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Venezuela and Ecuador vs… Colombia?
By Jon Menaster | March 7, 2008
As reported by James J. Brittain and R. James Sacouman in the excellent on-line newspaper Venezuelanalysis,
On March 1, 2008, the Colombian state, under the leadership of Uribe, Vice-President Francisco Santos Calderón, and his cousin Defence Minister Juan Manuel Santos, illegally deployed a military campaign within Ecuador, which resulted in the deaths of Raúl Reyes, Julian Conrado, and fifteen other combatants associated with the FARC-EP. Such actions are a clear display of the US-backed-Colombian state’s open negation of international codes of conduct, law and social justice.
Now in analyzing a situation like this, one must be careful, because there are so many different forces at work here (aren’t there always). The key is understanding the dynamics of the United States and Colombian relationship. The United States government, in all its wisdom, has decided countless times since its inception to back a country whose political system is much less than a democracy, in order to further its own goals. In this case, the War on Drugs has resulted in the United States pouring military aid into Colombia’s government, in the hopes it will use the money to help capture some of the top drug dealers in the region. This is what led to the capture of Pablo Escobar, as documented in the book,Killing Pablo
Venezuelan president Hugo Chavez, in response to the March 1 attacks, actually went ahead and labeled Colombia the “Israel of Latin America” during his weekly Sunday talk show Aló Presidente. In response, Chavez has moved thousands of troops to the Venezuelan and Colombian border. While this could be saber-rattling, Chavez is certainly not taking this lightly. In economic terms, the two countries do around $6 billion in trade every year. Chavez is unlikely to risk that over something which did not take place on his soil, but who knows. Tracking some of the Latin American ETFs, such as ILF and GML, clearly shows a downward trend this week (Although ILF remains on a tear, up a remarkable 48.75% so far this year). For investors in Latin America, this issue cannot have demonstrated any more clearly the axiom, no risk, no reward. The market volatility is high and so are diplomatic tensions. Neither are good for the people of Latin America - I’ll keep a close eye on this one from here on out.
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