07 October 2007

UNASUR MAKING VERY SMALL WAVES

On Oct.4 Brazil's Foreign Minister Celso Amorim arrived in Ecuador to discuss potential areas of mutual interest with President Rafael Correa. The visit followed last Sunday's national assembly elections that gave President Correa sweeping powers move forward his new socialist platform designed to reduce economic inequality and exploitation in Ecuador.

The visit was also a chance for the minister to talk with Correa about his announcement that Ecuador will now collect 99 percent of price windfalls on Ecuadorean oil, up from the 50 percent previously collected. Although Brazilian President Lula da Silva's Worker's Party is sympathetic to the current situation in Ecuador, the announcement imposes new extra-contractual conditions on Brazil's national petroleum company Petrobras, one of the largest producers in Ecuador and undermines the perceived rule of law in Ecuador.

A third reason for Amorim visit last week was to meet with Rodrigo Borja, former president of Ecuador and the new General Secretary of UNASUR. Brazil has been one of the principal forces behind the current integration movement and is forging ahead with bilateral projects and investment. Both nations agreed to open a direct air connection between Ecuador and the Brazilian city of Manaos and to help finance a the new Banco del Sur, a regional investment bank formed by UNASUR countries.

We also learned last week that Peruvian President Alejandro Toledo went ahead with his decision to file a complaint against Chile over their southern maritime border. The nations are fighting over a resource rich zone off the coast of Arica and Tacna. The dispute erupted last year when Peru's congress voted to annul a 1954 border treaty and claim what was until then accepted Chilean territory.

The Chileans reacted by cancelling President Michelle Bachelet's planned trip to Lima in Nov. Peru's move also complicates a current dispute between Bolivia and Chile over the same area which Bolivia claims to have a right to, even though it was lost the 1849 War of the Pacific.

Finally, we heard that Venezuelan President Hugo Chavez's planned talks with Colombia's Marxist guerrilla group the FARC were scrapped after Colombian President Alvaro Uribe backed down. Chavez offered to help negotiate the release of Ingrid Betancourt a dual French-Colombian politician and three US contractors who have been held hostage for several years, but all sides are moving slow and are wary of the consequences of introducing a new element into the conflict.

These three events illustrate three different aspects of UNASUR's current political environment. The first is that many nations are still unwilling or unable to make the local sacrifices necessary to improve continental relations. Ecuador's new administration must fund its planned social projects from somewhere, preferably without raising taxes on the lower socio-economic class. Foreign owned petroleum companies are an easy target for a young socialist leader to tap for these necessary funds, especially with the recent high price of oil on the world market. Correa is betting that Brazil will be patient and willing to negotiate like it has with Bolivia who nationalized Brazilian run gasfields last year after President Evo Morales came to power.

The second aspect the news highlights is the relative inability of regional institutions to solve local conflicts. Peru's use of the World Trade Organization (WTO) instead of a regional arbiter like UNASUR or the Andean Community to settle its disagreement with Chile highlights the lack of faith that Peru places in these treaties.

Actions like Peru's, combined with the previously mentioned conflict between Chile and Bolivia as well as the ongoing dispute between Argentina and Uruguay over the construction of paper mills on the River Platte make it hard for other nations to take South America's resolve to integrate seriously.

The third aspect about UNASUR that last week's news highlights is more positive. The willingness of the leaders of Venezuela, Brazil, and Ecuador to support a regional solution to the ongoing conflict in Colombia illustrates an increased consciousness that events in bordering countries have the ability to affect conditions at home. Whether the hostage talks succeed or not, it is a very positive step that Colombia's neighbors are finally taking the initiative on what is fundamentally a regional problem.