US (Energy) Security: Brazil is Key in Overdue Hemispheric Policy Shakeup

US (energy) security: Brazil is key in overdue hemispheric policy shakeup

This is the second in a two-part analysis of how Venezuela could contribute to US national security over the next decade. Andr’es Cala and Michael Economides are coauthoring America”s Blind Spot: Ch’avez, Oil, and US Security, which will be published by Continuum July 19.

An unexpected and brilliant diplomatic window opened last month in an impoverished, landlocked Latin America country for the US to improve its security and its muscle to confront foreign security priorities in Syria, Iran, Russia, China, Pakistan, and Afghanistan.

Paraguay impeached its president, setting off a diplomatic blitz in the hemisphere to contain the fallout, in a seemingly trivial affair. After all, Iran”s nuclear program, China”s emboldened naval claims, or a civil war in Syria, threatening to spiral into a regional conflict, are undeniably bigger concerns.

But America”s ability to deal with these and any other domestic and foreign challenge depends on its ability to return quickly to robust economic growth. And that is not happening under current oil production and consumptions scenarios this decade.

The Obama administration has so far remained cautious, a good thing. But well managed, the United States has the chance to catalyze a long overdue strategic shakeup in hemispheric policy, and in so doing spur an oil boom to forward its interests globally.

Indeed, President Barack Obama (or Mitt Romney if elected) has the chance to implement a version of Ronald Reagan”s strategy to defeat the Soviet Union.

An unexpected oil boom in Latin America would significantly improve America’s oil-burning economy while hurting oil bullies and their totalitarian alternatives to democratic rule.

The Paraguay crisis has given Washington the chance to do just that. By steering its policy toward Latin America from high and mighty overlord, to regional power broker alongside Brazil, the United States could reclaim its clout in the vital region increasingly courted by China, Russia, and even Iran.

A new approach would also attract more investment to develop the region’s untapped oil bounty, especially in Venezuela and Brazil. And that, more than any sanctions, has the power to neutralize radical Venezuelan leader Hugo Ch’avez and in the process spur an unexpected oil boom that will give the US more ammunition to pressure countries like Iran and Russia.

Paraguay, a Brazilian dilemma

This is not the 1970s. Latin America is an evolving and largely stable region with a booming middle class, according to the United States, other global powers, and multilateral institutions like the World Bank, the International Monetary Fund and others. There are stark differences between Paraguay and Chile, of course.

What happened in Paraguay is indeed reminiscent of a troubled past of dictators in Latin America, but what changed in the last two decades is that Brazil has grown confident enough to act as a regional leader, much like Saudi Arabia does in the Arab world, like Turkey does in the Middle East, and like Japan and South Korea in Asia.

The United States though has not changed its hemispheric policy much since the early 1990s and it insists on pushing outdated priorities that are hurting its image and clout. Brazil has consolidated its leadership, but the US policymakers tends to be more threatened than relieved by this.

Paraguay is Brazil’s problem because it has more influence and because it stands to lose more. Paraguay’s Congress decided to impeach former President Fernando Lugo within 24 hours, less than a year before his term was over.

It was legal, it appears, even if Lugo was denied the chance to a fair trial. And it was wrong. Lugo wasn’t tried for doing anything illegal. And in a functional democracy, impeachment isn’t meant as a technicality to fire rulers because it’s politically convenient.

Regardless, Latin America split into two camps. The hard line of the Bolivarian block led by Venezuela, which cut preferential oil shipments to Paraguay, demanded sanctions and ostracizing the new Paraguayan government. The more cautious conservative block including Mexico and Colombia condemned the impeachment, but favored a slap on the wrist, especially with just a few months before elections in Paraguay.

Brazil ultimately imposed a middle ground. It wasn’t a coup but a break in the “constitutional order.” Paraguay was also suspended from Brazilian controlled regional bodies like Mercosur trade block and UNASUR, a South American grouping of nations that is meant to evolve into a European Union equivalent.

The suspension will stand “until a democratic process allows for popular sovereignty to be restored,” which sounds like next year’s Paraguayan elections.

The State Department has said it will wait for the results of a fact finding mission led by the Organization of American States. The US needs to operate within the OAS, where it holds significant power. It questioned the quick trial, but has not passed judgment, although Brazil wants its support in condemning Paraguay.

Brazil’s priority is keeping instability as contained as possible. Its message is that it will not tolerate coups, military or political, in institutionally weak countries, say like Bolivia or even Peru. The most recent precedent is Honduras, where the military replaced its leader with Congressional support and then waited for new elections.

The regional priority imposed by Brazil is not ideological. In other words, Brazil is bringing all Latin American countries in line to condemn anti-democratic regime change, whether from the left or right, while containing the more reactionary forces, like Chavez and Paraguay’s landlord-based regime.

The diplomatic window

American interests are clearly aligned with Brazil’s. But the risk is that many in Washington still have a cold war mentality, especially in policies toward Latin America, and they still have an outdated vision of good vs evil. That is, Washington all too often prioritizes confronting Chavismo to supporting regional leader Brazil.

US interests suffered a significant setback in 2009 with the Honduran crisis when the Obama administration in effect tolerated a military regime to replace a Chavista wannabe, to the ire of Brazil. This time the US should position itself on the right side of history, working with Brazil, not confronting it.

The economic crisis and Chavez’s own mismanagement contained Chavismo, not the US. Meanwhile, Brazilian diplomats didn’t confront Chavez. They quietly let him blow smoke, and then bended his policies toward more pragmatism.

The result is Chavismo and Chavez are morphing. And Chavez has learned that the only way for him to survive is not as a Latin America leader, but as a Brazilian ally. Indeed, in the same meeting to suspend Paraguay, Venezuela was voted in as full member of Mercosur.

Chavez is rapidly softening his anti-market rhetoric to attract more foreign investment to gas and oil production. It’s only an economic imperative for his revolution and his legacy.

Obama and Romney should thus use the Paraguayan crisis to reshape American relations with the continent with Brazil as a regional leader.

US sanction on Venezuela are counterproductive, but letting Brazil deal with Chavez, while the US takes the higher moral ground, will spur the kind of oil boom in Venezuela that could actually change the supply and demand balance this decade.

Venezuela is simply the best option the United States has to bring enough crude to global markets, enough to jumpstart a robust economic recovery, and enough to allow the US to deal with its real security priorities.

© 2013 Energy Tribune

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