SAO PAULO – It was sweet – literally: Brazilian President Lula da Silva, the former metalworker, posing as a world leader in front of the powerful Sao Paulo industrial/agribusiness bourgeoisie – delighted that they may soon become the new sheikhs of a Green Saudi Arabia – as he struck a biofuel agreement with US President George “Social Justice” Bush, conveniently reconverted for his Latin American trip into compassionate crusader for trabajadores y campesinos.
If Bush’s dream of a Free Trade Area of the Americas was bombed in Mar del Plata, Argentina, in December 2005 – by a Mercosur alliance of Venezuela’s Hugo Chavez, Argentina’s Nestor Kirchner and Brazil’s Luiz Inacio Lula da Silva – at least now he can also bask in the glory of having found the new Green Saudi Arabia. Meanwhile, there are no illusions for the White House that the US-Brazilian biofuel agreement – cementing what Lula dubbed Brazil’s “energy revolution” – may be the perfect shortcut for turbocharging, again, the drive for hemispheric free trade.
Brazil and the US will be partners in an international biofuels forum that will set standards for global trading of ethanol as a commodity and technology transfer (basically by Brazil) to third countries. It’s a sweet match. Brazil has the technology – the fruit of an ethanol program launched during the military dictatorship in the 1970s – but lacks capital. The US has the capital plus enormous strategic interest. Thus the Brazilian desire to become a global exporter of biofuel technology matches US financing of ethanol-producing factories in South America, Central America, the Caribbean and Africa.
It will be a long and winding road. Brazil produces 17.5 billion liters of ethanol a year. It plans to step up to 30 billion liters by 2012. But the US will need 132 billion liters a year to reach the goal of 20% reduction in its consumption of gasoline. For the moment, 90% of Brazil’s ethanol is for the internal market. And the hefty, protectionist 54-US-cent tariff on every gallon (3.785 liters) of Brazilian ethanol imported to the US won’t be renegotiated before 2009.
As far as Democratic presidential hopeful Barack Obama – from Illinois, a corn-producing state – is concerned, the tax stays, indefinitely. Congress and corn producers say the US needs the tariff because Brazil has an “unfair” advantage of 30 years of ethanol-technology development. If Brazil were part of the “axis of evil”, one would expect a preemptive US strike to “liberate” Brazilian sugarcane fields.
It’s tariffs like these that block any progress in the Doha Round of the World Trade Organization – as the US and the European Union refuse to stop subsidizing their farmers while cynically exhorting the virtues of “free” trade.
The family diversifies
What’s with Biofuel Bush? The (dirty) secret of the new ethanol craze is that it is, once again, a Bush family business. Brother Jeb is one of the three chairmen of the Miami-based Inter-American Ethanol Commission (set up in December) along with a former agriculture minister in the previous Lula administration, agribusiness tycoon Roberto Rodrigues, and Colombian Luis Alberto Moreno, president of the Inter-American Development Bank.
Rodrigues spent Bush’s visit to Sao Paulo perfecting his bombastic pitch all over Brazilian corporate media – stressing that “what we are doing here is launching a new civilization” based on biofuels. Jeb’s pitch is way more pragmatic. In essence it involves, in the medium term, importing less oil from Chavez (12% of daily US needs) and more biofuel from friendly and/or pliable Brazil, Colombia, Central America and the Caribbean.
What this will mean in practice is hardcore US neo-colonization of Central America and the Caribbean – as vast sugarcane plantations – to feed US demand. The construction of an ethanol factory in Haiti – the poorest country in Latin America – has already been broached in the Bush-Lula discussions. Brazil leads the UN peacekeeping force in Haiti. The Haiti factory would be a model for the whole regional ethanol boom – US capital mixed with Brazilian technology profiting from a cheap local workforce.
Inevitably, the ethanol boom also fits the pattern of Latin America – in US hegemonic conception – as a mere “back yard”, our “neighborhood” (a favorite Bushism) historically adept at providing fabulous natural resources, slave or semi-slave labor, strategic outposts, and markets (including financial) for US oligarchies.
No wonder US hedge funds and investment banks, as well as the Sao Paulo agribusiness bourgeoisie, are pouring the champagne. What Brazilian producers actually want, medium-term, is not so far-fetched: a hemisphere-wide E10 brand of gasoline (blended with 10% ethanol).
So the alliances are on the table. In the US, it’s the corn-producing Midwest against sugarcane-producing Florida, and ultimately George W Bush against a protectionist Congress. In Brazil, it’s Jeb Bush and US investors, allied with Brazilian agribusiness, against the Chavez “threat”.
In a rally in front of 40,000 people in a soccer stadium in Buenos Aires last Friday night – parallel to Bush having a steak dinner in Montevideo, across the Rio de la Plata – Chavez stressed the “folly to plant so much corn and sugarcane not to feed humans but to sustain the American way of life”. So – in Bush family business thinking – it’s Chavez’ oil-fueled Bolivarian Revolution against the new Green Saudi Arabia (Brazil). Or is it? Totally absent from the Chavez demonization show is always the fact that what he is doing in Venezuela is to redistribute oil wealth, land and local and regional power – anathema to US conservatives and right-wingers as well as to the greedy, arrogant Latin American white oligarchies, Brazilians included.
Green Saudi Arabia?
The merciless spin in the new Green Saudi Arabia – by Bush and Brazilian Bush family allies – is that ethanol is cleaner than oil, more sustainable and anti-global warming. It’s not that simple. Scientists point out that biofuels are not necessarily environment-friendly. For example, palm-oil bio-diesel cultivation in Southeast Asia is increasing carbon emissions. Biofuel production on a very large scale emits a lot of carbon dioxide and involves herbicides, pesticides and fertilizers – all petroleum-based.
It also requires a lot of water. In the case of Sao Paulo state in Brazil, where it rains a lot, this is not a problem. Moreover, southern Brazil holds immense underground water reserves.
Brazil plants sugarcane far away from the Amazon rainforest: 80% in the center to south of the country (60% in wealthy Sao Paulo state, the center of this energy boom). The remaining 20% of plantations are on the northeast coast. The environmental threat by the sugar-ethanol industry is actually to the beautiful Pantanal wetlands. In the case of Malaysia and Indonesia – which want massive export of bio-diesel made from palm oil to the European Union – virgin rainforest inevitably will be devastated: at least 20 million hectares in Indonesia will be razed for new oil-palm plantations.
The unsung heroes of Green Saudi Arabia are the cortadores de cana – sugarcane cutters – a migrant army of at least 200,000 workers who fled the almost Sahara-like Brazilian northeast. They work for a minimum of 12 hours a day under relentless, scorching 30-degree-Celsius temperatures to earn less than $200 a month, living in precarious conditions in crowded guesthouses charging a fortune for rent.
It’s this unsung army who will allow Brazil to reach ethanol exports of 200 billion liters by 2025, with sugarcane plantations spreading from 6 million to 30 million hectares. The army will grow exponentially. In Florida it’s not that much different – as in Alligator Alley west of the I95 highway: the slaves in this case are Jamaicans and the landowners are Cuban sugar kings very cozy with Jeb Bush.
In the US, Corn Belt farmers – and their congressmen – are the great profiteers of the biofuel boom, as well as corn brokers and refineries. In Brazil – with the lowest cost of production in the world for the sugar industry – profits for Sugar Daddies are even more spectacular. In Sao Paulo, the cost of production is $165 per ton; in Western Europe it is $700 per ton. Large US and European corporations such as French Tereos and US-based Cargill are on a merger-and-acquisition frenzy all over Sao Paulo state, snatching every sugar mill they can find.
Diversification rules. Oil is a thing of the past. Jeb Bush and his Brazilian Green Sheikh pals are in to make a lot of money. And for a bit of R&R, retired George W can always count on the 100,000-hectare ranch daughter Barbara bought last year in the Paraguayan chaco. It may not be the green, green grass of home, but it certainly beats Fallujah.