Energy pact on Obama’s agenda

Here’s my bet: The Obama administration’s top priority in Latin America will be signing a hemispheric energy cooperation deal that — if carried out — would reduce U.S. dependency on foreign oil, bolster U.S. ties with Brazil, and undermine Venezuela’s petrodollar-fueled radicalism in the region.

It’s almost official, although they won’t frame it that explicitly. Obama first proposed an “Energy Partnership of the Americas” in a May 2008 campaign speech and later advanced the idea to develop alternative fuels in the region in interviews with me and other journalists.

Last week, Secretary of State-designate Hillary Clinton elevated the idea to a maximum regional priority during her confirmation hearings. In her opening statement, when she got to Latin America — almost at the end of her foreign policy priorities — her most specific proposal was “taking up the president-elect’s call for a new Energy Partnership of the Americas.”

Later at the hearing, when asked by the Senate panel about the Obama administration’s plans for Latin America, Clinton said: “We want to not only respond to the issues that are in the headlines,” but to “seize the opportunities in Latin America, which is why the energy partnership that the president-elect has suggested has so much potential.”

So what’s this plan all about? I asked people in Obama’s transition team. Is it any different from George W. Bush’s much-publicized 2007 cooperation agreement with Brazil to jointly develop ethanol and other alternative fuels in the two countries, as well as in Central America and the Caribbean?

Sources close to the Obama plan tell me that there are several differences.

Declaration of goodwill

First, the cooperation agreement between Bush and Brazilian President Luiz Inacio Lula da Silva was a “memorandum of understanding,” which, in diplomatic lingo, often means a declaration of goodwill. The Obama plan would become a U.S. law and a regional treaty, which means that it would include U.S. funding for feasibility studies and concrete projects and would have a broader geographic and political scope.

Second, in addition to meeting Obama’s domestic goal of reducing U.S. oil dependency and fighting global warming, it would shift U.S. policy away from its current narrow focus on free trade agreements and anti-drug efforts.

Third, it would cement U.S. relations with Brazil. While the United States currently has free trade agreements with Mexico, Central America, Peru and Chile, as well as anti-drug treaties with Colombia and other Andean countries, it has no such institutional bond with South America’s most important country, sources close to the plan say.

Fourth, the plan is likely to adopt several proposals contained in a $59 million “Western Hemisphere Energy Compact” bill that Sens. Dick Lugar, R-Ill., and Chris Dodd, D-Conn., are expected to reintroduce before the April 17 Summit of the Americas in Trinidad and Tobago.

Regional oil reserves

Among other things, the Lugar-Dodd plan calls for U.S. funds to create mechanisms such as regional oil reserves or regional ethanol reserves; provide funding for feasibility studies that would allow countries in the region to look into whether they can create jobs and promote economic growth by creating solar or wind-based energy industries or by turning soybeans, sugar cane or other crops into biofuels.

In addition, it could find an international mechanism to help Mexico’s ailing state-run oil industry, which is constitutionally barred from accepting foreign investments in key oil production facilities. And with Brazil’s active role, the plan could help build pipelines that would help countries such as Argentina and Chile overcome their chronic natural gas shortages.

My opinion: It won’t be easy. During the campaign, Obama opposed cutting U.S. import duties on Brazil’s sugar cane ethanol. Also, with gasoline prices at their current lows, political pressures to achieve energy independence may diminish. And the monumental U.S. financial bailouts will leave little money for grand hemispheric programs, no matter what they are.

X Andres Oppenheimer is a Latin America correspondent for the Miami Herald. Distributed by McClatchy-Tribune Information Services.