Energy populism divides South American nations

An Oct. 13 New York Times story, “Energy Crunch Threatens South American Nations,” poses the problem in terms of “growth…outpacing fuel supplies”—but actually sheds much light on the continent’s political fault lines, which persist despite the predominance of populist or left-of-center governments. The analysis reveals a centrifugal aspect to the populist program which ostensibly pits a united continent against the Behemoth to the North…

“During one of the coldest South American winters here in decades,” Alexei Barrionuevo writes from Santiago, “neighboring Argentina cut at least 90 percent of the natural gas it sends to Chile 79 times along pipelines that connect the two countries. Power plants and factories in this smoggy capital were forced to switch to diesel and fuel oil, which belch more air pollution and have nearly quadrupled the cost of producing electricity. Santiago reported its highest number of dangerous smog days in the past seven years. Argentina’s actions have chilled relations between the two countries.”

Néstor Kirchner, Argentina’s president, has steadfastly refused to raise his country’s gas and electricity prices, which are among the lowest in the world, ahead of the Oct. 28 election. Mr. Kirchner’s wife, Cristina Fernández de Kirchner, is the leading candidate to succeed him.

Instead, his government placed winter energy-use restrictions on industries and cut off its neighbor to the west, Chile.

And what about the regional gas giant to Chile’s immediate north?

Political problems have limited Chile’s energy options. Bolivia, which has the largest gas reserves in the region, has forbidden Argentina from re-exporting Bolivian gas to Chile because of a decades-old dispute over maritime access rights.

The conflict with Chile, our readers will recall, was a key issue behind Bolivia’s “Gas War” of 2003.

Christopher Garman, the Latin America director at Eurasia Group, a New York-based consulting firm, is quoted saying “Bottlenecks in energy supply will be a critical policy concern in Latin America over the next two to five years.”

And this issue is not only leading to tensions between nations, but within them. Saying “I do not want to make Brazil dependent on gas,” President Luiz Inácio Lula da Silva called for support for new hydroelectric plants and biofuels—projects which will erode his support among indigenous peoples and peasants.

See our last posts on Argentina, Chile, Bolivia and Brazil.

See also our February 2006 special report, “South American Pipeline Wars.”