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The CAFTA and Venezuela’s isolation

By Veneconomy

02.08.05 | President George W. Bush scored two points last week. One was the election of Luis Alberto Moreno as the president of the Inter-American Development Bank, despite the Venezuelan government’s attempts to prevent it; and the other was the approval of the Central American Free Trade Agreement (CAFTA), after a very close vote (217 in favor versus 215 against) in the House of Representatives.

With regard to the first success, the big surprise was the overwhelming preference demonstrated by the countries of the Caribbean for the Colombian candidate. This time, Venezuela’s efforts and promises of handouts as an incentive to support its candidate, former Finance Minister José Rojas, or if not him then the Brazilian Joao Sayad were in vain. The “small guys” showed courage and made it clear that they have more confidence in an agreement with the north than their rich brother’s promises.

The second success has important connotations for the entire continent, and the Bolivarian government’s expansionist policy will undoubtedly also feel its effects. President Bush’s opening words after signing the CAFTA show the direction things are taking. “This is more than a trade agreement,” he said, “it will take peace and prosperity throughout Latin America and will improve U.S. national security by strengthening the region’s weak democracies.”

The CAFTA is just one example of the intensification of bilateralism in the hemisphere’s trade relations as a side effect of the delay in the negotiations on signing an agreement that will establish the Free Trade Area of the Americas (FTAA). This is something that puts a dent in strategy being promoted by President Chávez to hinder the FTAA and at the same time puts a brake on his initiative, the Bolivarian Alternative for the Americas (ALBA after its initials in Spanish). What is worse, none of the 33 countries of the hemisphere that are negotiating the FTAA have expressed their intention of forming part of the ALBA, much less of abandoning these negotiations. The only one who has signed up for the ALBA party is Cuba, the only one without an invitation to the FTAA.

Now that Washington has scored these two successes, it looks as though Venezuela will be particularly isolated despite all the efforts to prevent this and the fistfuls of dollars that its government has been handing out right and left in its search for supporters to accompany it in its crusade against the United States.

It seems as though relations with the region are not turning out according to plan. On the one hand, Venezuela’s four Andean partners are actively going ahead with bilateral negotiations with the United States, and what is worse, Venezuela has not be invited to take part. While these negotiations have to do with the possible signing of a trade agreement, there is no denying their political implications. If these negotiations are concluded successfully, there will be a radical change in the nature of the Andean group, based originally on the idea of a customs union that should negotiate as a bloc with other countries.

On the other hand, the Caribbean countries are also trying to negotiate a bilateral trade agreement with the United States, given the expiry, in 2008, of the Caribbean Basin Initiative (CBI) adopted by the United States in the 80s. And while it is true that the poorer nations of the Caribbean will continue to be interested in the ALBA as long as it consists of granting favorable concessions such as those announced at the Caribbean Summit held in Puerto La Cruz, it does not look as though these countries are prepared to sacrifice future possibilities of development in exchange for those concessions.

The United States already has severañ points in its favor in the American hemisphere: current bilateral agreements with Canada, Chile and Mexico, the approval of the CAFTA, the conclusion of negotiations with Colombia, Peru and Ecuador, and a possible bilateral trade agreement between the Caribbean countries and the United States. Everything indicates that, in the long run, Venezuela could be left out in the cold.

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