August 10, 2007 [LINK / comment]

Chavez buys influence abroad

With more and more money from petroleum exports, Hugo Chavez is making another foreign trip in hopes of turning that wealth into power. He is presently visiting Uruguay, and signed an "energy security treaty" with President Tabare Vazquez, similar to deals struck with Argentina and Ecuador. Venezuela will help Uruguay expand output at the country's only petroleum refinery. (Any strings attached?) Chavez sees the MERCOSUR trade bloc as a strategic counter-weight to U.S. influence in Latin America. (It includes Brazil, Argentina, Uruguay, and Paraguay, with Chile and Bolivia as associates; Venezuela is trying to get in, pending ratification by legislatures in Brazil and Paraguay.) Chavez will end his journey in Bolivia, where he plans to announce a "grand South American alliance." See

Many observers of Latin America, including me, see MERCOSUR the same way: It has as much to do with power politics as with economic benefits. It's not necessarily a bad thing, though, and is probably inevitable. Brazil aspires to a leadership role in the emerging (Third) world, along with India and possibly South Africa, as a prelude to getting a seat on the U.N. Security Council some day.

As for Chavez's strategy of buying influence with petro-dollars, it puts Venezuela at risk of fluctuating world energy markets. Just because there is an oil boom now, and probably will be for the next year or two, doesn't mean it will last. Higher gas prices encourage thriftier consumer habits and more crude oil production, and things will even out eventually, at which point Chavez's influence will quickly wane.