Posts Tagged ‘trade’

Sabres Rattling In the South

Tuesday, March 4th, 2008

A major diplomatic breakdown is occurring right now in South America.

Perhaps Uribe should have known...
Chavez (left) hugs Uribe. Shouldn't Uribe have been worried here?

This story has been relegated to the back burner behind the upcoming Democratic primary on Tuesday, among other stories, but it merits some attention here. I will just list some bullet point facts from various sources to give a sense of what is going on, then we’ll move into some brief, and some [being honest] premature analysis, of the situation:

Is this really a region on the brink of war? No, and several well researched news stories point out the following reasons the conflict is unlikely to escalate militarily:

  • Trade—Colombian trade with Venezuela is worth $5 billion a year. Trade to Ecuador tops $2 billion a year, including vital foodstuffs. Colombia also supplies 10 percent of Ecuador’s electricity needs. (Follow the link for some great analysis of economic implications from Bloomberg News)
  • Legitimacy of the Raid—Colombia did not raid Ecuador for resources, but to capture (or kill) a top rebel commander. What they found, contained in three encrypted computer discs, was worth well over its weight in gold.
    • “One document, apparently written in February, suggests Venezuela recently gave the rebels $300 million, while another suggests the rebels were shopping for 50 kilos of uranium…”
  • Political concerns—This article from Time Magazine does a good job of going through the political implications of any border conflict among the three nations. Most importantly:
    • Colombia can’t afford another front in its perpetual battle against the FARC rebels
    • Chavez can’t afford an unpopular war when he is seeking a constitutional referendum
      • Venezuelan oil industry couldn’t handle the uncertainty a conflict would bring
    • International pressure on both Uribe and Chavez to be civilized
    • The perceived, and perhaps real, military superiority of the veteran Colombian army that has been engaged and active for the past several years against the FARC rebels

So why should we care about a little sabre rattling in South America? For one thing it is of particular interest to the US for a several reasons.

  • US dependency on oil—Venezuela crude oil supplies remain important to US energy policy
  • Colombia as a key US ally in Latin America
  • The US role in training and assisting the Colombian military in its fight against FARC rebels and wider role in the “War on Drugs”
  • The role of US intelligence services in the raid into Ecuador
  • The longstanding clash between Hugo Chavez and the United States, particularly US President Bush

Chavez holds up his plans for battle.
Chavez holds up his battle plans.

Any conflict, even a minor border skirmish, would pit a major US ally in the region (Colombia) against the fledgling alliance of a major US agitator (Hugo Chavez’s Venezuela). For now the evidence seems to be clearly pointing toward another case of Chavez’s showcase brinkmanship, and in all likelihood tensions should be reduced and relations normalized within the next couple of weeks. However, the taste of this clash may linger (especially the cutting of diplomatic ties, even if only briefly).

The divide between the US friendly Latin American countries and Chavez friendly Latin American countries may have just grown deeper still. The effects of this will be felt for awhile, and is something to monitor considering the persistent US interests in the region outlined above.

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An Enigma Wrapped Inside A Big Communist Riddle

Monday, March 3rd, 2008

North Korea has baffled American diplomats and politicians consistently for at least the last twenty years. Now a nuclear state, the question of Korea is even more important for the next President to provide some real solutions on. Hawks want to topple the regime and see a reunification of North and South Korea as the best solution for stability and security in East Asia. Doves want to use international pressure (particularly the 6-party talks) to coerce (convince, persuade?) North Korea into giving up its nuclear program and perhaps even opening a meaningful dialog with the West. Unfortunately, these competing tensions in US foreign policy have led to a 3 steps forward, 2 steps back development in US relations with Korea.

A little less lonely these days?

A few major events have taken place on the peninsula in the past month that indicate a need for Korea to be put on the national radar again. First, the issue that doesn’t involve Gershwin, classical music, or a cultural exchange—a perceived liberalization in Korean economic policy (which may in fact be music to the sound of capitalist reformers outside of Korea, and those hiding themselves within). North Korea, long known to hold major reserves of coal and precious metals, has begun selling its reserves to other countries—drastically increasing its meager foreign trade in a response to looming economic crisis. First let me throw some numbers at you from this excellent Washington Post article on the subject (incidentally, buried on page A19):

  • $1.4 billion—total North Korean exports in 2006
  • $11 billion—value of recent trade projects undertaken jointly between North and South Korea
  • $2 trillion—estimated value of North Korean mineral reserves

Why are these figures significant? Well, not only is North Korea exporting goods and engaging in foreign trade, but also this:

They say that Kim’s government is increasingly willing to lease mines to outside companies and to negotiate joint ventures with foreign governments.

If talking is the first step toward warmer relations between two countries (or a single country and the entire world… and it is) then here is that big first step. The fact that Kim Jong Il’s brutal dictatorship (and make no mistake it is brutal—starving millions of its own people in the early 1990s) is increasingly engaging in trade dialog with neighbor states and allowing foreign countries to lease mines means that slowly the Western, or perhaps just capitalist, culture and way of doing business are going to creep in. A brutal dictatorship may be able to control every aspect of the daily lives of its people, but even Kim Jong Il’s regime can’t force its citizens to unlearn what they have already learned. The trickle of information exchange that these economic efforts bring with them is a start toward an irreversible path of liberalization.

Or is it? In the same article Andrei Lankov, an expert on the North and occasional visitor, states:

More important are Kim’s conflicted feelings about mining, said Lankov… “He sees the money now,” Lankov said. “But he believes that by reforming, he would be committing suicide. So he wants mining done under strict control of North Korean managers.”

(more…)

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