Latin America’s unresolved border disputes
(Published in Power in Latin America (Issue 129/2004))
With the recent political implosion of Bolivia, some analysts and investors are questioning whether Latin America could see other festering border conflicts drastically affect private ventures. Although it is unlikely that we will see anything as severe as the Bolivia meltdown in the near future, Power in Latin America special correspondent Enrique Tessieri lays out a list of current and recent border conflicts. It is interesting to note that in the recent past, most Latin America countries have been engaged in a border dispute.
Who would have thought that a war that took place in the 19th century would put a multi-billion-dollar project like Pacific LNG in jeopardy and lead to the downfall of a president? As the political storm settles over Bolivia, some analysts are asking if there are other potential geopolitical hot spots in Latin America.
While some analysts believe armed conflict between Latin American nations are less likely today than when the region was ruled by military regimes, Bolivia offers a good lesson to future investors in the region: don’t underestimate geopolitical conflicts no matter how old them may be.
The most recent armed conflicts in Latin America caused by border disputes were between Ecuador and Peru in 1991 and in 1982, and between Argentina and the UK over the Falkland Islands. There have been other wars as well: the so-called Soccer War between El Salvador and Honduras in 1969, and the 1932 – 1935 Chaco War, in which Bolivia lost to Paraguay.
However, Pablo Lutereau, a Buenos Aires energy analyst at Standard & Poors, a sister company to Platts, believes that the Bolivian-Chilean geopolitical conflict is not likely happen elsewhere in the region.
“It’s a unique case because Bolivia is a landlocked country sitting on about 60 Tcf of gas reserves,” he told Power in Latin America. “The problem is that if Bolivia wants to sell gas to North America it has no other choice but to do it through a foreign port.”
Also, not all regional border disputes lead to armed conflicts, such as: Venezuela’s claim to two thirds of Guyana, and Guatemala’s dispute with of neighboring Belize.
“We are committed to resolving our territorial matters through peaceful means,” a Venezuelan diplomat said recently. “Certainly there would be a diplomatic row if Guyana gave foreign companies concessions to prospect for oil in disputed areas claimed by us.”
Some unresolved border disputes in Latin America include:
•Colombia-Venezuela: Territorial dispute over the maritime border between both countries at the Gulf of Venezuela, where about 25 miles off the northernmost tip of Colombia lie three strategic islands called Los Monjes, which control the entrance to the Gulf of Venezuela. The gulf is believed to be rich in oil and gas reserves.
•Venezuela-Guyana: Venezuela claims about two thirds (159,000 square kilometres) of Guyana to the Essequibo River. The region is rich in mineral and oil wealth, and the dispute entered international arbitration in 1987. President Hugo Chavez of Venezuela is expected to pay Guyana an official visit at the end of January 2004 to discuss matters including exporting oil and gas to
its eastern neighbor.
•Surinam-Guayana: In the late-1990s, Guyana granted an offshore exploration licence to Toronto-based CGX on territory claimed by Surinam. In 2000, patrol boats from Surinam evicted the drilling rig from the area.
•Ecuador-Peru: Both countries have had skirmishes in 1941, 1981, and 1995. The territorial dispute, which dates back to 1830, was largely resolved in 1998 when both countries signed an historic peace treaty in Brasilia. Ecuador had claimed large extensions of land to the port of Iquitos, which would have given it access to the Atlantic Ocean via the Amazon River.
•Peru/Bolivia-Chile: Bolivia and Peru fought the War of the Pacific against Chile, losing large areas of land, land-locking Bolivia. In the 1970s, the military governments of Bolivia’s Hugo Banzer and Chile’s Augusto Pinochet were close to ending the dispute by granting Bolivia a corridor to the Pacific Ocean, however, Peru objected as it had owned the land Chile planned to cede to Bolivia. Chile and Bolivia have since then broken off diplomatic relations.
•Argentina-Chile: In 1978, an eleventh-hour intervention prevented both countries from going to war over three islands—Picton, Nueva, and Lennox—at the mouth of the Beagle Channel. However, border disputes and suspicion have given way recently to greater economic
cooperation under civilian governments.
•Argentina-UK: Argentina and the United Kingdom went to war in 1982 over the Falkland Islands, which Buenos Aires claims were overtaken by England in 1833. Some 1,000 British and mostly Argentinean soldiers died in the conflict. Argentine Foreign Minister Rafael Bielsa said in January 2004 that the conflict over the islands will never end until sovereignty is restored.
Companies are prospecting for oil off Falkland waters.
•Central America: Each Central American country has a border conflict with its neighbour. Some of these, such as the one between El Salvador and Honduras, were resolved in 1992 by the International Court of Justice.
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