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Latin America: Events in September

By Thiago de Aragao.

September saw a series of political developments across the South American continent. No new events emerged, however, and instead progress was made on issues that had arisen in previous months.

One point that certainly is worth singling out is the career of Fernando Lugo in Paraguay. The ex-bishop could become the county's next president after next year's presidential election and align Paraguay politically closer to Venezuela.

Paraguay has always been a country quite susceptible to Brazilian political influence, but with the presidential candidacy of Fernando Lugo it could change its political direction like never before. Historically a country positioned on the political right or center-right, a victory for Fernando Lugo next year would distance Paraguay from Brazil and bring it closer to Hugo Chavez, the Venezuelan president. However, the matter of potentially more concern to Brazil is Lugo's intentions towards Itaipu. Lugo judges the contract agreed between his country and Brazil, which gives Paraguay rights to half the energy produced by Itaipu, to be unfair and intends to alter the accord. Paraguay currently uses much less than half the energy, while Brazil uses the rest. The ex-bishop intends to trade the Paraguayan energy surplus to create income for the country. Should this happen. Brazil would suffer a great shortage of energy distribution in the south and southeast of the country. Alert to any Brazilian action, Lugo this month declared that he would not be surprised if Brazil were to intervene militarily at the Itaipu power plant to protect its side. There a very clear reasoning behind Lugo's alarmist approach. In the same way that Chavez weekly repeats that the US wants to invade Venezuela, Lugo believes that raising the issue of Brazilian military intervention at Itaipu, will turn the world's eyes on the situation and Brazil will be obliged to act with caution and negotiation. It is still too early to know what might happen, but a possible victory for Fernando Lugo in the Paraguayan elections would certainly have a destabilizing effect on Brazilian foreign policy and threaten our power grid.

In Bolivia, deadlocks involving the Constituent Assembly continued in September. Evo Morales sought negotiations with leaders from his party (MAS) and opposition leaders during the month. The Bolivian president's low negotiation ability was crucial in the lack of any significant progress being made. Morales saw September as a black month for his government. Difficulties with allies and opposition were less important than popular discontent with his government, however. The big idea of the Constituent Assembly, which would centralize the power of the provinces in La Paz, and allow him indefinite reelection, seems a tragic idea today. The eyes of the MAS are opening and allies who were previously content with certain structural changes to legislation in the country are now demanding more radical changes. The opposition, which is strong and organized, but with little popular support, sees the fall in popularity of Morales as a great opportunity for spreading the anti-Morales movement in the country.

While legislative changes have been making life hard for Evo Morales, President Hugo Chavez in Venezuela made an important step towards approval of unlimited reelection. Not that there was any doubt that this would occur, since the whole National Assembly are members of the Venezuelan leader's party. The constitutional changes have been approved at National Assembly ballots and now only one more ballot remains (the result of which will be no different) to allow a popular referendum (which research indicates will bring Chavez a strong victory). Shortly before announcing the possibility of a popular referendum on the reelection issue, Chavez, in a masterstroke, announced a reduction in the working day from eight to six hours. This will give the poorer layers of society, Chavez's electoral base, and a goodwill gesture for their votes for unlimited reelection of the president.

The search for reelection is also topic of the month in Argentina. But this is not reelection of a person, but a surname. Cristina Kirchner's victory is now being taken as read. The senator is already traveling the world and acting in the manner of a president of Argentina. Cristina Kirchner's victory would in fact represent a greater victory for the current Argentine president, Nestor Kirchner. Behind the scenes, Nestor is consolidating his position as the most powerful person in the country. His government program is quite interesting: after the government of Cristina, he would be eligible to stand for reelection, and thus create a Kirchner Era of impressive duration.

Amidst the too and fro of accusations of corruption and poorly explained money scandals, Cristina has managed to maintain her leadership. Some of the key reasons for this are:

1. The economic period the country is going through (stability) is good enough for people who until recently were experiencing the worst economic crisis in their history. No scandal or political event would cause the people to threaten the economic stability Kirchner has achieved.

2. Despite there being a broad opposition with good candidates at the polls, it is completely disorganized and disunited. The political infighting among many opposition candidates only helps the government. Votes which, united, would be enough to defeat Cristina, are spilt between several candidates who exchange mutual accusations and always play the same tune against Cristina: corruption.

3. Cristina, wisely, tours the world. The electorate sees their candidate traveling the world, talking with Bush, Angela Merkel and Gordon Brown, and already associates her image with that of a leader of the country. At the same time, Cristina is not present at home to have to respond to the accusations of the lesser candidates.

The paradox between economic stability and political instability is not just restricted to the Argentineans. Alan Garcia is experiencing this paradox in Peru. The country has been widely praised by international bodies for the economic and monetary policies it has adopted. However, the arrival of the ex-president Alberto Fujimori in the country (to appear in court) has generated a climate of radicalism and confrontation between the ex-president's supporters and opponents. It is undeniable that Fujimori's presence in the country is prejudicial for Alan Garcia. The earthquake is also demanding considerable efforts from Garcia, leading to certain political matters being put to one side. The person benefiting from the situation is Ollanta Humala, Garcia's main opponent in the country.

The good news Garcia is hoping to give soon is the signing of the Free Trade Agreement (TLC) with the US. The treaty was recently approved at a recent simulation in the US Congress. Meanwhile, pen still needs to be put to paper before it can be celebrated. Garcia believes that the accord will lead to an upsurge in Peruvian exports, together with arrival of foreign capital for investment in the country. Garcia hopes to attract investments in the country's infrastructure, not just to modernize deteriorating public works, but also to allow reconstruction following the earthquake.

Relations between Brazil and Venezuela are going in two directions. While President Lula and President Chavez were all smiles at the meeting in Manuas, the Brazilian Congress is increasingly less enthusiastic towards approval of Venezuela's entry into MERCOSUL. Chavez's lack of sensitivity when making announcements has contributed to the establishment of ill will towards Venezuela in Congress. Lula, who needs to ask many favors and intense negotiation for absolving Renan Calheiros, seems less willing to do the same for Venezuelan entry into the bloc. If entry were favorable economically, it would further destabilize a naturally unstable bloc. Under opposition pressure, the chamber of Deputies Foreign Affairs Committee will only vote on Venezuelan entry on October 24. The frequent delays and new facts emerging daily should push voting on Venezuela's entry further towards the end of the year. As Chavez says that waiting more than nine months would be unacceptable, I believe that Venezuelan participation in MERCOSUL is becoming increasingly distant.

October 2007, Thiago de Aragão [thiago@arkoadvice.com.br]