Posted on 10/13/2005 7:22:26 AM PDT by Alex Marko
Since taking power two years ago, Argentina’s president, Néstor Kirchner, has fostered close political and economic ties with his counterpart in Venezuela, Hugo Chávez. At the same time, he has maintained cordial relations with Washington. But news that Venezuela wants to buy nuclear technology from Argentina could undermine this delicate balance. And even if the nuclear deal falls through, the links to Caracas are likely to grow tighter.
On October 8th, the Buenos Aires daily “Clarín” published documents revealing details of an August meeting between representatives of Petróleos de Venezuela (PDVSA), the state-owned oil company, and Argentina's Nuclear Energy Commission (CNEA). At that gathering it was agreed that the two parties would study the feasibility of installing a medium-power nuclear reactor in Venezuela’s oil region of Orinoco. Argentina has two nuclear power plants in operation, built with German and Canadian technology, and has a well-developed nuclear industry of its own. It has sold several small scientific research reactors to Egypt, Algeria, Peru and Australia.
The design of the power reactor has been completed, but the CNEA lacks the funds to build a prototype. Speculation is that the deal with Venezuela would provide those funds. Given the political sensitivity of nuclear energy, the timing of the news leak could not have been worse for Mr Kirchner, who in less than one month will play host to President George W Bush, Mr Chávez and other hemispheric leaders at the fourth Summit of the Americas to be held on November 4th-5th at the beach resort of Mar del Plata.
Petro and financial ties
Mr Kirchner has no reasons to irritate Washington at this time and could still reject the whole idea (Venezuela's energy minister has denied there are firm plans to build a nuclear power station). Yet Argentina remains one of the main targets of Venezuela's widening “petro diplomacy” in Latin America. Milestones in this growing relationship include the following:
* When Argentina faced an energy crisis last year, Venezuela supplied 4m barrels of fuel oil worth US$200m. In exchange, Argentina agreed to buy from Venezuela industrial goods, which this year comprised agricultural machinery, worth a similar amount.
* Mr Chávez has generously provided financing to Argentina since the country completed its massive debt restructuring with bondholders last April and went to the financial markets to get funds to repay loans owed to the IMF. Between May and July, Venezuela bought more than US$550m in Argentinian bonds. During a meeting last August, Mr Chávez told Mr Kirchner that such transactions would continue.
* A PDVSA shipping subsidiary has signed a US$112m contract with Argentinian shipbuilder Astilleros Rio Santiago, which is managed by a co-operative of workers, to build two oil tankers, with an option for another four. Many other ships will be built in Brazil. Venezuela spends some US$7bn a year on its oil industry--US$4bn of which is spend in the US--and part of that buying power is now being diverted to other suppliers.
* Venezuela wants to be a direct investor in Argentina as well. Last year, PDVSA opened an office in Buenos Aires, and it was rumoured that it intended to acquire Shell's (UK) interests in Argentina, including the operation of some 900 petrol stations. This did not materialise, but it was recently announced that PDVSA would buy Rhasa, a family-owned energy firm that has a small refinery and 136 petrol stations, for about US$100m. Spain's Repsol YPF will provide crude to the refinery, in exchange for expanded access to Venezuelan oil fields. Last February, Mr Chávez inaugurated PDVSA’s first two gas stations in Buenos Aires.
* PDVSA is also rumoured to be interested in buying the retail network of Uruguay's ANCAP in Argentina (172 petrol stations under the brand name Sol Petróleo). PDVSA, in association with Enarsa, the newly created Argentinian state energy firm, says it wants to operate some 600 service stations in Argentina, equivalent to 12% of the market. Enarsa has no assets but may get preferential access to offshore exploration contracts that may involve the Venezuelans as well.
Meanwhile, in Uruguay, Mr Chávez has signed an energy cooperation agreement with the leftist government of Tabaré Vázquez to supply oil for the next 25 years. Uruguay imports all the oil it consumes, roughly 50,000 barrels per day. The proceeds of the oil sales will be reinvested in Uruguay in two industrial facilities owned by ANCAP.
Broader ambitions
Mr Chávez is pushing the energy agreements he has signed with Uruguay and Argentina, as well as others with Brazil, as a way of building a network of regional energy companies: Petrosur, Petroamérica (in Central America and Mexico) and Petrocaribe. This is part of a broader plan to form ALBA (the Bolivarian Alternative for the Americas) as a response to the US-initiated attempt to create a Free-Trade Area of the Americas (FTAA).
Argentina has rejected joining the FTAA, but it has not so far endorsed the Venezuelan proposal, which Argentinian diplomats see as little more than propaganda. Buenos Aires instead prefers to mend relations with neighbouring Brazil within the existing Southern Common Market (Mercosur) arrangement. But with Venezuela getting closer every day, it could become difficult for Mr Kirchner to avoid a clearer definition of his relationship with the controversial Bolivarian president.
No doubt in order to insulate the petty dictatorship he has created.
And no doubt, "Jimmah Catah" approves.
Except for the nuclear stuff, none of this would raise
an eyebrow were it not for Chavez' hostility to the US.
Isn't that kind of like saying, "except for the pistol tucked into his waistband, none of his coworkers at the Post Office would have noticed a thing, were it not for his obvious hostility"? Chavez going for nuke technology, assuming it's a serious effort, has to be the last nail in his coffin. There would be nothing to keep him from sharing his technology with his pal, Fidel. Hugo's problem is that his embrace of Marxism has led him to believe that the US won't dare do anything to him.
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