[NYTr] Chavez Offers Billions in Latin America

[All the News That Doesn't Fit]

AP - Aug 26, 2007
http://hosted.ap.org/dynamic/stories/V/VENEZUELA_DOLLARS_FROM_CHAVEZ?SITE=WILAC&SECTION=HOME&TEMPLATE=DEFAULT

Chavez Offers Billions in Latin America

By NATALIE OBIKO PEARSON and IAN JAMES
Associated Press Writers

CARACAS, Venezuela (AP) -- Laid-off Brazilian factory workers have
their jobs back, Nicaraguan farmers are getting low-interest loans and
Bolivian mayors can afford new health clinics, all thanks to Venezuelan
President Hugo Chavez.

Bolstered by windfall oil profits, Chavez's government is now offering
more direct state funding to Latin America and the Caribbean than the
United States. A tally by The Associated Press shows Venezuela has
pledged more than $8.8 billion in aid, financing and energy funding so
far this year.

While the most recent figures available from Washington show $3 billion
in U.S. grants and loans reached the region in 2005, it isn't known how
much of the Venezuelan money has actually been delivered. And Chavez's
spending abroad doesn't come close to the overall volume of U.S.
private investment and trade in Latin America.

But in terms of direct government funding, the scale of Venezuela's
commitments is unprecedented for a Latin American country.

Chavez's largesse tends to benefit left-leaning nations that support
his vision of a Latin America with greater independence from the United
States. But he denies the two countries are in a competition.

"We don't want to compete with anyone. I wish the United States were
100 times above us," Chavez told the AP in a recent interview. "But no,
the U.S. government views the region in a marginal way. What they offer
is a pittance sometimes, and with unacceptable pressures that at times
countries can't accept."

U.S. aid tends to be low-profile, constrained by strict guidelines and
often distributed through other institutions so that recipients may not
know it's from the U.S. government. Venezuela offers money with few
strings attached and a personal Chavez touch that aid experts say
generates more good will dollar for dollar.

Clay Lowery, the U.S. Treasury Department's acting undersecretary for
international affairs, argues that the U.S. plays a larger role than
reflected in its aid figures. The United States, for instance, drove
Inter-American Development Bank and World Bank debt relief deals
totaling $7.5 billion over the past three years in Latin America, he
said.

"Who is the biggest financier of the IDB? The United States. Who is the
biggest financier of the World Bank? The United States is. We don't
count those," Lowery said. "We're basically engaged on a multilevel,
multi-prong approach."

Still, as the Chavez effect gains ground, there are signs the U.S. is
responding to the challenge.

The U.S. Navy medical ship Comfort is on a four-month, 12-country
voyage to Latin American ports, and has already treated more than
80,000 patients with free vaccinations, eye care, dental checkups and
surgeries aboard the converted oil tanker.

U.S. officials are taking their cue from the free eye surgeries and
medical training that Chavez offers, says Adam Isacson of the
Washington-based Center for International Policy, which tracks American
aid and advocates international cooperation.

"They're trying to do things that are aimed in a small way at
countering what Chavez is doing - Chavez's much larger aid programs,"
he said.

His group calculates that nearly half of U.S. aid to the region goes to
military and police programs. However, U.S. Treasury Secretary Henry
Paulson also has pointed to the U.S. government's work with the IDB to
mobilize up to $200 million through private lenders to support small
business loans.

Chavez's aid isn't limited to his region. Low-income Americans get
cheap heating oil, while the former Soviet republic of Belarus is
counting on Chavez to help pay off a $460 million gas bill to Russia.
But most of the funding goes to Latin America.

When a Brazilian plastics factory was shuttered in 2003 by its indebted
owners, hundreds of workers formed a cooperative. They appealed for
help in a private meeting with Chavez, who offered subsidized raw
materials in exchange for the technology to produce plastic homes in
Venezuela. The factory soon hummed back to life.

"I know there are people out there criticizing Chavez for helping us.
They say he is interfering with the internal affairs of Brazil," said
Salviano Jose da Silva, a security guard at the Flasko factory near Sao
Paulo. "But all he's doing is helping to guarantee our livelihood -
something the government should be doing but isn't."

When floods hit Bolivia this year, the U.S. provided $1.5 million in a
planeload of supplies and cash. Chavez promised 10 times more and sent
in teams that helped victims for weeks. In all, Chavez's pledges to
Bolivia total over $800 million, more than six times the U.S.
commitment this year.

He also offered money for new garbage trucks in Haiti and an Argentine
dairy cooperative.

Opponents say Chavez is spending haphazardly on "giveaways" abroad at a
time when more than a quarter of Venezuelans still live on less than $3
a day. They question how long he can sustain it since government
revenues are highly dependent on fluctuating oil prices.

While Venezuelan asphalt paves streets in Bolivia's capital, a sign
recently protruded from one of Caracas' potholes reading: "Why for
Bolivia yes and for me no?"

Chavez argues much of the funding brings benefits back to Venezuela,
including oil-related investments and other cooperative exchanges. He
says billions more are being spent within Venezuela, and cites social
programs credited with helping to reduce poverty.

His recent commitments in the region exceed those of the World Bank and
the Inter-American Development Bank. Each lent nearly $6 billion in
2006, but their influence has declined as nations repay their
outstanding loans. Regional International Monetary Fund debts dropped
from $49 billion in 2003 to just $694 million this year, largely due to
early repayments, some of them financed by Chavez.

Chavez offers funds in unconventional, sometimes spontaneous ways.
Summing it up is difficult due to a lack of transparent accounting, so
the AP tally is based on public pledges rather than what has actually
been spent. Some of the money is expected to be paid over multiple
years. The tally also cannot cover undisclosed spending, such as aid to
Cuba or Venezuela's share in building a $5 billion oil refinery in
Ecuador.

Venezuela's funding differs from U.S. aid because it includes
investments that in the U.S. would come from the private sector and
purchases of bonds that are later resold.

Most of the funding - $6.3 billion - involves energy projects, some of
which directly benefit Venezuela's oil industry, such as a $3.5 billion
refinery to be built in Nicaragua. That also includes funding for
electricity plants in Haiti and Bolivia, and an estimated $1.6 billion
in fuel financing to at least 17 nations.

Venezuela has pledged $772 million in development aid, including AIDS
treatment in Nicaragua, housing in Dominica and Cuban doctors in Haiti.

In Bolivia, $20 million went directly to mayors selected by leftist
President Evo Morales for projects including health clinics and
schools. Mayor Miguel Avila gratefully accepted a $427,000 check for
his town of San Lorenzo to build a new farmers' market.

Critics warn that scant oversight leads to waste and corruption.

"You don't do things well by just giving money away," said Liliana
Rojas-Suarez, a former IMF economist at the Washington-based Center for
Global Development. "If you give money without any conditions attached,
without any expectations, without anything, what are the incentives?"

But Mark Weisbrot of the Center for Economic Policy Research says
Chavez has succeeded in providing more financing options and breaking
up a "creditors' cartel" of Washington-based lenders whose economic
prescriptions failed to improve the lives of the poor.

Chavez helped Argentina pay off its IMF debt by buying some $5.1
billion in Argentine bonds in recent years, and now proposes a "Bank of
the South" that would use billions from Venezuela's international
reserves as seed money.

Meanwhile, Venezuela's state development bank, Bandes, is expanding
into Bolivia, Uruguay, Honduras, Guatemala and Haiti. In Nicaragua, it
is offering loans at just 5 percent interest, compared to 35 percent by
some private banks.

Nicaraguan farmer Juan Vicente Castillo, whose cooperative plans to
grow black beans to pay off part of a $750,000 Bandes loan, says: "We
are very grateful to President Chavez's government for this loan that
the commercial banks wouldn't give."

[Contributing to this report were AP correspondents Stan Lehman and Alan
Clendenning in Sao Paulo, Brazil; Dan Keane in San Lorenzo, Bolivia;
Filadelfo Aleman in Managua, Nicaragua; Nestor Ikeda in Washington,
D.C.; and Diego Mendez and Luis Romero on board the USNS Comfort.]

© 2007 The Associated Press.