Prince William arrives in the Falkland Islands today as the HMS Dauntless, a destroyer class ship, is deployed to the islands. This was all, per Britain's government, planned before the escalating rhetoric between Argentina and Britain over possession of the islands. Meanwhile, the Argentine foreign ministry lamented that Prince William was arriving "wearing a conqueror's uniform" and not "with the wisdom of a statesman who works for peace and dialogue between nations." An interesting analysis of this: Falklands tensions serve all parties--except the Falklanders.
[UPDATE 2/14/2012 In spite of a new boycott against any ships flying under the British flag (and not just the Falklands) by the C.A.T.T. (the Argentine Confederation of Transportation Workers, akin to the Teamsters), a British oil barge arrived yesterday, south of Buenos Aires. Meanwhile, Argentine President Cristina Kirchner has presented a denunciation of the "militarization" of the South Atlantic by the U.K. to the United Nations.]
[UPDATE 2/3/2012 A historical take on the War from the Argentine side, including the classified analysis from within the military itself--the secretly smuggled out Rattenbach Report which contained the criticism: "the invasion of the Malvinas was a military fling/adventure." (The word 'aventura' in Spanish connotes utter recklessness, it's the word translated as 'love affair.')]
Population (Sheep): 600,000 Population (Human): 2,478 (in 2006)
Thirty years ago, Argentina and the United Kingdom fought a war over possession of a few small islands in the South Atlantic. The United Kingdom won and continued its claim to the islands they call the Falkland Islands (in Argentina, they're known as Las Malvinas). Increased rhetoric on both sides now is raising the specter of conflict once more. (And, incidentally, the war was begun by Argentina's military junta and the failure of the war was instrumental in weakening the government and bringing in democracy.)
Argentina has never renounced its claim to Las Malvinas (which is based on proximity and a time of occupation in the early 19th century). The United Kingdom's claim to the Falkland Islands is based on earlier and later occupation of the islands and the fact that the islanders themselves reject Argentine rule and want to be an overseas United Kingdom territory. The isolated islands are strategic in a number of ways: they sit atop oil and natural gas reserves in the South Atlantic.
Tensions subsided for the decades following the war as Argentina transitioned to democracy, but as the anniversary approaches, there's been a flare-up. At the Mercosur Summit this past December, members of the Southern Cone Common Market approved a proposal to close all ports to ships "flying under the illegal flag" of the Falkland Islands. Mercosur comprises Argentina, Brazil, Paraguay, and Uruguay, meaning that ports on the Atlantic from the top of Brazil to the tip of Argentina are off limits.
The United Kingdom has, as expected, responded by expressing concern, affirming the right of self-determination of the islands. (Argentina counters that since these are not indigenous inhabitants of the islands, they were placed on the island by the British in order to establish their claim and therefore the argument of "self-determination" is invalid). Prince William's "provocative" anticipated visit (as part of his service in the Royal Air Force) in February and March will likely result in increased security on the island. Yesterday, Prime Minister David Cameron said "[W]e support the Falkland Islanders' right to self-determination. And what the Argentinians have been saying recently, I would argue, is actually far more like colonialism because these people want to remain British and the Argentinians want them to do something else."
The "colonialism" comment led to protests in Buenos Aires and British flag burning and demands from Argentina's left that Argentine President Cristina Kirchner break diplomatic ties with the United Kingdom. And in an interesting counter-balance, United Kingdom Foreign Minister William Hague has just visited Brazil, pushing for deeper ties between the two countries.
Flag burning at yesterday's Buenos Aires protest ("English out of Malvinas!")
Disagreement over Venezuela's membership in Mercosur is pitting the sovereignty of Paraguay against the political authority of the larger region.
In brief: the majority in Paraguay's congress oppose a proposal to make Venezuela a full member of Mercosur. The other three member countries (Argentina, Brazil, Uruguay) have supported Venezuela's entrance, as does the current president of Paraguay (Fernando Lugo). Rumors are spreading that Mercosur will force Venezuela's full entry through some sort of declaration that effectively circumvents the authority of Paraguay's congress and, by extension, the will of the Paraguayan people.
Within Paraguay, this is seen as a violation of Paraguay's sovereignty. Uruguay is hosting a Mercosur summit today, which will be attended by all four presidents, foreign ministers, and the heads of the central banks. Other agenda items have been overshadowed by the question of whether Venezuela's membership will be imposed upon Paraguay.
The Common Market of the Southern Cone (Mercosur) was created in 1991 by the Treaty of Asunción, signed by the four initial member countries: Argentina, Brazil, Paraguay, and Uruguay. According to the Treaty (Article 20), new members must be approved by unanimous consent of current members. Treaties (unlike "Agreements") require the approval by national parliamentary bodies--this is why they have so much more weight than just agreements signed by presidents. The former presidents of the four countries approved Venezuela's full membership in 2006, which was later ratified by the congresses of Argentina, Brazil, and Uruguay. Only Paraguay held out.
In Paraguay and Uruguay, Mercosur is often depicted as yet another way for the two large countries to impose their will on their smaller neighbors. While there has been a "leftward turn" in Latin America (all four countries are governed by left-of-center presidents), Hugo Chavez is not popular in Paraguay. Although the previous Paraguayan president (a Colorado Party conservative) approved Venezuela's full membership, there is a perception that leftist former Bishop Fernando Lugo is forcing Paraguay into a Bolivarian revolution. Moreover, this is framed within Paraguay (and now Uruguay) as a recapitulation of the War of the Triple Alliance (1865-1870), where the combined forces of Argentina, Brazil, and Uruguay demolished Paraguay.
But what this ultimately may be about is a classic power struggle within Paraguay between the executive and legislative branches, not between "right" and "left."
UPDATED: Venezuela and Ecuador are in the process of becoming full member countries of Mercosur. Presidents Hugo Chavez and Rafael Correa were present at the meeting today in Mercosur, arguing for the full admission of their countries. Correa has urged a greater closeness between Mercosur and CAN (the Andean Community-- Venezuela used to be a full member until 2006, when it withdrew from the agreement and sought to enter Mercosur).
As expected, some kind of solution that would work around the stalemate in Paraguay's congress was offered: a Special Commission has been created to determine the terms by which Venezuela and Ecuador will enter Mercosur. The commission will be directly appointed by the presidents of the full member countries (read: not depend on congress).
And though tomorrow I'll discuss the "energy integration" components of today's summit, I want to end with the terrible tragedy that shook the meeting: Iván Heyn was found hanged in his hotel room this afternoon, an apparent suicide. Mr Heyn, Argentine, 34 years old, was Cristina Kirchner's newly appointed Undersecretary of Foreign Trade and was participating in the meetings in Montevideo.
Monday Falls (Saltos del Monday) are located in eastern Paraguay, close to the majestic Iguazú Falls and the Saltos del Guairá, a region of spectacular natural beauty. (Guairá Falls were drowned to build Itaipú dam.)
As part of a plan to build tourism and protect Paraguay's natural beauty, the Paraguayan government has undertaken an investment of $6.5 million USD to construct a look-out on Monday Falls, to develop the proper road work that can hold the kind of traffic they'd like to see, etc. Government planners took Iguazú Falls as their inspiration--a major tourist attraction not just for Argentina and Brazil, but for the entire world. The hope was to bring in millions of revenue to the government which could then be re-invested in social development.
Instead, the government will get $220 USD a month.
For the next twenty years, Acqua Paraná Tour, SA will pay the municipality of Presidente Franco a paltry $220 a month for the right to run the national park, to charge admission, to sell food and souvenirs. Within Paraguay, this smacks of an illicit deal where government funds were used to build massive infrastructure and then the financial benefits were problematically transferred to private hands. The local mayor is claiming this is a great deal for the municipality.
(Image: seven of Paraguay's ten turbines in Itaipú Binacional.)
The political side of electricity.
Following the passage of the Joint Declaration's Itaipú energy provisions, Paraguay's government has embarked on a more aggressive strategy for Itaipú Binational hydroelectric dam. Paraguay owns 50% of the electricity produced by the world's largest dam (in 2010, Itaipú produced 87,970 GWh), but most of this is consumed within Brazil because Paraguay lacks the demand for its energy. Since 2008, the new government in Paraguay has sought to use its hydroelectric resources in a targeted way, to fund social and economic development. One part of this strategy includes increasing consumption and demand within Paraguay by attracting foreign investment.
Rio Tinto Alcan, the aluminum giant, is in talks with the Paraguayan government to open a smelting plant in Paraguay, but among the chief sticking points is just how much Paraguay's public utility company, ANDE, will charge Rio Tinto Alcan for electricity. Figuring out this number isn't just difficult because of various technical and financial factors that have to be considered. It's difficult because there are political hopes and promises and expectations that are attached to Itaipú energy for Paraguay. And these aren't minor hurdles, but significant competing priorities that drive the actions of decision-makers within Paraguay. The dam is an arena for major political battles within Paraguay--promises to change the way Itaipú dam's energy and financial resources were spent within the country was a key campaign pledge in the new government. And because of historical tensions between Paraguay and Brazil, the dam gets interpreted through a patriotic frame of reference.
That is to say, charging too little for energy from Itaipú is a matter of patriotism and treason.
And so, while the base cost of electricity from Itaipú is about $43.80/MWh, one of Paraguay's most influential engineers/members of Fernando Lugo's leftist government insists that $60/MWh is the minimum that should be charged. This contradicts CRU Strategies' (a UK consulting firm focused on mining, metals, and fertilizer) recommendation that the price be set somewhere between smelting industry standard: $35-$38/MWh. For a sense of perspective, recently in the U.S., a representative from Rio Tinto Alcan complained that the amount they were paying for electricity in Kentucky--$43.50/MWh--was 65% greater than the average cost for aluminum smelting worldwide--$26/MWh. And, to further complicate matters, it seems that smelting electricity costs in China run between $49 to $55/MWh.
The likely resolution will fall somewhere between the extremes ($26 and $60/MWh), but the process will be troubled by the intangibility of these numbers. What I mean is this: in Paraguay, electricity price seems to have nothing to do with the product delivered. There are regular black-outs (some caused by apparent error within the Paraguayan half of Itaipú itself), people often have illegal electricity connections, and the degree of financial mismanagement within the electricity sector (often described as "corruption") means that there's no trust that a price reflects value. Price instead reflects social power. You pay a set price not because that's what something is worth, but because that's what someone more powerful than you has said you should pay for it.
And so, one of the hidden factors in the price of electricity that Rio Tinto Alcan and the Paraguayan government are debating is that of trust. How much do Paraguayans trust that their government is demanding a fair price for the nation's natural resources? If the answer is "not much," then that means that no matter what the final number, it'll be perceived as "not enough." And this is the pressure that's being placed on Paraguay's negotiators.
I'll be presenting at the Annual Meeting of the American Anthropological Association, in Montreal, as part of a panel entitled "Managers Of Things, Or What Do Managers Imagine Themselves To Be Managing?" on Friday, November 18, from 8-9:45am.
Managing Expectations: Spectacles of Corruption, Rituals of Patronage
Because of its symbolic and economic weight within Paraguay, Itaipú hydroelectric dam--the world's largest--has come to embody what its planners hoped: the physical manifestation of an all powerful state. With the recent presidential election of leftist former Bishop Fernando Lugo, a new group of technocrats and politicians appointed to the helm did not merely manage the energy potential of the dam, but through it distilled the "promise" of the Paraguayan nation--promise in the sense of commitment and of hope for the future. As the engine of the Paraguayan state apparatus, the dam stood at the nexus of an intricate patronage system that grew concomitantly with the energy production. How and what favors were asked and answered by technocrats appointed to manage electricity production--a public secret--unmasks more than just the balancing act performed by high level employees as they juggled partisan obligations, political aspirations, and social pressure to portray generosity as a hallmark of power. Rather, this gets to the heart of how the fractured and tentative "state" is constituted in Paraguay--protecting privilege through the management of resources and relationships. Campaign promises to end patronage and administer the dam's wealth to bring development clashed with entrenched models of state-to-nation obligations and the personal ambitions of a new class of political elites. This paper explores how the top managers at the dam straddled informal expectations of patronage with formal responsibilities of energy production in the midst of a push towards "transparency" thwarted and abetted by mediatic "corruption" scandals. Based on eighteen months of fieldwork among Paraguay's political elite, this paper analyzes rituals of approach and request, how Itaipú managers configured multiple vectors of obligation, and how a hydroelectric dam embodied fantasies of prosperity. Itaipú's managers explicitly described this process as a way not just to remake the dam, but as a way to remake the Paraguayan state itself.
