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November
7, 2006
A New Kind of Oil Diplomacy
In
Nicaragua, a Chavez Wave?
By NIKOLAS KOZLOFF
Over the last few months, I had begun
to doubt whether Venezuelan President Hugo Chavez would indeed
have the kind of political staying power that I described in
my book, Hugo
Chavez: Oil, Politics, and the Challenge to the U.S.(recently
released by St. Martin's Press).
Initially, it seemed as if
Chavez was perfectly poised to capitalize on a wave of anti-American
discontent felt throughout the hemisphere. Throughout South America,
Chavez exchanged oil for political influence with newly emerging
leftist regimes in Uruguay, Argentina, and Brazil; the election
of Evo Morales in Bolivia, a key Chavez ally, seemed to underscore
Venezuela's rising influence.
But then, a series of dramatic
reversals cast doubt on Chavez's ambitions to become a truly
hemispheric leader and a lightning rod against U.S. influence.
Chavez's
Reversals, from Peru to the United Nations
In Peru, Chavez openly endorsed
the nationalist candidate Ollanta Humala in the country's presidential
election. But Chavez's strategy backfired when Humala's opponent,
Alan Garcia, charged that the Venezuelan leader was interfering
in Peru's internal politics. Garcia successfully exploited the
issue to his advantage and went on to beat Humala in last April's
election.
In Mexico, pro-business PAN
candidate Felipe Calderon ran a negative campaign against his
leftist challenger Andres Manuel Lopez Obrador. In his TV ads,
Calderon linked Obrador to Hugo Chavez, proclaiming "Lopez
Obrador is a danger to Mexico." Though Lopez Obrador cried
fraud in Mexico's July presidential election, the Electoral Tribunal
ruled that Calderon had won the election and rejected Obrador's
allegations. Calderon is set to assume office in December.
The next set back for Chavez
came in Ecuador, where the Venezuelan leader's would be protégé,
Rafael Correa, went down in defeat in the first round of the
country's presidential election last month. A Correa win would
have added another oil-rich country to Chavez's anti-American
alliance.
Correa, a leftist economics
professor, denied that Chavez had funded his campaign and the
Venezuelan leader, chastened by his defeats in Mexico and Peru,
was uncharacteristically quiet about the Ecuador election.
However, it's no secret that
the two had a personal rapport. Correa in fact visited Chavez's
home state of Barinas in August, where he met with the Venezuelan
leader and spent the night with Chavez's parents. Correa, who opposes an extension of
the U.S. lease at an air base in Manta, which serves as a staging
ground for drug surveillance flights, has nothing but contempt
for George Bush.
When he was recently asked
about Chavez's "devil" diatribe against the U.S. president
at the United Nations, Correa remarked amusingly, "Calling
Bush the devil offends the devil. Bush is a tremendously dimwitted
President who has done great damage to the world."
But Correa was shocked by a
strong last minute showing by his challenger, pro-U.S. banana
magnate Alvaro Noboa. Like Lopez Obrador, Correa has cried foul
and declared that his campaign might have fallen victim to electronic
fraud on the country's voting machines. He will face off with
Noboa in another runoff election in November.
Then there was Venezuela's
failed bid to secure a non permanent seat on the United Nations
Security Council. When the United States proposed its own candidate,
Guatemala, things turned ugly. Chavez characterized the race
as a struggle against U.S. domination throughout Latin America;
Venezuelan diplomats went so far as to describe Guatemala as
a U.S. stooge.
But in the end, Venezuela failed
to come up with the requisite votes. Chavez could take some satisfaction
that Guatemala too failed to come up with the necessary votes
at the United Nations, and had to withdraw in favor of Panama.
The reality, however, is that
despite Chavez's frenetic shuttle diplomacy throughout Africa
and calls for Third World solidarity, he could not muster more
votes than a small Central American country with very little
regional influence and an appalling human rights record.
It was hardly an impressive
showing.
The Chavez-Ortega
Alliance
Events in Nicaragua, however,
suggest that it won't be so easy for the Bush administration
to roll back Chavez's ambitions. It now seems as if the Sandinista
candidate Daniel Ortega will cruise to victory in the country's
presidential election and avoid a run off. As of Monday night,
preliminary results show Ortega with about 40 percent of the
vote, more than enough to avoid a future runoff.
For the White House, it's a
nightmare that officials had long sought to avoid.
Though Ortega, who was president
from 1985 to 1990 during the U.S.-fueled Contra War, is a pale
shadow of his former self, having jettisoned his leftist rhetoric
and hostility towards his northern neighbor, nevertheless Washington
must now recognize that it has patently failed to isolate Chavez
diplomatically. Nicaragua now seems poised to join the wave of
left leaning regimes throughout the hemisphere inspired by Chavez.
When Ortega traveled to Venezuela
for a meeting with Chavez last year, the friendship between the
two began to bear fruit. During the meeting at Miraflores, the
presidential palace, Ortega remarked that Latin American unity
was necessary to confront globalization. He added that Chavez's
electoral victory convinced him that revolutionary change could
be achieved through the ballot box. "I thought that they
were going to overthrow Chavez," Ortega remarked, "and
that he would meet the same fate as Salvador Allende."
Ortega later alarmed Washington
by remarking that if he won the election he would make sure that
Nicaragua would join ALBA, Chavez's Bolivarian Alternative for
The Americas. Chavez's trading plan, which is designed to sideline
traditional corporate interests and Bush's Free Trade Agreement
of The Americas (FTAA), is based on barter agreements between
Latin American countries. Recently, to the chagrin of U.S. policymakers,
Bolivia joined Venezuela and Cuba in ALBA.
Chavez,
Ortega and ALBA
"Without a doubt,"
Ortega declared during a Cuban summit meeting with Morales, Castro
and Chavez, "we have to look towards the south, we have
to look towards integration, and ALBA is an open door, it is
Latin American and Caribbean integration."
Ortega later added that he
opposed U.S.-backed trade deals. "Central America's trading
future lies not with the U.S. but with Venezuela, Brazil and
Argentina," he said.
Ortega, smarting from three
successive electoral defeats after the fall of the Sandinistas
from power, added that he was "convinced after 16 years
of neo liberal policies in Nicaragua that the conditions are
ripe for the Sandinista Front to retake power, now via the ballot
box."
In the Plaza de La Revolucion
in Havana, Chavez approached Ortega and remarked, "Daniel,
we are inviting you next year to come here as the president of
Nicaragua."
According to Ortega, Chavez
followed up on his promising words by offering to help Nicaragua
join in ALBA. Speaking before hundreds of workers in Managua,
Ortega said that Chavez and the president of the Venezuelan Economic
and Social Development Bank (known by its Spanish acronym Bandes)
had pledged to help open a development bank in Nicaragua. "Venezuela
is willing to provide support so that this bank will become a
reality and campesinos will have credits and a secure market,"
Ortega told supporters.
According to Ortega the Venezuelan
aid formed part of ALBA.
Chavez,
Ortega and CAFTA
In seeking to recruit Ortega
for his ALBA scheme, Chavez found a willing ally in Ortega. Indeed,
Nicaragua's experiment in "neo-liberal" economics since
the fall of the Sandinistas in 1990 has not been a very happy
one. Like Venezuela, which experienced political unrest as a
result of neo liberal policies pushed by Washington, Nicaragua
has been buffeted by "savage capitalism," as Ortega
has put it.
Today, Nicaragua is a bleak
place. Per capita income is a paltry $700 and more than 70% of
the population lives on less than $2 a day. Successive governments
have failed to restore Managua from a 1972 earthquake. Within
yards of the presidential palace lie slums and empty buildings;
beggars and barefoot children splash around in the gutters of
Managua instead of heading to class.
Like Chavez, Ortega has spent
a lot of time over the past years criticizing U.S.-led free trade
deals. For example, the Sandinista led the charge against CAFTA,
the Central American Free Trade Agreement. Ortega pledged to
pull Nicaragua out of CAFTA and "end savage capitalism when
we win." CAFTA, Ortega argued, was an effort by the U.S.
to exploit poor countries in a rush to the bottom and cheap labor.
"Bush is taking up CAFTA,"
Ortega remarked in an interview with the Christian Science
Monitor, "because it is his way of keeping Central America
from looking south." Ortega furthermore suggested that Washington
was seeking to splinter Nicaragua's solidarity with the Left
in Latin America such as Chavez's regime.
CAFTA was pushed ruthlessly
by U.S. trade representative Robert Zoellick over the objections
of labor, environmentalists and human rights groups [for more
on Zoellick, see my profile of the diplomat in my book].
"CAFTA is the opportunity
of a lifetime," Zoellick remarked in an address given at
the Heritage Foundation. "If we retreat into isolationism,
Daniel Ortega, Hugo Chavez and others like them, leftist autocratswill
advance."
Zoellick's efforts to link
Ortega and Chavez in order to ram through CAFTA were echoed by
paranoid, red baiting Republicans in the House and Senate. Oklahoma
Republican James Inhofe warned his fellow Senators: "These
Communists, these enemies of the United States, Chavez, Ortega,
and Castro, are all in opposition to CAFTA. If you want to be
on their side, you would vote against CAFTA."
In the House, Republican Rep.
Mike Kirk of Illinois took the fear mongering prize by arguing
that Chavez was "Venezuela's Mussolini." Chavez, claimed
Kirk, was purchasing weapons in order to fight a new war in Central
America. "Let us enact a free trade agreement with Central
America to lock in democratic growth and stability," Kirk
exclaimed, "and let us make sure that President Hugo Chavez's
Venezuelan agents find no fertile ground in America's back yard."
In the end CAFTA passed narrowly
in Congress. In Nicaragua, CAFTA was opposed by the Sandinistas
in the National Assembly as well as key figures in civil society,
including the president of the country's largest agricultural
organization, who warned that the agreement would give rise to
greater poverty in the countryside.
According to experts, CAFTA
stood to encourage the growth of more maquiladora assembly
plants, but any positive benefit would be offset by the loss
in farm jobs as a result of the influx of cheap U.S. agricultural
goods. Despite domestic opposition, Nicaragua passed CAFTA in
October 2005.
Efforts
to Demonize Ortega and Chavez
Despite its CAFTA public relations
victory, the Bush administration was clearly still worried and
kept up the pressure on Ortega during the run up to the presidential
election. Paul Trivelli, the U.S. Ambassador to Nicaragua, warned
that Ortega's victory would signify "the introduction of
a Chavez model" in Nicaragua.
Meanwhile the conservative
press flew into a tirade against Ortega, with the Washington
Times remarking that "Ortega will take Nicaragua out
of CAFTA and into Mr. Chavez's Bolivarian Alternative for the
Americas, and almost synonymous with this is a move to nationalize
industry, much like Evo Morales did in Bolivia."
The Washington Post
was similarly hostile, remarking in an editorial that Ortega
"is about to return to power and increase the alliance with
non-democratic countries [such as] Venezuela." The Post,
interestingly criticized the Bush administration for reacting
too slow to the Chavez and Ortega threat.
On the pages of National
Review, Otto Reich, a former State Department official who
dealt with Venezuelan opposition conspirators in the run up to
the coup against Chavez in 2002, remarked that "The emerging
axis of subversion forming between Cuba and Venezuela must be
confronted before it can undermine democracy inNicaragua."
As per the case in Peru, the
Nicaraguan right sought to link its Sandinista opposition to
Chavez in an effort to instill fear in voters. Presidential candidate
Jose Rizo remarked that Chavez and Ortega were "a threat
to regional and hemispheric stability," and claimed that
the Venezuelan leader was financing Ortega's campaign [both Venezuela
and Ortega deny the accusation]. "Ortega will become Chavez's
lieutenant in Central America and the Caribbean in the same way
that he represented the extinct and failed Soviet Bloc,"
Rizo added.
Ortega Unlikely
to Radicalize
Unlike Peru however the opposition's
strategy of trying to scare Nicaraguan voters proved unsuccessful
and at long last Ortega has prevailed in his drive to reach the
presidency. Despite the hyperbolic claims by the U.S. and conservative
politicians in Nicaragua however, Ortega is hardly in a position
to become Chavez's steward overnight. Unlike Venezuela, Nicaragua
is poor and foreign investment and aid accounts for 35 percent
of the budget. That money could disappear if Ortega started to
radicalize the country and expropriate industry.
In an effort to appease jittery
investors, Ortega recently signed a pro-business pact in which
he pledged to promote the private sector. Though he has spoken
about the need to renegotiate aspects of CAFTA, Ortega now says
he will build on free trade agreements. Ortega will have to tread
lightly: the U.S. is Nicaragua's largest trading partner and
accounts for about one fifth of the country's imports and approximately
a third of its exports. About 25 wholly or partially owned subsidiaries
of U.S. corporations operate in Nicaragua.
With so much at stake, Ortega
has predictably moderated his rhetoric by stating that he would
work with the International Monetary Fund, the World Bank, and
Inter American Development Bank.
Carlos Fernando Chamorro, son
of former president Violeta Chamorro and editor of the weekly
Confidencial newspaper, is not too concerned about a radical
Ortega agenda. He argues that Ortega is a pragmatist and will
try to appease the United States. Observers believe that the
right wing Liberal Constitutionalist Party (known by its Spanish
acronym PLC), the main opposition to the Sandinistas, will hold
onto its many seats in the National Assembly following this election,
which would further complicate any radical agenda.
But, Chavez's
Oil Diplomacy in Central America Could Be a Factor
Nevertheless, Chavez seems
to be trying hard to bring Nicaragua into its political orbit.
Chavez has enhanced his stature in South America by trading oil
for other goods, and seems to be pursuing a similar strategy
in Nicaragua. Venezuela has in fact already provided cheap fuel
to Nicaragua through Sandinista mayors. Speaking on his television
and radio program Alo, Presidente!, Chavez told Ortega
that Nicaragua could pay for Venezuelan oil with meat, milk,
cheese and other goods.
Ortega and Chavez have held
personal discussions about setting up a mixed Venezuelan-Nicaraguan
company that would import the cheap oil. Chavez is apparently
willing to invest in Nicaragua to set up necessary oil infrastructure.
Best of all, Chavez's offer could prove politically beneficial
to Ortega since restive students have protested any move to raise
transportation costs. Farmers meanwhile would not have to increase
their production costs.
What does it all add up to?
Despite some setbacks, Chavez stands to at least gain some diplomatic
and political leverage in Central America. Ortega will be hampered
in bringing about radical change, but will at least look upon
Venezuela as an important regional ally and friend. Try as it
might, the Bush administration has not been able to isolate Chavez.
To the contrary, the U.S., through its efforts to demonize both
Chavez and Ortega, has unwittingly brought them together.
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