Monday, November 21, 2005

 

Mexico is dragged into Venezuela’s road show

 

By Kenneth Emmond

 

What appeared to be a schoolyard-shouting match between Venezuelan President Hugo Chavez and Mexican President Vicente Fox, at the November 4 and 5 Summit of the Americas in Mar del Plata, Argentina, has escalated into a full-blown diplomatic incident.

 

And it still could result in the breaking of diplomatic relations between the two nations.

 

Worse, it could rip open the hemispheric fault line that’s developed between countries that want a Free Trade Association of the Americas (FTAA) and those that don’t – or, to put it another way, anti-Chavez and pro-Chavez countries.

 

A hemispheric split would be a triumph for Chavez, who gleefully told an informal gathering set up for him by the host country at the summit, “We are burying the FTAA.”

 

Meanwhile, Fox observed that 29 of the 34 countries involved want the FTAA. Only five – whose views were prominently on display in Mar del Plata – oppose it.

 

When he remarked, “Those who are trying to block such a deal are acting in their own interest,” Chavez took it personally and called Fox a “puppy of the Empire.”

 

Last week, following more insults, the ambassadors of the two countries were asked to head home. And if things don’t improve, embassy officers may soon start packing their bags as well.

 

It would be in the region’s best interest for the Fox-Chavez incident to die down. Fox has said it’s time to “turn the page,” in hopes it will go away.

 

It won’t.

 

Chavez will continue to badger the Mexican president because Fox is the region’s number one free trade fan and George W. Bush’s closest regional ally. Venezuela, or more accurately Chavez, is determined to drive a wedge between the United States and Latin America.

 

He could succeed.

 

The worldview of U.S. President Bush is, “If you’re not for us you’re against us.” That petulant, undiplomatic, and divisive attitude didn’t work in Iraq, and it’s backfiring in Latin America. Unfortunately it does play beautifully into the Chavez strategy. And Fox is trapped in the middle.

 

Furthermore, Chavez has antagonized the Mexicans in more insidious ways.

 

Last week the office of Mexico’s Attorney General reported that most of the heroin seized by anti-drug officials comes from Venezuela. Venezuela is also suspected of providing arms for Mexican rebel groups.

 

And it’s believed that Chavez is meddling in internal politics by providing money for the leftist Party of the Democratic Revolution (PRD). The PRD might welcome the funds, but it surely realizes that any perceived support from Chavez would be a Judas kiss as it tries to convince businessmen here that, if elected, it will be moderate in its plans for social progress.

 

Chavez believes Latin American prosperity can be achieved through a minimum of external trade and a maximum of self-sufficiency – exactly the opposite strategy to the one adopted by nations with the world’s highest sustained growth rates, like India and China.

 

His vision of a “Bolivarian Revolution” is as misty and distant as Simon Bolivar’s original dream of a united Latin America. It would quickly unravel should oil prices take one of their volatile downturns.

 

Chavez seems to see himself as a sort of Fidel Castro with money. He’s not. Unlike Castro, Chavez comes from the political class. His father governs the State of Barinas, and ever since he assumed power there the Chavez family has had an unusually good run of luck in accumulating wealth. Would Castro approve?

 

Last week, when he personally threatened Fox by saying “Don’t mess with me!” Chavez sounded more like a back street thug than a statesman.

 

What about the home record? During the years Chavez has been in power petroleum prices have moved from US$10 dollars a barrel to the US$60 range. Yet Venezuela’s state statistics-gathering agency reports that average living standards fell by 20 percent during that time – at least it said so until Chavez ordered it to rewrite its conclusions.

 

Fox made a proposal of his own at the summit. More modest yet more practical than the one touted by Chavez, his idea is to have Mexico’s national oil company, Petroleos Mexicanos (Pemex), build a US$3 billion oil refinery in Central America.

 

What seems to be shaping up is a kind of Latin American petro-war, where one oil-rich nation is a free trader and the other is not.

 

As to the internal meddling by Chavez, the most prudent response by Fox would be to do his best to ignore the schoolboy taunts, and to continue with his promotion of hemispheric trade.

 

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Kenneth Emmond, an economist, market consultant and journalist who has lived in Mexico since 1995, is also a columnist with MexiData.info.  He can be reached via e-mail at Kemmond00@yahoo.com.