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Uruguay’s Sour Deal with Ecuador Typifies Integration Hypocrisy

By: Hana Fischer - @hana_fischer - Oct 1, 2014, 3:20 pm
Latin-American governments established sweeping partnerships aimed at moving beyond the "materialism" of capitalism.
Latin-American governments established sweeping partnerships aimed at moving beyond the “materialism” of capitalism. (Presidencia Uruguay)

EspañolClassical liberalism, unlike other schools of thought, is not messianic. It does not pretend to create a “new world” comprised entirely of “new men.” Rather, it strives to objectively analyze human nature. It is interested in who people are, not how they should be in a utopian society. Therefore, its diagnoses are more accurate, and contribute to the well-being of the general population.

In line with this philosophy, great liberal thinkers like Ludwig von Mises have developed the theory of human action, known as praxeology. This discipline studies what governs human actions by extracting axioms, which by definition are immutable.

One of the principles of classical liberalism is the idea that individuals identify objectives and the appropriate means of achieving them. In fact, the same means can be used to achieve various ends, but only the individual himself can decide which objective serves him best, based on his own intrinsic values.

People are ultimately driven by self-interest. Although the motivation does not necessarily need to be material, it frequently is.

The majority of Latin-American governments, however, attempt to mask their true motives with lofty words. They present themselves as manifestations of a morality that rises above the “materialism” that pervades capitalist culture.

Over time, however, it eventually becomes clear that the people who make up these governments are no different than any other mere mortal.

An example of this recently came came to light in Uruguay with regard to the conduct of the National Administration of Fuel, Alcohol, and Portland Cement (ANCAP), the state-run oil monopoly.

The situation began in March 2010, when Ecuadorian President Rafael Correa came to Uruguay for the inauguration of José Mujica. During the occasion, an agreement between the two countries was announced whereby Petroecuador would provide crude oil to Uruguay in exchange for the use of Uruguay’s refining capacity — a strategic alliance among friendly governments.

It was within this context that Correa and Raúl Sendic — then minister of Industry, Energy, and Mining, and until recently the president of ANCAP during the Mujica administration — decided to make a symbolic gesture of the “new world” the two governments would be building.

In a joint press conference, Correa said the ANCAP-Petroecuador agreement is “part of the liberation of America to shake off dependence.” He said the agreement would allow for direct transactions between the countries, eliminating the role of intermediaries like Transfigura, a Dutch transnational accused of corruption in its dealings with state-run oil companies throughout Latin America and Africa.

Sendic, who is currently a vice presidential candidate for the ruling Broad Front party in October’s elections, said the agreement between the two state-owned companies had the “higher purpose” of “Latin-American integration.” He said it was a way to declare “independence” from the middlemen by cultivating “the friendship that exists” between the governments of the region.

However, we know now that something much more sinister lay behind Sendic’s “virtuous” words and deeds. The same year the ANCAP-Petroecuador agreement was signed, Sendic made another agreement with Transfigura to handle mediation between Petroecuador and ANCAP.

It’s worth noting that Transfigura had been suspended and was prohibited from operating in Ecuador at the time. In 2010 and 2011, dozens of shipments of oil (20.3 million barrels) were sent from Ecuador to Uruguay, but only two arrived in Montevideo. Transfigura sold the rest to the United States.

When opposition Ecuadorian congressmen discovered the fraud, they accused Correa of being complicit in the deal. Following the incident, Correa publicly declared: “We will not renew the contract with ANCAP, because the idea was for us to give them our crude to be refined … and the company began to sell our oil.” Four days later, Petroecuador announced the cancellation of the partnership, stating ANCAP “did not respect the spirit of the agreement.”

Throughout this entire process, the only ANCAP official to express his concern over the ANCAP-Tranfigura agreement was opposition figure Carlos Camy. He demanded the Court of Auditors conduct an audit of every transaction completed with Ecuador. To this day, however, this has not been completed.

Much of the information related to the entire situation stayed in Sendic’s hands, who asked for “discretion” with regard to a complaint filed with the ANCAP board of directors. The complaint was never investigated by any external agency.

In the end, who can we say benefited from all of this? Was it Latin-American integration and brotherhood? Uruguayan consumers?

The answer to this question is obvious, given the fact that Uruguay has the highest gas prices in the region. Further, under Sendic’s watch as president, ANCAP lost around US$500,000 a day in 2013, while borrowing millions from banks.

The only one to profit during Sendic’s tenure as president of ANCAP was Sendic, who has been the biggest surprise of this year’s primary elections. His unexpected success has earned him a spot on the presidential ticket as Broad Front candidate Tabaré Vázquez’s running mate.

This entire situation has proved that the same means can be used to achieve different ends, and that these goals are set based on the moral character of the person establishing them. In Sendic’s case, it is clear that this “higher purpose” was not exactly Latin-American integration and brotherhood.

Translated by Alex Clark-Youngblood.

Hana Fischer Hana Fischer

Hana Fischer was born in and resides in Uruguay. She serves as a writer, researcher, and international affairs columnist in different media outlets. A specialist in philosophy, politics, and economics, she has written several books and received honorable mentions. Follow her @hana_fischer.