Venezuela's About-Farce

Written By Brian Hicks

Posted April 19, 2007

In the struggle for international energy solutions, Venezuela’s Hugo Chavez views the Western Hemisphere’s ethanol effort as more of a tug-o’-war than a joint heave. If you’re looking for an answer, an argument alone won’t do. Who knows when Venezuela will ditch the dirt and seize its clear opportunities?

For the first two days of this week, Chavez convened Latin American leaders for the South American Energy Summit. The topics at hand were petroleum, natural gas, alternative energy and energy savings (i.e. efficiency).

El Universal, the major daily newspaper in the capital Caracas, characterized the mood as "intense" on Monday, when ministers of energy from a dozen countries in the region convened until ten o’clock at night. One key cause of the tension was the Venezuelan attitude towards ethanol, which had initially been positive when Brazil’s Luiz Inacio Lula da Silva was gravitating more towards Chavez’s Bolivarian Alternative group (including Bolivia and Cuba) than to the Bush administration.

But then, Bush went to Brazil. Last month, as I headed to South America for the Biofuels Americas conference in Cartagena, Colombia, Bush was also doing renewable energy business in the region.

Bush’s first stop was Brazil, where he and Lula agreed on a new initiative to plow forward with the promotion of ethanol production in Latin America. Chavez, an ardent critic of U.S. foreign policy and its petro-centric orbit, is still an oil profiteer. He doesn’t want America or the Americas to turn completely away from the oil that is his country’s lifeblood.

While Brazil has become the world’s leading producer of sugarcane-based ethanol, and Venezuela needs that ethanol as a non-lead fuel additive, Chavez wants his ethanol on his terms. But he couched his capitalistic fit in socialist terms, saying that U.S. corn ethanol production would "take corn away from people and the food chain to feed automobiles–a terrible thing."

Meanwhile, another Bush predicted another positive regional shift on the part of the U.S.

Jeb Bush, the president’s brother and former governor of Florida, said Monday that U.S. barriers to importing Brazilian ethanol would be lowered or eliminated within several years. The tariff currently stands at 54 cents per gallon, which "doesn’t make sense" to Jeb, who led one of the few U.S. states actually capable of industrial sugarcane production, though nowhere near the scale of Brazil.

Speaking in São Paulo, Brazil, perhaps he was blowing more wind in his brother’s sails in light of March’s linkup with Lula. He also might have been buttering up the Brazilian agribusiness crowd to whom he was speaking. But he was right. The tariff doesn’t make sense if the real goal of the American initiative is to promote the best producers in a market-based system.

Jeb also made sense in his appraisal of Chavez’s new attitude. "Mysteriously, for reasons I can’t explain, they did a complete about-face," he said, referring to both Chavez and Castro, who editorialized about the fuel vs. food threat in the weeks after Bush’s ethanol embrace.

Of course, Jeb can explain the about-face, because it’s part of Chavez’s "21st-century socialism."

In this politics of pure opposites, Chavez calls Bush the devil at the UN ("I can still smell the sulfur," he said) while playing the devil’s advocate to the press. But his trident has poked Lula, whom Chavez was trying to draw closer.

On Tuesday, Chavez tried to make nice. "I like to provoke to create headlines," he said with a wry smile. I would expect such a statement from Don Imus, not a national leader. But with each, there are headlines and red lines.

Chavez’s primary goal is not to find solutions to poverty, nor to advance free thinking. By the way, the Venezuelan press announced this week that the ministry of labor would soon introduce four-hour weekly socialism classes in public sector jobs. Bolivarian Work Councils (a.k.a. Soviets) will also begin to organize on local levels, though you can be sure that directives will come from the Caracas thought machine.

"There hasn’t been an ethanol war here," Chavez told the summit. "We aren’t against biofuels. In fact we want to import ethanol from Brazil," he added.

Silva, on the other side of the logical spectrum, seems to have balanced politics and economic logic well. "The truth is that biofuel is a way out for the poor countries of the world," Silva said. "The problem of food in the world now is not lack of production of food. It’s a lack of income for people to buy food."

Chavez knows this too, which is why his country continues to happily accept our dollars for Citgo gasoline that his country produces. Of course, Venezuela is still expanding its own ethanol production. It is estimated that $900 million will be spent in this sector so the country can become self-sufficient in ethanol by 2012.

This will demand 740,000 acres of sugarcane, manioc and rice, as well as the construction of 17 new processing plants. And that is just for fuel additive purposes, not the flexfuel cars that account for 80% of Brazilian auto sales.

When the oil runs dry, Chavez will wish he had maintained his bullish stance on the true fuel of the future.

Regards,

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Sam Hopkins

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