Friends of the Earth International urges banks to stop fuelling harmful agrofuel boom.
BRUSSELS (Belgium) / MONTEVIDEO (Uruguay), 19 May 2008 – Many major European banks are funding the rapid expansion of agrofuel production in Latin America, leading to large scale deforestation, increasing human right abuses and threatening food sovereignty, according to a new report released today. [1]
BY JOACHIM BAMRUD
Brazil has replaced Mexico as the European Union’s top market in Latin America, according to a Latin Business Chronicle analysis of 2007 trade data from Eurostat. Meanwhile, Latin America’s trade with the European Union continues to grow at faster levels than with the United States, the analysis shows.
“That’s not surprising [since] the European economies keep growing, while the United States is slowing down,” says Isaac Cohen, president of US-based consultancy Inverway and a former director of the Washington office of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
The EU’s trade with Latin America grew by 11.5 percent last year to a new record of 160.0 billion euros (US$245.3 billion). EU exports to Latin America reached 71.4 billion euro, an increase of 12.8 percent. Meanwhile, EU imports from Latin America grew by 10.5 percent to 88.6 billion euro.
That means Latin America’s trade with the EU is growing nearly twice as much as its trade with the United States, which only grew by 6.2 percent last year (See US-Latin Trade Grows). The EU also continues to have a much smaller trade deficit with Latin America than the United States. Last year it reached 17.3 billion euro (or $26.5 billion), an increase of 1.7 percent from 2006. By comparison, the US deficit reached $100.5 billion. However, the EU still lags the US in terms of total trade with Latin America. Last year’s EU trade with the region was less than half of U.S.-Latin America trade.
LATIN WINNERS & LOSERS
Brazil is the big winner in real terms when it comes to total trade, exports…
April 7 (Bloomberg) — South American nations, flush with cash from increased prices for oil, soy, copper and other commodity exports, are going on a military spending spree.
In the wake of Venezuelan President Hugo Chavez‘s arms purchases, which saw him order $1.3 billion in military aircraft and 100,000 assault rifles in 2005, nations across the region are bulking up.
Colombia is buying 24 Israeli Kfir fighter jets. Brazil plans to build its first nuclear submarine. Ecuador will boost military spending 19 percent this year. Overall, regional arms outlays surged 55 percent over four years to $38.4 billion in 2007, says the International Institute for Strategic Studies.
The risk is that all those weapons increase the chances that a minor incident, such as Venezuela’s recent saber-rattling over Colombia’s raid on a rebel camp in Ecuador, may escalate into a major one, says Christopher Sabatini, policy director at the New York-based Council of the Americas, a research group.
“There has been a dramatic military buildup,” Sabatini says. “The buildup of attack weapons and hardware allows leaders to be far more bellicose than they would be otherwise.”
Chavez led the region’s return to the arms market with his bid to make Venezuela “invulnerable” to attack, as he put it last year. The country’s $4.4 billion in weapons purchases from 2003 to 2006 placed it sixth among developing countries for the period, according to a report by the U.S. Congressional Research Service.
Chavez’s Spending
Spending by Venezuela, which holds the biggest oil and gas reserves in Latin America, has surged as oil prices rose to more than $110 last month, up from $12.30 when Chavez took office on Feb. 2, 1999.
His biggest purchases came in 2006. In that year alone, Chavez signed deals for $3.1 billion in advanced weapons, including 24 Russian-built Sukhoi Su-30 fighter jets and 38 combat and transport helicopters made by Russia-based Rostvertol Plc. The Su-30, with a range of 4,800 kilometers (3,000 miles), is an offensive weapon that can carry a payload of bombs and air-to-surface missiles, according to the research group Globalsecurity.org.
More recently, Russia’s Interfax news service reported April 4 that Venezuela may buy three Russian-made diesel-powered submarines.
“The sudden purchase of weapons and advanced weapon systems in Venezuela begs the question, `What is the emerging military threat?”’ U.S. Admiral James Stavridis, who oversees military affairs for Latin America, said in an interview.
Attacking Rebels
The tensions between Venezuela and neighboring Colombia spiked last month after Colombian President Alvaro Uribe launched an attack on rebels from the Revolutionary Armed Forces of Colombia hiding a mile inside Ecuador, a Chavez ally.
Chavez has urged recognition for the FARC militants as belligerents, rather than terrorists, as they are considered by the U.S. and other countries. Chavez termed the raid a “war crime” and ordered 10 tank battalions to the Colombian border.
“Chavez was much more comfortable being bellicose with his new weaponry,” says Adam Isacson, a Latin America analyst at the Center for International Policy, a foreign policy research group in Washington.
Colombia has received more than $5 billion in military and counter-narcotics aid from the U.S. since 2000, including 47 Black Hawk helicopters built by Sikorsky Aircraft Corp., to help fight the FARC. The Kfir fighters it is buying have a range of 3,200 kilometers and can carry bombs or missiles.
Less to Fear
Brazil, whose $1.3 trillion economy is the largest in Latin America, has less to fear from Chavez but sees a stronger military as a way to further its desire for a bigger role on the world stage, including a seat on the United Nations Security Council.
“To be more engaged in the global environment, you’ve got to have some instruments of foreign policy other than just your economy,” says retired U.S. Colonel Jay Cope, a senior researcher at National Defense University in Washington. “One of those instruments is the armed forces.”
Record soy prices helped Brazil buy $1.1 billion in arms in 2006, ranking it No. 7 in the developing world, according to the Congressional Research Service. Its purchases included 30 MI-35 transport-combat helicopters built by Rostvertol Plc and 270 German-made Leopard 1A5 battle tanks.
Brazil and France plan to sign an accord in December on technology transfers that will help Brazil build combat planes, helicopters and submarines. Empresa Brasileira de Aeronautica SA, the world’s fourth-largest aircraft builder, is boosting its defense-contracting business.
Protecting the Oil
Nelson Jobim, Brazil’s defense minister, told reporters Dec. 21 that the country needs new warships to protect its offshore oil reserves.
Brazil’s discovery in November of the Tupi oil field, which contains as much as 8 billion barrels, was one of the largest finds in the world the past 20 years. The Tupi field lies in a basin 400 kilometers off the coast of Rio de Janeiro in water up to three kilometers deep.
“If you’re Brazil, you’ve got to think about how you want to look after that ungoverned territory,” Cope said in a telephone interview.
Meanwhile, Ecuador’s defense budget is up 190 percent since 2000, according to the Stockholm International Peace Research Institute, known as SIPRI. President Rafael Correa backed this year’s 19 percent increase in Ecuador’s defense budget, to $920 million, to help boost salaries while shifting forces to the country’s northern border with Colombia.
The Last War
Ecuador took part in the region’s last war, in 1995, when a border clash with Peru killed as many as 500.
Military spending in Chile, the world’s largest copper producer, rose thanks to a 1987 law directing 10 percent of the country’s copper revenue to the military. The price of copper has almost quadruped over the past five years. Purchases since 2006 include 18 used F-16 jet fighters built by Lockheed Martin and 10 Boeing Co. Harpoon anti-ship missiles.
The U.S. Navy also wants to build up its forces in the region. Stavridis told Congress March 6 that he backs plans to designate a new fleet, led by a nuclear aircraft carrier, to patrol the waters of the Caribbean and Latin America in support of “counter-terrorism” operations. The reconstituted Fourth Fleet, which was disbanded in 1950, may be based near Jacksonville, Florida.
Not all South American nations are boosting military budgets. Uruguay’s defense expenditures have been declining since 1999, while Peru’s have fluctuated between $800 million and $1.1 billion a year since 1993, according to SIPRI.
Languishing Budgets
The commodity-and-arms boom follows years in which the region’s military spending languished, said Mark Stoker, a defense economist at the Institute for Strategic Studies. Brazil’s defense budget had fallen to $5.9 billion in 1991 from $14.2 billion in 1988, according to SIPRI; most of the country’s navy is more than 25 years old. Ecuador’s military budget of $778 million in 2003 was down from $809 million in 1995.
Cope says the regional arms buildup has its positive aspects, as countries buy equipment they might need to respond to natural disasters and help them gain experience in peacekeeping operations in places such as Haiti, where Brazilian and Argentine troops lead UN efforts to back the elected government.
“I see countries emerging from about 20 years of leaving defense budgets in limbo,” says Cope. “They’ve starved their militaries.”
Atlantis 