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Print Edition> World
UPDATED: May 12, 2015 NO.20 MAY 14, 2015
A Pivot to Latin America?
How the United States hopes to utilize energy cooperation in a bid to reestablish itself in the Western Hemisphere
By Sun Xuefeng

U.S. President Barrack Obama and Cuban President Raul Castro meet at the opening ceremony of the Seventh Summit of the Americas in Panama City, capital of Panama, on April 10 (XINHUA)

U.S. President Barack Obama took advantage of the Seventh Summit of the Americas held April in Panama to interact with Latin American leaders including Brazilian President Dilma Rousseff. He also met officially with President of Cuba Raul Castro, an incident that surprised many since the two countries severed diplomatic relations some 60 years ago.

Before, he visited Jamaica and had collective meetings with the heads of government of the Caribbean Community as well as holding talks with the leaders of Central American Integration System member countries.

Such bold gestures highlighted Washington's desire to improve relations with Latin America, with energy cooperation being cited as a potential breakthrough area in its efforts.

A changing landscape

Latin America has long occupied a special position in the U.S. foreign strategy. Its mentioning in the Monroe Doctrine, first put forth in the 19th century, is testament to this. Since the Spanish-American War in 1898, the United States has slowly but surely established its dominance in the Western Hemisphere. The events of the two world wars only helped to cement its position in the world order. During the ensuing Cold War, Latin America became an important battleground for both East and West.

Since the disintegration of the Soviet Union, however, the strategic importance of Latin America has waned. Post 9/11, U.S. focus has shifted toward the Middle East and Asia. Within that same period, left-wing forces in Latin American countries have strengthened considerably. Since Hugo Chavez first seized power in Venezuela in 1999, left-wing parties have continually won elections in many Latin American countries. As these countries have shifted foreign policy-wise toward expanding ties with other large powers such as China, Russia and India, the United States has had to take steps to avoid becoming completely marginalized.

What's more, Latin American countries are emerging as the new pillars of the world's energy supply, and recent history shows this has the potential to upset the established global order. Over the past half century, the Middle East's position at the center of the world's oil map has guaranteed the region's influence in international affairs. But its position has been weakened following technological breakthroughs in regard to exploration and exploitation in shale oil in North America and subsalt strata in Brazil. The exploitation of oil and gas reserves of Latin America has seen a significant upsurge. Statistics from British Petroleum shows that oil and gas reserves in Latin America are now second in volume only to the Middle East.

In recent years, many large offshore oil and gas fields have been discovered in Brazil. It is estimated that the country's daily oil production may soon reach 55 percent of that of Saudi Arabia, meaning the country will join the world's top 10 producers.

Based on current technological progress, energy supply in the Western Hemisphere will constitute a significant factor in the shaping of the future global energy landscape.

At present, approximately half of U.S. oil imports come from the Western Hemisphere. Mexico and Venezuela are respectively the second and fourth largest oil suppliers for the United States. Thus, the stability of Latin America, and in particular that of its energy supply, has significance for U.S. energy security and business interests.

Ever since Obama took office in 2008, Washington has begun to revaluate its Latin strategy in light of its efforts to reclaim its standing in the region. However, the first-term Obama administration displayed hesitancy regarding left-wing countries and whether or not to lift sanctions on Cuba. It was not until his second term, in the face of enormous resistance toward his domestic policies, that Obama sought to make his name in foreign policy. Latin America has become his main testing ground.

Seeking a breach

Since 2013, it has emerged that the United States had been keeping in contact with Cuba secretly. In November of that year, U.S. Secretary of State John Kerry announced the rescinding of the Monroe Doctrine, laying the foundation for the U.S. pivot to Latin America. In December 2013, Obama and Raul shook hands for the first time at the funeral of the late South African President Nelson Mandela, sending a strong signal for the easing of U.S.-Cuban relations and the further advancement of U.S.-Latin relations.

After that, Washington tried to strengthen relations with major Latin powers such as Brazil and Mexico, and, using its recent economic vivacity as leverage, has tried to win over Latin countries lying along the Pacific Rim via security cooperation, investment and trade. Washington has attached even more importance to Central American and the Caribbean countries whose actions are relevant to the security of the U.S. southern states.

Energy cooperation is key to the U.S. strategy to woo Latin countries and safeguard American interests. Washington is trying to influence Central American and Caribbean countries through the provision of assistance with their energy in the form of funds and technology, allowing those countries to overcome their dependence on Venezuelan oil. Ricardo Zuniga, a top Obama aide, even said publicly that the United States wishes to diminish Venezuelan influence through strengthening energy cooperation with Caribbean countries.

In 2005, Hugo Chavez launched the Petro-Caribe initiative, which allowed cash-strapped Caribbean nations to purchase oil from Venezuela on preferential terms. The payment system enabled these nations to purchase oil at market value for 5-50 percent up front with the remainder being paid off through a 17-25-year financing agreement with 1 percent year-on-year interest. At the time of writing, 18 Caribbean and Central American nations have signed on to the initiative, meaning Venezuela has been able to pip the United States to the post with regard to political pull.

Washington knows that its attempt to reenter the Latin American fold must have as its basis the overthrowing of Venezuela's role of regional leader. At the end of 2014, the United States passed bills to impose sanctions on 50 Venezuelan officials. The sanctions include provisions barring the officials from entering the United States and freezing any assets they may have there.

Furthermore in March, Obama signed an executive order imposing additional sanctions on seven Venezuelan officials over alleged human rights abuses and corruption. At the Summit of the Americas this April, Obama met with the Venezuelan opposition and accused the Venezuelan Government of human rights violations.

In the meantime, taking advantage of the falling international oil price and the deterioration of the Venezuelan economy, the United States has sought to undermine Venezuela's strategic foundation by strengthening energy cooperation with Central American and the Caribbean countries. At the end of 2014, Obama proposed the Caribbean Energy Security Initiative, which seeks to push regional countries to end their dependence on Venezuelan oil.

In January, U.S. Vice President Joe Biden headed up a Caribbean Energy Security Summit which proposed to set up a Caribbean energy investment network. Washington aimed to dominate the network by getting the U.S.-controlled World Bank to invest in Caribbean energy infrastructure. During his Jamaica visit, Obama posited several energy cooperation mechanisms and plans including the Clean Energy Finance Facility for the Caribbean and Central American and Energy Security Task Force among others. It also promised to launch a $20 million facility to encourage investment in clean energy projects in the Caribbean-Central America region, further aiming at easing regional countries' dependence on Venezuelan oil.

In addition, the United States is also trying to protect its own energy security and expand U.S. business opportunities in Latin America through bilateral and multilateral cooperation. The country has organized its first comprehensive energy cooperation network led by the State Department, in order to advance energy diplomacy in Latin America and convert its advantage with respect to energy development into trade and investment opportunity.

Early in 2009, the Obama administration proposed the Energy and Climate Partnership of the Americas, a scheme to actively promote the use of renewable energy and technology in Latin America. In 2012, the United States introduced the Connecting the Americas 2022 Initiative, aiming to promote power integration among Colombia, Central America and Mexico. The United States is also planning to promote grid interconnection in the Western Hemisphere, in an effort to make full use of its geographical and technological advantages so as to expand business opportunities in the Latin American electricity market.

All signs point to the fact that the United States is sharply adjusting its Latin America policy and strengthening economic and political relations with regional countries with energy being a pivotal battlefield. If things go smoothly, these changes will exert a significant influence in the region and will most likely change the global energy landscape irrevocably.

The author is an associate research fellow with the China Institutes of Contemporary International Relations

Copyedited by Eric Daly

Comments to liuyunyun@bjreview.com

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