Venezuela and Colombia Mend Diplomatic, Trade Fences

By Gaudin, Andres | NotiSur - South American Political and Economic Affairs, December 16, 2011 | Go to article overview
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Venezuela and Colombia Mend Diplomatic, Trade Fences

Gaudin, Andres, NotiSur - South American Political and Economic Affairs

With the signing of a panoply of economic and strategic accords, and without any reference to the serious problems that have plagued bilateral relations in the last three years, Colombia and Venezuela put an end to the last flashpoint of tension in the region.

In late November, Colombian President Juan Manuel Santos visited Venezuelan President Hugo Chavez, and, after just 10 hours of a dialogue prepared discretely by diplomats from both countries, they reached a series of understandings that returned relations to their level in the best moments in the two South American countries' history. More than merely closing the harmful chapter, the presidents made it clear that no real reasons existed for the estrangement, and they cleared the way for embarking on major undertakings together. The two presidents also sent strong signals to their people and, in particular, limited the offensive of their respective political opposition, both domestic and foreign.

Perhaps as important was the message sent to the region, showing that two presidents with conflicting ideological roots can not only dialogue and make good business deals but also take far-reaching steps in favor of integration and peaceful co-existence.

Santos and Chavez proposed resuming the common history that their two countries had built through two centuries of independence and that Colombia's ultraright ex-President Alvaro Uribe (2002-2008) destroyed in only eight years in office, especially after September 2008.

FTA will boost trade ties

The presidents signed various cooperation agreements, including a type of free-trade agreement (FTA) that sets preferential import tariffs on nearly 3,500 products. The goal is to resume the level of trade in which Colombia always had a trade surplus--in excess of US$7 billion in 2007, only to drop to just over US$500 million after three years of strained relations.

The tariff-preferences agreement replaced the regimen in effect until 2008 for both countries as signatories of the Comunidad Andina de Naciones (CAN) protocols. Venezuela had withdrawn from CAN in April 2006, although it maintained its rights and obligations until last April. At that time, the Chavez administration justified its decision saying that it was a form of protest for the FTA that Uribe was negotiating with the US (NotiSur, May 5, 2006, and June 23, 2006). It is worth noting that, paradoxically, the presidents are re-establishing relations little more than a month after the US Congress, after a four-year delay, gave the green light to the FTA with Bogota (NotiSur, Dec. 2, 2011).

Those are, essentially, the trade agreements reached. But other aspects of the meeting were substantially more important. First, Santos got Venezuela to agree to finance much of the construction of a new power plant some of whose energy will go to Venezuela. Second, Santos agreed to the sale, within six months, of 50,000 head of cattle that Venezuela will use to improve its stock, as it is doing with cattle imported from Argentina and Uruguay. Third, the energy agreements will also affect the Colombian state oil company Ecopetrol, which will be assigned two areas for exploitation in the "mature fields" of the Venezuelan border departments of Apure and Zulia.

Pipeline from Venezuela to Colombia's coast worries US

However, of the 11 protocols signed by the presidents, the most far-reaching was the one creating a mixed agency to carry out feasibility studies prior to construction of an oil pipeline of more than 2,000 km that will join Venezuela's Franja del Orinoco--one of the world's major oil reserves--with Colombia's Pacific port of Tumaco.

The initiative is vital for Venezuela, and Santos knows it. It would allow Caracas to double its oil exports to China by 2014, from the current 500,000 barrels per day to 1 million bpd. It has already silenced Chavez's internal opposition and the US government, both of whom see a great danger in the strong trade relations being developed between Venezuela and China.

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