Turbulence in the South American Energy Industry
AO reports on the region’s political instability and how it is affecting their energy industry
With oil prices causing a worldwide frenzy in the energy industry, it should not be surprising that energy issues are having a significant impact on the politics and policies of producing countries. In the western hemisphere in particular, it is worth taking a look at what is happening in South America, a continent well-supplied with energy reserves and at the same time, rife with political instability. After all, in a world of energy geopolitics, our national interests are intricately interwoven.
Given this scenario, the impression that many of the political agendas of the hemisphere are moving to the left, is cause for much concern; and there is good reason for this assumption. Starting with the rise to power of leaders such as Hugo Chavez of Venezuela and Brazil’s union boss Luis Inacio Lula da Silva, country after country has been electing candidates who espouse a seemingly left-wing platform. They promise to concentrate their efforts on social welfare and on insuring that the benefits of development, especially in resource-rich nations, reach the entire populations of their respective countries.
That was the case in Ecuador, where Lucio Gutiérrez came to power backed by impoverished indigenous groups; similar factions also played a major part in Evo Morales’ recent victory in the Bolivian elections, leading to his move to nationalize the oil and gas industry. Anti-American talk combined with a rejection of Washington-style economic policies might lend a hand to Ollanta Humala, in the upcoming second round of elections in Peru. And there is still plenty to come. Colombians, Mexicans, Brazilians, Ecuadorians, Nicaraguans, and Venezuelans are all going to the polls before the end of this year.
But much like what we are experiencing in Canada, the terms “left” and “right,” as they relate to political views, are no longer really meaningful. The particulars seem to be more indicative of local politics. In spite of Brazilian president Lula’s left-wing ideology, he presided over a monetary policy that is further to the right than that of his predecessor who, compared to him, was from the “centre.” Even Venezuelan Hugo Chavez, the ultimate anti–American crusader of the region, says one thing and does another. The U.S. is Venezuela’s leading trading partner, overwhelmingly the largest buyer of its oil and oil products. In turn, Chavez buys one quarter of its food imports from that country. In spite of his attitude, he seems quite happy to buy U.S.-subsidized soybeans.
The one commonality is that the masses have had enough of waiting for the benefits of development to trickle down to them. After centuries of hardship in a region that is characterized as having, after Sub-Saharan Africa, the greatest income inequality in the globe1, there is little patience for leaders who promise and don’t deliver, regardless of their political stripe.