Obama and Uribe Talk Trade and Term Limits AS/COA Online 06/30/09

Presidents Álvaro Uribe and Barack Obama met at the White House on June 29. (AP Photos)

Colombian President Álvaro Uribe met with his U.S. counterpart Barack Obama June 29 to discuss the future of the stalled free-trade agreement and Uribe’s political future. At the meeting, Obama praised Uribe’s achievements on improving security and his fight against drug cartels. The U.S. leader even joked about how difficult it would be to match Uribe’s 70 percent approval ratings after two terms in office. Still, Obama advised Uribe against running for a third consecutive presidential term and used U.S. President George Washington’s experience as an example of statesmanship: “[A]t a time when he could have stayed president for life, he made a decision that after service, he was able to step aside and return to civilian life. And that set a precedent then for the future.”

Obama’s counsel for Uribe to avoid a third term through constitutional change coincided with world attention on Honduras. A day earlier, a coup occurred in the Central American country after Honduran President Manuel Zelaya, planned to go forward with a referendum deemed illegal by the country’s main institutions. Obama expressed his support for democratically elected Zelaya and described the overthrow as “not legal.” Colombia also rejected the coup.

In Colombia, a referendum to pave the way for Uribe’s reelection still faces hurdles in Congress and already shows signs of fatigue among supporters. Cambio magazine explains that the chances to approve the legislation are slim, even with Uribe spending his political capital to move it forward. But Semana magazine says, “Uribe has radicalized his position about the referendum,” and that he sees it “as a matter of pride.”

The pending bilateral free-trade pact was also a central conversation point for the two leaders during their White House meeting. Obama offered his support for the deal but explained that concerns linger in U.S. Congress over human rights violations against Colombian labor leaders. At the summit, Uribe said that “we are very receptive to receive any advice, any suggestion that help us see how we can achieve our goals of zero human rights violations in Colombia.” After an event co-hosted by the Council of the Americas at the Wilson Center on the morning of June 30, Uribe said he had found Obama “more disposed and interested” in the trade deal. COA’s Eric Farnsworth blogs for Americas Quarterly, the two leaders’ meeting shows “that the bilateral agenda with Colombia goes well beyond passage of one agreement, as important as that is, and that the U.S.-Colombia relationship is strong and enduring.”

Learn more:

• COA Vice President Eric Farnsworth’s AQ blog post about Obama’s meetings with Uribe and Chilean President Michelle Bachelet.
• AS/COA coverage of Uribe’s dilemma about his second consecutive reelection.
• Americas Quarterly’s web exclusive about whether Uribe will seek reelection.
• Transcript of Obama-Uribe press conference following their June 29 meeting.
• Colombia’s constitution.
• Text of the pending U.S.-Colombia Trade Promotion Agreement.
• Semana analysis of U.S.-Colombia relations.

Will Bolivia Board the Lithium Express? AS/COA Online 6/23/09

The Salar de Uyuni holds the second largest lithium reserves in the world. (AP Photo)

Bolivia finds itself in the middle of a struggle for controlling and exploiting a key natural resource for the future of the world’s auto industry: lithium. Underneath the Salar de Uyuni, a salt desert in the southwest region of the Andean country, lie approximately 5.4 million metric tons of the resource. The deposits represent almost half of the world’s lithium reserves. American, Chinese, French, South Korean, and Japanese companies have expressed interest in a slice of the pie. But Bolivian President Evo Morales has made clear that his government, while looking for foreign investment, does not plan to give away sole exploitation contracts to any foreign company. His plans involve a state-run initiative to harvest the mineral deposits and manufacture batteries for electronics and, eventually, the world’s nascent electric vehicle market.

Unfortunately, Morales plans are easier said that done. The Salar de Uyuni in the department of Potosi has limited infrastructure to effectively mine the lithium deposits. As reported by newspaper La Rázon, Bolivia’s Mining Minister Luis Alberto Echazú acknowledged that the country hopes to move forward with the mining operation on its own but still needs a foreign partner to industrialize the battery production. “We need the technology to fabricate car batteries because we are still light-years away from it, that’s why we need a partner,” said Echazú.

Bolivia’s history of nationalizing foreign assets and breaking contracts with energy companies since Morales won the presidency in 2006 may seem like a deterrent for foreign investors. Yet companies like France’s Bolloré, Japan’s Sumitomo and Mitsubishi, South Korea’s LG, and even General Motors (before it declared bankruptcy) wooed Morales’ administration in search of agreements. The Times of London chronicles the competition between Chinese and Japanese delegations in Bolivia, which included donations to build a school in Morales’ hometown and military equipment. Still some preoccupation looms in investor’s minds, as demonstrated in dealings with the state-owned Yacimientos Petrolíferos Bolivianos (YPFB). After YPBF took over the natural gas and oil industries, production has dropped and corruption scandals have flourished.

But while debate persists in Bolivia, other countries have geared up to serve as suppliers in the upcoming lithium boom. Enter Chile, the leading lithium producer and holder of the world’s largest reserves, estimated at 7.5 million metric tons. U.S. Geological Survey expert Brian Jaskula said that more recent studies have reaffirmed Chile as the world leader. He also noted that, given Bolivia’s lack of infrastructure to commercially produce lithium, it may “end up missing the lithium express.” Other considerable lithium reserves are located in Argentina, China, and the United States.

The international pressure to secure access to this new commodity will likely increase in the next decade thanks to Washington’s push for lower emission electric vehicles powered by lithium polymer batteries. The U.S. Energy Department is offering up to $1.5 billion in federal grants for American companies to produce these new batteries and related components. Furthermore, the government is set to release on June 23 $25 billion to the car industry for the development of fuel-efficient cars.

Learn more:

• January 2009 U.S. Geological Survey Mineral Commodity Summary on lithium.
• Background on Bolivia’s infrastructure and economy in the Central Intelligence Agency’s World Factbook.
• U.S. Department of Energy’s portal on its Advanced Technology Vehicles Manufacturing Loan Program (ATVM).
• Technical report on the only lithium plant operating in the United States in Clayton Valley, Nevada.
• View a forecast report on the global supply and demand for the lithium industry through the year 2020 made by consultants TRM Group Inc and commissioned by the Mitsubishi Corporation.

Read the article as originally published at the AS/COA website.

Ethanol: Brazil Celebrates, United States Debates AS/COA Online 06/04/09

Pumping an ethanol blend at a Brazilian fuel station. (AP Photos)

São Paulo hosted the 2009 Ethanol Summit from June 1 to 3, featuring heavyweights such as President Luiz Inácio Lula Da Silva’s Chief of Staff Dilma Roussef, Petrobras CEO Jose Gabrielli, and environmental activist and former U.S. President Bill Clinton. Speakers discussed new cellulose-based ethanol plants, forecasts of increasing ethanol usage in Brazil, and concerns about deforestation. Meanwhile, Colombia has become South America’s second biggest ethanol player and seeks to build its industry. In the United States, the discussion surrounding biofuels continues to focus on subsidies given to U.S. corn growers, corn-based ethanol’s impact on food prices, and tariffs imposed on Brazilian sugarcane-based ethanol.

At the summit, Roussef announced Brazil’s moves toward producing for commercial use cellulose-based (also known as second-generation) ethanol made mainly from woodchips and switchgrass. She also said Brazil hopes to start selling ethanol in that form domestically by the year 2012. Second-generation ethanol should capture almost 30 percent of the Brazilian market by 2020, according to the president of a private firm who spoke at the summit. Gabrielli trumpeted the fact that Petrobras will invest $2.8 billions in biofuels for the next four years and expects that ethanol will represent 75 percent of the Brazilian fuel market by 2020. But with such massive growth, questions surfaced about the dangers of deforestation. Clinton urged Brazil to take decisive steps to protect the rainforest, reduce its carbon footprint, and share its technology with potential ethanol producers like the Dominican Republic and Haiti. In December, Brazilian Environmental Minister Carlos Minc unveiled an ambitious plan to curb deforestation rates by 72 percent by 2017.

Colombia is also pinning hopes on increasing its stake in the ethanol market, given its position as the second largest producer in Latin America. Colombian Agriculture Minister Andrés Fernández said last month that, with six new projects dedicated to ethanol coming online this year, the country’s production capacity should increase twofold. He also said Colombia plans for a fifth of the cars made or imported to have engines using fuel made up 85 percent ethanol blend by 2012. Still, the increases use of ethanol elevates fears that prices on food containing sugar will rise, as they did happened last year in the United States with corn-related products, El Espectador reports.

In the United States, where corn-based ethanol dominates the industry, the debate continues. The Wall Street Journal reports on two federal studies that found corn-based ethanol carries a high price tag for consumers and questionable environmental advantages. In an article for BusinessWeek, automobile journalist Ed Wallace suggests “we must immediately drop the 51 cents per gallon blending credit for ethanol creation in America and drop the 54 cents per gallon tariff on imported Brazilian ethanol.” Lula and U.S. President Barack Obama discussed the 54-cent tariff imposed to Brazilian sugarcane-based ethanol by Washington during his March 14 visit to the White House without any effect. Obama said then that the measure “it is not going to change overnight” but hinted that “over time this source of tension can get resolved.”

Read the article as originally published at the AS/COA website.