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Group Promotes Energy Integration and Cooperation in The Americas


A Washington-based public policy group is advocating an ambitious proposal for energy integration and cooperation in the Americas, with the ultimate goal of making the hemisphere energy self-sufficient. Proponents say the plan would spark economic development and solidify democracy in the Americas, but admit that potential pitfalls exist, including political rifts between the United States and some of its biggest energy partners, such as Venezuela.

Council of the Americas Vice President Eric Farnsworth says when it comes to meeting energy needs, the United States should look to its neighbors and partners in the Americas first. He says the hemisphere possesses enormous untapped energy sources and reserves, the proper use of which would be a boon to the entire region.

"You cannot really talk about development in the hemisphere and not talk about energy. It is difficult to see, for example, how a country like Bolivia, if you take energy out of the development equation, is going to develop. The same is true for any number of countries in the region," he said. "We believe there is a mutuality of interests in the hemisphere."

To some, the idea of the entire Americas region becoming energy independent may sound far-fetched, given that the United States consumes roughly 25 percent of global energy output and the world's largest reserves of oil and natural gas are found outside the Americas.

But Farnsworth points out that it is Canada, not Saudi Arabia, that stands as the biggest foreign energy supplier to the United States, and that significant energy reserves are to be found in Venezuela, Bolivia, and elsewhere in the hemisphere.

The non-profit, non-partisan Council of the Americas is calling for massive private and public investments to maximize energy output from Canada to Argentina, while focusing on developing and embracing alternatives to fossil fuels.

Farnsworth says he has no illusions about the challenges to implementing such a program.

"Sufficient energy sources do exist in the hemisphere," he added. "What is missing, however, is the massive investment required to develop those resources. It is therefore incumbent on nations to create an investment climate whereby foreign energy companies can work in partnership with local governments to develop the resources in a mutually beneficial manner."

Put simply, having large reserves of oil, gas or coal is not enough. Extracting it requires infrastructure, and the funds to build that infrastructure will only be forthcoming if investors have confidence in a particular country.

Farnsworth says nations wishing to attract that capital need to promote the rule of law, fight corruption, keep a check on onerous taxes and regulations, and develop an educated workforce.

Proponents of hemispheric energy cooperation admit that achieving political consensus on a way forward may not be easy.

The United States is Venezuela's largest purchaser or crude oil, yet President Hugo Chavez has accused the Bush administration of plotting to invade his country and threatened to cut off oil sales.

He has promoted South American economic and political integration as a bulwark against what he describes as the "imperialist" aims of the United States. During the past year, the Chavez government has also seized assets from domestic and foreign holdings.

Former Assistant Secretary of State for Western Hemisphere Affairs Roger Noriega says the business and investment climate in Venezuela could be better.

"Compared to other places where energy companies have to do business, Venezuela is not the worst place in the world, by any means," he explained. "But at the same time, there are these incremental measures by the Venezuelan government that are making it tougher and tougher to do business."

Bolivia has also grabbed headlines. The country's incoming president, Evo Morales, has railed against what he sees as the exploitation of his impoverished nation by powerful countries and multinational corporations.

Yet some international energy players seem unconcerned when asked about the emergence of populist, left-leaning leaders in parts of Latin America.

Steve Walsh, vice president of government affairs for the U.S.-based energy giant, AES Corporation, says Evo Morales reminds him of another socialist firebrand, one who moderated his tone and adopted a largely pro-business stance upon coming to power: President Inacio "Lula" da Silva of Brazil.

"President Lula has come out, for the most part, as a moderate and has taken the steps required to promote business development throughout the country," said Mr. Walsh. "I do not see that President Morales would take a course so radical that it would force investors in the energy sector to pull up stakes and flee."

The Council of the Americas' Eric Farnsworth says, if the United States is slow to seek out new energy opportunities in the Americas, China will gladly pick up the slack. In recent years, China has invested in a variety of energy projects in Venezuela, Ecuador, Peru, Brazil, and Argentina, and has expressed a strong desire to strengthen energy ties with Bolivia.

Farnsworth says a fundamental change is under way in energy markets in the Americas, with the arrival of China, which he calls the "new player on the scene."

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