THE ALIGNMENT OF FORCES IN THE ETHANOL WAR

By Alberto Garrido and - - Reprint | | Print |

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CARACAS, Jul 26 2007 (IPS) - For Brazil, the development of its ethanol production and exports represents the possibility of becoming the world\’s new energy power in the most promising fuel; the consumer that expects to benefit from the global development of ethanol is the US, writes Alberto Garrido, a journalist and professor of the theory and history of the labour movement at the University of the Andes. In this analysis, Garrido writes that the US-Brazil strategic alliance, finalised in the Camp David agreement signed by Bush and Lula on March 31, is in line with the strategic interests of both states, which have proposed to march together to create the \’\’Ethanol Age\’\’ and stimulate and control production of the fuel on a global scale. Bush\’s hope is to create, together with Brazil, an ethanol OPEC capable of competing with the oil OPEC and the future gas OPEC that Russia is pushing for. Brazil, the king of cheap ethanol, stands to benefit the most from the biofuel boom. Brazil will project itself as a world player, with ethanol as its geopolitical, economic, and energy weapon. But it will only be able to do this hand-in-hand with the United States, the great consumer. The political potentiality of the strategic Brazil-US axis will influence Brazil\’s foreign policy more and more.

Brazil and the US have been silently preparing their ethanol alliance since 2005. The nomination as World Bank president of now defenestrated Paul Wolfowitz was part of the agreement between Washington and Brasilia. The ethanol plan was completed with the nomination of Luis Alberto Moreno, ex-Colombian ambassador to Washington, as president of the Interamerican Development Bank (IDB).

Wolfowitz, a national security expert and ideological author -with Vice President Dick Cheney- of the occupation of Iraq to guarantee the US the Middle East’s oil reserves, travelled to Brazil as soon as he took the new position. Bush had been lobbying to put Wolfowitz at the head of the World Bank since early 2005. Washington hawks had come to the conclusion that the military disaster in Iraq was blocking the US energy plan and that it was necessary to develop the option of ethanol immediately.

Bush hopes that ethanol use can reduce US gasoline consumption by 20 percent in the next ten years. At present Brazil and the US produce 70 percent of the world’s ethanol, some 34 billion litres per year. In Brazil about 40 percent of cars have flex-fuel engines which can run on gasoline or ethanol. Brazil’s ethanol is derived from sugar cane while the US uses corn. The former is more profitable. Experts calculate that ethanol became attractive as an alternative fuel when the price of oil topped 30 dollars a barrel.

Wolfowitz took over at the World Bank in June 2005. In December Bush met with Lula and visited the Amazon jungle and the desert areas of the northeast, accompanied by ethanol entrepreneurs. At the end of his visit he announced that the World Bank would support Brazil in its development of ethanol and back ethanol production projects in Africa.

A year later the Interamerican Commission on Ethanol was created in the state of Florida, presided over by Bush’s brother Jeb, the governor of Florida. Luis Alberto Moreno, together with Roberto Rodriguez, ex-agriculture minister of Brazil, and US and Brazilian entrepreneurs met in Miami for the launching of the ”Ethanol Age”. The commission announced that it would make available 100 billion dollars from private enterprise to invest in ethanol development over the next five years. Moreno declared that the IDB would provide USD 3 billion to help establish ethanol in Latin America and the Caribbean.

The IDB also asked the firm Garten Rothkopf to prepare a report on ethanol’s prospects as an alternative fuel. Rothkopf concluded that USD 200 billion would need to be invested for ethanol to cover 5 percent of the world’s fuel consumption by the year 2020. At the same time Bush asked the US congress for USD 2.7 billion in funds to ”research alternative energy sources”, including biodiesel, ethanol, lithium ion batteries, and hydrogen fuel cells.

Next year will see a far greater flood of dollars in this direction. A wide range of transnationals -from agro-business and the oil, car, and computer industries, among others- are creating what Miguel Altieri, professor at the University of California, and Eric Holt Gimenez, executive director of Food First, have described as ”an unprecedented phenomenon of corporate global alignment”. Companies from ADM, Cargill, Bunge, to Bayer and Dupont, and to British Petroleum, Total, Shell, Peugeot, Renault, and Citroen are seeking agreements to take control of the biofuel market.

Brazil, the king of cheap ethanol, stands to benefit the most from the biofuel boom. But its strategic alliance with the US has its pluses and minuses. Brazil will project itself as a world player, with ethanol as its geopolitical, economic, and energy weapon. But it will only be able to do this hand-in-hand with the United States, the great consumer. The political potentiality of the strategic Brazil-US axis will influence Brazil’s foreign policy more and more.

Lula will also see before his term is up how his old friends from the left, lead by Fidel Castro and Hugo Chavez, will jump rapidly from an ethical criticism of the geo-politics of ethanol to action. Chavez -who has aggressively wielded oil as a geo-political instrument -has already demonstrated this by distancing himself from Mercosur.

Whether or not Venezuela joins this Brazil-led trade agreement, the Caracas-Brasilia axis, which at one point helped block the Free-Trade Area of the Americas, is broken.

The strategic geo-political conflict between oil politics and ethanol politics is a short term matter. (END/COPYRIGHT IPS)