Some 30 years ago, a politician in Paraguay whose name has disappeared in the waters of history made himself the laughing stock of the local community shortly after proposing to build hospitals, schools and bridges.
“But sir,” one of the locals corrected, “we don’t have any rivers.”
“No problem,” said the erstwhile leader, “we will build those too.”
The story stayed around for years, long enough to wonder at its accuracy, but it highlights the penchant of Latin American leaders to rely on promises with only limited veracity. This makes it very difficult to do business.
On Monday, Venezuela’s president Hugo Chavez announced a deal to supply China with crude petroleum and oil to the tune of 300,000 barrels per day. This is double the 150,000 bpd the country supplied in 2006 but less than the 500,000 bpd Chavez had committed to providing during a speech last year.
Spokespeople for the president said he misspoke himself. He has so many numbers in his head that he made a mistake. But then, this is a president that wants to build a coalition to oppose the US among countries he sees as potential counterpoints to the one existing superpower.
It is not altogether unlikely that the president saw more than was there. Venezuela’s non-privatized oil industry is famously inefficient and unreliable. China needs the oil and it is willing to invest to get it, which is not to say it is eager to form any kind of coalition with Chavez.
Speaking to his country’s media, Chavez said that Venezuela and China would launch a series of joint ventures in both countries “in the next two or three years” with a view to supply China with 1 million barrels of oil per day by 2012.
These deals, he said, will make Venezuela one of China’s main strategic partners. Trade between the two countries doubled last year to US$4 billion, which makes it about 2% of the trade surplus China has with the US and less than a fifth of India-China trade. So, other than its ability to supply oil, Venezuela is far from being one of China’s major partners.
Assuming the Chavez government doesn’t squander the money building rivers, it should help shore up an important industry in that country and fill up China’s oil reserves a little more.
The trick will be for Venezuela to stick to its part and avoid the tendency of many a Latin American government of the last fifty years to replace agreements with empty words that offer much and deliver little.