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Canada can help counter Chavez’s mischief

Calgary Herald, Canada

Canada can help counter Chavez’s mischief

Harper’s support will aid democracy

By Patrick Donnelly, For The Calgary Herald

15 July 2007

As Prime Minister Stephen Harper departs upon his first official visit to Latin America this weekend, he will likely make a better impression than did Pierre Trudeau on his own visit to South America.

Trudeau reportedly horrified his protocol-minded hosts when he disembarked from his plane in Brazil wearing sandals and a tie-dyed shirt. The Brazilians were in full military dress. Today, the only Latin American leader apt to show up in uniform, in the unlikely event Harper drops in for a visit, is Venezuela’s Col. Hugo Chavez.

Canada’s renewed interest in Latin America is timely. Earlier this spring, Chavez hosted the Bolivarian Alternative for the Americas, a summit for the socialist leaders of his own country, plus Cuba, Nicaragua, Ecuador and Bolivia. This was immediately followed by the nationalization of the last privately held oilfields in Venezuela. As an encore, Chavez shut down Radio Caracas Television, a leading Venezuelan opposition-aligned broadcaster, and is threatening to silence Globovision, the last remaining opposition broadcaster.

Along with other developed nations and international development institutions such as the Washington D.C.-based World Bank and the Inter-American Development Bank (IADB), Canada must use her influence, investment and know-how to counter Chavez’s misguided initiatives in the region.

Although Chavez was democratically elected president in 1998, after a failed coup in 1993, no one today would mistake him for a democrat. He has changed Venezuela’s flag, altered the country’s constitution, extended his control over the previously nationalized petroleum industry, nationalized its main telecom and central electricity companies, tightened state control over the media, persecuted the opposition, and renamed Venezuela the "Bolivarian Republic of Venezuela" to associate himself with South America’s liberator, Simon Bolivar.

Domestically, Venezuela is a mess. Despite high oil revenues, there has been a 48 per cent increase in the country’s public debt since 1998. Inflation is higher than most neighbouring countries, Venezuelan exports have decreased, corruption is endemic, and the underground economy is flourishing. Violence has increased dramatically; Venezuela now has a higher homicide rate than Colombia.

While Venezuela’s public debt stands at $22 billion US, Chavez has channelled funds outside his country to fund "foreign aid" projects worth $26 billion. Through this spending, Chavez seeks to extend his ideology of Bolivarianism, a mish-mash of anti-Americanism, grassroots political activism and socialism, throughout Latin America. However, where his mentor, Fidel Castro, was dependent upon Soviet largesse to finance and export the socialist revolution, Chavez, with pockets full of petrodollars, can act as his own venture-capital anti-capitalist revolutionary fund.

In 2005, Chavez extended low-cost loans to Brazil and Argentina, enabling those countries to pay off the International Monetary Fund (IMF), their long-time creditor, ahead of schedule. Chavez has provided much financial aid to his protege, Bolivia’s Evo Morales, thus enabling that country to thumb its nose at necessary economic reforms. He has provided subsidized fuel to Ecuador, Cuba, Nicaragua, the Dominican Republic, and other countries party to the San Jose trade agreement. Earlier this year, Chavez and Argentina’s leftist president, Nestor Kirchner, announced the founding of the Bank of the South, a direct competitor to the IADB. The recipients of this largesse are no doubt grateful. Venezuela received much support from Latin America for its recent bid for a UN Security Council seat. Unnoticed in the mainstream North American press was the admission of Venezuela to MERCOSUR, the trading bloc of southern-cone countries of Chile, Uruguay, Argentina and Brazil.

Canada and international organizations such as the World Bank can assist the long-term development of these countries by promoting a rules-based approach to funding economic development. This includes strict criteria for lending, which reduces the potential for corruption or the funding of economically dubious projects. Viewed as bureaucratic and out of touch, the World Bank, the IADB and nations such as Canada and the United States, will face competition from Chavez as a source of capital for Latin American development. However, long-term consequences of Chavez’s involvement with the region include erosion of the rule of law, distortions to regional economies and Venezuela’s continued impoverishment. Instead of assessing economic projects on their merits, Chavez-sponsored projects will instead be funded based on purely political criteria designed to score maximum points for the Bolivarian revolution.

Unfortunately, Chavez seeks to exploit valid criticism of the World Bank. The bank has long been accused of cronyism and inefficiencies that have slowed if not hampered development initiatives.

Prior to the manufactured scandal that drove him out, former bank president Paul Wolfowitz was attempting to make the institution more accountable.

Under Wolfowitz, the bank appeared to be embracing the innovative philosophy of Peruvian economist Hernando de Soto, whose most famous book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else argues for the establishment of the rule of law and private property rights as the precursor to advancing economic progress. De Soto’s philosophy, counter to the statist tenets of Chavez’s Bolivarianism, ironically appears truer to the beliefs held by Bolivar himself, a classic liberal.

Unfortunately, it is too soon to tell if Wolfowitz’s reforms will survive his departure.

There is compelling evidence that Venezuela is an active sponsor of terrorism, not only aiding violent guerrilla organizations in neighbouring Colombia (and thus undermining the oldest democracy in Latin America), but also providing support to Islamic terrorist groups such as Hamas and Hezbollah. In 2003, it was revealed by U.S. News & World Report that Islamic terrorists were not only operating within Venezuela, but that Venezuelan identity documents had been provided to thousands of Syrian, Lebanese, Egyptian and Pakistani nationals. In June, Chavez visited Iran where he was warmly welcomed by President Mahmoud Ahmadinejad. Following last summer’s conflict in Lebanon, the Iranian-backed Hezbollah leader, Hassan Nasrallah, publicly thanked Chavez for his support.

Notwithstanding Canada’s long-time involvement in the region, Latin America generally views Canada with curiosity. Brazil and Canada have a long history, somewhat marred by recent trade disputes.

Brascan Ltd., the storied Canadian corporation, started as the Brazilian Traction Light & Power Co. and pioneered the provision of electricity, gas and tramway services in Rio de Janeiro and Sao Paulo in the early 1900s. Scotiabank has an extensive presence throughout Spanish-speaking Latin America. Prior to its departure from Ecuador in 2005, EnCana was one of the largest petroleum producers in that country, and had spent millions of dollars to enhance health care, education and environmental protection.

Not only are Canadian companies perceived as safer and more stable than their Latin American counterparts — and somewhat removed from local corruption — they are also viewed, perhaps inaccurately, as not American. Latin America enjoys, at best, a schizophrenic relationship with the United States. Despite the large U.S. Hispanic demographic, too much American interest in the region is greeted with suspicion of imperialism and shouts of "Yanqui, Go Home" (as on President George W. Bush’s recent tour).

When America appears preoccupied with other areas of the world, as has happened since 9/11, Latin America accuses the United States of indifference.

Therein lies an opportunity for Canada. We are well positioned to mentor the region’s growth as it develops its vast potential.

Aside from private investment, Canada can best assist Latin America’s development through enhanced support of democratic regimes and encouragement of good governance. We can do this through government-to-government contacts and the promotion of free trade with Latin America — either through the now-moribund Free Trade Agreement of the Americas (FTAA) or by negotiating separate bilateral trade agreements with individual countries (as we have with Chile). The FTAA talks were derailed in 2003 by a combination of disinterest from participating countries and fierce opposition by Chavez and anti-globalists who viewed the FTAA as an American-imperialist plot.

Latin America is at a cross-roads. We must not allow this close neighbour, through our own indifference, to slip into Chavez’s destructive orbit. By engaging with Latin America on all fronts, we will provide healthy alternatives to Venezuela’s easy money. We can assist with elimination of the corruption, cronyism, human rights abuses and bad economics that have held the region back for too long. Bolivar would no doubt approve.

Patrick Donnelly is a Calgary-based lawyer.