http://www.pinr.com/report.php?ac=view_report&report_id=338 02 August 2005 ''Intelligence Brief: Caribbean Spheres of Influence''
Widening and deepening competition for spheres of influence in the Western Hemisphere became evident during the week of July 25 with the summit meeting of the Association of Caribbean States (A.C.S.) and the passage of legislation in the U.S. House of Representatives approving the Central American Free Trade Agreement (C.A.F.T.A.). [See: "Intelligence Brief: C.A.F.T.A."] Through the election of center-left governments pledged to implementing social welfare and importing substitution models of economic development, in place of the neo-liberal free trade paradigm, in Brazil, Argentina and Uruguay, in addition to the election of Hugo Chavez, who promotes a more radical model of cooperativism, to Venezuela's presidency, Washington's leadership in the hemisphere has been credibly challenged for the past several years. The rise of the center-left and populist left in South America has opened up a north-south split and a resulting competition between the two sides that reaches its flash point in Central America and the Caribbean -- the border between the two power blocs where they contend for dominant influence. With their high poverty and unemployment rates, and their lack of military power, the states of Central America and the Caribbean are dependent upon more prosperous and stronger outside powers for their economic sustenance and development, and their security. In turn, the powers of the north and south of the hemisphere bid for the allegiance of the weaker states in the center. In part, the north-south competition is a normal development of power politics -- the rise of Brazil's economic power and the use by Caracas of Venezuela's petroleum-created wealth for geostrategic purposes inexorably leads to a rebalancing of hemispheric power. The general tendency toward multipolarity is compounded by clashing models of economic development that reflect conflicts generated by domestic and national interests of the contending sides. A.C.S. Summit Founded in 1994 and including 25 states in and bordering the Caribbean Sea, the A.C.S. is committed to fostering "consultation, cooperation and concerted action" among its members. One of the maze of regional organizations that have sprung up around the world since the fall of the Soviet Union and the consequent collapse of the bipolar configuration of world power, the A.C.S. has functioned as a consultative forum and has made only small steps toward integration and none toward concerted action. The A.C.S. has remained a forum because of the divergent interests of its members that reflect the pushes and pulls of the north-south split. The north projects itself into the organization through Mexico, a partner in the Washington-led North American Free Trade Agreement (N.A.F.T.A.). The south is present through Venezuela, which pursues an assertive policy of oil diplomacy. The weaker states in the middle have divided allegiances, with market-oriented center-right governments -- primarily in Central America -- supporting Washington, and the Caribbean islands and Panama leaning toward Caracas because of its provision of subsidized oil to them. Although the A.C.S. cannot be expected to be a vehicle of concerted action, it is politically significant as an arena in which the competing powers can bid for influence among the member states. The north-south split was starkly apparent at the A.C.S. summit of heads of government and top cabinet ministers held in Panama City on July 28-29. The major news from the summit was the push by Caracas of its "PetroCaribe" plan, which offers Central American and Caribbean states crude oil on favorable terms. Venezuelan Foreign Secretary Ali Rodriguez announced that Caracas was ready to expand its program by tailoring deals to the particular conditions and needs of each participating state: "We can use methods from the most ancient to the most modern to achieve these types of exchanges." Those methods include credits, subsidized prices and barter exchanges. Caracas' oil diplomacy won wide support at the summit. Thirteen of the 15 island countries in the A.C.S. have already signed on to PetroCaribe, Panama is in negotiations and even Washington's chief ally in South America, Columbian President Alvara Uribe, said: "I can envision Venezuela playing a great leadership role." Mexico City's response to Caracas came in Mexican President Vicente Fox's call for a "strategic alliance" based on free trade and open markets, and investment protection accords that would give Mexican business interests in construction, manufacturing and telecommunications greater access to the region. On balance, Caracas made headway at the summit at the expense of Mexico City and Washington. While the six C.A.F.T.A. states in the region -- Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic -- remained on the side of the north, the rest of the A.C.S. members solidified their ties with and support of the south on the basis of the tangible benefits provided by Caracas. C.A.F.T.A. On the day before the A.C.S. summit convened, the U.S. House of Representatives approved U.S. membership in C.A.F.T.A. by a razor-thin majority of 217-215. The agreement, which lowers tariffs on U.S. agricultural goods, had run into determined opposition in Congress mounted by a coalition of sugar growers, textile manufacturers, labor unions, and human rights, labor rights and environmentalist groups. With the Central American and Caribbean members of C.A.F.T.A. already receiving favorable trade terms from Washington, formalizing the agreement has the economic consequence of helping domestic interests in the U.S. The Bush administration pushed hard for C.A.F.T.A. not only to reward those interests, but to lock the Central American and Caribbean members into a firm relation with Washington in order to ensure that regional trade remains geared to the U.S. and to forestall the spread of Caracas' sphere of influence. Had Congress failed to approve C.A.F.T.A., the center-right governments in the region that had signed on to the agreement would have suffered a loss of credibility and overall U.S. trade policy would have been placed in jeopardy. As it stands, growing economic nationalism in the U.S. probably means that C.A.F.T.A. will be the high watermark of Washington's neo-liberal strategy. The Bottom Line The inroads made by Caracas' oil diplomacy at the A.C.S. summit and the passage of C.A.F.T.A. in the U.S. Congress have sharpened the divide in the Caribbean region between pro-north and pro-south states. With Washington seemingly unwilling to offer incentives to oil-dependent states in the region, Caracas is free to create its "solidarity" coalition, but will be blocked in efforts to expand it by the C.A.F.T.A. states as long as they retain governments favorable to Washington. The outcome of the competition for spheres of influence in the Caribbean region will be in great part determined by the domestic politics of the region's states -- whether the balance of power between center-right and center-left and left governments shifts appreciably. Report Drafted By: Dr. Michael A. 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