Magnanimidade para Paraguai

  Brazil just renegotiated its energy relationship with Paraguay, to the tune of $240 million per year.  The Paraguayans will now be able to sell the excess capacity from the Itaipú dam at something “close” to the Brazilian market rates.  (The concept of a “market rate” for electricity isn't as simple as it sounds.)  The deal also cuts out the Brazilian middleman.  In concrete terms, the price they receive will triple.  Moreover, the Paraguayans will get a new $400 million transmission line, financed by Itaipú revenues.  In other words, the Paraguayans will pay for only half the cost.  Symbolically, Itaipú’s financial offices will now be opened to Paraguayan nationals, at least in theory, and the Paraguayan government will get to look at the books.  The agreement punts on Paraguay’s right to sell electricity to consumers in third countries.

$240 million is a substantial number for Paraguay.  It’s about 2% of the country's total GDP in 2007, 4% of its exports, and 11% of its government revenue.  That ain’t nothing.  On the other hand, it is pretty close to nothing for the Brazilian government. 

And what does Brazil get in return?  Well, Paraguay is has long been to Brazil what northern Mexico has recently become for the United States:  a source of lawlessness and smuggling.  

Given the new administration is friendly to Brazil, and about as trustworthy as any Paraguayan government in decades (heck, since Francia) more resources for it means more to be spent on, say, customs enforcement or law and order ... and yes, Brazil has and will continue to pressure Paraguay regarding law enforcement.  At some point in the future, the Brazilian government may want and need to turn Mercopol into a serious organization capable of operating inside Paraguay, and it will be extremely useful if Brazil is viewed as a helpful neighbor and not an imperialist aggrandizer. 

Plus, it gives Brazil an ally in its continuing attempts to turn Mercosur into a de facto Brazilian empire.  After all, Brazil wants to give the Parlasur more power, and Brazil plus Paraguay would have an incontestable majority in that body.

And it sends a signal to Bolivia:  last time, we warned you that we had a very big stick, and would peel away half your country if you got too obstreperous.  Now, we say there are benefits for cooperation.  Play nice, Evo.  In the inestimable words of Porfirio Díaz, “pan y palo.”

Canada, I tell you, if American governments were half as smart, y’all could kiss your sovereignty goodbye. Finland, aren’t you glad the Russians ain’t nowhere as slick?

Comments

[Jonathan]

I don't get it, the Canada reference. Is the Dominion a source of lawlessness and smuggling? If the USians made a $240 mil investment in Quebec Hydro could they wind their northern neighbor around their fingers? Explicate, please!

[Noel Maurer]

Heya, Jonathan! Bienvenidos!

The analogy in my head is Canada:America::Argentina:Brazil. The Brazilians are treating their version of Mexico (or the Dominican) much better and putting some institutional meat on their version of NAFTA. As a result, it's much easier for them to get their way in spats with Buenos Aires, since they can use their poor friends to push their rich partner around. Inside Mercosur, of course.

Not that the U.S. really needs to push Canada into doing anything that I can see. And for some reason, we've got a whole population of people who seem to have convinced themselves that a North American Union would be something other than a kinder and gentle American Empire. (What's not to like?) But if we could get past those two obstacles, we could rule the continent. All your softwood is belong to us! Mwahahahahahahahah!

Seriously, there are people who get worked up about, you know, building highways that intersect with the Mexican border, or the idea of talking to Mexican police officers. Remember our old friend Spencer Feldman? He is honestly worried about ameros and the Security and Prosperity Partnership Of North America and all that.

So as long as Spencer is the median voter setting our foreign policy, Canada is safe.

[Jonathan]

I see now.
Canada:America:Mexico::Argentina:Brazil:Paraguay.

So by accepting Mexican long-haul truckers and giving preferential treatment to Mexican building supplies, USA can cadge Mexican support for expropriating softwood and oil shales from Canada.

Sounds like a good idea to me.

[Noel Maurer]

Ah, putting it that way sounds like I was making an ill-thought-out off-the-cuff analogy to get a rise out of our Canadian friends, as opposed to a very serious thoughtful argument that has never been made in such detail or with such care.

But I'm glad you agree! Take the oil sands. I hear they got lots of water up there too. Even the raw hearts of freshly-killed seals.

Will, we turn our eyes to you.

[Randy McDonald]

"Take the oil sands. I hear they got lots of water up there too. Even the raw hearts of freshly-killed seals."

You know, right, that thanks to a combination of advanced bioengineering and a terrifying lack of medical ethics all Canadians have Wolverine's powers? It's a fact.

Anyway. I was think, in regards to hydroelectricity, Brazil:Paraguay::Québec:Newfoundland.

http://www.heritage.nf.ca/law/churchillfalls.html

Briefly put, in 1969 Newfoundland signed an insanely unlucrative--antilucrative?--contract with Québec in regards to the transmission of Labrador hydroelectric power into the North American power grid and has been constantly denouncing this contract and trying to change it. Québec, the larger partner and perhaps somewhat resentful over the loss of Labrador, refuses. The contract will last until 2034.

[Bernard Guerrero]

"an ill-thought-out off-the-cuff analogy to get a rise out of our Canadian friends"

A worthwhile goal in and of itself, of course.