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CFR Symposium: The International and the Domestic - Latin America and U.S. Policies and Politics, Session Three

Panelists: Michael A. Levi, David M. Rubenstein Senior Fellow for Energy and Environment, Council on Foreign Relations, and David J. Rothkopf, President and CEO, Garten Rothkopf
Moderator: Steven Mufson, Energy Correspondent, Washington Post
September 12, 2008
Council on Foreign Relations



This event was part of the symposium, The International and the Domestic - Latin America and U.S. Policies and Politics, which was made possible by the generous support of the Ford Foundation and the W.K. Kellogg Foundation.


Washington, D.C.

STEVEN MUFSON:  Thanks very much for coming.

My name is Steve Mufson.  I cover energy for The Washington Post, where I've been for about two decades now.

And joining me here today are David Rothkopf, who is well known to all of you; and Michael Levi as well. 

We're going to talk a bit about a wide range of energy issues having to do with Latin America and try to respond to some of your questions too.  A reminder to put your cell phones on vibrate before we get going.

Now, I'm just going to say a couple of words of introduction about some of the things that I wonder about when I think about energy in Latin America -- and I'm sure Michael and David have their own ideas and we'll either disregard those thoughts or maybe even address some of them.

So it seems to me there are two or three big issues on energy in Latin America.  One is the enormous influence that Venezuela has acquired with higher oil revenues.  It's giving probably eight times the amount of assistance to other countries in the Caribbean and Latin America as the United States is doing.  It doesn't seem to me that the Bush administration's had that much of a strategy for dealing with this.  It doesn't even -- you know, it's way down our radar screen in general.

But I think that one question in my mind is how do we deal with the influence that President Chavez has acquired?  Do we care about that?  Do we think he's wielding that in some way that that's an issue for us or not?

A second issue, I think, has to do with -- also about oil and the discovery of vast quantities of oil off the shore of Brazil.  And I think that raises questions for probably the only country in the region that's on a similar stature as Venezuela and it's, I think, a big question mark as to how the country deals with these reserves whether it becomes another petro state, like some of the others where oil's been as much a curse as a blessing; or whether, in fact, they structure Petrobras and deals and development and the use of revenues in a way that'll be beneficial for the country.

And then I think the third issue in my mind is more about climate change.  I know Michael's done a lot of work about this and has worked on the Council on Foreign Relations Task Force on Climate Change and talked, I think, a bit in that context of putting that issue back, as he put it, back where it belongs in the context of American foreign policy.

And I guess because of Brazil's forests and the whole issue of deforestation, if climate change is at the center of U.S. foreign policy, which I'm not sure that it will be -- whether or not it should be -- how do you deal with Brazil and the issue of deforestation?  Do you reward it for simply not engaging in bad behavior?  I think that's a major issue in deforestation.  Do you simply say, you know, have some sort of mechanism in the cap-in-trade system that will funnel dollars there in return for their saying, stop me before I do something destructive again?  Reward me before I do something destructive again -- maybe that would be the right way of thinking of it.

So these are the things -- and then, of course, there are biofuels, which I actually think is a smaller issue, since the whole size of the Brazilian biofuels industry is large by the standards of Brazil's economy, but not so much by the standard of our economy.  I know a lot of people are focused on that, but to me that's a more minor question.

So those are my thoughts and perhaps you have others.  But let's open it up. 

Do you want to go first, David?


Let me deal with your thoughts in going through some that I've got here.

I noticed we've only got 60 (percent) or 70 percent of the people in the room talking about immigration, which is a pity, because we know how that's going to turn out.  You know, the people who are here are going to get to stay, because we can't force them to go home; and we're going to try to keep out others, but we're not going to be very successful and we're going to have this discussion again in 10 years.  Okay, so now we can get finished with --

MUFSON:  That'll be with President Palin.

ROTHKOPF:  President Palin.

MUFSON:  Two terms!

ROTHKOPF:  There are really two scenarios, as far as the presidency goes -- thank you for bringing that up.  One is that John McCain is elected president and at some point -- you know, actuarial tables being what he is, he dies -- and Sarah Palin succeeds him. 

The other is that Barack Obama's elected president, collaborates with Harry Reid and Nancy Pelosi for a couple of years and Sarah Palin will end up being president again.  (Laughter.)

Now that we've taken care of that, let's move back to energy.

You know, clearly, energy is at the center of this election and of our national concerns, for a lot of good reasons.  And the intersection of energy and climate even more so.  And you know, you then say, well, you know, how important is that in the context of the Americas?  And you know, I think it's key to underscore that as of right now, this year, 51 (percent), almost 52 percent of our oil imports come from the America's.  So the majority of the oil that we import into the United States comes from this hemisphere.

Furthermore, if you're concerned about climate and carbon emissions, about 30 percent of carbon emissions -- excluding those associated with deforestation -- come from the Americas.  And about, well, certainly a majority of those associated with the deforestation comes from the Americas.  So maybe 40 (percent) or 50 percent of carbon emissions are associated with the Americas.  So it's kind of hard to ignore this.

Clearly, in terms of regional energy policy, put your finger on, you know, the big story in the context of Venezuela.  It's got, you know, the most oil in Latin America.  It is, you know, what is it -- sixth or seventh among the countries in the world in terms of its oil reserves.  And it's using that to produce what some in the United States consider mischief and 17 countries in the Caribbean consider good fortune and a bunch of other countries elsewhere in the region consider good fortune. 

And that's going to continue, because even as the price of oil declines -- as it's likely to do -- it's not going to go down below $70 or $80 a barrel, and that's going to give them plenty of money for the foreseeable future to play Chavez's foreign policy.

I find it kind of amazing, with the discussions recently -- say last night about the Russians and Georgia -- that we have not had so many discussions about Russian bombers landing in Caracas; Russian naval exercises with the Venezuelans taking place in the Caribbean or about Vladimir Putin not too long ago saying he wanted to restore the old ties to Cuba.  He's clearly sort of poking, you know, in the lion's cage to see what happens.  But you know, he in collaboration with the Venezuelans -- and what I mean by that is with Venezuelan oil money -- is a formidable force.

The Brazil story is another one of the critical stories in this mix.  And I think in terms of U.S.-Latin policy, the single biggest change that'll take place over the next four years will be the ascension of Brazil to a central role among the community of nations either in an G-8, a G-9, a G-10 -- you know, pick the number that comes after the G -- But China, India, Brazil are going to have to be part of that group. 

And once Brazil moves to that level, the United States is no longer going to be able to talk about Brazil or policy in the region in the context of cutting Brazil out of things in the context of minimizing Brazilian influence.  And Brazil is really going to be one of the leading nations of the world.  And that changes the strategic relationship and the oil makes a big deal there. 

And I agree with you:  biofuels does not.  Biofuels is important, but as long as Brazil has oil to export, it'll export oil.  It'll use biofuels primarily domestically.  And you know, it's important.  I mean, 90 percent of the cars in Brazil now -- the new cars sold -- are capable of using biofuels; 25 percent of the cars run on biofuels.  It's an interesting model, but it's not one for every country in the hemisphere, as most are learning.

One of the things associated with what's happened in Venezuela, of course, is this move towards nationalization of energy assets, which is going to continue to be a sore subject in Venezuela and in Bolivia.  And the twist -- again that you touched upon that is of some concern -- is that if the Brazilians do as President Lula is suggesting and create another national oil company to redistribute or to distribute the wealth associated with the new oil discoveries to the poor people of Brazil, this is the first step towards the mischief that is typically associated with having oil.  And you know, it's quite possible that the next president of Brazil will have the populous bent of Lula, but perhaps not the discipline.  And I can think of somebody who might be president of Brazil who might not be as disciplined and who might take this influx of cash and start to use it to cover up the kind of mistakes and governance that oil is typically used to cover up.

Having said that, given the centrality of climate -- and I think climate needs to be part of the foreign policy of whomever the next president is, because it poses a threat -- there's a lot of complacency about in Latin America.  We've done lots of meetings.  You go to the meetings and they say, well, that's somebody else's problem.  That's the developed world's problem; that's China's problem.  It's not our problem.

Well, quite apart from, you know, the general concern about deforestation, you know, there are estimates, for example, that in the next 10 to 15 years, as a consequence of climate change, Peruvian glaciers -- which are the largest tropical glaciers in the world -- will start to melt.  And when they dry up, you're not going to have the water that runs hydropower and hydropower is what runs a lot of South America.  And so the potential threats to the near-term economic growth of the region are great.  But the policy impulse throughout the region is to ignore it.

And in one of the events that we did not too long ago where we had over 100 government, scientific, academic and financial experts talking about the future of the region in terms of climate and energy policy, 90 percent of them said the biggest problem faced by Latin America is that Latin American policymakers don't understand the issues, are not up to speed on energy technologies, are not up to speed on climate and are therefore incapable of writing the laws that need to be written and enforcing the laws that need to be enforced in order to deal with these problems.

Four other very quick points:  One, Bolivia's political crisis is already causing day-to-day now problems in Brazil and in Argentina and has caused problems for Chile as well.  That's likely to continue for some months and that's going to create different consequences in each of those countries as they attend to their own needs.

You know, Chile is a country that imports 70 percent of its energy so it is in a particularly vulnerable place in that regard.  But you know, this will be a source of tension beyond the theatrics of Evo Morales sending home our ambassador and then Chavez sending home our ambassador, as if it mattered.  I mean, you know, we're in the midst of the most lame of lame duck presidencies.  You know, this is just shell game waiting for somebody else to come into office.

One of the big problems for Latin America that doesn't get covered is in dealing with next generation energy issues, in dealing with alternative energy in particular.  Latin America has focused on feedstocks and not on technology and scientific training.  And so it leaves -- you know, Brazil has a company that produces a lot of the world's blades for windmills, but there's no capacity to produce a wind turbine in Latin America.  They don't train -- Brazil trains half as many engineers as it should as a percentage of sort of GDP measure compared to other countries in the world.

And the solutions that are going to drive next generation energy -- green energy and the growth associated with it -- are going to come from training engineers, investing in science, investing in research and development and not being a resource provider, as Latin America has historically been.  That's a fundamental choice that the region has to make and right now, again, it's lagging in the way that it has.

Green energy typically is used to refer to biofuels, wind, solar and there are certain opportunities there that have not been tapped.  I think the biggest set of opportunities in Latin America are of municipal solid waste, biomass where there's a lot of municipal solid waste.  There's a problem with disposing of it.  There's the technology to turn that into energy and it's not being taken advantage of right now.  And there's some very interesting work being done in this area.

But if you hit every target that you've got in terms of alternative energy -- and this gets to your point about biofuels -- on biofuels, on solar, on wind, on geothermal and on wave -- you know, you name it -- in 10 or 15 years, that'll be 12, 15 percent of all the energy output that there is.  This means if you're going to green energy, if you want to focus on the growth areas in green energy, it's in traditional energy sources.  And you know, that's going to be coal.  And the Caribbean particularly, which depends heavily on oil, it's going to be oil.  And how do you make these things cleaner and how do you clean up what you've got?

Final point:  The hopefully politically motivated, not terribly seriously thought through, idea of renegotiating NAFTA has serious energy implications.  If the United States proceeds with this ill-considered approach under the administration that's advocated that or the potential administration that's advocated, you will see immediately a backlash from the Canadians and the Mexicans that will start with energy, you know?  And Canada's the number two oil reserves of the world, you know, a critical provider of oil to the United States. 

Mexico, despite its complete and utter and unending mismanagement of Pemex, is an important energy provider to the United States.  And ultimately, by the way, the theology of Pemex will collapse under the need to privatize it and sooner or later, you'll have a mostly private Mexican energy system, because you just simply can't lose 200,000 barrels a day year in and year out as they have been doing.

So you know, I think it's important to realize that whole host of other things that don't look like energy on one side have an energy consequence, whether it's renegotiating NAFTA or the recent boon list in green trade barriers.  You know, there's a trade debate between here and Europe about the importation of biofuels. 

The Obama administration -- or the Obama campaign has taken -- (laughter) -- I don't want to get ahead of myself.  But the Obama campaign has taken the position that it does not want to repeal the tariffs that exist on the importation of biofuels from Brazil and so Brazil is thinking of that --

MUFSON:  Not until he finishes winning Iowa.

ROTHKOPF:  Well, right.  And you can tell everything you need to know about the future of U.S. foreign policy towards Latin America by which swing states go for which candidate, because the states that are key to winning will dictate what U.S. foreign policy is.  And Florida has done this for a number of years, but if Michigan is key to winning, you know, getting ready for bailout of BM and all sorts of other wonderful things that allow that president to stay in office.

Anyway, I'll stop there.

MUFSON:  Good.  Thanks, David.

Go ahead, Mike.

MICHAEL A. LEVI:  I won't try to be comprehensive, but let me address a couple of the issues you brought up and then add one more to the list.

You brought of Venezuela in an interesting way that I think (provide for ?) a need for us to step back.  We talk a lot about energy security during this presidential campaign.  We're speaking about it a lot, but it's not clear that anyone agrees or even knows what it is we mean when we talk about energy security.  And it's important to figure out what it is we're actually after, because it influences the sort of policies we're going to be pursuing.

Energy security traditionally meant something about being safe from cutoffs on energy sources.  It seems during the campaign that it mostly means concerns about high-energy prices.  But you flagged a third piece, which I think is what it really is fundamentally about -- even those all these other pieces do play a role -- which is the flow of large amounts of money to regimes that buy them a lot of freedom in their actions at home and abroad in ways that are inimical to U.S. interests and that we would really rather not be having to deal with.

What that means is that dealing with those countries, and dealing with those situations, is not something we can strictly do by trying to become energy independent in the sense of producing more domestic energy or finding alternative suppliers for ourselves.  It becomes a genuine foreign policy issue -- if we want to deal with high prices, or at least stop them from getting too much higher; stop as much money from flowing to these sorts of countries; it needs to be something where we work with other major consuming countries.  And that means not only developed countries, but the rapidly emerging economies like China, like India. 

So it becomes a genuine foreign policy issue in a much broader sense if we want to deal with the situation, for example, in Venezuela the way you've describe it.  So I think that's one important thing to keep in mind.

On climate change, let me say something about forests, but then cite a couple of other relationships with Latin America that are important.  Dealing with deforestation is going to be an important part of dealing with climate change.  Roughly 20 percent of global carbon dioxide emissions come from deforestation.  About a third of those come from Indonesia; about a sixth of them come from Brazil.  So it's the number two source of emissions from deforestation.  And other tropical countries in Latin America also present challenges for deforestation.

Now, how do we deal with it?  That's a complicated question.  I won't go into all the different details.

The traditional way -- or at least these days -that people have been thinking about it is using what we call the offset markets, you talk about carbon markets to pay for forest conservation. That may be one way to do things, but it becomes very tricky, there are a lot of fundamental issues, especially in countries like Brazil, that get in the way of those sorts of solutions. 

When you don't have land rights for example, property rights, that are -- that -- either -- when they either don't exist or they aren't enforced properly, it's tricky to figure out what it means to go and pay people to conserve. It's also tricky to figure out how you make sure you don't pay someone for five years to keep their forest standing and then they're cut down in the sixth year, you've got nothing out of that. So, just a simple sort of pay-per-acre may be very difficult, we may be looking at much for traditional assistance and cooperation, looking at fundamental rule of law issues, property rights issues, also technology when it comes to sustainable logging and things like this.

We'll also have to look at it beyond Brazil. There are what we call leakage problems. Some activities may not shift, but to the extent that deforestation is driven by logging for timber, and not all of it is, but some of it is, as long as the demand for timber still exists, it -- it will shift somewhere else.

So isolating one country and trying to sort it out that way will have some benefits but, limited -- limited ones. I'd also say -- I wouldn't characterize it as rewards for stopping bad behavior because there are genuine social -- important social -- and economic drivers pushing things in Brazil, so it's more a reward for shifting to a kind of good behavior that benefits not only the local people, but also the world more broadly.

I think there are two other links into how we're going to deal with climate change, where Latin America becomes quite important. We tend to think about the switch from traditional fossil fuels to green energy, and David you mentioned that a lot of this is actually going to be about "greening" fossil fuels.  If you look at projections of what will happen if you constrain the U.S. economy, for example, in terms of carbon emissions one of the projections you tend to get is a substantial increase in natural gas use. That's a place where Latin America could play a key role.

We've been talking about oil, but there are a lot of tricky issues when it comes to natural gas, and that could become a significant -- a significant part of things. If we could sort things out with Latin America when it comes to natural gas it could make us feel more comfortable in taking certain actions to reduce emissions.

The last part is that there are all sorts of international mechanisms that exist, what we call the clean development mechanism, we're looking also at clean technology funds and other ways of subsidizing shifts to clean technology in the developing world. You mentioned that there are problems in these countries getting their own acts together, writing the laws, enforcing the laws.  I think there's also a lack of capacity in figuring out how to attract this kind of new investment and new support for building up new kinds of energy technology.  So developing that capacity and depending on how international regimes and approaches evolve, we'll have a, I think, a significant effect on how technology flows go to Latin America.

I'll flag a third issue that we didn't bring up -- when we think about Latin American energy we pretty much entirely think about how we get energy from Latin America.  Well, we need to also think about how Latin America powers its' own growth.  And I don't mean clean versus not-clean, I simply mean having enough energy to power its growth. The first two sessions today were on trade and on immigration.  A wealthier Latin America is better from the United States from a trade perspective.  A wealthier Latin America takes off pressures from the United States on the immigration front.  And that kind of growth, that kind of wealth depends a lot on how Latin America and various countries in Latin America sort out their energy problems.  So it's in the U.S. interests not only to sort out  how we get energy resources from Latin America but how Latin America handles its' own energy situation because that will have implications for us in a wide variety of areas.

ROTHKOPF:  Can I add a little --

LEVI:  Yeah. 

ROTHKOPF:  -- point to that?  You know, one of the -- there are several implications to Michael's last point, and one of them is an area where there's some considerable opportunity and we've been doing some work with the IDB on this that, you know, looks to be quite promising.

One of the advantages of new energy technologies -- wind and solar and microhydro and some others -- is that they are not necessarily part of big, centralized grid systems, and one finds in the world that if you have a big capital-intensive centralized grid system, it's expected to be in place for 15 or 20 years, it's very difficult to change that technology and it's obviously centralized where the economics put it. And so if you look in another way, you know, off into the future where you might end up with decentralized grid systems and smarter grid systems, then you can open the door to thinking about what might be sort of an analogy to micro financing, it's called micro energy, where you can take wind power, you can take solar power, you can distribute it out to poor communities, or in favelas or in other parts, create an answer to an immediate energy to an immediate energy solution at a fairly low cost, and then later integrate that together into a part of a grid. So -- and that's where you're likely to see the leap frog effect that we once saw in IT.  So, you know, in IT, you know, when Cambodia was devastated by war, the first thing that happened afterwards was we put up cell towers around the borders and people started to use cell phones and they just went to the next generation technology. And so it's quite possible that you could see in the neediest -- most developed -- most in need of development regions of Latin America work on micro energy and solar and wind and micro hydro that could leap frog some of the dirtier, bigger technologies.

LEVI:  It's a tricky thing to -- to sort out because the kind of financing required even for those relatively small projects, it's still big. I mean, energy projects are expensive, so you won't have microfinance for microenergy. You'll have pretty big finance for microenergy and then there's a question of whether you can sort that out in all sorts of different places.  I think it's a to-be-determined.

ROTHKOPF:  Well, that's what we're working with the IDB on.

MUFSON:  And that's what makes it different from cell phones.

One other thing I wanted to add, just to follow up on what Mike was saying about finance -- about wealthier Latin America being better for the United States -- it's probably the first place where we'll see this demonstrated -- or where this'll be -- the biggest problem will be in Mexico which, at the current rate, you know, in five to 10 years might not be exporting any oil at all, and the implications of that are, just, you know, hard to get your arms around both, as you were saying, for -- not only for oil but for things like immigration.

ROTHKOPF:  Well, also Brazil is heavily dependent on hydro, and if you get into these drought cycles that are associated with climate change, you will have periods every 10 or 15 years in Brazil where you literally don't have the ability to produce the power that the country needs to grow. And so that's another example. 

LEVI:  We've had a very recent event -- (inaudible) -- home that's cut off and gas from Bolivia to Brazil has -- I mean, the effect of it has, in substantial part been ameliorated by the fact that there has been a lot of water, this year, and hydro has been -- is able to produce at a higher level than it might otherwise have --

MUFSON:  If you were in a situation -- 

LEVI:  Exactly, if you were in a situation where hydro was reduced, you wouldn't have that kind of buffer.

ROTHKOPF:  And 2007 was a terrible year in that regard.  So you know, you could've missed it by 12 months and had a real problem.

MUFSON:  Well, let's open up for some questions now. I want to remind you to wait for the microphone, speak into it.  State your name and affiliation and to stand up.

Yes, Barbara, why don't you start off?

QUESTIONER:  Thanks, Steve.  Barbara Slavin of the Washington Times. I wanted to ask Mr. Rothkopf how concerned should we be about Russian military cooperation with Venezuela and other countries. Is this simply a tit-for-tat to pay us back for Georgia, and, you know, extending NATO and that sort of thing.  Is it really serious? 

And on the question of Venezuelan aid, is it getting -- what is it getting for the support that it's providing to these countries?  Is it getting anything real and tangible that we should be concerned about? How effective is the aid?  Thank you.

MR.ROTHKOPF:  Well, my sense is that, you know, I'm not worried about an imminent new Cold War.  What concerns me is that Vladimir Putin is systematically testing the United States and our willingness to stand up to a different role for Russia in the future than it's had over the past 10 to 15 years.  The debate over Georgia is a classic example of this.  How much involvement it can have in this hemisphere is another example of this.  Russian arms sales to Venezuela, which have been substantial, another example of this. 

And, you know, there is a kind of growing sort of -- you know, what I call a sort of, you know international anti-globalist alliance among, you know, countries like Russia and Venezuela, the Syrians, the Iranians time to time, to form a counterbalance to the United States.  And so, you know, saying we need to worry about Russia is not saying we need to have another Cold War.  Saying we need to worry about Russia is saying that they are being mischievous, that they want to have, you know, like, you know, they need to have limits set, and we need to recognize that we're moving into a different kind of balance of power game than we've had in the past, and they're going to be in the middle of it.

In terms of what is Venezuela getting, well, you know, besides Cuban doctors in exchange for oil and, you know -- you know, they are getting influence in Central America, they're getting influence in Cuba, they're getting influence in Bolivia, and they are forming here a kind of an alliance which is resistant to U.S. influence.  I'm less worried about that because they tend to be forming alliances with weaker countries and countries that will not at any time in the near future play an important role in terms of our, you know, national security priorities, at least at a high level.  That doesn't mean that some assistant secretary of State or some senior director at the NSC isn't going to spend hours and hours in the next administration running around pulling their hair out over it.  But it's not going to rise to the level of president of the United States very often.

MUFSON:  Yes, right behind Barbara.

QUESTIONER:  Hi, Johanna Mindleson Foreman, Center for Strategic and International Studies.  I wanted to drill a little deeper on what you mentioned David on energy strategy as a poverty reduction strategy because I think there's a lot that could be said and a lot of policies that could be developed on distributive energy that I think are very important in the absence of many legal frameworks.  And I think -- I'd like to hear a little bit more about your view on that because I don't think it takes as much money as people suspect; in fact, there's a lot being done in the absence of legal frameworks.

But the other point that the panel didn't seem to mention, and I wondered if you could comment on it, as a climate change issue are two factors.  One, we've just seen the entire Caribbean devastated by a series of hurricanes that was not unforeseen from all the predictions of climate change reporting that has gone on in the last few years and will continue if the predictions of -- a recent panel said we're going to see 60 percent of the population of the Caribbean lives on the coast -- what are we doing as far as environmental migrants which are going to be a substantial problem for the United States given the proximity of the Caribbean?  So I'd like comments on those two different issues.

ROTHKOPF:  Do you want to start with --

LEVI:  I can start with the last one first and --


LEVI:  You know, the standard partial response to that is you can never attribute any particular hurricane to the effects of climate change.  And even beyond that, I think there's an enormous amount of debate about what exactly climate change will do to hurricanes.  It's complicated, there's a question of will it affect frequency, will it affect intensity, even if it doesn't have much of an effect on frequency or intensity, just the fact that everything is starting from a foot higher make a big difference on what the impact of the exact same storm is.  So there's a lot to be understood, and it's probably worth thinking about in terms of risk reduction right now, not in terms of simply predicting what the future will be and then getting everything exactly right for it.

When we talk about environmental migrants it's become a very popular thing to talk about environmental refugees, climate refugees, things like that.  I suspect there are going to be an enormous number of different drivers that will lead to migration, will lead to tension in these sorts of things, and separating out climate as this one driver that we focus on is not necessarily productive.  I think we're going to have a lot of different flows of people that we're going to have to think about managing.  And it's -- you don't necessarily manage an environmental refugee any differently from how you manage a political refugee.  There are differences in the details, but at the big level, the sorts of things we need to sort out are probably uniform throughout.  So I wouldn't want to piece off climate that.

We're going to have to work with poorer countries to help them become more resilient to these sorts of impacts.  That affects things like migrants, it also affects -- comes right back into the traditional energy area, of course, because these sorts of things can effect energy production.  We're going to have to look at those things, but again being careful that we don't start shifting our attention and our resources to these things that may be the most exciting and may grab the headlines and have our development assistance shift away too much from other priorities that a lot of countries around the world including these countries have that have nothing to do with big storms and that sort of problem.

You know I think --

ROTHKOPF:  As all of you are well familiar, the discussions that take place in think tanks about these issues are often far removed from the realities that unfold.  And while, you know, a lot of these concerns are legitimate concerns that one might have if one had an endless amount of money and endless amount of time, the next president of the United States is going to arrive in office on January 21st, and somebody's going to give him a briefing and say Mr. President, you have two wars, a national recession or something like it, a global recession or something like it, a broken energy system, a broken education system, no investment in infrastructure in the past 50 years, a $9 trillion deficit that has made you dependent on some of your rival --

LEVI:  Debt.

ROTHKOPF:  -- debt, excuse me, that has made you dependent on some of your, you know, key rivals elsewhere in the world.  I haven't been able to go through everything that you know you need to deal with today, Mr. President, where do you want to start?  (Laughter.)   And you know, you know, seawalls in Costa Rica are not going to figure prominently in that discussion.  (Laughter.)  And I -- you know, so while these are important issues, I think that the place we're likely to make the most significant strides is in recognizing that just as you deal with political refugees by trying to avoid political crises, you deal with climate refugees by trying to avoid climate crises.  And we will undoubtedly not do that fast enough for a lot of those countries.

I remember speaking at an event with a bunch of ministers from around the hemisphere and we were talking about climate change and a guy from the Bahamas stood up and said look, you know, you talk about climate change one way, if there's a two-or three-foot change in sea level, we're out of business, you know we don't exist anymore.  And so, you know, those countries are going to have to get together.  And just as it's true with many, many things in Latin America, you know, we can talk about what we want, and what ideal U.S./Latin policy would be and all of that, but we're not going to focus much on Latin America in the next eight years. 

So if the countries in the region have a problem, they're going to have to get their act together and start solving that problem on their own, because the United States is not going to have the time or the wherewithal to do it.

MUFSON:  Julia?

QUESTIONER:  Just a follow-up to -- but just in the spirit of projects that all of us have worked on together, including you, David, and Mike that do sort of look down the road, yes, the United States has a list of major significant challenges domestically and globally, and Latin Americans are going to have to solve these problems without the United States taking the lead.  So take those assumptions, givens going in, what are countries such as Brazil, such as Mexico, such as Chile, that -- sort of the larger leading countries of the hemisphere going to be able to do, for example, a Caribbean initiative?  It doesn't necessarily involve the United States taking the lead, but it certainly might involve some of these large emitters, producers, consumers and subregional leaders.

I guess I'd just like you all to riff on that a bit because what, if anything, this day has sort of demonstrated is precisely because of our own domestic constraints, economic, political, financial, we're just -- you know, we're just -- we ain't what we used to be, and we're seeing that today in the region as well.

So what's the step going to forward in terms of the region acting?  Thank you.

LEVI:  Well let me take a quick step back and say one place where the United States probably can play a significant role, and that's with money.  With money.  Now, it's not going to be -- necessarily be large amounts of money that Congress appropriates, but there -- you know there's some constraints --

MUFSON:  Just wondering about that. (Laughter.)

ROTHKOPF:  So what is it going to be --

LEVI:  There's a -- there's a --

ROTHKOPF:  -- donations?

LEVI:  -- well we're, no we're -- I mean,

(Cross talk.)

LEVI:  If you look at the -- if you look at international climate discussions, there are a lot of discussions of ways that different mechanisms that are being used to transfer money to deal -- I mean, it already happens to some extent.  But different ways that monies are being transferred to deal with reducing admissions would --there'd be a levy on these sorts of things, and that could be directed toward adaptation.

Can you get enough money out of that?  Probably not.  These sorts of things are a lot more expensive than you think they are.  I give one -- one example that's not in Latin America.  I was up on Alaska a few weeks ago and you've got am Inuit village that has a little -- yes, part of the conspiracy -- (laughter) --

ROTHKOPF:  The great Inuit conspiracy -- (inaudible).

LEVI:  -- but you've got a village where you have the Army Corps of engineers reinforcing the shore.  It cost them $4 million for every 100 feet of shoreline that they reinforced -- you know, it's over $3,000 for every inch.  That's expensive stuff to do.  So I -- I do --that's a temporary bid -- the first thing I said, yes, we can come in with some money and we can also help in building institutions that do these kinds of things.  I mean, that's part of how you reduce the need to be dealing with every single issue every day and have someone at a high level in the U.S. government doing it.  You want to get something in motion and then work together.

But there's a lot of effort looking at international approaches to adaptation.  It's not like we're starting from the bottom up.  World Bank is doing things, for example, and the United States is involved.  So I don't think we need to invent something entirely new, but we need to work with these sorts of institutions.  And we need, to the extent possible, mainstream these things into other development assistance that we're already doing so that it isn't another thing on the list right at the top, it's another thing that gets included lower down in activities that are already happening.

MUFSON:  I just want to say one thing about those multi -- those other institutions we're talking about, like the World Bank or the Global Environment Fund, is that their priorities might not be Latin America.

LEVI:  Well there are interesting discussions right now again in the international negotiations, and I'm not necessarily optimistic on anything when it comes to these big international negotiations, but there's a theme in a lot of these areas, whether it's the global environmental fund or the clean development mechanism, how to distribute the money more evenly internationally.  So that's certainly on the agenda looking at whether money is too focused in particular areas with particular mechanisms.

ROTHKOPF:  You know, one thing that we might say just as a perspective to look at this is that, historically, these energy and related issues and secondary climate issues are looked at against sort of three metrics.  There's energy security, there's economic security and there's environmental security.  And, historically, environmental security has been a laggard, it's just not figured prominently in this.

Now, in some parts of the developed world, something is happening where we're starting to say, look, if you're going to go and undertake an initiative, it's got to advance the metrics on all three scales.  That's not happening so much in the developing world.  There are things that can be done that don't cost a lot of money in terms of establishing common standards, you know, sharing best practices, providing technical assistance and so forth that can help change that and change those metrics.

But I just think we have to set our expectations at a reasonable level and know that the World Bank and the IDB and CAF and, you know, the Bank of the South when it emerges and so forth, you know, will all provide some money.  And we're going to have to also get -- I mean, one of the biggest things the United States can do to get used to this is to get comfortable with the fact that other people's money and, therefore, other people's influence is actually going to be setting these policies and these guidelines.  And then, you know, China's going to go and invest a bunch of money because, you know, parts of Latin America may become the bread basket of China.  And, you know, if we start pulling our hair out because that happens, then we're going to have a different problem.

And so we're going to have to live with this new reality that you referred to in your comments.

MUFSON:  Next question here and then there.

QUESTIONER:  Hi, Shannon O'Neil from the Council on Foreign Relations.  We all know that Latin America's not going to be in that first briefing, but energy and U.S. policy towards energy may be in that -- that first day of briefings.  And as you stated, you know, Latin America provides the majority of energy to the United States, it's also the majority of --

ROTHKOPF:  The Americas.

QUESTIONER:  -- the Americas, right.  So the Americas provides the majority of energy, it's also the issue with carbon comes from the Americas as well.  So how should U.S. policy be designed to the Americas, and particularly what should it be designed in the Americas?  So if you think about trade, we have different models.  You have a bilateral model, NFTA's, we have a regional model, and then we also have world multilateral models.  And if you've thought about that in terms of energy, you know, are there issues that should be done on a bilateral basis with countries, be it Latin American countries or other countries?  Are there ones that should be done on a regional level so where would the Americas fit in?  Or should many of these issues, climate or energy, really be done a world stage, world markets, and not be focusing just on regions or countries?  What's your thoughts?

ROTHKOPF:  Well, I mean, first of all, you know, what would I like to see and what's likely are two different things.  And, you know, I have to qualify this by the fact that I'm one of the last five free trade Democrats in Washington.  So, you know, I'm in a minority of a minority -- I see my wife is here.  She's one -- (laughter) -- we're 40 percent of them right here.  But I -- and maybe I'm exaggerating a little bit, so, you know, you've got to take all this with a grain of salt. 

Having said that, clearly there are many, you know, gigantic global governance mechanism voids on issues of climate, and they're going to have to be addressed because you need to deal with these things on a multilateral basis effectively.  We are not going to get an agreement December of next year in Copenhagen the way everybody predicts because the president's not going to even have his team in place until five months before that, so that's going to get punted.  And then when the debate happens about energy in the United States government, you know, starting, you know, January 21st, they're going to first worry about the price of gasoline and then they're going to worry about energy security, which is, you know, our supplies.  And this climate stuff -- and people talk about it, even if it's a Democratic administration -- but it's going to be pushed to the end of the line, no matter how important it is, you know.

That doesn't mean there aren't going to be a lot of conferences and you're not going to hear a lot of Al Gore.  There'll be conferences and there will be czars appointed and committees and all that kind of stuff, but in terms of --

LEVI:  What about czarinas?

ROTHKOPF:  Czarinas -- very, very possibly czarinas.  (Laughter.)  But you won't get, you know, progress on those areas.

So what can you do in this hemisphere realistically?  You can recognize that we are not at a point where the Democratic-controlled House and Senate are very open to free trade agreements.  And so you're going to try to find other ways to produce integration in this hemisphere, such as energy cooperation and, you know, standards harmonization.  And one of the things is if you're moving to a whole new energy paradigm, if you establish the standards beforehand so you can share energy and so forth, then you don't have to spend 10 years retrofitting, which is normally what we do and have long negotiations about that.  So we could be proactive in some ways that could be quite constructive.


QUESTIONER:  My name is Patricia Vasquez and I'm with Energy Intelligence.  And for much of this talk that we have about Venezuela's potential influence in the region and what -- and the dangers that that may mean for the United States, the fact of the matter is that Venezuela keeps exporting 1.5 million barrels a day to the -- of oil to the United States and that has not changed.  It seems that so much of the political rhetoric, the commercial relationships stays there.  However, we're seeing other areas of political conflict emerging in Latin America that are related to energy in Bolivia, and like we said, they're now fighting in the streets because of foreign natural gas revenues.  Peru seems to be the next -- the next country coming; they gave 104 licenses to explore in areas that are in the Amazon that's causing a lot of social problems because of all these communities that live there.  Ecuador is going to open up the ITT, which is a biodiversity area in January, and that is going to be another focus.

Do you think that the United States should probably focus on these new areas of destabilization in the region more than probably what we've been talking about this geopolitical issue with Venezuela --we've been talking about this for 10 years now -- but, again, the commercial relationship goes on?

LEVI:  Let me comment quickly about Venezuela and maybe even the others.  I think it goes back to something from early on.  If our judgment of whether a country is a problem from an energy security perspective has to do mostly with whether it's going to cut off supplies or whether we have continuing commercial relationships, I think we're going to get our policy wrong.  So if the starting point is asking are they going to cut things off, have they cut things off, no they haven't, let's move on, I think we're making a mistake.  The problem is the amount of money that is flowing to them.  Frankly, the problem is that the money is going to Venezuela, perhaps more than that they're going to turn things off and not be getting any money.  So I just wouldn't use that kind of logic to exclude Venezuela as a significant problem from an energy security perspective.

MUFSON:  But, if I understood you correctly, I mean, if the -- if the problem is just the price, then the issue is more about domestic energy policy than about international policy.

LEVI:  The issue isn't just the price, the issue is the amount of money flowing to Venezuela and what it can do with that --

MUFSON:  Which is, which is obviously closer to price but you're not going to significantly shift the price just through U.S. domestic energy policy.

ROTHKOPF:  Look if the United States is going to get out of the business of buying oil from people we don't like, we're going to be off of oil pretty quickly.  (Laughter.)  So we're going to keep buying oil from people we don't like because that's who's got the oil. 

You know, as far as these other issues go, you know, one of the strange attributes of the United States government is it's one of the few places where every time anything happens in the world, somebody walks into an office and says what should we do about this?  In most other countries, the response is should we do something about this.  There are loads of issues that the United States can't do anything about, and, therefore, probably shouldn't get into halfway because we're just going to screw it up.  And it's not that, you know, again, we shouldn't deploy the deputy assistant secretary of State for minor energy crises in Latin America to go and deal with this stuff, we will.  But we're not going to play a leading role in resolving these crises.

MUFSON:  Okay.  Thank you very much.  I think that might do it for today.  I've been asked to ask you to please stay seated, that lunch will be served at each table during the keynote session.  And once again, I'd like to thank you for coming and for participating.  And thanks again.









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