May 2, 2006 8:48 pm

Chávez casts long anti-American shadow

Hugo Chávez, Venezuela’s president, has been promising to build a “Bolivarian axis” of like-minded anti-American governments. Only recently, few people took him seriously. Not anymore.

Bolivia’s nationalisation of Latin America’s second-largest reserves of natural gas on Monday has shown that Mr Chávez’s radical strategy has begun to influence events on the ground.

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Bolivia’s President Evo Morales has long advocated increasing state control over the sector – his poverty-stricken country’s most valuable industry. However, in recent weeks all the indications were that the new leftwing government in La Paz would move cautiously.

Bolivia has been reaping the benefits of a new tax and royalties regime imposed on operators last year, under which companies hand over 50 per cent of their profits to the government.

However, Mr Morales has been under tremendous pressure to nationalise the natural gas sector, one of his main campaign pledges and a measure supported by the vast majority of the country’s citizens: 95 per cent of Bolivians voted in favour of nationalisation in a referendum in 2004.

By nationalising, the Bolivian leader appears intent on shoring up his government’s popularity ahead of elections in July to an assembly that will rewrite the constitution. There have also been increasing grumbles about his authoritarian style.

“Politically, this is a very astute move,” said José Mirtenbaum of Gabriel Rene Moreno university in Santa Cruz. “Evo is trying to correct some of his failures in other policy areas, such as coca, education and health.”

Internationally, nationalisation also brings Mr Morales closer to Mr Chávez and Fidel Castro, the Cuban president. It is no coincidence that the nationalisation announcement came after a weekend in which the three leaders met in Havana, signed a “people’s trade accord” and attacked regional friends of Washington, such as Colombia and Peru.

Mr Morales, who had publicly postponed a decree on nationalisation several times, appeared to have made the decision to issue the decree collectively with the Venezuelan and Cuban presidents.

Economic relations between Havana and Caracas, which hinge on the exchange of Venezuelan oil for the services of Cuban doctors and dentists, have become increasingly important for both countries. Bolivia, which already hosts a few hundred Cuban doctors, is now part of the same “people’s trade area”.

For the region Mr Morales’s decision has two broader consequences.

First, it is a slap in the face for Brazil. Petrobras, the Brazilian state-owned company, is the biggest operator in Bolivia and has bent over backwards to develop good relations with the government.

But the decision to nationalise, accompanied by the dispatch of troops into the fields from where Brazil’s biggest markets are supplied, is not just an energy headache for the region’s biggest economy. It also signals a defeat for the country’s diplomats and their well-known ambitions for regional leadership.

Critics have been quick to attack President Luiz Inácio Lula da Silva’s diplomats, pointing out that failure to influence the government in Bolivia has followed lack of success in boosting Brazil’s image on the world stage, such as the costly but unsuccessful campaign to win a seat on the Security Council.

Second, Mr Morales’ decision will make regional politics in general more polarised. Mr Chávez and the lure of his resource-based populism seems to cast an ever longer shadow over the string of elections due to take place in the region over the next few months.

In Peru, Mr Chávez is backing a radical nationalist – Ollanta Humala – in a second round run-off due to take place later this month. Last week he even threatened to break off diplomatic relations with Lima if Alan Garcia, the more moderate of the two, triumphs.

In Mexico, which faces presidential elections in July, Mr Chávez’s influence is very limited. Even so, Felipe Calderón, the centre-right candidate, has risen in opinion polls after accusations that the leftwing front-runner, Andrés Manuel Lopéz Obrador, is close to Mr Chávez.

Ecuador, which goes to the polls in November, last month imposed a 50 per cent windfall tax on oil revenues and, although politics is highly fragmented, Mr Chávez has links to one leftwinger who has been prominent in the polls – the former finance minister, Rafael Correa.

In Bolivia, efforts by US officials and diplomats to work with Mr Morales and push him towards a moderate course are likely to prove more difficult.

“This really reinforces the position of the hardliners in areas like drugs,” says Michael Shifter, an analyst with Inter-American Dialogue in Washington. “Even if Mr Morales backtracks now it will be difficult to undo the effect of the decision.”

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