IPS-English BRAZIL-MEXICO: Lula's 'Ethano Date: Mon, 06 Aug 2007 17:40:52 -0700 ROMAIPS LA DV IF IP NR BRAZIL-MEXICO: Lula's ‘Ethanol Diplomacy' Yields Harvest Emilio Godoy MEXICO CITY, Aug 6 (IPS) - Brazilian President Luiz Inácio Lula da Silva has incorporated Mexico into his regional strategy to promote ethanol production. On a visit to Mexico lasting just over a day, the leftwing Lula and conservative Mexican President Felipe Calderón signed cooperation agreements for producing biofuels, especially ethanol from sugarcane, and for oil exploration. At the 7th Plenary Meeting of the Mexico-Brazil Business Committee, Lula said that ”Brazil is also ready to cooperate with Mexico on the development of biofuels, whether of ethanol derived from sugarcane, or biodiesel that can be extracted from a great variety of oil-bearing seeds.” Calderón welcomed Lula's offer, and acknowledged his country's opportunity to ”learn and benefit from the market and technology for biofuels, clean energy and energy technology, as well as in agribusiness, infrastructure and other areas where together we will be much more competitive.” Brazil is far ahead of Mexico in ethanol production from sugarcane. Mexico produces 56 million litres a year of ethanol, and imports a further 164 million litres, which are used as a fuel additive. And only in two years' time will this country have its first two ethanol refineries. Brazil, meanwhile, produced over 17 billion litres of ethanol in 2006, and is expected to produce 36 billion litres in 2012, thanks to the construction of 400 distilleries. By 2025, it could be producing 205 billion litres of ethanol a year. ”We want Mexico's support to establish a world market for clean, cheap, renewable fuels; fuels which can create jobs and income, especially in rural areas and among the poor, without putting our countries' food security at risk,” said the Brazilian leader. The Brazilians also have their eye on a strategic alliance between the state-owned Petrobras and Petróleos Mexicanos (PEMEX), which is facing the threat of a fall in oil production. PEMEX's proven reserves stand at 15 billion barrels, enough for about nine years of supplies at the current rate of consumption. Petrobras, Brazil's largest company and one of the eight biggest oil companies in the world, and PEMEX, the 10th largest oil company in the world, have signed a strategic agreement for deepwater oil exploration, under which Brazil will share technology that Mexico lacks. ”There is plenty of scope for cooperation in the energy field. Our state companies Petrobras and PEMEX play leading roles on the international stage; they have great capacity and technical knowledge, and they can carry out more joint activities,” Lula said. But the presidents' and business communities' plans have already come up against opposition. The leader of the Mexican left, Andrés Manuel López Obrador of the Democratic Revolution Party (PRD), said on Sunday that ”we don't want the leftwing government of Brazil and Petrobras to spearhead the privatisation of PEMEX.” ”I have a great deal of respect for (Lula), but the movement I represent, a real and true opposition movement, does not agree that Mexico's oil riches should be handed over to foreigners, in any way whatsoever,” said López Obrador, who lost the July 2006 presidential elections to Calderón, of the National Action Party (PAN), by a margin of just 230,000 votes. The leftwing leader and his followers complained of fraud in the elections. López Obrador named himself ”the legitimate president,” and refuses to recognise the Calderón administration. Congress is expected to debate a possible energy reform this year. The key change would be opening PEMEX up to private capital, without giving up state control of the company. This is the fifth meeting between Lula and Calderón, who first made contact last October when Calderón visited Brazil as Mexico's president-elect. In January they met in Davos, Switzerland during the World Economic Forum (WEF); in March, at the Rio Group Summit in Guyana; and in June, at the meeting of the Group of Eight most industrialised countries (G8) in Germany. Lula's visit has also been a useful opportunity for smoothing over differences between the two countries, arising from regional politics, and from their different views on regional integration schemes. Last January at the WEF gathering in Davos, Calderón criticised the prejudices which aborted the creation of the Free Trade Area of the Americas, nationalisation processes in countries like Venezuela and Bolivia, and ”dictatorships for life,” in a clear reference to Venezuelan President Hugo Chávez's continued hold on power. Lula replied that Chávez had been reelected democratically on three occasions, and that Bolivia nationalised its natural gas because it is that country's only source of wealth. Brazil and Mexico compete silently in a great many areas. For instance, both countries are candidates for a permanent seat on the United Nations Security Council, and Brazil appears to have the advantage there. In the World Trade Organisation's Doha Round of multilateral trade talks, Brazil and India are leading a powerful group of developing countries that are demanding a solution to the biggest hurdle: the multimillion dollar subsidies paid by Europe, the United States and Japan to their farmers. And then, in July, Brazil became the European Union's new strategic partner, a privilege so far enjoyed only by the United States, China and India. On the economic front, Brazil also seems to be doing better. The Economic Commission for Latin America and the Caribbean (ECLAC) forecast Mexico's gross domestic product growth for 2007 at 3.2 percent, compared to 4.5 percent for Brazil. ”We're falling behind the Brazilians,” wrote Enrique Quintana in his column for the local newspaper Reforma. Brazil also enjoys a trade surplus with Mexico. According to the Brazilian Development Ministry, Brazil's exports to Mexico amounted to 5.55 billion dollars in 2006, compared to Mexico's 1.15 billion dollars in exports to Brazil. But trade between the two countries is projected to climb to 13.4 billion dollars by 2010 as a result of the accords signed by Calderón and Lula. Mexico's possible entry to the Southern Common Market (MERCOSUR), whose founding members are Argentina, Brazil, Paraguay and Uruguay, was another issue that came up during Lula's visit. ”I know President Felipe Calderón is planning to observe South America a little, and to watch MERCOSUR also, and decide what strategy Mexico will adopt with other South American countries, with MERCOSUR, and with Brazil, so that we can start to dream of a stronger integration process throughout Latin America,” Lula said. This was the second time in less than a week that a South American president invited Mexico to draw nearer to MERCOSUR. Argentina's President Néstor Kirchner made a similar proposal during his recent three-day visit to Mexico. Kirchner and Calderón signed a strategic cooperation agreement, putting an end to a period of chilly relations triggered by differences between the centre-left Argentine leader and Calderón's predecessor, Vicente Fox (2000-2006) with regard to the FTAA. The Brazilian president's six-day tour will also take him to Honduras, Nicaragua, Jamaica and Panama. In all, Lula will sign 37 cooperation agreements in the five countries, most of them related to energy. ***** + Q&A: South-South Cooperation 'Can Change the Geography of the Planet' (http://www.ipsnews.net/news.asp?idnews=38782) + DEVELOPMENT: G8 Makes Room at Table for Emerging Five (http://ipsnews.net/print.asp?idnews=38001) (END/IPS/LA DV IF IP NR/TRASP-VD-SW/EG/JSP-DCL07) = 08070340 ORP003 NNNN