Santi Peña will be directly involved in the negotiation with Brazil, because several of his ministers are now part of the Itaipu council, such as Lea Giménez, the chief of staff, as well as Rubén Ramírez Lezcano, the national chancellor.
Write: Luis Allen.
In an unprecedented measure, but in keeping with the need to find the best strategy for the defense of national interests in Itaipu, President Santiago Peña arranged to send several executive ministers to the entity’s board of directors. From now on, one of the main issues in the relationship with Brazil is part of the negotiations for the new Annex C of the Treaty, but it could also be the case of fully entering into a renegotiation of the entire binational agreement that dates back to 1973.
The council of Itaipu Binacional is the scenario chosen by the governments of Brazil and Paraguay to carry out the difficult negotiations with a view to revising Annex C and even the same Treaty signed 50 years ago, after President Santiago Peña appointed several of its main ministers as members of the board of directors of the binational entity, emulating the appointments of state secretaries also made by the Brazilian president, Luiz Inácio Lula da Silva.
The issue of the Itaipu renegotiation will undoubtedly mark the presidency of Santi Peña, as it is a fundamental issue for the future of our country. Although the opposition has been somewhat surprised by the unusual decision of the new president, because the Constitution does not allow ministers to have any other occupation than that strictly related to their position.
Possibly, the Paraguayan head of state wanted to do the same as his Brazilian colleague, understanding the implicit message that the time has come for both countries to even try a total renegotiation of the Treaty and not just Annex C.
That is why the measure does not respond precisely to a “mirror effect” of the Brazilian attitude, but rather because it is essential that the national government demonstrate to its Brazilian counterpart that “the Paraguayan upper part” will be represented from now on by people who have with sufficient political weight, for having direct access to the president and therefore with the power to decide what is best for the country, if a valid strategy is really applied that is in tune with high national interests.
In the absence of an agreed strategy at the country level and known by public opinion, what Peña’s appointments suggest is the intention of showing Brazilians that the Paraguayan counterpart has sufficient backing from national political power, in order to defend with valid arguments the position that ultimately best suits Paraguay.
But for this, the necessary transparency in the negotiation towards society is a requirement, for which it is essential that a debate be opened with the active forces of the country, the political parties, the business community and the academic sectors, with a view to reaching to a great national agreement on the vital issue of the exercise of energy sovereignty and the demand to make the most of electrical energy for the benefit of the majority of the population, after for half a century a large part of Itaipu’s financial returns were to end up in Brazil, leaving a smaller portion in Paraguay, but in the hands of a minority of privileged people, especially because of their relationship with political and economic power.
A tip for negotiating
Itaipu’s board of directors basically governs the entity and represents the two partner states in the binational, although it can also serve as a sounding board to advance in the renegotiation of both Annex C and the Treaty as a whole. from its renewed composition, after the appointment of ministers who are members of the two cabinets of both governments.
For this reason, it can be affirmed without fear of equivocation that the final agreement on the future of the entity will no longer only be a merely technical issue in Itaipu’s board of directors, but eminently linked to political power, given the organization’s composition. There you can understand the reason for the majority presence of ministers, highlighting the historic moment of the hydroelectric renegotiation.
The understanding that is reached will already have the full support of power, both in Brazil and in Paraguay, but logically subject to the subsequent debate on the agreement reached, for its ratification in both national congresses.
The presence of the cabinet representatives will also help ensure that the technical-political agreement is not negotiated between roosters and midnight, with the Itaipu council being an appropriate body that has been chosen for this, taking into account the need to unite weighty technical arguments. with political priorities, which are also discussed on the broad stage of citizen opinion.
President Santi Peña has been directly involved both in the government and in the future of Itaipu, with the presence of several members of his cabinet in the management of the binational entity, thus highlighting the importance for the country of a better use of of the greatest national wealth.
Annex C and Treaty?
On August 13, 2023, the 50th anniversary of the Treaty was completed, beginning the review period of Annex C of financial benefits, according to the same fundamental Itaipu document. But Santi Peña proposed to Lula da Silva in a visit he made to him in Brasilia before taking office on August 15, that both countries start thinking about a total renegotiation of the Treaty, and not just Annex C.
In view of the fact that the Brazilian government itself sees that the negotiation will take a while, possibly longer than initially expected, the truth is that the first skirmishes will already take place in the negotiations with the contracting of power and the purchase of surplus energy by part of both countries, according to the current rate.
In this sense, there are technical opinions that indicate that Paraguay could still propose to its partner, with the current text of the Treaty, to buy the capacity that corresponds to it (50 percent of the total available in the plant), to resell part of the capacity to Brazil. energy that is not used at the national level at market prices in the auctions that are carried out in the neighboring market.
But this possibility would not be feasible if one takes into account that the Treaty is clear that Brazil should benefit from the transfer of energy not used by Paraguay, in exchange for “compensation”, as is currently the system that governs payments to the country, also including royalties, profits and compensation, which are provided for in the founding agreement.
In any case, our country requires enormous additional financial resources to reduce the large deficits in infrastructure, education, health and environmental sanitation, as well as housing and urban planning, so it is also a possibility that Itaipu continues to be thought of as a “rent ” through greater “compensation” for the transfer of energy to Brazil, until a long-term understanding is reached on the sale or export of surplus energy at current prices in the South American Southern Cone regional market.
The development model of Paraguay depends to a great degree on the greater use of energy for the purpose of industrialization in our territory, so there are also other key aspects to analyze in the Itaipu negotiation, on whose result the goal to achieve will also depend. the “investment grade” that allows the arrival of foreign capital to achieve the installation of industries, for example those of last generation technology based on renewable energy originated in the great binational dam of the Paraná River.
These are all very delicate and complex issues for negotiation with the neighbors, which somehow explains the step taken by Peña in the council of the binational, regardless of the fact that there is a vast sector of the opposition that disagrees with appointing ministers who must occupy full time of their specific work, according to the Constitution.
For the first time, Santi tested the political temperature thermometer for the first time in Deputies, where the opposition request to ask the Executive to review the appointments of ministers in Itaipu was flatly rejected.
This result confirms a comfortable situation of a pro-government political majority that prevents, for now, any hint of a request for impeachment for allegedly “poor performance of functions”, according to the opinion of some opposition spokesmen, regarding the president’s decision to send its ministers to form part of the Itaipu board of directors, which would collide with articles of the Constitution regarding the incompatibility for the secretaries of State in the exercise of their functions, in terms of having other occupations outside their portfolio.
But if it is a question of forming in Itaipu the representation on the council that ensures technical solvency and political support, it is possible to admit that the appointments made by Santi are a guarantee for success in the negotiation, so it is well worth it. the ministers are “commissioned” to such a great task that it does to the future of the nation.