has been time consuming but rewarding work! My own website, where you may find commentary and analysis on politics, security, and energy in the region, has been updated (mostly) as of this posting.

In this edition:

So many items are worth mention. I will try to cover the highlights here and get into more detail in future posts.

The Brazilian president's response to the worst aircraft accident in Brazilian history was dismal at best. The country suffers from a significant lack of infrastructure development, and the bureaucracy that supervises commercial aviation in Brazil is complicated and stuffed with political appointees. Many have little to no experience with matters of aviation security.

In Argentina, a couple recent scandals, one involving US$ 800,000 illegally brought to Argentina by a Venezuelan businessman on a private jet chartered by the Argentine national energy company, have tainted president Nestor Kirchner's popularity a little. But they seem to have not affected his wife's campaign for president. Elections are set for October. All expect Kirchner's wife to win, which means little by way of a chance in governance or economic policy - not a good sign for the country's long term growth and stability.

In Ecuador and Bolivia, presidents Rafael Correa and Evo Morales continue to push forward with a Constituent Assembly to rewrite the country's constitution, re-founding it to reflect the needs of the poor. In Bolivia, the process has been met with widespread protests, some for others against the government. Lately, Evo's left flank has become rankled over their perception of his soft stance on reform, a trend that might force Morales into the middle of protests from the both ends of the Bolivian political spectrum. In Ecuador, Correa remains popular but he has only just begun the process.

Venezuela's Hugo Chavez continues to push forward with Socialist reforms at home while purchasing support abroad. He has encountered significant resistance in trying to reform Venezuela's political system under one party, and a string of corruption scandals pointing at Venezuelan energy company PDVSA have begun to attract negative attention at the domestic level. The latest scandal involving the Venezuelan businessman in Argentina has also chilled relations between the two countries. To save face, Kirchner is demanding that Chavez investigate the corruption on his end, but that would force Chavez to face the ugly truth about corruption in his country. It's a stand off, but Kirchner will grow quiet soon. After all, it was Chavez who was just in Argentina to buy yet another US$ 500 million in Argentine government bonds.

In Guatemala, presidential and congressional elections set for September have grown ugly. Over 50 people have been killed in a string of events that points to the close involvement of organized crime in the Guatemalan political field. Financial support of municipal and departmental candidates will ensure a leap forward for organized crime in terms of controlling Guatemalan politicians. The future for this Central American country does not look good. I suspect it will become a much more violent place in the very near future.

Meanwhile, presidents George W. Bush and Felipe Calderon of Mexico are expected to announce the latest developments of a closely guarded plan for the two countries to cooperate in the latest front for Washington's War on Drugs. It has become hard to ignore the violence along the US-Mexico border. And since Calderon has come into office (December 2006), he has proven his determination to take the fight to his country's criminals, a posture that has earned him some respect in Washington. There are many challenges ahead for a US-Mexico plan, but both sides are seriously talking and Mexican security is on President Bush's agenda - something that never happened during the administration of Vicente Fox.