Brazil’s Capitalist Invasion Builds Socialism ‘à la Venezuela’

Humberto Marquez

HAVANA TIMES, Nov 21 (IPS) — Bridges, railroads, petrochemicals, steel mills, electricity, aqueducts, agriculture, meat-processing plants, ship building and even cable cars: Brazil’s powerful entrepreneurial arm is reaching towards the Caribbean, via Venezuela, where the Hugo Chavez government is working to build what it calls “21st century socialism.”

“The Brazilian construction companies work comfortably with the Venezuelan government, because behind them is the Brazilian government with its integration policy, with the understanding between both countries and Brazil’s BNDES (National Development Bank),” the director of the Venezuelan-Brazilian Chamber of Commerce and Industry, Fernando Portela, told IPS.

Historically, Venezuela has built infrastructure under the auspices of its petroleum exports. The cycle of high international oil prices this decade found its powerful neighbor to the south in an advantageous position to offer services in engineering and partnerships in heavy industry and trade.

“There is an interest amongst Brazil’s companies to make the most of Venezuela’s industrial complex and market in order to acquire companies or to partner with them, putting forth northern Brazil, Venezuela and the Caribbean as a major area of business,” said Portela.

One important aspect of this presence is that the Brazilian firms remain untouched by the nationalization process begun in 2007 by Venezuela’s President Chavez.

That policy went deeper this year with the nationalization of 220 companies – both foreign and domestic — including sectors in which Brazil is a leader, such as chemicals, steel, and construction.

On May 26, 2009, journalists covering a meeting between Chavez and Brazil’s President Luiz Inácio Lula da Silva in the northeastern Brazilian city of Salvador, heard a revelation when the microphones were left on during a private meeting. Chavez told Lula: “We are in a phase of nationalizing companies, except the Brazilian ones.”

Chavez jokingly admitted at the time that he asked the Brazilian corporate giant Emilio Odebrecht to join the socialist cause.

“I tried to converse with Don Emilio to come to socialism. He laughed and told me no,” said the Venezuelan leader.

But Odebrecht’s company has led at least 15 major infrastructure projects in Venezuela worth billions of dollars, and “with Chavez or without him, here we have work for at least 10 years more,” Venezuelan businessman Luis Berlioz told IPS. His firm, COMOPA, works with the Brazilians in concrete-based products.

Bridge over the Orinoco River

The iconic project — and most visible — is the second highway bridge over the Orinoco River. Just over three kilometers long, the span and its connecting ramps and roads were built between 2001 and 2006 at a cost of 1.28 billion dollars. The bridge alone cost 886 million, though the original estimated budget had been for just 480 million dollars.

The bridge benefits the two million residents of southeastern Venezuela and, because of its location near Ciudad Guayana, an industrial city 500 km from Caracas, is an important connection to the Caribbean ports in northeastern Venezuela.

Also counted in the millions are the users of other projects in which Odebrecht is participating, like the Tocoma dam, which cost 3 billion dollars and when finished in the middle of the decade will add 2,000 megawatts to the nearly 14,000 megawatts being produced by the hydroelectric system of the lower Caroní River, in southeast Venezuela.

Odebrecht is also building more Metro lines in Caracas and neighboring cities, a system that combines subway trains and buses, as well as infrastructure for water treatment in the eastern capital and for the city of Maracaibo, and the Metrocable, a system of cable cars for the steep hillside neighborhoods of Caracas.

The Brazilian corporation is also taking on projects to build 11,000 housing units in the southeast, a petrochemical plant, docks in the ports, and a third bridge over the Orinoco.

“One of Odebrecht’s traits, which is good for Venezuela, is its demanding stance in matters of solvency of the contracting companies and the safety of its workers. And it is difficult to adjust budgets if there are delays in shipping the materials or it has to deal with up to 10 unions, which are often clashing amongst themselves,” according to Berlioz.

Camargo Correa, another Brazilian construction company, is working on the Tuy River, which supplies water to Caracas. The 476-million-dollar project is part of a broader effort to improve sanitation systems and increase capacity of the aqueducts.

In Venezuela’s northwestern state of Zulia, the Brazilian steelmaker Gerdau has been operating the Sizuca steel mill since 2007, which produces 300,000 tons of raw steel and 200,000 TM laminates annually. Also operating there is the Oxiteno Company, which has a plant that produces tensioactive agents used in detergents, cosmetics, paints and textiles.

The Venezuelan state-run company Corpozulia mines for coal in that area, and signed an exploration agreement with the Brazilian firm Vale de Rio Doce

(CRVD) for the Perijá range. However, four indigenous groups claim that zone as ancestral territory, and many of the communities oppose any expansion of mining there.

Increased bilateral trade

While Brazil’s presence is evident in the construction cranes and reinforced concrete, bilateral trade is also flourishing and, unlike the last decades of the 20th century, the trade balance favors Brazil, which is less and less dependent on oil imports and is increasingly a food supplier to Venezuela.

In 1999, bilateral trade totaled 1.5 billion dollars, of which 974 million were Venezuelan sales. But by 2009, Brazilian exports reached 3.6 billion dollars, while its imports from Venezuela were just 581 million dollars.

“The trend will continue in 2010, with some 600 million dollars in Venezuelan exports and about 3.5 billion from Brazil,” Carlos Santana, chief of trade promotion at the Brazilian embassy in Caracas, told IPS.

Venezuela’s biggest imports are beef, chicken, sugar, mobile phones, tires and automobile parts, soybean oil, coffee and milk. While Brazil’s focus is on inputs for petrochemicals, coke (for steel), coal and electricity (31.5 million dollars in 2009) through power lines linking to the Caroní River hydroelectric dams.

But not everything is smooth sailing in Brazil and Venezuela’s bilateral relations.

The global economic crisis that unraveled in the United States in 2008 led the Braskem petrochemical company to reorganize Propilsur, a plant in eastern Venezuela intended to produce 450 million tons of polypropylene annually.

The Brazilian firm cut its investment in half, from one billion dollars to 500 million.

For its part, the Venezuelan oil company PDVSA has been pinched in meeting its 40-percent contribution to the Abreu e Lima refinery in northeastern Brazil, with an estimated price tag of four billion dollars. It is intended to process 230,000 barrels of primarily Venezuelan petroleum daily.

Its Brazilian counterpart, Petrobras, which has brought in some 70 billion dollars from international markets for its expansion plans, taken up the refinery construction on its own since 2009.

In Venezuela, “there are about 36 projects that involve Brazilian companies and are on stand-by or are waiting for better conditions, like resource fluidity or for Venezuela to officially join Mercosur (Southern Common Market, created by Argentina, Brazil, Paraguay and Uruguay),” said Portela.

Entry into Mercosur as a full member, which is on hold as it awaits approval from the Paraguayan Congress, “would simplify customs procedures that would mean more trade and would provide greater legal security, bringing in more Brazilian companies,” he added.