By Mario Osava
RIO DE JANEIRO, Apr 26 2006 (IPS)

Presidents Néstor Kirchner of Argentina, Luiz Inácio Lula da Silva of Brazil and Hugo Chávez of Venezuela concluded Wednesday in Brazil that a projected gas pipeline that would cross South America from north to south is viable, and that the plan should be ready to present to the other governments in the region in September.

The discussion on the megaproject, which will pipe natural gas from Venezuela’s Caribbean shoreline to Argentina, will be expanded to include the rest of the countries of South America at a meeting of energy ministers to be held five months from now in Brazil, announced Brazilian Foreign Minister Celso Amorim.

Wednesday’s meeting in Sao Paulo was the fourth meeting between the three left-leaning presidents in the past 13 months.

Bolivia will play a vital role in ensuring the project’s sustainability, because it has the second-largest natural gas reserves in South America (after Venezuela), said Chávez, the only president to talk to the press after the three-hour meeting.

The information provided referred only to the gas pipeline – seen by many experts as an overly ambitious dream – and ignored the disputes jeopardising South America’s integration process and the trade blocs that serve as its foundation: the Southern Common Market (Mercosur) and the Andean Community.

The Mercosur customs union is made up of Argentina, Brazil, Paraguay and Uruguay (Venezuela is in the process of becoming the fifth full member), while the Andean Community is comprised of Bolivia, Colombia, Ecuador, Peru and Venezuela.

Colombian President Álvaro Uribe, who was in Brasilia on Tuesday, requested Brazilian mediation in the conflict.

Uribe, who recognises Brazil’s leadership role in the construction of a new South American Community of Nations – based on the eventual convergence of Mercosur and the Andean Community – argued that the free trade deal his government recently signed with Washington would not affect trade within the Andean bloc, and that Colombia has the right to increase its oil exports to the U.S. market, where Venezuela already sells millions of barrels of oil.

The Bolivian government, headed by leftist President Evo Morales, has also threatened to withdraw from the Andean bloc if Colombia and Peru do not shelve the free trade accords signed with the United States, which are pending congressional ratification.

There is also the possibility that whoever wins the second round of Peru’s presidential elections, to be held in late May or early June, will cancel the free trade deal, or that the new legislature will not ratify it.

Both nationalist candidate Ollanta Humala, who won the first round, and his likely contender in the runoff, Alan García, lean towards the left.

Lula met with Kirchner Tuesday night in Sao Paulo to discuss, among other questions, the threat to Mercosur posed by the frustrations of its two smaller partners, Paraguay and Uruguay, which complain that they suffer discrimination and are not treated as equals.

Uruguayan President Tabaré Vázquez said last week that “the way things stand now, Mercosur is not useful” to the smaller members. His sentiments were echoed by his Paraguayan counterpart, Nicanor Duarte.

Another divisive factor is the “paper pulp mill war.” Environmentalists in Argentina, with government support, are opposed to the construction of two pulp factories on the Uruguayan side of a border river, arguing that they will cause environmental damages.

Argentine activists have been blockading bridges connecting the two countries since January, generating losses of hundreds of millions of dollars for Uruguay, according to Uruguayan authorities.

Brazilian mediation is being sought in this case as well, although Brazil is facing its own problems in Bolivia.

The Brazilian mining company EBX, which had planned to invest 150 million dollars in a new pig iron and steel plant near Bolivia’s border with Brazil, has been ordered out of the country by the new Bolivian government, reportedly for failing to comply with national laws.

In the meantime, the Morales administration is granting less advantageous conditions than were offered by previous governments to the Brazilian state-owned oil giant Petrobras, the largest foreign investor in Bolivia today.

Petrobras and the Bolivian authorities are currently involved in hard-fought negotiations for the prospecting, extraction and refining of natural gas.

Brazil has thus been forced to seek solutions to various conflicts in order to salvage its South American Community of Nations initiative and defend its national interests in neighbouring countries.

However, these disputes have also provided Lula and his foreign relations team with the opportunity to consolidate his leadership and score points for the upcoming elections in October, in which he is bidding for a second term. A series of corruption scandals last yearly seriously tarnished the image of both the Lula administration and the ruling Workers’ Party, posing a significant threat to his hopes for re-election.

Brazil has been obliged to take on this role of “settling or easing regional conflicts” by a new reality, “the outward expansion of Brazilian capitalism,” according to Clovis Brigagao, director of the Centre for Studies on the Americas at Cándido Mendes University in Rio de Janeiro.

Capitalist forces within a country naturally tend to expand beyond its borders, and Brazil is occupying a leadership role in South America in response to interests developed over recent years, reflected by the multinational presence of Petrobras and private sector companies like Ambev breweries and the Odebrecht construction group, Brigagao told IPS.

South American integration forms part of this context, and the most viable route is for Brazil to display “soft power” by seeking to reduce tensions through mediation efforts that are no longer limited to official diplomatic circles, but have also come to involve private companies and civil society, he observed.

Chávez makes more noise with his “ideological” battle with the United States, but his country plays a much smaller role, since oil money is not enough to substantiate leadership, he said.

Meanwhile, the projected gas pipeline that would cross almost all of South America, stretching over 10,000 kilometres and involving between 17 and 25 billion dollars in investment, continues to hold the attention of the three countries’ leaders.

Chávez announced in Sao Paulo that his country has 151 trillion cubic metres of natural gas reserves, or five percent of the worldwide total, which means the pipeline is entirely feasible in terms of supply. His statements came in response to media claims that the project was at a standstill because of Venezuela’s refusal to reveal the extent of its natural gas reserves for strategic reasons.

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