Monday, November 21, 2011

Chevron Oil Spill May Stain Brazil's "Pragmatic" Economic Policy

Chevron admitted to an accident caused by deep-sea drilling off the coast of Brazil, reports Reuters. A Chevron spokesman told the news agency that an estimated 18 barrels of oil was floating on the ocean surface off Brazil, in contrast to initial reports which maintained up to 5,000 barrels had spilled. According to U.S. environmental group Skytruth, where activists are using satellite imagery to track the spill, the most recent imagery from November 12 suggests some 15,000 barrels have been lost. The environmental disaster will likely create more controversy for Brazil’s offshore oil industry, expected to turn Brazil into the world’s fourth greatest oil producer by 2020.

According to the AP, the leak began November 7 and Chevron told Brazilian authorities what had happened a day later. According to Business Week, the U.S. energy company says they plugged the leak on November 13. So far there are no estimates on clean up costs.

Brazil saw large scale protests across the country last week, in regards to a proposed law which would redistribute oil royalty wealth. The Chevron accident may refocus public anger on the environmental dangers of offshore drilling, or else may create a new backlash against the partnering of national oil company Petrobras with foreign partners like Chevron. Bloggings by Boz predicts such a backlash is one likely outcome, arguing:

“If they can fully blame Chevron, then they don't have to acknowledge that it could also happen to Petrobras. They need this spill to be portrayed as a malevolent accident by a foreign oil company, not something that can happen to any effort to drill off shore.”

As the New York Times notes, Chevron is already facing an extended legal battle over the pollution of Ecuador’s Lago Agrio region. Brazilian police have said they are investigating the Chevron spill, amidst accusations by some officials that the company has been uncooperative with local authorities and reluctant to share information. Meanwhile, Brazil’s Energy Minister has voiced the possibility that Chevron could face legal action if found to have broken environmental law.

The accident is a reminder of the challenges facing Brazil as the country aggressively courts foreign partners while continuing to develop its oil, agriculture and gold industry. Brazil is already reportedly set to limit the amount of land that foreign agri-businesses can own, according to Merco Press. Depending on the true extent of the Chevron spill, there may be new concerns over the role of foreign firms as Brazil continues expanding its oil trade.

As the New York Times points out, Brazil’s economic policies are fundamentally driven by pragmatism. In terms of the nascent oil boom, this means striking a balance between developing offshore drilling and ensuring that environmental standards are followed. The Times notes that such pragmatism is akin to behaving like a “reality-based community,” instead of allowing economic policy to be discolored by politics:

“Leaders had to move beyond their ideologies. Facts had to become more important than principles. And a kind of pragmatic right-left consensus had to emerge — namely, that both a bustling market and an active government are essential to durable economic growth.”

For now, however, it seems all the facts regarding the Chevron spill case have yet to emerge.

News Briefs
  • El Faro reports that an unnamed group of top police commanders are willing to resign if a military official is appointed as the new Public Security Minister. Former minister Manuel Melgar resigned November 8 after two years of service, a decision widely understood as motivated by Melgar’s failure to achieve more results in reducing El Salvador’s crime rate. Another key factor is likely his deep unpopularity with U.S. officials, who cite claims that Melgar was involved in a 1985 guerrilla attack that left three U.S. marines dead. According to El Faro, retired general David Munguia Payes is rumored to soon took Melgar’s place, but the decision may provoke serious protest from the police.
  • Eric Olson, senior associate at the Woodrow Wilson International Center for Scholars, analyzes why the PRI won in last week’s gubernatorial elections in Michoacan. Since then, Mexico’s temporary interior secretary said that an unnamed drug cartel “interfered” with the election.
  • The Washington Post profiles migration in Bolivia, where according to government estimates about 20 percent of its population lives outside the country. Even with the global economy in a slump, migrants have shown no signs of returning home from places like Spain, the U.S. or Chile.
  • Jamaica’s Prime Minister Andrew Holness said he may call elections next month, reports the Associated Press. Holness replaced Bruce Golding, who stepped down October 23 after facing harsh criticism for how his administration handled the extradition of drug trafficker “Dudus” Coke to the U.S. Jamaica currently has one of the highest homicide rates in the region, with 52 murders per 100,000 inhabitants, on an island of just under 3 million people.
  • Reuters examines Mexico’s efforts to diversify its economy and find new trade partners besides the U.S. In counterpoint, an NPR story focuses on U.S-Mexico trade relations at the border. Elsewhere, an editorial in the LA Times surveys the legacy of President Felipe Calderon and concludes that his administration fell short of achieving its security and economic goals.
  • Two weeks after Nicaragua’s presidential, Confidencial argues that obtaining an objective and accurate measure of the alleged fraud which took place may well be impossible. Opposition group the Independent Liberal Party, or PLI, maintains that they had saw between 450,000 and 500,000 votes stolen.
  • The Miami Herald reports on Cuba’s new housing law, enacted November 10. The law is one of the most sweeping reforms yet passed by the Raul Castro administration, and allows Cubans to buy and sell homes at market prices for the first time since the Revolution. The Herald asks how the legislation will be enforced, noting that many details are left unclear. These include how to resolve the issue of Cuba’s illegal housing market, in which many homeowners clandestinely rent out rooms, as well as regulations regarding property titles.
  • Plaza Publica profiles Roxana Baldetti, Guatemala’s first female vice president.
  • The Wall Street Journal predicts it will be tough for Argentina for continue its pace of economic growth. The newspaper asks whether President Christina Kirchner will continue the “interventionist” strategies favored during her last term, or whether her policy makers are confused over what strategy to adopt next. Kirchner’s economic policies have drawn praise for reducing the income gap between the poor and wealthy, and for bringing unemployment down to its lowest levels in 20 years. Other Argentine and foreign consultancy firms and credit agencies have argued that Kircher’s approach is not sustainable over time, while international bodies like the IMF and the World Bank have questioned the government’s official statistics on economic growth.
  • La Silla Vacia reports on the shifting security dynamics in Cauca, the department where government forces killed FARC commander “Alfonso Cano” on November 4. Cano’s replacement, alias “Timochenko,” issued his first public communique Monday, says Colombia Reports.
  • Haiti’s president said he would create a civilian commission to study the government’s proposal to revive the national army, reports the AP. A government defense advisor told the Wall Street Journal that the commission is meant to ensure that the army’s reinstatement is “done properly and according to rules and procedures.”
  • Time profiles the emergence of a “new wave” of center-left presidents across Latin America.
  • An indigenous leader advocating for the return of ancestral land was killed a group of 40 gunmen in Brazil, reports the BBC.