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What Was Castro Buying In Brazil?

Editorial from | Investors.com

Posted 11/3/2005 | Latin America: Brazilians are rightly angry over allegations of illegal campaign donations from Fidel Castro. True or not, they coincide with an alarming weakness in foreign policy that benefits the Cuban dictator.

Was there a connection? We wonder for two reasons. First, Castro in recent years has aggressively sought influence across Latin America on a scale not seen since the 1960s. Second, Brazil has been oddly passive in response.

Fortified by the record-high oil earnings of his Venezuelan ally, Castro's had a free hand to whip up anti-capitalism and anti-Americanism in a bid to confront the West.

Brazil is no dinky state. Its $794 billion economy is Latin America's largest and the world's 11th biggest. Its strong democracy of 186 million people can easily assert regional leadership. But it has looked the other way even when a pariah like Castro threatens its interests.

Among those interests are energy. Brazil's GDP grew 4.9% last year, will expand 3.3% this year and has averaged 2.9% since 1993. Over the same 12-year period, its energy needs have grown 33%, raising the stakes as resources grow tight.

We've already noted how Castro has cranked up pork-barrel spending in Brazil's neighbor, Bolivia, in the heat of its own presidential campaign. The largess is conditioned on votes for Castro's favored candidate, Evo Morales, who wants to nationalize Bolivia's energy.

If Morales wins, the biggest victim of his expropriations will be Brazil's state oil firm, Petrobras, which supplies a major part of Brazil's economic powerhouse, the Sao Paulo region, with natural gas. Petrobras' investment is so large it makes up 20% of Bolivia's economy.

Petrobras already has been a target there. Last May, a car bomb blew up at its headquarters in Santa Cruz, and leftist groups aligned with Castro have said their aim is to expel Petrobras from Bolivia.

Petrobras also was one of four foreign oil companies targeted in Ecuador last summer by organized pipeline-smashing leftists believed to be aligned with Castro and Venezuelan President Hugo Chavez. Again, Brazil said nothing.

And Brazil certainly hasn't challenged Castro's ally, Chavez, who's treated Petrobras as harshly as 30 other multinationals. This year Chavez bullied Petrobras out of the 1997 service contract it paid for and forced it to join a minority "partnership" with the state oil firm on unknown terms, giving up its right to international arbitration.

With its interests threatened, Brazil should have the diplomatic muscle to force Castro and his allies to back off. But for some reason, it's held back, choosing silence when what's required is leadership.

Such reticence is even more disturbing considering that Brazil hasn't been afraid to speak up about neighboring states that have tried to defend themselves from Castro's meddling.

In September, Paraguay endured Brazil's wrath for its talks with the U.S. to establish a 400-troop presence, possibly to help with security, given the explosive situation in bordering Bolivia.

Instead of supporting Paraguay, Brazil said there was "no need" for such security and demanded that Paraguay disclose all its security plans with the U.S., something Castro would also like to know.

Did Castro's campaign contributions, reported in Veja news magazine and said to total $3 million, end up compromising the foreign policy of President Luiz Inacio Lula da Silva's administration?

We don't know. But if Castro's cash bought anything in Brazil, it's tragic because Lula was elected president as an un-Castro— a clean, responsible democratic leader. Brazilians hoped he'd be neither a corrupt machine pol nor a hard-core communist.

If a couple of influential aides took money from Castro and enacted a passive foreign policy, it paints a very different picture — what old Soviet analysts used to call Finlandization.

When President Bush visits Brasilia this weekend, he should urge Lula to wake up about Castro and start acting as a credible force to counter his spreading influence. It's not just outposts like Bolivia where Castro's threatening democracy.



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