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Brazil, Venezuela vie for energy clout

Brazil's president Lula da silva toured Mexico and four Central American countries this week as Venezuela's President Chavez visited four South American nations.

from the August 10, 2007 edition

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When President Bush visited Brazil in March to herald cooperation on ethanol production, Chávez – as well as Cuban leader Fidel Castro – quickly condemned the effort, saying that ethanol production, particularly from corn, will drive up food prices and hurt the poor.

Venezuela's efforts to join the South American trade bloc Mercosur have also been stalled. While Argentina and Uruguay have approved Venezuela's entry – a stance reiterated by Argentine President Néstor Kirchner during Chávez's visit this week – lawmakers in Paraguay and Brazil have yet to do so. Some have questioned Chávez's commitment to democracy in the wake of Chávez's refusal to renew the license of an opposition-aligned television station, Radio Caracas Television, or RCTV.

For many analysts, Chávez's tour is a reminder to South America that he still wields great power.

"He has recently become a little irritated," says Mr. Shifter, particularly with the positions of Brazil and Paraguay on RCTV. "He is wanting to remind South American governments that they should be grateful ... that he has lots of money and is prepared to spend it, and they need it." This is particularly true as they face an energy crisis during an unusually cold winter.

While there is some distance between Chávez and Lula these days, no one expects a confrontation between two leaders who depend on each other economically and politically.

Riordan Roett, director of the Latin America Studies Program at the Johns Hopkins School of Advanced International Studies in Washington, D.C., says that Lula is taking a more low-key approach to positioning his country than is Chávez.

"Brazilians are much more moderate; they are trying to contain Chávez as much as they can," he says. "The Brazilians are taking a very realistic long-term perspective on their role in the hemisphere."

But while analysts view his trip as more pragmatic, it also had diplomacy at its roots too. Lula spoke of boosting trade ties with Mexico so that Latin America "could begin to dream of a stronger integration." Many observers see this as an effort to counter Chavez's role in the region. Lula spoke of boosting trade ties with Mexico so that Latin America "could begin to dream of a stronger integration." Many observers see this as an effort to counter Chávez's role in the region.

"There is a lot of pressure in Brazil on him to become a regional power, and there has been a lot of frustration with the protagonism of Chávez," says Shifter. "Lula has been pretty eclipsed. He sees an opportunity in Mexico and Central America, because of ethanol, and the biofuel initiative, to establish himself as a Latin American leader."

Small countries gain

The biggest winners in this jockeying are countries with high poverty rates that are typically ignored because of their small economies. Nicaragua, for example, is benefiting mightily from the attention of both.

On his trip this week, Lula offered technical assistance to Nicaraguan President Daniel Ortega to produce ethanol. The pledge comes in the wake of promises by Chávez, during trips earlier this year, to provide the Central American nation with cut-rate oil and a new refinery, which would be the biggest on the isthmus.

• Wires services were used in this report.

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