Oil, Markets, and Solidarity

September 25, 2007

Though you wouldn’t know it from the evening news, the Bush Administration has not lost interest in the Americas. It is pushing as hard as ever for an “opening” of the region’s economies through an agreement that would give pride of place to transnational business and promote easy cross-border flows of investment, trade and various kinds of services (though not labor). If it comes into being, this hoped-for agreement will go by the name of the Free Trade Area of the Americas (FTAA). The key negotiations are taking place in the FTAA Trade Negotiations Committee, co-chaired by Brazil and the United States.

Opponents of such an institutionalized opening fear it might become the ultimate arbiter between a variety of national protections and an international (or inter-American) right to do business, legitimizing unchecked flows of destabilizing speculative capital. Others fear that giving pride of place to the market means, as has often been remarked, giving even more power to those who control the market: those who, more often than not, have U.S. addresses.

In the ongoing FTAA talks, the opposition to the international “right to do business” has been led by the region’s middle-income countries, particularly Brazil in alliance with its (not all middle-income) trading partners in the Southern Common Market (Mercosur), Argentina, Uruguay and Paraguay. The Mercosur countries point to the growing income gap between countries of the region over the past 25 years of pro-market restructuring, and say they are more interested in leveling the playing field of the Americas and, if necessary, in surrounding themselves with a protective “wall of dignity” until that leveling begins to take place.

They say they would like to negotiate an accord that would fall into place gradually, step by step, according to each country’s readiness to integrate. They have emphasized their interest in seeing Mercosur develop as a political union and to see Latin America negotiate as a bloc with the United States. One of their weapons is oil; two of Mercosur’s associate members, Mexico and Venezuela, rank second and fourth, respectively, among the suppliers of crude oil to the U.S. market.

The United States now consumes 16 million barrels a day, about 25% of the world’s supply, a demand expected to surge over the next two decades. It is in this climate that the last three U.S. administrations—Bush, Clinton and Bush—have worked hard to form a U.S.-controlled hemispheric energy bloc. Washington’s strategy has been to create such a market-driven bloc within the proposed FTAA.

When Washington talks about energy, one gets the very clear impression that it is only U.S. oil that is at stake: it is Washington that must secure oil fields, negotiate with the Saudis, pressure the Mexicans, etc. U.S. politicians speak as though the world’s oil is rightly theirs, thus their legitimate concern with the Middle East and other oil-producing regions. And as for pressuring Mexico, members of the House Committee on International Relations recently suggested that Petróleos Mexicanos (Pemex) further open itself to U.S. investment if the Mexican government wanted to see some pro-Mexican immigration reform emerging from that committee.

In response to this hegemonic attitude, Venezuela’s Hugo Chávez has proposed the creation of a Latin America oil conglomerate called “Petroamérica.” Based on South-South solidarity, Petroamérica would include the participation of major oil producers like Petróleos de Venezuela (PDVSA), Mexico’s Pemex, Brazil’s Petrobras, Colombia’s Ecopetrol and Argentina’s Repsol YPF. As a prelude to this region-wide energy bloc, Venezuela and Argentina have already signed an agreement to form “Petrosur,” a company to be owned jointly by PDVSA and Repsol YPF, with the active participation of private capital from both countries.

Mercosur and Petroamérica both spring from a practical kind of regional solidarity and a hope to generate more internal trade and investment within Latin America itself. They spring from a desire to negotiate from a position of greater strength, reducing the South’s debilitating dependence on the North. Until now, individual Latin American economies have been too small and/or too weak to negotiate their way into the world economy on favorable terms. Lula, Chávez and even market-friendly leaders like Mexico’s Vicente Fox and Chile’s Ricardo Lagos have recognized that some prudent solidarity in the face of U.S. hegemony is necessary for the South to grow, develop and come into its own.

Fred Rosen is one of NACLA's editors.


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