The Bully from Brazil
South America's superpower is shoving its weight around across the continent – and the natives aren't exactly thrilled
July 20, 2012 | Jean Friedman-Rudovsky | Source: Foreign Policy
Delmi Morales Nosa never imagined she'd need her family's bow and arrow for anything other than hunting. But when construction started last year on a highway set to bisect her homeland, Bolivia's second-largest national park (known here as Tipnis), she reconsidered. "The road will ruin our way of life, and we will defend ourselves by any means necessary," said the indigenous Yuracaré mother of two, as she shoved wood into her outdoor adobe oven. Having survived centuries of incursion by the Spanish, rubber traders, and loggers, the park's residents say the road – which environmental impact studies predict could contaminate the Isiboro and Sécure rivers and push 11 endangered species toward extinction – represents the gravest threat yet. Surveying the remote wilderness around her, Morales Nosa said Tipnis residents are preparing their traditional weapons: "We will not let the bulldozers in here," she said.
But what Morales Nosa doesn't realize is that stopping the road might require somewhat more formidable weapons. Bolivian President Evo Morales touts the project as vital to the country's future. "Thankfully, [the highway's detractors] are only a few, while the great majority of Bolivians support this project because they know that highways bring development," he said a year ago. Although this may be true, the controversial 152-mile stretch of pavement-to-be is also vital for something much bigger: a continentwide infrastructure network championed by neighboring Brazil, the region's dominant power and economic engine.
Dreams of an integrated South America date back to the days of Simón Bolívar, the continent's 19th-century independence hero. But geography has always been a hindrance. The planet's longest mountain range, the Andes, practically slices the continent in two, complicating east-west roadways. Two-thirds of the landmass is tropical, with soft terrain that makes constructing durable roads costly or virtually impossible. The Amazon and its numerous tributaries should have alleviated the impasse problem (moving goods by water can be 30 times less expensive than by land), but these rivers have portions too narrow or shallow for large cargo ships, and their muddy, constantly shifting banks make terrible ports. Stymied by insufficient means to reach its resources, South America needed a bold solution if it was ever going to find its way out of the backwaters of underdevelopment.
In 2000, one emerged. The continent's 12 governments launched the Initiative for the Integration of Regional Infrastructure in South America (IIRSA) – a vast infrastructure offensive to power up and interconnect the disparate continent. Brazil took the lead, offering strategic planning and financing in order to stimulate collective growth. "Integration is about bringing people together and promoting development," says Esther Bermeguy, Brazil's secretary of planning and investment. IIRSA was hailed as visionary: $69 billion was pledged for 531 "megaprojects" aimed at stimulating economic growth by expanding export corridors, improving accessibility to remote regions, and increasing energy-generation capacity. (That budget has since exploded to almost $1 trillion.) Over half the budget was to build or improve highways; another quarter went to the construction of railways, bridges, seaports, and waterways; 15 percent went toward energy projects (primarily hydroelectric dams); and the rest funded everything from coordinated air-traffic control to shared IT networks to eased border crossings. But in the 12 years since this monumental task was announced, progress has been slow: Only 12 percent of the projects are complete, while 60 percent are ongoing (in various stages of completion). But the long-deferred dream of linking a continent was finally under way. "Without this kind of planned network of physical integration," says Ariel Pares, Brazil's former IIRSA coordinator, "South America would not stand a chance in the 21st century."
The advance has been met with the predictable protest. Environmentalists decry the massive ecological cost such broad development necessitates. "Many of IIRSA's planned investments are taking place on the continent's most vulnerable ecosystems, including the world's largest intact forest – the Amazon," says Conservation International's Timothy Killeen, author of the 2007 report "A Perfect Storm in the Amazon Wilderness." Also up in arms are indigenous groups, like Morales Nosa's Yuracaré, who say their homelands are being sacrificed for the greater integration ideal. "We suffer the consequences while others reap the benefits," said Daniel Rivera as he and 1,000 others marched 350 miles to La Paz last year in protest against the Tipnis roadway. Although IIRSA projects often include mitigation efforts – environmental impact minimization or relocation if necessary – indigenous protests against IIRSA from Paraguay to Ecuador indicate that there's a groundswell of dissatisfaction among those whose backyards are getting torn down.
But amid the noise of what seems to be just another round of the age-old development vs. conservation debate, South America's push for integration is actually bringing to the fore a much more nuanced discussion. "Integration itself is not bad," says Brent Millikan, an organizer with International Rivers, a California-based organization that monitors dam projects worldwide. "It's a question of what kind of integration we want." Indeed, many of IIRSA's critics are not saying no to all development, but rather are trying to raise the query: Who gets to define our development?
IIRSA, they say, posits a problematic answer. "Behind the concept of IIRSA's integration lies the interests of Brazilian capital," says César Gamboa of Rights, Environment and Natural Resources, a Peru-based environmental advocacy group. He notes that these megaprojects are designed to fuel and enhance Brazil's mammoth economy above all else. "Brazil doesn't want to be considered the region's new imperialist power," Gamboa says, "but that's what they act like."
The IIRSA initiative was born as a multilateral agreement at the end of the first meeting back in 2000 of the Union of South American States, or UNASUR. The plan divided the continent into nine geographic hubs, and technocrats within each country's planning ministry were put in charge of carrying out the program. But with far superior planning capacity than its neighbors, Brasilia dispatched teams of experts to assist with the design and implementation of the initiative. "This put Brazil in the driver's seat," says an analyst with close knowledge of IIRSA negotiations over the last decade who requested anonymity. The economic giant also got involved financially. IIRSA has been primarily financed by the Inter-American Development Bank, the Andean Development Corporation, and the Financial Fund for the Development of the River Plate Basin, but Brazil offered easily accessible loans via its National Development Bank, or BNDES. (Expected to lend $78 billion in 2012 alone, BNDES is now a larger lender than the World Bank). This ensured the goliath an even more central role in integration advancement, as every BNDES loan required that a Brazilian company be hired to carry out the construction of the project being financed.
The initiative, though, still seemed like a win-win for regional governments: easy financing and planning assistance for desperately needed development projects. Poorer neighboring countries "were grateful for the investment," says Stratfor analyst Karen Hooper. And after more than a decade of slow but steady progress, everyone has reaped some rewards. Throughout the continent, improved accessibility to formerly isolated areas has increased mining, biofuel production, cattle ranching, and large-scale agriculture. It's now possible to drive from the east coast to the west coast on one continuously paved road, and the ongoing construction of several hydroelectric complexes that will dwarf the Hoover Dam may help alleviate the continent's energy bottlenecks. There has been measureable growth too: Bolivian exports to Brazil increased 60 percent in recent years, thanks to better roadways, officials say. Peru's 2010 economic growth rate of 8.78 percent is partially due to the continent's first transoceanic highway, former Peruvian President Alan García has been fond of noting. IIRSA's real economic impact may still be yet to come, says Brazil's Pares, who is now a director of programs in Brazil's Ministry of the Environment: "Integration doesn't mean development in and of itself, but rather a basis for the region to advance."
But, ask critics, what basis is that exactly? "If the Tipnis road were for the benefit of Bolivians, it would be a totally different highway," says Silvia Molina of the Bolivian Forum on the Environment and Development. She and many others here see the highway as designed to benefit Brazilian business interests. For example, the road, which would eventually link to the new transoceanic highway, will be a major transport route, facilitating transport of goods from Brazil's western Acre and Rondonia states to Pacific Peruvian ports – an easier journey than to Brazil's own Atlantic coast. It's thus designed, says Molina, to be wide enough to support classes of trucks nonexistent in Bolivia but that are commonly used by Brazilian shipping companies, which will increase environmental impact. The thruway will also open up a large swath of Bolivian land for cattle ranching and possible agricultural expansion – two sectors dominated by Brazilians in Bolivia. Critics also point out that Brazil's oil giant, Petrobras, holds exploration rights inside Tipnis alongside the planned highway.
Numerous proposals for alternative roads that would enable transportation of goods through Tipmis but would minimize environmental impact have been submitted to the Bolivian government by various civil society organizations. But the Morales administration has routinely refused to consider these proposals, and though the Brazilian government has repeatedly denied any specific interests in the road's construction and the Brazilian ambassador in La Paz denied requests for comment, environmentalists here think that Morales's refusal to consider alternatives is, in part, because none are as attractive to Brazil.
Inside Tipnis, residents aren't necessarily against the idea of the road, just the one that has been designed. "That highway doesn't even go near my house," says Matilda Vargas, who lives approximately five hours by boat from the planned highway. "I'd be happy to have a road that makes my life easier," she added. Vargas and her family, like most inside the park, live off subsistence agriculture, fishing, and a limited income from small-scale cocoa production. Because residents often travel to Trinidad, the nearest city, to buy goods and sometimes require medical attention beyond what the park's clinics can provide, many interviewed were in favor of a transport option that would be quicker than boat and would be reliable even in the dry season when the Isiboro and Sécure rivers can get too low to navigate easily. "But [the road] would need to be small so our rivers and our forests can survive as well," says Vargas.
Across the continent, similar patterns arise. The transcontinental highway completed in December 2010 is touted as a blessing for Peru because it enhances port access for local business. But Gamboa says that the country's losses due to the large-scale project – deforestation and haphazard work by Brazilian contractors that cost the state millions of dollars – have outweighed the benefits. Meanwhile, the clear winners from that road are soy exporters in northwest Brazil who gained a Pacific port to Asian markets. The trend continues for energy projects, says International Rivers' Millikan, explaining that many of IIRSA's main hydroelectric projects – despite being touted for bringing electricity to remote areas and communities – are "designed for large-scale energy production for Brazilian industry … not for local use."
Brazilian businesses even make gains at the expense of other countries on the front end, say critics. In Ecuador, the six-dam San Francisco hydroelectric IIRSA complex caused conflict in 2008 when it became clear that the Brazilian construction company Odebrecht hired for the project had botched the turbines and conduction tunnels. The dam began to malfunction, leading Ecuadorean President Rafael Correa to seize Odebrecht's in-country assets and refuse to pay off its BNDES loan for the project. This then provoked a diplomatic crisis in which Brazil withdrew its ambassador from Quito. Odebrecht finally agreed to pay Ecuador $48 million in damages, pocket change for the construction giant, which has been one of IIRSA's biggest winners.
Despite growing unhappiness with IIRSA among their constituents, South American leaders have been hesitant to criticize the plan or back down. "It's hard to argue with the concept of integration," says Gamboa, of the Peruvian environmental group, who explains that IIRSA taps into the pride of a long-oppressed continent, lifting itself up on its own. "Thanks to integration efforts led by great Brazil – our brother with whom we walk hand in hand," said then Peruvian President García as he inaugurated the continent's first transoceanic highway in 2010, "we can create a road of social justice and well-being for all our South American people."
Also, there's the question of power dynamics between the goliath and its neighbors. "Brazil has nearly all the power, and the rest of the countries have much less," says the source close to IIRSA negotiations. Conservation International's Killeen agrees that the chances of a small country like Uruguay or Suriname blocking one of the major IIRSA projects are "none whatsoever." Indeed, a former high-level official inside Bolivia's Foreign Relations Ministry said that years ago, Bolivia had considered publicly opposing the mammoth Santo Antonio and Jirau hydroelectric complex currently being constructed in Brazil on the Madeira River it shares with Bolivia, just 100 miles from the Bolivian border, on the grounds that environmental impact studies said the dams may flood a huge tract of northern Bolivia. When the issue was raised in private talks with Brasilia, she said, "We were basically told: Keep your mouths shut about the dams or we will cut off diplomatic relations."
Brasilia chafes under the accusation of being an emerging imperialist power, and it says it is trying to make amends. IIRSA was given a face-lift last year and has a new name: COSIPLAN, or the South American Council on Infrastructure and Planning, though few outside Brasilia have even heard the new acronym. Bermeguy, Brazil's planning secretary, says that though all IIRSA projects are alive and well under the new entity, there has been real reform, like the fact that decision-making power has been transferred from technocrats to political leaders in each country – which should improve accountability. Brasilia emphasizes that, most importantly, under COSIPLAN there's increased attention on making projects accessible to and beneficial for local communities. "We don't just want to build roads for the population to watch trucks and buses going by," says Ernesto Carrara, director of Brazil's Finance Department within the Ministry of Planning, explaining that COSIPLAN now includes secondary projects that enable communities to take advantage of the large-scale infrastructure in their area. With a bigger budget and more projects at hand, though, analysts see an even more dangerous trend developing: "COSIPLAN means that there will now be Brazilian influence not only in other countries' infrastructure but in their political, military, and communications planning as well," says Peru's Gamboa.
Brazilian officials also point out that ensuring their country's own economic interests is good neighborly policy. "More than granting Brazil access to other countries, [integration projects] are giving these countries access to the Brazilian market," says Carrara. Given that Brazil represents 60 percent of South America's GDP, Carrara explains, a network that enhances smaller countries' access to this market is a plus.
That is, if the powerhouse is able to keep afloat. Brazil was, until recently, seen as a pinnacle of emerging economies. During the government of Luiz Inácio Lula da Silva, the economy grew fast and steady, pulling through the 2008 world financial crisis better than almost any country. Debt was kept under control, and tens of millions of impoverished Brazilians rose into the middle class. But this "magic moment" may soon go sour: The steady rise was almost entirely dependent on high demand and high prices for its ample natural resources, including copper, iron ore, and oil. The volatile market for these commodities is now taking a downward turn, and Brazil's boom could go with it.
If this happens, say experts, Brazil may end up realizing that IIRSA is no help at all. "IIRSA is about increasing reliance on raw material export, above all to China," says Jerónimo Montero, a political and economic geography researcher at Manchester University. During 2011, the first year that South America's transoceanic highway was operational, Brazil's soy exports to China jumped 7 percent, which enabled the South American giant, for the first time, to surpass the United States as China's leading soy provider. "There is almost nothing in this plan that affords for value-added production or for the development of industry," Montero says, adding that IIRSA takes the continent "virtually back to the beginning of the 20th century," when the region survived on nothing more than shipping away its natural resources. This, other critics conclude, combined with the environmental risks of unsustainable resource extraction and expansion of the agricultural frontier, is a time bomb waiting to explode.
Meanwhile social unrest continues. Amazonian indigenous people and their allies are raising international outcry against Belo Monte, IIRSA's largest hydroelectric complex, on the Xingu River. Last year's TIPNIS march in Bolivia almost toppled the Morales government, and another 350-mile march against the highway arrived in the capital in June, raising pressure yet again. In Peru, strong local opposition to a planned Tambo-40 dam caused the Brazilian construction company Odebrecht to cancel the project last year. It's doubtful the tide of backlash will ebb anytime soon. If anything, civil society groups see the momentum as an ideal tool for pressuring their continent's leaders toward a more sustainable vision of development.
"We have an opportunity to change the rules of the game," says Gamboa. And don't be fooled: Although the marches and protests may seem like a throwback to the conservation vs. development contention of eras past, they are actually about a new struggle over who gets to define – and design – the future.