| | |  Americas & Beyond | May 2009 
Venezuela’s Hope of More Sway Dims as Riches Dip
 Simon Romero - New York Times
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| | President Luiz Inácio Lula da Silva of Brazil, left, and President Hugo Chávez of Venezuela. (Eraldo Peres/Associated Press) | |
Caracas — President Hugo Chávez’s push to extend his sway in Latin America is waning amid low oil prices and disorder in Venezuela’s own energy industry.
In recent years, Mr. Chávez has used his nation’s oil wealth to drive his socialist-inspired agenda at home and draw other countries in the region into his sphere of influence, helping to consolidate a leftward political shift in parts of Latin America.
But more than a dozen big projects intended to broaden his nation’s reach are in limbo — including a gas pipeline across the continent and at least eight refineries, from Jamaica to Uruguay — as Venezuela grapples with falling revenues and other troubles in its national oil company.
Venezuela is also cutting back sharply on other types of financial support for its neighbors, a cornerstone of its regional influence. One recent study by the Center of Economic Investigations, a financial consulting firm here, found that Venezuela had announced plans to spend only about $6 billion abroad this year, down from $79 billion in 2008.
That includes proposed spending on everything from military purchases to aid, and points to a major weakening of Mr. Chávez’s oil diplomacy. Gone, for instance, are multibillion-dollar outlays to buy Argentine bonds, replaced by modest loans like $9 million for growing rice in Haiti.
Now countries that have been dependent on Venezuelan aid are turning elsewhere. Argentina locked in a $10 billion deal with China to help it buy Chinese imports, while Ecuador, a close ally of Venezuela, is rekindling ties to the International Monetary Fund, the kind of Western-dominated institution that Mr. Chávez scorns.
Some Venezuelan allies even appear to be warming to the Obama administration, sometimes in areas like military training. This month, President Rafael Correa of Ecuador sent a personal pilot to study at the Air War College in Montgomery, Ala.
Cuba, too, is cautiously opening the door to improving ties with Washington, while trying to attract investment from Brazil, potentially reducing its reliance on Venezuela.
“Chávez’s influence is starting to reach its natural limits, after years of pushing a regional integration process where Venezuela was the hub and others are the spokes,” said Daniel P. Erikson, an analyst at the Inter-American Dialogue, a research institution in Washington. “Midsize countries in Latin America have no interest in being a spoke to Venezuela.”
Larger countries, meanwhile, are pursuing their own agendas, helping to redraw the map of energy alliances and power in Latin America away from Venezuela and from Bolivia, a top ally of Mr. Chávez’s with large natural gas reserves. Brazil, Argentina and Chile all moved forward this year with projects to import natural gas from rival sources, like Russia and Trinidad and Tobago.
Brazil has also emerged as an energy rival after discovering large amounts of oil and natural gas off its Atlantic coast. Now it is increasing exports to the United States, Mr. Chávez’s top customer, while Venezuela’s national oil company faces declining output from its oil fields.
Despite the changes, Venezuela still retains broad influence in the region, including parts of the Caribbean and Central America, where it allows more than 15 nations to defer part of the bill for Venezuelan oil. Their debts to Venezuela climbed more than 30 percent in 2008, to $5.5 billion.
Another of Venezuela’s top priorities, the formation of the Bank of the South, a development bank intended to counter the influence of the World Bank, also seems to be making some progress, though it is unclear when it will start operating.
Venezuela also wields influence in ALBA, a cooperation group of about six of the region’s poorest nations, including Nicaragua and Bolivia.
Still, a sharp fall in oil revenue here has accentuated problems at the national oil company. Tensions are high with labor unions over salaries that trail the nation’s inflation rate, the highest in Latin America. Losses are accumulating because Venezuela has some of the world’s most generous domestic fuel subsidies, leading also to illegal smuggling of cheap fuel to Colombia. And there have been long delays in assembling complex export projects, and mounting debts.
Amid the problems, Mr. Chávez seized the assets of dozens of foreign and domestic oil contractors this month instead of paying debts to them valued at more than $10 billion.
Under such pressures, Mr. Chávez has had to shift focus this year from the vast international projects that expand his influence to shoring up the national oil company, Petróleos de Venezuela, which provides the country with more than 90 percent of its export income. In April, the company cut executive salaries by 20 percent and froze the salaries of its 75,000 employees.
Other projects, like a long-delayed plan to tap offshore natural gas reserves by shipping the fuel in supertankers, are advancing at a snail’s pace.
“Venezuela tried to impose its own view of energy integration in the region, but that model is falling to pieces,” said Roger Tissot, an authority on Venezuela’s energy industry at Gas Energy, a Brazilian consulting company. “The potential markets are seizing on low energy prices to achieve diversity of supply.”
Some of the strain may even be showing in Venezuela’s program to provide subsidized oil to nations in the region. At least one country eager to participate, Costa Rica, has said that its request has languished, a potential sign that Caracas is less willing to take on new members at a time of declining revenues. At the same time, Costa Rica has been considering a deal with China for building a $6 billion oil refinery.
By contrast, Brazil’s ascendance in regional political and energy issues was on display after the election in March of a leftist in El Salvador, Mauricio Funes, who was greeted with enthusiasm by Mr. Chávez as proof of the “historical current that has been rising in Latin America in this first decade of the 21st century.” Yet Mr. Funes’s first visit after winning was to meet with Brazil’s moderate leftist president, Luiz Inácio Lula da Silva.
“I identify more with the Brazilian model than with Venezuela’s, but I want good relations with them all,” Mr. Funes said during the visit in March. Publicly, Brazil applauds Mr. Chávez’s regional initiatives, like the often delayed Bank of the South, and the $20 billion pipeline from Venezuela to Argentina. But Brazil does so with caveats in line with its own interests. “I think the project is feasible,” Brazil’s foreign minister, Celso Amorim, said in April of the pipeline, “but during the crisis there are not any available funds. The large project should wait a while.”
Alexei Barrionuevo contributed reporting from Brasília, Brazil. |
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