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20/04/2007 | Venezuela - Sweetening the Rhetoric on Brazilian Ethanol

Stratfor Staff

At the April 16-17 South American Energy Summit, Venezuelan President Hugo Chavez toned down his rhetoric against ethanol. In making this conciliatory gesture toward Brazil, Chavez is trying to avoid a serious rift between Caracas and Brasilia that might undermine his regional ambitions. However, he is likely to continue to work behind the scenes against U.S.-Brazilian ethanol cooperation.

Venezuelan President Hugo Chavez backed away from his opposition to Brazil's ethanol expansion plans at the April 16-17 South American Energy Summit on Venezuela's Margarita Island. This was a diplomatic gesture aimed at avoiding a widening split in the region -- though Chavez likely will continue to attempt to undermine Brazil's ethanol ambitions through indirect means.

Chavez and his ally, Cuban leader Fidel Castro, began criticizing ethanol as a threat to the world's food supply following the formation of a U.S.-Brazilian ethanol alliance during U.S. President George W. Bush's trip to the region in March. Chavez and Castro are concerned that a U.S.-Brazilian-backed expansion of ethanol production in the region -- particularly in Central America and the Caribbean -- would pose a challenge to Venezuela's oil-based diplomacy as embodied by its Petrocaribe initiative, launched in 2005.

At the summit, attended by all 12 South American heads of state, Chavez said he does not oppose ethanol as a strategy as long as it does not compromise food production or prices. He further said he welcomes ethanol to the region's energy mix and intends to restart Brazilian ethanol imports to Venezuela, which were suspended in October 2006. He also called on the United States to stop using corn-based ethanol and to reduce its tariff on Brazilian sugarcane-based ethanol.

Although Chavez had two other options -- to ignore ethanol as a topic or continue his anti-ethanol rhetoric -- he chose to be conciliatory in an effort to maintain the appearance of general unity and cooperation on energy matters in the region. Energy is the most tangible route to expanding regional cooperation and integration in South America. Thus, if energy cooperation fails, political cooperation also is likely to suffer -- and incentives to cooperate would diminish.

Chavez's statements, however, do not mean he is capitulating. Rather, he is attempting to change perceptions that Brazil's ethanol ambitions are linked inexorably to the U.S. partnership and focus perceptions instead on ethanol as a regional desire -- while simultaneously criticizing the U.S. approach to ethanol.

Brazil expects to benefit both financially and politically from sharing its ethanol technology with poorer countries that are traditional sugarcane growers, and can bypass U.S. ethanol tariffs because of special waivers. In addition, Brazil and the United States are working together to give birth to ethanol as a global commodity by establishing universal quality standards. Knowing Brasilia will not change its mind on this joint project, Chavez is trying to change the perception that the project amounts to a geopolitical defeat for his country.

The most important outcome of Chavez's gesture is that he has avoided a regional rift. He likely realized that, although Brazil is not prone to take sides, the ethanol issue has the potential to create a real split between them. Venezuela does not want Brazil as an enemy, and Chavez's regional alliances are not strong enough to ensure that other countries would line up behind him if such enmity did emerge. Chavez likely found it particularly telling that Ecuadorian President Rafael Correa decided earlier in April to proceed with his country's ethanol partnership plans with Brazil, despite his objections.

Furthermore, Brazil's opposition to Venezuelan regional initiatives is crippling them, and Venezuela would benefit from more Brazilian goodwill. Brazil has taken a skeptical approach to Venezuela's proposed Banco del Sur -- intended as a substitute for U.S.-dominated institutions such as the International Monetary Fund and World Bank. Brazil's recalcitrance undermines Chavez's aim to have the region view the new bank as a legitimate regional institution under Venezuela's strong influence, rather than as a factional institution serving as a front for Venezuela's power.

Attacking Brazil directly would backfire for Chavez, though his recent gestures should not be interpreted as a real truce. Chavez and Castro likely will continue taking steps to undermine ethanol expansion, partially by funding environmental and indigenous groups that argue the rainforest is being destroyed to make way for sugar plantations. Moreover, as food prices continue to rise, they will blame ethanol.

Chavez and Castro will continue to distinguish between the U.S. and Brazilian approaches to ethanol -- while making sure to mention from time to time Brazil's unfortunate connection to the U.S. attack on the world's food supply. In the best of circumstances, Chavez would hope to make the impact of ethanol a public relations problem for Brazil, and thus encourage it to voluntarily distance itself from its partnership with the United States.

With that prospect unlikely, however, Chavez is wisely positioning himself to avoid a strong confrontation on the issue, and thus a double defeat -- harming Venezuela's relationship with Brazil even while Brazil's influence expands in the region.

Stratfor (Estados Unidos)

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31/01/2007\|	Hu's Visit to Africa: More Deals than Diplomacy
31/01/2007\|	Hu's Visit to Africa: More Deals than Diplomacy
25/01/2007\|	Ecuador: A Midair Collision and Correa's Balancing Act
25/01/2007\|	Ecuador: A Midair Collision and Correa's Balancing Act
23/01/2007\|	2007 Annual Forecast: Time to Look Inward -- Part II
23/01/2007\|	2007 Annual Forecast: Time to Look Inward -- Part II
23/01/2007\|	2007 Annual Forecast: Time to Look Inward -- Part I
23/01/2007\|	2007 Annual Forecast: Time to Look Inward -- Part I
10/01/2007\|	China: Exploiting the Uighur 'Terrorist Camp' Raid
10/01/2007\|	China: Exploiting the Uighur 'Terrorist Camp' Raid
03/01/2007\|	China: Aftershocks from the Crash
30/12/2006\|	Global Market Brief
30/12/2006\|	Global Market Brief
30/12/2006\|	Serving Up Dolly: Implications of an FDA Ruling
30/12/2006\|	Germany's EU Presidential Ambitions
30/12/2006\|	Serving Up Dolly: Implications of an FDA Ruling
30/12/2006\|	Germany's EU Presidential Ambitions
23/12/2006\|	Turkmenistan: The Battle to Follow Turkmenbashi's Death
23/12/2006\|	Turkmenistan: The Battle to Follow Turkmenbashi's Death
23/12/2006\|	Iran's Sudden Opportunity in Turkmenistan
23/12/2006\|	Iran's Sudden Opportunity in Turkmenistan
23/12/2006\|	Russia: Moving in on Turkmenistan
23/12/2006\|	Russia: Moving in on Turkmenistan
23/12/2006\|	Russia: The Fallout from a Cash Deal on Sakhalin-2
23/12/2006\|	Russia: The Fallout from a Cash Deal on Sakhalin-2
23/12/2006\|	Mexico: The Vital Role of 'Gatekeepers' in the Smuggling Business
23/12/2006\|	Mexico: The Vital Role of 'Gatekeepers' in the Smuggling Business
20/12/2006\|	Nigeria: Using Bombs to Keep the Pressure On
20/12/2006\|	Nigeria: Using Bombs to Keep the Pressure On
20/12/2006\|	Russia: An Energy Cutoff for Belarus, But Not for Europe
20/12/2006\|	Russia: An Energy Cutoff for Belarus, But Not for Europe
16/12/2006\|	A Saudi Power Struggle?
16/12/2006\|	A Saudi Power Struggle?
16/12/2006\|	Belarus: Can Foreign Investment Pay the Gas Bill?
16/12/2006\|	Belarus: Can Foreign Investment Pay the Gas Bill?
16/12/2006\|	A SAFE Approach to the Energy Debate
16/12/2006\|	A SAFE Approach to the Energy Debate
15/12/2006\|	Venezuela: Documenting the Threat
15/12/2006\|	Venezuela: Documenting the Threat
15/12/2006\|	Russia's Plans for Iran
15/12/2006\|	Russia's Plans for Iran
15/12/2006\|	Mexico's Anti-Cartel Operation: A Small Stone in a Big River
15/12/2006\|	Mexico's Anti-Cartel Operation: A Small Stone in a Big River
12/12/2006\|	U.S.: The Army's Stunted Transformation
12/12/2006\|	U.S.: The Army's Stunted Transformation
12/12/2006\|	India's Nuclear Negotiations Enter a New Phase
12/12/2006\|	India's Nuclear Negotiations Enter a New Phase
12/12/2006\|	Calderon's Presidential Challenges
12/12/2006\|	Calderon's Presidential Challenges
05/12/2006\|	Iraq's Evolving Relationship with Iran
05/12/2006\|	Iraq's Evolving Relationship with Iran
05/12/2006\|	The Venezuelan Vote
05/12/2006\|	The Venezuelan Vote
05/12/2006\|	EU, Kazakhstan: The Geopolitics of Energy Cooperation
05/12/2006\|	EU, Kazakhstan: The Geopolitics of Energy Cooperation
02/12/2006\|	India Records Torrid Growth in Q2
02/12/2006\|	India Records Torrid Growth in Q2
29/11/2006\|	India, Pakistan: Another Aspect to the Military Race
29/11/2006\|	India, Pakistan: Another Aspect to the Military Race
29/11/2006\|	Somalia: The Deyr Delays an Imminent Clash
29/11/2006\|	Somalia: The Deyr Delays an Imminent Clash
22/11/2006\|	Russia: LUKoil's Bold Expansion Plan
22/11/2006\|	Russia: LUKoil's Bold Expansion Plan
22/11/2006\|	Russia, the West and the Espionage Game
22/11/2006\|	Russia, the West and the Espionage Game
18/11/2006\|	Linking Russia's WTO Bid to Iran
18/11/2006\|	Linking Russia's WTO Bid to Iran
17/11/2006\|	Global Market Brief- What the Gazprom - ENI Deal Does -- and Does Not -- Mean
16/11/2006\|	Industry's New Stake in Kyoto
14/11/2006\|	India, Pakistan: Al Qaeda and the Airport Threat
13/11/2006\|	INDIA - The Abduction of a High-Tech Executive's Son
11/11/2006\|	Colombia's Multifaceted Security Problem
11/11/2006\|	U.S., Russia: The Politics Behind the WTO Talks
11/11/2006\|	CHINA - Blocking Investment to Promote Stability
08/11/2006\|	MEXICO - Jumping on the Oaxaca Bandwagon
07/11/2006\|	Global Market Brief
07/11/2006\|	Mexico City Bombings: An Escalation in Tensions
04/11/2006\|	Iraq Without Bechtel
04/11/2006\|	AUSTRIA - The Kidnapping Plot Against a Crystal Heiress
01/11/2006\|	Europe: The Taliban's Broadening Scope
31/10/2006\|	HONDURAS-Honduras' Operation Thunder: The Effort to Stem Rising Crime
31/10/2006\|	MEXICO - A Mexican Standoff Worsens
31/10/2006\|	BOLIVIA - BRAZIL: La Paz's Natural Gas Dilemma
28/10/2006\|	BRAZIL-Strength in Victory, Weakness in Office
28/10/2006\|	BANGLADESH - Conditions Conducive to a Coup?
24/10/2006\|	IRAQ - The Coming Change in U.S. Strategy
24/10/2006\|	IRAQ- Big Plans, Major Obstacles, for the Oil Sector
24/10/2006\|	Somalia's Islamists Court Mainstream Muslims
24/10/2006\|	SUDAN-Khartoum Moves Against Foreign Intervention in Darfur
21/10/2006\|	U.S.: Al Qaeda and the U.S. Midterm Elections
21/10/2006\|	Japan's Nuclear Message for China
18/10/2006\|	Time for Iran's Close-Up - Part 1
18/10/2006\|	RUSSIA - Sunset for Shtokman?
18/10/2006\|	Time for Iran's Close-Up - Part 2 - South Asia: Still Feeling the 'Washington Effect'
18/10/2006\|	The EU Scrambles for a Russia Policy
18/10/2006\|	Chemical Risk: Mass Storage and Transport as Weapons, Not Targets
18/10/2006\|	RUSSIA, BULGARIA, GREECE- The Pipe Dream Pipeline
14/10/2006\|	IRELAND -The Latest 'Tiger Kidnapping' Trend
14/10/2006\|	PAKISTAN - Rockets, Coup Rumors and Musharraf
14/10/2006\|	RUSSIA - Americans as Targets of Ultranationalist Street Gangs
14/10/2006\|	RUSSIA -The Kremlin's Hands-On Energy Policy
14/10/2006\|	CHINA - Using Unions To Access Company Records
14/10/2006\|	RUSSIA -The Kremlin Puts LUKoil Under Pressure
07/10/2006\|	North Korea: Beijing's Diminishing Power of Persuasion
05/10/2006\|	Nigeria: The Threat Against Bonny Island
05/10/2006\|	Kuwait: Moving to Become an Oil Market-Mover?
05/10/2006\|	Dirty Bombs: Weapons of Mass Disruption
29/09/2006\|	SOMALIA - Ethiopia's Islamist Fears
28/09/2006\|	IRAN, RUSIA - A Nuclear Marriage of Convenience
27/09/2006\|	SOUTH KOREA - Rethinking its Military Future
27/09/2006\|	Hezbollah's Iranian Connection
27/09/2006\|	MEXICO - Passing the Oaxacan Buck
24/09/2006\|	THAILAND - A Possible Respite in Southern Violence
23/09/2006\|	BOLIVIA - Military Bases in the Lowlands
23/09/2006\|	KENYA - Corruption as Catalyst for Crime
23/09/2006\|	The World Bank at a Crossroads
30/08/2006\|	SRI LANKA- Strategic Potential on Hold
30/08/2006\|	A Polite Meeting About Missiles
27/08/2006\|	EU: Energy Security and the Nuclear Genie
02/08/2006\|	CUBA - A New Castro Assumes the Old Power
02/08/2006\|	SOMALIA - Islamists and Clan Politics
30/07/2006\|	AFRICA - Toward a Three-Way Conflict in the Horn of Africa
30/07/2006\|	U.S., India: Hammering Out a Nuclear Deal
28/07/2006\|	Perception and Reality in the Oil Market
28/07/2006\|	Chavez's World Tour
23/07/2006\|	MEXICO - Acapulco as a Main Front in the Drug Wars
19/07/2006\|	IRAN - Using the Israeli-Hezbollah Conflict Advantageously
15/07/2006\|	The Economic Impact of an Israeli-Lebanese War
14/07/2006\|	Middle East Crisis: Backgrounder
06/07/2006\|	MEXICO - Facing Its Greatest Democratic Test
06/07/2006\|	BOLIVIA - A Highland Constitution and Lowland Discontent
06/07/2006\|	USA-The GOP Challenge: Retaining Religious Voters
06/07/2006\|	SLOVAKIA - An Unlikely Coalition
30/06/2006\|	Global Market Brief
30/06/2006\|	Global Market Brief
30/06/2006\|	Mexico's Economic Choices in the Upcoming Election
30/06/2006\|	Mexico's Economic Choices in the Upcoming Election
30/06/2006\|	Sri Lanka, India: The Tigers Try to Charm New Delhi
30/06/2006\|	Sri Lanka, India: The Tigers Try to Charm New Delhi
26/06/2006\|	China: Crisis and Implications
26/06/2006\|	China: Crisis and Implications
24/06/2006\|	UKRAINE-Timoshenko, the Turkmenbashi and a Dilemma for Gazprom
24/06/2006\|	UKRAINE-Timoshenko, the Turkmenbashi and a Dilemma for Gazprom
22/06/2006\|	NORTH KOREA - Another Bluff in the Korean Missile Game?
22/06/2006\|	NORTH KOREA - Another Bluff in the Korean Missile Game?
20/06/2006\|	ROBERT ZOELLICK - Washington Staffs for a New View of China
20/06/2006\|	ROBERT ZOELLICK - Washington Staffs for a New View of China
20/06/2006\|	NORTH KOREAN - The Logic of a North Korean Missile Test
20/06/2006\|	NORTH KOREAN - The Logic of a North Korean Missile Test
20/06/2006\|	MEXICO - Why the Upcoming Election Matters
20/06/2006\|	MEXICO - Why the Upcoming Election Matters
20/06/2006\|	WORLD CUP-The Potential -- and Reality -- of Violence at the World Cup
20/06/2006\|	WORLD CUP-The Potential -- and Reality -- of Violence at the World Cup
05/06/2006\|	Key Steps to Avoid Falling Victim to Crime
04/06/2006\|	Self-Protection: Acquiring -- and Practicing -- the Necessary Skills (Part III)
03/06/2006\|	Cosmetic Change in China's Economy
02/06/2006\|	Self-Protection: Analysis and Planning II
02/06/2006\|	Mexico: Of Soccer and Electoral Strategy
01/06/2006\|	Self-Protection: Assessing Threats and Vulnerabilities
01/06/2006\|	U.S. Perceptions of a Chinese Threat
31/05/2006\|	Bicycles: Another Lethal Weapon in the Militant Arsenal
29/05/2006\|	Peru, Colombia: Elections and Second Thoughts on Populism
28/05/2006\|	Kaibiles: The New Lethal Force in the Mexican Drug Wars
23/05/2006\|	The U.S. Immigration Debate's Fallout in Mexico
17/05/2006\|	Brazil: When Violence Reaches a Tipping Point
17/05/2006\|	EU, Latin America: Summit, Or Pique?
13/05/2006\|	Beheadings in Mexico: The Foreign Element in Mexico's Drug Wars
07/05/2006\|	Bolivia's Energy Nationalization: Opting for Short-Term Gains
07/05/2006\|	Diplomatic Snubs and Sino-U.S. Relations
06/05/2006\|	U.S.: CIA Director Porter Goss' Resignation
06/05/2006\|	China, Russia, U.S.: Washington's Strategic Insults
04/05/2006\|	No Relief at the Gas Pumps
02/05/2006\|	Bolivia and Leftward Movement in Latin America
02/05/2006\|	Bolivia: Nationalized Oil and Gas
30/04/2006\|	COLOMBIA- A Slaying Threatens the President's Re-Election
25/04/2006\|	Repsol in Bolivia: When Business Serves Foreign Policy
24/04/2006\|	Al Qaeda's New Focus on Sudan
24/04/2006\|	The Shiite Schisms
23/04/2006\|	Iraq: Jaafari Steps Aside -- Not Down
23/04/2006\|	Russia: Pipeline Monopolies Stymie Infrastructure Improvement
21/04/2006\|	Bush, Hu and the 'Accidental' Journalist
21/04/2006\|	The Shiite Schisms
21/04/2006\|	The Pakistan-Jihadist Connection
18/04/2006\|	Vietnam: The Party Congress Tackles Corruption
18/04/2006\|	PNA: Hamas' Message in the Tel Aviv Attack
18/04/2006\|	Russia: The Centralization Trend Continues
18/04/2006\|	Countdown to a Coup in Nepal?
17/04/2006\|	India, Venezuela: Caracas Diversifies its Oil Markets
13/04/2006\|	North Korea: Weighing the Benefits of the Nuclear Card
13/04/2006\|	Idealism, Realism and U.S. Foreign Policy
10/04/2006\|	The Saudi Militant Threat in Israel and the Palestinian Territories
08/04/2006\|	Political Instability in Europe's Core
06/04/2006\|	Ukraine: An Orange Reunion?
06/04/2006\|	Italy's Attraction for Islamist Militants
05/04/2006\|	Venezuela's Oil Dreams
30/03/2006\|	RUSSIA: WTO Accession Still Not a Done Deal -- From Any Point of View
28/03/2006\|	ITALY - Running the Electoral Numbers
28/03/2006\|	Thailand's Political Unrest: The Significance for Multinationals
27/03/2006\|	BRAZIL- Continuity at the Finance Ministry
24/03/2006\|	CHINA-Pumping an Iranian LNG Deal for Oil
24/03/2006\|	Residential Security - PDF
24/03/2006\|	CORRUPTION-Execution in China: Sending a Message to Big Business
24/03/2006\|	SPAIN- ETA's Cease-Fire and its Search for Viability
24/03/2006\|	GERMANY -The German Weapons - Smuggling Scandal: Opportunities for Merkel
24/03/2006\|	IRAN - Reading Between the Lines of Khamenei's Blessing
22/03/2006\|	INDONESIA- Violent Protests: A Message to Multinationals?
22/03/2006\|	The Unlikely Terrorist Threat Against U.S. Agriculture
20/02/2006\|	INDONESIA-Yudhoyono's Plan for Indonesia's Resurrection
20/02/2006\|	Nigeria - Same News, Different Network
18/02/2006\|	India: Hopes for Nuclear -- and Geopolitical -- Power
11/02/2006\|	India: King Abdullah Gets the Royal Treatment
11/02/2006\|	Drugs, Weapons and Violence: The U.S.-Mexican Border's Hot Commodities
11/02/2006\|	Mexico, U.S.: Election-Year Rhetoric on Both Sides of the Border
07/02/2006\|	China's Motive in Oil Deals with India
26/01/2006\|	The Bin Laden Tape and the Strike in Damadola
25/01/2006\|	Annual Forecast 2006: The Year of Great and Near-Great Powers -- Part II
22/01/2006\|	Annual Forecast 2006: The Year of Great and Near -Great Powers -- Part I
19/01/2006\|	EU: Austria's Presidential Problem
19/01/2006\|	Taiwan: Chen Risks China's Ire to Visit Gadhafi
14/01/2006\|	Thailand and the Possible Terrorist Threat to Tourists
14/01/2006\|	Travel Security: The Importance of Understanding the Risks
12/01/2006\|	Arms Market: Accident or careful planning?
12/01/2006\|	Iran's latest nuclear provocation : the resumption of nuclear fuel
06/01/2006\|	Russian gas: This is not all about Moscow -- Germany has a stake as well
20/12/2005\|	Evo Morales won Bolivia's presidential elections Dec.18: Morales Signals Left, Turns Right
01/08/2005\|	Argentina: Kirchner's Populism and a Darkening Economic Future
06/01/2005\|	Iran - Rice: 'If negotiations have been exhausted, we have the votes'

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Peoples of the Earth | Martin E. Andersen

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