Oil and gas dominate EU-Latin trade summit
Bolivia’s Evo Morales and Hugo Chavez of Venezuela were heading today to a European summit amid criticism of recent moves making it tougher for foreign energy firms to do business in their countries.
Energy, trade and Europe’s anxiousness to secure its fuel supplies from Latin America are the focus of this week’s talks in Vienna among 58 leaders from the three regions.
Morales’ abrupt move to order the nationalisation of Bolivia’s natural gas industry, wresting control from foreign firms, was expected to dominate discussions. His ally Chavez, meanwhile, introduced a new tax targeting foreign companies, which already pay a hefty royalty fee to extract heavy crude.
On the eve of the summit, EU Trade Commissioner Peter Mandelson warned that nationalising the energy industry could create uncertainty and unfairly shut out European companies. He cautioned that protectionist moves could scare away foreign investment.
“There have been problems with certain Andean nations,” Mandelson told reporters in Brussels, Belgium. He added that failure to allow companies to freely chose where they operate “will see foreign investment become less mobile, more selective and choosy”.
That “will do considerable damage to investment in certain countries”, he warned.
Brazilian President Luiz Inacio Lula da Silva also expressed his disappointment to Morales over Bolivia’s actions, Brazil’s foreign minister said.
Foreign Minister Celso Amorim said the complaint was registered privately with Morales during a presidential conference last week in Argentina.
Draft summit statements obtained by The Associated Press stress the “sovereign right of the countries to manage and regulate their natural resources”.
European and Latin American nations must agree to “continue and strengthen … cooperation with a view to establishing a balanced trade framework”, they said.
Watching closely are oil companies such as Spanish-Argentine Repsol, Britain’s BG Group and France’s Total, which have been ordered to negotiate new contracts within six months or leave Bolivia, which has South America’s second-largest natural gas reserves after Venezuela.
The moves by Chavez and Morales come amid frustration on both sides about the lack of progress on forging closer trade and political ties between Europe and Latin America.
“The signs are not easy to interpret in Europe,” German Foreign Minister Frank-Walter Steinmeier said in Brazil last week, reacting to a decision by Chavez to drop out of the Andean group of trading nations because two members, Peru and Colombia, have signed free-trade pacts with the US.
EU leaders are expected to press Morales and Chavez to explain whether they might also try to thwart trade pacts with the European Union, even though many in the region view deals with the Europeans as a potential counterbalance to US economic and political influence.
“Chavez is very vocal and he has in some sense, I think, succeeded in shifting the centre of gravity of debate about some issues of Latin American concern,” said Kevin Middlebrook from the Institute for the Study of the Americas at the University of London.
“It might, over the longer term, be the stimulus to some degree of collective action on things like regional energy infrastructure and so on, and that could be of benefit to Latin America,” he said.
EU External Relations Commissioner Benita Ferrero-Waldner said the EU “will do everything we can to ensure that the way is clear for a closer partnership, but we look to our counterparts to provide the political will to overcome remaining obstacles on their side”.
She said the summit was a “crucial opportunity to re-energise the strategic partnership” between the two sides. Her office has drafted a new “strategy” to bolster ties between the bloc and a region where many nations are former European colonies.
The EU is not expected to start new free-trade talks with Latin American groupings until a deal is reached in world trade talks. The EU also has demanded that the regional groupings push for more integration on their side before starting trade talks with Europe.
Similarly, EU free-trade negotiations with Mercosur, the group including Brazil, Argentina, Paraguay and Uruguay, show no sign of restarting after becoming bogged down over the EU’s refusal to open its agricultural market, while the South Americans refuse to grant access to their services sector.
Foreign ministers meet for talks today before an informal leaders’ dinner hosted by Austrian Chancellor Wolfgang Schuessel, whose country holds the rotating EU presidency. UN Secretary-General Kofi Annan also was expected to attend the summit.
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