Colombia/Venezuela: What would Simon Bolivar say?

Colombian President Uribe and Venezuelan President Chavez hug, as Latin American Independence hero, Simon Bolivar, looks on.  Source: Google Images
Colombian President Uribe and Venezuelan President Chavez hug, as Latin American Independence hero, Simon Bolivar, looks on. Source: Google Images

Latin America is not usually high on the list of hotspots for geopolitical analysts.  Yet Hugo Chavez is threatening war against neighboring Colombia.  (See the note below from a JPMorgan publication today.)  Venezuelan President Chavez is America’s nemesis in the hemisphere, and Venezuela shares a long border with Colombia in the north of South America, facing the Caribbean.  The word is that Chavez is on friendly (financial) terms with the FARC, the murderous, drug-dealing insurgency that has plagued Colombian society for decades.  Yet Venezuela and Colombia are also important trading partners, though this trade has suffered amid recent tensions.  Chavez doesn’t like the close military ties Colombia has fostered with the United States, quietly intensified by the Obama administration earlier this year.  Meanwhile Chavez buys arms from US global competitor, Russia.  Conflict in Latin America has been rare in recent years, though there was a cross-border flare-up in early 2008 between Colombia and Ecuador, currently led by Chavez’s nationalistic ally, Rafael Correa, who won a second term earlier this year.  Apparently Correa allowed the FARC to operate across the border from Colombia, prompting the government of Alvaro Uribe to launch a raid against a FARC camp in Ecuador. 

Like Iran in the Persian Gulf, Venezuela wishes to be a regional power countering local U.S. allies, wielding its oil wealth to make arms purchases.  The best the U.S. could do to counter Venezuela’s threats is to move ahead with the Colombian free trade agreement, pushed aggressively by George W. Bush and scuttled by Democrats in Congress, including then Senator Barack Obama.  See a note on this I penned a year and a half ago.  President Bush openly talked about America’s strong alliance with Colombia.  It might be worthwhile for President Obama to do the same.

From JPMorgan’s Emerging Markets Today, 11/10/09

Colombia/Venezuela: Escalating political noise

Julio CallegariAC (55-11) 3048-3369 julio.c.callegari@jpmorgan.com

Ben RamseyAC (1-212) 834-4308 benjamin.h.ramsey@jpmorgan.com

Over the weekend, Venezuelan President Hugo Chavez told

his military and civil militias to prepare for a possible war

with Colombia, saying that “the best way to avoid a war is

to be prepared for one.” Chavez has been saying that the

military co-operation pact signed in October between

Bogota and Washington could set the stage for a US

invasion of Venezuela. The Colombian government, in turn,

has been highlighting that the agreement with the US is

intended to fight drug trafficking and insurgents within

Colombia, and responded to Chavez’s threats in a statement

saying “Considering the threats of war enunciated by the

government of Venezuela, the government of Colombia

proposes going to the Organization of American States and

the Security Council of the United Nations.” We remain of

the view that an actual armed conflict will not ensue,

particularly because the Venezuelan military would be

reluctant to actually fight Colombia (indeed, Chavez

would be entering dangerous territory if he sought to force

them). However, the threat of further deterioration of the

bilateral trade relationship is real. Indeed, we highlighted

last week that total Colombian exports decreased 11%oya in

September (the latest official figure available) while exports

to Venezuela dropped 50%. Moreover, partial data from

Customs, suggest that while total exports fell about 15%oya

in the first three weeks of October, exports to Venezuela

plunged 80%oya. The ongoing deterioration in Colombia’s

relationship with Venezuela should hurt bilateral trade even

more in the coming months.

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