USA/Venezuela politics: Cold War
FROM THE ECONOMIST INTELLIGENCE UNIT
The war of words between the George Bush administration and that of Venezuela’s Hugo Chávez escalated into actual deeds at the start of February, with both sides expelling staff members at the embassies in Washington and Caracas. Threats on the Venezuelan side to halt oil exports to the US have again materialised. The Chávez administration is highly unlikely to take such a drastic step, but the tense state of affairs between the two countries is worrisome and raises concerns about the potential for friction in overall US-Latin American relations.
The trigger to the latest diplomatic clash between the two countries appears to have been the Bush administration’s efforts late last year to block the sale by third countries of military hardware to Venezuela. On February 2nd, the Venezuelan government raised the stakes in its battle with Washington when it expelled a US embassy naval attaché on grounds of alleged spying, a charge the US denies. This was seen as a very provocative move, and the next day the Bush administration sent home the second-highest-ranking Venezuelan diplomat in Washington. Days later, Mr Chávez announced his intention to accelerate the country’s arms build-up in order to defend it from potential US invasion.
Diplomatic moves have been accompanied by the usual rhetorical battles between the two countries. The US defence secretary, Donald Rumsfeld, recently compared Mr Chávez with Adolf Hitler; Mr Chávez subsequently compared Hitler favourably against Mr Bush.
On February 4th Mr Chávez even told a crowd of supporters that he would stop the flow of oil to the US if Washington decided to sever relations with Caracas—a highly unlikely occurrence. The Venezuelan president has made such threats in the past, but these are, for the moment, not considered credible. Venezuela, the world’s fifth-largest oil exporter, relies on the US market to consume its extra-heavy crude that cannot be refined elsewhere. Although it is trying to diversify its export markets by increasing its refining capacity in Venezuela and elsewhere, it would be virtually impossible to find a replacement for the US as a market any time in the foreseeable future.
This does not mean that friction with the US will not affect its oil business at all. Venezuela’s state oil company, Petróleos de Venezuela (PDVSA), wholly owns Citgo, a US refiner and retailer of oil and oil products. A conservative US religious group, the American Family Association, has called for a boycott of Citgo petrol stations by US consumers. Citgo has 14,000 such stations in the US.
Meanwhile, PDVSA has been using oil as a publicity tool of its own in the US. In the aftermath of Hurricane Katrina, when US oil and petrol prices spiked, PDVSA through Citgo began to distribute subsidised home heating oil at a 40% discount to lower-income households in various communities in the country. Most recently, on February 5th, it expanded the programme to Vermont, and will also supply homeless shelters with free oil. This follows shipments to five other states in January. The programme is seen as an attempt by Venezuela to taunt and embarrass the Bush administration, which has been criticised for its poor handling of Katrina disaster relief and for failing to address the jump in oil prices.
Regional repercussions
Venezuela’s vice-president, José Vicente Rangel, and its deputy foreign minister, Pavel Rondón, have tried to downplay the importance of the latest crisis in relations. The friction is certainly not new, as bilateral relations have deteriorated steadily since Mr Chávez came to power seven years ago, and especially since Mr Bush took office in 2001.
However, the latest round of heated language and the expulsion of diplomats could also damage Washington’s relations with Latin America in general. The US continues to accuse Mr Chávez of destabilising democracy in the region, by supporting radical presidential candidates such as the new president of Bolivia, Evo Morales (and presidential contender Ollanta Humala in Peru), and by using its oil wealth to influence and interfere in politics in other countries.
Venezuela has indeed positioned itself as the leading critic of the US in Latin America. Mr Chávez used the Sixth Summit of the Americas in Argentina in November and the gathering of the World Social Forum in Caracas at the end of January as a platform for his brand of anti-free-market, anti-Americanism. Venezuela also engages in an active programme of petro-diplomacy, having negotiated joint energy projects with a variety of countries and subsidised oil supply agreements with several Caribbean nations.
Venezuela’s growing diplomatic presence in the region has not been universally welcomed. Peru and Mexico (both of which have presidential elections due in 2006) have both withdrawn ambassadors as a result of diplomatic spats with Caracas in recent months. However, most governments in the region appear to have welcomed new Venezuelan oil and investment accords, and there is no sign that they are avoiding Mr Chávez’s overtures or see him as a threat. They might, however, resent the assertions made in Washington that they are being influenced by Venezuela. Consequently, the US’s hostility to Mr Chávez, despite his own provocations, probably does not constitute a productive form of diplomacy towards either Venezuela or the region as a whole.
With Latin America on a leftward trend (left-leaning governments are also power in Argentina, Bolivia, Brazil, Chile, Ecuador and Uruguay, and could soon be elected in Mexico and Peru), Washington will have to devise a more nuanced strategy that separates the difficult issues surrounding its relations with Venezuela from a much-needed positive and productive agenda for the rest of the region. This might not be in Mr Chávez’s interest, but it would be in everyone else’s.
SOURCE: ViewsWire Latin America
The war of words between the George Bush administration and that of Venezuela’s Hugo Chávez escalated into actual deeds at the start of February, with both sides expelling staff members at the embassies in Washington and Caracas. Threats on the Venezuelan side to halt oil exports to the US have again materialised. The Chávez administration is highly unlikely to take such a drastic step, but the tense state of affairs between the two countries is worrisome and raises concerns about the potential for friction in overall US-Latin American relations.
The trigger to the latest diplomatic clash between the two countries appears to have been the Bush administration’s efforts late last year to block the sale by third countries of military hardware to Venezuela. On February 2nd, the Venezuelan government raised the stakes in its battle with Washington when it expelled a US embassy naval attaché on grounds of alleged spying, a charge the US denies. This was seen as a very provocative move, and the next day the Bush administration sent home the second-highest-ranking Venezuelan diplomat in Washington. Days later, Mr Chávez announced his intention to accelerate the country’s arms build-up in order to defend it from potential US invasion.
Diplomatic moves have been accompanied by the usual rhetorical battles between the two countries. The US defence secretary, Donald Rumsfeld, recently compared Mr Chávez with Adolf Hitler; Mr Chávez subsequently compared Hitler favourably against Mr Bush.
On February 4th Mr Chávez even told a crowd of supporters that he would stop the flow of oil to the US if Washington decided to sever relations with Caracas—a highly unlikely occurrence. The Venezuelan president has made such threats in the past, but these are, for the moment, not considered credible. Venezuela, the world’s fifth-largest oil exporter, relies on the US market to consume its extra-heavy crude that cannot be refined elsewhere. Although it is trying to diversify its export markets by increasing its refining capacity in Venezuela and elsewhere, it would be virtually impossible to find a replacement for the US as a market any time in the foreseeable future.
This does not mean that friction with the US will not affect its oil business at all. Venezuela’s state oil company, Petróleos de Venezuela (PDVSA), wholly owns Citgo, a US refiner and retailer of oil and oil products. A conservative US religious group, the American Family Association, has called for a boycott of Citgo petrol stations by US consumers. Citgo has 14,000 such stations in the US.
Meanwhile, PDVSA has been using oil as a publicity tool of its own in the US. In the aftermath of Hurricane Katrina, when US oil and petrol prices spiked, PDVSA through Citgo began to distribute subsidised home heating oil at a 40% discount to lower-income households in various communities in the country. Most recently, on February 5th, it expanded the programme to Vermont, and will also supply homeless shelters with free oil. This follows shipments to five other states in January. The programme is seen as an attempt by Venezuela to taunt and embarrass the Bush administration, which has been criticised for its poor handling of Katrina disaster relief and for failing to address the jump in oil prices.
Regional repercussions
Venezuela’s vice-president, José Vicente Rangel, and its deputy foreign minister, Pavel Rondón, have tried to downplay the importance of the latest crisis in relations. The friction is certainly not new, as bilateral relations have deteriorated steadily since Mr Chávez came to power seven years ago, and especially since Mr Bush took office in 2001.
However, the latest round of heated language and the expulsion of diplomats could also damage Washington’s relations with Latin America in general. The US continues to accuse Mr Chávez of destabilising democracy in the region, by supporting radical presidential candidates such as the new president of Bolivia, Evo Morales (and presidential contender Ollanta Humala in Peru), and by using its oil wealth to influence and interfere in politics in other countries.
Venezuela has indeed positioned itself as the leading critic of the US in Latin America. Mr Chávez used the Sixth Summit of the Americas in Argentina in November and the gathering of the World Social Forum in Caracas at the end of January as a platform for his brand of anti-free-market, anti-Americanism. Venezuela also engages in an active programme of petro-diplomacy, having negotiated joint energy projects with a variety of countries and subsidised oil supply agreements with several Caribbean nations.
Venezuela’s growing diplomatic presence in the region has not been universally welcomed. Peru and Mexico (both of which have presidential elections due in 2006) have both withdrawn ambassadors as a result of diplomatic spats with Caracas in recent months. However, most governments in the region appear to have welcomed new Venezuelan oil and investment accords, and there is no sign that they are avoiding Mr Chávez’s overtures or see him as a threat. They might, however, resent the assertions made in Washington that they are being influenced by Venezuela. Consequently, the US’s hostility to Mr Chávez, despite his own provocations, probably does not constitute a productive form of diplomacy towards either Venezuela or the region as a whole.
With Latin America on a leftward trend (left-leaning governments are also power in Argentina, Bolivia, Brazil, Chile, Ecuador and Uruguay, and could soon be elected in Mexico and Peru), Washington will have to devise a more nuanced strategy that separates the difficult issues surrounding its relations with Venezuela from a much-needed positive and productive agenda for the rest of the region. This might not be in Mr Chávez’s interest, but it would be in everyone else’s.
SOURCE: ViewsWire Latin America
posted by Marko at 2/07/2006 05:28:00 PM
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