Oil Disad 2 - Scholars

Gonzaga Debate Institute 2008 Scholars Lab

1 2nd Wave Oil DA’s

4th Wave Oil DA’s (Venezuela/Nigeria/Indonesia/Mexico) 4th Wave Oil DA’s (Venezuela/Nigeria/Indonesia/Mexico)...........................................................................................1 ***General Oil UQ – 4th Wave***................................................................................................................................5 Oil Prices ....................................................................................................................................................................6 Oil Prices  - AT: Biggest Price Decline in 17 Years....................................................................................................7 Oil Prices  - AT: Downward Trend..............................................................................................................................8 Oil Prices  - AT: Offshore Drilling .............................................................................................................................9 Oil Prices ...................................................................................................................................................................10 Oil Prices - Offshore Drilling....................................................................................................................................11 ***Russian Oil Updates – 4th Wave***.......................................................................................................................12 Russia DA – UQ – Russia Econ ...............................................................................................................................13 Russia DA – UQ – Corruption ...................................................................................................................................14 Russia DA – UQ – Russia Diversification ...............................................................................................................15 Russia DA – Internals – Oil Key to Russian Econ........................................................................................................16 ***Russia Answers – 4th Wave***..............................................................................................................................17 Russia Answers – UQ – Russia Econ ........................................................................................................................18 Russia Answers – UQ – Russia Infl .........................................................................................................................19 Russia Answers – Internals – AT: Oil Key to Russian Econ.........................................................................................20 Russia Answers – Internal Link Turn: Inflation K/T Econ...........................................................................................21 ***Saudi Oil Updates – 4th Wave***..........................................................................................................................22 Saudi DA – UQ – Saudi Econ ..................................................................................................................................23 Saudi DA – UQ – Saudi Inflation ..............................................................................................................................24 Saudi DA – UQ – Impact: Coup = US Invasion...........................................................................................................25 ***Saudi Answers – 4th Wave***................................................................................................................................26 Saudi Answers – UQ – Saudi Econ ...........................................................................................................................27 Saudi Answers – UQ – Saudi Inflation ....................................................................................................................28 Saudi Answers – UQ – Middle East Instability .......................................................................................................29 ***Venezuelan Oil DA***...........................................................................................................................................30 Venezuela DA – 1NC....................................................................................................................................................31 Venezuela DA – UQ – Econ Up....................................................................................................................................32 Venezuela DA – UQ – Econ Down...............................................................................................................................33 Venezuela DA – UQ – Oil Up.......................................................................................................................................34 Venezuela DA – UQ – Oil Down (1/2).........................................................................................................................35 Venezuela DA – UQ – Diversification Up....................................................................................................................37 Venezuela DA – UQ – Diversification Down...............................................................................................................38 Venezuela DA – UQ – Inflation Up..............................................................................................................................39 Venezuela DA – UQ – Inflation Down.........................................................................................................................40 Venezuela DA – Oil K/T Economy (1/2)......................................................................................................................41 Venezuela DA – Investment K/T Oil............................................................................................................................43 Venezuela DA – A2: Oil Causes Poverty......................................................................................................................44 Venezuela DA – A2: Inflation (1/2)..............................................................................................................................45 Venezuela DA – Impact – Stability/War.......................................................................................................................47 Venezuela DA – Impact Module – Health....................................................................................................................49 Venezuela DA – Impact – Health – Oil K/T Health......................................................................................................50 Venezuela DA – Impact – Health – Health Care Up.....................................................................................................51 Venezuela DA – Impact – Health – Malaria.................................................................................................................52 Venezuela DA – Impact – A2: Turn: Arms Race/Instability.........................................................................................53 Venezuela DA – Impact – A2: Heg (1/2)......................................................................................................................54 Venezuela DA – Impact – A2: Terrorism......................................................................................................................56 Venezuela DA – Impact – A2: Colombian War (1/3)....................................................................................................57 Venezuela DA – Impact – A2: Chavez Bad – Oil Not K/T Chavez (1/2).....................................................................60 Venezuela DA – Impact – A2: Chavez Bad – Indict.....................................................................................................62 Venezuela DA – Impact – A2: Chavez Bad – Turn: Democracy/Stability (1/2)...........................................................63 Venezuela DA – Impact – A2: Chavez Bad – A2: Democracy.....................................................................................65 Venezuela DA – Impact – A2: Chavez Bad – A2: Poverty/Econ (1/2).........................................................................66

Gonzaga Debate Institute 2008 Scholars Lab

2 2nd Wave Oil DA’s

Venezuela DA – Impact – A2: Chavez Bad – A2: Poverty – It’s Down.......................................................................68 Venezuela DA – Impact – A2: Chavez Bad – A2: Bomb (1/4).....................................................................................70 Venezuela DA – Impact – A2: Chavez Bad – A2: Terrorism........................................................................................74 ***Venezuela Answers***...........................................................................................................................................75 Venezuela Answers – No Internal Link – A2: Oil K/T Econ (1/2)...............................................................................76 Venezuela Answers – Internal Link Turn: Dutch Disease (1/2)....................................................................................78 Venezuela Answers – Internal Link Turn: Corruption..................................................................................................80 Venezuela Answers – Internal Link Turn: Inflation (1/2).............................................................................................81 Venezuela Answers – Internal Link Turn: Inflation K/T Econ.....................................................................................83 Venezuela Answers – Impact T/O – A2: Health Care...................................................................................................84 Venezuela Answers – Impact Turn -- Oil = Chavez......................................................................................................85 Venezuela Answers – Impact Turn – Chavez Bad: Oil = Chavez.................................................................................86 Venezuela Answers – Impact Turn – Chavez Bad: War/Lead/Democr 2AC................................................................87 Venezuela Answers – Impact Turn – Chavez Bad: Econ (1/3).....................................................................................88 Venezuela Answers – Impact Turn – Chavez Bad: Econ – Poverty Up........................................................................91 Venezuela Answers – Impact Turn – Chavez Bad: Democracy....................................................................................92 Venezuela Answers – Impact Turn – Chavez Bad: Democracy – Model.....................................................................93 Venezuela Answers – Impact Turn – Chavez Bad: Arms Race.....................................................................................94 Venezuela Answers – Impact Turn – Chavez Bad: Bomb............................................................................................95 Venezuela Answers – Impact Turn – Chavez Bad: Bomb – Feasibility........................................................................96 Venezuela Answers – Impact Turn – Chavez Bad: Bomb – NW..................................................................................97 Venezuela Answers – Impact Turn – Chavez Bad: Heg (1/4).......................................................................................98 Venezuela Answers – Impact Turn – Chavez Bad: Heg – K/T World........................................................................102 Venezuela Answers – Impact Turn – Chavez Bad: Terrorism.....................................................................................103 Venezuela Answers – Impact Turn – Chavez Bad: Columbia War (1/2)....................................................................104 ***Nigerian Oil DA***..............................................................................................................................................106 Nigeria DA – 1NC.......................................................................................................................................................107 Nigeria DA – UQ – Econ Up......................................................................................................................................109 Nigeria DA – UQ – Econ Down..................................................................................................................................110 Nigeria DA – UQ – Oil Up..........................................................................................................................................111 Nigeria DA – UQ – Oil Down.....................................................................................................................................112 Nigeria DA – UQ – Diversification Up.......................................................................................................................113 Nigeria DA – UQ – Diversification Down..................................................................................................................114 Nigeria DA – UQ – Inflation Up.................................................................................................................................115 Nigeria DA – UQ – Inflation Down............................................................................................................................116 Nigeria DA- Oil K/T Economy...................................................................................................................................117 Nigeria DA- Oil K/T Economy...................................................................................................................................118 Nigeria DA- Oil K/T Economy- Employment............................................................................................................119 Nigeria DA- Oil K/T Economy- Gov’t Revenue........................................................................................................120 Nigeria DA- Oil K/T Economy- Foreign Exchange Reserves....................................................................................121 Nigeria DA- A2: Dutch Disease..................................................................................................................................122 Nigeria DA- A2: Inflation...........................................................................................................................................123 Nigeria DA- A2: Corruption.......................................................................................................................................124 Nigeria DA- Impact: Stability Up...............................................................................................................................125 Nigeria DA- Impact: Spillover....................................................................................................................................126 Nigeria DA- Impact: Regional Stability.....................................................................................................................127 Nigeria DA- Impact: Regional Stability.....................................................................................................................128 Nigeria DA- Impact: Heg............................................................................................................................................129 ***Nigeria Answers***..............................................................................................................................................130 Nigeria Answers- No Internal Link- A2: Oil K/T Economy.......................................................................................131 Nigeria Answers- No Internal Link- A2: Oil K/T Economy.......................................................................................132 Nigeria Answers- Internal Link Turn: Dutch Disease.................................................................................................133 Nigeria Answers- Internal Link Turn: Inflation..........................................................................................................134 Nigeria Answers- Internal Link Turn: Corruption......................................................................................................135 Nigeria Answers- Internal Link Turn: Organized Crime............................................................................................136 Nigeria Answers- Impact T/O: Stability Down...........................................................................................................137 Nigeria Answers- Impact Turn: Coup Good...............................................................................................................138

Gonzaga Debate Institute 2008 Scholars Lab

3 2nd Wave Oil DA’s

***Mexican Oil DA***..............................................................................................................................................139 Mexican Oil DA – 1NC..............................................................................................................................................140 Mexico DA – UQ – Econ Up......................................................................................................................................141 Mexico DA – UQ – Econ Up......................................................................................................................................142 Mexico DA – UQ – Econ Down.................................................................................................................................143 Mexico DA – UQ – Oil Up.........................................................................................................................................144 Mexico DA – UQ – Oil Down....................................................................................................................................145 Mexico DA – UQ – Diversification Up......................................................................................................................146 Mexico DA – UQ – Diversification Down.................................................................................................................147 Mexico DA – UQ – Inflation Up................................................................................................................................148 Mexico DA – UQ – Inflation Down............................................................................................................................149 Mexico DA- Oil K/T Economy...................................................................................................................................150 Mexico DA- Oil K/T Economy...................................................................................................................................151 Mexico DA- A2: Reforms Turn..................................................................................................................................152 Mexico DA- A2: Dutch Disease.................................................................................................................................153 Mexico DA- A2: Inflation...........................................................................................................................................154 Mexico DA- A2: Corruption.......................................................................................................................................155 Mexico DA- A2: Organized Crime.............................................................................................................................156 Mexico DA – Impact: Key to World...........................................................................................................................157 Mexico DA – Impact: Key to World...........................................................................................................................158 Mexico DA – Impact: Key to World...........................................................................................................................159 Mexico DA – Impact: Key to World – A/T: 1996 ......................................................................................................160 Mexico DA – Impact – A2: Mexico Resilient.............................................................................................................161 ***Mexico Answers***..............................................................................................................................................162 Mexico Answers- No Internal Link- A2: Oil k Econ..................................................................................................163 Mexico Answers- Internal Link Turn: Inflation..........................................................................................................164 Mexico Answers- Internal Link Turn: Reforms..........................................................................................................165 Mexico Answers- Internal Link Turn: Dutch Disease................................................................................................166 Mexico Answers- Internal Link Turn: Corruption......................................................................................................167 Mexico Answers- No Impact – Resilient....................................................................................................................168 Mexico Answers- No Impact – A2: Key to World......................................................................................................169 ***Indonesian Oil DA***..........................................................................................................................................170 Indonesia DA – 1NC Shell..........................................................................................................................................171 Indonesia DA – 1NC Shell..........................................................................................................................................172 Indonesia DA – UQ – Econ Up...................................................................................................................................173 Indonesia DA – UQ – Econ Down..............................................................................................................................175 Indonesia DA – UQ – Oil Up......................................................................................................................................176 Indonesia DA – UQ – Oil Down.................................................................................................................................177 Indonesia DA – UQ – Diversification Up...................................................................................................................178 Indonesia DA – UQ – Diversification Down..............................................................................................................179 Indonesia DA – UQ – Inflation Up.............................................................................................................................180 Indonesia DA – UQ – Inflation Down........................................................................................................................181 Indonesia DA – Oil K/T Economy..............................................................................................................................182 Indonesia DA – A2: Dutch Disease.............................................................................................................................183 Indonesia DA – A2: Inflation......................................................................................................................................184 Indonesia DA – A2: Corruption..................................................................................................................................185 Indonesia DA – Impacts: Key Global Economy.........................................................................................................186 Indonesia DA – Impacts: Terror..................................................................................................................................187 Indonesia DA – Impacts: Democracy.........................................................................................................................188 Indonesia DA – Impacts: Democracy.........................................................................................................................189 Indonesia DA – Impacts: Democracy – It’s Up..........................................................................................................190 Indonesia DA – Impacts: Democracy Good—Heg.....................................................................................................191 Indonesia DA – Impacts: Democracy Good—Terrorism (1/2)...................................................................................192 Indonesia DA – Impacts: Democracy Good—Terrorism (2/2)...................................................................................193 Indonesia DA – Impacts: Democr K/T US Rel’s........................................................................................................194 Indonesia DA – Impacts: Relations – Terrorism.........................................................................................................195 Indonesia DA – Impacts: Relations – Democracy......................................................................................................196

Gonzaga Debate Institute 2008 Scholars Lab

4 2nd Wave Oil DA’s

Indonesia DA – Impacts: Relations – Asia Stability...................................................................................................197 Indonesia DA – Impacts: Democr K/T World Model.................................................................................................198 Indonesia DA – Impacts: Stability – It’s Up...............................................................................................................199 Indonesia DA – Impacts: Reg’l Stability....................................................................................................................200 Indonesia DA – Impacts: Reg’l Stability....................................................................................................................201 Indonesia DA – Impacts: Reg’l Stability – Escalation/NW........................................................................................202 Indonesia DA – Impacts: Hrts.....................................................................................................................................203 Indonesia DA – Impacts: Biodiversity T/O.................................................................................................................204 ***Indonesia Answers***..........................................................................................................................................205 Indonesia Answers- Internal Link Turn: Inflation.......................................................................................................207 Indonesia Answers- Internal Link Turn: Corruption...................................................................................................208 Indonesia Answers- Internal Link Turn: Instability....................................................................................................209 Indonesia Answers- Turn: Biodiversity.......................................................................................................................210 Indonesia Answers- Econ Resilient.............................................................................................................................211 Indonesia Answers- Impact T/O: Stability..................................................................................................................212 Indonesia Answers- Impact T/O: Democracy.............................................................................................................213 Indonesia Answers- Democracy Bad—Terrorism......................................................................................................214 Indonesia Answers- AT: Democracy Solves Terrorism...............................................................................................215 Indonesia Answers- Democracy Bad— Conflict........................................................................................................216

Gonzaga Debate Institute 2008 Scholars Lab

5 2nd Wave Oil DA’s

***General Oil UQ – 4th Wave***

Gonzaga Debate Institute 2008

6 2nd Wave Oil DA’s

Scholars Lab

Oil Prices  Despite drop, prices remain very high The Wall Street Journal 7/16 (“Oil Matters” http://online.wsj.com/article/SB121622189274758757.html?mod=googlenews_wsj) The Labor Department reported Wednesday that the consumer price index jumped 1.1% in June, marking the second-highest increase since 1982 and the highest since 2005. Excluding food and energy, it advanced 0.3%. On a year-over-year basis, prices rose 5%, while the "core" rate grew 2.4%, well above the Federal Reserve's preferred range. The inflationary effect of rising oil prices is certainly no secret. But economists have been watching intensely for a spillover of that inflation into other categories. And Wednesday's data fed such fears. "The June uptick in the core rate provides an early indication that the tidal surge in energy and other commodity costs are trickling through to consumer prices at large," said Kenneth Beauchemin, of Global Insight. In testimony on Capitol Hill, Fed chief Ben Bernanke said U.S. inflation "is too high" and reiterated that the Fed's aim is to achieve price stability. The problem, of course, is that Mr. Bernanke and other policy makers are also contending with an economic slowdown made worse by turmoil in financial markets. Raising interest rates to stifle inflation runs the risk of braking the economy even more. Cheaper oil would certainly serve

the goals of price stability and economic growth. And although nobody expects crude to retreat to levels that are now viewed with nostalgia, its price is dropping. On Wednesday, light, sweet crude for August delivery dropped $4.50 to $134.24 a barrel in morning trading in New York on government data showing a surprising spike in U.S. crude and gasoline supplies. Prices fell $6.44 Tuesday in the biggest one-day drop in dollar terms since the Gulf War. But lest anyone start

celebrating, prices remain about 80% above where they were a year ago and up about 40% from the start of the year.

Oil prices , supply concerns prove AFP 7/15 (“Oil prices near record highs” http://afp.google.com/article/ALeqM5iULbqz7a_RWOvuo-LtKNAkNzTERw) World oil prices jumped close to record heights on Tuesday as the dollar slumped to an all-time low against the euro, and amid ongoing supply tensions including a strike in Brazil. New York's main oil contract, light sweet crude for August delivery, gained 1.21 dollars to 146.39 dollars a barrel. That was close to the record high of 147.27 that was struck last Friday. London's Brent North Sea oil for August gained 1.36 dollars to 145.31 dollars. Brent had jumped to an all-time high of 147.50 on Friday. "Oil prices were higher (on Tuesday), with the dollar resuming its decline against major currencies on downbeat sentiment over US financial markets after the US government's reassurance to rescue Freddie Mac and Fannie Mae failed to boost investor confidence," said Sucden analyst Andrey Kryuchenkov.

Oil prices  long term, supply concerns prove Reuters 7/15 (“Tight supply, strong demand raising oil price: Bush” http://www.reuters.com/article/politicsNews/idUSWAT00978920080715)

President George W. Bush said on Tuesday that speculators are not to blame for higher oil prices and it is the market fundamentals of tight supplies and strong demand that are pushing up crude costs. "The fundamentals are what's really driving the long-term price of oil," Bush told reporters at a White House news conference. "Demand for oil has increased and supply has not kept up with it."

Gonzaga Debate Institute 2008 Scholars Lab

7 2nd Wave Oil DA’s

Oil Prices  - AT: Biggest Price Decline in 17 Years The decline in prices is a small percentile decline – it has no impact on global oil profits CNN Money 7/15 (“Biggest oil price drop in 17 years” http://money.cnn.com/2008/07/15/markets/oil/?postversion=2008071516) The drop in oil was the largest single-day slide in dollar terms since Jan. 17, 1991, when oil fell by $10.56. On that day, President George H.W. Bush withdrew oil from the Strategic Petroleum Reserve ahead of the first Gulf War. But in 1991, oil was trading at just $32 a barrel, so the more than $10 slide in dollar terms represented a record 33% drop. Oil fell 4.4% Tuesday, which does not even crack the top 100 price declines in percentage terms.

Gonzaga Debate Institute 2008 Scholars Lab

8 2nd Wave Oil DA’s

Oil Prices  - AT: Downward Trend The drop in prices is temporary, prices will climb again soon Washington Post 7/16 (“Speculating About an Oil "Bubble"” http://newsweek.washingtonpost.com/postglobal/energywire/2008/07/speculating_about_an_oil_bubbl.html) Today prices got another push downward because the Energy Department’s Energy Information Administration reported that U.S. commercial inventories of crude oil and petroleum products climbed by 7 million barrels last week. One reason: an increase in oil imports, perhaps partly as a result of slightly higher Saudi oil output last month (it takes 45 days for oil to get to the United States from Saudi Arabia). The EIA data also showed that U.S. gasoline demand was down 375,000 barrels a day

from the same week a year earlier, continuing a trend of gradually declining U.S. fuel consumption. That comes a day after Mastercard reported that last week’s purchases of gasoline fell 5.2 percent last week compared to a year earlier. It was the twelfth consecutive weekly decline reported by Mastercard. That doesn’t mean high oil prices are over. U.S.

commercial oil inventories are still down 55 million barrels from last year this time.

Price drop is tempororary trend is still upward The Capital Spectator 7/16 (“PRICE TROUBLES ONCE MORE, BUT STILL HOPING FOR A BREAK” http://www.istockanalyst.com/article/viewarticle+articleid_2403169&title=Price_Troubles_Once.html)

But let's not get too giddy. Rising commodities prices generally, and oil in particular, are based on a fundamental shift in the supply/demand equation in the global economy. To restate the obvious: demand has risen sharply in recent years while supply growth has lagged. Perhaps we'll enjoy a break from the trend and see energy prices fall in the wake of economic slowdown or worse. Maybe. It all depends on how much of a global slowdown we're looking at, and how much influence the U.S. has over oil prices these days. The latter subject is open to debate, thanks to the rise of China, India, etc. and the relative maturing of the U.S. economic growth outlook compared with emerging markets. In any case, it wouldn't surprise us to see oil prices drop sharply from current levels. Volatility and commodities, after all, are old friends, regardless of economic conditions. Longer term, however, it's unlikely that oil prices are due for a sustained fall. Noise may dominate the short term, but supply and demand dictate price trends over time. That means that while inflation pressures may ebb for a time, the respite will only be temporary, assuming it comes at all.

Gonzaga Debate Institute 2008 Scholars Lab

9 2nd Wave Oil DA’s

Oil Prices  - AT: Offshore Drilling Lifting the ban on offshore drilling wont have any affect on oil prices for years Money Matters 7/15 (“Oil steady, weighs demand fears vs supply risks” (http://www.livemint.com/2008/07/15085408/Oil-steadyweighs-demand-fear.html) Rising fuel costs have sparked global protests and cut US fuel demand during the typical peak summer gasoline season, but robust growth in emerging economies continues to keep their appetite to consume high. On Monday, US President George W. Bush lifted

a presidential ban on offshore drilling to boost domestic supplies and combat soaring energy prices. Analysts said the plan would take a decade to bring real results and offer little short-term relief. A congressional ban on offshore drilling also remains in place, and Senate Democratic Leader Harry Reid later on Monday rejected Bush’s call to lift the moratorium. Markets were also eyeing a low-pressure system about 1,300 miles east of the Lesser Antilles that could develop into a tropical depression.

Any oil drilled would be sold at current prices Concord Monitor 7/16 (“Drilling Wont Help Reduce Gas Prices” http://www.redorbit.com/news/business/1480740/drilling_wont_help_reduce_gas_prices/)

Why would domestically produced oil be sold for any less? It isn't anticipated that so much oil would be extracted from offshore locations that it would significantly impact the world market price. And whether oil is drilled in Saudi Arabia or off the coast of Florida, it will be sold at the world price. It makes little difference whether we purchase oil from Canada (our leading supplier), nations with anti-American governments like Venezuela, or nations like Saudi Arabia where the money may filter into the hands of terrorists. If we ceased purchasing from Venezuela tomorrow, they would simply sell to someone else for the same price. The same amount of oil money would flow into the coffers of Hugo Chavez even if we managed to get 100 percent of our oil from friendly producers. Gas prices would still be at the same level. The only realistic way to contain gasoline prices in the near term is to cut demand. That means driving more fuel-efficient vehicles, driving less frequently and driving at slower speeds. In the long term, we'll need something other than drilled oil to power our transportation.

Drilling wont decrease prices Associated Press 7/15 (“Oil rises, but back off day's high” http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBBtAD91UAQMG0) Also, a weakening of the dollar helped to support commodity prices Tuesday. Many investors view oil and other commodities as hedges against inflation and a weakening dollar, and their prices tend to rise as the currency declines. The dollar fell to 105.79 yen in Asian currency trade, while the euro rose to an all-time high of $1.6038 in European trading, before settling back at $1.5983. On Monday, President Bush lifted an executive ban on offshore oil drilling. That alone is not expected to loosen global

supplies in the short term since a Congressional prohibition remains in place and any new wells would take years to complete.

Gonzaga Debate Institute 2008

10 2nd Wave Oil DA’s

Scholars Lab

Oil Prices Oil prices continuing to decline Associated Press 7/16 (“Oil tumbles again; prices fall over $10 in 2 days” http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD91V4HL00)

Oil prices have settled sharply lower for the second straight day, capping a dizzying drop that has left crude more than $10 cheaper in just two days of frenzied trading. Light, sweet crude for August delivery fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, after earlier sinking as low as $132. The drop follows a $6.44 sell-off Tuesday, meaning prices have plummeted over $10 since Monday.

Oil Prices , decreased US demand proves Reuters 7/15 (“Oil plunges $6 on mounting US economic concern” http://africa.reuters.com/wire/news/usnSP264611.html) Oil dropped more than $6 Tuesday, the largest drop in dollar terms in 17 years, as growing concern about the economic health of top energy consumer the United States stirred demand worries. Federal Reserve Chairman Ben Bernanke said financial markets were under "considerable stress," adding to concerns about the strain of the weak housing market and high energy and food prices on the U.S. economy. U.S. crude settled down $6.44 at $138.74 a barrel, the biggest one-day drop since 1991, when prices retreated at the start of Operation Desert Storm. The session low was notched at $135.92 earlier. London Brent crude fell $5.17 to $138.75.

Oil prices , decreased US demand proves CNN Money 7/15 (“Biggest oil price drop in 17 years” http://money.cnn.com/2008/07/15/markets/oil/?postversion=2008071516) Oil prices plummeted by the second-largest margin on record Tuesday as investors feared a further decline in U.S. demand after hearing comments from Federal Reserve Chairman Ben Bernanke. Light, sweet crude fell $6.44 to settle at $138.74 a barrel in trading on the New York Mercantile Exchange. The drop in oil was the largest single-day slide in dollar terms since Jan. 17, 1991, when oil fell by $10.56. On that day, President George H.W. Bush withdrew oil from the Strategic Petroleum Reserve ahead of the first Gulf War.

Gonzaga Debate Institute 2008

11 2nd Wave Oil DA’s

Scholars Lab

Oil Prices

- Offshore Drilling

Drilling will lower prices In Rich 6/17 (“Gilmore backs McCain's stance on offshore drilling” http://www.inrich.com/cva/ric/news.apx.-content-articles-RTD-200806-17-0153.html) Former Virginia Gov. Jim Gilmore, who is running for the U.S. Senate, today praised Sen. John McCain's support of lifting the federal ban on offshore drilling. "As working families across the commonwealth of Virginia and across our country face

financial hardship due to soaring gasoline prices, I commend Senator John McCain for speaking out on the need to decisively begin to decrease our dependence on foreign oil and increase American oil production," Gilmore said in a statement. Gilmore said "drill here, drill now and pay less" is "our path to quickly reduce our dependence on foreign oil" and to lower prices. Democrat Mark R. Warner, Gilmore's opponent in the Senate race, will discuss his energy policy in an address Wednesday morning at the Science Museum of Virginia.

Drilling will lower prices Washington Post 6/17 (“McCain: End Fed Ban on Offshore Drilling” http://news.aol.com/politicalmachine/2008/06/17/mccain-end-fed-ban-on-offshore-drilling/) Sen. John McCain called yesterday for an end to the federal ban on offshore oil drilling, offering an aggressive response to high gasoline prices and immediately drawing the ire of environmental groups that the presumptive Republican presidential nominee has courted for months. The move is aimed at easing voter anger over rising energy prices by freeing states to open vast stretches of the country's coastline to oil exploration. In a new Washington Post-ABC News poll, nearly 80 percent said soaring prices at the pump are causing them financial hardship, the highest in surveys this decade. "We must embark on a national mission to eliminate our dependence on foreign oil," McCain told reporters yesterday. In a speech today, he plans to add that "we have untapped oil reserves

of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production. . . . It is time for the federal government to lift these restrictions."

Gonzaga Debate Institute 2008 Scholars Lab

12 2nd Wave Oil DA’s

***Russian Oil Updates – 4th Wave***

Gonzaga Debate Institute 2008 Scholars Lab

13 2nd Wave Oil DA’s

Russia DA – UQ – Russia Econ  Russian econ strong Washington Post 7/17 (“Slowing Economy Gives Way to Global Role Reversals” http://www.washingtonpost.com/wpdyn/content/article/2008/07/16/AR2008071602732.html)

Contrast that with oil-fat Russia -- a red-hot emerging market. As in many commodity-driven economies

in the developing world, soaring energy revenue has largely insulated Russia, the world's secondlargest oil exporter, from the turbulence in global markets. Its gross domestic product is expected to grow 8 percent this year, and consumer spending continues to boom, with a 13 percent increase so far this year, according to Troika Dialog, a Moscow investment house. "We are overloaded with money, crazy amounts of money from the energy market," said Mikhail Bergen, a professor at Moscow's Higher School of Economics.

Russian econ strong Neal 7/16 (Jeff Neal is Senior Writer, Options Strategist & Profit Strategies Radio Show, Market Correspondent. http://www.optionetics.com/market/articles/19849) Russia is still the largest market for foreign investments when looking at the Eastern European region. The reason behind this is because Russia is by far the strongest economy. Russia’s Gross Domestic Product increased an average of 7.5 percent per year for the last eight years. In addition, the nation’s once large debts have been replaced with a $150-billion stabilization fund. Their trade balance shows a big surplus of $72.5 billion and its benchmark RTS stock index has increased by 1,992 percent since 2000. Even with this growth most analysts assert that Russian stocks are still cheap and the cheapest of any emerging market. Currently Russian companies are trading at an average of just nine times forward earnings. This is a bargain when compared to the 14 times forward earnings of Latin American and 15 times forward earnings of Asian stocks or the 20 times forward earnings of U.S. equities.

Russian econ strong Speedie 7/14 (David Speedie is Senior Fellow, Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University “The Rise of the Rest: How the Ascent of China and Russia Affects Global Business and Security” http://www.policyinnovations.org/ideas/briefings/data/000066) Two, realize and accept that Russia is a global economic player, although this has to be taken in perspective. There is obviously a highly visible Russian commercial presence in London, Europe's finance capital, and this will be replicated in New York. Under Yeltsin, Russian GDP peaked at $200 billion. Under Putin, it reached $1.3 trillion. However, even if Russia ascends to the top five global economies, it will still be a mere fraction in terms of global GDP of, for example, the United States, the European Union, and China. Three, Russia's economic growth under Putin has included, as said before, a rising entrepreneurial middle class and a robust consumer economy. Just look at the piece in The New York Times a couple of weeks ago that showed the Turkish resort on the Mediterranean where Russian tourists were basking in a replica of the Kremlin and Saint Basil's Cathedral. This is the new Russian consumer with money to go abroad and be where they feel comfortable.

Gonzaga Debate Institute 2008 Scholars Lab

14 2nd Wave Oil DA’s

Russia DA – UQ – Corruption Russia is more transparent and working to reduce bureacracy Thompson Financial News 7/11 “Russian oil sector at 'critical juncture' – Putin” Thomson Financial News, http://www.forbes.com/afxnewslimited/feeds/afx/2008/07/11/afx5205986.html

'The oil sector has reached a critical juncture,' Putin said after visiting the Sevmash shipyard in Severodvinsk where Russia's first Arctic oil rig is under construction. He said tax cuts approved this year had already given oil companies more money to spend on development and added that the government was considering additional tax breaks for companies operating in oil-rich regions of Siberia. The government will also ease bureaucracy for companies opening new oil fields and develop

infrastructure in remote areas to encourage investment. 'Our energy policy will be clear, transparent, liberal. We do not plan any economic egoism. We will take into account the legitimate interests of our partners but we will also defend our national interests,' he added. 'We have no doubt that now, in the medium-term and in the longterm, we will completely cover the growing demand of the Russian economy and fulfil our obligations to our foreign partners,' he continued.

Gonzaga Debate Institute 2008 Scholars Lab

15 2nd Wave Oil DA’s

Russia DA – UQ – Russia Diversification  Russia diversification  Neal 7/16 (Jeff Neal is Senior Writer, Options Strategist & Profit Strategies Radio Show, Market Correspondent. http://www.optionetics.com/market/articles/19849)

Russia has always been known for its abundance of natural resources. They have the world’s largest natural gas reserves, the second largest coal reserves and the eighth-largest oil reserves. However, Russia is currently in the process of transitioning from an economy focused just on natural resources to an economy based on domestic consumption because of the big increases in disposable income. The bottom line is that these emerging markets in Eastern Europe, led by Russia, are worthy of taking a closer look at for profitable opportunities.

Gonzaga Debate Institute 2008 Scholars Lab

16 2nd Wave Oil DA’s

Russia DA – Internals – Oil Key to Russian Econ Oil key to Russian econ, vulnerable to drop in oil prices Hugh 7/9 (Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance. “Russian Inflation: Is the Boom About To Bust?” http://seekingalpha.com/article/84286-russian-inflation-is-the-boomabout-to-bust) At the same time the price of Russia's Urals crude continues to touch all-time highs (it averaged $106 a barrel in the year through July 2, compared with $60 a barrel in the same period a year earlier). Russia produced 9.77 million barrels of oil a day in June, more than Saudi Arabia did, thus becoming the biggest exporter of the fuel. Russia also produces the energy equivalent of about 11 million barrels a day of gas. As a result of such factors Russia's trade surplus hit a record $130.92 billion in 2007. So what could possibly go wrong? Well, the central point would be that the strong rise in oil

prices we have seen since the start of the century has only served to increase Russia’s dependence on oil and gas revenue and has not been used to facilitate the kind of diversification which could allow for a more stable development path. As such, the Russian economy—despite the outward semblance of "you've never had it so good" boom times—has never been more vulnerable to sudden falls in oil and gas prices.

Gonzaga Debate Institute 2008 Scholars Lab

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***Russia Answers – 4th Wave***

Gonzaga Debate Institute 2008 Scholars Lab

18 2nd Wave Oil DA’s

Russia Answers – UQ – Russia Econ Russia’s economy is slowing PrimeTass 7/17 ([http://www.prime-tass.com/news/show.asp?topicid=50&id=441576] Kudrin: Slower industrial growth in Jun doesn't indicate long-term trend/ July 17, 2008) Russian Finance Minister Alexei Kudrin said Thursday that he believed slower industrial output growth in June did not indicate a long-term slow-growth trend. "For the time being, it's difficult to talk about a trend," said Kudrin, who is also a deputy prime minister. Russia's industrial output rose 0.9% in June, slowing down from a 1.4% growth rate in May, according to the Federal State Statistics Service. Kudrin said, however, that he believed Russia's high inflation rate resulted in high interest rates, less investment, and slower economic growth.

Russian econ growth slowing Harrison 7/14 (Jon Harrison is Director of FX Strategy at Dresdner Kleinwort in London http://www.reuters.com/article/reutersComService4/idUSDIS43812720080714) GDP growth remains among the strongest in the EEMEA region (Eastern Europe, the Middle East and Africa), delivering 8.1 percent year-on-year last year. High oil and commodity prices continue to put the economy in a strong position but

we do not expect Russia to be entirely insulated from the global economic slowdown. We forecast GDP growth slowing to 6-7 percent this year and next.

Russian econ overheating, inflation  Hugh 7/9 (Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance. “Russian Inflation: Is the Boom About To Bust?” http://seekingalpha.com/article/84286-russian-inflation-is-the-boomabout-to-bust) At the same time there is now extensive evidence that the Russian economy is overheating. The IMF in their June 2008 Article IV Consultation Report mention three factors: 1i) the fact that inflation has almost doubled over the past year and now extends well beyond food and energy price increases; 2) domestic demand is increasing at an annual rate of 15 percent in real terms, while GDP is growing at 8 percent, a rate which is somewhat above the level that can be maintained without causing accelerating inflation, according to estimates by both Russian and IMF experts;3) resource constraints have now become strikingly evident in labor markets, where shortages are causing real wage increases of about 16 percent annually, well above growth in labor productivity (see chart below), and unit labor costs are

now rising steadily. Domestic resource constraints are also evident in the rise in import volume growth to almost 30 percent annually.

Gonzaga Debate Institute 2008 Scholars Lab

19 2nd Wave Oil DA’s

Russia Answers – UQ – Russia Infl  Russian econ overheating, inflation  Hugh 7/9 (Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance. “Russian Inflation: Is the Boom About To Bust?” http://seekingalpha.com/article/84286-russian-inflation-is-the-boomabout-to-bust) Russia's inflation rate remained tantalizingly frozen at its highest in more than five years in June as energy and food prices continued to move on upwards. Russian consumer prices were up 15.1 percent from a year ago— matching the rate in May—according to data released earlier this week by the Federal Statistics Service. As a result, the Russian government is struggling to bring inflation down towards its 10.5 percent target after increased income from rising global energy prices boosted domestic demand and made possible 300 billion rubles ($13 billion) of extra government spending on items like pensions and state wages in the runup to last December's elections. The result has been a massive surge in

consumer spending and construction activity, which has pushed the rate of expansion in the Russian economy above its long-term "comfort" capacity level. In this post we will look at the general macro economic situation of the Russian economy, and we will see that, with output in the resource sector effectively at or near its peak, the main drivers of Russian growth are now construction and domestic consumption. Since long-term labour supply issues mean that Russia is unable to comfortably grow at its current rate of expansion, the end product is rising inflation and structural distortions in the development of the manufacturing sector. Policy limitations at the level of fiscal demand management and exchange rate adjustment mean that this whole process is only being accelerated rather than contained. As a result, the living standards improving boom could easily, under unfavourable circumstances, be converted into precisely its opposite: an impoverishing bust.

Gonzaga Debate Institute 2008 Scholars Lab

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Russia Answers – Internals – AT: Oil Key to Russian Econ Oil is not the key factor in Russian econ growth Hugh 7/9 (Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance. “Russian Inflation: Is the Boom About To Bust?” http://seekingalpha.com/article/84286-russian-inflation-is-the-boomabout-to-bust)

The structure of Russian real GDP growth has shifted significantly towards non-tradable sectors in recent quarters, partly reflecting booming domestic demand and the appreciating real effective exchange rate of the ruble. There has decline in the relative importance of resource extraction - oil output has stopped rising, and was 1% down year on year in June - and an increasing dependence on imports and construction. In the earlier years of this century, and in particular during 2003-2004, oil and some industrial sectors were the key engines of economic growth. From 2005 onwards, however, the expansion has largely been driven by non-tradable services and goods production for the domestic market, including manufacturing goods. In 2007 the wholesale and retail trade alone accounted for almost a third of the overall economic growth. Booming construction and manufacturing contributed another 30 percent. Within the industrial sector, manufacturing - which is largely directed towards the domestic market was a key driver, expanding by 7.4 percent in 2007, compared to only 2.9 percent in the previous year. In contrast growth in the resource extraction industry has virtually ground to a halt, reflecting binding capacity constraints and the comparative remoteness (and cost) of new deposits.

Gonzaga Debate Institute 2008 Scholars Lab

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Russia Answers – Internal Link Turn: Inflation K/T Econ Inflation is the worst threat to Russian growth Rautava 8 (Jouko, BOFIT Online, June, www.bof.fi/bofit, “The Challenges of the Medvedev Era”) Inflation began to accelerate in the second half of 2007, and today is a central issue of contention in economic policy. The actual inflation figure of 11.9 % handily beat the government’s 2007 inflation target of 8.5 %. This year, inflation continues to gain steam, although there is hope it may ease during the summer due to seasonal factors. After an almost continuous decline since 1999, inflation is accelerating (at least temporarily). This is disconcerting for several reasons. Respondents to Russian opinion polls consistently rank inflation as the worst threat to their personal finances. If trust in a strong rouble falters, flight to other currencies could very well destabilise the financial system. Even small changes can have large effects on saving patterns and capital flows. The lack of coherent economic policy response is the inability to agree on what is causing the inflation. As in other countries, the problem can be seen in higher food prices. Yet, while nearly a third of foodstuffs in Russia are imported, the biggest problem is domestic. Russian food production has not managed to keep up with the boom in consumer spending, so prices of both animal and vegetable products have shot up dramatically. A second interpretation of the leap in inflation is that larger-than- anticipated amounts of foreign currency have made there way into the country via the trade and capital accounts. The third, perhaps most realistic, explanation is that the Russian economy is simply overheated. A variety of bottlenecks put upward pressure on wages, raw material prices and building costs. All of these explanations conveniently align with the various measures proposed for fiscal, monetary and exchange rate policy.

Gonzaga Debate Institute 2008 Scholars Lab

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***Saudi Oil Updates – 4th Wave***

Gonzaga Debate Institute 2008 Scholars Lab

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Saudi DA – UQ – Saudi Econ  Saudi econ  AME Info 7/13 (“Saudi wealth reaches new heights” http://www.ameinfo.com/163321.html) Saudi crude production has reached 9.7 million barrels-per-day (bpd) in July. By the end of 2009, sustainable capacity is due to be increased to 12. 5 million bpd. Peter Burnett chief executive of UBS Investment bank in the Middle East and North Africa, which has just received a licence to operate in the kingdom, says: 'They have petrodollars flowing in and are in

the process of enormous wealth creation.' The kingdom's economy has doubled in size since 2002 and its nominal gross domestic product is projected to reach $465bn in 2008, and already accounts for half the wealth management business in the Middle East. Should oil prices continue at present levels and above, Saudi income is likely to grow well beyond the $1bn a day it had already reached before world prices hit $140 a barrel.

Gonzaga Debate Institute 2008 Scholars Lab

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Saudi DA – UQ – Saudi Inflation Saudi inflation down Ghafour 8 (Abdul, Arab News [http://www.arabnews.com/?page=6§ion=0&article=111329&d=29&m=6&y=2008] Inflation lets up a little in Kingdom/ June 29, 2008) Annual inflation in Saudi Arabia hit 10.5 percent in April this year, the highest in more than 30 years. As a result the government took a series of measures to curb inflation and rising prices of essential commodities. Hamad Al-Sayari, governor of Saudi Arabian Monetary Agency (SAMA), has predicted the Kingdom’s inflation rate would come down by the second half of this year. “Unfortunately, the forces pushing inflation are still active. We expect that it will slow down in the second half of the year as a result of the slowdown of the global economy and impact on demand for commodities,” he said. With crude oil selling for prices above $140 a barrel, forces pushing inflation in Saudi Arabia include housing and rent, and they are taking time to ease, Al-Sayari said.

Saudi taking measures to control inflation Gulf Daily News 7/17 ([http://www.gulf-dailynews.com/Story.asp?Article=223290&Sn=BUSI&IssueID=31119] Inflation in Oman 'to stabilise as food crisis eases'/ July 17, 2008) Gulf governments have increased price controls, boosted subsidies and raised employee wages in response to inflation. As the impact of such anti-inflation measures kicks in, price rises in Saudi Arabia are likely to ease in the second half of the year, its central bank governor has said. Inflation in the world's top oil exporter eased slightly to 10.4pc in May from an at least 30-year high of 10.5pc a month earlier. Oman's central bank has tightened lending curbs three times in less than a year to rein in money supply growth.

Gonzaga Debate Institute 2008 Scholars Lab

25 2nd Wave Oil DA’s

Saudi DA – UQ – Impact: Coup = US Invasion Saudi coup would force a US military intervention World Tribune 5 (“U.S. fears prospect of Saudi coup, weighs invasion plans” http://www.worldtribune.com/worldtribune/05/front2453676.157638889.html)

The United States has raised the prospect of a military invasion of Saudi Arabia. The House Armed Services Committee considered the possibility of a Saudi coup and U.S. response during a hearing on Oct. 26. Saudi Arabia, with 200,000 military and National Guard troops, is the largest oil producer and exporter, with an output of nine million barrels of oil per day, according to Middle East Newsline. The Arab kingdom is the third largest supplier of oil to the United States, with more than 1.55 million barrels per day. The scenario was outlined by Michael O'Hanlon, a senior fellow of the Brookings Institution, who cited a Saudi coup as one of several threats to the United States. "How should the United States respond if a coup,

presumably fundamentalist in nature, overthrows the royal family in Saudi Arabia?" O'Hanlon asked. "Such a result would raise the specter of major disruption to the oil economy." The response could include the deployment of three U.S. Army divisions backed by fighter-jets and airborne early-warning and alert aircraft. In all, the U.S.-led mission could include up to 300,000 troops. Congressional sources said the House hearing, which focused on future threats in the Middle East and other regions, marked increasing U.S. concern of Saudi instability. They said the open hearing echoed a series of briefings on Saudi and Gulf Arab instability given by non-government analysts to the State Department, Defense Department and National Security Council since 2002. The House committee was told that

U.S. concern of a Saudi coup appears greater than ever. O'Hanlon said such a coup would also destabilize Pakistan, a nuclear power since 1998. "This type of scenario has been discussed for at least two decades and remains of concern today — perhaps even more so — given the surge of terrorist violence in Saudi Arabia in recent years as well as the continued growth and hostile ideology of Al Qaida along with the broader Wahabi movement," O'Hanlon said. In his testimony, O'Hanlon envisioned a Saudi coup as resulting in the emergence of what he termed a fundamentalist regime intent on acquiring nuclear weapons. Another prospect was that the new regime would seek to disrupt the oil market. "Indeed, it might be feasible not to do anything at first, and hope that the new regime gradually realized the benefits of reintegrating Saudi Arabia at least partially into the global oil economy," O'Hanlon said. "But in the end the United States and other western countries might consider using force." O'Hanlon envisioned a U.S.-led military operation designed to seize Saudi oil wells, located along

the eastern coast. Washington and its allies would place the proceeds from Saudi oil sales into escrow for a future pro-Western government in Riyad. A U.S.-led military force of 300,000 would be required to secure the entire Saudi Arabia, O'Hanlon said. He said about 10,000 troops could capture eastern Saudi Arabia, which contains virtually all of the kingdom's oil wells. But more than 100,000 additional troops would be required to protect the wells and other vital infrastructure. "An operation to overthrow the new Saudi regime and gradually stabilize a country of the size in question would probably require in the vicinity of 300,000 troops, using standard sizing criteria," O'Hanlon said. "So in fact a coastal strategy, while easier in some ways and perhaps less bloody in the initial phases, could be fully half as large and might last much longer."

Gonzaga Debate Institute 2008 Scholars Lab

***Saudi Answers – 4th Wave***

26 2nd Wave Oil DA’s

Gonzaga Debate Institute 2008 Scholars Lab

27 2nd Wave Oil DA’s

Saudi Answers – UQ – Saudi Econ Saudi econ declining, stock markets prove Bloomberg 7/12 (“Samba and Banque Saudi shares drag Saudi Arabian index down” http://archive.gulfnews.com/articles/08/07/13/10228378.html)

Saudi Arabian shares declined for a third day, led by Banque Saudi Fransi and Samba Financial Group. The Tadawul All Share Index retreated 0.3 per cent to 8,971.32 at 1.02pm in Riyadh. The index has lost 5.7 per cent during its three-day losing streak. Banque Saudi Fransi, the Saudi lender partially owned by a unit of Credit Agricole SA, slid 2.4 per cent to 81 riyals. Samba, the second-largest bank, dropped 1 per cent to 73.25 riyals. The Tadawul is the only Arab exchange monitored by Bloomberg that's open on Saturdays.

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Saudi Answers – UQ – Saudi Inflation  Saudi inflation is  Gulf Times 7/17 (“No revaluation on council proposal: Sama economist” http://www.gulftimes.com/site/topics/article.asp?cu_no=2&item_no=230410&version=1&template_id=48&parent_id=28) A top economist at Saudi Arabia’s central bank, the Saudi Arabian Monetary Agency (Sama), said yesterday that the kingdom won’t revalue or depeg its currency from the dollar after a proposal to appreciate the riyal by 20% was submitted to the Shura Council this week. “I don’t see any change in the value of the riyal happening,” Saudi-based Sama economist Fadi Alajaji told Zawya Dow Jones in an exclusive interview. Inflation in Saudi Arabia, the Mideast’s largest economy, is running at a 30-year

high, fueled in part by the riyal’s peg to the dollar, which drives up the cost of imports and forces Saudi Arabia to mimic the US’ currently loose monetary policy. In May, annual inflation in Saudi Arabia hit 10.6%, compared with 2.96% in May 2007.

Gonzaga Debate Institute 2008 Scholars Lab

29 2nd Wave Oil DA’s

Saudi Answers – UQ – Middle East Instability  Middle east instability now Barrons 7/14 “You Won't Go Broke Filling Up on the Stock” http://online.barrons.com/article/SB121582947553448191.html?mod=googlenews_barrons Obviously, the Middle East is synonymous with political instability and depends on a single commodity, oil, whose price some believe has peaked. But even at lower oil prices, money will continue to roll into these countries at unprecedented rates. And instability, as Iran's missile tests underscored again last week, only seems to lift the price of oil. Over the past six years, Gulf states have built up nearly $1 trillion in financial reserves they can spend in the unlikely event of a collapse in prices.

Middle east instability now Pollack 7/15 (Kenneth M. Pollack, a senior fellow at the Brookings Institution's Saban Center for Middle East Policy. “How the Middle East Wastes Its Oil Wealth Squandered Riches” http://www.istockanalyst.com/article/viewiStockNews+articleid_2394912&title=How_the_Middle_East.html)

You might think that $140 per barrel oil would be good for at least one part of the world, the Middle East. It's too soon to tell for certain, but the region may well turn out to be the part of the world that suffers the most. As painful as the current (or coming) oil-driven recession will be for Americans, it does seem to be persuading us to make the sacrifices necessary to diminish our reliance on oil. Over the long term, that could prove a huge boon for our economy, our environment and our national security. In the Middle East, the situation may be reversed. Right now, the region is experiencing an economic boom, creating the opportunity to address the deep-seated political, economic and social problems that have spawned terrorist groups like Al Qaeda. That's certainly what the people of the region hope. The danger is that the way that the rising revenues are

being spent will more likely worsen the region's instability over time. And that's a problem, because problems in the Middle East have a bad habit of becoming big problems for the rest of the world. The Middle East isn't Las Vegas: What happens there doesn't stay there.

Gonzaga Debate Institute 2008 Scholars Lab

***Venezuelan Oil DA***

30 2nd Wave Oil DA’s

Gonzaga Debate Institute 2008 Scholars Lab

31 2nd Wave Oil DA’s

Venezuela DA – 1NC Venezuela’s GDP at record highs Latin Business Chronicle 8 ([http://www.latinbusinesschronicle.com/app/article.aspx?id=2535] Venezuela: Latin America's Richest?/ June 23, 2008) Venezuela will replace Chile as the country with the region's highest GDP per capita and Argentina as the region's third-largest economy, according to a Latin Business Chronicle analysis of data from the International Monetary Fund (IMF). Venezuela's GDP per capita is estimated to reach $11,933 this year. That's higher than the estimated figure for Chile of $10,126. The IMF estimates also show that Venezuela's GDP is set to reach $334.7 billion this year, while that of Argentina will likely end up at $323.8 billion.

Oil revenue is critical to Venezuelan poverty eradication Collier 6 (Robert, Nonprofit Organization [http://www.commondreams.org/headlines06/1002-06.htm] Venezuela's Oil Wealth Funds Gusher of Anti-Poverty Projects/ October 2, 2006) While the Venezuelan president has caused international controversy with his angry denunciations of the Bush administration, this is where the rubber meets the road for Chavez's radical rhetoric. He is spending billions of dollars on anti-poverty programs, in what experts say may amount to the largest such effort in a developing nation. And in a gamble that turns part of his own government's power structure on its head, he is handing a large degree of authority over these spending programs to thousands of these elected local councils. "The issues in these neighborhoods are very old fights -water, land, decent housing," said Andres Antillano, a professor of social psychology and criminology at the Central University of Venezuela in Caracas who has been an adviser to many neighborhood groups. "For many years, the only relationship with the state was the police. They came here and put everyone against the wall," Antillano said. "Chavez has chosen to gamble on legitimizing these issues. The communal councils are a very serious attempt at grassroots organizing." The policy appears especially popular in the hard-bitten slums of Caracas -- although as is true elsewhere around the country, the electorate seems divided between a strongly pro-Chavez minority and an apathetic majority. San Juan's new council was chosen in local voting a week previously, with only 330 of the neighborhood's 916 eligible adult residents casting ballots. "We like Chavez because he's giving us control," said Leomar Aquino, who had just been chosen head of the Education, Culture, Recreation and Sports Committee, one of a half-dozen such panels on the council. "If you don't want to participate in it, hey papito, that's your problem." On this night, nobody seemed to know exactly how much their neighborhood would receive. Nor, the next day, did anyone at the offices of the local district government or in the central government buildings downtown. What is certain, however, is that

Venezuela's petroleum export earnings are rising rapidly, and the government is spending the money with abandon. The government initially budgeted $857 million for social spending in 2006. But as oil money floods in, officials keep increasing the amount. It now stands at $7 billion, although many experts view that figure as a guesstimate of money being spent on the fly. Public works projects are everywhere, ranging from subway lines in Caracas and Valencia to bridges over the Orinoco River. New medical clinics -- mostly staffed by Cuban doctors provided under Chavez's oil aid program to Fidel Castro -- are within reach of almost everyone in this nation of 25 million people. Illiteracy, formerly at 10 percent of the population, has been completely eliminated, and infant mortality has been cut from 21 deaths per 1,000 births to 16 per 1,000. Another initiative that could change the lives of millions of poor Venezuelans is a new program aimed at increasing land ownership.

Poverty outweighs nuclear war – Their impact args are biased Abu-Jamal 98 (Mumia, political activist, http://www.mumia.nl/TCCDMAJ/quietdv.htm) This form of violence, not covered by any of the majoritarian, corporate, ruling-class protected media, is invisible to us and because of its invisibility, all the more insidious. How dangerous is it -- really? Gilligan notes: "[E]very fifteen years, on the average, as many people die because of relative poverty as would be killed in a nuclear war that caused 232 million deaths; and every single year, two to three times as many people die from poverty throughout the world as were killed by the Nazi genocide of the Jews over a six-year period. This is, in effect, the equivalent of an ongoing, unending, in fact accelerating, thermonuclear war, or genocide on the weak and poor every year of every decade, throughout the world." [Gilligan, p. 196] Worse still, in a thoroughly capitalist society, much of that violence became internalized, turned back on the Self, because, in a society based on the priority of wealth, those who own nothing are taught to loathe themselves, as if something is inherently wrong with themselves, instead of the social order that promotes this self-loathing. This intense self-hatred was often manifested in familial violence as when the husband beats the wife, the wife smacks the son, and the kids fight each other. This vicious, circular, and invisible violence, unacknowledged by the corporate media, uncriticized in substandard educational systems, and un-understood by the very folks who suffer in its grips, feeds on the spectacular and more common forms of violence that the system makes damn sure -- that we can recognize and must react to it.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela DA – UQ – Econ Up Venezuela’s GDP at record highs Latin Business Chronicle 8 ([http://www.latinbusinesschronicle.com/app/article.aspx?id=2535] Venezuela: Latin America's Richest?/ June 23, 2008) Venezuela will replace Chile as the country with the region's highest GDP per capita and Argentina as the region's third-largest economy, according to a Latin Business Chronicle analysis of data from the International Monetary Fund (IMF). Venezuela's GDP per capita is estimated to reach $11,933 this year. That's higher than the estimated figure for Chile of $10,126. The IMF estimates also show that Venezuela's GDP is set to reach $334.7 billion this year, while that of Argentina will likely end up at $323.8 billion.

Venezuela’s economy is expected to grow Latin Business Chronicle 8 ([http://www.latinbusinesschronicle.com/app/article.aspx?id=2535] Venezuela: Latin America's Richest?/ June 23, 2008) Venezuela's economy grew by 8.4 percent last year, but is starting to see a slowdown. This year it should expand by 5.8 percent and next year only by 3.5 percent, according to IMF forecasts. Argentina's economy will see a similar trend, albeit not as marked. Last year, its economy expanded by 8.7 percent. This year it should grow by another 7.0 percent before expanding by 4.5 percent in 2009.

Increased democratic participation improves Venezuelan economy Jordan 8 (James, Political Affairs [http://www.politicalaffairs.net/article/articleview/7046/1/340/] Close the Misnamed National Endowment for Democracy/ June 19, 2008) Has participatory democracy been good for Venezuela? Since the people gained popular power in 1998, the poverty rate has dropped from 54% to 38.5%--30% if food and health subsidies are factored in; millions have gained access to free health care; half the population is enrolled in free, public education; and over 5 million acres of fallow land have been turned over to rural people for agricultural development. The economy has been growing steadily since NED funded attempts to overthrow the government in 2002.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela DA – UQ – Econ Down Venezuela’s economy is down Sabino 8 (Carlos, Latin Business Chronicle [http://www.latinbusinesschronicle.com/app/article.aspx?id=2510] The Absurd Venezuelan Economy/ June 16, 2008) The next several months will bring increased inflation, more shortages, and greater internal strife within Chavismo. CARACAS—To any observer walking through the streets of this city, the poor performance of the Venezuelan economy is a powerful revelation. The basic elements of Venezuelans’ daily diet are missing; it is hard—sometimes impossible—to find milk, chicken, or flour; and there is a shortage of medicine and other products essential to good health. But as the state budget continues to increase due to a dramatic rise in oil revenues since 2003, wages have been frozen for years despite the government’s claim to operate on the people’s behalf.

Venezuela is experiencing inflation and slow growth AP 8 (Associated Press [http://www.baltimoresun.com/news/nation/bal-te.venezuela15jun15,0,3509271.story] Venezuela boom deflates/ June 15, 2008) Boom times are waning in oil-rich Venezuela, even as world crude prices soar. Inflation is nearing 30 percent, the highest in Latin America, and annual economic growth slowed to 4.8 percent in the first quarter, a four-year low. Analysts say President Hugo Chavez's economic policies are hindering private investment and growth just as he hopes to boost support ahead of November's regional elections. Many point to the economy as his Achilles' heel.

Venezuelan economic growth cut in half AP 8 (Associated Press [http://www.baltimoresun.com/news/nation/bal-te.venezuela15jun15,0,3509271.story] Venezuela boom deflates/ June 15, 2008) Foreign direct investment fell to $646 million in Venezuela last year, about half its average for the previous four years, according to the U.N. Economic Commission for Latin America and the Caribbean. Analysts warn that slowing flow of capital is a drag on the country's annual growth rate, which slowed to 4.8 percent at the end of the first quarter from 8.8 percent last year.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela DA – UQ – Oil Up Venezuela has future oil reserves Amaral 8 (Rodrigo, Fund Strategy [http://www.fundstrategy.co.uk/cgi-bin/item.cgi?id=168858] Prepare to Fly/ July 14, 2008) "Venezuela has a difficult president, but also has lots of oil and will pay its debts," he says. "It raises the classic point: the client has money to pay its debt. But does it want to pay? I think Venezuela does." Kassim says that some market analysts may be moved by other factors than purely economic analysis to have developed such contempt for Venezuelan bonds. "With all the oil they have, Venezuelan bonds are delivering yields of 10.5-11 percent. It doesn't make any sense. The market doesn't like Venezuela, but I do."

Venezuela has larger reserves than Saudi Arabia Business News 8 ([http://www.monstersandcritics.com/news/business/news/article_1414579.php/Era_of_cheap_oil_is_gone_Venezue lan_expert_says__Roundup_] Era of cheap oil is gone, Venezuelan expert says (Roundup)/ July 2, 2008) Non-OPEC countries are expected to use up their reserves by the late 2020s, according to Calderon. The most important future OPEC producers will include Venezuela, whose reserves are the worlds biggest, surpassing those of Saudi Arabia, the former energy minister said. Calderon denied that Venezuela's oil production had declined, and put production at more than 3 million barrels a day, as opposed to other estimates of 2.4 million barrels.

Venezuela has the world’s largest oil reserves Sugget 8 (James, Venezuela Analysis [http://www.venezuelanalysis.com/news/3643] Venezuela Increases Oil Financing for Petrocaribe Nations/ July 15, 2008) Chávez encouraged countries to pay part of their debt in “goods and services,” assuring that “a distinct market will be born in Petrocaribe” which creates “opportunities for integral development.” Chávez also proposed that Petrocaribe nations create mixed enterprises with the Venezuelan state oil company PDVSA to extract oil from the Orinoco Oil Belt, where Venezuela has some of the world’s largest oil reserves. This way, each country in Petrocaribe would produce its own oil supply, strengthen its economy, and be less affected by the soaring oil prices, Chávez explained.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela DA – UQ – Oil Down (1/2) Oil revenue and investment are down GAO 6 (June, http://www.gao.gov/new.items/d06668.pdf) Future foreign investment is uncertain given the Venezuelan government’s recent decision to unilaterally change its business dealings with foreign companies. Beginning in 2005, the Venezuelan administration took steps to make private Venezuelan and foreign companies producing crude oil under the 32 operating service agreements renegotiate those agreements. Essentially, the new agreements increase the maximum royalty from 16-2/3 percent to 30 percent, increase income taxes from 34 percent to 50 percent, and give PDVSA at least a 51 percent share of the operations covered by the agreement. Oil industry officials and experts have generally reacted negatively to the changes in the agreements. Most company officials we contacted told us that Venezuela’s move to unilaterally impose new agreements increased their risk and eroded the investment climate in Venezuela, likely leading to future production declines. Many oil industry officials and experts told us that the changes in the foreign company participation structure, such as mandating a majority share of the operation for PDVSA, pose investment risks and uncertainty for foreign companies because the Venezuelan government has ultimate control in decisionmaking. When France’s Total and Italy’s Eni oil companies failed to sign new agreements, the Venezuelan government seized control of their operations in April 2006; five other fields were turned over to PDVSA after negotiations, according to the Venezuelan spokesperson. Also, ExxonMobil and Norway’s Statoil chose to sell their minority stakes in smaller fields rather than accept Venezuela’s required changes. Furthermore, in May 2006, the Venezuelan Congress approved a new oil extraction tax. According to the Venezuelan spokesperson, the extraction tax is 33.33 percent applied to well production, with royalty fees deducted from this tax.

More ev… Alvarez & Hanson 6-27 (Cesar & Stephanie, Council on Foreign Relations, http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html)

Venezuela has an estimated 78 billion barrels of proven conventional crude oil reserves and an additional estimated 235 billion barrels of unconventional extra-heavy crude oil in the Orinoco Belt region located southeast of Caracas. If development in the region can turn this extra-heavy tar-like oil into a more marketable commodity, Venezuela’s total reserves could rival those of Saudi Arabia, reports the New York Times. Oxford Analytica notes, however, that PDVSA will struggle to develop its heavy-oil reserves in a timely fashion given its lack of infrastructure investment and the ongoing oil nationalizations. Oil industry experts suggest that PDVSA needs to invest at least $3 billion annually into its existing fields just to maintain current production levels.

Venezuelan oil production down Rocky Mountain News 8 ([http://www.rockymountainnews.com/news/2008/jul/05/dont-scapegoat-energyprice-runup/] Don't scapegoat energy price runup/ July 5, 2008) One cause driving up prices at the margins doesn't get a lot of headlines: 77 percent of the world's known petroleum reserves are controlled by state-owned oil companies. As Reason magazine science correspondent Ronald Bailey has noted, oil production from several of the world's largest suppliers Iran, Mexico, Nigeria and Venezuela - has recently slipped. Corruption is sometimes to blame, but the greater problem is that the state companies are inefficient and they haven't reinvested enough oil profits in infrastructure and technology.

Venezuelan oil production declining Seeking Alpha 8 (leading provider of stock market opinion and analysis [http://seekingalpha.com/article/81979oil-s-supply-and-demand] Oil's Supply and Demand/ June 19, 2008) Another important factor is that the production in many oil-exporting nations has been in decline due to under investment in new drilling and infrastructure by state run oil companies. Venezuela and Iran are two countries that fit into this category. Production in Venezuela and Iran is declining due to years of under investment as oil profits have been funneled into social programs designed to keep each country’s ruling party in power. Recent political instability in the Middle East has also contributed to the oil price rise.

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Venezuela DA – UQ – Oil Down (2/2) Venezuela’s oil production decreasing The Market Oracle 8 (Financial Markets Analysis & Forecasting online publication [http://www.marketoracle.co.uk/Article5187.html] China Raises Fuel Prices: Is this the End of the Oil boom?/ June 23, 2008) Worst of all, Mexico's production crisis is deepening: In April, Mexico's oil output fell to a nine-year low of 2.8 million barrels a day, mostly because of a decline in the Cantarell field. Think that's scary? Consider this: At current rates of decline, Mexico will become a net oil importer by 2016, and maybe sooner, according to Mexico's Energy Ministry! And it's not just Mexico. Venezuela, another big supplier of U.S. imported oil, is hemorrhaging oil production due to the slipshod management by its deluded president, Hugo Chavez. Result: The combined net oil exports from Venezuela and Mexico to the U.S. dropped by 414,000 bpd in just five months recently. That's an astounding annual decline rate of 32% a year!

Venezuelan oil revenue is down Johnson & Cohen 4 (8-12, Stephen & Ariel, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg1787.cfm) During its 20-year history before Chávez, PDVSA built a reputation for smooth operation and competence, but the 2002-2003 national strike devastated the oil giant. Some 35,000-40,000 skilled workers, including fire fighters, walked out while spillage and fires ensued. Production capacity dropped from three mbd to 600,000 barrels. Chávez fired 18,000 skilled managers and workers, further undermining PDVSA's precarious situation.17 To regain and maintain pumping capacity at an estimated 2.5 mbd, PDVSA engineers reportedly "goose" wells by pumping air and water into them to coax Venezuela's viscous petroleum to the surface, endangering the long-term viability of existing fields. Despite recent high oil prices that have provided a fresh infusion of cash, PDVSA remains in disarray. Venezuelan economist Gustavo García calculates that this year's internal investment fell from $5 billion to $4.3 billion while salaries went up 60 percent despite no apparent increase in productivity or number of employees.18 Without reinvestment in equipment and maintenance, PDVSA will not be able to maintain current production levels. Moreover, Chávez has reportedly channeled between $1.6 billion and $3.7 billion from PDVSA into a special account that he is using to finance social programs to influence voters in the upcoming referendum on his presidency.

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Venezuela DA – UQ – Diversification Up Venezuela’s economic diversification up Alvarez & Hanson 6-27 (Cesar & Stephanie, Council on Foreign Relations, http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html)

Hugo Chavez took office in 1999. Since then, Venezuela’s economy has remained squarely centered on oil production. In 2006, Chavez announced a nationalization of oil fields managed by foreign companies, which resulted in an increase of the government’s shares in these projects from 40 percent to 60 percent. Government officials argue, however, that economic growth efforts are not solely focused on oil. Venezuela’s ambassador to the United States, Bernardo Alvarez Herrera, wrote in a 2006 Foreign Affairs essay that the non-oil sector, which includes mining, manufacturing, and agriculture, grew 10.6 percent in 2005, “indicating an important diversification of the country's economy.” Yet even if the country is working to diversify,“oil still predominates,” says Miguel Tinker-Salas, a professor of Latin American history at Pomona College.

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Venezuela DA – UQ – Diversification Down Diversification in Venezuela is down Berry 8 (Albert, Professor Emeritus of Economics at the University of Toronto, with a research focus on the economics of Latin America, March, http://www.focal.ca/publications/focalpoint/fp0308se/?article=article4&lang=f) Dutch disease constitutes at least some degree of threat in Venezuela, Bolivia, Ecuador, Mexico, Colombia and Brazil. The threat is currently greatest in Venezuela and Bolivia. In fact, Venezuela’s stagnation in the wake of the previous oil price hikes of the 1970s qualifies it as a classic victim of this disease: slow growth as manufacturing and agriculture are hamstrung by the appreciated exchange rate; low employment creation in productive sectors; and the resulting high levels of “informalization” and inequality. Bolivia’s level of inequality still shows Dutch disease’s impact on tin from earlier times. Mexico (now) and Brazil (when its oil becomes a major export) are less likely to suffer ill effects from energy exports because they are bigger, more diversified countries, and probably also because their decision-makers will have a better handle on how to deal with the problem.

Diversification low- Venezuela dependent on oil profits Jordan 8 (James, Political Affairs [http://www.politicalaffairs.net/article/articleview/7046/1/340/] Close the Misnamed National Endowment for Democracy/ June 19, 2008) While Venezuela is engaged in a massive effort to diversify its economy, it still remains dependent on oil profits which, under participatory democracy, support social spending. Community members are involved in decisions about whether or not to develop oil resources and, for the first time in Venezuelan history, indigenous nations most affected by oil development, take part in these decisions.

Kay & Quispe-Agnoli 2 (Stephen J, Myriam, Atlanta Fed's Latin America Research Group, http://findarticles.com/p/articles/mi_m0KXG/is_3_4/ai_93610810) Venezuela, for example, is more dependent on oil than any other country in Latin America with year2000 petroleum-export revenue accounting for approximately 23 percent of gross domestic product, half of the government's revenue, and 86 percent of exports. Consequently, the Venezuelan economy undergoes cycles of expansion and contraction associated with the price of oil. The economic swings are exacerbated by the fact that fiscal policy has traditionally been procyclical, with government spending rising during the boom years and shrinking when revenues fall. An oil stabilization fluid is a tool that governments can use to enact countercyclical fiscal policies that could potentially reduce the disruptive impact of a sharp drop in the price of oil.

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Venezuela DA – UQ – Inflation Up Inflation skyrocketing Cancel 7/8 (Daniel [http://www.bloomberg.com/apps/news?pid=20601086&sid=a_s9FFSShDfI&refer=news] Venezuelan Inflation Surges to Five-Year High in June/ July 8, 2008) Venezuela's annual inflation rate reached the highest in five years last month as the easing of price caps on foods caused supermarket prices to surge. Consumer prices rose 32.2 percent from a year earlier, exceeding the 31.4 percent median forecast of 12 analysts surveyed by Bloomberg. Monthly inflation was 2.3 percent, according to the central bank's benchmark index of prices in Caracas.

Inflation in Venezuela high The Economist 8 ([http://www.economist.com/world/la/displaystory.cfm?story_id=11585215] A funny way to beat inflation/ June 19, 2008) Nevertheless, the economy slowed sharply in the first quarter of this year (see chart). That came as a surprise to the planning ministry, which had forecast growth of 6.7%. To make matters worse, the government's inflation forecast of 12% for this year has proved even more wildly optimistic. This is particularly bad news for the poor, Mr Chávez's main constituency. The price of food is rising faster than the overall index. According to the Centre for Documentation and Analysis (CENDA), a group linked to the trade unions, the cost of feeding a family of five rose by 2.4% in May and stands some 60% higher than the minimum wage, even though this was recently increased. For the first time in the past three years, the living standards of ordinary Venezuelans are declining.

Inflation in Venezuela at 29% The Vancouver Sun 8 ([http://www.canada.com/windsorstar/news/editorial/story.html?id=1dc006ab-b7f14699-b015-768b1de09f99] Renewed inflation looms for Canadians/ July 14, 2008) In Thailand, inflation has jumped to a 10-year high of 8.9 per cent. In Russia, inflation is running at more than 14 per cent; in Argentina, 23 per cent (unofficially); in Venezuela, 29 per cent; and in Indonesia, nine per cent (with analysts predicting 12 per cent next year).

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Venezuela DA – UQ – Inflation Down Venezuela taking steps to decrease inflation Sugget 8 (James, Venezuela Analysis [http://www.venezuelanalysis.com/news/3584] New Venezuelan Finance Minister Presents Plan to Fight Inflation/ June 23, 2008) On Sunday, Ali Rodríguez, the new Venezuelan Finance Minister, detailed ministry plans to take on the “immediate challenge” of inflation by investing Venezuela’s “overflowing” oil revenues in a broadened state apparatus to stimulate agricultural production and gradually leave behind “state capitalism.” Rodríguez recommended that inflation “be combated in two directions, on the one hand, the stimulation of production principally in the food sector and, on the other hand, we must carry out a very prudent moderation of consumption.”

Inflation down in Venezuela Herald Tribune 8 ([http://www.iht.com/articles/ap/2008/07/08/business/LA-GEN-Venezuela-Inflation.php] Venezuela inflation reaches 15.1 percent in first six months/ July 8, 2008) President Hugo Chavez's government has been battling South America's highest inflation rate. The Central Bank says monthly inflation has slowed to 2.4 percent in June — down from 3.2 percent a month earlier. The Central Bank said Tuesday that price increases have slowed primarily in the food sector, partly due to an increased supply of agricultural products

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Venezuela DA – Oil K/T Economy (1/2) Oil key to Venezuelan economy Alvarez & Hanson 6-27 (Cesar & Stephanie, Council on Foreign Relations, http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html)

Venezuela's proven oil reserves are among the top ten in the world. Oil generates about 80 percent of the country’s total export revenue, contributes about half of the central government’s income, and is responsible for about one-third of the country’s gross domestic product (GDP). Increases in world oil prices in recent years have allowed Venezuelan President Hugo Chavez to expand social program spending, bolster commercial ties with other countries, and boost his own international profile. Though Chavez has threatened to stop exporting Venezuelan oil and refined petroleum products to the United States, its biggest oil-trading partner, experts say a significant short-term shift in oil relations between Venezuela and the United States is unlikely. The medium-term outlook for state oil company PDVSA is questionable, however, and analysts draw links between PDVSA's profitability and the political stability of the country.

Oil key to Venezuelan Economy Cibils and Scott 1 (Vicente Fretes Lead Specialist, LAC, The World Bankand Kinnon World Bank. Washington, D.C http://wbln0018.worldbank.org/LAC/lacinfoclient.nsf/e9dd232c66d43b6b852567d 2005ca3c5/fe8ed dae8d8fdec985256b0b005a28b9/$FILE/C-II.pdf) Over the last ten years, the structure of the economy has changed: Venezuela has become more dependent on the oil sector with the share of oil–GDP in total real GDP increasing from about 21 percent in the early 1990s to about 26 percent in the late 1990s.3 At the same time, the share of agriculture in total real GDP decreased from about 6 percent in 1990 to about 5 percent in 2000 and manufacturing decreased from about 13 percent to about 11 percent.4 The service sector (including government, commerce and other services) remained at about 47 percent of real GDP. Finally, reflecting the failure of exports to diversify away from the oil sector, and the impact of the overvaluation of the domestic currency on the external competitiveness over time, the share of non–oil exports to total exports remained, on average, below 25 percent.

More ev… Sullivan & Olhero 8 (1-11, CRS Report, Specialist in Latin American Affairs, http://www.fas.org/sgp/crs/row/RL32488.pdf) Since Venezuela is a major supplier of foreign oil to the United States (the fourth major foreign supplier in 2006, after Canada, Mexico, and Saudi Arabia), providing about 11% of U.S. crude oil imports, a key U.S. interest has been ensuring the continued flow of oil exports. Some 68% of Venezuela’s oil exports are destined for the United States, highlighting the dependency of Venezuela on the U.S. market, and oil exports account for the overwhelming majority of Venezuela’s exports to the United States. In 2006, Venezuela’s total exports destined for the United States amounted to $37.2 billion, with oil products accounting for $35.1 billion, or 94% of the total.106 The December 2002 strike orchestrated by the opposition reduced Venezuela’s oil exports, but by May 2003, Venezuelan officials maintained that overall oil production returned to the pre-strike level. Venezuela’s state-run oil company, PdVSA, owns CITGO, which operates three crude oil refineries and a network of some 14,000 retail gasoline stations in the United States. The Chávez government has benefitted from the rise in world oil prices, which has increased government revenues and sparked an economic boom. As a result, Chávez has been able to increase government expenditures on anti-poverty and other social programs associated with his populist agenda.

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Venezuela DA – Oil K/T Economy (2/2) Low oil prices would devastate Venezuela’s economy Lapper 6 (Richard, Council on Foreign Relations [http://www.cfr.org/content/publications/attachments/VenezuelaCSR.pdf] Living with Hugo U.S. Policy Toward Hugo Chávez’s Venezuela/ November 2006) But Venezuela also suffers from considerable weaknesses. Venezuela’s failure to diversify its economy and invest sufficiently in its hydrocarbons industry has made shortterm growth dependent on oil prices. Should prices decline, Venezuela, along with countries that rely on Chávez’s financial support, may face tough economic challenges. Even if oil prices remain high, further investment is necessary to create enough jobs for a growing workforce and make recent improvements in living standards sustainable. Yet, unless Venezuela is able to make its public sector more transparent, the government is unlikely to be able to attract adequate quantities of foreign capital.

US demand is key Lapper 6 (Richard, Council on Foreign Relations [http://www.cfr.org/content/publications/attachments/VenezuelaCSR.pdf] Living with Hugo U.S. Policy Toward Hugo Chávez’s Venezuela/ November 2006) Yet, despite Chávez’s tendency to publicly insult American leaders and whip up anti-American sentiment, the United States and Venezuela remain mutually dependent. Chávez relies on U.S. oil demand to sustain the Venezuelan economy; roughly 60 percent of Venezuelan oil exports are destined for the United States. Threats by Caracas to divert energy exports to China are not credible in the short term, given the tremendous infrastructure and transportation costs such a shift would involve.

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Venezuela DA – Investment K/T Oil Investment critical to Venezuelan oil GAO 6 (June, http://www.gao.gov/new.items/d06668.pdf) The oil industry is capital-intensive and heavily dependent on continuous investment to maintain existing wells, establish new wells for crude oil production, and develop and maintain the infrastructure supporting the production network. According to the EIA, PDVSA is Venezuela’s largest employer and accounts for about one-third of the country’s GDP, about 50 percent of the government’s revenue, and 80 percent of Venezuela’s export earnings. PDVSA stated in 2005 that it plans to invest $26 billion to expand its oil production to 5.8 million barrels per day by 2012.

Foreign investment is critical GAO 6 (June, http://www.gao.gov/new.items/d06668.pdf) According to Venezuelan officials, as of late 2005, no agreements had been signed or investments made to start implementing the major oil production expansions detailed in the plan; experts told us that, without agreements, the plan will face significant delays, at best. The absence of such deals increases the likelihood that Venezuelan oil production will continue to fall because, given that PDVSA’s own production is in decline, Venezuela needs willing foreign oil company partnership to maintain its current level of oil production.

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Venezuela DA – A2: Oil Causes Poverty Oil is lifting Venezuela out of poverty Washington Post 6 (http://www.washingtonpost.com/wp-dyn/content/article/2006/11/22/AR2006112200 252.html) Millions of Venezuelans like her have come to rely on the heavily subsidized state-run grocery stores established by the government of President Hugo Chavez, and she says it's a big reason why she will vote to re-elect him in Dec. 3 elections. "He has done many things. You can see it," said Oliveros, who struggles to raise two children on her husband's salary of $230 a month at a car wash. The cheap food and other programs funded by Venezuela's oil wealth haven't lifted her family out of poverty, but she says getting by is easier today than when Chavez was elected in 1998. It's a view often echoed in the poor barrios of Venezuela, where Chavez remains popular as he seeks another six-year term. He has pledged to eliminate poverty completely by 2021, when he hopes to be in office still. Drawing on billions of dollars in oil revenues, Chavez has started a long list of social programs, called "missions," which offer everything from job training to cash assistance for single mothers.

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Venezuela DA – A2: Inflation (1/2) No inflation risks in Venezuela – Tools check it Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) Inflation itself is a problem, now running at 19.4 percent. But it should be emphasized that double-digit inflation rates in a developing country such as Venezuela are not comparable to the same phenomenon occurring in the United States or Europe. Inflation in Venezuela was much higher in the pre-Chávez years, running at 36 percent in 1998 and 100 percent in 1996. It has fallen through most of the current recovery, from a 40 percent annual rate (monthly, year-over-year) at the peak of the oil strike in February 2003 to 10.4 percent a year ago, before climbing again to its present rate (see Figure 3). Over the last three months it appears to have stabilized at 19.4 percent. Because of its large current account surplus, large reserves, and low foreign debt, the government has a number of tools available to stabilize and reduce inflation – as well as eventually bring the currency into alignment – without sacrificing the growth of the economy. It appears the government is committed to maintaining a high rate of growth, in addition to its other goals. Therefore, at present it does not appear that the current economic expansion is about to end any time in the near future.

More ev… Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) The current uptick in inflation is fueled by a combination of shortages and the accumulated effects of three and a half years of very rapid growth. How serious of a problem is this increased inflation, and could it lead to an economic crisis and/or the end of the current economic expansion? First, it should be kept in mind that there is no consensus in the macroeconomic research on inflation as to how high it can go without a negative impact on growth, with some studies finding a threshold of 20 percent or more – a threshold that Venezuela is just now approaching.31 Second, it should be emphasized that double-digit inflation rates in a developing country such as Venezuela are not comparable to the same phenomenon occurring in the United States or Europe. Inflation in Venezuela was much higher in the pre-Chávez years, running at 36 percent in 1998 and 100 percent in 1996. Although much of the public does not understand this, it is real (after-inflation) growth in incomes— and employment – that affects people's living standards, not the rate of inflation per se. This is true so long as inflation does not spiral to the point where it actually reduces real growth. So far, it does not appear that inflation in Venezuela is getting out of control. In the last 3 months it has stabilized at about 19.4 percent. Beginning in February of this year, the government reduced the value added tax, in an effort that probably contributed to stabilizing the inflation rate. It is also worth noting that inflation has fallen sharply through most of the current economic recovery, and has only risen over the last year. In the last year it has risen to about half of its peak in February 2003, which was driven by the oil strike of that year.

More ev… Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) Furthermore, since the country is running such a large current account surplus, and the government is taking in more revenue that it can spend, it has a number of tools to fight inflation without necessarily sacrificing economic growth. One has been sterilization, whereby the government takes excess domestic currency out of circulation by issuing bonds. The recent sale of $7.5 billion worth of bonds by PDVSA in April, which were snapped up by a large number of investors,32 are an example of the government using bond sales for this purpose. Venezuela's current account surplus also gives it the leeway to defuse inflation through imports. This is what happened through most of the current economic recovery, when inflation was falling despite very rapid growth – excess domestic currency was converted into dollars and spent on imports. As can be seen in Table 6, imports tripled from their depressed level of $10.5 billion in 2003 to $32.2 billion, or 17.8 percent of GDP in 2006. But exports, fueled by rising oil prices and the recovery of oil production from the strike, grew much faster, from $27.2 billion in 2003 to $65.2 billion, or 36 percent of GDP. As a result, the country is running a huge current account surplus: it was 15 percent of GDP for 2006. In the last 2 quarters this surplus has shrunk considerably, but is still about 8 percent of GDP.

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Venezuela DA – A2: Inflation (2/2) Inflation isn’t a threat and the gov’t can cushion it Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) In sum, inflation has been rising over most of the last year but it is not an imminent threat to the current expansion. This is likely to remain the case so long as Venezuela maintains a large current account surplus. Nonetheless, the government will need to make sure that inflation does not begin another upward climb of the sort that has happened over the last year. Fortunately, given the government's favorable current account, international reserves and borrowing capacity, it has the ability to bring down inflation without a sharp slowdown in economic growth.

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Venezuela DA – Impact – Stability/War Collapse of Chavez government causes war Carlson 8 (5-12, Chris, Staff – Venezuela Analysis, http://www.venezuelanalysis.com/news/3433 Venezuelan President Hugo Chavez warned opposition leaders against any attempts to break away from Venezuela on his weekly talk show Aló Presidente on Sunday. In light of the recent proposal for autonomy in the oil-rich state of Zulia, President Chavez aired his weekly show from the capital of this state and warned that any attempts at breaking away would be cause for war. “It would be a cause for war if someone came here and tried to divide up Venezuela,” he said from Maracaibo, state capital of Zulia. Chavez warned opposition leaders that they better “get an army” if they plan on trying to break away from the country.

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Venezuela DA – Impact – Instability Bad: Kills Millions

Venezuela war risks millions while threatening the world’s oil supply Logan 6 (Int’l Security Network, Sam, Investigative journalist “Invasion or civil war for Venezuela?” http://www.isn.ethz.ch/news/sw/details.cfm?id=15232) For years, Venezuelan President Hugo Chavez has claimed to be protecting his people from the corrupt and greedy Venezuelan elite class, represented by the Venezuelan political opposition. Now he is protecting them from an external foe, the US, which he has accused of intending to invade Venezuela. Riding on the rhetoric of an eventual US invasion, Chavez is building up a massive civilian militia answerable directly, and only, to him. That militia, however, is more likely intended to deter a military coup than a US invasion. After the 2002 attempt to overthrow his government, Chavez changed tactics, taking on a larger role as protector of his people from the US. As such, he must continue to claim that the US will someday invade Venezuela and that they only thing that will keep the Yankees at bay is two million trained civilians. The formation of a civilian militia gives physical presence and weight to Chavez's rhetoric that the US will one day invade. Considering the many rumors of a palace coup and the shuffling of military commanders in Chavez’s top brass, however, the formation of a civilian militia looks more like another bulwark intended to protect himself against a militaryled coup d’etat. The only conventional army likely to threaten Chavez is Venezuela’s own military forces, the FAN. In the event of a successful FAN-orchestrated coup, two million hardcore supporters with military training could be ordered to drag the country into a civil war. Given the world’s dependence on Venezuelan oil, such a possibility would have serious international repercussions.

More ev… Logan 6 (Int’l Security Network, Sam, Investigative journalist “Invasion or civil war for Venezuela?” http://www.isn.ethz.ch/news/sw/details.cfm?id=15232) What military analysts call asymmetrical warfare, also referred to as fourth-generation warfare, is characterized by war between a nation-state and a non-state actor. Latin America’s history is riddled with examples of how asymmetrical warfare has been used to overthrow a government, such as the Cuban Revolution, or used to prolong a struggle, such as the Revolutionary Armed Forces of Colombia (FARC). In some cases, these non-state actors have been integrated into politics, such as the FMLN in El Salvador. Chavez is in a position to take advantage of this history to promote his ideology of a region-wide resistance against US imperialism. It is convenient rhetoric that veils what many believe are his intentions to deter a military coup. By the end of 2007, it is quite possible that a total of two million Chavez supporters will have been trained and reinserted back into their normal lives, ready to resist at a moment’s notice. It is highly unlikely that this militia will be called to protect Venezuela from an outside invader. Rather, they could be called on to protect Chavez’s regime from a cadre of military officers and others who want to remove him from office. If Chavez manages to survive such a coup attempt, he may go quietly or he may seek to embody the spirit of Cuba’s Fidel Castro and regional revolutionary hero Ernesto “Che” Guevarra by leading his faithful into a civil war. The FAN is believed to have at least 80,000 professional soldiers, who could be forced to face two-million urban guerrillas. A civil war in Venezuela would be intense, extremely destructive, and spell doom for the future of Venezuela’s economy, society, and oil output. Due to the nature of asymmetrical warfare, it would be nearly impossible to completely eradicate a group of dedicated and trained Chavez supporters.

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Venezuela DA – Impact Module – Health Oil revenue is invested in Venezuela’s health care infrastructure Briggs and Roberts 7 (Charles L. is a Professor of Anthropology at UC Berkeley and Venezuelan public health physician and Associate Researcher, Emily is a master’s student in the Schools of Public Health and Social Welfare, http://socrates.berkeley.edu:7001/Events/spring2007/02-05-07-briggs/index.html) Three weeks after Chávez told the health minister, “Get me that program!” Misión Barrio Adentro was nationalized. Although Chávez did not initiate the Barrio Adentro movement, his leadership proved instrumental and led to a rollout of resources to build, stock and staff the clinics. Thirty thousand Cuban health professionals were brought over to take posts across the country. The implementation of Misión Barrio Adentro sparked new ideas for locally-based social programs which in turn led to the reallocation of millions of dollars in oil revenues to finance the wide array of education, health, social and cultural programs visible in Venezuela today.

A strong health care system saves millions from malaria Travel Health Service 5 (Department of Health Government of Hong Kong Special Administrative Region http://www.travelhealth.gov.hk/english/outbreaknews/2005/ond13march2005.html) A research paper published in Nature estimated that there were around 515 million cases of malaria worldwide in 2002, nearly double previous estimates in 1998 by the World Health Organization. One third of the population in the world i.e. 2.2 billion people, are at risk from the malaria. The disease claims 1 million lives a year in sub-Saharan Africa alone, most of them children under 5 years old. Of the 4 malaria parasites, Plasmodium falciparum is the most dangerous, which is prevalent throughout the tropics (including Southeast Asia), and has developed resistance to most anti-malarial drugs. Health experts worry about the situation in Southeast Asia. Many people with malaria do not go to clinics and many clinics do not submit disease figures. There are many more malaria cases in Southeast Asia than recognised before. Global control of malaria relies on efficient public health measures, health education, provision of bed-nets and effective drugs to persons needed.

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Venezuela DA – Impact – Health – Oil K/T Health Oil drives the Venezuelan health care system Schuyler 3 (Department of history University Central Arkansas http://www.soc.uoc.gr/kousis/KOIN1/Health/NeoLiberalismHealth/NeolibHealthVenezuela.pdf) Popular participation played a key role in the adjustment processes of both Venezuela and Cuba. Venezuela’s democratic governance has been highly centralized with great inequality and little effective participation at the grassroots. Policy decisions have traditionally come from the top down. When oil income and social spending dropped sharply in the 1980s and 1990s, poor Venezuelans participated even less in the health care system. Collapsing public health helped shape the popular perception that the democratic system was using a collective resource – oil – for the privileged few. Political legitimacy and trust in the leadership dissolved, leading to attempted golpes and, in the late 1990s, the election of Hugo Chávez, a former coup leader, as president.

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Venezuela DA – Impact – Health – Health Care Up Venezuela’s national healthcare program solves World Development Indicators 0 ([http://www.nationsencyclopedia.com/economies/Americas/VenezuelaPOVERTY-AND-WEALTH.html] Distribution of Income or Consumption by Percentage/ 2000) Venezuela enjoys some of the highest health standards in South America in terms of infant mortality (26.4 per 1,000 population) and longevity (73.07 life expectancy). Much of this was made possible by government intervention. Much of the population gets its medical care from facilities and hospitals operated by the Venezuelan Social Security Institute. Treatment at the country's clinics is free, though there is a small charge for prescription drugs. At the public hospitals, the poor receive treatment for free, and a small fee is charged to those who can afford to pay it. There is also a public welfare program that provides survivor and old-age pensions, maternity benefits, and payment for work-related accidents and illnesses. The institute finances its activities by a mandatory payment of 12 percent of the salaries of all Venezuelan workers. The government has had great success in implementing programs of prenatal care and children's immunization, improving water and sanitary conditions, and eliminating diseases.

Modern technology is improving Venezuela’s healthcare The World Bank 4 ([http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/VENEZUELAEXTN/0,,menuPK:3317 77~pagePK:141132~piPK:141107~theSitePK:331767,00.html] Venezuela Country Brief/ August 2004) The Endemic Disease Control Project helped to control malaria and other endemic diseases such as Chagas, dengue, yellow fever, leprosy, and leishmaniasis. The project lowered the incidence and impact of endemic diseases, and strengthened the institutions that are responsible for their control. Currently, Venezuela is better prepared to apply modern technology to control and treat these causes of ill health thanks to expanded training and the creation of research, diagnostic, and field support facilities. Between 1996 and 2000, the project saved an estimated 11,500 lives, prevented 500,000 illnesses, and treated about 3.5 million non-lethal infections. Under the project, the Malaria Directorate was able to control malaria in approximately 408 square kilometers where the disease is endemic. The number of deaths due to malaria dropped from 25 per year in 1995 to 7 in 1999, while the number of cases decreased from 22,056 to 21,685. In the state of Bolívar, the time from onset of symptoms to treatment was cut by 33 percent, diminishing the prevalence and possibility of transmission. A significant decline in mortality due to dengue was also achieved between 1995 and 1999. In 1995, dengue took the lives of 65 people. By 1999, the number of deaths dropped to 15, and the number of cases decreased from 32,280 to 26,602. Strengthened control activities also moved Venezuela into the elimination phase of leprosy, according to Pan American Health Organization standards. Improvements in detection and treatment decreased the number of children affected and people incapacitated by the ailment.

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Venezuela DA – Impact – Health – Malaria An outbreak of diseases is coming Hong 00 (Evelyn Third World Network Prepared for the Peoples Health Assembly http://www.phmovement.org /pdf/pubs/phm-pubs-hong.pdf) Global economic forces have given rise to a situation where exposure to pathogenic microorganisms has increased and human resistance has been weakened. It has led to new emerging diseases and old diseases have staged a comeback. In 1993, WHO estimated 14.4 million people died of infectious diseases. In the US, TB rose by 18 percent between 1985 and 1992. One third of the world’s population is said to be carrying the infection. The spread of the HIV virus, which destroys the immune cells that keep the TB germ under control in the body, will cause many to die of the disease. With several strains of the TB bacterium now resistant to all anti-TB drugs, the WHO admits that the disease ‘is out of control in many parts of the world’. Diptheria has reemerged as a major killer of adults in Russia. Plague has resurfaced in India, while malaria has returned to regions which it had been eliminated and is spreading to previously unaffected areas. Cholera has re-emerged as a major killer in South America. Epidemics of dengue fever transmitted by the Aedes Aegypti mosquito have swept parts of Venezuela, Brazil, India and Australia the first time ever. Yellow fever is on the increase in Africa.

A malaria outbreak will happen in Venezuela Hong 00 (Evelyn Third World Network Prepared for the Peoples Health Assembly http://www.phmovement.org /pdf/pubs/phm-pubs-hong.pdf) The incidence of vector borne and water borne diseases climbs during El Nino and La Nina years, especially in areas hit by floods or droughts. Longterm studies in Colombia, Venezuela, India and Pakistan reveal, that malaria surges in the wake of El Ninos: regions stricken by flooding or drought during the El Nino of 1997-1998 (the strongest of the century) often experience a convergence of diseases borne by mosquitoes, rodents and water. Additionally, in many dry areas, fires raged out of control, polluting the air for miles around.

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Venezuela DA – Impact – A2: Turn: Arms Race/Instability Bilateral talks prevent regional war Flight International 8 (“Latin America: military modernisation or arms race?” http://www.forecastinternational.com/notable/flightglobal.pdf 3/19/08)

Venezuela - The Chavez administration's purchases of Russian military equipment continue with the December 2007 contract for an initial four Kazan Ansat light utility helicopters. Venezuela also planning to buy 12 more Russian-built aircraft, says Barrett, with a mix of Ilyushin Il-76 transports and Il-78 tankers likely to be procured to replace the ageing Lockheed C-130s. In 2006, the Chavez administration purchased 24 Sukhoi Su30MK2 fighters, the last of which will be delivered to the air force this year. The Venezuela army, meanwhile, is receiving a total of 53 Mil Mi-17V5 transport, Mi-26T heavylift and Mi-35M2 combat helicopters. "There has been an application, but no contract yet, for the purchase of Russian Mi-28 Night Hunter combat helicopters," she says. Particularly disturbing for the US government, which keeps up a war of words with leftist Chavez, Venezuela has plans with Belarus to develop an integrated air-defence and electronic-warfare system, as well as to purchase dieselelectric submarines from Russia. But Barrett believes continued bilateral talks between nations will prevent Latin America's long pent-up military modernisation escalating into a regional arms race. "Venezuela has the equipment to be a threat but, for Hugo Chavez, so far it has only been talk," she says.

No arms race – Just normal modernization Flight International 8 (“Latin America: military modernisation or arms race?” http://www.forecastinternational.com/notable/flightglobal.pdf 3/19/08)

"While some might see this as a potential arms race, I believe that it is more nations' attempts to meet a pentup demand for modernisation of their armed forces," says Rebecca Barrett, Latin America analyst with Forecast International. "This is not to say that Venezuelan procurement activity is not extravagant, or necessary to the extent to which President Chavez has brought it," she says. "He remains the region's hotheaded leader who will continue to incite non-allying nations until the end of his term."

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Venezuela DA – Impact – A2: Heg (1/2) US leadership is Latin America is done Flynn 7-11 (Mathew, Center for Intl Policy Staff, http://americas.irc-online.org/am/5362) South America's relationship with the rest of the world has changed substantially in recent years. While the United States has been preoccupied with the War on Terrorism and focusing its attention mainly in the Middle East, South America has increased its trade relations with the rising economies of Asia. The Council on Foreign Relations recently released a report saying the United States is losing hegemony in the region and new direction is needed.5 The Council's Task Force on Latin America bluntly states this new reality: "If there was an era of U.S. hegemony in Latin America, it is over."

Military deterrence checks Flynn 7-11 (Mathew, Center for Intl Policy Staff, http://americas.irc-online.org/am/5362) Analysts continue to debate on how to measure military power in Latin America, but all agree that if a "strategic imbalance" exists in the hemisphere, it continues to favor the United States. SouthCom's communications officers did not respond to requests concerning its operating budget, but documents available on the internet put it around US$170 million for 2008.17 This amount does not include military aid. Oddly enough, since the end of the Cold War when U.S. economic aid was more than the amount of military aid, now the two are growing closer. In 2005, Congress appropriated $921.07 million in economic aid and at least $859.69 million in military aid.

More ev… BBC 5-10 (http://www.venezuelanalysis.com/news/3427) With regard to the supposed U.S. military challenges in the region, Sánchez added: “Let’s be honest. Even if Venezuela acquires a Russian submarine, or Brazil wants to develop a nuclear submarine, neither of these countries can present a military threat to the United States.” From the analyst’s perspective, the U.S. navy’s recent decisions demonstrate, among other things, that “no matter which Latin American country is in an arms race, they cannot compare to U.S. military power.”

Democracy and free markets make influence resilient Brookes 8 (Heritage Foundation, Peter, Senior fellow. “Uncle Sam’s Latin challenge” http://www.heritage.org/Press/Commentary/ed013108a.cfm) Another positive note: Democratic politics, with some notable exceptions, have become entrenched in the Latin psyche since the end of the Cold War. Free markets are also on the march, fostered by regional free trade agreements. So, has the United States "lost" Latin America? Nah. While some nations, prodded by Chavez's petrodollars, have moved left and become less democratic, that trend is balanced by positive developments in democracy and free markets.

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Venezuela DA – Impact – A2: Heg (2/2) Latin America is not influenced by Chavez Lapper 6 (Richard, Council on Foreign Relations [http://www.cfr.org/content/publications/attachments/VenezuelaCSR.pdf] Living with Hugo U.S. Policy Toward Hugo Chávez’s Venezuela/ November 2006) Despite these noteworthy trends, it would be a mistake to exaggerate Chávez’s ability to influence regional political dynamics. Bolivian government officials have expressed a desire to act independently of Venezuela, and pressure from regional interests seeking greater autonomy may well limit the ability of President Morales to centralize power in the same way as Chávez. On numerous occasions, Latin American electorates have resisted the prospect of Venezuelan interference in their countries’ internal affairs. President Alan García’s aggressive stance toward Caracas proved to be a vote winner in Peru. Similarly, accusations (probably unfounded) that Mexico’s Andrés Manuel López Obrador was close to Chávez helped Felipe Calderón turn the tables on his opponent and eventually win Mexico’s election in July. More consolidated democratic and nationalist political cultures in Latin America, especially in countries such as Brazil, Argentina, Chile, and Uruguay, are generally resistant to the crude populist appeal and interventionist tactics of Chávez. For the same reasons, however, many Latin Americans view U.S. attempts to intervene in Venezuelan domestic politics with equal suspicion. As long as the United States is seen to covertly support opposition groups and promote regime change in Venezuela, U.S. denunciations of Chávez’s own regional activities will ring hollow.

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Venezuela DA – Impact – A2: Terrorism Venezuela has no terrorist affiliations AP 8 ([http://www.naharnet.com/domino/tn/NewsDesk.nsf/0/BE358F609E1E6A16C225746E0025780C?OpenDocument] Venezuela Says 'No Terrorists Here' After U.S. Action Against Alleged Hizbullah Supporters/ June 20, 2008) Venezuela's foreign minister on Thursday rejected U.S. government accusations that a Venezuelan diplomat helped finance Hizbullah in Lebanon. Foreign Minister Nicolas Maduro did not specifically refer to Ghazi Nasr al Din, who was targeted Wednesday in a U.S. Treasury Department action ordering any assets he controls in the United States to be frozen and forbidding U.S. citizens from doing business with him. But Maduro told reporters that "there are no terrorists here," and said officials should be going after the assets of U.S. President George Bush. "If they want to search for terrorists, look for them in the White House," he said. Washington considers the Iranian- and Syrian-backed Hizbullah a terrorist group. Wednesday's action accuses Nasr al Din of using his position as a diplomat and a leader of a Caracas-based Shiite Islamic center to help the group. The main Shiite Muslim center in Caracas is the Imam al Hadi Venezuelan Islamic Center, said Mohamad Mtayrek, a 42-year-old Lebanese immigrant who helps manage the small mosque and community center in a two-story house. Mtayrek said the center has no link to Hizbullah and dismissed Washington's allegations as "politics." He said he knows Nasr al Din but declined to speak about him, saying "it's not my business."

Venezuela opposes terrorism Venezuela Analysis 3 [http://www.venezuelanalysis.com/news/142] Venezuela Ratifies its Commitment to Fight Terrorism/ October 5, 2003) In the face of the recent bomb attacks against government buildings in Venezuela, and claims by the U.S. News and World Report of possible Venezuelan support for terrorists, the country has confirmed its strong commitment to fight terrorism. Venezuela has recently ratified several international treaties through which it makes clear its condemnation and repudiation of that type of crime in all its forms, and its commitment to fight against this threat to peace and international security. The International Convention for the Suppression of Terrorist Bombings, the Terrorist Financing Convention and the Convention on the Rights of the Child on the involvement of children in armed conflicts, were the instruments ratified at the United Nations, during the 58th Ordinary Session of the General Assembly of the UN. By ratifying these treaties, they automatically become national laws of obligatory enforcement, according to the Bolivarian Constitution of Venezuela, approved in December of 1999. Venezuela also reinforced its commitments for the international cooperation between the States with the development and the adoption of practical and effective measures to prevent terrorist acts and the trial and punishment of the perpetrators of these acts.

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Venezuela DA – Impact – A2: Colombian War (1/3) Chavez does not want a war with Colombia Weisbrot 8 (Mark Co-Director of the Center for Economic and Policy Research, in Washington, D.C. http://www.venezuelanalysis.com/analysis/3554 ) Washington's foreign policy establishment - and much of the U.S. media -- was taken by surprise this week when President Hugo Chávez of Venezuela stated that the Revolutionary Armed Forces of Colombia (FARC) should lay down their arms and unconditionally release all of their hostages. The FARC is a guerrilla group that has been fighting to overthrow the Colombian government for more than four decades. Chávez's announcement should not have come as a surprise, because he had already said the same things several months ago. On January 13, for example, Chávez said: "I do not agree with the armed struggle, and that is one of the things that I want to talk to Marulanda (the head of the FARC who died last March) about." Chávez also stated his opposition to kidnapping, and has made numerous public appeals for the FARC to release their hostages. Chávez had also explained previously that the armed struggle was not necessary because left movements could now come to power through elections, something that was often difficult or impossible in the past because of political repression. The surprise in U.S. policy and media circles is a result of a misconception of Chávez's recent role in Colombia's conflict. A comparison: former President Jimmy Carter has recently called upon the United States to negotiate with Hamas - dismissed as a terrorist organization by the U.S. and its allies in Israel and Europe. Carter is not an advocate of Hamas nor of armed struggle. He has met with Hamas and called for negotiations because he is trying to promote a peace settlement.

Documents saying Chavez wants to attack Colombia can not be verified Grandin and Hylton 8 (Greg New York University - Professor of History, Forrest New York University Department of History http://www.venezuelanalysis.com/analysis/3440) We once again appeal to the media for objectivity, and to treat unsubstantiated allegations the same way they would treat such allegations if they were made against the United States government -- i.e. to have some standards of evidence. Interpol cannot and will not verify the validity of any charges made against the Venezuelan government.. There are as yet no allegations that would hold up in a court of law. Over the last month, the Colombian government's strategy has involved a media campaign with timed leaks of new documents to the New York Times, the Wall Street Journal, the Miami Herald and other outlets, many of whom relied on the Colombian interpretation of their meaning, and with little acknowledgement of the deep controversy surrounding them. Even if the documents were indeed produced by the FARC, this does not mean that the information is accurate. As Adam Isacson of the Center for International Policy, who has analyzed the documents, noted, "We are forced to rely on accounts from far-flung guerrilla leaders who have a strong incentive to portray their overtures to Venezuela as successful. For the FARC, getting material support from Caracas was probably the main benefit they hoped to win from these contacts, so anything that even appeared to hint at progress toward getting arms or cash was prominently reported, possibly in an exaggerated way."

No war – Columbia wont fight Reuters 3-6-8 (http://www.reuters.com/article/topNews/idUSL0632108620080306) Colombian Vice-President Francisco Santos said on Thursday he saw no risk of war with Venezuela or Ecuador despite military mobilization in a dispute over Colombian FARC rebels. "I don't think there is a risk of war. The Colombian government has been very clear it won't use force," Santos told Reuters in an interview during a visit to Brussels for talks with EU officials. "It won't fall into the game of provocation."

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Venezuela DA – Impact – A2: Colombian War (2/3) Newest evidence proves no war Venezuela Analysis 7-12 (http://www.venezuelanalysis.com/news/3639) Venezuela’s President Hugo Chavez and Colombia’s President Alvaro Uribe reconciled and said they “moved on” to overcome differences, following a two-hour private meeting on Friday. Chavez said the meeting, which took place in the Venezuelan peninsula of Paraguaná, “started and ended well.” The meeting covered not only the recent differences between the two presidents over Venezuela’s supposed support for the Colombian guerilla group the FARC, but also touched on the various agriculture and energy cooperation agreements between the two countries. “We had a frank and warm conversation where we completely moved on [past the earlier differences],” said Chavez in a press conference following the meeting, adding, “With the force with which we began this new phase, I am sure we will recover lost time and confront the common challenges.”

Neither side has a motive Dyer 8 (3-8, Marcia, Journalist, Yemen Observer, http://www.yobserver.com/opinions/10013876.html But they’d never actually go to war, would they? It still seems very unlikely, in particular because the far more experienced Colombian army would dismantle any forces the Ecuadorians sent against it in a matter of days. Venezuela and Colombia are more evenly matched, and for that very reason it would not be in either government’s interest to have a war: neither side would win.

Columbia is the aggressor, not Chavez Podur 8 (Josh, writer & activist, http://www.venezuelanalysis.com/analysis/3112) Plan Colombia and Uribe's rule were enough to kill the last attempt at a political solution to the conflict. This outcome has served US interests in the region in several ways. Within Colombia, as described above, the war provides a pretext for attacking all social movements and resistance, and a cover for displacing peasants from resource rich territories that end up in the hands of multinationals and landowners. More than this, however, Colombia's war and the close relationship between the US and the Colombian military have provided the US with a base from which to monitor, and attack, Venezuela, a major oil producer with an independent political project of its own.

More ev… Podur 8 (Josh, writer & activist, http://www.venezuelanalysis.com/analysis/3112) Throughout those years, analysts have argued that one of the true targets of Plan Colombia was in fact Venezuela, its oil, and its revolutionary process (4). And indeed, border incidents and troubles over the past several years, as well as tensions between Chavez and Uribe, have shown that Colombia is a base for attacks on Venezuela. In March 2003, Colombian 'irregulars' raided across the Venezuelan border and were answered by bombing from the Venezuelan air force (5). About a year later (May 2004), dozens of Colombian paramilitaries were arrested on a ranch near Caracas on a terrorist plot (6). Some later confessed and were charged, while others were returned to Colombia. Around the same time as the paramilitaries were infiltrating Venezuela (March 2004), Colombia made a high-profile announcement that it was going to acquire several dozen tanks, from Spain, for posting on the Venezuelan border (7). The deal had been made under Spanish Prime Minister Jose Maria Aznar, however.

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Venezuela DA – Impact – A2: Colombian War (3/3) Venezuela is peaceful – No war risk Podur 8 (Josh, writer & activist, http://www.venezuelanalysis.com/analysis/3112) Entering the Colombian conflict on this basis has been risky for Venezuela, but it also seems to be very intelligent and principled diplomacy. Venezuela could have responded to US and Colombian provocations militarily, getting sucked into an arms race and militarization, diverting resources and political capital from social programs and social change to war preparations and militarism, perhaps supporting FARC militarily. Or it could have capitulated to a show of force. Instead, Chavez's government responded politically, taking advantage of the popular desire for peace in Colombia and throughout Latin America. Even though Uribe counts on some 5-6 million voters who believe strongly in his anti-guerrilla politics, Colombia has 44 million people and most want peace despite Plan Colombia, despite Uribe's tenure as President, and despite all US efforts to the contrary. If Uribe and the US win, they will paint Venezuela as a supporter of terrorist crimes and achieve what they sought, a pretext to attack Venezuela, destroy the Bolivarian project, and strengthen control of the region. Peace would give Venezuela's process time to develop and Colombia's movements room to breathe. The stakes are high for everyone involved.

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Venezuela DA – Impact – A2: Chavez Bad – Oil Not K/T Chavez (1/2) Chavez is insulated from oil prices – They govt budgets conservatively and has reserve funding Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) Oil prices collapsed beginning in 1981, and the Venezuelan economy went down with them.6 Is this sort of unraveling ahead in Venezuela, as many analysts predict? Of course, the future of oil prices is difficult to project. The July 10 short-term outlook of the US Energy Information Agency projects oil prices at $65.56 per barrel for 2007 and $66.92 for 2008.7 The risks of unanticipated supply shocks seem to be mostly on the downside, which would increase prices. Most importantly, there is the potential for adverse supply shocks from the Middle East, where the Bush Administration has threatened to bomb Iran if the standoff over that country's nuclear program cannot be resolved; and the general risk of widening war, terrorism, or rebellion there carries an unknown risk for other major world suppliers in the region. However, there is always the risk of an unexpected downturn in oil prices. If such an unanticipated reduction in oil prices is temporary, Venezuela would seem well-prepared to withstand it. The government has about $25 billion, or about 14 percent of GDP, in international reserves. This is much more than is needed maintain a safe level of reserves for imports or other needs. As discussed below, the country also has relatively low levels of public and foreign public debt, and if necessary could borrow rather than cut government spending or public investment enough to seriously slow the domestic economy. The government also budgets conservatively for oil prices that are far below current prices: for 2006, the government budgeted for oil at $26 per barrel, whereas the average price of Venezuelan crude oil was $60.20 (see below). The probability of an economic collapse brought on by falling oil prices therefore appears to be very small.

More ev… Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) Venezuela has budgeted conservatively with respect to the price of oil, and the prospect of a collapse in oil prices in the foreseeable future seems unlikely – as described above. Critics also point to the run-up in government spending as an unsustainable trend. Table 5 shows the government's finances since 1998. As can be seen, there has indeed been a very large increase in central government spending, from 21.4 percent of GDP in 1998 to 30 percent in 2006. However, revenues increased even more, from 17.4 to 30 percent of GDP over the same period, leaving the central government with a balanced budget for 2006. For 2007, the government has once again budgeted very conservatively for oil at $29 per barrel, 52 percent under the average $60.20 dollars per barrel that Venezuelan crude sold for last year. However, what the government generally does as oil revenue far exceeds the budgeted price, is to spend beyond budgeted expenditures. Thus, while a fall in oil prices will not cause a budgetary crisis, it could lead to reduced government spending from current levels. This could slow the economy from its present very rapid pace, but it is unlikely to cause a downturn, because Venezuela has a considerable cushion to deal with a decline in oil prices.

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Venezuela DA – Impact – A2: Chavez Bad – Oil Not K/T Chavez (2/2) Chavez can borrow out of low oil prices As can be seen in Table 5, Venezuela has taken advantage of the current expansion and increased oil revenues to reduce its public debt, and especially foreign public debt. Total public debt increased quite substantially through the crisis of 2002-2003, reaching a peak of 47.7 percent of GDP in 2003. But by 2006 it was down to a modest 23.8 percent of GDP. The government also transitioned away from foreign financing, leaving the external component of the foreign debt at just 14.7 percent of GDP. Goldman-Sachs projects a further decline of total debt to 20 percent of GDP, despite their projection of a growth slowdown (from 10.3 to 7 percent of GDP).27 Total interest payments on the public debt, foreign and domestic, summed to a relatively small 2.1 percent of GDP in 2006. Thus there is plenty of room to borrow, if necessary, if Venezuela were to face an unexpected decline in oil revenues. But before having to borrow, the government could dip into its international reserves. As can be seen in Table 6, the government's foreign exchange reserves, as of June 30 were $25.2 billion, or about 14 percent of GDP. This has dropped sharply from its peak of $37.4 billion last year, but it is still much larger than the country's needs, enough to pay off almost its entire foreign public debt. The recent depletion of reserves was the result of a $6.77 billion transfer to the National Development Fund (FONDEN), the creation of an offshore account by the National Treasury for PDVSA’s tax payments in order to manage monetary liquidity (i.e. this is central government tax revenue held in dollars and not being spent), a significant increase in the volume of currency transactions to finance imports approved by CADIVI28, and the recent purchase of dollars from the Central Bank by PDVSA as a result of placing $7.5 billion in international bonds (i.e. money raised in bolivares and sold to the Central Bank in order to absorb liquidity). Therefore, these actions do not represent any economic trend that would be expected to further deplete reserves. Also, if we add the offshore accounts of the FONDEN and the National Treasury to the current level of international reserves, the total is in excess of $40 billion29– with some estimates of these total effective international reserves as high as $45 billion.30 The government's revenue from oil last year was $28.9 billion. In the face of an unanticipated decline in oil prices, the government could therefore draw on reserves and borrowing from financial markets for some time before any serious budget cuts would be necessary. For example, if oil revenue were to decline by as much as 20 percent, this could be absorbed from reserves, which would otherwise be expected to grow over the next year.

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Venezuela DA – Impact – A2: Chavez Bad – Indict Their sources are biased Herrera 6 (Bernardo, July/Aug, Ambassador to US, Foreign Affairs) In her recently released book, Friendly fire: Losing Friends and Making Enemies in the Anti-American Century, Latin America scholar Julia Sweig writes, "When U.S. elites -- in government, media, and the private sector -- get their information mainly from their counterparts in other societies, the United States becomes disconnected from the conditions, feelings, preferences, and experiences of those living on the margins of what Americans have incorrectly assumed to be a universal phenomenon of political, social, and economic progress promised by democracy and globalization." As Venezuela's ambassador to the United States, I have spent a large part of my tenure attempting to encourage Washington's policy and government establishments to look beyond the information they receive about Venezuela from Venezuelan elites. Given the generally hostile attitudes toward Venezuela and its president, Hugo Chávez, in Washington today, it seems that there is much work left to be done.

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Venezuela DA – Impact – A2: Chavez Bad – Turn: Democracy/Stability (1/2) Declining Venezuelan oil revenue prevents Chavez from protecting regional democratic stability – Causes secessionist oil grabs Lendsman 8 (Stephen, 6-2, Ctr for Research on Globalization, http://www.venezuelanalysis.com/analysis/3516) It's vital because Venezuela is also threatened. It's oil-rich Zulia state has similar secessionist ideas. Big Oil exploits them, and their local allies in the past supported a referendum to choose independence from Caracas. Its governor is Manuel Rosales. He ran against Chavez in 2006 and lost big. He backs the idea, is close to the Bush administration, and signed the infamous "Carmona Decree" after the April 2002 coup. It dissolved the National Assembly and Supreme Court, erased the Constitution, and ended Bolivarianism for the people. For now, more autonomy is enough for Rosales but unthinkable if Chavistas can help it. They condemn the idea and will fight it. Stay tuned. November approaches in both countries. The Bush administration's tenure is short. But it's got plenty of time left to incinerate two continents and end the republic if that's its plan. An inert public needs arousing. Michel Chossudovsy says we're "at the crossroads of the most serious crisis in modern history." It's part of a "war and globalization" process. The stakes for humanity are incalculable, but rogue states don't weigh them. World communities better while there's time.

Chavez is critical to regional democracy Pilger 8 (John, Staff, New Statesman, http://www.venezuelanalysis.com/analysis/3385) With Colombia as its front line, the war on democracy in Latin America has Chávez as its main target. It is not difficult to understand why. One of Chávez's first acts was to revitalise the oil producers' organisation Opec and force the oil price to record levels. At the same time he reduced the price of oil for the poorest countries in the Caribbean region and central America, and used Venezuela's new wealth to pay off debt, notably Argentina's, and, in effect, expelled the International Monetary Fund from a continent over which it once ruled. He has cut poverty by half - while GDP has risen dramatically. Above all, he gave poor people the confidence to believe that their lives would improve. The irony is that, unlike Fidel Castro in Cuba, he presented no real threat to the well-off, who have grown richer under his presidency. What he has demonstrated is that a social democracy can prosper and reach out to its poor with genuine welfare, and without the extremes of "neo liberalism" - a decidedly unradical notion once embraced by the British Labour Party. Those ordinary Vene zuelans who abstained during last year's constitutional referendum were protesting that a "moderate" social democracy was not enough while the bureaucrats remained corrupt and the sewers overflowed.

Chavez is good for Latin American democracy and stability Weisbrot 8 (Mark Co-Director of the Center for Economic and Policy Research, in Washington, D.C. http://www.venezuelanalysis.com/analysis/3554 ) The whole controversy is an illustration of the vast gulf between most of Latin America, which now has leftof-center governments, and the United States foreign policy establishment. For Latin America, Chávez is a friend and important ally who has promoted regional economic integration and growth - even helping to create new institutions for this purpose such as the Bank of the South and UNASUR. He has shared a good part of Venezuela's oil wealth with his neighbors, even helping some to deliver on their electoral promises, thereby contributing to democratization in the region. He has tried to promote a peaceful settlement to the conflict in Colombia. He has been democratically elected repeatedly, and to the region his government is as legitimate as any in the world. For Latin America's leaders, these considerations far outweigh any differences they may have with his rhetoric or confrontational style vis-à-vis the United States - which after all, did support a military attempt to overthrow his democratically elected government in 2002.

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Venezuela DA – Impact – A2: Chavez Bad – Turn: Democracy/Stability (2/2) Venezuelan democracy is up – Self-reports prove Herrera 6 (Bernardo, July/Aug, Ambassador to US, Foreign Affairs) A recent survey on democracy in Latin America sheds some light on contemporary Venezuela. Conducted by Latinobarómetro, a well-respected independent Chilean polling firm, the survey found that of the populations of the 18 Latin American countries studied, Venezuelans were the most likely to describe their government as "totally democratic." Similarly, Venezuela came in second in terms of citizens' satisfaction with their system of democracy, ranking behind only Uruguay. In fact, satisfaction with the government in Venezuela has been higher during President Chávez's tenure than ever before, and it remained so even during 2003, when an opposition-led oil sabotage heightened a sense of political crisis. None of this should be surprising: the 1999 constitution broadened the definition of rights and responsibilities, expanded political participation, and encouraged Venezuelans to become more active stakeholders in the country's political, economic, and social development. Venezuelans have participated in numerous elections since President Chávez took office, including one specifically designed to allow citizens to cut short the tenure of an elected official -- in this case, the president himself.

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Venezuela DA – Impact – A2: Chavez Bad – A2: Democracy Checks in place prevent Chavez’s concentration of power Sullivan & Olhero 8 (1-11, CRS Report, Specialist in Latin American Affairs, http://www.fas.org/sgp/crs/row/RL32488.pdf) A key decision for President Chávez will be how he proceeds politically in the aftermath of the defeat of the constitutional reform. In the past, the President has resorted to harsh political rhetoric and polarization to win at the ballot box, and ensure his popular support. The defeat of the referendum, however, could be a sign that such hardline tactics may no longer be as successful. Some observers think that the defeat could cause Chávez to use more pragmatic political tactics that would appeal to moderate Chavistas and those supporters that abstained in the 2007 referendum. Such an approach might enable the President to regain strong popular support, or enough support to again attempt efforts to achieve passage of constitutional reforms in the future, particularly the elimination of presidential term limits. Other observers contend that it is unlikely that Chávez will refrain from hardline tactics to enact his radical agenda, especially given now that he is term limited until early 2013. Such a strategy of continued polarization, however, could be counterproductive for the President at the ballot box if it alienates moderate Chavistas. Moreover, at this juncture, the government’s attempt to impose any unpopular policy that affects civil rights or the state of democracy risks triggering widespread street protests by an energized student movement and the political opposition.

Checks prevent Chavez from threatening democracy and fomenting anti-American regimes Johnson & Cohen 4 (8-12, Stephen & Ariel, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg1787.cfm) The good news is that the majority of Venezuelans do not support Chávez's evolving dictatorship. Opponents have succeeded in petitioning for a referendum to recall him from office on August 15. Democratic governance and free markets are making slow strides in Latin American countries formerly ruled by dictators. While oil resources give him power, countries can buy oil from other vendors.

Democracy is resilient in Latin America Walser 8 (Ray, 3-11, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/hl1079.cfm) There is no silver bullet, no quick solution to creating greater energy security in the Western Hemisphere. The Western Hemisphere, with one glaring exception, is made up of 35 sovereign states committed to democratic governance. Nations committed to democracy, free markets, and more open trading account for more than 85 percent of the gross domestic product of Central and South America. Some "carnivores" may face extinction quicker than we imagine.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela DA – Impact – A2: Chavez Bad – A2: Poverty/Econ (1/2) Oil revenue isn’t diverted – Investments are productive Alvarez & Hanson 6-27 (Cesar & Stephanie, Council on Foreign Relations, http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html)

Critics of Chavez think he should be pouring money into infrastructure to ensure a sustainable oil industry rather than allocating so much for social and foreign policy initiatives. According to the Wall Street Journal, PDVSA “spent just $60 million on exploration in 2004, compared with $174 million in 2001.” But Vicente Frepes-Cibils, the lead economist for Venezuela at the World Bank, says “investment is increasing” and Venezuela has an accumulation of reserves including outside funds ranging from $10 billion to $15 billion that it is planning to use for oil infrastructure.

High oil prices solves poverty, health care and unemployment in Venezuela Schuyler 0 (George, Department of History University of Central Arkansas [http://www.soc.uoc.gr/kousis/KOIN1/Health/NeoLiberalismHealth/NeolibHealthVenezuela.pdf] Healltth and Neolliiberralliism:: Venezuella and Cuba/ 2000) During the last two decades, low oil prices, rising debt and lagging foreign investment drove Venezuela into an economic crisis. Pressured by the International Monetary Fund and advised by neoliberal gurus such as the Harvard economist Jeffrey Sachs, Venezuela transformed its development strategy from state-led industrialization to neoliberalism: open markets, free trade, exports, privatization and limited government spending and involvement in the economy. In the 1980s, per capita gross domestic product fell by 20 percent or more. By 1988, real wages dropped by one-third, to their 1964 level.18 Unemployment and underemployment rose steadily, inflation soared and income inequality widened. By 1989, poverty was 150 percent more than in 1980 and continued to engulf Venezuelans in the 1990s. A study by the Catholic University Andres Bello indicated that 57 percent of Venezuelan families lived in poverty while a labor union claimed that only 10.2 percent of Venezuelans could afford to buy the basic supply of food deemed necessary for adequate nutrition and health.19

The Venezuelan economy has grown under Chavez Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) There is much evidence to contradict this conventional wisdom. Venezuela suffered a severe economic growth collapse in the 1980s and 1990s, with its real GDP peaking in 1977. In this regard it is similar to the region as a whole, which since 1980 has suffered its worst long-term growth performance in more than a century. Hugo Chávez Frias was elected in 1998 and took office in 1999, and the first four years of his administration were plagued by political instability that had a large adverse impact on the economy. (See Figure 2). This culminated in a military coup that temporarily toppled the constitutional government in April 2002, followed by a devastating oil strike from December 2002-February 2003. The oil strike sent the economy into a severe recession, during which Venezuela lost 24 percent of GDP. But in the second quarter of 2003, the political situation began to stabilize, and it has continued to stabilize throughout the current economic expansion. The economy has had continuous rapid growth since the onset of political stability. Real (inflation-adjusted) GDP has grown by 76 percent since the bottom of the recession in 2003. It is likely that the government's expansionary fiscal and monetary policies, as well as exchange controls, have contributed to the current economic upswing. Central government spending has increased from 21.4 percent of GDP in 1998 to 30 percent in 2006. Real short-term interest rates have been negative throughout all or most of the recovery (depending on the measure—see Figure 4).

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Venezuela DA – Impact – A2: Chavez Bad – A2: Poverty/Econ (2/2) Oil profits improve the quality of life in Venezuela The World Bank 4 ([http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/VENEZUELAEXTN/0,,menuPK:3317 77~pagePK:141132~piPK:141107~theSitePK:331767,00.html] Venezuela Country Brief/ August 2004) Oil confers a competitive advantage in international trade, but also creates an imbalance in the domestic economy. Petroleum accounts for about 25 percent of gross domestic product (GDP), about 80 percent of exports and approximately 50 percent of fiscal revenues. A windfall from Venezuela’s natural resource wealth has bolstered development progress in some areas: • 92.4 percent of the country’s children are enrolled in primary school; • 83 percent of the population has access to an improved water source; and • Child mortality decreased from 27 per 1,000 in 1990 to 22 per 1,000 in 2002.

Oil profits are spent on improving public services Collier 6 (Robert, Nonprofit Organization [http://www.commondreams.org/headlines06/1002-06.htm] Venezuela's Oil Wealth Funds Gusher of Anti-Poverty Projects/ October 2, 2006) While the Venezuelan president has caused international controversy with his angry denunciations of the Bush administration, this is where the rubber meets the road for Chavez's radical rhetoric. He is spending billions of dollars on anti-poverty programs, in what experts say may amount to the largest such effort in a developing nation. And in a gamble that turns part of his own government's power structure on its head, he is handing a large degree of authority over these spending programs to thousands of these elected local councils. "The issues in these neighborhoods are very old fights -water, land, decent housing," said Andres Antillano, a professor of social psychology and criminology at the Central University of Venezuela in Caracas who has been an adviser to many neighborhood groups. "For many years, the only relationship with the state was the police. They came here and put everyone against the wall," Antillano said. "Chavez has chosen to gamble on legitimizing these issues. The communal councils are a very serious attempt at grassroots organizing." The policy appears especially popular in the hard-bitten slums of Caracas -- although as is true elsewhere around the country, the electorate seems divided between a strongly pro-Chavez minority and an apathetic majority. San Juan's new council was chosen in local voting a week previously, with only 330 of the neighborhood's 916 eligible adult residents casting ballots. "We like Chavez because he's giving us control," said Leomar Aquino, who had just been chosen head of the Education, Culture, Recreation and Sports Committee, one of a half-dozen such panels on the council. "If you don't want to participate in it, hey papito, that's your problem." On this night, nobody seemed to know exactly how much their neighborhood would receive. Nor, the next day, did anyone at the offices of the local district government or in the central government buildings downtown. What is certain, however, is that

Venezuela's petroleum export earnings are rising rapidly, and the government is spending the money with abandon. The government initially budgeted $857 million for social spending in 2006. But as oil money floods in, officials keep increasing the amount. It now stands at $7 billion, although many experts view that figure as a guesstimate of money being spent on the fly. Public works projects are everywhere, ranging from subway lines in Caracas and Valencia to bridges over the Orinoco River. New medical clinics -- mostly staffed by Cuban doctors provided under Chavez's oil aid program to Fidel Castro -- are within reach of almost everyone in this nation of 25 million people. Illiteracy, formerly at 10 percent of the population, has been completely eliminated, and infant mortality has been cut from 21 deaths per 1,000 births to 16 per 1,000. Another initiative that could change the lives of millions of poor Venezuelans is a new program aimed at increasing land ownership.

More ev… Sullivan & Olhero 8 (1-11, CRS Report, Specialist in Latin American Affairs, http://www.fas.org/sgp/crs/row/RL32488.pdf) Venezuela is using windfall oil profits to boost social spending and programs to fight poverty. Beginning in 2003, the Chávez government began implementing an array of social programs and services known as misiones, or missions. As a result of the booming economy and increased social spending, poverty rates in Venezuela have declined. The U.N. Economic Commission for Latin America and the Caribbean reports that poverty fell from 48.6% in 2002 to 30.2% in 2006, with extreme poverty falling from 22.2% to 9.9% over the same period.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela DA – Impact – A2: Chavez Bad – A2: Poverty – It’s Down Poverty down Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) The poverty rate has decreased rapidly from its peak of 55.1 percent in 2003 to 30.4 percent at end of 2006, as would be expected in the face of the very rapid economic growth during these last three years. (See Table 3). If we compare the pre-Chávez poverty rate (43.9 percent) with the end of 2006 (30.4 percent) this is a 31 percent drop in the rate of poverty. However this poverty rate does not take into account the increased access to health care or education that poor people have experienced. The situation of the poor has therefore improved significantly beyond even the substantial poverty reduction that is visible in the official poverty rate, which measures only cash income. Measured unemployment has also dropped substantially to 8.3 percent for June 2007, its lowest level in more than a decade; as compared to 15 percent in June 1999 and 18.4 percent in June 2003 (coming out of the recession). Formal employment has also increased significantly since 1998, from 44.5 to 49.4 percent of the labor force.

More ev… Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) The poverty rate has decreased rapidly from its peak of 55.1 percent in 2003 to 30.4 percent at end of 2006, as would be expected in the face of the very rapid economic growth during these last three years. Table 3 shows the poverty rate since 1997, by household and population. If we compare the pre-Chávez poverty rate (43.9 percent) with end of 2006 (30.4 percent) this is a 31 percent drop in the rate of poverty, which is substantial.21 However this poverty rate measures only cash income – it does not take into account the increased access to health care or education that poor people have experienced. As we have shown previously, taking the most conservative estimate of just the value of the health care benefits – what the poor would have spent on health care in the absence of these new programs – would lower the measured poverty rate by about 2 percentage points. 22 Of course, this is a very conservative estimate of the value of just the increased health care benefits to the poor, since in the absence of these benefits, most poor people would simply have gone without health care, and therefore suffer from worse health, lower income, and lower life expectancy. So the value of these health care services is much greater than the amount that they would have spent out-of-pocket in the absence of the government programs.23 The situation of the poor has therefore improved significantly beyond even the substantial poverty reduction that is visible in the official poverty rate, which measures only cash income.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela DA – Impact – A2: Chavez Bad – A2: Heg

Chavez doesn’t undermine US hegemony- Latin American countries are not influenced Petras 4 (James, Professor of Sociology at Binghamton University [http://www.venezuelanalysis.com/analysis/682] Myths and Realities: Venezuela's Chavez and the Referendum/ September 2, 2004) Evidence to the contrary is abundant. Brazil under Lula has sold oil exploration rights to US and European multinational corporations, provides a contingent of 1500 troops (along with Argentina, Chile etc) to Haiti to stabilize Washington's puppet regime imposed through the kidnapping of President-elect Aristide. Likewise in the other Andean countries (Ecuador, Peru, Bolivia and Colombia) the elected regimes propose to privatize public petroleum companies, support ALCA and Plan Colombia and pay their foreign debts. The Broad Front in Uruguay promises to follow Brazil's neo-liberal policies. While Chavez promotes the regional trading bloc MERCOSUR, the major members Brazil and Argentina are increasing their trade relations outside the region. In effect there is a bloc of neo-liberal regimes arrayed against Chavez's anti-imperialist policies and mass social movements. To the extent that Chavez continues his independent foreign policy his principle allies are the mass social movements and Cuba.

Chavez isn’t looking undermine US influence in Latin America Petras 4 (James, Professor of Sociology at Binghamton University [http://www.venezuelanalysis.com/analysis/682] Myths and Realities: Venezuela's Chavez and the Referendum/ September 2, 2004) But a defeat of imperialism does not necessarily mean or lead to a revolutionary transformation, as post-Chavez post-election appeals to Washington and big business demonstrate. More indicative of Chavez politics is the forthcoming $5 billion dollar investment agreements with Texaco-Mobil and Exxon to exploit the Orinoco gas and oil fields. The euphoria of the left prevents them from observing the pendulum shifts in Chavez discourse and the heterodox social welfare--neo-liberal economic politics he has consistently practiced. President Chavez's policy has always followed a careful balancing act between rejecting vassalage to the US and local oligarchic rentiers on the one hand and trying to harness a coalition of foreign and national investors, urban and rural poor to a program of welfare capitalism. He is closer to Franklin Roosevelt's New Deal than Castro's socialist revolution. In the aftermath of the three political crises--the failed civil-military coup, the debacle of the oil executives lock out, and the defeat of the referendum--Chavez offered to dialogue and reach a consensus with the media barons, big business plutocrats and US government, on the basis of the existing property relations, media ownership and expanded relations with Washington.

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Venezuela DA – Impact – A2: Chavez Bad – A2: Bomb (1/4) Chavez can’t possess nuclear capabilities for 10 years at least Logan 5 (Sam, Writer for ISN. “Venezuelan nuclear technology is a long shot” http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Chavez has a strong track record. He has engaged Argentina and Brazil for assistance in developing so-called peaceful nuclear technology. Argentina and Brazil have tacitly agreed, effectively giving him the regional support he covets. The reality that Chavez does not have a group of Venezuelan nuclear scientists cannot be ignored. He needs to borrow the expertise from elsewhere. He does not know how to build a reactor, or operate one. And his neighbors in the region, while having demonstrated an ability to build and operate nuclear reactors, are still subject to international pressure in the form of the IAEA. Additionally, the countries in the region that do have nuclear energy required no less than ten years to build a reactor. If Chavez is serious about bringing nuclear power to Venezuela, he would need at least ten years, if not closer to 20, to realize the first kilowatt of nuclear power output. There is currently little guarantee that he can stay in power that long. Producing nuclear power would allow Venezuela to export more oil and generate additional revenues for the state treasury. If Chavez manages to stay in power long enough to take advantage of nuclear technology in Venezuela, he is likely to use the extra energy to alleviate domestic need for oil he would rather export. Herein lies the strongest chord of truth.

No nuclear program for 5 yrs and it would be peaceful Markey 5 (Patrick 10-1, Staff http://osdir.com/ml/culture.discuss.cia-drugs/2005-10/msg00392.html Venezuela‘s President Hugo Chavez is approaching his wary South American neighbors about developing a nuclear energy program, raising questions in Washington about his atomic ambitions. Chavez, a self-described socialist revolutionary fiercely opposed to the U.S. administration, says he wants to cooperate with Argentina, Brazil and possibly Iran to develop nuclear energy as part of his drive for regional integration. But energy experts estimate it will take his government at least five years of studies, training and investment to develop a sustainable nuclear energy project in Venezuela, the world‘s No. 5 oil exporter. "Nuclear energy is for peaceful purposes. We are not the ones developing atomic bombs, it‘s others who do that. We are not the ones who launch atomic bombs," Chavez told a Brazilian newspaper this week, dismissing fears over his proposal.

No real plans yet and it would be for power generation Markey 5 (Patrick 10-1, Staff http://osdir.com/ml/culture.discuss.cia-drugs/2005-10/msg00392.html Venezuelan officials have given mixed signals about what they want and initially suggested they could use nuclear energy to power oil operations. But Energy Minister Rafael Ramirez said the program is still in its infancy. "We don‘t have any plans to buy a nuclear reactor. We are just evaluating where we could put one," he told reporters this week. "We would use it for electricity generation."

Can’t obtain materials – US and EU check Markey 5 (Patrick 10-1, Staff http://osdir.com/ml/culture.discuss.cia-drugs/2005-10/msg00392.html Scientists said a Canadian CANDU reactor used by Argentina was the most feasible for Venezuela as it would require no complex fuel enrichment and uses only natural uranium. But to build a reactor with the average of around 700 megawatts to 1,000 megawatts of power Venezuela would have to go beyond Argentina and bring in other commercial partners from the United States, Canada or Europe, experts said.

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Venezuela DA – Impact – A2: Chavez Bad – A2: Bomb (2/4) Argentina and Brazil will not transfer nuke tech Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Argentina is interested in completing the sale, but is adamant about meeting international standards and expectations for transparency, which means it would register its intent with the IAEA. The IAEA, in turn, would monitor the process closely and is likely to request a complete review of the plant once the facility is installed and operational in Venezuela. There is no guarantee, however, that Venezuela will yield to the will of an international agency, much less one that has been ignored and badgered by countries around the world since its inception. There are questions in Argentina, however, as to whether the transfer of the technology required to operate a mid-sized nuclear reactor would constitute a “dual-use” situation. This is a touchy subject. It is difficult to see how Argentina would benefit from transferring technology necessary to operate a dual-use nuclear reactor. The international pressure would be fierce.

More ev… Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Brazil’s capacity to enrich uranium is certainly attractive for Venezuela. But the Brazilian government is hesitant to bring more attention from the IAEA to this continent, which is exactly what would happen if the two countries announced a deal to share nuclear fuel enrichment facilities. Regional alliances are stronger than the fear of upsetting an international regime perceived to be largely controlled by the US. But these alliances are trumped by sovereignty and national security considerations. Neither Brazil nor Argentina would benefit from a nuclear weapons program in Venezuela. “There is nothing concrete,” insists Brazilian presidential foreign policy advisor Marco Aurelio Garcia. He argues that Brazil’s nuclear program is transparent and protected from any military use. Aurelio Garcia goes further to speculate that in any initial phase of a nuclear program in Venezuela, Argentina would provide the reactor while Brazil would provide the enriched uranium. He believes that neither country would provide enough technology transfer to allow the Venezuelans to take complete control of the process.

No tech transfer – Int’l pressure Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Brazil’s capacity to enrich uranium is certainly attractive for Venezuela. But the Brazilian government is hesitant to bring more attention from the IAEA to this continent, which is exactly what would happen if the two countries announced a deal to share nuclear fuel enrichment facilities. Regional alliances are stronger than the fear of upsetting an international regime perceived to be largely controlled by the US. But these alliances are trumped by sovereignty and national security considerations. Neither Brazil nor Argentina would benefit from a nuclear weapons program in Venezuela. “There is nothing concrete,” insists Brazilian presidential foreign policy advisor Marco Aurelio Garcia. He argues that Brazil’s nuclear program is transparent and protected from any military use. Aurelio Garcia goes further to speculate that in any initial phase of a nuclear program in Venezuela, Argentina would provide the reactor while Brazil would provide the enriched uranium. He believes that neither country would provide enough technology transfer to allow the Venezuelans to take complete control of the process.

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Venezuela DA – Impact – A2: Chavez Bad – A2: Bomb (3/4) 10 years from Chavez bomb Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Any use of a peaceful nuclear program to conceal or hint at a nuclear weapons program would come as a fringe benefit, an ace up Chavez' sleeve, but nothing more than that. This prospect is something to watch out for, but will not be a threat to regional security for at least a decade, if at all.

More ev… Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Additionally, the countries in the region that do have nuclear energy required no less than ten years to build a reactor. If Chavez is serious about bringing nuclear power to Venezuela, he would need at least ten years, if not closer to 20, to realize the first kilowatt of nuclear power output. There is currently little guarantee that he can stay in power that long.

The program would be peaceful, dedicated to energy production Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Producing nuclear power would allow Venezuela to export more oil and generate additional revenues for the state treasury. If Chavez manages to stay in power long enough to take advantage of nuclear technology in Venezuela, he is likely to use the extra energy to alleviate domestic need for oil he would rather export. Herein lies the strongest chord of truth. Venezuelan oil output is limited. Many suggest the country's oil output has declined and will continue to do so. Chavez’s intention to pull together the region with the carrot of generous oil export contracts and other financial incentives suggests that over time, he will need more money, more oil, and another reliable source of energy.

Chavez is bluffing – No interest in nukes Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Yet sources within Venezuela are convinced that Chavez’s nuclear announcement is more political than actual. “The nuclear plan is [hollow],” Venezuelan journalist and political observer, Manuel Malaver told ISN Security Watch. Malaver argues that Chavez has embarked on a strategy similar to that of the North Koreans, threatening the use of nuclear technology and leveraging heightened international tensions to ensure access to resources and technology that he could not obtain otherwise. “I don’t believe Chavez has an interest in developing nuclear [technology], which would take years, considering Venezuela does not have nuclear scientists,” Malaver said, adding, “for Chavez it’s more important to demonstrate that he has the support of the region in his desires for nuclear technology than to actually have the technology itself.”

Reactor safety prevents diversion Newsmax 5 (10-28, http://archive.newsmax.com/archives/ic/2005/11/28/173737.shtml) Chavez in August made a formal offer to purchase a nuclear reactor from Argentina. It is unknown whether Argentina will agree to a sale, but scientists claim there is no threat that the reactors in question will be used for military purposes. "The technology is quite advanced,” said Argentine scientist Elias Palacios, co-secretary to the BrazilianArgentine Agency for Accounting and Control of Nuclear Materials. "Because of the system of safeguards and inspections,” Palacios told the New York Times, "there is no way to divert it” into weapons programs.

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Venezuela DA – Impact – A2: Chavez Bad – A2: Bomb (4/4) Chavez is bluffing NYT 5 (10-27) José Goldemberg is a physicist who as minister of science and technology in the 1990's led the dismantling of Brazil's nuclear weapons program. While he says he worries that even a flirtation with Venezuela will hurt the reputation of two countries that have won praise for renouncing their nuclear arms programs, he does not think much will come of Mr. Chávez's campaign. "This is braggadocio," he said. "It's a way of challenging Bush, of making themselves feel important and forcing the United States to pay attention."

The US will pressure Argentina and Brazil NYT 5 (10-27) With relations between the Bush administration and Mr. Chávez so hostile, Washington has little leverage over Venezuela. But that is not the case with Brazil and Argentina, which have extensive ties, and the United States seems to have decided to focus its efforts there. "We consider partners like Brazil and Argentina to be responsible partners on issues like nuclear power and proliferation," said Thomas A. Shannon, the assistant secretary of state for hemispheric affairs. "We fully expect them to act in a responsible fashion."

Safeguards prevent diversion NYT 5 (10-27) The technology is quite advanced, and because of the system of safeguards and inspections, there is no way to divert it" into weapons programs, said Elías Palacios, an Argentine scientist who is co-secretary of the Brazilian-Argentine Agency for Accounting and Control of Nuclear Materials. "If it's economically profitable for Argentina, there's no reason why it shouldn't be done."

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Venezuela DA – Impact – A2: Chavez Bad – A2: Terrorism No risk of Latin American terrorism Walser 8 (6-30, Ray, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg2152.cfm Latin America cannot afford to be seen as half terrorist-friendly and half terrorist-hostile. In the long run, radical populist regimes will likely run out of steam as they are consumed by non-competitiveness, corruption, and inefficiency, spawning the sorts of popular backlashes that ended previous efforts to construct populist paradises. U.S. success in Iraq and Afghanistan against Islamist terrorism will curb or contain its expansionary ways. Even in Iran, shifts in leadership among the mullahs could easily undo Iran's inroads into the Western Hemisphere. In the long run, the U.S. and the strengthening democracies of the region can prevail. An era of good feeling of the sort experienced in the 1990s may be restored as nations turn to improving Latin America's global competitiveness and development.

Gonzaga Debate Institute 2008 Scholars Lab

***Venezuela Answers***

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Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela Answers – No Internal Link – A2: Oil K/T Econ (1/2) Oil dependency causes widespread poverty in Venezuela Cibils and Scott 1 (Vicente Fretes Lead Specialist, LAC, The World Bankand Kinnon World Bank. Washington, D.C http://wbln0018.worldbank.org/LAC/lacinfoclient.nsf/e9dd232c66d43b6b852567d 2005ca3c5/fe8ed dae8d8fdec985256b0b005a28b9/$FILE/C-II.pdf) In the environment provided by the low and unstable real income growth, with high dependency on the oil sector and inconsistent economic policies, real wages and employment opportunities have decreased significantly over the last decade. The deterioration in real per capita income, employment and labor productivity—despite the problems and limitations with the data and the methodologies—indicate that poverty in Venezuela has increased. Indeed, while there is no consensus on the level of poverty, poverty is unambiguously higher in the late 1990s than in the early 1980s. Moreover, inequality increased between the early 1980s and late 1990s. This finding is statistically robust, despite changes in computational methods. Poverty and inequality have, however, remained below the average for the LAC region throughout the 1990s. Other composite welfare indexes and social indicators also show that the living standards in Venezuela deteriorated significantly during the 1990s.

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Venezuela Answers – No Internal Link – A2: Oil K/T Econ (1/2) Venezuela is insulated against oil price declines Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) In sum, the performance of the Venezuelan economy during the Chávez years does not fit the mold of an "oil boom headed for a bust." Rather it appears that the economy was hit hard for the first few years by political instability, and has grown rapidly since the political situation stabilized in the first quarter of 2003. High oil prices have certainly contributed to this growth, as has the government's expansionary fiscal and monetary policy. Containing and reducing inflation, as well as realigning the domestic currency, appear to be the most important challenges in the intermediate run; in the long run, diversifying the economy away from its dependence on oil is also a major challenge. However, the declining public debt (as a percentage of GDP), the large current account surplus, and the accumulation of reserves have given the government considerable insurance against a decline in oil prices. This favorable macroeconomic situation has also left the government with much flexibility in dealing with inflation and the related imbalance in the exchange rate. Since the government is committed to maintaining solid growth, it does not seem likely that it would sharply curtail economic growth in order to bring down inflation, as is often done. This is especially true since it has not exhausted other alternatives. Therefore, at present it does not appear that the current economic expansion is about to end any time in the near future. The gains in poverty reduction, employment, education and health care that have occurred in the last few years are likely to continue along with the expansion.

Gonzaga Debate Institute 2008 Scholars Lab

78 2nd Wave Oil DA’s

Venezuela Answers – Internal Link Turn: Dutch Disease (1/2) Oil fuels a lack of diversification that dooms the Venezuelan economy Cibils and Scott 1 (Vicente Fretes Lead Specialist, LAC, The World Bankand Kinnon World Bank. Washington, D.C http://wbln0018.worldbank.org/LAC/lacinfoclient.nsf/e9dd232c66d43b6b852567d 2005ca3c5/fe8ed dae8d8fdec985256b0b005a28b9/$FILE/C-II.pdf) The performance of the Venezuelan economy over the last decade has been dismal, and economic policy makers have been unable to cope with the oil cycles and the general decline in real oil prices (and real oil revenues) over the long–term.1 This has resulted in low economic growth with bursts of inflation and recurrent recessions. Over the last ten years, real GDP per capita growth averaged –1.2 percent per year and the inflation rate averaged about 40 percent per year (with a declining trend over the last five years). For the same period, real non–oil GDP per capita growth average about –2 percent per year. At the same time, as the economy failed to diversify, it became more vulnerable to the boom and bust cycles generated by the oil sector (see Graph 1).

Lack of diversification kills the Venezuelan economy Cibils and Scott 1 (Vicente Fretes Lead Specialist, LAC, The World Bankand Kinnon World Bank. Washington, D.C http://wbln0018.worldbank.org/LAC/lacinfoclient.nsf/e9dd232c66d43b6b852567d 2005ca3c5/fe8ed dae8d8fdec985256b0b005a28b9/$FILE/C-II.pdf) While the economic plan includes important initiatives, the main challenges for the Government remain to sustain stability and growth, without major social disruptions, to diversify the economic structure over the longer term, and to improve the living standards of the population. To restore and sustain stability over the long term, the non– oil fiscal deficit must be reduced through the adoption of measures to enhance non–oil revenues and control expenditures. Moreover, the strong links between oil price volatility and public sector expenditure must be reduced (this could be achieved by imposing an inter–temporal budget constraint through the full implementation of the oil stabilization fund). To complement these policies, the external position should be strengthened through a combination of exchange and monetary policies. With regard to the exchange rate, to ensure external competitiveness of non–oil exports, a more flexible exchange rate regime could be adopted to adjust prices to significant and protracted changes in the terms of trade, thereby avoiding the full adjustment through real wages. In turn, a restricted monetary policy of high interest rates cannot be used as a substitute for non–oil fiscal adjustment and a mis–aligned real exchange rate, as high real interest rates will delay economic recovery and growth.8

Gonzaga Debate Institute 2008 Scholars Lab

79 2nd Wave Oil DA’s

Venezuela Answers – Internal Link Turn: Dutch Disease (2/2) Venezuela cannot deal with large influxes of oil revenue, creating Dutch Disease – empirically proven St. Hilaire 4 (12, “Dutch Disease, Oil and Developing Countries,” http://209.85.141.104/search?q=cache:hwrE75a6uYJ:www.business.ualberta.ca/cabree/pdf/2004%2520Fall%2520UG%2520Projects/Dutch%2520disease, %2520oil%2520and%2520developing%2520countries.pdf+Mexico+%22Dutch+Disease%22&hl=en&ct=clnk&cd= 5&gl=us&client=firefox-a) However, this did little to stall the impending crisis and the 50% reduction in the price of oil in 1986 did nothing to help the situation. In 1989 the IMF stepped in with loans and the price increases related to the reforms necessary for the loans caused rioting and the worst violence the country had seen since it became a democracy. The increase in the price of oil in the 1970s caused Venezuela to be affected negatively although its peak oil production point had already been reached in 1970. Because of the increase in the price of oil the government relied completely on oil revenue and like Mexico, was reluctant to take steps to prevent a crisis. The IMF had to impose the increases in domestic prices necessary to complete the cycle that played out. Protectionism through government subsides and spending held domestic prices low enough to remain competitive imports. In this sense Venezuela was escaping Dutch Disease. However, these prices were supported not through true market value but through borrowing and extra revenue. As soon as those avenues shut down so did the government’s ability to control domestic prices. The sudden jump in prices imposed by the IMF caused recession so severe that rioting was induced. Another case of the lack of value-added industry creation led to the eventual downfall of an economy given the opportunity to grow. Essentially, the government had relied completely on revenue from oil because these revenues were so large. The Venezuelan government bet that the price of oil would continue to rise. This was risky bet even with the trends of the seventies; the price of oil was so high because of the decisions made be OPEC not because of true market value. An eventual return to market value caused the sharp decrease in prices and Venezuela lost its bet. The development of a domestic traded manufacturing sector simply did not occur. Therefore, the revenue from oil was spent primarily on imports. Because nearly all industry was supported through subsidies the country was unattractive to foreign investment. Also, high tariffs on imports and exchange rate manipulation had protected the domestic market. Thus, Venezuela had avoided Dutch Disease only temporarily and as a factor of having little traded manufacturing that was truly competitive to begin with. Traditional exports of oil, iron, coffee, and cocoa made 95% of the exported commodities in the early 1980s. The closed economy, while initially protecting against the lower prices of imports could not sustain this position. The decision to depend further on the high price of oil in the early 1980s led the country into a tailspin that would deteriorate the economy. According to the Economist, Venezuela is currently suffering from a 27% drop in real GDP between 1998 and 2003. This has created a poor majority in Venezuela and with little real recovery since the economic crisis their current president, Hugo Chavez, seems to be stretching for a solution. His main focus is on attracting foreign direct investments in the oil industry. Whether and how Venezuela will recover from its crisis still remains to be seen. Chavez is a politically controversial figure and he has been unable to turn the country around. Two patterns have emerged through the discussion of these two countries. The first is a reflection of the oil price increase in the 1970s. While North America, and doubtless the rest of the world, suffered through the temporary increase in oil prices the developing countries with oil seem to have fared much worse in the long run. The increase in the price of oil, in both cases, caused an unprecedented increase in revenue for these countries. Combine this fact with the lack of wise government in both places and economic ruin results. Many postulate that Dutch Disease is only a temporary structural problem concerned with the adjustment of the economy to the acquisition of the resource however it seems that developing nations can suffer lengthy consequences. This is especially the case where the increase is related to the sale of oil and no other valuable industry is created from this wealth. It seems that developing countries do not have the capacity to deal properly with the large inflow of resources. Perhaps an analysis of an Arab country belonging to OPEC will shed some light on the whether the control of supply can aid in the avoidance of Dutch Disease.

Gonzaga Debate Institute 2008 Scholars Lab

80 2nd Wave Oil DA’s

Venezuela Answers – Internal Link Turn: Corruption Oil fuels corruption which hurts growth IPS 3 (Inter Press Service, August 20, “Industry: The Murky Business of Oil”) "The reason corruption is so rampant in oil-exporting countries is not difficult to see," Terry Karl, co-author of the CRS report says in a telephone interview.. "There is no other commodity that produces such great profit -and this is generally in the context of highly concentrated power, very weak bureaucracies, and weak rule of law. 'People rob', the finance minister of Venezuela once said to me many years ago, 'because there is no reason not to." Of the eleven members of the Organization of the Petroleum Exporting Countries (OPEC), Indonesia, Nigeria and Venezuela are listed in the TI Index. The TI report says these are among most corrupt in the world at positions 96, 101 and 81 respectively. The other OPEC members are Algeria, Iran, Iraq, Kuwait, Libya, Qatar, Saudi Arabia and the United Arab Emirates -- hardly examples of transparency. Big oil names are also directly linked with corruption.

Gonzaga Debate Institute 2008 Scholars Lab

81 2nd Wave Oil DA’s

Venezuela Answers – Internal Link Turn: Inflation (1/2) Oil fuels inflation Economic Times 8 (June 8, “Despite oil wealth, Venezuela inflation rises” http://economictimes.indiatimes.com/articleshow/msid-3111726,prtpage-1.cms) Boom times are waning in oil-rich Venezuela, even as world crude prices soar. Inflation is nearing 30 percent, the highest in Latin America, and annual economic growth slowed to 4.8 percent in the first quarter, a four-year low. Analysts say President Hugo Chavez's economic policies are hindering private investment and growth just as he hopes to boost support ahead of November's regional elections. Many point to the economy as his Achilles' heel. Already complaining of inflation and food shortages, voters last December rejected constitutional changes that would have allowed Chavez to run for re-election indefinitely his first blow at the ballot box, where he had enjoyed four straight electoral and referendum wins. Inflation has been a familiar problem, but a newly slowing growth rate is making it a more urgent concern. Chavez plans to announce a package of economic measures to boost growth in coming days and to name a new finance minister to lead the strategy, Information Minister Andres Izarra said. Venezuela, the world's 10th-largest producer of crude, has seen its annual budget triple to US$63.9 billion (euro41 billion) since 2004 as oil prices soared. State oil monopoly Petroleos de Venezuela SA provides about half of the government's income. Chavez pumped huge amounts of that revenue into social programs for the poor, flooding the economy with cash and fueling a consumer spending boom while banks increased lending. Stanford University political scientist Terry Karl says oil booms always send growth soaring until an economy reaches what she calls an ``absorption crunch.'' ``You just can't absorb that huge influx of money properly,'' Karl said. ``You get problems with your prices, you get problems of supply. ... All those bottlenecks slow down growth and eventually create inflation.'' Like many oil-producing nations, Venezuela has a history of inflation, which reached 103 percent in 1996, two years before Chavez was first elected. As prices now climb again, Chavez's government has tried to tame the trend issuing US$4 billion (euro2.6 billion) in bonds in April to absorb excess cash, enforcing price controls on basic foods and holding the currency to a fixed exchange rate. It introduced a new monetary unit in January to boost confidence in its sagging ``bolivar,'' and changed the way inflation is measured, incorporating data from smaller cities with less cash on hand. The Central Bank embraced a more traditional anti-inflationary measure in March, raising interest rates on credit cards to 32 percent and on savings deposits to 10 percent to slow consumer spending. But inflation is galloping, with rates of roughly 30 percent after running at nearly 20 percent a year earlier. And some of Chavez's tactics have backfired. Price caps have caused sporadic shortages, as some food producers sought other, more profitable work. And foreign exchange controls make it harder for businesses to get dollars to buy imports, driving them to buy the US currency on the black market, where it has sold at times for twice the official rate further inflating prices.

Gonzaga Debate Institute 2008 Scholars Lab

82 2nd Wave Oil DA’s

Venezuela Answers – Internal Link Turn: Inflation (2/2) High oil prices mean inflation for Venezuela Stack and Daragahi 8 (Megan K., Borzou, Los Angeles Times Staff Writers, July 17, http://www.latimes.com/news/printedition/front/la-fg-oil17-2008jul17,0,6710073.story) But vast oil wealth comes with risks. All three countries are struggling with inflation, which might slowly erode popular support. In Russia, public spending doubled from 2004 to 2007. Oil and gas revenues are expected to surpass $178 billion in 2008, nearly $33 billion more than originally projected. The International Monetary Fund, wary of inflation, has warned Russia against rampant spending. Inflation in Iran has aggravated a devaluation of the currency. Political changes wrought by the oil windfall also may backfire. Venezuela's output is declining in part because skilled engineers and foreign companies are fleeing. Analysts say sanctions, brain drain and dearth of foreign investment have badly hurt Iran's potential output because of a lack of modern techniques. For now, however, all three are riding high on oil revenue.

More ev… Cancel 8 (Daniel, Bloomberg News, http://www.sun-sentinel.com/news/local/caribbean/sfl0624venoil,0,1492641.story) Venezuela Finance Minister Ali Rodriguez said higher consumer prices are being driven by a greater distribution of oil wealth to the population. Rodriguez said inflation, which in May accelerated to 31.4 percent from a year earlier, results from increased spending power among Venezuelans, causing demand to outpace supply, according to a statement on the Information Ministry's Web site. He was named finance minister June 15. ``The inflation phenomenon should be combated in two ways,'' Rodriguez said. ``On one hand, production needs to be stimulated, and on the other, consumption needs to be moderated by restructuring measures that don't improve the general well- being in the population.'' Venezuela has the fastest inflation of 79 countries tracked by Bloomberg. Food costs surged 6.1 percent in May after the government eased price restrictions on basics such as milk, eggs and chicken that had become scarce. Rodriguez, 70, a former president of OPEC, is the ninth finance minister under President Hugo Chavez since 1999. He said yesterday that controlling inflation is his biggest challenge.

Gonzaga Debate Institute 2008 Scholars Lab

83 2nd Wave Oil DA’s

Venezuela Answers – Internal Link Turn: Inflation K/T Econ Inflation is a threat to critical sectors of Venezuela’s economy El Universal 8 (July 14, http://english.eluniversal.com/2008/07/14/en_eco_art_less-growth-andhigh_14A1795039.shtml) Historically, Venezuelans have associated increases in oil prices with wealth and economic growth. However, the first semester of 2008 shows an unusual result: in spite of an unexpected jump in the oil prices, which averaged USD 100 per barrel by the end of the first half this year, the Venezuelan economy has lost momentum and skyrocketing inflation is deeply hurting consumers' purchasing power. According to the data provided by the Central Bank of Venezuela, the economic growth was 4.8 percent in the first quarter. This represents a sharp fall with respect to an 8.8 increase in the same period in 2007. This is the lowest growth since 2003. Such slowdown hits some areas that are vital for job creation and production. The construction sector was down from a 27 percent growth in the first quarter of 2007 to just 2.6 percent during the same period in 2008. On the other hand, manufacturing decreased from 6.8 percent in the first three months of 2007 to 1.4 percent in the same period this year. According to the data provided by the Central Bank of Venezuela, the economic growth was 4.8 percent in the first quarter. This represents a sharp fall with respect to an 8.8 increase in the same period in 2007. This is the lowest growth since 2003. Such slowdown hits some areas that are vital for job creation and production. The construction sector was down from a 27 percent growth in the first quarter of 2007 to just 2.6 percent during the same period in 2008. On the other hand, manufacturing decreased from 6.8 percent in the first three months of 2007 to 1.4 percent in the same period this year.

Gonzaga Debate Institute 2008 Scholars Lab

84 2nd Wave Oil DA’s

Venezuela Answers – Impact T/O – A2: Health Care Decrease oil prices wont decrease Venezuelan social spending Weisbrot & Sandoval 7 (Mark & Luis, Center for Econ Policy Res, http://www.venezuelanalysis.com/indicators) However, Venezuela has a large cushion of reserves to draw upon before an oil price decline would begin to squeeze its finances. A decline in oil prices of 20 percent or more could be absorbed from official international reserves, which at $25.2 billion are enough to pay off almost all of Venezuela's foreign debt. This does not include other government offshore accounts, which are estimated to be in the range of an additional $14-$19 billion. With its low foreign debt (14.6 percent of GDP), the government could also tap international credit markets in the event of an oil price decline. Furthermore, a collapse of oil prices does not appear to be likely in the foreseeable future. The July 10 short-term outlook of the US Energy Information Agency projects oil prices at $65.56 per barrel for 2007 and $66.92 for 2008. The risks of unanticipated supply shocks – especially in the volatile Middle East − seem to be mostly on the downside, which would increase prices.

Social programs aren’t improving mortality Alvarez & Hanson 6-27 (Cesar & Stephanie, Council on Foreign Relations, http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html)

Opinion is divided over the effect of Chavez's policies on Venezuela's economy. Some economists say the tremendous rise in social spending under Chavez has greatly reduced poverty and pushed unemployment below 10 percent, its lowest level in more than a decade. According to a February 2008 report from the Washington-based Center for Economic and Policy Research, not only has unemployment dropped, formal employment has increased significantly (PDF) since Chavez took office. But other economists express concerns about the country's high inflation levels. The IMF has forecast inflation of 25.7 percent in 2008 and 31.0 percent in 2009—among the highest rates for any country in the world—and according to news reports, the country is already experiencing food shortages of goods such as sugar and milk. Francisco Rodriguez, former chief economist of the Venezuelan National Assembly, writes in a 2008 Foreign Affairs article that income inequality has increased during Chavez's tenure, and further, Chavez's social programs have not had a significant impact on infant mortality rate or literacy rates among Venezuelans.

Gonzaga Debate Institute 2008 Scholars Lab

85 2nd Wave Oil DA’s

Venezuela Answers – Impact Turn -- Oil = Chavez US oil consumption fuels Chavez –No revenue goes to productive economic purposes Bremmer 7 (Ian, President of Eurasia Group. “Hugo Chavez's Most Dangerous Enemy?” It's Chavez Himself http://www.realclearpolitics.com/articles/2007/11/hugo_chavezs_most_dangerous_en.html) In proven and unproven reserves, Venezuela is believed to control some 270 billion barrels of oil, the deepest supply in the world. As crude prices lurch toward $100 per barrel, President Hugo Chavez would appear to hold the only weapon he needs to further tighten his grip on domestic political power and extend his foreign-policy influence. But a close look at how his government milks the country's cash cow suggests he has serious cause for concern. Chavez remains popular at home, but if Venezuela's economy turns south and state spending on popular social programs is substantially cut, he may not be popular for long. His fortunes increasingly depend on the future of Venezuela's oil production, because the government's cash comes almost exclusively from the country's state-run energy giant, Petróleos de Venezuela (PDVSA). As recently as the mid1990s, PDVSA hoped that joint development projects with foreign firms would lift production to 6.5 million barrels per day (bpd). In 1998, the company produced about 2.9 million bpd. Output has since fallen to around 1.6 million. There are two main reasons. First, during a power struggle with Chavez in 2003, PDVSA's workers went on strike. The president retaliated by firing 18,000 of them, including the vast majority of the company's most talented and experienced engineers. Nearly five years later, the company has yet to recover from the loss of expertise. Second, Chavez is bleeding the company of the revenue that might be reinvested in aging infrastructure and new equipment. He has diverted $12 billion into a fund meant to subsidize health and education projects. Some argue that this is a worthy undertaking, but this spending represents three times the amount devoted to oil exploration and the maintenance of PDVSA's existing assets, the source of Venezuela's future income. In addition, all these subsidies are awarded off the books. It's impossible to know exactly how all that money is really being spent. The company's profit margins fell by about 25 percent in 2006, despite the surge in oil prices. In the first quarter of 2007, the company took on $12 billion in new debt. These are official figures; the reality may be much worse. The broader economy is already in rough shape. The most optimistic estimates put core inflation at 20 percent, and the real figure might be closer to 35 percent. Foreign investment in the country is severely limited by Chavez's habit of voiding contracts with international firms, creating product shortages across the board. Venezuela is a net importer of virtually everything except oil and remains deeply dependent on its neighbors, including the United States, for goods and services vital to the country's economy. Convinced that oil production will rise and that high prices are here to stay, Chavez has aggressively antagonized the United States, his best oil customer. He has essentially awarded exclusive rights to future development deals in the country's oil-rich Orinoco belt, believed to hold the largest petroleum reserves in the world, to CNPC (China), ONGC (India), LUKoil (Russia), Gazprom (Russia), Petrobras (Brazil), NIOC (Iran), and Repsol YPF (Spain). He has repeatedly threatened to divert oil exports now destined for the United States toward consumers in Asia. Herein lies the shortsightedness of Chavez's plans. The new prominence of foreign state-owned energy companies comes at the expense of multinationals like ExxonMobil and ConocoPhillips. Chavez has squeezed these and other international companies operating in the country by tearing up existing contracts to seize a bigger share of their profits. If the economy slows further and Chavez needs more cash, he'll find it a lot tougher to push around the state-owned firms of would-be allies. In addition, Venezuela needs access to U.S. energy markets, because crude oil shipments to America represent more than half of the country's total exports. Chavez can't simply redirect that much oil toward China and India. Venezuela has no direct access to the Pacific Ocean. Its rusting tanker fleet must pay transit fees to use the Panama Canal, and it takes a Venezuelan tanker seven weeks to reach East Asia. More to the point, neither China nor India will have the capacity to refine that much of Venezuela's heavy crude oil anytime soon. Hugo Chavez's most dangerous enemy is Chavez himself. His quixotic rule continues to generate damage that his ministers must scramble to minimize. On May 1, the Venezuelan president proudly pledged that his country would withdraw from the International Monetary Fund and World Bank, institutions he considers appendages of an "evil empire" based in Washington. His finance minister was among those taken by surprise by the announcement. Chavez apparently didn't know that clauses in the country's IMF agreement stipulate that withdrawal from the fund could trigger a large-scale debt default as other lenders were freed to demand immediate repayment of $21 billion in sovereign debt. Informed of this by his ministers, Chavez has now begun to hint that the time might not be ripe for such a bold move. Chavez has also announced the state takeover of Venezuela's largest telecom company and power utilities along with several ambitious energy projects without a clear plan on how the move should be executed. In response, the country's stock market plunged 20 percent in a single day.

Gonzaga Debate Institute 2008 Scholars Lab

86 2nd Wave Oil DA’s

Venezuela Answers – Impact Turn – Chavez Bad: Oil = Chavez Oil revenue key to Chavez Walser 8 (Ray, 3-11, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/hl1079.cfm) While Chávez pursues his aggressive agenda and erodes the efficiency and long-term viability of his energy sector, Washington understands that a sudden reduction in the price of oil would ripple through PdVSA and Venezuela, severely undercutting Chávez and his ability to govern. Mounting inflation, widespread food shortages, and violent crime have lessened Chávez's approval ratings, and his domestic grip appears to have slipped. The failure to achieve popular approval of a package of constitutional reforms in December 2007 has raised hope in opposition circles that the Venezuelan people may be able to select new leadership in 2012.

Oil revenue funds Chavez’s agenda Alvarez & Hanson 6-27 (Cesar & Stephanie, Council on Foreign Relations, http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html)

Under Chavez, however, the company's mandate has drastically expanded. In 2002, Chavez redefined PDVSA’s role to include the government’s social priorities. PDVSA must now spend at least 10 percent of its annual investment budget on social programs. This money is funneled through the National Development Fund, or Fonden, an investment fund set up in 2005 that is not included in the government's budget. Peter Hakim, president of the Inter-American Dialogue, a Washington-based center for policy analysis, says that Chavez’s gradual takeover of PDVSA has given him an enormous bankroll to pursue his political and economic ambitions.

Low oil prices are key to undermining Chavez’s power Shifter 6 (Michael, Adjunct Professor of Latin American Studies at Georgetown University's School of Foreign Service [http://www.foreignaffairs.org/20060501faessay85303-p0/michael-shifter/in-search-of-hugo-ch-vez.html] In Search of Hugo Chávez/ June 2006) To be sure, Chávez's capacity to govern the country is not unlimited. A drop in oil prices, although unlikely in the near term, would prove highly problematic for his plans. There are credible reports of largescale corruption within the regime and, as evidenced by infrastructure problems, major inefficiencies in the economy and the public sector. Shortages in basic commodities have begun to appear sporadically, the result of prolonged price controls. Incipient splits within Chávez's amorphous coalition could become more pronounced and create problems for governance. And although Chávez remains personally popular, polls indicate that the population is becoming increasingly dissatisfied over a variety of key issues.

Chavez uses oil revenues to increase his influence in Latin America and fund guerrilla groups Hanson 8 (Stephanie, Council on Foreign Relations [http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html#2] Venezuela’s Oil-Based Economy/ June 27, 2008) Increased oil revenues have also given Chavez the ability to extend assistance programs outside Venezuela’s borders. For example, he provides oil at a preferential price to many countries in the Caribbean through the Petrocaribe initiative. In August 2007, the Associated Press calculated that Chavez had promised $8.8 billion in aid, financing, and energy funding to Latin America and the Caribbean between January and August 2007, a figure far higher than the $1.6 billion of U.S. assistance for the entire year. Though it is impossible to determine how much of that funding was actually dispersed, the difference in aid is striking. Chavez is also suspected of funneling money to the FARC, a Colombian guerrilla group, as well as providing funds to Argentine President Cristina Kirchner’s election campaign in 2007—though he denies both charges.

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Venezuela Answers – Impact Turn – Chavez Bad: War/Lead/Democr 2AC Venezuelan oil revenue finances anti-American dictatorships in Latin America causing regional war Johnson & Cohen 4 (8-12, Stephen & Ariel, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg1787.cfm) Hugo Chávez is no democrat. At home, he has concentrated the powers of the state in his presidency, expropriating budgets from municipal governments, strengthening the national police, and packing the Supreme Court with cronies.23 Abroad, he appears to be in the initial stages of creating a confederation of nations opposed to the United States that is sustained by oil and united by an improvised nationalist ideology. History suggests a future of conflict and poverty, both for those under his rule and for all those who are allied with him. Other countries in Latin America share some of Venezuela's economic characteristics--abundant resources and high rates of poverty that make them easy prey for populist demagogues. A bloc of states united in leftist authoritarianism and oil extortion could ignite the flames of armed confrontation again in the Western Hemisphere. To avoid needless conflict as well as a possible energy crisis, the United States should help direct Venezuela back toward democracy, develop alternate sources of petroleum, and engage Latin America more effectively to help allies strengthen democratic institutions and market economies.

Latin America key to worldwide democracy Diamond 8 (Larry, Council on Foreign Relations [http://www.foreignaffairs.org/20080301faessay87204-p0/larrydiamond/the-democratic-rollback.html] The Resurgence of the Predatory State/ April 2008) In the coming decade, the fate of democracy will be determined not by the scope of its expansion to the remaining dictatorships of the world but rather by the performance of at-risk democracies such as Kenya. A list of such democracies would encompass more than 50 states, including most countries in Latin America and the Caribbean, four of the eight democracies in Asia, all of the post-Soviet democracies that do not belong to the European Union, and virtually all of the democracies in Africa. The most urgent task of the next decade is to shore up democracy in these countries.

Democracy stops nuclear war Larry Diamond, Hoover Institution, Stanford University, December, PROMOTING DEMOCRACY IN THE 1990S, 95, p. http://www.carnegie.org//sub/pubs/deadly/diam_rpt.html //. Nuclear, chemical and biological weapons continue to proliferate. The very source of life on Earth, the global ecosystem, appears increasingly endangered. Most of these new and unconventional threats to security are associated with or aggravated by the weakness or absence of democracy, with its provisions for legality, accountability, popular sovereignty and openness. The experience of this century offers important lessons. Countries that govern themselves in a truly democratic fashion do not go to war with one another. They do not aggress against their neighbors to aggrandize themselves or glorify their leaders. Democratic governments do not ethnically "cleanse" their own populations, and they are much less likely to face ethnic insurgency. Democracies do not sponsor terrorism against one another. They do not build weapons of mass destruction to use on or to threaten one another. Democratic countries form more reliable, open, and enduring trading partnerships. In the long run they offer better and more stable climates for investment. They are more environmentally responsible because they must answer to their own citizens, who organize to protest the destruction of their environments. They are better bets to honor international treaties since they value legal obligations and because their openness makes it much more difficult to breach agreements in secret. Precisely because, within their own borders, they respect competition, civil liberties, property rights, and the rule of law, democracies are the only reliable foundation on which a new world order of international security and prosperity can be built.

Gonzaga Debate Institute 2008 Scholars Lab

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Venezuela Answers – Impact Turn – Chavez Bad: Econ (1/3) All oil revenue is diverted to Chavez, killing the economy Walser 8 (Ray, 3-11, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/hl1079.cfm) Chávez uses his oil revenues as a massive ATM for domestic spending and to prop up the Castroite Communist regime in Cuba ($2 billion to $4 billion annually), to purchase influence with smaller, energydependent Caribbean and Central American nations via PetroCaribe, and to spend billions on the purchase of Russian small arms, jets, helicopters, and submarines. He has dispatched bags of soft political cash as far as Argentina and is lending support to advance the electoral prospects of the leftist Farabundo Martí Liberation Front in El Salvador in 2009. Chávez's recent uptick in support for the Revolutionary Armed Forces of Colombia (FARC) and his momentary flirtation with war threats against Colombia lead to serious questions about his long-term ambitions regarding the future stability and democratic governance of Colombia. The enormous costs of these undertakings draw away from productive investments in energy and other sectors of productive growth.

Oil prices drive fuel Chavez’s inefficient spending which hurts Venezuela’s economy Ashwell 5 (Nick, World markets Analysis, September 14, “GDP May Reach Double Digits in 2005, Says Venezuelan Official”) Central bank director Domingo Maza said yesterday that GDP in Venezuela is likely to grow by 8-10% over 2005 as a whole, well above the official forecast of 5%. The chief factor behind Venezuela's stronger-than-expected performance is high oil prices, according to Zavala. These are allowing sharp increases in public spending; the price of Venezuelan crude has averaged US$43.35 per barrel so far this year - well above the US$23 assumed in the 2005 budget. Zavala forecast GDP growth in the third quarter of 10% year-on-year, above the 9.3% recorded in the first half of 2005 (see Venezuela: 19 August 2005: Oil Industry Underpins Double-Digit GDP Growth in Venezuela). He also said that annual inflation should end this year at less than 15% (see Venezuela: 2 September 2005: Consumer Inflation in Venezuela Accelerates Somewhat in August Amid Rising Food Prices). Significance: As ever, the performance of the Venezuelan economy remains heavily dependent on the trajectory of oil prices. Rather than taking advantage of bumper revenues to strengthen the public finances and diversify the economy, the administration of President Hugo Chavez is cranking up social spending at a remarkable pace, while undermining investor confidence by embarking on an expropriation campaign of 'unused and under-used' land and corporate plants.

Oil wealth doesn’t solve poverty Sullivan & Olhero 8 (1-11, CRS Report, Specialist in Latin American Affairs, http://www.fas.org/sgp/crs/row/RL32488.pdf) Despite the country’s oil wealth, economic conditions in the country deteriorated in the 1990s. The percentage of Venezuelans living in poverty (income of less than $2 a day) increased from 32.2% to 48.5% of the population between 1991 and 2000, while the percentage of the population in extreme poverty (income of less than $1 a day) increased from 11.8% in 1990 to 23.5% in 2000.51 In 2002-2003, the country’s political instability and polarization between the government and the opposition contributed to a poor investment climate, capital flight, and declines in GDP. The national strike orchestrated by the opposition from late 2002 to early 2003 contributed to a contraction of the national economy by almost 9% in 2002 and 7.7% in 2003.

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Venezuela Answers – Impact Turn – Chavez Bad: Econ (2/3) Chavez hurts the Venezuelan economy and causes regional instability Johnson 6 (Stephen, Hertiage Foundation. “Is Hugo Chávez a threat?” http://www.heritage.org/Research/LatinAmerica/hl938.cfm May 1, 2006) Biographers tell us that Hugo Chávez trained for a radical career ever since childhood, though no one guessed he would be president. He learned Marx and Machiavelli from a neighborhood historian but seemed disinterested. In the Venezuelan Army, he joined a group of left-leaning officers that secretly advocated Marxism and military rule, calling themselves Bolivarians after the Venezuelan patriot Simón Bolívar. They got little notice. When Chávez and a handful of fellow officers attempted to overthrow President Carlos Andrés Pérez in 1992, few took him seriously. When Pérez got impeached a year later on corruption charges, people saw Chávez as a reformer. Released from jail in 1994, he formed his own Fifth Republic Movement and promised to clean up government and relieve poverty. Venezuela’s political parties were running on empty. Its caretaker state, based on exploiting natural resources and distributing profits through social spending

Venezuelans living under the poverty line had gone from 27 percent of the population to more than 50 percent. Chávez called his predecessors “squalids” and referred to the capitalism they espoused as “savage.” The public brushed it off as rhetoric. The mainstream daily newspaper El Nacional and TV networks Venevisión and Televén even supported Chávez’s candidacy. Chávez in Power Opinions changed after he was elected in 1998. Instead of governing by consensus, which was what Venezuelans had become accustomed to, he led by confrontation. Politicians, civil society, and the commercial sector fell into paralysis. He had the constitution rewritten to consolidate his powers and extend his mandate. In 2002, an uprising took him temporarily from office, but he came back a crusader, successfully linking his cause with the state. Thereafter, he attacked opponents with a vengeance. He enacted a “social responsibility” law permitting the government to close radio and programs, had become sluggish and inefficient. Since 1980,

TV stations for airing content that “causes anxiety.” Another imposed jail terms for even mildly criticizing the government. In the background, prosecutors began rounding up opposition leaders for show trials conducted by provisional, handpicked judges. In August 2004, the president survived a recall vote by padding electoral rolls and intimidating opponents. Now politicians from opposition parties seem increasingly unwilling to run against him or his candidates. Outside his borders,

Chávez threatens non-leftist states. Financed by the national oil industry he directly controls, the president sees himself taking over Fidel Castro’s leadership of the Latin American left and strengthening hemispheric ties to such rogue nations as Iran and North Korea.

More ev… Washington Times 7 (Richard W. Rahn, Director general of the Center for Global Economic Growth, a project of the FreedomWorks Foundation. “Collapsing Venezuela” http://www.washingtontimes.com/news/2007/jan/21/20070121-102603-4793r/)

If Venezuelan President Hugo Chavez deliberately intended to sabotage his nation's economy, he would be hard-pressed to do anything different from what he is now doing to his country. It has been widely reported that Mr. Chavez has been increasingly taking control of the oil, telecommunications and energy sectors, as well as the media. What has not been reported is the full extent of the corruption in Venezuela and how this ultimately will destroy the economy. The financial scandal taking place is far bigger than Enron, and may ultimately even exceed the U.N. "oil-for-food" scandal, the biggest financial disgrace of all time. Venezuela has had a rapidly growing economy for the last few years, due to high oil prices, but the house of cards is about to collapse. The former Venezuelan representative to Transparency International, Gustavo Coronel, has documented how much of this corruption has taken place in a report published by the Cato Institute's Center for Global Liberty and Prosperity. Forty years ago, Venezuela had become a functioning democracy and was experiencing solid economic growth, but beginning in the mid-1970s corruption increased. Partially as a result, Hugo Chavez was elected president in December 1998 on an anticorruption platform. In the years since, Mr. Chavez has been dismantling the independent political institutions and sharply reducing transparency. He has also stripped the Central Bank of its independence and misappropriated much of its reserves. Some of the funds have been used to buy billions of dollars of Argentine bonds, to buy influence in Argentina. That country has not been able to sell bonds in the international markets since its 2001 default because Argentina still has not come to an agreement with its private creditors, despite having extensive and growing foreign exchange reserves.

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Venezuela Answers – Impact Turn – Chavez Bad: Econ (3/3) Chavez diverts oil funding to unproductive sources Washington Times 7 (Richard W. Rahn, Director general of the Center for Global Economic Growth, a project of the FreedomWorks Foundation. “Collapsing Venezuela” http://www.washingtontimes.com/news/2007/jan/21/20070121-102603-4793r/)

The Argentine bonds were then sold by the Venezuelan government to cooperative local banks at artificial rates as a way to get rid of the bonds. Venezuela established exchange controls several years ago to try to reduce capital flight, which immediately resulted in a parallel (black or free market) market, giving Venezuela two different exchange rates (the official and the black or free market rate). The government uses the existence of these two rates to reward "friendly" banks and "intermediaries" (some of whom are known terrorists). Since 2004, the Venezuelan Central Bank has transferred about $22.5 billion to accounts abroad by the Chavez government, and about $12 billion of that remains unaccounted for. It has also been reported that the gold reserves have been removed from the Central Bank. Mr. Chavez has also set up a "development bank," which operates without transparency. As the Chavez government takes over more and more of private industry, it also ceases reporting on the financial results of those industries, such as the state-owned oil company, which operates Citgo in the U.S. Mr. Chavez announced this month he will take over the privately owned telecommunications and power companies, and we can expect that shortly after he does so his government will also stop reporting their finances. Increasingly, Mr. Chavez uses the massive oil revenues the country receives, as well as other government revenues, as his own private piggy bank.

More ev… Washington Times 7 (Richard W. Rahn, Director general of the Center for Global Economic Growth, a project of the FreedomWorks Foundation. “Collapsing Venezuela” http://www.washingtontimes.com/news/2007/jan/21/20070121-102603-4793r/)

Where has all the money gone? It has gone to buy foreign political influence and loyalties in places like Cuba, Bolivia, Nicaragua and even the United States (notably to subsidize some New England fuel oil consumers through a company controlled by members of the Kennedy family). The money has gone to buy weapons from Russia, Spain and elsewhere, endearing those countries to Mr. Chavez. The money has gone to local cronies for inflated infrastructure and economic development projects and to buy the loyalty of government officials and supporters, including judges. The Venezuelan economy will collapse, despite massive oil revenues because we know socialist economies perform poorly. While the rest of the world has been moving away from socialism for the last quarter-century for good reason, Venezuela is becoming socialist. We know governmental use of central banks to basically print money to cover expenditures results in rising inflation and eventually monetary meltdown. Venezuela no longer has an independent central bank, and inflation is already up to 17 percent and rapidly rising. We know countries thrive with economic freedom but decline without it, and Venezuela is now down to 126 out of 130 nations in the 2006 Economic Freedom of the World the most rapid decline ever (in 1995 it was No. 75). And, finally, we know that when a state becomes totally corrupt an economic collapse always follows. Mr. Chavez and his cronies had already been spending far more than they were taking in before the recent drop in oil prices. Without a big jump back up to $70 a barrel or more for oil, the Venezuelans will be increasingly squeezed, and you can bet the blood from the innocent Venezuelan people will be drained long before those on the take from Mr. Chavez agree to have their looting stopped.

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Venezuela Answers – Impact Turn – Chavez Bad: Econ – Poverty Up Poverty high in Venezuela Helwege 7 (Ann, GLOBAL DEVELOPMENT AND ENVIRONMENT INSTITUTE [http://www.ase.tufts.edu/gdae/Pubs/wp/07-02LatinAmPoverty.pdf] Declining Poverty in Latin America? A Critical Analysis of New Estimates by International Institutions/ September 2007) Four of the region’s more developed countries – Argentina, Colombia, Peru, and Venezuela – have shown the worst performance. As a group, they’ve seen moderate poverty balloon from 11% to 25%, while extreme poverty jumped from 2% to 10% (WB). In all four cases, the data are incomplete and sometimes inconsistent, but the extent of problems in these relatively large countries raises doubts about prospects for halving poverty by 2015.

Poverty rates rapidly increasing in Venezuela The World Bank 4 ([http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/VENEZUELAEXTN/0,,menuPK:3317 77~pagePK:141132~piPK:141107~theSitePK:331767,00.html] Venezuela Country Brief/ August 2004) Despite the country’s progress, the percentage of Venezuelans living in poverty (household income of less than $2 a day) has increased from 32.2 percent in 1991 to 48.5 percent in 2000. Likewise, the proportion of those living in extreme poverty —below $1 a day— rose from 11.8 percent to 23.5 percent. This increased poverty is accompanied by a widening inequality gap. Currently, the richest 20 percent of Venezuelans receives 53 percent of all income, while the poorest 20 percent accounts for only a three percent share of the country’s total income. Most observers agree that the biggest obstacle to stable growth in Venezuela is the country’s polarized political climate. A successful conclusion to continuing efforts at mediation of the country’s political divisions would be a strong factor in favor of improving Venezuela’s prospects for growth and poverty reduction.

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Venezuela Answers – Impact Turn – Chavez Bad: Democracy Chavez undermines Latin American democracy Johnson 6 (Stephen, Heritage Foundation, 5-1, http://www.heritage.org/Research/LatinAmerica/hl938.cfm In fact, Chávez has made good on all his promises except to curb poverty and corruption, which have increased under his rule. He has successfully corralled opponents at home and has targeted the democratic, free-market West. His diplomats actively support radical parties in such countries as Bolivia, Peru, Ecuador, Panama, Nicaragua, El Salvador, and Mexico. He hopes to link Latin American radicals with Middle Eastern jihadists and exploit nuclear technology with Iran. One should not take that lightly. But his menace could also serve as a wake-up call. Elsewhere in the region, powerful presidencies still impose agendas out of touch with public desires while subservient legislatures and judiciaries fail to curb their excesses. In most countries, party leaders, not voters, choose candidates who are placed on lists and elected according to the proportion of votes collected by each party. Today, half the countries in Latin America have poverty levels at about the 50 percent mark. Most of those economies are still manipulated to shield state or family-owned monopolies while placating the middle class and poor with social programs. Increased trade helps established industries and contributes to economic growth but fails to create enough jobs to keep up with population growth, which will increase by 200 million in 20 years. The region cries for change, but whose vision will prevail? To guard against Chávez-style authoritarianism spreading throughout the rest of Latin America, countries with “at-risk” profiles of high poverty, high unemployment, poor social integration, and lagging opportunity for social advancement must undertake reforms to become “opportunity societies.” More to the point, Washington can help by engaging more vigorously with our neighbors to: Promote deeper political reforms, bolstering homegrown efforts to improve governance, strengthening citizen control of political parties now dominated by founder/owners, establishing links between legislators and constituent districts, enhancing separation of powers, and promoting equal treatment of all citizens before the law. Foster freer markets by concluding pending bilateral free trade accords with Panama and the Andean countries of South America. Beyond trade, U.S. diplomacy and assistance should help strengthen property rights, simplify business licensing for small enterprises, encourage banking competition to make credit more affordable, and provide models for privatization that enhance competition, not stifle it. Improve security through regional cooperation by encouraging regional partnerships based on day-to-day military-to-military and law enforcement-to-law enforcement cooperation to promote common standards and practices as well as share intelligence on criminal and terrorist threats. Boost communication with the audiences Chávez seeks by reviving public diplomacy programs such as scholarships and exchanges for poor and indigenous youth to study and visit the United States as well as expanding Voice of America broadcasts to Latin America to balance the propaganda of Venezuela’s Telesur TV network. Toward Venezuela, U.S. diplomats should avoid responding to Hugo Chávez’s provocations—a device he uses to show followers that he can taunt world powers. Still, Washington should support Venezuelan democrats by urging continued international scrutiny of human rights under Venezuela’s emerging police state and pressing U.S. allies to join in denouncing Chávez’s dictatorial policies. Since childhood, Hugo Chávez has been underestimated. Today, he is

becoming a major irritant, if not a threat, to Latin America’s fragile democracies and to the United States. As an antidote, the United States and its allies should ignore verbal provocations, but stand by Venezuela’s democrats, and help democracy and markets fulfill their promise in the rest of the hemisphere.

More ev… Walser 8 (6-30, Ray, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg2152.cfm Loosely networked and filled with a variety of left sympathizers, the Chávez left draws from a collection of old-line Communists, radicals, indigenous leaders, and anti-Americans who travel freely from Havana to Caracas to La Paz and other locations. Assisted by Venezuelan financial aid, it hides its dangerous tendencies behind a smokescreen of unabashed apologetics. The groups that make up this movement aspire to become catalysts for the destabilization of democratic, free-market, pro-U.S. governments and do not play by normal rules of the political game.

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Venezuela Answers – Impact Turn – Chavez Bad: Democracy – Model Latin America key to worldwide democracy Diamond 8 (Larry, Council on Foreign Relations [http://www.foreignaffairs.org/20080301faessay87204-p0/larrydiamond/the-democratic-rollback.html] The Resurgence of the Predatory State/ April 2008) In the coming decade, the fate of democracy will be determined not by the scope of its expansion to the remaining dictatorships of the world but rather by the performance of at-risk democracies such as Kenya. A list of such democracies would encompass more than 50 states, including most countries in Latin America and the Caribbean, four of the eight democracies in Asia, all of the post-Soviet democracies that do not belong to the European Union, and virtually all of the democracies in Africa. The most urgent task of the next decade is to shore up democracy in these countries.

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Venezuela Answers – Impact Turn – Chavez Bad: Arms Race Chavez uses oil profits to buy weapons Shifter 6 (Michael, Adjunct Professor of Latin American Studies at Georgetown University's School of Foreign Service [http://www.foreignaffairs.org/20060501faessay85303-p0/michael-shifter/in-search-of-hugo-ch-vez.html] In Search of Hugo Chávez/ June 2006) Chávez has also used oil money to buy weapons, which he justifies by invoking the threat of a U.S. invasion. He has purchased combat helicopters and 100,000 AK-47s from Russia and has struck a deal with Spain for some $2 billion in military equipment. Although it is uncertain whether the deals that have been announced will actually materialize (Washington has tried to block arms purchases from Spain and Brazil), it is clear that such moves are part of Chávez's mission to increase his own power vis-à-vis the world's only superpower.

Venezuela’s oil revenues go to purchasing weapons Hanson 8 (Stephanie, Council on Foreign Relations [http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html#2] Venezuela’s Oil-Based Economy/ June 27, 2008) Military expenditures are also funded by the government's flush coffers. Between 2004 and 2006, Venezuela spent roughly $4.3 billion on weapons, according to a January 2007 Defense Intelligence Agency report. As part of deals signed with Russia in 2006, Venezuela purchased 100,000 Kalashnikov rifles, twenty-four Sukhoi-30 fighter planes, and fifty-three Russian helicopters. In March 2008, it hired Belarus to build an air defense system.

Chavez fuels a regional arms race Sullivan & Olhero 8 (1-11, CRS Report, Specialist in Latin American Affairs, http://www.fas.org/sgp/crs/row/RL32488.pdf) As noted above, the Bush Administration has expressed concerns about Venezuela’s purchases of military equipment. Defense Intelligence Agency Director Lt. Gen. Michael Maples expressed concern in February 2006 congressional testimony about Venezuela’s arms purchases, maintaining that Venezuela was seeking to increase their capability for their own defense and to operate elsewhere in Latin America and the Gulf area.122 State Department officials maintain that Venezuela’s military purchases from Russia go far beyond what the country needs for self-defense. Secretary of State Donald Rumsfeld cited concerns among neighboring Latin American countries about Venezuela’s military purchases and also a concern that the assault rifles could end up in the hands of terrorist groups like the Revolutionary Armed Forces of Colombia.123 President Chávez criticized Secretary Rumsfeld for suggesting that countries such as Colombia are concerned about Venezuela’s military purchases. In January 11, 2007 testimony before the Senate Select Committee on Intelligence, Director of National Intelligence John Negroponte expressed concern that the President Chávez’s military purchases and moves toward developing his own weapons production capability are increasingly worrisome to his neighbors, and could fuel an arms race in the region.

An arms race causes conflict due to strategic imbalances Flynn 7-11 (Mathew, Center for Intl Policy Staff, http://americas.irc-online.org/am/5362) The Chavez government has reacted angrily to the U.S. bases surrounding Venezuela and U.S. generals listing "radical populism" a major new security threat.14 One dangerous scenario (outright war would be worse) is an acceleration of the alleged arms race occurring in South America. Former Brazilian President Jose Sarney and other regional leaders warn about Venezuela increasing its military strength. "If [Venezuela] truly becomes a military power, an arms race in Latin America will ensue. It will lead to a strategic disequilibrium on the continent," Senator Sarney cautioned.15

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Venezuela Answers – Impact Turn – Chavez Bad: Bomb Chavez will obtain a nuke and fuel a regional arms race Johnson 6 (Stephen, Hertiage Foundation. “Is Hugo Chávez a threat?” http://www.heritage.org/Research/LatinAmerica/hl938.cfm May 1, 2006) He has proposed energy cartels, such as PetroCaribe and PetroSur, to integrate Latin America’s state hydrocarbon industries under one roof minus the participation of private U.S. companies. And, despite controlling the seventh largest oil and tenth largest natural gas reserves in the world, Chávez

announced last May plans to acquire nuclear technology from Iran, fueling fears that he may try to develop a bomb. He is friendly with the Revolutionary Armed Forces of Colombia (FARC) guerrillas and allowed FARC units to camp out in Venezuelan territory. His government granted FARC commander Rodrigo Granda Venezuelan citizenship before he was captured on a bounty and sent back to Colombia. His new regional satellite TV network called Telesur bashes Colombia for its relations with the United States in addition to beaming Marxist propaganda throughout South America. Chávez opposes the planned Free Trade Area of the Americas while advocating his own Bolivarian Alternative for the Americas (ALBA)—a notional aid network to be financed largely by Venezuelan oil profits. Although the highway from Caracas to its international airport lies in disrepair, he has committed more than $3 billion a year in aid to Latin American neighbors and has bought up Argentine and Ecuadoran debt, which is passed on to international financial markets. Chávez

has embarked on an arms buildup to scare Brazil and Colombia. He has announced plans to buy more than a million rifles and acquire armored vehicles and new attack aircraft from Russia. Recently, he called for Britain to leave the Falkland Islands. In the United States, his government has paid lobbyists up to $100,000 a month to polish his image before the public and U.S. Congress. It reportedly funds the Venezuela Information Office, a public relations firm operating under the Foreign Agents Registration Act. Although they claim no direct link to the Venezuelan state, pro-Chávez activist groups called “Bolivarian Circles” have surfaced in Miami, Chicago, and other cities.[2] After years of persuading fellow OPEC (Organization of Petroleum Exporting Countries) members to suppress petroleum production to raise prices, Chávez has negotiated with selected U.S. Congressmen to sell small amounts of discount heating oil to poor neighborhoods in northern U.S. cities, to help these lawmakers to gain political clout.[3] By meddling in U.S. internal politics, Chávez hoped to drive a wedge between the American people and their government. A Call to Action Whether Venezuela’s President Chávez is a serious threat or a threatening buffoon depends on your point of view. If he cuts off oil shipments to the United States, other suppliers can step in. If he buys Russian MiGs, Washington could theoretically send his neighbors F-16s.

Chavez supports terrorism and intends to acquire nuclear weapons from Iran Johnson 6 (Stephen, Hertiage Foundation. “Is Hugo Chávez a threat?” http://www.heritage.org/Research/LatinAmerica/hl938.cfm May 1, 2006) Moreover, how much trouble can Venezuela cause with an annual gross domestic product comparable to that of St. Louis, Missouri? In fact, Chávez has made good on all his promises except to curb poverty and corruption, which have increased under his rule. He has successfully corralled opponents at home and has targeted the democratic, free-market West. His diplomats

actively support radical parties in such countries as Bolivia, Peru, Ecuador, Panama, Nicaragua, El Salvador, and Mexico. He hopes to link Latin American radicals with Middle Eastern jihadists and exploit nuclear technology with Iran. One should not take that lightly. But his menace could also serve as a wake-up call. Elsewhere in the region, powerful presidencies still impose agendas out of touch with public desires while subservient legislatures and judiciaries fail to curb their excesses. In most countries, party leaders, not voters, choose candidates who are placed on lists and elected according to the proportion of votes collected by each party. Today, half the countries in Latin America have poverty levels at about the 50 percent mark. Most of those economies are still manipulated to shield state or family-owned monopolies while placating the middle class and poor with social programs. Increased trade helps established industries and contributes to economic growth but fails to create enough jobs to keep up with population growth, which will increase by 200 million in 20 years. The region cries for change, but whose vision will prevail?

Chavez will use oil funds to acquire a nuke and go to war w/Columbia Brookes 8 (Heritage Foundation, Peter, Senior fellow. “Uncle Sam’s Latin challenge” http://www.heritage.org/Press/Commentary/ed013108a.cfm) Fortunately, Chavez's outlandish antics, such as a UN speech where he referred to President Bush as "the devil," undermine his appeal. Many Latin

Venezuela is awash in oil profits, which Chavez is using to consolidate power at home, bankroll Leftist pols across the region, provide cut-rate oil to amigos like Cuba, buy billions in Russian weaponry and back guerillas in Colombia. He's also chummy with Iran's President Mahmoud Ahmadinejad. The two nations have signed a number of joint-venture deals, but the real worry is the prospect of Iranian missile or even nuclear (weapon) proliferation to Venezuela. Castro's Americans see him more as a disruptive hothead than the model statesman he fancies himself. But

Mini-Yo also hopes to squeeze the United States by cutting off oil shipments, too - if he can find a new customer base. (Venezuela produces 15 percent of our imported oil.) Happily, Chavez failed to win a key ally when Felipe Calderon won the 2006 presidential election in Mexico, an important US trading partner. But USMexico relations are a mixed bag - complicated by thorny issues such as Mexico being a prime source of illegal immigrants to the US, and the preferred transit route for more. Another problem: narcotics trafficking. Calderon has felt obliged to call in the army to deal with the drug lords; he's even asked the United States to help fight gangs, narco-gunslingers and corrupt cops. Chavez gets along far better with Bolivia's Evo Morales and Ecuador's Rafael Correa, two populist leftist leaders who've gotten financial support from him - and take many political cues from him, too. Each is looking at rewriting his nation's constitution (as Chavez has tried to do) to consolidate power and nationalize energy resources. Bloodshed

and civil strife can't be ruled out, especially as indigenous peoples are politically mobilized. Then there's Nicaragua's President Daniel Ortega. Chavez backed his campaign, forgave Nicaraguan debt and provides aid. Some worry Ortega still longs for the bad ol' Sandinista days. Ortega and Ahmadinejad are buds, too. On a recent visit, the Iranian leader claimed he and Ortega "have common interests, common enemies, and common goals." On an earlier visit, Ortega honored his Iranian guest with two of Nicaragua's highest medals of national honor. Ortega has supported Iran's nuclear ambitions at the United Nations, while Ahmadinejad has promised Ortega hundreds of millions in public-works projects.

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Venezuela Answers – Impact Turn – Chavez Bad: Bomb – Feasibility Chavez bomb entirely feasible w/o US Logan & Cirino 5 (1-26, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286) Argentina and Brazil have the capability and technology to deliver all of Chavez' requirements to effectively execute a nuclear energy program. And many observers do not discount the fact that Chavez has the money and the political connections to take such a program and bring it close enough to a nuclear weapons program to ensure a believable bluff.

North Korea or Iran could feasibly give Chavez a bomb Logan & Cirino 5 (1-26, Investigative Journalist & Historian, ISN Security Watch Staff, Sam & Julio, http://www.isn.ethz.ch/news/sw/details.cfm?ID=13286)

What worries observers in Washington, however, is not Brazilian or Argentine intentions - which many consider to be carefully thought out and to have benign motivations - but rather Chavez’s constant communication with Iran and North Korea. Though this is not alarming at present, it is worth careful consideration. If Brazil and Argentina are not willing to provide the technology transfer required for an independent Venezuelan nuclear program, it is possible that both Iran and North Korea will be more accomodating especially North Korea, considering its need for fuel and Venezuela’s abundance of oil. Both North Korea and Iran are relatively advanced in the field of nuclear technology, an area where Venezuela has literally no experience or technological know-how. Neither country would suffer adverse effects from a nuclear weapons program in Venezuela. Considering their antagonistic stance vis-à-vis the US, it is more plausible that North Korea and Iran would support Venezuela’s intention to at least threaten to acquire a nuclear weapons program. It is plausible that Chavez has already invited scientists from both countries to Venezuela. The confirmed installation of a North Korean embassy in Caracas reinforces the possibility of North Korean scientists in Venezuela.

They would build a bomb – They have the motive Newsmax 5 (10-28, http://archive.newsmax.com/archives/ic/2005/11/28/173737.shtml) No matter what Mr. Chavez says, Scheinman told the Times, if Venezuela acquired the technology to produce nuclear energy, he would have the material necessary to build a nuclear bomb. "One has to contemplate that possibility,” he warned. "We do have a problem here of a country that’s very antagonistic toward the United States and linking itself with Cuba. There is reason to be vigilant.”

Chavez has a “prestige” motive for nuclear weapons NYT 5 (10-27) But Lawrence Scheinman, who was assistant secretary of state for nonproliferation and disarmament in the Clinton administration, notes there is "a prestige factor involved" in having nuclear reactors, and prestige has always interested Mr. Chávez. No matter what Mr. Chávez says now, if Venezuela acquired the technology to produce nuclear energy, he would have uranium and fuel that could be used to build a bomb.

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Venezuela Answers – Impact Turn – Chavez Bad: Bomb – NW Venezuelan proliferation guarantees Latin American arms race which escalates to nuclear war Zulauga 5 (Felipe, wrier for visions of South America. “Venezuela…A Good Neighbor?” http://www.ucis.pitt.edu/clas/publications/Visions_vol1_issue1.pdf) Although Chavez indicates that the development of nuclear power is to be for peaceful purposes only, his statement in May was not well received in the majority of Venezuela’s neighboring countries or in the United States. But why is Chavez’s idea regarded with suspicion by the international community? Why is his initiative viewed as a threat rather than a positive development? The most likely answer can be summed up by security and stability reasons, as Venezuela is seeking a more secure position in the global context. However, this ambition engenders concerns in the Latin American region and could potentially generate serious repercussions for the entire Latin American community Among these concerns is determining the true reason as to why President Chavez aspires to acquire nuclear energy. According to Douglas Mackinnon in an article from the Houston Chronicle, the real reason that Chavez wants to develop nuclear technology is for the purpose of developing nuclear weapons! It may be hard to determine the credibility of this statement, but considering Mackinnon’s source is a high ranking official for a Latin American government, it should not be taken lightly. It is upsetting and almost incomprehensible to conceive of the Venezuelan government developing nuclear weapons. This not only poses a threat to the stability and security of the Latin American region, but it also has the potential to cause a nuclear crisis at the global level. If nuclear technology is developed in Venezuela for the purpose of acquiring nuclear arms, the country will violate the Treaty of Tlatelcol, which prohibits nuclear weapons in Latin America. This treaty, signed by 23 Latin American states, has been the pillar in maintaining nuclear security for the entire region and sets an example for other regions to successfully achieve nuclear-free zones. However, if Venezuela officially decides to break the treaty by achieving nuclear power, it is probable that other countries with previous intentions to develop military nuclear capacity - such as Mexico, Chile, Brazil and Argentina – will follow suit.

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Venezuela Answers – Impact Turn – Chavez Bad: Heg (1/4) Chavez undermines U.S. leadership Brookes 8 (Heritage Foundation, Peter, Senior fellow. “Uncle Sam’s Latin challenge” http://www.heritage.org/Press/Commentary/ed013108a.cfm) Maintaining - or regaining - America's influence in our own neighborhood will be a key challenge for the next US president. The perceptions are especially grim these days. Latinoamericanos accuse Uncle Sam of neglecting their needs at the same time they chastise us for unwelcome meddling. And the rise of leftist antiYanqui leaders has many Norteamericanos lamenting what they see as a precipitous decline in America's influence to the South. One anti-American is on his way out, though: the "Bearded One" - Fidel Castro, who'll join other communist cronies in the dustbin of history any time now. On death's door for months, Fidel has turned running the government over to his "First Brother," Raul. Sadly, Havana's communist cadre will likely retain their nearly 50-year death grip on the Cuban people. Meanwhile, Venezuela's caudillo president, Hugo Chavez, intends to replace Castro as leader of the Latin Left. While his political fortunes have been on a rollercoaster, Chavez has made a sport of taunting the United States in both word and deed. He'd like to place a kindred anti-US spirit at the helm of every Latin or Caribbean nation. Just last week, Chavez urged countries in the region to form an alliance against the United States - proposing that Nicaragua, Bolivia, Ecuador, Cuba and Dominica become a unified military force.

Chavez uses oil money to foment anti-Americanism Brookes 8 (Heritage Foundation, Peter, Senior fellow. “Uncle Sam’s Latin challenge” http://www.heritage.org/Press/Commentary/ed013108a.cfm) Fortunately, Chavez's outlandish antics, such as a UN speech where he referred to President Bush as "the devil," undermine his appeal. Many Latin Americans see him more as a disruptive hothead than the model statesman he fancies himself. But Venezuela is awash in oil profits, which Chavez is using to consolidate power at home, bankroll Leftist pols across the region, provide cut-rate oil to amigos like Cuba, buy billions in Russian weaponry and back guerillas in Colombia.

Oil money allows Chavez to check US influence in Latin America and acquire nuclear capability The Washington Times 6 (“Chavez and Tehran” April 5, 2006 http://www.washtimes.com/news/2006/apr/04/20060404-085855-4644r/) Venezuelan President Hugo Chavez is accustomed to rallying his populist support through his fiery anti-Americanism and public support for regimes that oppose the United States. But there is growing concern that his government may have moved beyond mere rhetorical support with a deal that could allow Iran access to known uranium deposits in Venezuela. Allying himself with countries that share his dislike of the United States is nothing new for the oil-rich Mr. Chavez and his brand of authoritarianism, but any movement toward a joint nuclear effort with Iran is alarming. "Iran has every right, like many other countries have done, to develop its atomic energy and continue its research in this field," Mr. Chavez said in March 2005, after meeting with Iranian President Mohammad Khatami. The two leaders also used that meeting to build their economic ties, including infrastructure projects in Venezuela, which have continued to strengthen relations between the second- and thirdleading oil exporters of the Organization of the Petroleum Exporting Countries. Along with Cuba and Syria, Venezuela voted in January against referring the Iranian nuclear program to the U.N. Security Council. Last month, Mr. Chavez claimed that "it's absolutely false that the Iranian government is developing an atomic bomb." During a visit to Caracas in February by the speaker of the Iranian parliament, however, several agreements were announced, one of which could lead to the mining of

Chavez has also expressed interest in nuclear technology, though Caracas claims, like Tehran, that the technology is only for civilian uses. One serious question that needs to be posed is why would Iran, which already has a uranium-mining operation, be interested in uranium deposits in Venezuela? Potential answers all smack of nuclear proliferation. Mr. Chavez has found that heading the world's fifth-largest oil exporter has given him sufficient resources, often manifest in foreign aid, to influence his Latin American neighbors. Critics accuse Mr. Chavez of inserting himself and his leftist influence into politics in Bolivia, Colombia, Mexico and Nicaragua. It's clear that both his influence and his propensity to exert that influence have increased substantially in recent years, helped along by increasing oil prices. To what extent Mr. Chavez intends to wield this influence in more strategic ways -- and over how much broader of a geographical scope -- is yet to be fully determined. But it needs to be watched carefully. Venezuelan uranium for Iranian use, according to press reports. Mr.

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Venezuela Answers – Impact Turn – Chavez Bad: Heg (2/4) Chavez will use oil revenue to undermine US influence Dr. Cohen et al. 6 (9-6, Heritage Foundation, Ariel, Stephen Johnson & William Schirano, http://www.heritage.org/Research/LatinAmerica/em1010.cfm) Mentored by Castro, Chávez is keenly aware of prior defeats and how to avoid them. Though freely elected, he has replaced Venezuela’s checks and balances with a crony congress, silenced critics with draconian media laws, and placed the state oil company under his thumb as head of the National Oil Council. Unbridled by popular will or economic sense, Chávez wants to block U.S. influence and become a power unto himself— picking up where Castro left off. Courting Outside Partners. Soon after his election in 1998, Chávez began to curtail 50 years of U.S.– Venezuelan military cooperation. Finally, in 2004, his government asked the U.S. military mission to leave Venezuela’s armed forces headquarters in Caracas. Anti-drug operations and training of Venezuelan pilots in U.S.-supplied F-16 fighters ceased. Shortly thereafter, Venezuela began to seek arms from Russia. The Bush Administration suspended arms sales in May 2006, and Spain and Sweden are withholding weapons with U.S. components. Chávez has signed contracts worth $3 billion for 24–30 military airplanes and more than 50 helicopters, has agreed to buy some 100,000 Kalashnikov assault rifles to arm a new reserve force, and reportedly is seeking short-range surface-to-air missiles. During the last week of July 2006, he was in Moscow to finalize the purchase of the Su-30 supersonic fighter-bombers and Mi-35 assault helicopters. He also signed an agreement to purchase a Kalashnikov weapons and munitions plant. In Belarus, Chávez announced a strategic alliance with President Alexander Lukashenko to keep “hands at the ready on the sword” against imperialism. Iranian President Ahmadinejad awarded him a medal and promised collaboration on developing new oil fields. In China, Chávez pledged to shift more petroleum exports to Beijing. Meanwhile, ties with North Korean leader Kim Jong-Il could facilitate the acquisition of intermediate-range missiles. Venezuela is replacing some military equipment that has fallen into disrepair, but setting up a Russian weapons plant and striking alliances with state sponsors of terrorism (Iran, Cuba, and North Korea) is alarming. Chávez already allows Colombian rebels to resupply in Venezuela and funds like-minded Bolivarian movements in neighboring countries. Venezuelan Kalashnikovs could help them go from street marches to armed attacks. The Su-30 will be Latin America’s most advanced attack aircraft. With North Korean ballistic missiles, Venezuela could threaten neighbors and the United States, and a gelling global oil alliance could limit U.S. imports at a critical moment.

More ev… Johnson & Cohen 4 (8-12, Stephen & Ariel, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg1787.cfm) Venezuelan President Hugo Chávez is systematically leading his country into dictatorship by provoking internal conflict and characterizing his internal opponents as traitors. Beyond Venezuela, he sees himself replacing Fidel Castro as the leader of Latin America's radical left--uniting the region against U.S.-style democracy, free markets, and American influence. Chávez derives popular support from fellow ideologues and a small but committed segment of Venezuela's largely poor population, and he is beginning to use the hemisphere's dependence on Venezuelan oil to encourage leftist movements elsewhere and to pressure other countries into acquiescing to his activities. By politicizing and mismanaging the state petroleum industry, Chávez is jeopardizing vital U.S. interests in the Western Hemisphere.

More ev… Johnson & Cohen 4 (8-12, Stephen & Ariel, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg1787.cfm) The bad news is that Chávez has consolidated his hold over Venezuela's public institutions and is manipulating the electoral system in his favor. Increasing global demand for petroleum has given him an international power base, and his anti-American political agenda--fueled by petrodollars--could threaten nearby fledgling democracies and flourishing markets.

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Venezuela Answers – Impact Turn – Chavez Bad: Heg (3/4) Chavez can undermine US influence in Latin America Johnson & Cohen 4 (8-12, Stephen & Ariel, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg1787.cfm) Beyond the hemisphere, Chávez is preparing to shift PDVSA's customer base toward Asia and an increasingly oil-thirsty China, making Venezuela less dependent on petroleum sales to immediate neighbors. A deal signed on July 14, 2004, to build oil and gas pipelines between the Maracaibo Basin in Venezuela and the Caribbean and Pacific coasts in Colombia may seem innocuous, but it would enable Venezuela to ship petroleum to China without using the Panama Canal. This would make it more critical than ever for Chávez to secure a pliant government in Colombia to keep this facility operating in Venezuela's interest.16 Chávez would thus have the luxury of cutting deliveries to those who opposed him, forcing them to seek other sources at greater cost. By destabilizing and replacing democratic governments in hydrocarbon-rich Bolivia, Colombia, and Ecuador, he also could achieve a regional energy monopoly that could support rogue regimes and frustrate U.S. interests in the hemisphere.

Chavez promotes regional anti-Americanism and nationalism which crush international coop, especially on drugs and terrorism Walser 8 (6-30, Ray, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg2152.cfm While radical populism claims to respond to economic and social demands of the excluded and impoverished, it draws substantial guidance from 20th century models of social revolution and violent political change. In addition to revering the memory of Simón Bolívar, South America's great Liberator, radical populists often seek guidance from the ideas and deeds of Lenin, Mao, Fidel Castro, and Ernesto "Che" Guevara.[6] Fascination with the struggles of the armed left runs deep in the fabric of radical populism and exerts a powerful influence over the minds of intellectuals, journalists, politicians, and would-be revolutionaries.[7] It is reflected in continued glorification of arch-guerrilla icon Guevara, dedication to the armed path to power, and infatuation with the FARC's terrorist bravado.[8] While radical populism wins legitimacy by mobilizing dissatisfaction at the ballot box, it also fosters an aggressive, conspiratorial, nationalistic worldview. Central to radical populism is strident anti-Americanism. While it is fashionable to attribute this attitude to the past sins of American interventionism, dependency, U.S. hegemony, or even the missteps of the Bush Administration in Iraq, radical populists long ago learned from Juan Perón and Fidel Castro that demonizing the U.S. and embracing anti-Americanism is a powerful demagogic tool for winning the public's attention and mobilizing popular support. The chief danger of anti-Americanism is not the harm that it does to the American psyche, but the distrust that it creates between the U.S. and its practitioners. Extreme anti-Americanism leads entire nations to opt out of cooperative international arrangements and programs to combat terrorism and trafficking in drugs and arms. In the Andes, it seriously threatens to dismantle progress achieved in counterdrug cooperation. Not surprisingly, the amount of cocaine transiting Venezuela has risen from an estimated 57 metric tons in 2004 to 250 metric tons in 2007, while drug seizures have fallen by half.

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Venezuela Answers – Impact Turn – Chavez Bad: Heg (4/4) Chavez is undermining US influence in Latin America Hanson 6 (Stephanie, Council of Foreign Relations [http://www.cfr.org/publication/12086/six_more_years_of_chavez.html] Six More Years of Chavez/ December 4, 2006) The opposition’s momentum appears of little concern to Chavez, who continues to direct his rhetorical fire at the United States. At his final election rally he cried, “We are confronting the devil," (BBC), a reference to President Bush. The United States has remained quiet in the run-up to Venezuela’s elections but U.S. aid to Venezuelan organizations, some of which are critical of Chavez and the government, has irked Venezuelan officials (NYT). The government’s hammering on the United States has trickled down to the streets: A recent poll conducted by the Associated Press and Ipsos shows that half of Venezuelans think the United States is a military threat (PDF) to their country.

Chavez undermines US influence in Latin America Shifter 6 (Michael, Adjunct Professor of Latin American Studies at Georgetown University's School of Foreign Service [http://www.foreignaffairs.org/20060501faessay85303-p0/michael-shifter/in-search-of-hugo-ch-vez.html] In Search of Hugo Chávez/ June 2006) From the outset, it has been clear that Venezuela, with a population of 26 million, is too small a stage for Chávez's ambitions. Chávez has taken full advantage of a confluence of favorable factors -- lots of money, Latin America's political disarray, U.S. disengagement from the region, widespread hostility to the Bush administration -- to construct alliances throughout the Western Hemisphere and beyond. He has skillfully managed to establish himself as a global and regional leader, using oil money and brash antiAmericanism to attempt to construct a counterweight to U.S. power. Chávez's close friendship with Castro has been integral to this project. In exchange for Cuban teachers and doctors, Chávez furnishes the financially strapped island some 90,000 barrels of oil a day. Castro probably also provides Chávez with strategic advice, along with some military support and intelligence. More and more, Cuba and Venezuela are important referents for each other. When Venezuelans mention "the embassy," they now mean the Cuban, not the U.S., embassy in Caracas. Chávez's aggressive oil diplomacy has also enhanced his influence. Last year, he inaugurated Petrocaribe, under which Venezuela will provide 198,000 barrels of oil a day to 13 Caribbean nations with "soft" financing for up to 40 percent of the bill. Chávez has also given high priority to the countries of the continent's southern cone, especially Argentina and Brazil, which are central to his plan to launch Petrosur, another regional energy initiative that he has pledged to largely bankroll. He has bought $2.8 billion in Argentine bonds and $25 million in Ecuadorian bonds and has substantially underwritten Telesur, a Latin American alternative to CNN.

Chavez undermines US influence around the world Shifter 6 (Michael, Adjunct Professor of Latin American Studies at Georgetown University's School of Foreign Service [http://www.foreignaffairs.org/20060501faessay85303-p0/michael-shifter/in-search-of-hugo-ch-vez.html] In Search of Hugo Chávez/ June 2006) The primacy of petroleum has also given Chávez leverage beyond Latin America. He defended his visits with Saddam Hussein and Qaddafi on grounds of Venezuela's membership in OPEC. He has also worked to forge stronger ties with key countries such as India and China, in keeping with his declared intention to eventually direct Venezuelan oil away from its current principal market -- the United States. He has vowed to build a pipeline through Panama for trans-Pacific shipments, and PDVSA opened an office in Beijing last year.

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Venezuela Answers – Impact Turn – Chavez Bad: Heg – K/T World Latin America is key to US leadership The Brookings Institute 8 ([http://www.brookings.edu/projects/latin-america/about.aspx] Brookings Latin America Initiative/ May 14, 2008) “As we prepare for a new U.S. administration, we believe it is an opportune time to take stock of the U.S.Latin American relationship and stimulate new partnerships across a host of critical issues, including trade, poverty alleviation, immigration, security and energy,” said Strobe Talbott, president of Brookings and a member of the Partnership for the Americas Commission. “The Commission will advance recommendations and new solutions for the hemisphere. It is one of the first steps in a major new Brookings’ Latin America Initiative that will seek to sustain U.S.-Latin American engagement on the critical challenges for the hemisphere.” The Partnership for the Americas Commission is co-chaired by former Mexican President Ernesto Zedillo and former U.S. Under Secretary of State Thomas R. Pickering. "It is time to improve cooperation in our hemisphere and the Partnership for the Americas Commission seeks to provide guidance and ideas on how to re-invigorate our relationships, focus on a common agenda, and deliver solutions," Zedillo said. “The change in the U.S. political leadership provides a critical opportunity to engage with our neighbors in Latin America constructively and cooperatively across a range of important issues. We must enhance our partnership with Latin America if we are to resolve global challenges,” added Pickering.

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Venezuela Answers – Impact Turn – Chavez Bad: Terrorism Chavez foments anti-American terrorism Walser 8 (6-30, Ray, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg2152.cfm The files on these computers and devices chronicle the thoughts and actions of the FARC and raise serious questions about the effectiveness of U.S. regional policies against the interconnected challenges of terrorism, insurgency, and drug violence in the Western Hemisphere. The FARC files are essentially a smoking gun that proves that Venezuelan President Hugo Chávez is supporting the FARC. The revelations from the FARC files have prompted several Members of Congress to call for the U.S. to place Venezuela on its list of state sponsors of terrorism. However, doing so could jeopardize economic and commercial ties with the fifth-largest supplier of crude oil to the U.S. and an important U.S. trading partner. It would also likely spark a nationalist backlash in Venezuela and more anti-Americanism throughout Latin America. A more prudent policy would be a course of targeted sanctions against individuals who are illegally supporting the FARC. In addition, Chávez's growing ties with Iran appear to open a door for Islamist terrorism and raise the question of whether the U.S. has done enough since 9/11 to protect against backdoor terrorist threats originating in the Western Hemisphere. The U.S. needs to explore ways to strengthen vigilance and to prevent Iran from exploiting this potential conduit to the homeland.

More ev… Walser 8 (6-30, Ray, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg2152.cfm Radical populist Hugo Chávez and his network of allies—Bolivia, Cuba (a state sponsor of terrorism), Ecuador, and Nicaragua—are deeply engaged in a campaign to bolster the FARC's legitimacy and survivability at the expense of Colombia and to perpetuate the conflict indefinitely or to achieve a political and military victory.[4] In their anti-American zeal, Chávez and company are demonstrating a tendency to make common strategic cause with Iran, potentially opening the Western Hemisphere to exploitation and infiltration by Islamist terrorists.

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Venezuela Answers – Impact Turn – Chavez Bad: Columbia War (1/2) Chavez undermines regional stability and intends to make war on Columbia Podur 8 (Justin. Writer and activist. “Colombia’s war and Venezuela’s foreign policy” http://www.venezuelanalysis.com/analysis/3112) Chavez's rule in Venezuela coincides with the rise and fall of the last peace process in Colombia. He came to power in 1998, the same year the demilitarized zone was declared in Colombia. He was Venezuela's President through the declaration of Plan Colombia in 2000 and its implementation, and then through the years of Uribe's rule in Colombia. Throughout those years, analysts have argued that one of the true targets of Plan Colombia was in fact Venezuela, its oil, and its revolutionary process (4). And indeed, border incidents and troubles over the past several years, as well as tensions between Chavez and Uribe, have shown that Colombia is a base for attacks on Venezuela. In March 2003, Colombian 'irregulars' raided across the Venezuelan border and were answered by bombing from the Venezuelan air force (5). About a year later (May 2004), dozens of Colombian paramilitaries were arrested on a ranch near Caracas on a terrorist plot (6). Some later confessed and were charged, while others were returned to Colombia. Around the same time as the paramilitaries were infiltrating Venezuela (March 2004), Colombia made a high-profile announcement that it was going to acquire several dozen tanks, from Spain, for posting on the Venezuelan border (7). The deal had been made under Spanish Prime Minister Jose Maria Aznar, however.

Colombia/Venezuela war leads to a Latin American arms race Flight International 8 (“Latin America: military modernisation or arms race?” http://www.forecastinternational.com/notable/flightglobal.pdf 3/19/08)

Military procurements in Latin America have sparked fears of a new arms race, led by Venezuela. But is it really a build-up or more a need to modernise ageing hardware? Now defused, the border confrontation between Colombia and Venezuela in early March has underlined the continued volatility of a region where recent procurement activity has lead to forecasts of a new Latin American arms race. Venezuelan president Hugo Chavez is usually viewed as the instigator of the race, as he has drastically increased the country's defence procurement levels, buying front-line fighters and other equipment from Russia. Several other Latin American nations have followed suit, seeking to restore and enhance their decrepit military inventories. "While some might see this as a potential arms race, I believe that it is more nations' attempts to meet a pent-up demand for modernisation of their armed forces," says Rebecca Barrett, Latin America analyst with Forecast International. "This is not to say that Venezuelan procurement activity is not extravagant, or necessary to the extent to which President Chavez has brought it," she says. "He remains the region's hot-headed leader who will continue to incite non-allying nations until the end of his term." The most recent instigation was Chavez's belligerent reaction to a 1 March raid by Colombian forces into neighbouring Ecuador to strike a rebel camp. The raid, which involved the Colombian air force's Embraer Super Tucanos, killed a senior commander of the insurgent Revolutionary Armed Forces of Colombia. Chavez, who maintains relations with FARC, immediately warned Colombia that any similar raid into Venezuela would be a cause for war. Tensions between the two countries have been high for months, but appeared to ease after the exchange of rhetoric following the border incident.

This escalates to full-scale regional war CSM 8 (Newser.com “Mistrust' Fueling Latin American Arms Race” http://www.newser.com/story/16574.html) (Newser) – Recent bursts of defense spending from Brazil and Venezuela have experts wondering if Latin America—decades removed from a war between nations—has entered an arms race, the Christian Science Monitor reports. Chile has also invested in weapons recently, and Colombia is rife with war-on-drugs firepower. “There is a real risk of it escalating,” one expert said. “There is tremendous mistrust between countries.” “Brazil won’t say it, but Chavez’s buildup is what made it invest in its military,” said one analyst of Venezuela's combative president. But each country also has internal reasons for bulking up. Brazil, for example, wants to shut down drug traffickers, keep out Colombian guerillas, and protect newfound oil wealth. “Venezuela comes fairly low down the list” of enemies, deadpanned one analyst.

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Venezuela Answers – Impact Turn – Chavez Bad: Columbia War (2/2) Chavez will go to war w Columbia – It will escalate regionally Anderson 6-23 (Jon Lee, Staff, New Yorker, http://www.newyorker.com/reporting/2008/06/23/080623fa_fact_anderson/?currentPage=all)

Suddenly, there was talk of regional war. Television broadcasts showed Venezuelan tanks moving toward Colombia’s borders; trade between the two countries ground to a halt, and diplomats were expelled. One Latin-American diplomat told me he feared that the situation could easily escalate into a larger armed conflict. “Chávez is using this incident to divert public attention from his internal problems,” he said. “And I think he is also trying to demonstrate that he is the leader of the region’s popular forces. It is a very risky calculation.”

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***Nigerian Oil DA***

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Nigeria DA – 1NC Nigerian growth is up Ogbonna 8 (Amechi, The Daily Sun [http://www.sunnewsonline.com/webpages/news/businessnews/2008/jul/16/bussines-16-07-2008-002.htm] ICAN boss predicts increase in FDI/ July 16, 2008) According to the ICAN boss the quantum of foreign direct investment grew from and average of $1.477billion between 1990 and 2000 to $5.445billion in 2006, pointing out that it was indicative of the growing confidence of the international community in the Nigeria economy. He remarked; “What has become evident with this massive inflow of investible funds, is that the Nigerian business environment or landscape has assumed a different outlook.”

Oil is key Financial Times, The Banker, “Nigeria - Fuel Injection - High Prices And New Finds Mean Nigeria's Dependence On Hydrocarbon Exports Will Go On, Albeit With A Greater Emphasis On Inhouse Refining. John McCarthy Reports,” April 1, 2007, lexis Since the oil crisis of the mid-1970s, Nigeria's oil and gas industry has grown to become the single largest contributor to Nigeria's economy, turning over about $25bn annually and accounting for more than one-fifth of gross domestic product (GDP). Soaring oil prices over recent years have seen the Nigerian government reap a revenue windfall. By the end of 2005, high oil prices had propelled Nigeria's foreign exchange reserves to $28bn, up two- thirds from the $17bn recorded a year earlier, enabling the government to pay down Nigeria's huge foreign debt and invest in some strategic infrastructure improvements.

Economic decline causes regional war and terrorism Brown 7 (Michael A., Council on Foreign Relations, 6-7, http://www.internationalrelations.house.gov/110/35872.pdf) The United States must pay close attention to Nigeria for its own national security interests. If the Nigerian economy became afflicted with a cold because of the chilling effects on investment occasioned by political instability, peace and prosperity in the fragile ECOWAS region would be jeopardized, and become a promising target for Al Qaeda penetration or recruitment. Nigeria’s vast oil and gas resources would also be targeted. Proven reserves are estimated at 25 billion barrels; natural gas reserves exceed 100 million cubic feet. Crude oil production averages 2.2 million barrels per day. Nigeria, as the fifth largest exporter to the United States, supplies it with approximately 11% of its aggregate oil imports.

African conflict escalates to nuclear war Deutsch 2, PhD and political risk consultant and Founder, Rabid Tiger Project, 11/18/, Jeffrey (http://www.rabidtigers.com/rtn/newsletterv2n9.html) The Rabid Tiger Project believes that a nuclear war is most likely to start in Africa. Civil wars in the Congo (the country formerly known as Zaire), Rwanda, Somalia and Sierra Leone, and domestic instability in Zimbabwe, Sudan and other countries, as well as occasional brushfire and other wars (thanks in part to “national” borders that cut across tribal ones) turn into a really nasty stew. We’ve got all too many rabid tigers and potential rabid tigers, who are willing to push the button rather than risk being seen as wishy-washy in the face of a mortal threat and overthrown. Geopolitically speaking, Africa is open range. Very few countries in Africa are beholden to any particular power. South Africa is a major exception in this respect - not to mention in that she also probably already has the Bomb. Thus, outside powers can more easily find client states there than, say, in Europe where the political lines have long since been drawn, or Asia where many of the countries (China, India, Japan) are powers unto themselves and don’t need any “help,” thank you. Thus, an African war can attract outside involvement very

quickly. Of course, a proxy war alone may not induce the Great Powers to fight each other. But an African nuclear strike can ignite a much broader conflagration, if the other powers are interested in a fight. Certainly, such a strike

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would in the first place have been facilitated by outside help - financial, scientific, engineering, etc. Africa is an ocean of troubled waters, and some people love to go fishing.

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Nigeria DA – UQ – Econ Up Nigeria’s economy has a positive outlook Ogbonna 8 (Amechi, The Daily Sun [http://www.sunnewsonline.com/webpages/news/businessnews/2008/jul/16/bussines-16-07-2008-002.htm] ICAN boss predicts increase in FDI/ July 16, 2008) According to the ICAN boss the quantum of foreign direct investment grew from and average of $1.477billion between 1990 and 2000 to $5.445billion in 2006, pointing out that it was indicative of the growing confidence of the international community in the Nigeria economy. He remarked; “What has become evident with this massive inflow of investible funds, is that the Nigerian business environment or landscape has assumed a different outlook.”

Nigeria’s economy growing Reuters 8 ([http://africa.reuters.com/business/news/usnBAN347656.html] Nigerian economy growth slows in Q1 - central bank/ June 23, 2008) Nigeria's economy grew by 6.49 percent year-on-year in the first quarter of 2008, compared with a revised figure of 7.82 percent in the last quarter of 2007, the central bank said on Monday. The bank said overall GDP growth was driven by a 9.67 percent growth in the non-oil sector of sub-Saharan Africa's second biggest economy. Nigeria had originally reported a GDP growth rate of 7.64 percent for the final quarter of last year.

Nigeria’s economy is strong BusinessWire 8 [http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080703005146&newsLang= en] Nigeria Commercial Banking Report Q2 2008 Available Now/ July 3, 2008) In absolute terms, Nigeria’s banking sector enjoyed very good growth through the year to December 31 2007. In local currency terms, total assets, total loans and total deposits increased by 58%, 96% and 60% respectively. The loan/deposit, loan/asset and loan/GDP ratios all rose. Relative to other countries surveyed by BMI, these achievements are even more impressive. Of the 59 countries surveyed, Nigeria ranks second in terms of local currency asset growth, third in terms of both local currency loan growth and local currency deposit growth. However, it needs to be remembered that all three of the ratios are rising from very low levels. Nigeria’s rankings in terms of its loan/deposit, loan/asset and loan/GDP ratios are 36th, 39th and 53rd respectively. In a country with per capita GDP of US$1,114, deposits per capita are just US$334.

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Nigeria DA – UQ – Econ Down Nigeria’s economy down Okolo 8 (Paul [http://www.bloomberg.com/apps/news?pid=20601116&sid=awebvCIXTbCo&refer=Africa] Nigerian Oil Output Fell 4% in First Quarter, GDP Growth Slows/ July 23, 2008) Nigeria's crude oil production fell almost 4 percent in the first quarter following the sabotage of oil facilities, crimping economic growth, the central bank said. Oil production slid to 2.05 million barrels per day, while economic growth slowed to 6.5 percent from 7.8 percent in the previous three months, the Abuja-based Central Bank of Nigeria said today in a quarterly report published on its Web site.

Nigeria’s GDP projected to fall Kirk 8 (Leigha, Business Daily [http://www.businessdayonline.com/energy/11846.html] News Analysis: What the attack on Bonga might unleash/ June 24, 2008) Forecast revenue is at risk because planned production levels may not be attained. Before the attack, government had, through the minister of finance, Shamsudeen Usman, said the country was producing 1.8 million barrels per day. With the shut in of an extra 200,000 from Bonga (which brings Shell’s total to 400,000), current production would be as low as 1.6 million barrels per day. Industry insiders say it may be lower. It was 2.7 billion in 2006. For contributing 30 percent to Nigeria’s Gross Domestic Product (GDP), the drop in production has implications also for projected GDP, which is put at over 10 percent by government and 6.1 percent by the Economist Intelligence Unit. These projects may be revised further down. The inflation fears of the Central Bank may now be confirmed as the shut in triggers further rise in the international price of crude. And because our refining capacity is short handed, the nation would import fuel at higher prices with the full inflation implications. With further inflation, the thought of meeting the Millennium Development Goal of halving poverty becomes mere conjecture.

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Nigeria DA – UQ – Oil Up Nigeria has vast future oil reserves Rice 8 (Xian, The Guardian [http://www.guardian.co.uk/business/2008/jul/14/oil.internationalaidanddevelopment] 'The best thing that could happen to the country is if no oil is found'/ July 14, 2008) The twin islands of São Tomé and Príncipe squat in the Gulf of Guinea. Their nearest neighbours are Nigeria, Cameroon, Equatorial Guinea and Gabon. All have found significant reserves of oil, much of it offshore. In 1997, a tiny Houston-based company called Environmental Remediation Holding Corporation (ERHC), which had no history of oil finds or production, decided São Tomé might have its own deep-water deposits. In return for near-exclusive mineral exploration and exploitation rights for 25 years and a half share of profits, ERHC offered São Tomé $5m and its marketing services. São Tomé, heavily in debt and reliant on donors to fund most of its $30m budget, was desperate for cash. The deal was signed. Industry watchers such as Mohamed Yahya, of the UK-based peacebuilding NGO International Alert, would later describe the contract as "one of the worst in the history of oil". And ERHC's gamble paid off. Seismic data showed there could be up to 11bn barrels of oil under the sea around the islands. The most promising area was north of Príncipe, in waters also claimed by Nigeria.

Nigeria has 33 billion barrels of oil reserves Adeoye 8 (Yemie, Vanguard Online [http://www.vanguardngr.com/index.php?option=com_content&task=view&id=11825&Itemid=0] FG moves to separate gas business from oil/ July 8, 2008) We shall begin this discussion by reviewing the available gas resource. It would be necessary to express that the estimated oil reserve in Nigeria is put at 33 billion barrels (28 of which are in the Niger-Delta and 5 in the Deepwater),while our gas reserves is about 187 Tcf (27 Tcf in the Deepwater and 160 Tcf in the Niger-Delta).

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Nigeria DA – UQ – Oil Down Nigeria’s oil production at a 25 year low Chip 8 (Brian, Fox Business [http://www.foxbusiness.com/story/markets/industries/energy/comtex-smartrendrmorning----june/-1756064925] Comtex SmarTrend(R) Morning Call -- June 23, 2008) A hastily-called oil summit ended in the expected 200,000 b/d Saudi production increase, pushing Saudi production to its highest in 30 years, but well short of the 400K-500K b/d analysts advised needed to make a meaningful impact on supplies and offset recent production declines resulting from militant activity in Nigeria. Arguments continued to rage on the root of the price gains, with producers claiming speculators at fault and others pointing to burgeoning demand from developing countries. Cuts in gasoline and diesel prices in China led to a 3.5% drop in crude on Thursday, before analysts dispelled expectations for a demand drop, and prices again headed higher. However, on Sunday Niger militants announced a ceasefire, although still remaining unwilling to participate in upcoming peace talks. Nigeria's production is now at its lowest in 25 years.

Nigeria’s oil production slowing Leigh 8 (Kirk, Business Day [http://www.businessdayonline.com/economic-watch/13006.html] Falling oil production: The good news/ July 8, 2008) Oil production in Nigeria is at low ebb in Nigeria and this gives concern to not a few given that it earns the most revenue for the country but there is a bright side and you don't have to be a sadist to see it. True oil has been a factor in Nigeria 's growing revenue profile not because we are producing more but because the price wouldn't stop tracing an upward path. In fact oil production is responding to gravitational pull from a combination of factors including militants attack and the cut back on capital expenditure by the oil majors. This has resulted in cuts from a position of 2.6 million barrels a day two years ago to about 1.3 million barrels. This should bring down revenue but not so since the price of crude keeps rocketing from pent up demand by China and India , unrest in the Gulf and activities of militants in Nigeria 's Delta region.

Gonzaga Debate Institute 2008 Scholars Lab

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Nigeria DA – UQ – Diversification Up Nigeria’s economy is diversifying Amaefule 8 (Everest [http://www.punchng.com/Articl.aspx?theartic=Art200807083205446] Nigeria loses 30% of budget revenue to N’Delta crisis/ July 8, 2008) The minister said the reforms initiated by the present administration would soon help the nation to leave its current six per cent growth rate. He said, “The Nigerian economy is rapidly transforming; the contribution of non-oil sectors such as real estate, services, telecommunications and agriculture have shown remarkable improvements. “Currently growing above six per cent GDP rate, the economy is set to depart from the six per cent group to an economy with superior GDP growth rate.

Nigeria’s telecoms sector is growing Senge 8 (Miebe, Vanguard Online Edition [http://www.vanguardngr.com/index.php?option=com_content&task=view&id=12392&Itemid=0] The Starcomms stocks challenge and expectations of the telecom industry/ July 16, 2008) IT was the most unlikely telecommunications company in Nigeria expected to get listed on the Nigerian Stock Exchange, but listed it did last Monday and in the process made history as the first company in highly lucrative sector. Starcomms Plc, Nigeria’s fourth largest telecommunications by last Monday’s listing of its 6, 878, 478, 096 ordinary shares of 50 Kobo at N13.56K breasted the tape ahead of more robust GSM mobile operators — MTN Nigeria, Celtel Nigeria and Globacom — to become the first telecom operator to be listed on the Exchange. Before Monday’s listing on the floor of the Nigerian Stock Exchange, Starcomms Plc had successfully raised N64.35 billion through a private placement offer. The private placement beefed up the company capital base. However two institutional investor Actis, and Emerging Capital Partners LLC, (ECP) divested some of their holdings from the company thus widening the shareholder base. The shares of the company which were listed at 12.27 p.m made significant gain immediately, as it went up five per cent after only five minutes of listing/trading to close at N14.33k. Reacting to the development Mr. Maher Qubain, Chief Executive Officer said: “At Starcomms, we do not just cook up figures. We operate as a transparent company and today’s history making event is meant to drive our growth. We want to become the 3rd, if not 2nd biggest telecom operator in Nigeria by 2010. This is a promise, and at Starcomms, we keep our promise”. The historic listing presents an excellent opportunity for every Nigerian to buy into one of the fastest growing and profitable sectors of the telecom sub-sector of the Nigerian economy.

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Nigeria DA – UQ – Diversification Down Oil is the keystone of Nigeria’s economy Thill 8 (Scott [http://www.alternet.org/audits/89692/?ses=6e1c01335219ab1b41c846a850bedd38] Africa: The Next Victim in Our Quest for Cheap Oil/ July 14, 2008) Commercial oil production began in 1956, and the first exports in 1958. Since that time, perhaps $600 billion in oil revenues have been accrued by the Nigerian government. The government takes a share through a legal joint venture contract with the international oil companies of about 80 percent of the value of each barrel of oil. Since oil accounts for 90 percent of all Nigerian exports and 80 percent of government revenue, and about half of GDP, oil is the Nigerian economy. The country is a classical petro-state dependent upon one resource. The book shows how this vast wealth has been stolen: Estimates from the World Bank vary from $100 (billion) to $200 billion. It has also been wasted. The International Monetary Fund says that oil has probably not added to the standard of living of average Nigerians. This is a stunning indictment.

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Nigeria DA – UQ – Inflation Up Inflation high in Nigeria Akpe 8 (Ameto, Business Day [http://www.businessdayonline.com/energy/12322.html] Soludo warns danger ahead over government expenditure/ July 2, 2008) Nigeria has is oil and tampering with the resources makes the country run at risk. Nigeria's inflation rate (year-on-year) rose from 8.2 percent in April 2008 to 9.7 percent in May, heightening worries over the return of double-digit inflation rates in the country. Rising price levels has also brought about hikes in the Monetary Policy Rate (MPR) by the CBN from 9.5 per cent in December 2007 to 10 per cent in April 2008 and also 10.25 per cent in June. Soludo explains that any amplification in the oil benchmark would crowd-out the private sector because of the peculiar source of government revenue.

Nigerian inflation hitting double digits Daily Guide 8 ([http://dailyguideghana.com/portal/modules/news/article.php?storyid=6197] Business : Prime Rate Rises Again?/ July 15, 2008) Inflation which reached a new height of 18.41 percent last Friday as predicated by Databank Research Department was the main factor that led to the increase in the prime rate- the rate at which the Central Bank does its overnight lending to universal, commercial and merchant banks in order to check the supply of money in circulation. India and Nigeria who had been enjoying stable single digit inflation for sometime had also been hit by these global factors with India seeing a new inflation of over 12 percent.

Inflation high in Nigeria Okolo 8 (Paul [http://www.bloomberg.com/apps/news?pid=20601116&sid=axUjEXUV1Kew&refer=Africa] Nigerian Inflation Accelerated to 9.7% in May on Food (Update1)/ June 23, 2008) Nigeria's inflation rate rose to 9.7 percent in May, the highest in two years, as the cost of food, energy and building materials increased. Inflation accelerated from 8.2 percent in April, the National Bureau of Statistics, based in the capital Abuja, said today in a statement on its Web site. Prices rose 1.9 percent in the month. ``Inflationary pressures are here to stay'' as prices of food and fuel continue to rise, said Bismarck Rewane, Chief Executive Officer of Financial Derivatives Ltd., a Lagos-based fund manager. ``The moment it goes into double digit, we're likely to see a more restrictive response from the central bank.''

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Nigeria DA – UQ – Inflation Down Nigeria keeping inflation to single digits Komolafe 8 (Babajide, Vanguard News [http://allafrica.com/stories/200806230179.html] Nigeria: Interest Rate a Slide to the Ugly Past?/ June 23, 2008) On the 2nd of June, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) by 25 basis points to 10.25 from 10.0 per cent. This would be the third time the apex bank will be increasing the MPR since it was introduced December 2006 It would be recalled that the MPR replaced the Minimum Rediscount Rate (MRR), as the bench mark for interest rate in the economy. While the MRR represents the minimum interest rate banks can borrow from the CBN, the MPR is a short- term interest rate at which banks can predictably borrow from the apex bank. Thus, the MPR serves as an indication for other interest rates be it deposit or lending rate in the economy The MPR was introduced at 10.0 per cent with spread of 600 basis points around the rate, i.e. 300 basis points above and 300 basis points below. This translates into an upper limit of 13 per cent and a lower limit of 7 per cent. The first movement in the MPR was announced on June 5, 2007, a 200 basis point reduction from 10.0 per cent to 8.0 per cent as well as a reduction in the width of the interest rate corridor from plus or minus 300 to plus or minus 250 basis points. But that was the last reduction as subsequent movements were increases. The first increase was a 100 basis point upward review to 9.0 per cent in October 2007, the second increase was a 50 basis points upward review to 9.5 per cent in December 2007. Later on, at the beginning of 2008, the MPR was further increased by 50 basis points to 10.0 per cent. Also pertinent is the fact that the increases in the MPR were occasioned by one major factor, which is the need to forestall upward movement in the inflation rate. For example, in the communiqué that announced the first increase in October 2007, the CBN stated: "The MPC noted that year-on-year headline inflation would continue to remain single-digit in the rest of 2007, but at the upper region of the single digit range. Overall, a combination of stable food prices and a restrictive monetary policy stance is expected to help sustain the headline inflation within single digit. The Committee also noted the challenges arising from rising autonomous private inflows and the attendant risk of further appreciation of the naira/dollar exchange rate. In addition, the Committee also noted the high possibility of substantial fiscal injections in the fourth quarter, arising from the supplementary budget at the federal and state levels. Similarly, in announcing the increases in December 2007, April 2008 and June 2008, the CBN stated,

"The Monetary Policy Committee (MPC) noted that the overall macroeconomic picture in 2007 has reflected improved stability; just as the prospects for the first quarter 2008 appear good. The bank's projections show that the year-on-year (headline) inflation could remain single-digit in the first quarter of 2008, provided CBN continues to take proactive steps to manage the liquidity surfeit.

Nigeria fighting inflation Komolafe 8 (Babjide, Vanguard News [http://www.vanguardngr.com/index.php?option=com_content&task=view&id=11439&Itemid=43] N563bn excess crude fund crashes inter-bank interest rate/ July 2, 2008) Market operators however said that the excess liquidity occasioned by the inflow might be short lived as the Central Bank of Nigeria (CBN) is already mopping up the liquidity to forestall upward pressure on the inflation rate. The apex bank according to sources issued a huge amount of treasury bills to the market as well as a ten year federal government bond.

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Nigeria DA- Oil K/T Economy The oil industry is key to the Nigerian economy Financial Times, The Banker, “Nigeria - Fuel Injection - High Prices And New Finds Mean Nigeria's Dependence On Hydrocarbon Exports Will Go On, Albeit With A Greater Emphasis On Inhouse Refining. John McCarthy Reports,” April 1, 2007, lexis Since the oil crisis of the mid-1970s, Nigeria's oil and gas industry has grown to become the single largest contributor to Nigeria's economy, turning over about $25bn annually and accounting for more than one-fifth of gross domestic product (GDP). Soaring oil prices over recent years have seen the Nigerian government reap a revenue windfall. By the end of 2005, high oil prices had propelled Nigeria's foreign exchange reserves to $28bn, up two- thirds from the $17bn recorded a year earlier, enabling the government to pay down Nigeria's huge foreign debt and invest in some strategic infrastructure improvements.

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Nigeria DA- Oil K/T Economy Oil is vital to Nigeria’s economy Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) Oil is a major source of energy in Nigeria and the world in general. Oil being the mainstay of the Nigerian economy plays a vital role in shaping the economic and political destiny of the country. Although Nigeria’s oil industry was founded at the beginning of the century, it was not until the end of the Nigeria civil war (1967 - 1970) that the oil industry began to play a prominent role in the economic life of the country. Nigeria

can be categorized as a country that is primarily rural, which depends on primary product exports (especially oil products). Since the attainment of independence in 1960 it has experienced ethnic, regional and religious tensions, magnified by the significant disparities in economic, educational and environmental development in the

the major discovery of oil in the country which affects and is affected by economic and social components. Crude oil discovery has had certain impacts on the Nigeria economy both positively south and the north. These could be partly attributed to

and adversely. On the negative side, this can be considered with respect to the surrounding communities within which the oil wells are exploited. Some of these communities still suffer environmental degradation, which leads to deprivation of means of livelihood and other economic and social factors. Although

large proceeds are obtained from the domestic sales and export of petroleum products, its effect on the growth of the Nigerian economy as regards returns and productivity is still questionable, hence, the need t evaluate the relative impacts of crude oil on the economy. In the light of the study, the main objective is to assess the impact of crude oil on the Nigerian economy. Given the fact that the

oil sector is a very crucial sector in the Nigeria economy, there is the dire need for an appropriate and desirable production and export policy for the sector. In Nigeria, though crude oil has contributed largely to the economy, the revenue has not been properly used. Considering the fact that there are other sectors in the economy, the excess revenue made from the oil sector can be invested in them to diversify and also increase the total GDP of the economy. This study comprises of five sections. Section two presents the background of the study, while the third section focuses on the research methodology. Section four includes data analysis and interpretation of results, and the final section presents and policy proposal and study conclusions.

The oil industry directly increases Nigeria’s GDP Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) In general, the contribution of an industry or branch of activity to the gross domestic product (at factor cost) during any accounting period is measured by its gross output less the cost of inputs-materials, equipment, services, etc. purchased from other industries or branches of activity. (Deduction of any taxes net of subsidies paid, gives the gross domestic product at market prices). The gross output of the petroleum sector consists of the proceeds from oil exports, local sales of crude oil for local refining, and local sales of natural gas. But because of the massive involvement of foreign operators in the Nigerian petroleum industry, not all of the industry's value added is retained in the country; at the moment a substantial proportion is sent out in the form of factor payments profits, dividends, interest, fees, and wages and salaries paid abroad. It

is therefore more realistic to consider the industry's contribution to gross national product i.e., gross domestic product less factor payments made abroad. The industry's value added can also be obtained by adding together the various payments to the government in the form of rents, royalties, profit taxes, harbor dues, etc.; the wages and salaries of employees paid locally; and any net retained earnings.

The Oil industry stimulates local economic growth Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) The oil industry's periodic injection of purchasing power through its local expenditure on goods and services is another of its important contributions to the Nigerian economy. Apart from direct payments to the government, oil industry expenditure in Nigeria takes the form of payments of wages and salaries, payments to local contractors, local purchases of goods and services, harbor dues, vehicle licenses, telephone and postal charges, local rents, educational grants and scholarship awards, donations and subventions, and other minor social charges Cumulative expenditure on these items totaled about 950 million by the end of 1974. Apart from the direct stimulation given to the producers of these goods and services such injections also exert secondary influences, through the multiplier process, on the level of output and employment in other related sectors of the economy, the magnitude of the overall effect depending on the size of the initial injection and the extent of leakages out of the local economic system that may exist.

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Nigeria DA- Oil K/T Economy- Employment The oil industry directly increases employment and capital investment Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) One of the first contributions of the oil industry to the Nigerian economy was the creation of employment opportunities. From the start, Nigerians were employed in a variety of non-basic activities such as the building of roads and bridges, the clearing of drilling sites, transportation of materials and equipment, and the building of staff housing and recreational facilities. As time went on and as the industry's training programme progressed, they began to be employed in seismic and drilling operations, and in supervisory and managerial functions. However, direct oil industry employment in Nigeria is not likely to expand significantly in the future because the industry is very highly capital intensive, as is illustrated by the size of the capital-labour ratio in the industry, compared with other industries. The very high capitallabour ratio in the oil industry means that growth in oil operations is generally reflected, not in the relative expansion of employment, but in the expansion of capital investment. This will be particularly the case when, with the passage of time and increased extraction, the need arises for increased investment in costly techniques of secondary recovery. At the moment total oil industry employment in Nigeria (including employment by ancillary firms) represents only 1.3 per cent of total modern sector employment in the country.

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Nigeria DA- Oil K/T Economy- Gov’t Revenue Oil revenue directly increases Nigerian economic growth Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) The payment of substantial revenues to the government is another important aspect of the contribution of the oil industry to the Nigerian economy. The significant increase in government receipts in recent years is a reflection of three factors: increased crude oil production in Nigeria; the huge increase in crude oil prices and the more favorable fiscal arrangements obtained by the government as a result of its improved bargaining position over the years. At the early stages of oil operations when the prospects of establishing a viable oil industry in Nigeria were rather uncertain, the government was in a weak bargaining position via the oil companies. Consequently, the terms negotiated at that time with the Shell-BP Petroleum Company of Nigeria were favorable to the Company, and included relatively low concession rents, a 12.5 per cent royalty rate, a 50150 profit-sharing formula based on realized prices, and large capital allowances. The use of realized prices in the calculation of taxable profits meant that the country's oil revenues fell as oil prices fell throughout most of the 1960. But as the country's oil prospective improved and the government's bargaining power consequently increased, these terms were progressively revised to take account of the changed conditions. These changes resulted in a significant increase in government oil revenues, particularly in 1973 and 1974. As noted above, a large part of the increase in oil revenues was accounted for by the huge increase in crude oil prices during 1973-74. How far oil prices will continue to be high in the future will depend on the balance between the demand for and the supply of energy-in particular, on the level of economy in energy consumption, and the speed of development of substitute fuels in consuming.

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Nigeria DA- Oil K/T Economy- Foreign Exchange Reserves The oil industry allows Nigeria to amass foreign exchange reserves, increasing development Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) This is an important aspect of the oil industry's contribution to the Nigerian economy, which could not have come at a more opportune moment because the country is embarking upon a massive programme of industrialization and economic development which postulates huge imports of capital goods and specialized services involving massive expenditure of foreign exchange. In many underdeveloped countries, especially those that depend heavily on a narrow range of primary commodities, acute shortages of foreign exchange, often exacerbated by massive declines in world commodity prices, constitute a major obstacle to effective economic development. The oil industry in Nigeria now has substantial foreign exchange reserves and is in the healthy position of being able to finance the foreign exchange cost of her development programmes. The industry's contribution to foreign exchange is not measured by the gross value of crude oil exports because the practice followed by the oil companies is to retain the entire proceeds from exports abroad, and to remit to the producing country only the amount needed to sustain their local operations.

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Nigeria DA- A2: Dutch Disease Stable oil is key to a transition and diversification of Nigeria’s energy sector Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) Another contribution of the oil industry to the Nigerian economy is the provision of a cheap and/or readily available source of energy for industry and commerce, through the operations of the local refinery and the utilization of locally discovered natural gas. The Elesa Eleme refinery, near Port Harcourt, which came into operation in November 1965, had an initial capacity of 1.9 million tonnes per annum, and was designed to meet the country's main product requirements at that time, with the exception of bitumen, aviation gasoline, and lubricating oils. A liquefied petroleum gas plant, with a capacity of 15,000 tonnes per annum, was added in 1966. The refinery was damaged during the civil war but has since been rebuilt and expanded to a capacity of about 2.75 million tonnes. It is planned further to expand the capacity of the refinery to 3.75 million tonnes per annum and to build two new refineries one at Warri in Bendel State (now Delta State) and the other at Kaduna in Kaduna State-during the current National Development Plan (1975 - 1980). The objective is to eliminate the scandalous shortage of petroleum products in a country that is currently swimming in oil. The availability of huge reserves of natural gas provides a good opportunity for the supply of cheap energy to industry and commerce. Already, associated natural gas natural produced jointly with crude oil is being supplied by Shell-BP to the National Electric Power Authority for thermal electricity generation; to the Nigerian Petroleum Refining Company for use as fuel in petroleum refining at Elesa Eleme; and to a number of industrial undertakings around the centres of oil operations. Total consumption of natural gas in Nigeria, excluding the amount used as fuel at the oilfields by the producing companies has increased from 1,100 million cubic feet in 1963 to 6,916 million cubic feet in 1973. However, annual consumption is still a tiny proportion of total production and the latter, which at the moment comes wholly from oilfields, is much less than available productive capacity.

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Nigeria DA- A2: Inflation Nigeria is able to curb inflation in the face of economic struggle Adesida 7 (Seun, Chief Executive Officer of Intercontinental Bank Plc, August 6, http://www.sunnewsonline.com/webpages/features/ceomagazine/2007/aug/06/ceomagazine-06-08-2007-001.htm) Despite the disappointments in the areas of poverty reduction, tackling unemployment and weak consumer purchasing power, a number of achievements were made on the economic front. Core inflation stabilized and actually dipped below the single digit levels for the first time since the 80s; while adroit foreign reserve management and fiscal discipline ensured that the country paid off its foreign debts and meant that our reserves hit an all-time high of over N43 billion.

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Nigeria DA- A2: Corruption Reforms solve corruption Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) During 2003–2007 Nigeria has attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDS). The purpose of NEEDS is to raise the country’s standard of living through a variety of reforms, including macroeconomic stability, deregulation, liberalization, privatization, transparency, and accountability. NEEDS addresses basic deficiencies, such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediments to private enterprise, and corruption. The government hope that NEEDS will create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. A related initiative on the state level is the State Economic Empowerment Development Strategy (SEEDS).

Corruption solved – New commission Ribadu 6 (Nuhu, Executive Chair, Economic & Financial Crimes Commission, May 19, http://www1.worldbank.org/publicsector/anticorrupt/bbagdetails.cfm?ID=267) For years Nigeria has suffered a string of rulers bent on looting the national treasury. Presidents, military dictators, parliamentarians, and state governors all took advantage of their position to steal literally billions of dollars of the national patrimony. But things are beginning to change. Corrupt proceeds secreted abroad are being returned and senior officials prosecuted for wrongdoing. While these successes represent the coordinated response of many agencies in Nigeria and reflect the strong support of its President, outside observers say much of the credit is due to the work of the Economic & Financial Crimes Commission. Formed in April 2003, it has recovered or seized assets from various people guilty of fraud inside and outside of Nigeria, including a syndicate with highly placed government officials who were defrauding the Federal Inland Revenue Service (FIRS). Several influential individuals, including the governors of two states, have been arrested and are currently awaiting trial. This success has come at a price, however. Three of the Commission's investigator's have been assassinated this year alone and many more have received death threats. Nuhu Ribadu, a former police officer and prosecutor, has headed the commission since its inception. He will review the commission's record and discuss the factors that help explain its success.

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Nigeria DA- Impact: Stability Up Instability in Nigeria low Lesser 8 (Howard, VOA News [http://www.voanews.com/english/Africa/2008-07-16-voa4.cfm] Court Upholds Election of Nigeria's Senate President/ July 16, 2008) Attorney and legal consultant Emmanuel Ogebe is a managing partner in the Washington office of the US – Nigeria law group. He says that yesterday’s decision favoring Mark, who is a member of the ruling People’s Democratic Party (PDP), would also appear to help President Yar’Adua, who faces an appeals ruling later this year from his two opponents in last year’s presidential vote, which was widely condemned as flawed. “This is a huge sign that Nigeria is on the step towards stability. In March, we had a ‘super Tuesday,’ where the courts decided in the space of 48 hours on the validity of the elections of the president, the vice president, and then the third in line of succession, the senate president. So in essence, if the courts had kicked them all out, we would have had a power vacuum and a constitutional crisis. So the fate of the senate president is actually almost as decisive as the fate of the president and the vice president,” he said.

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Nigeria DA- Impact: Spillover A Nigerian coup overthrow would spill over into other regions of Africa NIC 5 (National Intelligence Council [http://www.dni.gov/nic/confreports_africa_future.html] Mapping SubSaharan Africa's Future/ March 2005) Other potential developments might accelerate decline in Africa and reduce even our limited optimism. The most important would be the outright collapse of Nigeria. While currently Nigeria's leaders are locked in a bad marriage that all dislike but dare not leave, there are possibilities that could disrupt the precarious equilibrium in Abuja. The most important would be a junior officer coup that could destabilize the country to the extent that open warfare breaks out in many places in a sustained manner. If Nigeria were to become a failed state, it could drag down a large part of the West African region. Even state failure in small countries such as Liberia has the effect of destabilizing entire neighborhoods. If millions were to flee a collapsed Nigeria, the surrounding countries, up to and including Ghana, would be destabilized. Further, a failed Nigeria probably could not be reconstituted for many years—if ever—and not without massive international assistance.

A coup overthrow in Nigeria would collapse West Africa Eboh 5 (Camilius, The Union Tribune [http://www.signonsandiego.com/news/world/20050525-0956-nigeriacollapse.html] Nigeria could collapse and bring down W.Africa-CIA/ May 25, 2008) A coup in Nigeria could cause the oil exporting country to collapse and bring down much of West Africa with it, the CIA's National Intelligence Council said in a long-term outlook released in Nigeria on Wednesday. The catastrophic scenario was listed as a possible risk in a long-term forecast for Africa which also saw most of the continent becoming increasingly marginalised over the next 15 years. 'While Nigeria's leaders are locked in a bad marriage that all dislike but dare not leave, there are possibilities that could disrupt the precarious equilibrium in Abuja,' said the report, which was given to the press by Nigerian lawmakers. 'The most important would be a junior officer coup that could destabilise the country to the extent that open warfare breaks out in many places in a sustained manner. 'If Nigeria were to become a failed state, it could drag down a large part of the West African region.'

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Nigeria DA- Impact: Regional Stability Nigeria is key to stability in the region Lymen 5 (Princeton, Adjunct Senior Fellow for Africa Policy Studies [http://www.cfr.org/publication/8136/electoral_reform.html] ELECTORAL REFORM: THE NEXT MILESTONE IN NIGERIA’S DEMOCRACY/ March 19, 2005) If it were only Nigeria’s democracy at stake in the effectiveness of its electoral process, that would be serious enough. But the truth is that Nigeria’s importance runs far beyond its borders. Nigeria is a leader in much of what is happening throughout the continent. It was President Obasanjo, along with South Africa’s President Thabo Mbeki, Senegal’s President Wade, and Algerian President Bouteflika, who developed the New Partnership for African Development (NEPAD) that set out principles of good governance and economic management that is now a key policy framework of the Africa Union. NEPAD has also become the foundation for the evolving new partnership between Africa and the industrialized countries of the world. Because of NEPAD, there now exists an Africa Action Plan that charts the future relationship between the G8 and Africa in terms of trade, aid and security. Beyond just words and principles, Nigeria has become the key actor in pushing back efforts to undermine democratic progress in West Africa. In Guinea-Bissau, Sao Tome and Principe, and most recently in Togo, Nigeria together with its allies in the Economic Commission for West Africa (ECOWAS) forced reversal of coups and the undermining of constitutional processes. Had these actions not been taken, NEPAD would have been only words on a page. Now these principles are a part of reality.

Nigeria key to solving conflict in the region Lymen 5 (Princeton, Adjunct Senior Fellow for Africa Policy Studies [http://www.cfr.org/publication/8136/electoral_reform.html] ELECTORAL REFORM: THE NEXT MILESTONE IN NIGERIA’S DEMOCRACY/ March 19, 2005) Finally, Nigeria has been playing a central role in resolving conflicts. Nigerians have paid a heavy price for peace, in the many lives lost and in the treasure expended in the peacekeeping operations of Sierra Leone and Liberia. Nigerians have not flinched from this responsibility. In Burundi, in Congo, and most recently in the Darfur region of Sudan, Nigeria dedicates peacekeepers, money, and time to end the terrible conflicts that have afflicted those countries. Today, it is Nigeria that is providing the leadership and the venue for the political talks that are critical to ending the tragedy in Darfur. What this means for the subject we have been discussing these last three days is that the future of Nigeria’s democracy has repercussions far beyond Nigeria. Nigeria is very much a bellwether for the progress of democracy in Africa. Moreover, should the worst happen, should problems in the elections in 2007 lead to unrest and instability in Nigeria, the impact would be even greater, unsettling the region and weakening one of the most important forces for peace and progress on the continent. Nigeria thus carries a heavy responsibility, first and foremost for its people but also for the continent. This is not new for Nigeria. And I know that Nigeria will not shy from the responsibility just as it has not shied away from the responsibilities I have already mentioned.

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Nigeria DA- Impact: Regional Stability Economic decline causes regional war and terrorism Brown 7 (Michael A., Council on Foreign Relations, 6-7, http://www.internationalrelations.house.gov/110/35872.pdf) The United States must pay close attention to Nigeria for its own national security interests. If the Nigerian economy became afflicted with a cold because of the chilling effects on investment occasioned by political instability, peace and prosperity in the fragile ECOWAS region would be jeopardized, and become a promising target for Al Qaeda penetration or recruitment. Nigeria’s vast oil and gas resources would also be targeted. Proven reserves are estimated at 25 billion barrels; natural gas reserves exceed 100 million cubic feet. Crude oil production averages 2.2 million barrels per day. Nigeria, as the fifth largest exporter to the United States, supplies it with approximately 11% of its aggregate oil imports.

Nigeria is key to African stability Committee On Foreign Affairs 7 (house of representatives http://www.internationalrelations .house.gov/110/35872.pdf) Nigeria has played, and continues to play, a critical role in the region and subregion and it is an important partner to the United States. It has the second-largest economy in Africa and is the continent’s largest producer of oil. The country generates over $47 billion a year in oil and gas revenues. It is the third-largest oil supplier to the United States and the largest beneficiary of U.S. investment on the continent. Through the Economic Community of West African States and the African Union, Nigeria has provided peacekeeping troops for missions that western governments are unwilling to do. Nigeria sent troops to Sierra Leone while the Revolutionary United Front was still wreaking havoc in that country, and they deployed to Liberia during the last days of the Charles Taylor regime. If Nigeria had not sent troops to those countries, it is doubtful that those conflicts there would have ended when they did. They also sent a strong message to Sao Tome and Principe to tell the troops there to stay in the barracks and, therefore, avoided a coup d’etat.

African conflict escalates to nuclear war Deutsch 2, PhD and political risk consultant and Founder, Rabid Tiger Project, 11/18/, Jeffrey (http://www.rabidtigers.com/rtn/newsletterv2n9.html) The Rabid Tiger Project believes that a nuclear war is most likely to start in Africa. Civil wars in the Congo (the country formerly known as Zaire), Rwanda, Somalia and Sierra Leone, and domestic instability in Zimbabwe, Sudan and other countries, as well as occasional brushfire and other wars (thanks in part to “national” borders that cut across tribal ones) turn into a really nasty stew. We’ve got all too many rabid tigers and potential rabid tigers, who are willing to push the button rather than risk being seen as wishy-washy in the face of a mortal threat and overthrown. Geopolitically speaking, Africa is open range. Very few countries in Africa are beholden to any particular power. South Africa is a major exception in this respect - not to mention in that she also probably already has the Bomb. Thus, outside powers can more easily find client states there than, say, in Europe where the political lines have long since been drawn, or Asia where many of the countries (China, India, Japan) are powers unto themselves and don’t need any “help,” thank you. Thus, an African war can attract outside involvement very

quickly. Of course, a proxy war alone may not induce the Great Powers to fight each other. But an African nuclear strike can ignite a much broader conflagration, if the other powers are interested in a fight. Certainly, such a strike would in the first place have been facilitated by outside help - financial, scientific, engineering, etc. Africa is an ocean of troubled waters, and some people love to go fishing.

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Nigeria DA- Impact: Heg Nigeria is key to Africa’s growth and stability and to US heg in the region U.S. Department of State, States News Service, “REMARKS ON U.S. ASSISTANCE TO NIGERIA,” October 30, 2006, lexis Nigeria is arguably our most important strategic partner in Africa. It is Africa's most populous state as well as its second-largest economy. Nigeria is our largest African trading partner, and a growing key oil supplier to the United States. It is a crucial continental power broker in dealing with African institutions and in resolving armed conflict. It is a vital player in the War on Terror. Located along the Sahel, Nigeria exerts great influence on African political, economic, and socio-cultural trends. A prosperous Nigeria is vital to Africa's growth and stability, and to projecting U.S. influence as a strategic partner. U.S. policy objectives in Nigeria--which conform to the established goals of the Government of Nigeria--are to enhance Nigeria's ability to deliver social services; strengthen democracy, pluralism, and good governance; promote a more market-led economy; and to enhance Nigeria's capacity as a responsible regional and trade partner. Support for professionalism in, and reform of, the security services is integral to this strategy. Given Nigeria's size and our limited resources, we are trying to focus on the impoverished Muslim North and on the oil-rich and unstable Niger River Delta.

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***Nigeria Answers***

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Nigeria Answers- No Internal Link- A2: Oil K/T Economy Oil revenue doesn’t help Nigerian economy – only 1% goes to population Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) Nigeria’s economy is struggling to leverage the country’s vast wealth in fossil fuels in order to displace the crushing poverty that affects about 57 percent of its population. Economists refer to the coexistence of vast natural resources wealth and extreme personal poverty in developing countries like Nigeria as the “resource curse”. Nigeria’s exports of oil and natural gas at a time of peak prices have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80 percent of Nigeria’s energy revenues flow to the government, 16 percent covers operational costs, and the remaining 4 percent go to investors. However, the World Bank has estimated that as a result of corruption 80 percent of energy revenues benefit only one percent of the population. During 2005 Nigeria achieved a milestone agreement with the Paris Club of lending nations to eliminate all of its bilateral external debt. Under the agreement, the lenders will forgive most of the debt, and Nigeria will pay off the remainder with a portion of its energy revenues. Outside of the energy sector, Nigeria’s economy is highly inefficient. Moreover, human capital is underdeveloped Nigeri ranked 151 out of 177 countries in the United Nations Development Index in 2004 and non-energy-related infrastructure is inadequate.

The Nigerian oil industry is too flawed to be the economic keystone Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) The oil sector has been plagued by various problems which undermined it’s optimal development over the years. In general terms, the oil sector of the Nigerian economy in the 1990ies faced (and still faces some of) the following problems: Public control and bureaucracy The Nigerian National Petroleum Corporation (NNPC) is controlled by the Ministry of petroleum Resources. It lacks autonomy, as a result of which decision taking is often bureaucratic and unnecessarily delayed. Therefore, the operation of the NNPC is characterized by ineffiiency, especially in refinery operations, distribution and marketing. Poor

funding of investments Frequent delays in the payment of cash calls to the joint venture operators have tended to discourage increase in the level of investment by the oil companies. Insufficiency of funds has also constrained adequate equipment maintenance and efficient refinery operations by the NNPC. The Federal Government’s delays in the payment of cash calls for its JV operations in the upstream sub-sector, focusing more on maintenance rather than growth. Communal Disturbances There had been frequent communal disturbances which disrupts crude production as oil communities’ clamour for higher stake in oil operations. Smuggling and diversion of petroleum products There are reported cases of massive smuggling of petroleum products across the borders in quest for foreign exchange and to take undue advantage of the lower domestic prices vis-а-vis neighboring countries prices. Fraudulent domestic marketing practices Some marketers hoard products in periods of scarcity in order to sell in the black market at higher prices. Products adulteration This is encouraged largely by price differential of some products and the proliferation of illegal sales outlets where some adulterations occur. Others are Relatively low level of investments in the sector, compared to its potentials. High technical cost of production, due to low level of domestic technological development. Restrictions imposed by crises and production disruptions caused by host communities.

Environmental degradation due to the flaring of associated gas.

The oil industry only serves to hurt the population of Nigeria Africa News 4 (July 12, Daily Champion, “Nigeria: Oil: Prize or Curse?”) Meanwhile, deep in the Ecuadorian forest, discharges from 333 wells despoil Indian homelands and contaminate the headwaters of the Amazon. In Africa's most populous nation, sludge sickens communities as slicks bathe Niger River banks. In the Gulf of Mexico, the Niger River Delta, and the Persian Gulf, fish nibbling near drilling sites get their fill of mercury and other toxins and pass it on to birds, marine mammals, and humans who eat them. Refining emits benzene, which causes cancer, and burning pollutes the air and water with mercury, particles, and smog and causes acid rain

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Nigeria Answers- No Internal Link- A2: Oil K/T Economy Oil turns Nigeria toward economic disaster Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) Petroleum production and export play a dominant role in Nigeria's economy and account for about 90 % of her gross earnings. This dominant role has pushed agriculture, the traditional mainstay of the economy, from the early fifties and sixties, to the background. While the discovery of oil in the eastern and mid-western regions of the Niger Delta pleased hopeful Nigerians, giving them an early indication soon after independent economic development was within reach, at the same time it signaled a danger of grave consequence: oil revenues fueled already existing ethnic and political tension and actually "burned" the country. This tension reached its peak with the civil war that lasted from 1967 to 1970. As the war commenced, the literature reflected the hostility, the impact, and fate of the oil industry. Nigeria survived the war, and was able to recover mainly of the huge revenues from oil in the 1970s. For some three years an oil boom followed, and the country was awash with money. Indeed, there was money for virtually all the items in its developmental plan. The literature of the postwar years shifted to the analysis of the world oil boom and bust, collectively known as the "oil shock." Starting in 1973 the world experienced an oil shock that rippled through Nigeria until the mid - 1980s. This oil shock was initially positive for the country, but with mismanagement and military rule, it became all economic disaster. The larger middle class produced by the oil boom of the 1970s gradually became disenchanted in the 1980s, and rebellious in the 1990s. The enormous impact of the oil shock could not escape scholarly attention. For almost twenty years (1970s - 1990s), the virtual obsession was to analyze the consequences of oil on Nigeria, using different models and theories. A set of radical-oriented writers was concerned with the nationalization that took place during the oil shock as well as the linkages between oil and an activist foreign policy. Regarding the latter, the emphasis was on OPEC, Nigeria's strategic alliance formation within Africa, the vigorous efforts to establish the Economic Community of West African States (ECOWAS), and the

If many had hoped that oil would turn Nigeria into an industrial power and a prosperous country based on a large middle class, they were to be disappointed when a formally rich country became a debtor nation by the 1980s. The suddenness of the economic difficulties of the 1980s "bust years" had an adverse effect on class relations and the oil workers who understood the dynamics of the industry. As if to capture the labor crisis, writings country's attempts to use oil as a political weapon, especially in the liberation of South Africa from apartheid.

on oil workers during this period covered many interrelated issues, notably working conditions, strikes, and state labor relations. To be sure, labor issues were not new in the 1980s, since the left-oriented scholars had made a point of exposing labor relations in the colonial era. What was new after 1980 was the focus on oil workers, unions, and class conflict [OPEC annual report 1983].

Oil money doesn’t solve instability from inequality Brown 7 (Michael A., Council on Foreign Relations, 6-7, http://www.internationalrelations.house.gov/110/35872.pdf) Nigeria is beset by perhaps the most unequal distribution of wealth in the world. The Niger Delta is emblematic. Despite its lucrative oil and gas resources, the indigenous population barely subsists. The infrastructure is either ramshackle or non-existent. A chronic militancy and worrisome violence has arisen. Oil and gas production has been periodically interrupted. President Yar’ Adua, however, has pledged in his first hundred days to fashion a plan for catalyzing economic and social development in the Niger Delta. The plan could include contract or employment setasides for qualified local businesses or employees and job training opportunities.

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Nigeria Answers- Internal Link Turn: Dutch Disease Dependence on oil creates systemic impacts on Nigerian economy Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favour of an unhealthy dependence on crude oil. In 2000 oil and gas exports accounted for more than 98 % of export earnings and about 83 % of federal government revenue. New oil wealth, the concurrent decline of other economic sectors, and a lurch toward a statist economic model fueled massive migration to the cities and led to increasingly widespread poverty, especially in rural areas. A collapse of basic infrastructure and social services since the early 1980s accompanied this trend. By 2000 Nigeria's per capita income had plunged to about one-quarter of its mid-1970s high, below the level at independence. Along with the endemic malaise of Nigeria's non-oil sectors, the economy continues to witness massive growth of "informal sector" economic activities, estimated by some to be as high as 75 % of the total economy. Nigeria's proven oil reserves are estimated to be 35 billion barrels; natural gas reserves are well over 100 trillion ftі (2,800 kmі). Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), and in mid-2001 its crude oil production was averaging around 2.2 million barrels (350,000 mі) per day. Poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta oilproducing region continue to plague Nigeria's oil sector. Efforts are underway to reverse these troubles. In the absence of government programs, the major multinational oil companies have launched their own community development programs. A new entity, the Niger Delta Development Commission (NDDC), has been created to help catalyze economic and social development in the region. Although it has yet to launch its programs, hopes are high that the NDDC can reverse the impoverishment of local communities. The U.S. remains Nigeria's largest customer for crude oil, accounting for 40% of the country's total oil exports; Nigeria provides about 10% of overall U.S. oil imports and ranks as the fifth-largest source for U.S. imported oil.

Oil dependency takes out all local efforts at economic success Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) Oil dependency, and the allure it generated of great wealth through government contracts, spawned other economic distortions. The country's high propensity to import means roughly 80 % of government expenditures is recycled into foreign exchange. Cheap consumer imports, resulting from a chronically overvalued Naira, coupled with excessively high domestic production costs due in part to erratic electricity and fuel supply, have pushed down industrial capacity utilization to less than 30 %. Many more Nigerian factories would have closed except for relatively low labor costs (10 % - 15 %). Domestic manufacturers, especially pharmaceuticals and textiles, have lost their ability to compete in traditional regional markets; however, there are signs that some manufacturers have begun to address their competitiveness.

Oil revenue isn’t used productively Blocher 7 (10-31, Christopher Charles, http://internationalbusiness.wikia.com/wiki/Nigerian_Economic_Markets_and_Structures) “Nigeria's entire economy revolves around oil - with large reserves meaning the country has, in theory, the potential to build a very prosperous economy” (Hale, 2002). The main reason why Nigeria has never seen much profit from this oil is because the money stays within the central government and never trickles outside to the areas in need of it. Another large factor in why there are little profits seen in the production of oil in Nigeria is the state and condition that much of the equipment is in. The dilapidated equipment places production way under normal capacity. Nigeria’s oil sales “account for 40% of its GDP. It is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves” (Economy of Nigeria). The export of crude oil accounts for almost 85% of Nigeria’s Federal Government revenue. The needless spending of the government dwarfs this revenue. This careless spending has been going on since the 1980’s. While, a “new entity, the Niger Delta Development Commission (NDDC), has been created to help catalyze economic and social development in the region” (Economy Nigeria), the organization has shown little or no progress. This organization has actually wasted more money then helping out with Nigeria’s economic downfall.

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Nigeria Answers- Internal Link Turn: Inflation More oil revenue translates to increased inflation Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) Expanded government spending also has led to upward pressure on consumer prices. Inflation which had fallen to 0 % in April 2000 reached 14. 5% by the end of the year and 18.7 % in August 2001. In 2000 high world oil prices resulted in government revenue of over $16 billion, about double the 1999 level. State and local governmental bodies demand access to this "windfall" revenue, creating a tug-of-war between the federal government, which seeks to control spending, and state governments desirous of augmented budgets preventing the government from making provision for periods of lower oil prices.

Increased oil revenue creates market distortions and inflation Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) The monetization of oil revenue has been a major factor in liquidity management in Nigeria. Measuring liquidity as the narrow and broad money definitions by the CBN, the early 1990s saw increases that were dampened by 1995 up until the civilian administration came on board in 1999. The new Government maintained disciplined fiscal operations for about one year and thereafter, the floodgates were opened. Since then, the CBN has been battling to keep liquidity in check, in order to ensure that it does not create adverse effects on the three key macroeconomic prices (i.e., interest rate, exchange rate and inflation rate). The greatest challenge is when Nigeria generates more revenue from crude oil sales than it budgeted, like now. Such excesses have always been monetized, creating market distortions and inflationary pressure [Biodun Adedipe 2004].

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Nigeria Answers- Internal Link Turn: Corruption Oil has fueled corruption in Nigeria Africa News 4 (July 12, Daily Champion, “Nigeria: Oil: Prize or Curse?”) In Nigeria, Ecuador, Venezuela and Sudan, oil has widened economic divides and the wealth generated engenders conflicts. Nigeria has suffered profoundly from political unrest fueled by oil and from reprisals in which thousands have been killed. The corruption spawned by oil casts a vast net of social pain that has not abated with the transition to democracy.

Corruption disrupts any attempts at improving Nigerian well being Olusegun 8 (Gbadebo, Department of Economics and Development Studies Covenant University, http://www.ogbus.ru/eng/) A long-term economic development program is the United Nations (UN) sponsored National Millennium Goals for Nigeria. Under the program, which covers the years from 2000 to 2015, Nigeria is committed to achieve a wide range of ambitious objectives involving poverty reduction, education, gender equality, health, the environment, and international development cooperation. In an update released in 2004, the UN found that Nigeria was making progress toward achieving several goals but was falling short on others. Specifically, Nigeria had advanced efforts to provide universal primary education, protect the environment, and develop a global development partnership. However, the country lagged behind on the goals of eliminating extreme poverty and hunger, reducing child and maternal mortality, and combating diseases such as human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and malaria. A prerequisite for achieving many of these worthwhile objectives is curtailing endemic corruption, which stymies development and taints Nigeria’s business environment. Corruption mostly harms Nigerians themselves, but the country is widely known around the world for a fraudulent activity known as the "Advance fee fraud" scheme, a.k.a the "419" scam or the Nigerian scam, which seeks to extort money from foreign recipients of letters and emails with the promise to transfer a nonexistent windfall sum of money.

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Nigeria Answers- Internal Link Turn: Organized Crime Oil increases Nigerian organized crime Arvantides and Butcher 8 (Chip, Jamey, http://www.american.edu/ted/hpages/crime/Nigeria.htm) Nigerian organized crime has become influential in transnational illegal activities only recently. It can be traced to the collapse of oil prices in the early 1980s and the subsequent problems that this caused for an economy that relied on oil exports for 95 percent of its earnings. This resulted in a number of welleducated Nigerians, many living in other countries, to be deprived of their primary source of income. This in turn created a wave of individuals turning to crime as a means of supplementing their income. Nigerian Criminal Enterprises have developed large scale drug trafficking operations that are second only to the Asian triads in their import of heroin into the United States. This has been facilitated by a relatively secure home base, characterized by lack of legislation and law enforcement capacity, as well as political instability, corruption and few sources to devote to fighting organized crime. Further, Nigerian organizations have engaged in extensive fraud and extortion activities, including credit card fraud, and fraudulent activities through commercial banks and government assistance programs. Nigerian Criminal Enterprises are difficult to infiltrate due to the fact that they operate in a tribal structure. These groups also have little problem accepting menial jobs, which include narcotics trafficking activities, despite a membership that has a generally high level of education.

Organized crime funnels money out of Nigeria Mutume 7 (Gumisia, July, http://www.un.org/ecosocdev/geninfo/afrec//vol21no2/212-organized-crime.html) Because drug trafficking, prostitution, gambling, loan-sharking and official corruption are illegal and many transactions are consensual, experts note that the extent of organized crime is hard to establish on the basis of official data, in Africa or elsewhere. “But perception surveys, as well as international crime intelligence and seizures of contraband, suggest that Africa may have become the continent most targeted by organized crime,” UNODC states in a 2005 report, Crime and Development in Africa. “Lack of official controls makes the continent vulnerable to money laundering and corruption activities, both of which are vital to the expansion of organized crime.”

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Nigeria Answers- Impact T/O: Stability Down Rebel attacks are increasing in Nigeria Fletcher 8 (Sam, Oil & Gas Journal [http://www.ogj.com/display_article/334097/7/ONART/none/GenIn/1/MARKET-WATCH:-Supply-fears-pushenergy-prices-higher/] MARKET WATCH: Supply fears push energy prices higher/ July 9, 2008) A statement by the Movement for the Emancipation of Niger Delta that its 2-week ceasefire will end July 12 also helped boost energy prices. Rebels indicated they would resume attacks because of the recent promise by US officials to back the Nigerian government in the conflict that has already shut in a quarter of Nigeria's oil production in the last 2 years. In the interim, security forces said gunmen kidnapped employees of a German construction firm in Port Harcourt, Nigeria, on July 11. The abductees work for Julius Berger Nigeria PLC, a unit of Bilfinger Berger AG, Germany's second-largest builder.

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Scholars Lab

Nigeria Answers- Impact Turn: Coup Good A coup to overthrow the illegitimately elected president in Nigeria would ultimately strengthen democracy Jean Herskovits, Research Professor of History at the State University of New York, “Nigeria's Rigged Democracy,” Foreign Affairs, July/August

2007

Many Nigerians say that in the wake of the discredited elections, nothing is off the table. Although coups are said to be out of fashion in much of Africa, in Nigeria they have repeatedly been used against a misbehaving political class. Such military intervention would not, of course, be the preference of most Nigerians -- or of the U.S. government. But the flagrantly rigged elections were not either, and in the event of a coup carried out by leaders committed to returning the country to democracy within months, Western governments should pause before imposing sanctions. The notion that a coup could lead to democracy may seem counterintuitive, but if nothing is done to redress the 2007 electoral travesty, many Nigerians would welcome a short-lived military regime whose goal was to arrange legitimate elections. Nigerians have again shown their commitment to democracy, and nothing should be done by people far away to further dim their prospects for eventually achieving it, however they can.

Oil revenue causes inequality which generates Nigerian instability Blocher 7 (Christopher Charles, 10-31, http://internationalbusiness.wikia.com/wiki/Nigerian_Economic_Markets_and_Structures)

Perhaps the most explosive threat facing future Nigerian economic growth lies with internal conflict and unrest. Critical oil production occurs along the Niger Delta, which is also a home for militant groups like the Movement for the Emancipation of the Niger Delta (MEND) [5]. Due to the impoverished nature of the region, and fueled by the lack of non-oil economic growth, the poverty seems to be a breeding ground for militant groups dissatisfied with government corruption. A government position is often a path to wealth, and many government officials have been known to enrich themselves with money appropriated for economic development, blunting any appeals they might make to militant groups which kidnap civilians, which then disrupt oil production and oil profits[6].

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***Mexican Oil DA***

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Mexican Oil DA – 1NC Mexican econ strong – Oil is key Dickerson 8 (Marla, Las Angeles Times [http://www.latimes.com/news/nationworld/world/la-fi-mexgdp232008may23,1,6979146.story] Mexico prospering despite U.S. slowdown/ May 23, 2008) Skyrocketing crude prices might be pinching U.S. drivers, but they've meant record oil revenue for Mexico, the world's sixth-largest oil producer. The petroleum windfall is bankrolling a slew of government spending and investment, which is helping to keep the economy rolling. Total public spending increased 9.5% in the first three months of the year compared with the same period last year.

Mexico is critical to the world Rubin and Weisberg 3 (Roburt Rubin U.S. Secretary of the Treasury, Jacob Weisberg American political journalist, currently serving as editor of Slate magazine and a columnist for the Financial Times) I told the President that the Mexican government faced an imminent threat of default and that, in the hope of preventing it, we were recommending that he support a massive, potentially unpopular, and risky intervention: providing billions of dollars to the Mexican government to avoid a collapse in its currency and economy. Then I asked Larry to explain the situation in more detail. It took him ten minutes to spell out our essential analysis and recommendation, which we'd finished formulating in a meeting with Fed chairman Alan Greenspan hours earlier. If

our government didn't step in to help, and help quickly, the immediate and long-term consequences for Mexico could be severe. But the real reason for acting was that critical American interests were at stake. The alternatives to the massive intervention we were recommending were not promising. If Mexico defaulted on its foreign obligations, Larry and I went on to explain, the flow of capital out of Mexico would probably accelerate and the peso would collapse, likely triggering severe inflation, a deep and prolonged recession, and massive unemployment. And that would surely have a substantial impact on the United States. Mexico was our third-largest trading partner, which meant that many American companies and workers would be hurt. We presented estimates that a Mexican default could increase illegal immigration by 30 percent, a half-million additional refugees a year. The flow of illegal drugs could intensify as well. A crisis in Mexico might also hurt us indirectly, by affecting other countries. Fears of a Mexican default were already producing wobbles in developing markets throughout the hemisphere, a phenomenon that came to be known as the "Tequila Effect." Such a chain reaction could lead investors to pull back from emerging markets around the world indiscriminately. That, in turn, could affect economic conditions in the United States-since roughly 40 percent of our exports went to developing countries. According to an estimate made by the Federal Reserve Board, a Mexican default and the consequent "contagion" that was possible could, in a worst-case scenario, reduce growth in the United States by 1/2 to 1 percent a year. We weren't proposing intervention for the sake of Mexico, despite our special relationship, but to protect ourselves. That was our case for asking Congress to provide billions of dollars in loan guarantees, as part of a package to be coordinated with the International Monetary Fund (IMF).

Econ collapse leads to nuke war Nyquist, economic expert, 07[7-6-07,J. R. Nyquist, “The Path of Dissolution,” http://www.financialsense.com/stormwatch/geo/pastanalysis/2007/0706.html, accessed 7-6-07] The world is made up of armed nation states, and some of those states have nuclear and biological weapons that could easily kill several hundred million people. We don’t like to think that these weapons would ever be used, but it’s safe to say they’ll be used all the same. Weapons are always used. This is not because of some dark conspiracy to use them. They are used because they exist to be used, and the occasion for using them – though unwelcome by most of us – nonetheless recurs through time. People always seem ready to hate somebody, to blame somebody, and to unleash destruction on somebody. The reasons for hatred may be ethnic, religious or ideological. We can see these reasons falling from the lips of al Qaeda spokesmen, from Latin American dictators and Chinese generals. Everyone knows that war plans were drawn up in Washington and Moscow long ago. But war did not come when the two sides were carefully watching one another; mainly on account of the nuclear “balance of terror.” Such balances, however, do not last forever. In fact, a major economic disruption might overthrow the “balance of terror.”

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Mexico DA – UQ – Econ Up Mexico is experiencing economic growth Dickerson 8 (Marla, Las Angeles Times [http://www.latimes.com/news/nationworld/world/la-fi-mexgdp232008may23,1,6979146.story] Mexico prospering despite U.S. slowdown/ May 23, 2008) A sizzling stock market. A strengthening peso. Good economic growth. Someone forgot to tell Mexico that the U.S. has been flirting with recession. Mexico's gross domestic product expanded at an annualized rate of 2.6% in the first three months of the year compared with a year earlier, according to government figures released Thursday. It's a respectable performance that highlights the nation's surprising resilience in the face of a U.S. slowdown.

Mexico’s GDP up by 3.8% Dickerson 8 (Marla, Las Angeles Times [http://www.latimes.com/news/nationworld/world/la-fi-mexgdp232008may23,1,6979146.story] Mexico prospering despite U.S. slowdown/ May 23, 2008) The growth appeared muted compared with the fourth quarter of 2007, when Mexico's GDP expanded by 3.8%. But there was statistical noise in the first-quarter numbers. The government this year adopted a new international standard for calculating GDP, which is the value of all goods and services produced in the economy. And the January-to-March period was hobbled by this year's early Easter week holiday, which resulted in fewer working days compared with the first three months of last year. Adjusting for those factors, first-quarter GDP growth was a solid 3.7%, according to the Treasury secretariat.

Mexican econ strong because of high oil prices Dickerson 8 (Marla, Las Angeles Times [http://www.latimes.com/news/nationworld/world/la-fi-mexgdp232008may23,1,6979146.story] Mexico prospering despite U.S. slowdown/ May 23, 2008) Skyrocketing crude prices might be pinching U.S. drivers, but they've meant record oil revenue for Mexico, the world's sixth-largest oil producer. The petroleum windfall is bankrolling a slew of government spending and investment, which is helping to keep the economy rolling. Total public spending increased 9.5% in the first three months of the year compared with the same period last year. .

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Mexico DA – UQ – Econ Up Mexico’s economy is in an upward trend Focus Economics 8 (June 30, Global economic insight with a regional focus http://www.latin-focus.com/focuseconomics/indicators/080630_mexico_economic_activity.htm) A more complete set of data for first quarter gross domestic product (GDP) confirms the 2.6% expansion reported earlier. The first quarter reading represented a notable deceleration compared with the 4.2% growth observed in the fourth quarter. The deterioration over the previous quarter was broad-based, as both domestic demand and the external sector decelerated over the fourth quarter. Total consumption slowed from 4.0% growth in the fourth quarter to 3.3%, while investment expanded 2.7% year-on-year (Q4 2007: +4.8% yoy). Meanwhile, the net contribution of the external sector to overall growth deteriorated, as exports decelerated from 7.8% in the fourth quarter to 5.4%,

More recent data point to a recovery in economic activity. According to the global indicator for economic activity (IGAE, Indicador Global de la Actividad Económica), the economy increased 6.2% in April over the same month last year. The reading constituted a strong rebound compared to the 1.5% contraction registered in March, which had been negatively affected by the Easter holidays, and also came in ahead of market expectations, which had anticipated economic activity expanding 4.5% annually. The acceleration over the previous month was broad-based, as all three main economic sectors registered higher growth rates. Agriculture experienced the sharpest rebound and expanded 7.2% over the same month last year, after having contracted 5.3% in March. The industrial sector also bounced back and increased 5.5% year-on-year (March: -4.9% yoy). Finally, the services sector expanded 6.7% (April: +1.1% yoy). A month-on-month comparison does not corroborate the acceleration suggested by the annual figures, as economic activity declined 0.17% over the previous month in seasonally adjusted terms, which contrasted the 1.01% expansion recorded in March. Nevertheless, as a result of the strong April reading, the annual average growth rate stepped up from 3.3% in March to 3.6%. while imports picked up the pace and increased 8.8% over the same quarter last year (Q4 2007: +8.2% yoy).

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Mexico DA – UQ – Econ Down Mexican economy slowing- US downturn spilling over Garr 8 (Emily, Economic Policy Institute [http://www.epi.org/content.cfm/webfeatures_snapshots_20080709] As U.S. construction slows, remittances to families in Mexico decline/ July 9, 2008) More remittances are sent to Mexico in May than any other month of the year, driven in part by the number of immigrants (a majority of them Mexican) working in construction. With the deflating housing bubble and the decline of construction jobs in the first quarter of 2008, the unemployment rate of Hispanic immigrants rose to 7.5%, and Hispanic construction workers now earn less than they did in the first quarter of 2006.1 The continuing economic slowdown in the United States will undoubtedly affect Mexicans on both sides of the border.

Mexican economy down Lang 8 (Jason, The Union Tribune [http://www.signonsandiego.com/news/mexico/20080709-1502-mexicoeconomy-inflation.html] Mexico inflation jumps to highest since late 2004/ July 9, 2008) The quickening pace of inflation comes as the economy is starting to slow, hurt by weaker growth in the United States, Mexico's top trading partner. The economy expanded at an annual pace of 3.7 percent in the first quarter, discounting the effect of Holy Week holidays, down from 4.2 percent in the fourth quarter of 2007.

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Mexico DA – UQ – Oil Up Mexico is using technology and future reserves to keep oil production high Luhnow 8 (David, The Wall Street Journal [http://rastrup.eu/verdens-n%C3%A6stst%C3%B8rste-oliefeltudt%C3%B8rer-1269.htm] Mexico/ July 9, 2008) Pemex hopes to largely offset Cantarell’s decline in the next three years by doing the same kind of nitrogen injection at its second-biggest producer, Ku-Maloob-Zaap, a collection of three fields within eyeshot of Cantarell’s platform. (Its Mayan names translate to “nest,” “good,” and “charcoal.”) But KuMaloob-Zaap, which is also ranked in the world’s top 20 fields, will start its own decline in 2011, according to Pemex. Pockets of Oil That leaves Chicontepec, a massive onshore field in eastern Mexico that was discovered in the 1920s, but hasn’t been fully developed because it is broken up into tiny pockets of oil that spread out over thousands of square miles in rocky terrain. Pemex says it will need more than 15,000 wells to fully tap the field — a big stretch for a company that has drilled about 23,000 wells since it was formed in 1938. Developing Chicontepec is also difficult politically; there are scores of nearby towns that may take a dim view of oil production in their backyard. For now, Pemex is doing what it can to keep Cantarell going as long as possible. A narrowing band of oil means that wells that are drilled at lesser depths have started to hit gas, which is less valuable than oil. Wells that are too deep hit greater amounts of water, which must be extracted from the oil before sale.

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Mexico DA – UQ – Oil Down Mexico’s oil production is at a 9 year low The Market Oracle 8 (Financial Markets Analysis & Forecasting online publication [http://www.marketoracle.co.uk/Article5187.html] China Raises Fuel Prices: Is this the End of the Oil boom?/ June 23, 2008) Worst of all, Mexico's production crisis is deepening: In April, Mexico's oil output fell to a nine-year low of 2.8 million barrels a day, mostly because of a decline in the Cantarell field. Think that's scary? Consider this: At current rates of decline, Mexico will become a net oil importer by 2016, and maybe sooner, according to Mexico's Energy Ministry! And it's not just Mexico. Venezuela, another big supplier of U.S. imported oil, is hemorrhaging oil production due to the slipshod management by its deluded president, Hugo Chavez. Result: The combined net oil exports from Venezuela and Mexico to the U.S. dropped by 414,000 bpd in just five months recently. That's an astounding annual decline rate of 32% a year!

Mexico’s future reserves are dwindling Katusa 8 (Marin, The Resource Investor [http://www.resourceinvestor.com/pebble.asp?relid=44271] Securing the Insecure: U.S. Oil Imports/ July 10, 2008) Mexico has less of a currency conundrum than the Canadian exploration companies, but they face a much larger problem – their reserves are dropping quickly, with little ability to replace them. For example, production at Cantarell, one of the world’s largest oil fields, is conservatively estimated to fall to half of its 2003 peak by the end of 2008. This problem is exacerbated by Mexico's increasing domestic consumption. Its population already consumes 60% of its crude. Mexico, and its rapidly dwindling resources, could become a net importer of crude oil in the near future. (Jeffery Brown’s Export Land Model estimates that this reversal will occur no later than 2014… six short years from now.)

Oil revenue is limited – Bureaucracy and corruption Walser 8 (Ray, 3-11, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/hl1079.cfm) The petroleum situation in Mexico is less rosy. Mexico is the world's fifth-largest oil producer and in 2007 the second-largest supplier to the U.S. Yet in many respects Mexico is paying the price for its past bout with resource nationalism. The Mexican oil industry was nationalized under former President Lázaro Cárdenas in 1938, which led to the creation of Petróleos Mexicanos (PEMEX). March 18, 2008, marks the 70th anniversary of oil nationalization in Mexico and will be celebrated widely in Mexico. Yet overall, Mexicans may have little real reason to be jubilant at this time. Since 1938, a heavy reliance on PEMEX has powered Mexico's development, but the petroleum monopoly has also served as a huge fount of corruption to sustain workers' unions, inefficient bureaucrats, and state and national politicians. Today, earnings from PEMEX cover 42 percent of Mexico's national budget. State ownership of subsoil wealth and hydrocarbons remains firmly embedded in the Mexican psyche and political ethos. A majority of Mexicans continue to oppose opening PEMEX to private and foreign investment. PEMEX, say most oil experts, is in serious trouble. It is the world's most indebted oil company. Output from Mexico's flagship oil field, Canterell, which is located in the Gulf of Mexico, peaked in 2004. The Canterell field once produced 60 percent of Mexico's petroleum. The field now yields 42 percent of national output, dropping by 5.7 percent in 2007. Production difficulties continue as a result of under-investment. Four of every 10 gallons of gasoline consumed in Mexico are imported from abroad, as is much of Mexico's natural gas.

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Mexico DA – UQ – Diversification Up Mexico is diversifying its market Tiku 8 (Pran, The Street Journal [http://www.thestreet.com/story/10426035/1/emerge-richer-with-six-sizzlingmarkets.html] Emerge Richer With 'Six Sizzling Markets'/ July 14, 2008) Mexico, the eleventh-largest country in terms of population, benefits from NAFTA, but it has also been decreasing its reliance on the U.S. by diversifying exports. Mexico is producing industry leaders like America Movil(AMX - Cramer's Take - Stockpickr), which continues to build a footprint in Latin America, and cement giant Cemex(CX - Cramer's Take - Stockpickr), which is expanding globally, taking market share and even buying companies in Europe.

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Mexico DA – UQ – Diversification Down Oil makes up 40% of Mexico’s economy Schwartz 8 (Jeremy, The Palm Beach Post [http://www.palmbeachpost.com/business/content/business/epaper/2008/07/06/sunbiz_mexicodollars_0706.html] Plunging U.S.dollar hurts some, helps some in Mexico/ July 6, 2008) When it comes to remittances, though, the weak dollar has had a powerful, if often overlooked impact. The strengthening peso means that the $7.3 billion sent home in the first four months of the year lost about $366 million in value compared to last year's exchange rate, based on numbers from Mexico's central bank. But the dollar's biggest impact in Mexico may be on Pemex's oil profits. Oil money is crucial for Mexico since it accounts for 40 percent of the federal budget.

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Mexico DA – UQ – Inflation Up Inflation in Mexico has hit a 5 year high Rota 8 (Valerie [http://www.bloomberg.com/apps/news?pid=20601086&sid=aIDSsULInmG0&refer=news] Mexico's Peso Holds Near Five-Year High on Interest-Rate Spread/ July 14, 2008) Mexico's peso held near a five-year high on mounting speculation the difference between Mexican and U.S. benchmark lending rates will continue to widen, drawing investors to the nation's higher-yielding securities. The peso has risen 5.8 percent this year as two interest- rate increases by Banco de Mexico since October have swelled the spread between Mexican and U.S. lending rates to 5.75 percentage points, the biggest since September 2005. Mexican central bankers will raise the key rate by a quarter-percentage point to 8 percent when they meet on July 18, according to the median estimate of 20 analysts surveyed by Bloomberg.

Inflation high in Mexico Lang 8 (Jason, The Union Tribune [http://www.signonsandiego.com/news/mexico/20080709-1502-mexicoeconomy-inflation.html] Mexico inflation jumps to highest since late 2004/ July 9, 2008) Mexican inflation jumped in June to its fastest pace in over three years on higher food and energy prices, increasing pressure on the central bank to raise borrowing costs despite a slowing economy. The central bank said Wednesday that consumer prices rose 5.26 percent in the 12 months through June – the highest inflation rate since November 2004. The May rate was 4.95 percent.

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Mexico DA – UQ – Inflation Down Mexico fighting inflation Gould 8 (Erik [http://www.bloomberg.com/apps/news?pid=20601086&sid=aqrSSajQI8wg&refer=news] Mexico May Raise Benchmark Rate to Tame Inflation: Week Ahead/ July 14, 2008) Mexico's central bank will probably raise its benchmark interest rate for a second consecutive month in a bid to curb the fastest inflation in 3 1/2 years. Banco de Mexico policy makers will increase the rate at least a quarter percentage point to 8 percent on July 18, according to 12 of 16 economists surveyed by Bloomberg. The four other analysts forecast no change.

Mexico increasing rates to fight inflation Rota 8 (Valerie [http://www.bloomberg.com/apps/news?pid=20601086&sid=auyorqUBhLKA&refer=latin_america] Mexican Bonds Rise on Bets Central Bank to Keep Rates Unchanged/ July 15, 2008) Yields on the benchmark government bond fell for the first time in three days on speculation Banco de Mexico may wait until at least next month to increase lending rates. Last month the bank raised its key rate by a quarter-percentage point to 7.75 percent to slow the fastest inflation in 3 1/2 years.

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Mexico DA- Oil K/T Economy The plan decreases oil prices which are up and critical to Mexican economic growth Jardon 8 (Eduardo, April 17, http://www.zibb.com/article/3084378/Mexican+oil+revenue+exceeds+forecasts?expired=2586195) This year Mexico could obtain around 220bn pesos [21.008bn dollars] in additional oil revenue, if the average price of the Mexican oil blend stays at its current level. According to government estimates, the effect on oil revenue of a one-dollar change in the annual average price of crude oil is equivalent to 0.06 per cent of GDP. For 2008, the Finance and Public Credit Secretariat (SHCP) has predicted that the nominal value of the economy will be 10.424 trillion pesos [995.416bn dollars]. So, it turns out that for every additional dollar in the price of a barrel of oil the government will obtain extra funds totalling approximately 6.255bn pesos [597.307m dollars]. So far in 2008, the price of Mexican oil has averaged 84 dollars, which is 35 dollars above the 49 dollars set for this year in the Revenue Law. Based on these figures, the additional funds from crude oil would represent 2.1 per cent of GDP, or around 220bn pesos [21.008bn dollars]. This amount is equivalent to double the revenue estimated for this year from the collection of the Single Business Tax (IETU), which totals 110.615bn pesos [10.563bn dollars]. Nevertheless, the SHCP adjusted the average price of crude oil for 2008 to 59 dollars. With that price, the government would obtain an additional 50.3bn pesos [4.803bn dollars] in oil revenue. In the Revenue Law, 865.559bn pesos [82.655bn dollars] are expected to be collected in that area this year. Oil revenue has exceeded the government's forecasts since 2002, since the price of crude oil has been greater than the price set for drawing up the budget. Various factors, such as greater demand by developing countries, mainly China, as well as climate change and conflicts in the geopolitical arena, have pushed prices of the hydrocarbon to record levels. The changes in the prices observed, compared to the estimates, have meant additional revenue totaling 474bn pesos [45.264bn dollars] over the last six years. Government spending depends to a great extent on funds from oil sales. In 2007, funds from this source represented 35 per cent of budget revenue. Yesterday, the price of a barrel of the Mexican export blend reached a record level of 94.90 dollars, resulting in a 15.1 per cent increase so far this year. Pemex [Mexican Petroleum] estimates that this month the price of a barrel of Mexican crude oil will be 90.18 dollars, which is 65.3 per cent greater than the price observed in April of last year and 2.5 per cent greater than the March figure.

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Mexico DA- Oil K/T Economy Oil key to Mexican growth Malkin 6 (Elisabeth, May 17, http://www.nytimes.com/2006/05/18/business/worldbusiness/18peso.html?_r=1&fta=y&pagewanted=print&oref=sl ogin) Mexico's economy expanded 5.5 percent in the first quarter over the similar period last year, the Finance Ministry said Wednesday, the fastest growth since 2000. Economists pointed to the data as evidence that Mexican industry was recovering from the shock of Chinese competition. A surge in manufacturing that began late last year and increased construction spending was behind the growth, analysts said. Mexico's auto industry has had the most notable rebound: output grew 54 percent in the first quarter as plants here began producing models like the Ford Focus. At the same time, the federal government is flush with additional revenue from the soaring price of Mexican oil exports. By law, much of that money must go toward spending on infrastructure. With an eye to presidential elections on July 2, both the federal and state governments are hurrying to make those investments. Alfredo Thorne, an economist with J. P. Morgan Chase in Mexico City, remarked, "The truth is that all the stars are aligned in favor of Mexico, and that's what the numbers are showing." On a seasonally adjusted basis, the economy grew 1.54 percent over the preceding quarter, the ministry said.

Mexico’s economy is dependent on oil Kay and Quispe-Agnoli 2 (Stephen J., Myriam, Atlanta Fed’s Latin America Research Group, third quarter, http://www.frbatlanta.org/invoke.cfm?objectid=1B0BDCE0-904D-43E4-BF7E42DC3F12D06F&method=display) The United States depends on Latin America for a significant portion of its oil. In 2001 Mexico and Venezuela were respectively the second- and fourth-largest suppliers of U.S. oil imports, and for the month of May 2002, Mexico surpassed Saudi Arabia as the largest single supplier of crude oil to the United States. Yet only a few Latin American countries — Venezuela, Mexico, Ecuador and Colombia — are large net oil exporters. Some countries, like Argentina, have become self-sufficient and have begun to export oil while others, including Brazil, seek self-sufficiency in the coming decade. The rest of the region, however, resembles the United States in its dependency on oil imports. The bottom line is that oil has a significant effect on the economy of every Latin American country.

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Mexico DA- A2: Reforms Turn Oil funding supports reform OECD 7 (Organisation For Economic Co-operation, http://www.oecd.org/document/61/0,3343,en_2649_34569_39415037_1_1_1_1,00.html) Mexico has gained a solid reputation for fiscal rectitude, and the new fiscal responsibility law is expected to facilitate prudent fiscal management. It establishes strict budget rules and defines new guidelines for allocating excess revenue and drawing from the various stabilisation funds (the States Revenue Stabilization Fund, PEMEX Investment Stabilization Fund and the Oil Stabilization Fund). Also important to improving the soundness of public finances has been the reform of the federal government employees’ pension system (ISSSTE), on which the government managed to build a consensus and which was approved in March 2007. The reform substantially reduces the government’s pension liabilities and allows portability of pension rights between the government and the private sector. Building on it, the government should now reform the other social security sub-systems of government agencies and state-owned companies. Other key

reforms are needed to reduce the dependence of the budget on oil revenue and address fundamental weaknesses in public finances. Aware that the current fiscal settings fall short of what is needed to support the growth process, the government submitted to Congress in June 2007 a wide-ranging public finance reform. The reform package includes four main pillars: *Improving tax administration in order to facilitate tax compliance and to fight tax avoidance and evasion more effectively. * Establishing an institutional structure that guarantees more efficient and transparent spending at the three levels of government. * Redefining fiscal federalism by providing states and municipalities with better tools

Setting the foundations for a tax system that allows the substitution of oil revenues with more stable sources of income. and incentives and promoting responsibility and accountability at all levels of government. *

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Mexico DA- A2: Dutch Disease Mexico’s economy is diversified now—only 10% of exports are oil Johnson 7 (Scott, Newsweek, October 17, http://www.newsweek.com/id/55642/output/print) The paradox is a result of Mexico's unique place in the global economy. Unlike many oil states, Mexico has a relatively diversified economy--only 10 percent of its exports come from oil. The problem is that the other 90 percent, including things like electronics, textiles and medical supplies, go almost wholly to the United States. And there, high oil prices are beginning to have a dampening effect on the economy. What's more, non-oil exports are facing increasing competition from China, which has siphoned off thousands of Mexican manufacturing jobs. And a sclerotic state-controlled oil sector hasn't invested enough in homegrown refineries, meaning that Mexico must buy refined petroleum from the United States, at the going prices. The result, says Alejandro Werner, a senior adviser at the Finance Ministry, is a situation in which "the Mexican economy may slow down, even as oil prices continue to go up."

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Mexico DA- A2: Inflation Mexico is successful at managing inflation Amiel 6 (Rafael, Global Insight, August 10, “Inflation Remains on Target Despite Political Uncertainty in Mexico”) The central bank of Mexico (Banxico) has succeeded in controlling inflation: the 12-month inflation rate went down from 3.18% at the end of June to 3.06% at the end of July, i.e., practically on the targeted rate. Banxico targets inflation at 3% plus/minus one percentage point. Annual inflation has been within the targeted band since August 2005.

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Mexico DA- A2: Corruption Mexican corruption is down Walser 8 (6-30, Ray, Heritage Foundation, http://www.heritage.org/Research/LatinAmerica/bg2152.cfm Mexican President Felipe Calderón inherited from President Vicente Fox a crisis of public insecurity. Violent drug cartels were working as a conduit for Andean cocaine and were deeply involved in the production and distribution of methamphetamines, marijuana, and heroin in U.S. markets. After assuming office, Calderón called in the Mexican military to fight the cartels in several Mexican states. While largely a stopgap measure, the move demonstrated Calderón's commitment to restoring public security. Calderón has also stepped up cooperation with the United States. In 2007, Mexican authorities extradited 80 criminal suspects to the U.S., including 65 Mexicans. For the longer term, Calderón's administration has developed a seven-point strategy that includes creating a professional and corruption-free national federal police, developing community policing, overhauling the judicial process, and adding new crime-fighting technologies and training facilities.

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Mexico DA- A2: Organized Crime Mexico and the US are working now to eradicate organized crime Sarukhan and Lugar 8 (Ambassador Arturo, Sen. Dick, May 15, “Hands across the border” Politico.com) At issue is an administration request for the first allocation of $500 million for Mexico's anti-drug efforts as part of the upcoming supplemental spending bill. This represents the possibility for a sea change in US-Mexico relations and the way both our nations fight organized crime. It was born from a proposal formulated by Mexican President Felipe Calderon, who has changed Mexico's traditional approach to bilateral cooperation by seeking deeper security ties with the United States. At a March 2007 meeting in Merida, Mexico, our two leaders agreed to take a decisive step toward significantly enhanced cooperation. This commitment, known as the Merida Initiative, to jointly address the challenge of drug trafficking includes a multiyear program to strengthen Mexico's capabilities to fight organized crime with resources for training and equipment, information sharing, enhanced border security and support for judicial reform, respect for human rights, and the fight against corruption.

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Mexico DA – Impact: Key to World Mexico is key to the world’s economy Hansen 4 (Fay, Workforce Management contributing editor http://www.workforce.com /section/06/feature/24/78/99/index.html) Mexico’s economy and business environment remain closely tied to the United States, but signs are emerging that Mexico is succeeding in its attempt to break away from the U.S. business cycle and establish itself as a major trading nation in the world market. Within the next decade, Mexico may be able to build significant trade and investment relationships with European and Asian nations and with other Latin countries. For the immediate future, however, it is largely dependent on the United States as its largest trading partner and primary source of foreign investment

Mexico affects the global economy Hansen 4 (Fay, Workforce Management contributing editor http://www.workforce.com /section/06/feature/24/78/99/index.html) Although trade with the U.S. is critical, Mexico has moved rapidly in recent years to expand its role in the world economy. Greater global integration offers Mexico the opportunity to accelerate economic growth and develop trade beyond NAFTA and the cyclical movements of the U.S. economy. “Mexico is intricately tied into the U.S., but it is also a key player in Latin America,” says Luis E. Ramirez Thomas, a principal in the Phoenix-based law firm of Lewis and Roca, LLP and part of the firm’s international business unit for Mexico and Latin America. Within Latin America, Mexico’s economy is second in size only to the Brazilian economy, but Mexico’s foreign trade is greater than the combined trade of Brazil, Argentina, Chile and Colombia, he notes. Since the signing of NAFTA a decade ago, Mexico has pursued free trade agreements (FTAs) around the world, resulting in FTAs with 41 nations, including the 25 members of the European Union, and partial scope agreements with three others. “The most notable agreements have facilitated trade with Europe and Central America where future trade prospects are the brightest,” says Pisani. “Mexico is also working on increased trade linkages with Asia bi-laterally and through APEC, with a particular focus on Japan. Nonetheless, Mexico’s trade fortunes lie with the U.S., and with these other trade partners it may only hope to help smooth out the North American business cycle, of which Mexico is part and parcel.” After the recent signing of a FTA with Japan, the Mexican economic minister announced that Mexico would temporarily halt negotiations for new free trade agreements. “Mexico has enough free trade agreements for the development stage that the country is confronting at this moment,” notes Joey Bremauntz, Vice President of Sherwood Partners, a business continuity advisory firm that assists both U.S. and Mexican companies. Mexico’s current goal, he believes, is to increase commerce with the existing FTA countries and meet the objectives of each agreement. “Mexico is an example of the success that a country can experience if it adopts a free trade agreements strategy,” he says. “It has also proven that Mexican companies have

Mexico has assumed a leadership role as an intermediary in multilateral negotiations. Mexico hosted World Trade Organization meetings in 2003 and organized a summit of the Asia-Pacific Cooperation Forum in 2002. “All these efforts have meant a very successful decade for Mexico,” he says. “That is why it is expected that the government will continue making more agreements when it is convenient for the country. In the next few years, we may see Mexico initiate negotiations with countries of the southern cone, such as Paraguay and Argentina.” the capability to enter into first-world country markets because of the quality and competitive price of their products.” Bremauntz also notes that

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Mexico DA – Impact: Key to World Mexican economy key to global econ stability B Net 96 (the go to place for management http://findarticles.com/p/articles/mi_m0365/is_n2_v40/ai_18338853) In December 1994, Mexico shocked world Financial markets with a sharp devaluation of the peso. Huge outflows of capital from Mexico before and after the devaluation seriously depleted its international reserves and threatened default on the country's foreign-held debt. Five years worth of carefully nurtured international confidence in Mexico's political leadership and economic management was swept away. Moreover, the Mexican crisis aroused investor concern regarding other emerging markets, raising the specter of a spreading financial calamity. The Mexican crisis was eventually quelled by a $47.8 billion rescue package provided by the United States, the International Monetary Fund (IMF), and a group of ten central banks working through the Bank for International Settlements (BIS). But the rescue package was arranged only with considerable difficulty, subjecting world financial markets to a six-week period of uncertainty. Mexico showed improvement in subsequent months as the peso stabilized, the inflation rate first rose then declined, and trade deficits were corrected. These positive effects were achieved, however, with an economic austerity program that plunged the country into a severe recession. Should the recession be prolonged, political and social pressures would mount and raise again the question of Mexico's ability to meet its external debt service. Against the background of the Mexican crisis and its consequences, on June 26-27, 1995, the Global Interdependence Center (GIC) and the Foreign Policy Research Institute (FPRI), both headquartered in Philadelphia, jointly sponsored a round-table meeting. Both the GIC and the FPRI concluded that the causes and consequences of the Mexican crisis pointed to a situation that needed both political and economic analysis. The participants in the meeting, therefore, consisted of twenty-five economists, political scientists, and business leaders with experience in emerging markets. Lawrence R. Klein, Nobel laureate in economics from the University of Pennsylvania and vice chairman of the Global Interdependence Center, chaired the meeting. This article draws from information and ideas expressed at those sessions but does not purport to be a summary of it. Thus, any errors and weaknesses are the responsibilities of the authors.

Mexican economic collapse spills over to global markets B Net 96 (the go to place for management http://findarticles.com/p/articles/mi_m0365/is_n2_v40/ai_18338853) Economic Lessons 1. Trouble in one country can easily spread to others. The Mexican crisis was akin to a run on a large bank that risked involving others. History shows that runs on banks, while starting with a bad bank, can spread to good banks as well. History also shows that a default of one country can lead to default of others. This occurred in 1931 when a failure in Austria spread to Germany and other countries, and again in the early 1980s after Poland and Mexico were the first countries to declare inability to pay. While in the latter period the problem was limited to other high-debt countries, some of those - for example, Chile - might well have avoided difficulties if Poland and Mexico had not started a chain reaction. In 1994-95, Mexico's financial panic transmitted turmoil to emerging markets around the world. The most lasting effects on others were felt by Argentina. 2. The potential for spreading financial instability has increased dramatically since the early 1980s. The volume and speed of short-term capital flows have burgeoned as individuals have employed mutual funds to participate in the expected growth of developing countries, and as institutional investors have enlarged their foreign stakes. Large inflows of capital to emerging markets would seem welcome, but this so-called hot money can leave as quickly as it came if the investor becomes disenchanted with the host country. A mutual-fund holder need only make a telephone call to withdraw his money. In contrast, the developing country debt crisis of the early 1980s largely involved bank creditors who could be organized into committees to renegotiate loan terms. In Mexico, many of the foreign investors were small players looking for a better return than could be found in well-established financial markets of advanced industrial countries. Some were large investment funds whose managers controlled the portfolio decisions for thousands of smaller investors. But it was not only foreign sources that shifted their funds out of Mexico. Many Mexicans, suspecting that devaluation was on the way, moved their money abroad. This in turn angered foreign investors, who may not be willing to take such risks again soon.

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Mexico DA – Impact: Key to World Mexico ties directly into the global economy Rubin and Weisberg 3 (Roburt Rubin U.S. Secretary of the Treasury, Jacob Weisberg American political journalist, currently serving as editor of Slate magazine and a columnist for the Financial Times) I told the President that the Mexican government faced an imminent threat of default and that, in the hope of preventing it, we were recommending that he support a massive, potentially unpopular, and risky intervention: providing billions of dollars to the Mexican government to avoid a collapse in its currency and economy. Then I asked Larry to explain the situation in more detail. It took him ten minutes to spell out our essential analysis and recommendation, which we'd finished formulating in a meeting with Fed chairman Alan Greenspan hours earlier. If our government didn't step in to help, and help quickly, the immediate and long-term consequences for Mexico could be severe. But the real reason for acting was that critical American interests were at stake. The alternatives to the massive intervention we were recommending were not promising. If Mexico defaulted on its foreign obligations, Larry and I went on to explain, the flow of capital out of Mexico would probably accelerate and the peso would collapse, likely triggering severe inflation, a deep and prolonged recession, and massive unemployment. And that would surely have a substantial impact on the United States. Mexico was our third-largest trading partner, which meant that many American companies and workers would be hurt. We presented estimates that a Mexican default could increase illegal immigration by 30 percent, a half-million additional refugees a year. The flow of illegal drugs could intensify as well. A crisis in Mexico might also hurt us indirectly, by affecting other countries. Fears of a Mexican default were already producing wobbles in developing markets throughout the hemisphere, a phenomenon that came to be known as the "Tequila Effect." Such a chain reaction could lead investors to pull back from emerging markets around the world indiscriminately. That, in turn, could affect economic conditions in the United States-since roughly 40 percent of our exports went to developing countries. According to an estimate made by the Federal Reserve Board, a Mexican default and the consequent "contagion" that was possible could, in a worst-case scenario, reduce growth in the United States by 1/2 to 1 percent a year. We weren't proposing intervention for the sake of Mexico, despite our special relationship, but to protect ourselves. That was our case for asking Congress to provide billions of dollars in loan guarantees, as part of a package to be coordinated with the International Monetary Fund (IMF).

Gonzaga Debate Institute 2008 Scholars Lab

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Mexico DA – Impact: Key to World – A/T: 1996 A financial crisis now would be different than in 96 Falk 7 (Rainer, http://www.weltwirtschaft-und-entwicklung.org/cms_en/wearchiv/042ae699af0b75901.php) Almost exactly ten years after the Asian crisis, the world is again confronted with a veritable financial crisis. This time the harbingers arise on the other side – the USA rather than East Asia. Whereas ten years ago a real estate bubble in Thailand burst, triggering the flight of international speculative capital, today it is the fallout of the real estate crisis in the USA which threatens the financial markets. By Rainer Falk Every financial crisis has its peculiarities and its similarities with predecessors. The current crisis differs from the Asian crisis also because the search for its origins is not leading to some form of crony capitalism in emerging economies but to the centres of the world financial system with all its modern financial innovations. Some analysts say that this is the first crisis in the modern financial markets where new “products”, created by debt and asset securitisation, are traded globally. However, already the 1994/95 Mexican crisis was labelled “the first major crisis in our new world of globalised financial markets,” by former managing director of the IMF, Michel Camdessus.

Current market situations would make a collapse now worse Falk 7 (Rainer, http://www.weltwirtschaft-und-entwicklung.org/cms_en/wearchiv/042ae699af0b75901.php) There are good reasons to fear that the current financial crisis will be worse than the burst of the New Economy bubble at the beginning of this decade or the collapse of the LTCM hedge fund in 1998 in the USA. There is a much higher risk, e.g. of a chain reaction of collapse and insolvency, whose mechanism was described by US economist Paul Krugman, recently writing in the New York Times: “Financial institution A (e.g. a hedge fund; R.F.) can’t sell its mortgage-backed securities, so it can’t raise enough cash to make the payment it owes to institution B, which then doesn’t have the cash to pay institution C – and those who do have cash sit on it, because they don’t trust anyone else to repay a loan, which makes things even worse.” This is the situation that led the central banks — above all the European Central Bank (ECB) to pump more liquidity into the inter-bank market than in any previous crisis. However, it has long been clear that this is much more than a liquidity crisis that can be bridged with temporary injections of money. Today we not only have a liquidity crisis like in 1998, we also have an insolvency crisis and a debt crisis with a number of debtors who became excessively over-indebted in the boom phase, says US economist Nouriel Roubini in his blog. “We have a hundred thousand households that can no longer pay their mortgage. That is not only a problem of the market for sub-prime debt. In some cases these dubious practices (securitisation) are par for the course… They have a batch of insolvent mortgage banks… We have insolvent hedge funds and other funds… Some are already bankrupt or close to it…”

Gonzaga Debate Institute 2008 Scholars Lab

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Mexico DA – Impact – A2: Mexico Resilient Mexico’s economy is on the brink Morley 8 (Robert, Columnist for The Trumpet [http://www.thetrumpet.com/index.php?q=5309.3600.0.0] Disorder South of the Border/ July 8, 2008) The world’s second-richest man is Mexican. His estimated net worth is $60 billion. Yet, more than 50 million people living south of the border live on just dollars per day—and the standard of living for many millions is about to get worse. Over the past few years, Mexico has made big strides in reducing poverty and increasing the standard of living for many. However, it is becoming increasingly evident that the Mexican miracle was built on a sand foundation. The economic tide is now turning, and the current pillars of its economy—oil production, foreign remittances and low inflation—are being undermined. Mexico is primed to boil, and the spillover could scathe the United States.

Gonzaga Debate Institute 2008 Scholars Lab

***Mexico Answers***

162 2nd Wave Oil DA’s

Gonzaga Debate Institute 2008 Scholars Lab

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Mexico Answers- No Internal Link- A2: Oil k Econ Even if prices dropped, Mexico wouldn’t be seriously damaged MedioVero 4 (July 30, http://apptik.typepad.com/mediovero/2004/07/political_disho.html) The sad fact is that most of the countries that supply the US with oil rely on that oil revenue to survive in the world economy. When Kerry says we must become energy independent, how in the world does he plan to prop up important countries like Saudi Arabia, Mexico, Venezuela and Russia when they can no longer sell oil? Mexico is probably the best off which is a good thing since its right on our border. Oil exports to the US make up only about 1/10th of their exports. It would be a hit, but Mexico has diversified enough that it would not seriously weaken them.

Gonzaga Debate Institute 2008 Scholars Lab

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Mexico Answers- Internal Link Turn: Inflation High energy prices are fueling Mexican Inflation Lange and O'boyle 8 (Jason, Michael, July 9, http://www.signonsandiego.com/news/mexico/20080709-1502mexico-economy-inflation.html) Mexican inflation jumped in June to its fastest pace in over three years on higher food and energy prices, increasing pressure on the central bank to raise borrowing costs despite a slowing economy. The central bank said Wednesday that consumer prices rose 5.26 percent in the 12 months through June – the highest inflation rate since November 2004. The May rate was 4.95 percent. The reading was in line with expectations and reinforced bets made by investors in recent weeks that the central bank will raise interest rates as soon as next week. The peso currency firmed 0.33 percent to 10.304 per dollar. “This kind of cements expectations that the central bank will hike,” said Bertrand Delgado, an economist at research firm IDEAglobal in New York. The quickening pace of inflation comes as the economy is starting to slow, hurt by weaker growth in the United States, Mexico's top trading partner. The economy expanded at an annual pace of 3.7 percent in the first quarter, discounting the effect of Holy Week holidays, down from 4.2 percent in the fourth quarter of 2007. The central bank increased its benchmark overnight interest rate in June by 25 basis points to 7.75 percent. Delgado said he sees policy-makers raising interest rates by another 25 basis points next week. Inflation across Latin America has jumped this year, driven by higher demand for grains in fast-developing countries such as China and by the expansion of the biofuel industry. “It is relevant to point out that food continues with its upward trend,” the central bank said in its price report. Food prices have jumped 9.51 percent in the year through June, central bank data showed. ENERGY PRICES The central bank said government-set prices for energy and energy-related services – like gasoline, electricity and public transportation – also fueled the rise. The government has been quickening the pace of gasoline price increases since April despite massive subsidies aimed at shielding consumers from rising international oil prices. Mexico imports about 40 percent of its gasoline. That has stirred fears among investors that inflation could quicken.

Inflation is the worst threat to Mexico’s economy Amaral 8 (Rodrigo, July 14, http://www.fundstrategy.co.uk/cgi-bin/item.cgi?id=168858) The biggest threat for Latin American bond markets at the moment is an old foe of the region's economies: inflation. But this time it is not only the locally-brewed variety that causes concern. Raphael Kassim, the head of Emerging Markets Fixed Income at Crédit Suisse, notes that inflationary expectations can trigger a flight from stock exchanges. "When investors see exchange indexes coming down, they may decide to sell emerging market bonds, because everyone wants to keep away from any kind of risk." For once, in this case, Latin American bonds would suffer despite the efforts of local governments, and not because of them. "The correlation between the economy of developed countries and emerging ones is decreasing by the day," Kassim says. "So such a drop in the market wouldn't necessarily reflect the ability of Latin American countries to pay their debts. It would be much more a matter of people avoiding to invest in a building, albeit a solid one, because all other buildings around it are tumbling down." Kassim recommends that investors keep their cool and wait for Latin American bonds to provide the expected returns in the long term.

Gonzaga Debate Institute 2008 Scholars Lab

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Mexico Answers- Internal Link Turn: Reforms High oil prices offset pressure for economic reforms Weiner 90 (Lauren, THE WASHINGTON TIMES, August 8, WORLD; CRISIS IN THE PERSIAN GULF; Pg. A9) But Mr. Pazos warned against a "wave of false optimism" of permanent gains in oil revenue, saying that this was the mistake made by Mexican President Jose Lopez Portillo during his spendthrift 1976-1982 administration. He said if Iraq withdraws from Kuwait and normal oil flows resume, then governments like Venezuela and Mexico would be left out on a limb. A transitory oil boom could tempt these governments to relax the austerity measures they have imposed to curb runaway inflation and pay their debts, thus setting back economic reform, Mr. Pazos said.

Economic reform is key to growth Reiner 8 (Karl, June 26, http://www.azstarnet.com/business/245469) Infrastructure-poor southern Mexico is stagnating. While the northern part of the country has mostly benefited from the impact of the North American Free Trade Agreement, the southern part of the country has not. Nearly 50 percent of the population of Mexico's southern states — Guerrero, Oaxaca and Chiapas — lives in extreme poverty. In the adjacent Central American countries things are no better, with 30 percent to 50 percent of the population living in poverty. Mexico's Ministry of Agriculture estimates that only 6 percent of the nation's farms are highly efficient and profitable. When NAFTA began, a program to help small Mexican farmers switch from growing corn and coffee to more profitable and labor-intensive crops such as fruits and vegetables was supposed to have been implemented. Nothing materialized; the funds went to other purposes. The governments of Mexico and the Central American countries rely on a de facto policy of exporting labor as an economic safety valve and as a national income earner. A review of Central Intelligence Agency and World Bank data reveals that the remittances workers send back to Mexico are the country's second-largest source of foreign income. In El Salvador, the remittance inflow nearly equals the income generated by the nation's exports. In Guatemala and Honduras, remittance income equals twothirds and three-fourths of the value of those nations' exports. By uncoupling the need for economic progress from the issue of border security, we are setting the stage for failure. If migrant workers can't go north while development at home remains stifled, instability and chaos will eventually result. We face a stark choice. We can start to push economic reform in the countries south of the border or plan to deal with more menacing problems.

Gonzaga Debate Institute 2008 Scholars Lab

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Mexico Answers- Internal Link Turn: Dutch Disease Dependence on oil revenue undermines investor confidence Rota and Rodriguez 7 (Valerie, Carlos Manuel, August 3, http://www.bloomberg.com/apps/news?pid=20601086&sid=aIHcqnFeHdZg&refer=latin_america) Mexico's has improved its ability to weather an economic slowdown in the U.S., as decelerating inflation has generated stronger internal consumer demand, said Joydeep Mukherji, a sovereign ratings director at Standard & Poor's. ``There's more stability now,'' Mukherji said in an interview from Mexico City. The country ``can better compensate for a slight downturn in U.S. growth.'' Consumers in Mexico, which slashed its inflation rate by more than 75 percent over the past decade, are borrowing more money to buy goods such as houses and cars as a diminishing inflation rate has pushed lending rates lower, Mukherji said. The growth in domestic consumption will help offset a housing slump in the U.S. that threatens to reduce demand from U.S. consumers, who buy about 80 percent of Mexican exports, he said. Bank lending to Mexican consumers has risen more than ten- fold since 1997 to 430 billion pesos ($39.1 billion) in June, according to the central bank. The country's annual inflation rate has fallen to 4 percent from 20 percent over the same period. Mexico still has room to grow as domestic demand strengthens, Mukherji said. Approval of President Felipe Calderon's plan to boost tax collections to wean Mexico off dependence on oil export revenue will bolster the economy, he said. The government this week reiterated it expects growth to slow to 3.3 percent this year from 4.8 percent in 2006, the fastest pace in six years. Growth in Latin America's second- biggest economy last year was less than China's 10 percent expansion and Colombia's 5.1 percent advance. `Ability to Grow' ``It's not an impressive achievement,'' Mukherji said. ``Mexico has the ability to grow at a faster pace.'' S&P, which rates Mexican foreign debt BBB, the second- lowest investment-grade rating, last month raised its credit rating outlook to positive from stable. The move was partly driven by expectations legislators will approve Calderon's tax plan. Calderon sent to congress in June a proposal to raise tax revenue by 3 percent over of gross domestic product by 2012 to avert a fiscal deficit as oil production declines. The proceeds from oil sales make up more than one-third of government income. ``If Mexico manages to reduce its oil-revenue dependence, this can no doubt help the country's rating,'' Mukherji said. ``We're still optimistic.''

Gonzaga Debate Institute 2008 Scholars Lab

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Mexico Answers- Internal Link Turn: Corruption Mexican oil industry breeds corruption Africa News 4 (July 12, Daily Champion, “Nigeria: Oil: Prize or Curse?”) Venezuela has been in cyclic turmoil, with oil the trophy. Angola, rich in oil, diamonds, and gold, has just ended a 30-year war, leaving physical devastation across the land. Its wealth in petrodollars has fanned skyrocketing corruption, with some news agencies reporting upwards of $2 billion dollars missing from its treasury over the past 10 years! Graft and corruption have also rocked Mexico's premier oil corporation PREMEX for years. As for Russia's oil industry, it has become a case study for students of organized crime!

Mexican oil industry is overrun with Corruption Business News Americas 2 (October 3, “Shedding light on shady dealings”) In Mexico President Fox is locked in battle with oil union leaders, who face charges over their alleged involvement in siphoning off US$160mn from accounts belonging to state oil company Pemex to fund the presidential campaign of the PRI party, in office prior to Fox's PRD party. In Ecuador workers at state oil company Petroecuador have asked the country's anticorruption committee to investigate irregularities surrounding the awarding of 40 contracts worth US$320mn. Workers claim Petroecuador declared tenders null and void due to lack of investor interest only to later award them privately.Meanwhile Eliseo Gomez, the Ecuadorian representative of Spanish oil company Repsol-YPF, claims he was approached for bribes by officials, and compared the country's courts to auctions where the highest bidder wins. The anticorruption agency has launched an investigation into the accusations.Then there's the "peddling of influence, fraud and embezzlement, breach of trust and other evidence of corruption" regarding the sell-off of assets at former Guayaquil distributor Emelec, according to an anonymous accuser. Authorities will need to resolve the situation before proceeding with a second attempt to sell Emelec assets, valued at some US$130mn. And don't forget why Emelec assets are being sold in the first place: to reimburse the clients of Banco Progreso, like Emelec owned by businessman Fernando Aspiazu, now in jail for fraud.

Unfortunately corruption often goes hand in hand with outdated bureaucracy. The two factors are expected to cost Mexico's public works sector US$7.25bn this year, or 30% of the US$23.6bn the federal government has under contract in this area. Corruption skims some 10% of the funds authorized for public works in the county, while another 20% is wasted on inefficient practices and red tape, according to a government report that named construction as the most vulnerable sector.

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Mexico Answers- No Impact – Resilient Mexican economy can withstand market flux Reuters 8 (Thompson, June 3, http://in.reuters.com/article/oilRpt/idINL0363499720080603) PARIS, June 3 (Reuters) - Mexico is well positioned to stand up to financial market turmoil but needs to remain vigilant, Finance Minister Agustin Carstens said on Tuesday. Cloudy prospects for the United States, Mexico's biggest trading partner, and high food prices had created global uncertainty but had not so far significantly hurt the overall Mexican economy, he said. "Middle income countries have been resilient so far," he said in a speech at the Paris-based Organisation for Economic Cooperation and Development. Recent fiscal and public sector reforms, combined with robust domestic demand, an export sector helped by the peso's decline in the wake of the weaker dollar and a well-capitalised private sector had all helped, he said. "With all these elements in place, the Mexican economy is well prepared to maintain a positive growth path," he said. The government expects full-year growth at 2.8 percent, down from the previous year's 3.3 percent growth. But he said policymakers had to be on guard and ready to respond "should global financial conditions deteriorate further and global commodity prices continue to rise". Surging energy prices have helped Mexico, the world's sixth-largest oil producer. Domestic demand has also been buoyant, boosted by a strong housing sector and government investment in highways and other infrastructure. "In previous episodes of global turmoil, the Mexican economy was ill-equipped to sort it out without much damage," he said. "Today, the Mexican economy has much stronger foundations."

Gonzaga Debate Institute 2008 Scholars Lab

169 2nd Wave Oil DA’s

Mexico Answers- No Impact – A2: Key to World Mexico does not have a drastic effect on the world economy Smith and Walter 95+ (Roy C. NYU Kenneth Langone Professor of Entrepreneurship and Finance, Seymour Milstein Professor of Finance, Ingo Corporate Governance and Ethics at the Stern School of Business, New York University http://books.google.com/books?id=Js1vyvBTLlsC&pg=PA199&lpg=PA199&dq=%22tequila+effect%22,+mexico&source=web&ots=LxDKJg8R3F&sig=q7xbD0BIlT4 gZmHjJY3q6ZQmvA&hl=en&sa= X&oi=book_result&resnum=1&ct=result#PPA199,M1 )

The tequila effect was limited and did not last long, except in Mexico. The paper rightly points out that the Mexico crisis resulted in an overhang, the tequila effect, in Mexico and many other emerging markets in the first quarter of 1995. But there has been a substantial correction since then (Figure 1, data from the IFC’s Emerging Markets Data Base). Stock markets in Argentina, Indonesia, Malaysia, and Thailand, for example, soon recovered and were at the same level or higher at the end of 1995 compared with January 1994. Since then , equity markets have further recovered in many emerging markets.

Gonzaga Debate Institute 2008 Scholars Lab

***Indonesian Oil DA***

170 2nd Wave Oil DA’s

Gonzaga Debate Institute 2008 Scholars Lab

171 2nd Wave Oil DA’s

Indonesia DA – 1NC Shell Indonesian growth up Mingxin 8 (Bi, China View [http://news.xinhuanet.com/english/2008-07/09/content_8517925.htm] Indonesian economy forecast to grow by 6.2 % in 1st half /July 9, 2008) Indonesian economy is predicted to growth by 6.2 percent in the first half of this year, the Finance Minister Sri Mulyani Indrawati said here Wednesday. Indonesia has trimmed its economic growth target in 2008 from 6.8 to 6.0 percents after the soaring global oil price. The National Statistic Bureau will announce the economic growth at the first semester at the mid of August. "At the second quarter, we are optimistic economy will grow by 6.1 percent. So if we combine with the 6.3 percent growth in the first quarter, the economy will grow at 6.2 percent at the first semester," Mulyani told reporters at finance ministry office. The minister said that the figure was driven by the growth at the household consumption by around 5 percent, investment about 2 percent, export and import at the range of 11 and 12 percents.

Oil is key Rosser 7 (Andrew, political economist, worked for AusAID, consultant to the World Bank, the UK Department for International Development, the Organisation for Economic Cooperation and Development, Journal of Contemporary Asia, Vol. 37) In this context, Indonesia's rapid economic growth during the 1970s and 1980s seems remarkable. The oil and gas sector accounted for as much as 80% of the country's total annual exports and 70% of the central government's annual revenues during these decades (Rosser, 2002: 42-3). But, despite this massive natural resource wealth, the country's economy grew strongly during the 1970s and 1980s. As Figure 1 shows, annual real economic growth was more or less consistently in the 6%-10% range each year during the 1970s, except for a couple of years during the mid-1970s. During the 1980s, economic growth was somewhat slower, due mainly to the contracting effects of the two-stage collapse of international oil prices in 1981-82 and 1985-86, but was still strong overall. So strong was Indonesia's economic growth during the 1970s and 1980s that by the early 1990s, the country had become widely regarded as one of East Asia's so-called "miracle" economies (World Bank, 1993)

Indonesian economy key to their democracy Ghoshal 4 (Baladas former Professor of Southeast Asia and South-West Pacific Studies and Chairman of the Centre for South and Southeast Asian Studies at Jawaharlal Nehru University, New Delhi “Democratic Transition and Political Development in Post-Soeharto Indonesia” )

Unless democratic processes and institutions quickly take root and deliver results, the pendulum may swing back the other way. Without economic recovery, there will not be political stability, and some of the provinces will become more restless. Without unity, the country will plunge into instability with huge economic costs and this may reverse democratic reform. The challenge of democratic reform in Indonesia is not to drift from one form of extremism to another, but to find the right balance for the coexistence of democracy with stability, devolution with unity, reform with prosperity and freedom with peace. Indonesia

needs time to work out this delicate balance, but it is unwise for others to push Indonesia too hard in this process.

Indonesia is key to global democracy The Carter Center 4 (“Annual Report 2003-2004”http://cartercenter.com/documents/2087.pdf) In 2004, Indonesia held three sets of elections, including for the first time a direct election of the president, demonstrating an impressive strengthening of democracy in the country. The world’s fourth largest country and home to the world’s largest Muslim population, Indonesia is crucial to democratic progress throughout Southeast Asia and beyond. “The 2004 elections were a major step forward in Indonesia’s democratic transition,” said Dr. David Carroll, acting director of the Center’s Democracy Program. “Voters demonstrated their commitment to democratic principles and to holding leaders accountable. The presence of our observers helped build confidence in the electoral process.”

Gonzaga Debate Institute 2008 Scholars Lab

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Indonesia DA – 1NC Shell Democracy stops nuclear war Larry Diamond, Hoover Institution, Stanford University, December, PROMOTING DEMOCRACY IN THE 1990S, 1995, p. http://www.carnegie.org//sub/pubs/deadly/diam_rpt.html //. Nuclear, chemical and biological weapons continue to proliferate. The very source of life on Earth, the global ecosystem, appears increasingly endangered. Most of these new and unconventional threats to security are associated with or aggravated by the weakness or absence of democracy, with its provisions for legality, accountability, popular sovereignty and openness. The experience of this century offers important lessons. Countries that govern themselves in a truly democratic fashion do not go to war with one another. They do not aggress against their neighbors to aggrandize themselves or glorify their leaders. Democratic governments do not ethnically "cleanse" their own populations, and they are much less likely to face ethnic insurgency. Democracies do not sponsor terrorism against one another. They do not build weapons of mass destruction to use on or to threaten one another. Democratic countries form more reliable, open, and enduring trading partnerships. In the long run they offer better and more stable climates for investment. They are more environmentally responsible because they must answer to their own citizens, who organize to protest the destruction of their environments. They are better bets to honor international treaties since they value legal obligations and because their openness makes it much more difficult to breach agreements in secret. Precisely because, within their own borders, they respect competition, civil liberties, property rights, and the rule of law, democracies are the only reliable foundation on which a new world order of international security and prosperity can be built.

Gonzaga Debate Institute 2008 Scholars Lab

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Indonesia DA – UQ – Econ Up Indonesia economy growing by 6.2% Mingxin 8 (Bi, China View [http://news.xinhuanet.com/english/2008-07/09/content_8517925.htm] Indonesian economy forecast to grow by 6.2 % in 1st half /July 9, 2008) Indonesian economy is predicted to growth by 6.2 percent in the first half of this year, the Finance Minister Sri Mulyani Indrawati said here Wednesday. Indonesia has trimmed its economic growth target in 2008 from 6.8 to 6.0 percents after the soaring global oil price. The National Statistic Bureau will announce the economic growth at the first semester at the mid of August. "At the second quarter, we are optimistic economy will grow by 6.1 percent. So if we combine with the 6.3 percent growth in the first quarter, the economy will grow at 6.2 percent at the first semester," Mulyani told reporters at finance ministry office. The minister said that the figure was driven by the growth at the household consumption by around 5 percent, investment about 2 percent, export and import at the range of 11 and 12 percents.

Indonesia’s economy growing- multiple reasons Antara News 8 (National News Agency [http://www.antara.co.id/en/arc/2008/7/9/indonesias-economic-grew-62percent-in-2nd-quarter-2008/] Indonesia`s economic grew 6.2 percent in 2nd quarter 2008/ July 9, 2008) Finance Minister Sri Mulyani Indrawati has estimated Indonesia`s economic growth in the second quarter of 2008 at 6.1 percent so that the economic growth in the first semester of this year was estimated at 6.2 percent. The minister told a press conference on Wednesday that the economic growth was fueled by household consumption, government expenditure, investment, exports, high raw material and capital good imports. "Household consumption grew 5.2-5.3 percent as spending for motor-vehicles and electricity remained high," the minister said. She said investment grew 10.4-10.5 percent while in the same period last year it was only 7-8 percent. "We will continue to boost investment so that it would reach a twodigit growth at the end of the year," Mulyani said. Indonesia`s exports in the first semester of this year also booked a growth of 11.9-12.0 percent while imports grew by 11.1-11.2 percent, the minister said. "Imports of capital goods and raw materials were high while imports of consumption goods fell so that the economic growth in quarter 3 and 4 possibly dropped," she said.

Indonesia is experiencing economic growth ALB 8 (Asian Legal News [http://asia.legalbusinessonline.com/news/features/25363/details.aspx] THE ALB 50: Asia’s Largest Firms/ June 30, 2008) September’s sale of a 10 per cent stake in Bao Viet, Vietnam’s leading (and state-owned) insurance firm marked not only the biggest M&A deal in the country’s history but is opening the floodgates to a tranche of other work. A report released in May by the Australian Strategic Policy Institute noted that while Indonesia has enjoyed impressive and sustained economic growth over the past several years, that growth is more impressive in that it takes place against a backdrop of decreasing government debt and relatively stable inflation.

Indonesia’s economy is growing Singh 8 (Daljit, Singapore: Insitute of Southeast Asian Studies [www.bookshop.iseas.edu.sg] Indonesia/ 2008) Not only was the economy sufficiently recovered in 2007 to have made up for much of the impact of the 1997 economic crisis there were once again signs of an economic boom. Building sites that had stood vacant and decaying for a decade in the nation’s capital began stirring to life. Once again Jakarta’s skyline was filled with cranes as new office buildings, shopping malls and apartment towers sprang up so quickly that the satellite imagery from Google Earth failed to keep pace with the changing landscape. The booming economy was fuelled mostly by consumption but it nevertheless brought with it employment for millions and restored the nation’s sense of confidence.

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Indonesia DA – UQ – Econ Down Electricity shorts and bad infrastructure are destroying Indonesia’s economy AFP 8 ([http://afp.google.com/article/ALeqM5irIDhDTPmi8OaCFKgmbG871FVVdQ] Indonesia orders weekend factory work due to blackouts: report/ July 15, 2008) The rolling blackouts in Jakarta are officially due to maintenance work that will interrupt gas supplies to two state-owned generating stations in North Jakarta. Analysts have blamed the country's crumbling infrastructure and warned electricity shortages could limit economic growth and discourage investment in Southeast Asia's largest economy. Rising demand for electricity has led to increasing numbers of blackouts across the country in the past few years despite Indonesia's vast resources of oil, natural gas, coal and geothermal energy.

Indonesia economy down- consumer confidence Karunungan 8 (Lilian [http://www.bloomberg.com/apps/news?pid=20601091&sid=aPEZR3n2oV7M&refer=india] China, Malaysia, Philippines, Taiwan: Asia Local Bond Preview/ July 15, 2008) Indonesia: The consumer confidence index fell to a 32-month low in June on concern higher food and fuel prices will erode incomes, a central bank survey showed. The measure dropped to 79.1 from 82.4 in May, according to a Bank Indonesia survey released yesterday. A reading below 100 indicates pessimists outnumber optimists. The yield on the 9 percent bond maturing in September 2018 was little changed at 12.465 percent, according to the Inter Dealer Market Association.

Indonesia’s economy expected to slow down Reuters 8 ([http://in.reuters.com/article/asiaCompanyAndMarkets/idINJAK4164820080709] UPDATE 1Indonesian economy estimated to slow in Q2-fin min/ July 9, 2008) Indonesia's economic growth is estimated to have slowed to 6.1 percent in the second quarter, from 6.28 percent in the first quarter, partly due to slowing private consumption, the finance minister said on Wednesday. Sri Mulyani Indrawati said growth is likely to have been supported by strong exports and imports of capital goods. But private consumption is estimated to have grown at a slower pace. She did not elaborate, but analysts said soaring inflation, boosted by high food and global oil prices, is likely to have hurt consumption, the country's main driver of growth.

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Indonesia DA – UQ – Oil Up Indonesia has future supplies of oil Reuters 8 ([http://uk.reuters.com/article/rbssEnergyNews/idUKJAK17079720080624] Pertamina, Talisman to cooperate on Indonesia oil/ June 24, 2008) Most of Pertamina's energy blocks in Indonesia are already mature and need further investment to recover remaining oil reserves. Pertamina forecasts it will produce 160,000 barrels per day (bpd) of crude oil in 2008, compared with 143,000 bpd last year. Indonesia has said it has 8.6 billion barrels of proven and potential oil reserves and about 182 trillion cubic feet of natural gas reserves.

Indonesia has future oil reserves Montlake 8 (Simon, The Christian Science Monitor [http://www.csmonitor.com/2008/0716/p07s01-woap.html] Indonesia struggles to capitalize on its oil/ July 16, 2008) In 2007, Indonesia had 4.4 billion barrels in proven reserves, according to the CIA Factbook. That's more than either Malaysia and Vietnam, its nearest regional rivals, and just below Ecuador. Reserves in Saudi Arabia, the largest producer, are estimated at 264 billion barrels.

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Indonesia DA – UQ – Oil Down Decline in oil production inevitable- no future oil reserves Joshi 8 (Vijay, Associated Press [http://ap.google.com/article/ALeqM5hIdcAiV0_qx0W33u7XUQOpzO_TlAD91PEUA00] Food, oil crises 'grave threats'/ July 7, 2008) Although Malaysia, Indonesia, Iran and Nigeria are oil-producing countries, their economies have been hit hard by rising fuel prices. Oil prices fell by $4 a barrel on Monday, but remain at more than $140 a barrel. Malaysia raised gasoline prices by 41 percent and diesel by 63 percent last month. The government says inflation is likely to cross 5 percent this year, which has fueled public anger. Indonesia, the region's biggest oil producer, is also facing public unrest because of escalating food and oil costs. It said it will quit the Organization of Petroleum Exporting Countries because of declining oil reserves and investments.

Indonesia oil production down Montlake 8 (Simon, The Christian Science Monitor [http://www.csmonitor.com/2008/0716/p07s01-woap.html] Indonesia struggles to capitalize on its oil/ July 16, 2008) With crude oil fetching over $140 a barrel, these should be the best of times for resource-rich Indonesia, the only Asian oil producer in the Organization of Petroleum Exporting Countries (OPEC). Instead, Indonesia is quitting the cartel at the end of the year. Falling output from aging oil fields and a paucity of major new finds has left it unable to meet its OPEC production quota. Since 2004, it has been a net importer of oil.

Risky markets have resulted in a decline of oil production Montlake 8 (Simon, The Christian Science Monitor [http://www.csmonitor.com/2008/0716/p07s01-woap.html] Indonesia struggles to capitalize on its oil/ July 16, 2008) As long as foreign oil companies, big and small, see risk and uncertainty around every corner, analysts warn that Indonesia will struggle to pump more oil, even with the lure of sky-high crude prices. Indeed, these prices may persuade local authorities, whose land and cooperation is required for new oil facilities, to attempt to extract a greater share of revenues.

Oil investment is down NYT 5 (8-17) Pessimists say the bureaucracy is holding up many of the foreign investment pledges being made. "All the hoopla over F.D.I. coming to Indonesia hasn't come through," said Harry Su, head of research at BNP Paribas in Jakarta, referring to foreign direct investment. New toll roads and other infrastructure projects, for example, are being held up as bureaucrats and investors wrangle over terms, analysts say.

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Indonesia DA – UQ – Diversification Up Indonesia expanding its steel and nickel industry STL 8 (Sify Technologies Limited[http://sify.com/finance/fullstory.php?id=14705901] New seven wonders of the stock market/July 2, 2008) Jindal Stainless (JSL) is India's largest stainless steel manufacturer having manufacturing facilities at three locations - Hisar, Vizag and Orissa.It is the flagship company of the USD 6 billion Jindal Group and manufactures different ranges of flat steel products to serve the domestic and international markets. The company recently signed a joint venture agreement with an Indonesian mining company - Antam to develop a nickel smelting and stainless steel plant in Indonesia from early 2009. JSL already has a stainless steel cold rolling complex in Indonesia and this project is a step towards becoming a global industry leader.

Indonesia’s manufacturing industry is increasing ALB 8 (Asian Legal News [http://asia.legalbusinessonline.com/news/features/25363/details.aspx] THE ALB 50: Asia’s Largest Firms/ June 30, 2008) Meanwhile confluence of factors, from continued liberalisation in Vietnam, which has in the very recent past been the scene of a number of equitisation deals as the government in Hanoi seeks to divest itself of centralised control and ownership pf the economy, to resource and manufacturing booms (complemented by increasing political stability) in nations like Indonesia, have become attractive centres for dealmaking firms from Europe, the UK and Australia.

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Indonesia DA – UQ – Diversification Down Indonesia’s economy relies on oil Abraham 0 (Kurt, Business Net [http://findarticles.com/p/articles/mi_m3159/is_2_221/ai_60499090] Indonesia poised to lead Asian rebound - Indonesian petroleum industry will play a key role/ February 2000) Indonesia's strategic position between the Pacific and Indian Oceans has always influenced the country's cultural, social, political and economic life. The nation is the world's largest archipelago, consisting of five major islands and about 30 smaller groups. Indonesia's 205 million-plus people compose a wide array of ethnicities, and speak 583 languages and dialects throughout the archipelago. Oil and gas are crucial to Indonesia's economy. Together, they account for 36% of government revenue and 22% of export earnings. They also constitute 86% of primary energy supply.

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Indonesia DA – UQ – Inflation Up Inflation high in Indonesia Mingxin 8 (Bi, China View [http://news.xinhuanet.com/english/2008-07/09/content_8517925.htm] Indonesian economy forecast to grow by 6.2 % in 1st half /July 9, 2008) Mulyani said that the inflation rate at the first semester was about 11.03 percent, rupiah exchange rates against one U.S. dollar was at 9,261 and the oil lifting counted from December 2007 to May2008 was on average of 937, 000 barrel per day. Indonesian Central Bank increased its interest rate by 25 basis point to 8.75 percent last week to cope with the high inflation pressure. The soaring global oil and food prices, which have started to rise since at the beginning of this year, has put pressure on inflation in Indonesia. The biggest Southeast Asia economy, Indonesia, revised up inflation target from 6.6 percent to 9.5 percent this year. The government raised oil prices by an average of 27.8 percent in May.

Inflation at a 21 month high Unditu 8 (Aloysius [http://www.bloomberg.com/apps/news?pid=20601080&sid=auV8HCfKVHto&refer=asia] Indonesia's Inflation Accelerates to 21-Month High (Update2)/ July 1, 2008) Indonesia's inflation accelerated to a 21-month high after the government increased fuel prices, stoking speculation the central bank will raise its benchmark interest rate for a third straight month. Consumer prices rose 11.03 percent in June from a year earlier, after gaining 10.4 percent in May, the Central Statistics Bureau said in Jakarta today. The agency changed its base year to 2007 from 2002 for calculating June's inflation. The increase in prices was less than the median 12.6 percent forecast in a Bloomberg News survey of 20 economists, who used 2002 as the base year.

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Indonesia DA – UQ – Inflation Down Indonesia fighting inflation now Goodman 8 (Wes [http://www.bloomberg.com/apps/news?pid=20601091&sid=aUWETdDDd7JI&refer=india] China, Indonesia, Singapore, Taiwan: Asia Local Bond Preview/ July 10, 2008) Indonesia: The central bank will use the exchange rate and interest rates to slow inflation that is running at the fastest pace in 21 months, Governor Boediono said. ``We will use all instruments'' to control price pressures, Boediono said at the Jakarta Foreign Correspondents Club yesterday. The yield on the 9 percent bond maturing in September 2018 slid 21 basis

Indonesia raising interest rates to fight inflation Reuters 8 (Gulf News [http://www.gulfnews.com/business/Economy/10225511.html] Inflation puts brakes on Asia's economic growth/ July 3, 2008) "In recent times, input costs have gone up, interest rates have gone up and investment demand is expected to plateau. That's the reason we are seeing growth moderating." The poll showed that central banks in seven economies, including China, Indonesia, the Philippines, India and Thailand, would raise interest rates this year to tackle inflation.

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Indonesia DA – Oil K/T Economy Oil is critical to Indonesian exports, which are critical to growth Rosser 7 (Andrew, political economist, worked for AusAID, consultant to the World Bank, the UK Department for International Development, the Organisation for Economic Cooperation and Development, Journal of Contemporary Asia, Vol. 37) In this context, Indonesia's rapid economic growth during the 1970s and 1980s seems remarkable. The oil and gas sector accounted for as much as 80% of the country's total annual exports and 70% of the central government's annual revenues during these decades (Rosser, 2002: 42-3). But, despite this massive natural resource wealth, the country's economy grew strongly during the 1970s and 1980s. As Figure 1 shows, annual real economic growth was more or less consistently in the 6%-10% range each year during the 1970s, except for a couple of years during the mid-1970s. During the 1980s, economic growth was somewhat slower, due mainly to the contracting effects of the two-stage collapse of international oil prices in 1981-82 and 1985-86, but was still strong overall. So strong was Indonesia's economic growth during the 1970s and 1980s that by the early 1990s, the country had become widely regarded as one of East Asia's so-called "miracle" economies (World Bank, 1993)

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Indonesia DA – A2: Dutch Disease Intense oil revenue spurs private sector development Rosser 7 (Andrew, political economist, worked for AusAID, consultant to the World Bank, the UK Department for International Development, the Organisation for Economic Cooperation and Development, Journal of Contemporary Asia, Vol. 37) A second group of scholars has focused on the link between natural resource wealth and state capacity. They have pointed to the economic problems of so-called "rentier" states--that is, states that receive regular and substantial amounts of "unearned" income in the form of, for instance, taxes on natural resource exports or royalties on natural resource production (Mahdavy, 1970; First, 1974; Skocpol, 1982; Beblawi, 1987; Luciani, 1987; Tanrer, 1990; Chaudhry, 1994; Vandewalle, 1998). These states, it is argued, tend to develop greater capacity in distributive functions such as social welfare, education, and health and productive functions than in functions related to the regulation and supervision of the economy and domestic taxation because of the state's domination of the economy (Garaibeh, 1987; Chaudhry, 1994). This in turn, it is suggested, reduces the potential for economic policy-making geared towards private sector development. In this perspective, resource abundant countries are only likely to achieve sustained rapid economic growth when state formation occurs prior to natural resource domination of the economy. In these cases, it is suggested that state capacity is likely to be less skewed across the different functions mentioned above, in turn facilitating the promotion of private sector development (Karl, 1997; Vandewalle, 1998). For example, Karl (1997) has explained Indonesia's economic success compared to other "petro-states" such as Nigeria and Venezuela in these terms.

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Indonesia DA – A2: Inflation Indonesia can continue to keep inflation steady in the face of rising oil prices Danareksa Research Institute 8 (Intelligence on the Indonesian economy, January 15, http://danareksaresearch.wordpress.com/2008/01/15/faster-growth-despite-rising-external-risks/) International oil prices (US WTI) were on an uptrend since the beginning of 2007, climbing around 52.8 percent during 2007. Indeed, prices soared from US$61/barrel at the beginning of 2007 to US$96/barrel at the end of December following the disturbances on the Turkey-North Iraq border. Over the year, the oil price averaged about US$71/barrel. Unlike in 2005, however, the increase in world oil prices in 2007 did not have a significant impact on the Indonesian inflation figure. This was because the Indonesian government was able to avoid hiking domestic fuel prices as the impact of high oil prices to the 2007 State Budget is still neutral to positive. Note that given the production of crude oil could be maintained at around 900,000 barrels/day during 2007, the increase in international oil prices actually benefited the state budget in 2007. Increases in the prices of some basic foodstuffs such as rice and cooking oil were actually the main contributors toward the relatively higher than expected inflation in 2007. And inflation in the foodstuffs component peaked at a rate of 12.99 percent y-o-y in September 2007 on the back of seasonal price increases during the Idul Fitri holiday season. However, Bank Indonesia’s consistency in carrying out its monetary policy kept inflationary pressures in check in 2007. As a result, the 2007 inflation rate was relatively unchanged at 6.6 percent y-o-y, compared to the 2006 inflation rate.

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Indonesia DA – A2: Corruption World Bank anti-corruption efforts are working now The World Bank 4 (April 8, http://go.worldbank.org/2LWKUZVSV0) For the past eight months, Joel Hellman, one of the Bank's leading anti-corruption experts, has been in Jakarta co-ordinating an ambitious program to tackle corruption in Indonesia from the ground up. The Jakarta team is attempting to recruit local governments to a good governance initiative that may pave the way for a major improvement in accountability, transparency and participation at the local level in Indonesia - and it is hoped the economic and poverty reduction performance in the selected regions. Hellman says there is a strong demand from both the general Indonesian population and foreign investors to see concrete results in reducing corrupt practices in the country. Corruption is widely seen as endemic and "extremely difficult to eradicate", Hellman, the senior governance advisor, to the Bank's Indonesia resident mission says. "Corruption is often said to be ingrained at all levels of the system in Indonesia. Even Government ministers talk openly to the press of the problem of corruption," Hellman says. "There has been a general feeling of where do you begin?" The Bank is moving to capitalize on Indonesia's current program of decentralizing power to the country's more than 400 local governments. The Jakarta team's anti-corruption campaign has focused on finding local administrations that are receptive to improving their governance outcomes and tackling systemic corruption. "We have been concentrating on finding those who are committed to improving accountability, participation and transparency and finding ways to help them achieve their goals," Hellman says. "We hope that a reform-minded group of regions will pull away from the pack and that their performance will begin to attract investment and other advantages." Hellman says corruption has been one reason Indonesia has struggled to mobilize domestic investment and attract foreign investment. The country has not been seen as ready to take the next step in terms of governance.

Corruption is being solved now in Indonesia ANTARA News 8 (ANTARA is now trusted to be the president of the Organization of Asia-Pacific News Agency http://www.antara.co.id/en/arc/2008/6/25/indonesian-government-more-efficient-less-corrupt-world-bank/) A reform push by leaders in Indonesia has substantially improved the performance of government and cut into corruption in Southeast Asia's largest economy, the World Bank said Wednesday. The bank's Worldwide Governance Indicators (WGI) report found governance had improved significantly in Indonesia in the 10 years of "reformasi" since the 1998 ouster of dictator Suharto, a statement said. "The progress is a reflection of a country whose political leaders, policymakers, civil society and private sector view good governance and corruption control as crucial for sustained and shared growth," report co-author Daniel Kaufmann was quoted by AFP as saying in the statement. "A decade into the reform era, Indonesia bears all the hallmarks of a thriving democracy -- freedom of expression, freedom of association, freedom of the press, and now freedom of public information," he said.

More ev… NYT 5 (8-17) Analysts also say that one of Mr. Yudhoyono's biggest obstacles remains getting the country's lumbering bureaucracy to enact his policies. Yesterday, he reiterated his pledge to eradicate corruption and shake up the government machinery. In addition to filing 233 lawsuits charging corruption, he said he would seek changes in government salaries, professionalism, productivity and "the increase of discipline and work ethos."

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Indonesia DA – Impacts: Key Global Economy Indonesian economic stability is key to the global economy The Trumpet 98 ( the Philadelphia Trumpet newsmagazine analysis of recent global geopolitical, economic events and trends http://www.thetrumpet.com/index.php?page=help&q=about ) Indonesia is an oil-rich group of islands stretching across Southeast Asia and Oceania. Notice what the May 18 WSJ reported: “Global commodity markets gyrated last week at the prospect of a top producer of resources such as coffee and tin shutting down; shaky Korean and Japanese banks trembled at the thought of further delays in restructuring the massive debts owed them by Indonesian companies; the Australian dollar sank to a 12-year low, and Thailand’s Finance Minister warned that the unrest in Indonesia could spark a fresh wave of selling in markets across the region. On Friday [May 15], Standard & Poor’s downgraded the credit rating on an Indonesian bond rating to triple C-plus, a rating that implies a default [or failure of the government to pay] is possible, from a more stable single B-minus. “While the Indonesian unrest rocked global commodities markets, sending prices for resources such as coffee, tin, palm oil and gold sharply higher on worries that supply from Indonesia would be cut off…a bigger worry is that the collapse of the nation’s economic infrastructure—and the exodus of the ethnic Chinese who dominate Southeast Asia’s economies—could make shipment and financing more difficult.” The May 11 WSJ shed more light on Indonesia’s importance to the world when it reported, “The stakes are huge, not only for Indonesia, but also for global commodity supplies…. In 1997, Indonesia was Asia’s largest producer of natural gas, the world’s second-largest producer of crude palm oil, and among the top five producers of coffee. It is also a major exporter of gold, tin, copper, cocoa and vanilla, with the world’s largest single copper and gold mine operating on the island of Irian Jaya.”

Indonesia is key to stability and global commerce The Trumpet 98 (the Philadelphia Trumpet newsmagazine analysis of recent global geopolitical, economic events and trends http://www.thetrumpet.com/index.php?page=help&q=about ) In a tense reality check for world powers, it cannot help but be noticed that the present unrest in Indonesia is once again threatening the “life line” of Asian nations: their oil supply. Is it possible that this seemingly insignificant regional unrest has the potential to turn into another globe-spanning conflict? Indonesia is a major producer of oil, with an OPEC production quota of 1.456 million barrels per day, a large percentage of which goes to Japan. If anarchy collapses Indonesia into total chaos, you can bet that Indonesia’s flow of oil to the world will cease. Of more concern, however, is the potential disruption of oil from the Middle East brought about by control of the Indonesian shipping lanes. Admiral Joseph Prueher, commander of the U.S. Pacific Command, said this before a U.S. Senate hearing in May 1998: “In addition to having a geo-strategic location along the Malacca Straits—through which about 400 ships a week pass to go up to north Asia—[Indonesia] is the linchpin of…the Southeast Asian nations.” Bilveer Singh, senior lecturer at the National University of Singapore, said, “In the present economic circumstances, there’s every temptation to interception [piracy] in the hope of making your millions. Oil tankers are protectionless. And if there are rogue elements from the [Indonesian] military involved, then it’s a whole different story.” Indonesian society is in danger of completely unraveling, and that could potentially mean heavily armed “rogue elements” breaking off from the Indonesian military to threaten international shipping in the world’s busiest waterway, lying between Malaysia and Indonesia. In that event, a large portion of world trade is at risk. In fact, over half of all international shipping travels through Indonesian waters. U.S. warships in the Pacific even needed permission to cross Indonesian waters to get to the Persian Gulf. Add to that the fact that Indonesia is the world’s largest Islamic country and the fourth most populated nation.

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Indonesia DA – Impacts: Terror Economic collapse in Indonesia causes a shift in power to radical Islam which escalates globally The Trumpet 98 (the Philadelphia Trumpet newsmagazine analysis of recent global geopolitical, economic events and trends http://www.thetrumpet.com/index.php?page=help&q=about ) Since its independence in 1945, Indonesia has had only one change in leadership: when Suharto wrested control from President Sukarno. That upheaval in 1965 and 1966 claimed as many as 500,000 lives. “The

question now,” the May 19 WSJ asks, “is whether the antiSuharto movement, sparked by the discontent caused by the country’s economic crisis, will trigger a similar convulsion…. The stage is set for a sharp new political confrontation in Indonesia.” Time magazine of May 25 soberly stated, “It is a sad testament to the nature of power in Indonesia that the country must again be brought to the brink of disaster before leadership can be transferred.” Even after Suharto’s resignation, enormous forces of anarchy, especially radical Islam, remain active in the streets of Indonesia, only awaiting a spark to re-ignite them. As witnessed in the mid-1960s, Indonesian-style violence can be devastatingly destructive when it occurs. If Islamic fundamentalists succeed in stirring up more trouble in Indonesia, the present volatility may lead to a global conflagration. Social unrest of the kind recently incited in Indonesia can quickly lead to a change-over in leadership. The unseating of Suharto may well have been only the first step in eventually empowering a leader steeped in Islamic fundamentalism. Time will tell if, in the absence of Suharto, a close relationship forms between Indonesian leaders and Islamic militants. If it does, the world could be in for real trouble! (see sidebar, “King of the

Indonesia is like a ripe plum, just waiting to be picked and added to the radical Islamic camp. The economic problems and social unrest are the perfect vehicle to vault a new leader into power. The same thing happened to Germany in the 1930s. Hitler came to power through promises of social and economic reform. South,” p.23).

Germany of the 1930s and Indonesia of the 1990s have many parallels: high unemployment, a vastly devalued currency and violent social unrest aimed at wealthy minorities, to name a few. In the case of the king of the south, oil and water do mix: meaning, in part, control of the Indonesian waterways through which perhaps one-half of the world’s commerce flows, and especially meaning the flow of Middle East oil through those perilous waters! Surely,

Indonesia must have the cross-hairs of radical Islam aimed squarely at it!

Indonesia is key to global terrorism Howard 5 (The Honorable John Prime Minister of Australia http://www.asiasociety.org/speeches/howard05.html) As this audience probably appreciates better than most, the world has an enormous stake in encouraging the development of a secure, prosperous and democratic Indonesia. In the age of terrorism, it is about the most powerful weapon we can have against Islamic extremism in our part of the world. The success of Indonesia is crucial to the ongoing fight against terrorism in our region. The world’s largest Muslim nation and the world’s third largest democracy, Indonesia deserves more credit than it has been given for the political reforms that have taken root in recent years. It’s a failing sometimes of mature democracies to forget how long it took their forebears to fashion the secure democracy we now openly enjoy and tend to take for granted. It is important that the international community, not least the United States, continue to help Indonesia in its efforts to strengthen democratic institutions, to attract foreign investment, to maintain the pace of economic reform and to enhance her security.

Indonesia is key to the fight against terrorism Kern 5 (Soeren Senior Analyst for Transatlantic Relations at the Strategic Studies Group http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/Elcano_in/Zon as_in/Cooperation+Developpment/ARI+8-2005) Indonesia is also a front-line state in the global war on terrorism. With about 90% of its 240 million people followers of Islam, Indonesia has more Muslims than all the Middle Eastern Arab states combined. The vast majority of Indonesia’s Muslims have historically been noted for their moderation, and it is one of the few Muslim-majority nations in which Islam is not the state religion. But it is also the heartland of the Jemaah Islamiyah terrorist movement, an al-Qaeda affiliate responsible for the October 2002 bombings in Bali, the August 2003 attack on the J.W. Marriott Hotel in Jakarta’s financial district and the September 2004 car bombing of the Australian Embassy, also in Jakarta. The US and Australia believe Indonesia

has the potential to be a global beacon of moderate Islam, democracy and growth. But the country faces major problems: a complicated transition from authoritarian rule to democracy; complex and politically sensitive economic problems left from the 1997-98 financial crisis; ethnic and sectarian violence resulting in thousands of deaths and hundreds of thousands of displaced persons; a significant increase in violence by radical Muslims; and continued armed rebellion in Aceh.

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Indonesia DA – Impacts: Democracy Economic problems cause the rise of an Islamic authoritarian regime Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) The “muddling through” scenario presented in the previous section should be considered to be among the better-case scenarios. The fragile economy and a breakdown of order could generate more negative scenarios. One such negative scenario would be a return to authoritarian rule. There are some powerful factors that militate against this outcome, at least in the short term, including the backlash against Suharto’s 32-year rule, the emergence of new political and civil society forces, and the discredit suffered by the military and the security services as a result of their association with the Suharto regime. Nevertheless, continued inability of the new democratic institutions to deliver stability, competent government, and economic growth could generate a demand for the return of a strong ruler. Any return to authoritarian rule must have the backing of the military, but the military would prefer to stay in the background. Only a catastrophic political collapse would compel the military to assume effective control of the government. If that were to happen, the most likely model would be a military-technocratic government, with economic policymaking in the hands of nonpolitical technocrats and eventual return to formal civilian control. A second negative scenario could be an alliance of the military with political sectors, such as one or more of the Islamic parties. That was the Pakistani model before September 11, when there was considerable infiltration of the Pakistani government and the military by militant Islamic forces. Some secular Indonesians are concerned that the “creeping Islamization” that the country is undergoing (see Scenario 4 later in this chapter) over time could make the Islamic parties an acceptable partner for the military or a military faction. This scenario could precipitate the secession from Indonesia of areas in which Christians are a majority or a substantial minority, or could result in civil war. A third version of the scenario might be one that follows the “Burmese model.” As the name of this scenario suggests, it would constitute a very repressive form of military rule in which the leaders try to isolate the country from Western influences. This government would try to bring the press, political parties, and independent sectors of society under its control and repress groups it considers subversive. This model of authoritarian government could come about if the military were convinced that its institutional integrity or the country’s survival was at stake.

Indonesian economy key to their democracy Ghoshal 4 (Baladas former Professor of Southeast Asia and South-West Pacific Studies and Chairman of the Centre for South and Southeast Asian Studies at Jawaharlal Nehru University, New Delhi “Democratic Transition and Political Development in Post-Soeharto Indonesia” )

Unless democratic processes and institutions quickly take root and deliver results, the pendulum may swing back the other way. Without economic recovery, there will not be political stability, and some of the provinces will become more restless. Without unity, the country will plunge into instability with huge economic costs and this may reverse democratic reform. The challenge of democratic reform in Indonesia is not to drift from one form of extremism to another, but to find the right balance for the coexistence of democracy with stability, devolution with unity, reform with prosperity and freedom with peace. Indonesia

needs time to work out this delicate balance, but it is unwise for others to push Indonesia too hard in this process.

Indonesian economy key to their democracy Ghoshal 4 (Baladas former Professor of Southeast Asia and South-West Pacific Studies and Chairman of the Centre for South and Southeast Asian Studies at Jawaharlal Nehru University, New Delhi “Democratic Transition and Political Development in Post-Soeharto Indonesia” )

Unless democratic processes and institutions quickly take root and deliver results, the pendulum may swing back the other way. Without economic recovery, there will not be political stability, and some of the provinces will become more restless. Without unity, the country will plunge into instability with huge economic costs and this may reverse democratic reform. The challenge of democratic reform in Indonesia is not to drift from one form of extremism to another, but to find the right balance for the coexistence of democracy with stability, devolution with unity, reform with prosperity and freedom with peace. Indonesia needs time to work out this delicate balance, but it is unwise for others to push Indonesia too hard in this process.

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Indonesia DA – Impacts: Democracy The economy is key to Indonesian democracy Forrester 99 (Geoff, Asia & Associates Pty Ltd (GFA) is an Australian-based company specialising in political and economic analysis of Indonesia http://books.google.com/books?id=7gr9Mi4CUAYC&pg=PA11&lpg=PA11&dq= %22if+indonesia's+economy%22&source=web&ots=9qncEUHIPe&sig=SHlJ69itvpPU11FOQZjq6F8IZEY&hl=en&sa=X&oi=b ook_result&resnum=4&ct=result)

‘Indonesia instead of becoming a strong sovereign country, will for many years be a beggar among the nations – a grotesque outcome against what the military once set out to achieve.’ And yet he is optimistic. He asserts that there is no ‘natural law’, no inexorable Javanese cultural logic that Indonesia can not establish a genuinely democratic system. He expects democracy to prevail, in part because there is such a strong yearning for it at all levels of Indonesian society, and in part because ABRI has acknowledged its past errors and is now behaving with appropriate humility. He also asserts that the period of parliamentary democracy in the 1950’s was not as bad as predicted by either President Sukarno or President Soeharto’s New Order. Magnis-Suseno’s optimistic outlook has one proviso. He believes the economy is the deciding factor. … the next ten months will be decisive. The greatest challenge does not lie in the political field. It is economics. If Indonesia’s economy really breaks down, the establishment of democracy may remain a short summer nights dream.

Economic stability is critical to Indonesian political stability and civilian military oversight Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) In the best-case scenario, Indonesia continues to develop along a secular, democratic trajectory, makes progress in resolving some of the critical problems in the economy, and satisfies demands for provincial autonomy without losing central control of its macroeconomic policy. In the area of civil-military relations, there is more effective civilian control of the military through better oversight of military affairs by the minister of defense and the parliament. If economic growth resumed and the necessary resources became available, a greater proportion of the Indonesian military’s expenditures could be funded from the state budget, rather than from off-budget sources. In the short term, it would be unrealistic to expect the military to withdraw from its economic activities, but there could be greater transparency in the operation of military businesses. There would also be some movement away from the territorial structure, beginning in areas where that structure is no longer needed, such as the island of Java.

Indonesian growth is critical to stability Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) This second scenario builds on trends that are already evident. Indonesia continues on a democratic path, but fails to make meaningful progress on economic, political, and military reform. The structural problems in the Indonesian economy are not addressed. Military reform comes to a halt after the initial impetus for reform, which had been generated by domestic and international public pressure after the fall of Suharto, slows down. The military is formally under civilian authority, but retains a decisive voice in national security decision making. In this scenario, the government is not successful in negotiating a political solution to the problem of separatism in Aceh and Papua and continues to resort to a “security approach.” Jakarta has the military power to prevent the separatists from seriously threatening its control of these provinces, but is obliged to mount costly counterinsurgency campaigns that overextend the military’s resources. The pressure on the military inevitably leads to overreaction and human rights violations which, in turn, generate criticism by human rights advocates and strain Jakarta’s relationship with the United States and other Western countries. This scenario reflects the current situation in Indonesia and is therefore the most relevant to current policymakers.

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Indonesia DA – Impacts: Democracy – It’s Up Indonesia transitioned to a democracy Singh 8 (Daljit, Singapore: Insitute of Southeast Asian Studies [www.bookshop.iseas.edu.sg] Indonesia/ 2008) Even more impressive than the recovery of the economy is the success of Indonesia’s transition to democracy. The economic recovery has brought Indonesia to a point where for the first time since early 1997 there is a sense of real optimism and vitality, at least in the nation’s capital, but Indonesia is yet to match the rates of growth that it enjoyed in the 1980s and 90s. The democratic transition, however, is not taking Indonesia back to a place where it once was but rather it is taking it somewhere it has never been before. Even in the 1950s democracy was never as firmly rooted and stable as it has now become. In a very real sense Indonesia has now moved beyond initial democratic transition and is now in a period of democratic consolidation. It is impossible to conceive of this democratic transition having succeeded without the withdrawal of the military from politics. Military reform is still very much a work in progress, but the withdrawal of the military from politics and governance is now complete. The doctrine of dwifungsi, which only recently seemed destined to prevail for decades more, melted away with surprising rapidity and lack of contestation.

Indonesian democracy up Crispin 6 (Shawn, Asia Times Online's Southeast Asia editor [http://www.atimes.com/atimes/Southeast_Asia/HJ19Ae02.html] Behold Indonesia's democratic beacon/ October 19, 2006) Breaking with former strongman Suharto's top-down New Order regime, Indonesia's peripheral populations are now less captive to the interests and abuses of local political heavies, who under Suharto often inserted themselves as gatekeepers to financial and natural resources through central government authority. While many attempted to co-opt new democratic institutions to perpetuate their power, nearly 40% of local level incumbents have in recent years been booted from office at the ballot box. In certain conflict-plagued regions, local democracy is even having a healing effect. According to a recent report in the Jakarta-based Van Zorge Report, head and vice head candidates, often representing respectively localities' Muslim majority and Christian minority populations, have frequently teamed up to beat competing candidates who ran on a one-religion ticket. That is, local-level democracy is rewarding politicians who form religiously inclusive, not exclusive, coalitions.

US relations strengthen democratic consolidation Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) Indonesia’s painful progress toward democracy—and the military’ssupport in this process—has created opportunities for a closer rela-tionship between the U.S. and Indonesian militaries. This increasedinteraction provides the United States with a foundation to helpshape the Indonesian military’s capability to deal constructively withthe challenge of rebuilding civil-military relations based on demo-cratic principles.

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Indonesia DA – Impacts: Democracy Good—Heg A. Global spread of liberal democracy key to check counter-balancing – only way to preserve primacy. Owen, Assistant Professor of Government and Foreign Affairs at University of Virginia, 2002 (John M., International Security, 26.3, Lexis) In this article I argue that the degree to which a state counterbalances U.S. power is a function of how politically liberal that state is, measured by the degree to which its internal institutions and practices are liberal and the degree to which liberals influence foreign policy. Political liberalism is an ideology that seeks to uphold individual autonomy and prescribes a particular set of domestic institutions as means to that end. n15 No coalition has formed to counterbalance U.S. power because political liberalism constitutes a transnational movement that has penetrated most potential challenger states at least to some degree. How liberal a state is affects both how it responds to U.S. power and policy and how the United States treats it. Liberal elites the world over tend to perceive a relatively broad coincidence of interest between their country and other liberal countries. They tend to interpret the United States as benign and devote few state resources to counterbalancing it. In turn, the liberals who govern the United States tend to treat other liberal countries relatively benignly. But antiliberal elites tend to perceive a more malign United States and devote relatively more state resources to counterbalancing; the United States meanwhile tends to treat less benignly countries governed by such elites and their favored institutions. The interactions between the United States and a given potential challenger are mutually reinforcing, and so each relationship is on a path that is difficult to abandon. Unilateral moves by the administration of George W. Bush on issues such as the environment and missile defense may perturb and even anger U.S. allies, but should not drive them toward military counterbalancing. Similarly, U.S. policies are unlikely to cause China to abandon counterbalancing. The U.S.-Russian relationship is the least settled, in part because the Russian domestic regime is itself unsettled. Should Russia end up with an antiliberal regime, it will likely counterbalance the United States more consistently. U.S. policies toward Russia can have a marginal effect on the fate of Russian liberalism: The more objectively threatening are U.S. gestures toward Russia, the more Russian liberals lose domestic credibility and influence. In this way the power of transnational liberal identity is limited, as is the durability of U.S. primacy. If Americans want to preserve primacy -- and the benefits of U.S. primacy outweigh the costs for many non-Americans as well as for Americans -- their country must walk a difficult line, simultaneously preserving not only its power but transnational liberalism where it can, and yet guarding against actions that appear imperialistic to foreign elites.

B. US leadership is essential to prevent global nuclear exchange. Zalmay Khalilzad, RAND, The Washington Quarterly, Spring 1995 Under the third option, the United States would seek to retain global leadership and to preclude the rise of a global rival or a return to multipolarity for the indefinite future. On balance, this is the best long-term guiding principle and vision. Such a vision is desirable not as an end in itself, but because a world in which the United States exercises leadership would have tremendous advantages. First, the global environment would be more open and more receptive to American values -- democracy, free markets, and the rule of law. Second, such a world would have a better chance of dealing cooperatively with the world's major problems, such as nuclear proliferation, threats of regional hegemony by renegade states, and low-level conflicts. Finally, U.S. leadership would help preclude the rise of another hostile global rival, enabling the United States and the world to avoid another global cold or hot war and all the attendant dangers, including a global nuclear exchange. U.S. leadership would therefore be more conducive to global stability than a bipolar or a multipolar balance of power system.

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Indonesia DA – Impacts: Democracy Good—Terrorism (1/2) A. Democracy is the only way to address the root cause of terrorism Dr. Larry Diamond, Senior Fellow at the Hoover Institution, Stanford University, and founding co-editor of the Journal of Democracy, “Winning the New Cold War on Terrorism: The Democratic-Governance Imperative,” Institute for Global Democracy, March 2002 If we are serious about getting at the roots of international terrorism, we must get serious about fostering development that gives people hope and dignity and improves the quality of their lives. That requires dramatic improvements in governance, and these will not come without increased international incentives and assistance. In real terms, levels of U.S. development assistance have fallen dramatically since the 1970s and especially since the end of the last Cold War. It will not work to just throw money at the problem in some new "Marshall Plan." No infusion of economic resources, no matter how massive and sustained, will in itself generate development because the problem (unlike in Europe after World War II) is not simply a lack of resources or functioning infrastructure. The problem is a more fundamental shortage: of the institutions and norms of democracy and good governance. Unless we help to develop states that collect taxes, limit corruption, control crime, enforce laws, secure property rights, provide education, attract investment and answer to their own people, countries will not develop and the rage against the West will not subside. This is why we must not only substantially increase our foreign assistance budget, but also devote a much larger portion of that budget to democracy and good-governance programs (while deploying more career aid officials with expertise in these fields).

B. Terrorism causes extinction Pacotti, “Are we doomed yet?” http://www.salon.com/tech/feature/2003/03/31/knowledge/index.html, March 31, 2003 A similar trend has appeared in proposed solutions to high-tech terrorist threats. Advances in biotech, chemistry, and other fields are expanding the power of individuals to cause harm, and this has many people worried. Glenn E. Schweitzer and Carole C. Dorsch, writing for The Futurist, gave this warning in 1999: "Technological advances threaten to outdo anything terrorists have done before; superterrorism has the potential to eradicate civilization as we know it." Schweitzer and Dorsch are so alarmed that they go on to say, "Civil liberties are important for a democratic society; the time has arrived, however, to reconfigure some aspects of democracy, given the violence that is on the doorstep." The Sept. 11 attacks have obviously added credence to their opinions. In 1999, they recommended an expanded role for the CIA, "greater government intervention" in Americans' lives, and the "honorable deed" of "whistle-blowing" -- proposals that went from fringe ideas to policy options and talk-show banter in less than a year. Taken together, their proposals aim to gather information from companies and individuals and feed that information into government agencies. A network of cameras positioned on street corners would nicely complement their vision of America during the 21st century. If after Sept. 11 and the anthrax scare these still sound like wacky Orwellian ideas to you, imagine how they will sound the day a terrorist opens a jar of Ebola-AIDS spores on Capitol Hill. As Sun Microsystems' chief scientist, Bill Joy, warned: "We have yet to come to terms with the fact that the most compelling 21st-century technologies -- robotics, genetic engineering, and nanotechnology -- pose a different threat than the technologies that have come before. Specifically, robots, engineered organisms, and nanobots share a dangerous amplifying factor: They can self-replicate. A bomb is blown up only once -- but one bot can become many, and quickly get out of control." Joy calls the new threats "knowledge-enabled mass destruction." To cause great harm to millions of people, an extreme person will need only dangerous knowledge, which itself will move through the biosphere, encoded as matter, and flit from place to place as easily as dangerous ideas now travel between our minds. In the information age, dangerous knowledge can be copied and disseminated at light speed, and it threatens everyone. Therefore, Joy's perfectly reasonable conclusion is that we should relinquish "certain kinds of knowledge." He says that it is time to reconsider the open, unrestrained pursuit of knowledge that has been the foundation of science for 300 years. "[D]espite the strong historical precedents, if open access to and unlimited development of knowledge henceforth puts us all in clear danger of extinction, then common sense demands that we reexamine even these basic, long-held beliefs."

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Indonesia DA – Impacts: Democracy Good—Terrorism (2/2) The root cause of terrorism is non-democratic states Dr. Larry Diamond, Senior Fellow at the Hoover Institution, Stanford University, and founding co-editor of the Journal of Democracy, “Winning the New Cold War on Terrorism: The Democratic-Governance Imperative,” Institute for Global Democracy, March 2002 This twisted logic resonates emotionally among large numbers of the one billion Muslims who stretch from Morocco to Indonesia–and even some who live or reside in Europe and the United States. With time, force, vigilance and some luck, we may substantially destroy and disrupt the existing global infrastructure of terrorism. But no amount of military force, law enforcement vigilance and operational genius can contain an army of suicide bombers that stretches endlessly across borders and over time. We must ultimately undermine their capacity to recruit and indoctrinate new true believers. That requires getting at the root factors that generate breeding grounds for terrorism. And one of the principal factors is chronically bad governance.

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Indonesia DA – Impacts: Democr K/T US Rel’s An authoritarian government collapses U.S. Indonesian relations Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) The policy response by the United States and other Western democracies to this scenario would almost certainly be a call for a return to democratic rule. U.S. and other Western policymakers would want to develop a package of incentives and sanctions to bring about a rapid return to civilian rule, but they would be confronted with a dilemma. While the Indonesian military will have a decisive voice in determining the pace and timing of a return to democratic government, U.S. domestic and international pressures will drive the U.S. administration in the direction of sanctions and curtailment of ties with the TNI.

Maintaining Indonesian security is key to avert a shift to radical Islam and authoritarian rule which crushes relations with the U.S. Masters 3 (Edward, U.S. Indonesia Commission Vice Chairmen, http://www.usindo.org/publications/USIndonesia_Commission_Report_Oct03.pdf) Indonesia faces three critical challenges: 1) It is striving to consolidate a fragile democratic system with little experience and limited resources. If it fails it could revert to authoritarianism or chaos. Some Indonesians already speak nostalgically of the stability and economic progress of the Suharto era; 2) Moderate Muslims, still a substantial majority, are under challenge from a radical fringe which has grown significantly during the past five years. The goal of the radicals is to capitalize on domestic vulnerabilities and international issues to win over or intimidate the moderate majority; 3) The nation is striving, in the face of rising economic nationalism, to work its way out of the economic mess left by the Suharto regime. The outcome of these three contests will be crucial to the future of Southeast Asia and U.S. relations with the region.

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Indonesia DA – Impacts: Relations – Terrorism US-Indonesian relations key to fighting terrorism in Asia Huang 2 (Reyko, Center for Defense Information Research Analyst [http://www.cdi.org/terrorism/priority.cfm] Priority Dilemmas: U.S.-Indonesia Military Relations in the Anti-Terror War/ May 23, 2008) First, some practical security reasons: full cooperation with Indonesia would facilitate the crackdown on Southeast Asian terrorist networks. The region was identified as a hotbed of terrorists soon after Sept. 11, when investigations led to fresh discoveries of terrorist evidence in Indonesia, Malaysia and the Philippines. Had Washington not had the congressional ban on relations with the TNI, Indonesia may well have joined Yemen, Georgia and the Philippines as recipients of direct U.S. military training and aid for counterterrorism purposes. Furthermore, the military has not fully handed over internal security responsibilities to the police and thus still "has the only real database on Islamic extremists." Washington's limited relations with the TNI may therefore be obstructing deeper intelligence sharing, which is fundamental for successful counterterrorism.

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Indonesia DA – Impacts: Relations – Democracy US Indonesia relations key to democracy Huang 2 (Reyko, Center for Defense Information Research Analyst [http://www.cdi.org/terrorism/priority.cfm] Priority Dilemmas: U.S.-Indonesia Military Relations in the Anti-Terror War/ May 23, 2008) Second, and more an argument based on values and principles: stronger U.S. ties with the TNI, U.S. officials claim, is likely the best way to transform the military with a notorious record of human rights abuses. Since Washington ended Indonesian participation in its International Military and Education Training (IMET) program in 1991, a generation of TNI officers has missed out on U.S. military and human rights education, as well as on opportunities to befriend American officers who could have served as exemplars. A resumption of the IMET for the Indonesian forces would not only help them rebuild its damaged reputation and credibility, they argue, it would also inculcate values of democracy, human rights, and the rule of law in the next generation of TNI officials.

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Indonesia DA – Impacts: Relations – Asia Stability US Indonesian relations key to solving conflict in Asia Perlez 1 (Jane, The New York Times [http://query.nytimes.com/gst/fullpage.html?res=9805E2D6103FF931A2575BC0A9679C8B63] U.S. to Renew Relationship With Military In Indonesia/ August 12, 2001) The Bush administration plans to renew some American ties to the Indonesian military, the most powerful institution in the sprawling Southeast Asian country but one fraught with human rights abuses. The decision is part of an effort to cement stronger ties with Indonesia, one of the most important but unstable countries in the region, after the relatively smooth coming to power of the new president, Megawati Sukarnoputri, whose ascent was supported by the military. The Pentagon once had longstanding ties with the Indonesian military, dating back to the early days of the cold war. But relations have been circumscribed since the early 1990's over human rights abuses. Critics of the plan to revive ties say America's past training of Indonesian troops did little to prevent the widespread abuses, in particular those that accompanied the secession of East Timor from the country three years ago. In re-establishing military ties, the Bush administration says it would like to help ensure the stability of the country, a vast archipelago that has been riven by separatist movements. Indonesia is seen as pivotal for the stability of Southeast Asia and, administration officials say, has assumed new significance as the broader region stumbles through an unexpected period of economic downturn and political uncertainty.

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Indonesia DA – Impacts: Democr K/T World Model Indonesia is key to global democracy The Carter Center 4 (“Annual Report 2003-2004”http://cartercenter.com/documents/2087.pdf) In 2004, Indonesia held three sets of elections, including for the first time a direct election of the president, demonstrating an impressive strengthening of democracy in the country. The world’s fourth largest country and home to the world’s largest Muslim population, Indonesia is crucial to democratic progress throughout Southeast Asia and beyond. “The 2004 elections were a major step forward in Indonesia’s democratic transition,” said Dr. David Carroll, acting director of the Center’s Democracy Program. “Voters demonstrated their commitment to democratic principles and to holding leaders accountable. The presence of our observers helped build confidence in the electoral process.”

Indonesia key to democracy Caragata 3 (Warren, journalist with Maclean's and Asiaweek[http://www.jewishtoronto.net/page.aspx?id=68101] As the world's largest Muslim nation struggles with democracy, its latest election offers encouraging news/ 2003) Indonesians, including Muslims, are a generally tolerant people, as I was reminded when I went to a Jakarta mosque shortly after the terrorist attacks of Sept. 11. The mosque was supposedly one of the most radical in the city, and I fully expected the men I interviewed after Friday prayers would be uncompromising in their views. Should women wear headscarves, I asked? Everyone in the small group agreed, but the next question elicited a more surprising response. Do your wives and daughters wear headscarves? Oh no, they said. They don't like them. They're too hot. Should sharia be the law of the land? All said no: That would upset Indonesian Christians. There are fundamentalists, to be sure, but they are on the margins. The firm establishment of democracy in Indonesia can be a beacon to the rest of the Muslim world, demonstrating that Islam and democracy are not incompatible. Aid money in great quantities flows to supposed democratic incubators like Iraq and Afghanistan, but Indonesia's democratic experiment, to judge by its track record, is far more likely to succeed.

Indonesia key to democracy IRI 3 (International Republican Institute, nonprofit nonpartisan organization [http://209.85.141.104/search?q=cache:SIBZnnhBx5EJ:www.iri.org/asia/indonesia.asp+%22indonesia+is+a+model %22&hl=en&ct=clnk&cd=3&gl=us] As the world's largest Muslim-majority country, Indonesia is a model for other Muslim countries undergoing the transition to democracy. The International Republican Institute (IRI) has been working with the people of Indonesia to advance their country's democratization since the fall of the Haji Mohammad Suharto regime in 1998. IRI has worked to support the change to popular representation, strengthen the country's electoral system, and train political parties to address the concerns of voters.

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Indonesia DA – Impacts: Stability – It’s Up Indonesia is stable Singh 8 (Daljit, Singapore: Insitute of Southeast Asian Studies [www.bookshop.iseas.edu.sg] Indonesia/ 2008) By 2007 many of the things that have been so long awaited — democracy, stable and accountable government, the ending of large-scale conflict, greaterautonomy and a fairer share of resources for the regions, freedom of the press, legislative reform, and the withdrawal of the military from politics — had finally come. At the same time Indonesia had finally moved beyond its decade-long, multidimensional crisis. Economic growth, public expenditure and public investment are back to being at or near pre-crisis levels. Indonesia is now safely past its crisis in political stability. At the same time the threat represented by separatist movements to Indonesia’s national integrity — a threat that was never as large in reality as it was in the imaginations of many — could finally be regarded as having past. And, although the threat of terrorism will never completely disappear, Indonesia is now no longer facing a security crisis with respect to terrorism. All of this is good news but the real challenge now for post-crisis Indonesia is to make steady and sustained improvements in good governance and public sector services.

Indonesia has reached a state of stability Singh 8 (Daljit, Singapore: Insitute of Southeast Asian Studies [www.bookshop.iseas.edu.sg] Indonesia/ 2008) In 2007 the news wires had comparatively little to report from Indonesia. Indonesia, thankfully, had dropped off the radar screen of breaking news series and live reports from disaster sites. At the same time, the steady improvement in confidence, the slow recovery of economic growth and the overall progress of reform finally bought Indonesia to a point where it could be said to be postcrisis. 2007 was Indonesia’s first year in a decade of being post-crisis. It was also Indonesia’s first year of living normally.

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Indonesia DA – Impacts: Reg’l Stability Indonesia key to Southeast Asian stability Sisodia and Naidu 5 (N. S. Sisodia, G. V. C. Naidu, Institute for Defence Studies and Analyses http://books.google.com/books?id=jSgfLG3Ib9wC&pg=PA58&lpg=PA58&dq=%22indonesia+is+critical%22&sour ce=web&ots=lsgjv6Ww7j&sig=vfsMAiw_XMmJaNLmZwE9Jb_nFlw&hl=en&sa=X&oi=book_result&resnum=10 &ct=result) Given South East Asia’s position- straddling the sea lanes through which pass so much of the world’s trade- the US is increasingly concerned about Maritime security in the region. Seven of the worlds 25 megaports are in Southeast Asia; two-thirds of the worlds liquefied natural gas passes through Southeast Asian Seas; 600 vessels navigate the Strait of Malacca daily, carrying 25 % of world commerce and half the worlds oil. The US has developed a range of policies- including the proliferation security initiative (PSI), the container security initiative (CSI), and the regional Maritime security initiative (RMSI)- to help secure maritime transit in the region. Success ultimately depends on cooperation and coordination with other countries in the region. So far, the record is mixed. Indonesia is of particular importance in the region. For long the anchor of ASEAN, political instability and drift in Jakarta have taken a toll on Indonesia and all of Southeast Asia. Given its geographic position and stretch, stability in Indonesia is critical to that of the region as a whole. A corner may have been turned with the election of Susilo Bambang Yudhoyono as president in 2004, but his plans may yet be frustrated by political inexperience and determined opposition.

Indonesia is key to world stability Masters 3 (Edward, U.S. Indonesia Commission Vice Chairmen, http://www.usindo.org/publications/USIndonesia_Commission_Report_Oct03.pdf) Indonesia is the pivotal state in Southeast Asia. The world’s fifteenth largest and fourth most populous nation, it exercises strong influence in Southeast Asia and plays a constructive international role. It has huge natural resources and a strategic location astride major sea lines of communication—half of the world’s merchant fleet capacity passes through the Straits of Malacca, Sunda, and Lombok. Including the oil and mineral sectors, Indonesia is home to an estimated $25 billion in U.S. investment, with more than 300 major U.S. firms represented in the country. There are two additional factors of great importance today:• Indonesia has by far the world’s largest Muslim population, and historically Indonesia’s Muslims have been noted for their moderation. It has the two largest Muslim social and educational organizations in the world—the Nahdlatul Ulama and Muhammadiyah—each of which is moderate and has more than 30 million members. Indonesia is one of the very few Muslim-majority nations in which Islam is not the state religion. Indonesian Islamic scholars have had a moderating impact on debate within the Muslim world on the relationship between religion and the state. This influence will be enhanced if Indonesia succeeds in its efforts to develop a viable and nonsectarian democratic system. • A stable and responsible Indonesia is critical to regional stability. It is the anchor of the Association of Southeast Asian Nations (ASEAN) and a key player in the ASEAN Regional Forum (ARF), the only organization in the Asia-Pacific region that brings the United States together with Japan, China, the ASEAN nations, and others to discuss security issues. The cohesion and effectiveness of ASEAN have eroded significantly due to Indonesia’s preoccupation with domestic crises. Instability in Southeast Asia has already provided openings for Islamic radicalism. In short, an unstable, hostile or unpredictable Indonesia would adversely affect U.S. interests and objectives, tilt the international balance toward radical Islam, complicate transit through strategic sea and air routes, hamper efforts to combat piracy and drug trafficking, and weaken a potentially constructive regional counterpoint to China.

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Indonesia DA – Impacts: Reg’l Stability Indonesia is key to regional stability and strategic U.S. interests Kern 5 (Soeren Senior Analyst for Transatlantic Relations at the Strategic Studies Group http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/Elcano_in/Zon as_in/Cooperation+Developpment/ARI+8-2005) Indonesia is the linchpin to stability in South-East Asia. As the world’s fourth most populous nation, the third largest democracy and the only Asian member of the Organisation of Petroleum Exporting Countries (OPEC), Indonesia exercises major influence in the region and occupies some of the most strategic real estate on earth. It has vast natural resources and is strategically located astride major sea lines of communication (SLOCs) between the Pacific and Indian Oceans. Half of the world’s merchant fleet capacity passes through the Straits of Malacca, Sunda and Lombok; the straits also enable the US to send warships from its Pacific Fleet by the shortest routes to the Indian Ocean and the Persian Gulf. Australia, Japan and the US also view Indonesia as a bulwark against Chinese expansionism in SouthEast Asia. For example, Indonesia creates a strategic northern shield for Australia; any attack on the Australian mainland would have to be staged through the Indonesian archipelago. And in case of a Taiwan crisis, Indonesia can cut off China’s access to oil from the Persian Gulf, since 80% of China’s imported oil passes through the Strait of Malacca. Moreover, Indonesia is the anchor of the Association of Southeast Asian Nations (ASEAN) and a key player in the ASEAN Regional Forum (ARF), the only organisation in the Asia-Pacific region that brings the US together with China, Japan and others to discuss security issues. Indonesia also constitutes Australia’s largest and most immediate regional neighbour. Indeed, Australian Defence Minister Richard Campbell Smith said a stable Indonesia is a ‘top national priority’.

Indonesia is critical to regional stability Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) Indonesia has been described as the least known of the world’s most important countries. Its importance derives from well-known geopolitical factors. It is the world’s fourth most populous country and the largest Muslim-majority country, with a population and a land mass almost as large as those of the rest of Southeast Asia combined, vast natural resources and economic potential, and a strategic location straddling critical sea lanes and straits—all of which makes it the key to Southeast Asia’s security. A stable, strong, and democratic Indonesia could resume its leadership role in the Association of Southeast Asian Nations (ASEAN), further regional integration based on democratic principles, contribute to maintaining regional stability, and deter potential Chinese adventurism. Conversely, an unstable or disintegrating Indonesia would make the regional security environment more unpredictable and dangerous, create opportunities for forces seeking to subvert the regional status quo, and generate large-scale humanitarian demands on the international community. Beyond that, the outcome of Indonesia’s democratic experiment could have a major impact in shaping the political evolution of Asia and of the larger Muslim world. If Indonesia’s democratic transition holds, it will be the world’s third-largest democracy as well as the largest secular democracy in the Muslim world. This transition could have enormously important global consequences. The future of Islam, some argue, will not be decided in its Arab heartland with its authoritarian and intolerant models of governance, but in countries such as Indonesia, where Islam has not jelled into a fundamentalist mold and where democracy remains an attainable prospect.1

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Indonesia DA – Impacts: Reg’l Stability – Escalation/NW Asian war goes global and nuclear Ogura and Oh 97 (Toshimaru and Ingayu, Professors of Economics, Monthly Review, April) North Korea, South Korea, and Japan have achieved quasi- or virtual nuclear armament. Although these countries do not produce or possess actual bombs, they possess sufficient technological know-how to possess one or several nuclear arsenals. Thus, virtual armament creates a new nightmare in this region – nuclear annihilation. Given the concentration of economic affluence and military power in this region and its growing importance in the world system, any hot conflict among these countries would threaten to escalate into a global conflagration.

Asian war goes nuclear Michael May, Professor of Engineering-Economic Systems at Stanford, Summer 1997, The Washington Quarterly The unpalatable facts, to Europeans and North Americans, are that Asia has about half of the world's people, that it is growing faster than other parts of the world, and that, by mid-century, it will probably have more than half the population of the developed world and more than half of its money. Energy consumption, economic influence, and military power will be distributed in proportion. That is the rosy scenario. The dark scenario is that of a war that would, in all likelihood -- because nuclear weapons can be procured and deployed by any of these countries at a fraction of the cost of peaceful development --leave most of the civilized world devastated.

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Indonesia DA – Impacts: Hrts Instability hurts human rights and spills over to the rest of Asia Brown 3 (Colin, Professor of Asian Studies and Languages A SHORT HISTORY OF INDONESIA: THE UNLIKELY NATION? p. 246) The future of Indonesia remains, of course, unknown. The unity of the state is under greater challenge than at any time since the regional rebellions of the 1950s. The country is clearly not well served by its current leaders. Yet despite economic and political crises, for most Indonesians life goes on, despite the maneuverings of those in positions of political leadership. Ultimately the future of the ‘nation’ and the ‘state’ will be determined by whether ordinary Indonesians feel sufficiently committed to the principles these terms represent to be prepared to work to ensure that they remain alive. For all its faults, Indonesia still offers the majority of its citizens a better and more enlightened future than any of its potential successor states could offer. The break-up of the state would not only be a strategic disaster for the country's neighbors in Southeast Asia, including Australia but, more importantly, it would be a human rights disaster for its citizens, for no such break-up is likely to occur peacefully. But to survive the nation must adjust and making those adjustments is the challenge now facing the national leadership. The next few years will show how successful they are in meeting that challenge.

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Indonesia DA – Impacts: Biodiversity T/O Biodiversity in Indonesia is being solved now Compton Foundation 4+ (http://www.comptonfoundation.org/scenario/Environment/Indonesia_ Biodiversity_HotSpot.pdf) Initiatives are also under way to expand existing in-country protected area networks. In 2004, the Indonesian government made a commitment to create 12 new protected areas. One of these was the Tesso Nilo/Bukit Tigapuluh landscape in central Sumatra, where the Critical Ecosystem Partnership Fund (CEPF) is supporting a corridor-level initiative to link four existing protected areas and one new protected area into a three-million-hectare haven of lowland forest. Such collaborative conservation efforts increase the effective size of protected areas to a great extent, but can only be effective in the long term if management strategies deal with the socio-economic and political drivers of land-use change. WWFIndonesia is currently implementing two major initiatives within Tesso Nilo National Park with support from CEPF: the first involves protecting tigers from the wildlife trade, while the second involves developing and implementing a community based conservation plan. The Indonesian government is implementing policies to promote conservation. The central government is currently promoting a new policy to reduce the number of existing logging concessions by half. Some of these cancelled or abandoned concessions have been converted to protected areas, such as the Sebangau area in Central Kalimantan, while others will be designated for sustainable forest harvesting programs. In addition, a new policy allows for protected area creation by local governments rather than just the national government; this model, which promotes local ownership and stewardship, has already been used to create protected areas. For example, the 108,000 hectare Batang Gadis National Park, in northern Sumatra, was established as a locally managed protected area in early 2004. In May of the same year, the Ministry of Forestry declared the area a national park. Four local NGOs are currently working to develop biodiversity-friendly economic activities, and to involve communities adjacent to the park in management and conservation activities. CI is playing a coordinating role in the management of this park.

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***Indonesia Answers***

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Indonesia Answers- Internal Link Turn: Dutch Disease Indonesia is oil dependant and vulnerable to price shocks Syarifuddin 7 (Ferry, Economist, Bank Indonesia, June 15, http://www.bi.go.id/web/en/Publikasi/Kertas+Kerja+dan+Materi+Seminar/Kertas+Kerja/library7.htm) Overall, the paper shows that since 2004, Indonesia has been facing a serious oil and refinery product shortage. The recent domestic oil supply disturbances have reduced production while domestic oil consumption has been increasing. Consequently, oil import is also raising which making Indonesia as one of net oil-importing countries since then. The intense of using of only few kind of energy sources moreover oil and decreasing trend of domestic oil reserve, lead Indonesia to be more dependent on oil and vulnerable to oil shock. It is confirmed by several oil dependence measurements. In order to preserve national energy, the government has pursued some efforts to increase energy conservation, efficiency, and diversification by utilizing alternative energy including renewable energy. With implementing the policy, it is expected that by 2025, the national energy requirement composition will reduce oil dependency as well as raising alternative energy including renewable energy used in all sectors.

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Indonesia Answers- Internal Link Turn: Inflation Rising oil prices cause inflation Arnold 5 (Wayne, August 17, http://www.nytimes.com/2005/08/17/business/worldbusiness/17indo.html?_r=3&oref=slogin&oref=slogin&oref=slo gin) This week, Indonesia reported that its economy slowed to 5.5 percent in the second quarter compared with the period a year ago, from 6.2 percent in the first quarter. The second-quarter figure was below the government target of 6 percent for the year, the pace economists and policy makers agree is the minimum necessary to absorb new entrants into the job market and reduce poverty in the restive archipelago, the world's most populous Muslim nation. Faltering investment in oil and gas showed up as a 2.9 percent drop in overall mining output. But optimists were encouraged by the data, noting that other sectors were performing well. "It's not really a broad-based slowdown," said Chua Hak Bin, senior regional economist at DBS Bank in Singapore. "I find it difficult to be too alarmist." But pessimists caution that rising fuel prices are pushing up prices for other goods and services, auguring ill for consumer spending. Inflation in July rose to 7.8 percent.

Rising oil prices cause inflation Reuters 5 (Singapore, August 7, http://www.newagebd.com/2005/aug/07/busi.html) Indonesian inflation hit a two-year high of 8.8 percent in March, after the government raised domestic fuel prices. In the year through July, inflation was still high at 7.8 percent. Malaysia, which has the region’s highest subsidies, raised retail petrol and diesel prices last week. Consumer price inflation there is at a sixyear high. Taiwan also has rising inflation. It is only in Singapore and Korea, countries where fuel is not subsidised, that price pressures remain muted. Economists say consumers should be made to feel the pinch of $60-a- barrel oil, even if that means they pay more for goods and transport. Subsidies can have grave side-effects. ‘It leads to a deterioration in the government’s fiscal accounts,’ said Rob Subbaraman of Lehman Brothers in Tokyo. ‘More importantly, it is not allowing market forces to work. Asian households and companies are not going to become more efficient in using energy.’

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Indonesia Answers- Internal Link Turn: Corruption Oil abundance creates an elitist and corrupt environment that diverts the revenue Rosser 7 (Andrew, political economist, worked for AusAID, consultant to the World Bank, the UK Department for International Development, the Organisation for Economic Cooperation and Development, Journal of Contemporary Asia, Vol. 37)

In explaining economic outcomes in resource abundant countries, many scholars, particularly those operating from neoclassical/public choice or behaviouralist perspectives, have focused on the extent to which policy elites in these countries have been guided by economic rationality in their policy-making decisions. Mitra (1994) and Krause (1995), for instance, have argued that one of the main reasons why resource abundant countries have performed less well in economic terms than resource poor countries is that resource booms have often caused policy elites in the former set of countries to become myopic, slothful, and/or over-exuberant (Ross, 1999: 309). Other scholars have suggested that this difference in economic performance has stemmed mainly from the effect of resource booms on policy elites' propensity to engage in rent-seeking behaviour. Ross (2001), for instance, has argued that resource booms in Indonesia and Malaysia during the 1970s created severe economic problems because they encouraged political and bureaucratic elites to either directly seize the rents created by these booms or try to gain control over the right to allocate them rather than invest them productively. Conversely, Prawiro (1998) has explained Indonesia's success in overcoming the resource curse during the 1970s and early 1980s in terms of the strong influence of technocratic ministers over economic policy, particularly macroeconomic and fiscal policy. As he puts it, this period saw the "relinquishing of the extreme, emotioncharged focus on ideology [of the previous regime] for a more detached, analytical, and flexible approach based on pragmatism" (Prawiro, 1998: 87-8).

Oil Revenue disappears due to corruption Australian Broadcasting Corporation 8 (http://www.radioaustralia.net.au/news/stories/200807/s2300571. htm?tab=latest) Indonesia's corruption watchdog has opened an investigation into the disappearance of $US22 billion in state oil and gas revenues. Our Jakarta correspondent, Geoff Thompson, reports ten years after it was set up, Indonesia's Corruption Eradication Commission or KPK is beginning to cut a swathe through key Indonesian institutions. The Bank of Indonesia's former Governor is on trial and five parliamentarians have been recently accused of corruption and often been caught red-handed in sting operations. The attorney-general's department has been implicated with prosecutors caught taking bribes to drop embezzlement probes.

Corruption in Indonesia means the country does not benefit form oil revenues Pesek 6 (William Pesek Jr Asia-Pacific columnist for Bloomberg News http://www.iht.com/article s/2006/03/26/bloomberg/sxpesek.php ) That would almost be comical, were it not for the fact that more than half of Indonesia's 239 million people live on less than $2 a day. The country has not benefited from its abundant reserves of oil, a natural resource that leaders in countries like China spend virtually every waking moment searching for. That neglect might soon be over, now that Indonesia has signed a deal to extract oil from the $2.6 billion Cepu field, the country's biggest untapped reserve of the resource. The agreement with Exxon Mobil and Pertamina, Indonesia's state oil company, is expected to provide a huge boost to the economy. Or will it? The project will generate $3.3 billion a year to be shared by the government, Exxon and Pertamina, in that order. Higher tax revenue will leave more money for job creation, education and health care, as well as better roads, bridges and ports. During the four-year dispute over the field, Indonesia's fuel-import bill reached as much as $1.6 billion a month. Investors appreciate the calculated risk that President Susilo Bambang Yudhoyono took by allowing Exxon, a U.S. company, to take charge of the long-delayed plan. His gutsy move to sideline Pertamina shows that he is putting economic realism ahead of nationalism.That could generate a multiplier effect by encouraging

Is oil a blessing or a curse? Commodity-created wealth rarely trickles down very far into an economy, never mind to those living in poverty. Economists call this the "paradox of plenty," and Indonesia needs to counter this aggressively. All too often, inhabitants of resource-rich nations fail to prosper from treasures like oil, gold or diamonds. Politicians and their cronies get wealthy, while the needs of the struggling masses are ignored. That has been Indonesia's experience far more often than not. History is littered with examples of how oil wealth leads to a kind of economic-policy tunnel vision. Awash in oil, governments lose incentive to create other viable industries. They have little time for agriculture, textiles or manufacturing industries that could employ much of the population. Why bother when the real money is in oil? "Oil promises to make you rich, but instead it makes you poor," the Stanford University economist Terry Lynn Karl wrote in "The Paradox of Plenty: Oil Booms and Petro-States." Her 1997 book, which focuses on Algeria, Indonesia, Iran, Nigeria and Venezuela, is even more relevant today amid near-record oil prices. The instant windfall from commodity exports can destroy a nation's competitiveness. more investors to consider Indonesia anew. Yet Indonesia now faces a sticky question that confronts all oil-rich nations:

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Indonesia Answers- Internal Link Turn: Instability High prices generate Indonesian instability – Undermine current regime NYT 5 (8-17) Indonesia's oil troubles are coming home to roost, posing a growing challenge to President Susilo Bambang Yudhoyono's ability to maintain economic stability. A Pertamina oil exploration site in Indonesia. Turmoil and red tape have helped turn the country into a net oil importer, despite its reserves. Indonesia is a member of the Organization of the Petroleum Exporting Countries, and oil and natural gas are among the country's largest sources of export revenue. But red tape, legal uncertainty and past political turmoil have turned Indonesia into a net oil importer, and companies have shied away from investing in new oil wells or refineries. At $65 a barrel, oil has become as big a threat to Indonesia's economic health as it is to that of the United States or Europe. Analysts are increasingly divided as to whether Mr. Yudhoyono will be able to keep Indonesia on course or whether oil prices will join the list of calamities buffeting the country, including terrorist attacks, the December tsunami, bird flu, the reappearance of polio and spreading forest fires that have sent a pall of acrid haze across Southeast Asia in the last two weeks.

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Indonesia Answers- Turn: Biodiversity Increased demand for oil in Indonesia kills biodiversity Koh and Wilcove 8 (Lian Pin Postdoctoral Research Fellow at ETH Zurich David S. Professor of Ecology and Evolutionary Biology and Public Affairs Princeton University http://news.mongabay.com/2008/0520-palm_oil.html) More than half of the oil palm expansion between 1990 and 2005 in Malaysia and Indonesia occurred at expense of forests, reports a new analysis published in the journal Conservation Letters. The conversion had a "detrimental" impact on regional biodiversity say the authors. Analyzing data from the United Nations Food and Agriculture Organization, Lian Pin Koh and David S. Wilcove of Princeton University found that 55-59 percent of oil palm expansion in Malaysia and at least 56 percent of that in Indonesia occurred at the expense of forests. Given that oil palm plantations are biologically impoverished relative to primary and secondary forests, the researchers recommend restricting future expansion to pre-existing cropland and degraded habitats. In recent years Malaysia and Indonesia have rapidly expanded the area of land devoted to oil

palm cultivation: between 1990 and 2005 the area of oil palm plantations in Malaysia more than doubled to 3.6 million ha; in Indonesia the area planted with palm expanded by more than 270 percent to 4.1 million ha. At the same time Indonesia's forest cover declined by 28 million ha, while Malaysia lost some 1.5 million ha. Koh and Wilcove calculate that at least 1.704 million ha of forest land in Indonesia and 1.04 million ha in Malaysia were converted for the oilseed during the period. "Our analysis indicates that oil palm plantations in Malaysia and Indonesia have replaced

forests and, to a lesser extent, pre-existing cropland," the authors write. Using data on birds and butterflies showing that conversion of forest to oil palm produces steep declines in species richness, Koh and Wilcove say the expansion of the oil palm estate in Malaysia and Indonesia negatively affected regional biodiversity. Noting that demand for palm oil is expected to increase dramatically in coming years, the authors suggest future oil palm expansion be limited to lands that have already been converted for agriculture or are otherwise heavily degraded. Even logged forests — which support considerably higher levels of biological diversity than plantations — should be off-limits to oil palm development, they conclude.

Indonesia is key to biodiversity UNCSD 97 (United Nations Commission on Sustainable Development http://www.un.org/esa/agenda21/natlinfo /countr/indonesa/natur.htm#biodiv) Indonesia is one of the centers of mega-biodiversity in the world, with 47 ecosystem types ranging from ice fields and alpine meadows in Irian Jaya, to a wide variety of humid lowland forests, from deep lakes to shallow swamps, and from spectacular coral reefs to sea-grass meadows and mangrove swamps. Approximately 17% of the total number of species in the world are found in Indonesia. The country harbors at least 11% of the world's known flowering plant species, 12% of the world's mammals 15% of all amphibians and reptiles, 17% of all birds and at least 37% of the world's fish. The diversity of ecosystems and species naturally leads to genetic diversity. Indonesia is the center of genetic diversity for many important food and economic crops such as bamboo, orchids, rattan, nutmeg, cloves and tropical fruits. Genetic diversity is further developed through traditional agroforestry and cultivation systems. This is reflected in the numerous varieties of rice, taro, bananas and mangoes (not native to Indonesia) and other cultivated crops in Indonesia. Indonesia also harbors great knowledge on the uses and development of biodiversity embedded in the cultural forms and knowledge systems of its many and varied traditional communities. Some 6,000 plants, 1,000 animals and 100 microbe species are used by Indonesian communities in their daily life. Knowledge on medicinal and food values of wild and cultivated species are interlinked with cultural systems that are fast disappearing in Indonesia. Thus, it is obvious that

the erosion of Indonesia's biodiversity and traditional knowledge on biodiversity is not just a matter of national concern, but of international concern as well. Opportunities to develop new varieties of food crops, new medicines and new industrial raw materials will be lost with the erosion of Indonesia's biological and cultural diversity. With a growing population, a modernizing economy and still marked regional disparities, biodiversity management issues are bound to be prominent in a biologically diverse region such as the Indonesian archipelago. The biodiversity in Indonesia is nearly unparalleled worldwide and yet the qualitative and quantitative demands placed on Indonesian terrestrial and marine ecosystems by the Indonesian population poses many threats at both the species and ecosystem level. This threat is significant for Indonesian society as well - the degree of Indonesian society's dependence on renewable biodiversity (i.e. natural resources) for economic and social needs is widely recognized. In order to elaborate contemporary natural resource issues relating to biodiversity, the Indonesian baseline must first be established.

Indonesian biodiversity is among the richest in the world - there are at least 42 distinct natural terrestrial ecosystems and five marine ecosystems.

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Indonesia Answers- Econ Resilient The Indonesian economy is resilient The Jakarta Post 7 (http://www.indonesia-ottawa.org/economy/Economicissues/economy-2008-resilient.htm) The country's economy will remain resilient next year, although it may grow slightly slower than the government's estimate amid tough challenges on both the external and internal fronts, predicts the Indonesian Chamber of Commerce and Industry (Kadin). In its year-end economic assessment unveiled Wednesday, the powerful business grouping predicts economic growth of 6.5 percent next year, as compared to the government's target of 6.8 percent. Kadin said in its report that the global economic slowdown resulting from high oil prices and the U.S. subprime mortgage crisis would affect Indonesia's economy next

private consumption has contributed a major part of our economic growth. However, we assume that the increasing level of private consumption has been based on borrowing, which won't last long. "Therefore, we predict that in 2008, private consumption won't contribute that much to the economy," Kadin chairman Muhammad S. Hidayat said. year, marked by expected declines in domestic consumption and exports, two main drivers of the country's economic engine. "In the past five years,

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Indonesia Answers- Impact T/O: Stability Instability in Indonesia is inevitable Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) Although Indonesia’s future is highly uncertain, several conditions can be expected to hold for the next several years: First, a sustained economic recovery is not on the horizon. Although the economy (i.e., the GDP) grew at a rate of 3.5 percent in 2001, the underlying causes of the country’s economic weakness— large private and public debt and the insolvency of much of the corporate and banking sectors— remain unresolved. Second, the political system will remain under stress. The Megawati government has been unable to make headway on economic reform or to show much administrative competency, but the opposition parties have yet to develop any coherent strategies for governing the country. The decentralization process, if not properly managed, has the potential to be greatly destabilizing. Third, the issue of the role of Islam in politics—which, as already noted in this report, goes back to the fundamental question of the nature of the Indonesian state—will continue to be a divisive issue and could have significant impact on the 2004 and subsequent elections. Will Megawati, if she is reelected, continue to be dependent on the Muslim political parties for her parliamentary majority? If the Golkar organization (the political instrument of the New Order, which has been trying to recreate itself as a viable post-Suharto party) collapses, will Islam form the basis for a new political bloc?

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Indonesia Answers- Impact T/O: Democracy New authoritarianism is low probability Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) The “muddling through” scenario presented in the previous section should be considered to be among the better-case scenarios. The fragile economy and a breakdown of order could generate morenegative scenarios. One such negative scenario would be a return to authoritarian rule. There are some powerful factors that militate against this outcome, at least in the short term, including the back-lash against Suharto’s 32year rule, the emergence of new political and civil society forces, and the discredit suffered by the military and the security services as a result of their association with the Suharto regime. Nevertheless, continued inability of the new democratic in-stitutions to deliver stability, competent government, and economic growth could generate a demand for the return of a strong ruler.

No radical take-over Rabasa and Haseman 2 (Angel Senior Policy Analyst, an expert in Regional security Colombia Latin America South East Asia Indonesia John served with the US Army in Vietnam as a Military Intelligence Officer and Advisor “STRATEGIC SCENARIOS FOR INDONESIA AND THEIR IMPLICATIONS”) A radical Islamic takeover is possible, but should be considered a low-probability scenario at this stage. It would be opposed by secularists in the political establishment and in the military and probably by most Indonesian Muslims themselves, the vast majority of whom are moderate and do not support the radicals’ agenda. However, progressive Islamization—defined as increased influence of Islam in politics and more overt manifestations of religiosity in public behavior—would be entirely possible.

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Indonesia Answers- Democracy Bad—Terrorism Democratization causes instability and rollback, spurring war and terrorism Edward D. Mansfield and Jack Snyder, “Prone to Violence,” The National Interest, Winter 2005/2006 THE BUSH Administration has argued that promoting democracy in the Islamic world, rogue states and China will enhance America's security, because tyranny breeds violence and democracies co-exist peacefully. But recent experience in Iraq and elsewhere reveals that the early stages of transitions to electoral politics have often been rife with violence. These episodes are not just a speed bump on the road to the democratic peace. Instead, they reflect a fundamental problem with the Bush Administration's strategy of forced-pace democratization in countries that lack the political institutions needed to manage political competition. Without a coherent state grounded in a consensus on which citizens will exercise self-determination, unfettered electoral politics often gives rise to nationalism and violence at home and abroad. Absent these preconditions, democracy is deformed, and transitions toward democracy revert to autocracy or generate chaos. Pushing countries too soon into competitive electoral politics not only risks stoking war, sectarianism and terrorism, but it also makes the future consolidation of democracy more difficult.

Terrorism causes extinction Pacotti, “Are we doomed yet?” http://www.salon.com/tech/feature/2003/03/31/knowledge/index.html, March 31, 2003 A similar trend has appeared in proposed solutions to high-tech terrorist threats. Advances in biotech, chemistry, and other fields are expanding the power of individuals to cause harm, and this has many people worried. Glenn E. Schweitzer and Carole C. Dorsch, writing for The Futurist, gave this warning in 1999: "Technological advances threaten to outdo anything terrorists have done before; superterrorism has the potential to eradicate civilization as we know it." Schweitzer and Dorsch are so alarmed that they go on to say, "Civil liberties are important for a democratic society; the time has arrived, however, to reconfigure some aspects of democracy, given the violence that is on the doorstep." The Sept. 11 attacks have obviously added credence to their opinions. In 1999, they recommended an expanded role for the CIA, "greater government intervention" in Americans' lives, and the "honorable deed" of "whistle-blowing" -- proposals that went from fringe ideas to policy options and talk-show banter in less than a year. Taken together, their proposals aim to gather information from companies and individuals and feed that information into government agencies. A network of cameras positioned on street corners would nicely complement their vision of America during the 21st century. If after Sept. 11 and the anthrax scare these still sound like wacky Orwellian ideas to you, imagine how they will sound the day a terrorist opens a jar of Ebola-AIDS spores on Capitol Hill. As Sun Microsystems' chief scientist, Bill Joy, warned: "We have yet to come to terms with the fact that the most compelling 21st-century technologies -- robotics, genetic engineering, and nanotechnology -- pose a different threat than the technologies that have come before. Specifically, robots, engineered organisms, and nanobots share a dangerous amplifying factor: They can self-replicate. A bomb is blown up only once -- but one bot can become many, and quickly get out of control." Joy calls the new threats "knowledge-enabled mass destruction." To cause great harm to millions of people, an extreme person will need only dangerous knowledge, which itself will move through the biosphere, encoded as matter, and flit from place to place as easily as dangerous ideas now travel between our minds. In the information age, dangerous knowledge can be copied and disseminated at light speed, and it threatens everyone. Therefore, Joy's perfectly reasonable conclusion is that we should relinquish "certain kinds of knowledge." He says that it is time to reconsider the open, unrestrained pursuit of knowledge that has been the foundation of science for 300 years. "[D]espite the strong historical precedents, if open access to and unlimited development of knowledge henceforth puts us all in clear danger of extinction, then common sense demands that we reexamine even these basic, long-held beliefs."

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Indonesia Answers- AT: Democracy Solves Terrorism There is no statistical or empirical evidence showing democracy decreases terrorism F. Gregory Gause III, Associate Professor of Political Science at the University of Vermont and Director of its Middle East Studies Program, “Can Democracy Stop Terrorism?” Foreign Affairs, September/October 2005 There is, in other words, no solid empirical evidence for a strong link between democracy, or any other regime type, and terrorism, in either a positive or a negative direction. In her highly praised post-September 11 study of religious militants, Terror in the Name of God, Jessica Stern argues that "democratization is not necessarily the best way to fight Islamic extremism," because the transition to democracy "has been found to be an especially vulnerable period for states across the board." Terrorism springs from sources other than the form of government of a state. There is no reason to believe that a more democratic Arab world will, simply by virtue of being more democratic, generate fewer terrorists.

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Indonesia Answers- Democracy Bad— Conflict Democratization Fails & Spurs Ethnic Conflict Eric J. Hobsbawm, meritus professor of economic and social history at Birkbeck, University of London, “Spreading Democracy: The World's Most Dangerous Ideas,” Foreign Policy, September/October 2004 While threatening the integrity of universal values, the campaign to spread democracy will not succeed. The 20th century demonstrated that states could not simply remake the world or abbreviate historical transformations. Nor can they easily effect social change by transferring institutions across borders. Even within the ranks of territorial nation-states, the conditions for effective democratic government are rare: an existing state enjoying legitimacy, consent, and the ability to mediate conflicts between domestic groups. Without such consensus, there is no single sovereign people and therefore no legitimacy for arithmetical majorities. When this consensus – be it religious, ethnic, or both – is absent, democracy has been suspended (as is the case with democratic institutions in Northern Ireland), the state has split (as in Czechoslovakia), or society has descended into permanent civil war (as in Sri Lanka). "Spreading democracy" aggravated ethnic conflict and produced the disintegration of states in multinational and multicommunal regions after both 1918 and 1989, a bleak prospect.

Ethnic conflict causes terrorism and genocide that goes global Rodolfo Stavenhagen, Professor at the United Nations University, “The Ethnic Question,” p.84, 1990 Finally, when ethnic conflict becomes violent, it has a tendency to be particularly destructive, leaving deep scars in the body politic and the collective psyche. Massive human rights violations have been associated with ethnic conflicts, ranging all the way from genocide to apartheid to terrorism. The international community is therefore particularly concerned with the wider implications of ethnic conflicts around the world.