Key "Bolivarian Axis" allies face serious issues

In a crucial year for the government of Venezuelan President Hugo Chávez, his stranglehold on power is followed closely by his regional allies, some of which are dealing with tough times themselves without having Venezuela as a template for political prowess or, even worse, as a lending hand.

Venezuela's huge debt no longer allows Chávez to provide relief for the crumbling Argentine economy, and it has become more difficult to uphold social subsidies for Bolivia and Ecuador, both ALBA partners, while Cuba branches out to diversify its partners in fear that it may soon lose its bail out from Caracas in 2013.

In over a decade, the "Bolivarian Revolution" has used petrodollars to forge a regional alliance with continental partners in which Venezuela is the main source of funds through large imports, loans, direct subsidies or joint investments.

In Argentina, escalating corruption, agricultural infighting and a stagnant economy, led in 2001 to a growth of 8.9% while in 2012 the World Bank believes it would be 2.2%, and has built up distrust toward the government of Cristina Fernández de Kirchner, whose popularity sinks rapidly.

After expropriation of Spanish oil company Repsol's stake of 51% in YPF, based on "lack of investment," Fernández de Kirchner launched a diplomatic crisis with Madrid, and she claims that the European Union are in on it as well.

Capital flight resulting from lack of confidence in the government forced Kirchner to implement currency restrictions, resulting in public outcries from all sectors. In May alone, investors withdrew USD 1.6 billion from banks, that is, 12.3% of total deposits in dollars, from the local financial system, according to Argentine firm Econométrica.

These crises have not severed the ties between Caracas and Buenos Aires, however, as those ties are based on ideology.

"The country with which Cristina Kirchner has executed more bilateral agreements during her first tenure is Venezuela, the one with which Argentina maintains tighter bonds is Venezuela, in so many ways... this denotes a special relationship as well as political and ideological affinity," explained Rosendo Fraga, director of the Research Center Union for a Greater Majority.

Evo's struggle

Bolivia's first president from an indigenous background, Evo Morales has had to deal with strong protests from his "brothers" who criticize him for his economic policies, which they claim destroy their habitat and environment.

This social crisis deepens as large multinational mining companies accuse the government of failing to honor its agreements on use of resources, while the government points the finger right back at them.

Indian conglomerate Jindal Steel opted to terminate a multimillion contract for development of Bolivia's first iron and steel project, a setback in Morales' plans to lure in foreign investment and industrialize the country. Lack of legal security remains the principal cause of concern.


Correa's plight

With less economic struggles yet facing an increasingly polarized society, Rafael Correa's government has set out on an intense crusade against private media in Ecuador, a scenario resembling Chavez's first few years in office.

Branding himself as a sentinel of "truth" in the eyes of the media, Correa reached office in 2007 and has since then accused private media of mishandling information in "attempts to taint my government."

In addition, the state increasingly applies stringent controls over the Ecuadorian economy, distancing itself from foreign investors, without harming Correa's popularity as he has the support of 81% of Ecuadorians. This position grants him a blank check and enables him to apply and strengthen his personalistic style.

Translated by Félix Rojas Alva