As the Obama Administration settles into the White House and
reviews its foreign policy agenda, one significant topic likely to
emerge early will be U.S. relations with Venezuela and its radical,
anti-American president Hugo Chávez. The orderly
transition from a Republican to a Democratic
Administration in the U.S. in January 2009 contrasts with the
polarizing battle underway in Venezuela over perpetuating
Chávez's stay in office. A new constitutional referendum
took place on February 15. Its passage will allow Chávez to
run for additional six-year terms in 2012 and beyond, giving him
the time he says he needs to consolidate his Bolivarian Revolution.
The referendum raises the specter of further restrictions on
individual freedoms and the consolidation of authoritarian rule in
During the electoral campaign and in the run-up to his January
20 inauguration, President Barack Obama expressed interest in
improving relations with Venezuela. Nonetheless,
President-elect Obama had also signaled concern about
Chávez's political and economic role in the region and over
Chávez's support for the narco-terrorists of the
Revolutionary Armed Forces of Colombia (FARC).
These comments provoked an angry firestorm from Chávez
who charged the President-elect with meddling in Venezuelan
politics, and launched into a fresh diatribe against what he called
the U.S.'s effort to dominate Latin America and undermine his
regime. It was a blast reminiscent of
Chávez's anti-American tirade when he expelled the U.S.
ambassador to Venezuela last September 11. Chávez's behavior also
highlights the substantial challenge the U.S. and the Obama
Administration face when dealing with a Latin American leader who
has staked his international and domestic policy on hostile
relations with the U.S. and on the construction of an alliance
aimed at undermining U.S. influence in the Western Hemisphere.
This analysis focuses primarily on President Chávez's
actions as an international actor and on Venezuela's increasingly
antagonistic international role. This paper argues that coherent
and prudent U.S. policy will attend first to key U.S. national and
security interests in Latin America that include curbing drug
trafficking, defending against potential threats of
international terrorism, helping friends and allies, and preventing
the formation of a global anti-U.S. coalition aimed at weakening
While many experts proclaim the demise of the Monroe Doctrine
and consider "spheres of influence" to be an obsolete
geopolitical concept, the U.S. naturally recoils from continued
loss of influence and leverage in the region. Washington
should continue to view extra-hemispheric security challenges
from hostile regimes or forces as matters of national concern. A
sound policy for Venezuela will also contain an adequate plan for
addressing U.S. energy dependence since President Chávez
treats his nation's oil resources as a pressure tool and
The Obama Administration should refrain from dispatching a new
ambassador to Caracas until it can assure the American people that
it has developed an effective strategy for tackling the
challenges outlined above. Absent a firm commitment for
constructive and verifiable cooperation by President
Chávez, the White House should refrain from renewing
It should also consider a range of measures that include
rigorous monitoring of Venezuelan banks and companies, including
the national oil company, for potential acts of corruption,
money laundering, or fronting to help others evade
international sanctions, and additional Treasury
sanctions against key Venezuelan officials guilty of criminal
acts. The Administration must also step up cooperation with key
regional friends, such as Brazil, Colombia, and Peru, to provide a
balance for Venezuela's destabilizing activities. Finally, the
Administration should prepare a contingency plan for measures to be
taken if Venezuela cuts off oil supply to the U.S.
Clashing with Hugo Chávez
Undoubtedly, Hugo Chávez will remain a polarizing
figure in the years ahead. Many opinion makers, academics, and
presumptive Latin American experts blame the U.S. for the friction
with Chávez. They portray Chávez as a harbinger of
hope, an inspiration for Latin America's poor, and a member of what
one true believer dubbed the "axis of hope." They argue that
current U.S. difficulties with Venezuela and Latin America result
from bad U.S. global and regional policies: the war in Iraq,
"neo-liberalism," hegemonic arrogance, failed drug-trafficking
policies, interventionism, unrestrained free trade, rapacious
consumerism -- the list is endless.
They blame free trade, markets, and rampant globalization for
poverty and inequality and accuse Washington of misconstruing
Chávez's allegedly noble efforts to empower the poor and
powerless and bring about genuine social improvements. They
blame the clash with Chávez on the Bush Administration and a
handful of meddling neo-conservatives bent on regime change.
They hope the Obama Administration will make a 180 degree turn from
Fortunately, the majority of Americans are not so easily
deceived. Americans instinctively disapprove of Chávez's
concentration of power, the absence of checks on executive
authority, and his quest for indefinite power. They oppose
curtailments of freedom and individual rights either by
regulation or intimidation. They are offended by his aggressive
insults and slurs against American leaders. Moreover, they
worry about Chávez's cozy relations with Iran and Russia,
ties to FARC, and covert efforts to radicalize and destabilize
Latin American democracies. Americans distrust a leader whose
objective is to drive up the price of oil and who routinely
threatens to cut off sales to the U.S.
An Oversized Personality
Determining a sound policy for dealing with the Chávez
challenge requires a general assessment of Chávez's
character, his attitudes, and worldview. Chávez is no
ordinary Latin American political leader. He is charismatic,
committed, dynamic, intemperate, impulsive, militaristic, and
shameless. While at times humorous and engaging, he is often
embarrassingly crude and insulting.
Born in July 1954, Hugo Chávez Frías attended
Venezuela's military academy and served as a tank-division soldier
and paratroop officer, rising to the rank of lieutenant colonel. In
February 1992, Chávez participated in a failed military
coup, which resulted in the deaths of 14 Venezuelan soldiers.
Imprisoned for two years, Chávez received a
presidential pardon in 1994 from Rafael Caldera. In 1998,
Chávez launched a political campaign as a relatively unknown
third-party candidate and swept the elections with 56 percent of
Having ousted the reigning two-party system, Chávez
oversaw the drafting of a new constitution to broaden executive
power. He survived a brief opposition attempt to oust him in April
2002, a coup he erroneously claims had full U.S. backing. This coup
was followed by a prolonged strike by the national oil company
(PdVSA) and by a recall referendum in 2004, which Chávez won
handily. Chávez was re-elected president in December 2006
with 63 percent of the vote, but suffered a setbackto his
ambitionswhen his an attempt to alter the constitution to
become re-electable for life failed in December 2007.
Chávez thrives on confrontation and conflict. In the
opinion of veteran Miami Herald journalist Andrés
Oppenheimer, he represents a brand of narcissistic Leninism that
inflates his ego to enormous proportions. Enrique Krauze, a
prominent Mexican historian, recently concluded in a new study that
Chávez has a deep-rooted need for the "personification" of
power and that Venezuela currently suffers from a politically
unhealthy "cult of personality."
Unlike most Latin American leaders, Chávez is not content
to govern within the confines of a single nation. Former
Brazilian president Henrique Cardoso observed that Chávez is
driven by a deep sense of ideological fervor and missionary zeal.
Latin American intellectuals have interpreted Chávez in the
light of past strongmen or caudillos, calling him a
"Péron with Petroleum" or "Tropical Mussolini." Latin
American critics, such as Krauze or Peruvian writers Mario and
Alvaro Vargas Lllosa, former Mexican foreign minister Jorge
Castañeda, author Carlos Fuentes, and Venezuela's Moises
Naim, editor of the American journal Foreign Policy, speak
their minds freely and accurately about Chávez's
anti-democratic mindset and the threat he poses to democracy in
Three manifestations of his combative personality will fuel
A Compulsion to Fight the "Oppressor." Chávez's
Latin America is shaped by a deep, ongoing Marxian-like
struggle between haves and have-nots, between oppressors and
victims. In Chávez's mind, Latin America is a prisoner held
in subjugation by external powers and their internal allies
and agents who write the economic rules and dispense political
For Chávez, history is confrontation, collision, and
struggle against empires that began with the European arrival in
the Americas. It is a classic representation of what the
Venezuelan political analyst Carlos Rangel called the evolution
from "the good savage to the good revolutionary."
Chávez claims he does not hate the U.S., only its past
interventions in Latin America, its capitalism, its imperialism,
and, of course, its elected leadership. Yet, the U.S. he
envisions is one significantly shorn of global power and
international influence. Visceral anti-Americanism lies at the core
of much of Chávez's thinking and rhetoric. It is the
critical unifier that draws popular support and international
connections. Chávez, moreover, is taking deliberate steps to
make Caracas a mecca for anti-American pilgrims, a center for
"crystallizing forces in opposition to the empire."
A Penchant for Political Violence. While Chávez
rose to office by the use of the ballot box, he is verbally and
ideologically inclined to political violence. Many of his
idols -- from Mao to Che -- were responsible for revolutionary carnage
and the deaths of thousands, if not millions. As a soldier,
Chávez participated in a military coup that shed blood, and
views force as integral to political action. The
militarization of the state and use of military power is an
essential tool for attaining and preserving political power. Power,
he claims, once attained must never be returned to the privileged,
even if it requires sending tanks to crush the opposition.
Chávez walks a thin line between flirting with and
advocating political violence as a means for political change.
Continued efforts to scapegoat the U.S. and attack anyone allegedly
associated with the U.S. can, observes historian Alan McPherson,
"turn from criticism [of the U.S.] to distrust to outright hatred
[and violence] in the blink of an eye...."
A Desire to Don Fidel Castro's Mantle. As an ailing Fidel
Castro clings to life, 54-year-old Hugo Chávez stands ready
to assume his place as the leader of Latin America's radical Left.
When asked recently what differentiates him from Castro,
Chávez replied, "Fidel is a communist. I am not. I am a
social democrat. Fidel is a Marxist-Leninist. Fidel is an atheist.
I am not." Indeed, while Chávez has adopted a
far looser variety of economic policies and has yet to come near
Cuba's totalitarian controls over society, he zealously pursues an
aggressive internationalist strategy similar to that of Fidel. Upon
Fidel Castro's death he may likely feel the need to radicalize his
behavior, certainly eclipsing Raul Castro, to become the
lodestar for the revolutionary Left in Latin America.
President Chávez is a catalytic leader who hopes to write
a new chapter for the Western Hemisphere, one that equalizes the
two halves of the hemisphere. Aside from oil, energy for his brand
of "revolution" is derived from nationalism, cultural resentment,
ethnic and social exclusion, poverty, and a sense of victimization.
Historically, the U.S. faces significant difficulties in its
relations with charismatic leaders able to concentrate power and
cast themselves as a revolutionary antithesis to the U.S.
Chávez is no exception.
Chávez's Three Levels of
Chávez aims to exercise power at three levels: national,
Latin America and the Caribbean, and global.
1) The National Level: The Bolivarian Republic of
Venezuela. Chávez places himself squarely at the center
of Venezuela's political, economic, and social transition from a
two-party democracy to a one-party people's democracy and from a
market-based economy to one that is socialistic and
state-dominated. Chávez has reshaped the nation's
political landscape, routed the once-powerful opposition,
and concentrated political power in an effort to impose a vertical,
top-down system of political authority.
His new political party, the United Socialist Party of Venezuela
(PSUV), exercises nearly complete dominance over the
unicameral legislature, while judicial independence scarcely exists
in Venezuela. Ninety percent of cabinet ministers are or were
military officers. In general, an increasingly militarized
Venezuela reinforces Chávez's capacity for control, binds
the allegiance of the armed forces to his political agenda, and
builds a power base able to defeat possible counter-currents of
Under Chávez's direction, Venezuela's oil-dominated
economy continues moving toward a socialism of the 21st century, a
hybrid between socialism and mercantilism, or a form of state
capitalism. Substantial sectors of the productive
economy are being nationalized. Land "reform," collectives, and
other communal economic ventures are supposed to power an
agrarian transformation. The private sector is subjected to
threats of confiscation, nationalization, and excessive government
On November 30, 2008,Chávez issued an order to the PSUV
and the Venezuelan people to begin laying the legislative
groundwork that would allow him to alter the constitution to enable
him to remain in power to 2019 or 2021. On February 15, 2009, a
referendum to allow Chávez to run in 2012 passed with 54
percent of the vote. In general, the Chávez project calls
for the creation of a socialist economy and a monolithic political
system that nurtures a new generation of politically
indoctrinated loyalists and clients while tightening the noose
of control and restriction around traditional mainstays of
pluralism in Venezuelan society: multiple political parties,
the Catholic Church, independent unions, student movements,
civil society, and a free media.
2) The Latin American and Caribbean Level: Glorious
Unity. The second tier of Chávez's ambitions
centers on what Argentinean writer Tomás Eloy Martinez calls
"the utopian dream of Latin American political unity" advocated by
the liberator Simon Bolivar and other 19th-century
visionaries. In flights of political fantasy,
Chávez imagines a resurrection of "Gran Colombia." He
also envisions economic and eventual political integration of
Latin America and its development as an independent
counterweight to the U.S.
Chávez views race and ethnic and class identity as
critical tools in the struggle for continent-wide influence. He
accentuates polarization throughout the continent between the
traditional "haves," notably the Europeanized elites, and the
historic "have nots," from the generally less privileged but
numerous mestizo to the largely excluded indigenous and
Afro-Latin Americans. He holds out a promise of transfers of wealth
and political power from the elite to the masses.
Chávez recognizes he cannot entirely dictate the regional
agenda for Latin America. He must, therefore, remain
sufficiently flexible to support projects such as the recently
created Union of South American States (UNASUR). He must also
adjust economic and trade policies sufficiently to preserve
membership in South America's common market, MERCOSUR.
Chávez also stakes his reputation for leadership on an
ability to either finance or promise large-scale infrastructure,
such as pipelines, refineries, and trade and market
integration schemes. In exchange, Chávez hopes others
will join him in opposition to U.S. policies and influence.
Chávez works hard to win support for organizations, such as
the Rio Group and the Organization of American States (OAS).
3) The Global Level: The World According to Chavez.
Unlike other Latin America leaders who are largely content to
govern within the political and economic confines of their nations,
Chávez aspires to a broader, international role. A
relentless world traveler, Chávez roams the planet searching
for platforms and venues through which to cultivate new
friends, attack U.S. "imperialism," and lay the foundation for an
alternative international order, reminiscent of the 1960s and 1970s
Third World demand for a new international order. From the rise of
radical Islam to the crisis in the international financial
system and the return of great-power competitors to the U.S. like
China and Russia, Chávez applauds and encourages a
changing "correlation of forces" and shifts in the distribution of
international power favorable to his views and particular
The Power of Petroleum: Tool and
U.S. policymakers would undoubtedly pay less attention to
Chávez and Venezuela were it not for its giant reserves of
oil and gas. It is estimated that Venezuela possesses the
seventh-largest amount of oil reserves. It is currently the world's
eighth-largest producer of crude oil. Oil exports account for as
much as 94 percent of Venezuelan export earnings and 50 percent of
its government revenue. Just recently Venezuela surpassed
Mexico as the third-largest supplier of crude oil imported to the
U.S. -- after Canada and Saudi Arabia. (The U.S. imported 1,162,000
barrels a dayfrom Venezuelain October 2008.) Oil revenues
allowed Chávez to increase social spending by 314 percent in
one decade in power. For Chávez, oil is a tool for an
aggressive foreign policy and a potential weapon against the
Chávez uses Venezuela's oil wealth to sustain his
domestic popularity, provide subsidies to the poor, and as the
source of generous international assistance and influence.
Chávez began providing oil assistance to Cuba in 2000. In
June 2005, he launched Petrocaribe to offer discounted oil to an
expanding list of member nations. Currently, 19 Caribbean and
Central American nations benefit from Petrocaribe. Members consume
about 300,000 barrels per day, roughly 10 percent of
Venezuela's daily output on concessionary terms. While payment
terms vary according to rises and falls in the price of oil, the
standard Petrocaribe mechanism requires payments of 40 to 50
percent in the first 90 days, and the balance over 20 years at 1
The political strings associated with Petrocaribe are
unclear, but Chávez certainly seems to believe that
membership and receipt of Venezuela's assistance will
translate into favorable influence abroad and in regional
bodies like the OAS. Chávez has also used special
arrangements to send petroleum and other aid to assist Daniel
Ortega and the Sandinistas in Nicaragua and the Farabundo Marti
National Liberation Front (FMLN) in El Salvador. He even sends
heating oil to poor Americans.
Within OPEC, Chávez acts as a price hawk pushing for
higher prices at the pump. At the annual OPEC meeting in 2007, he
pushed for the oil cartel "to become a stronger player in the
geopolitical domains," calling on it to assume an active role in
battling poverty and assisting development. In short, pressing OPEC
to act as a tool for the global redistribution of wealth and the
establishment of a new international economic order. When OPEC met
in December 2008, Chávez pressed for a throttling back
of OPEC production and for higher prices of between $70 and $80 per
barrel in order to advance Venezuela's socialist development.
On repeated occasions, Chávez has absurdly denounced
the U.S. for either plotting to overthrow him and invade Venezuela,
or for meddling in the domestic economy. At each turn,
Chávez has relished playing the role of alarmist,
repeatedly threatening to cut off oil to the U.S. He has also
made it clear that he intends to redirect Venezuelan oil that
generally is sold to the U.S. to new clients with more compatible
political views such as China and Vietnam.
A rush to punish the U.S. might result in economic suicide
for Chávez. While oil is a fungible commodity, the nature of
Venezuela's product -- heavy sour crude -- requires specialized and
costly refining in nine refineries either in the U.S. or in the
Caribbean, which are primarily structured to serve the U.S. market.
Cutting off sales to the U.S. could thus prove disruptive to
American oil supply, but would likely have disastrous economic
consequences for Venezuela as well. The logic of the current
situation is that the U.S. should undertake a concerted effort to
wean itself from its reliance on oil from Venezuela, doing so at a
pace that outstrips Chavez's capacity to find the new clients he
claims will make the enormous investments in exploration,
shipping, and refining to meet his long-term goals.
PdVSA: Corruption's Energy Giant? The fortunes of
Venezuela hinge on the success of the national oil company
Petroleos de Venezuela, S.A. (PdVSA). PdVSA generates revenue in
excess of $100 billion annually. Its ability to develop Venezuela's
precious oil efficiently and honestly is critical to the lives
of all Venezuelans. Yet, according to most experts familiar with
the company, PdVSA is an increasingly opaque entity, a
combination black box and an automated teller machine for the
The mystery begins with accounting and production figures.
Many experts believe that in recent years, despite touted
investments, production has declined. PdVSA produces, it claims,
3.2 million barrels of oil per day, although experts believe this
figure is exaggerated by as much as 0.5 million barrels per
day. Management of PdVSA is reportedly disorganized, with frequent
changes in ministers and with politicization of the industry to
advance Chávez's political agenda. PdVSA resources are used
to pay for nationalization of the non-energy sector and to fund a
broad array of social programs. Venezuelan oil is, as noted above,
freely used to assist friends with subsidized sales or for
barter-like agreements with Cuba.
With transparency and accountability continuing to decline in
Venezuela, PdVSA increasingly appears to be a vehicle for corrupt
practice. In November 2008, a Miami federal jury convicted
Venezuelan citizen Franklin Duran of acting as an unregistered
foreign agent after he accepted a mission to enter the U.S.
and offered to pay a certain Guido Antonini Wilson for his silence.
This was the same Antonini Wilson who was arrested in Buenos Aires
in August 2007 carrying a suitcase filled with $800,000 in cash
after landing in an aircraft owned by PdVSA.
The money, the prosecutors contended, was intended for the
campaign of Christina Fernandez de Kirchner, who was then running
for president of Argentina. Witnesses at Duran's trial claimed that
Venezuelans acting on behalf of the Chávez government
were passing as much as $5 million in cash to the Kirchner
campaign. They also stated that Chávez had ordered
Venezuela's intelligence chief Henry Rangel Silva to silence
Antonini Wilson with bribes. The lengthy trial provided
a disturbing look at corruption within Venezuela and left unclear
the role of PdVSA assets in the operation.
While unfamiliar names in the U.S., Ricardo Fernandez Barruecos,
a Colombian-Venezuelan rags-to-riches beneficiary of the largesse
of the Chávez regime, or Walter Alexander del Nogal, a
pardoned murderer and high-flying Venezuelan who fled Argentina at
the time the Antonini Wilson "suitcase" case broke in
Argentina in 2007, constitute what is referred to as the new
"Bolivarian bourgeoisie," or boliburguesia, an unsavory
crowd infatuated with expensive cars, high-priced real estate, and
lavish life styles. The range of credible allegations
regarding these and other prominent individuals range from illegal
enrichment and corruption to money-laundering and
narcotics-trafficking. Given the protective smokescreen
provided by the Chávez regime and a lack of independent
investigative agencies, men like Fernandez Barruecos and del Nogal,
only serve to raise suspicions about presumably legitimate
businesses in Venezuela. The equivalent of modern-day
buccaneers, they are attracted to PdVSA's hidden treasure.
Earlier in 2008, files from a laptop computer belonging to FARC
guerrilla leader Raul Reyes contained a cryptic discussion of
a Venezuelan offer to provide FARC with oil that could then be sold
to support military operations.
The Duran case, the activities of Fernandez Barruecos or
del Nogal, and evidence from a dead guerrilla's computer were
quickly dismissed by Chávez as fabrications. Yet for others,
they may represent the tip of a dangerous, undirected iceberg.
It is plausible that the top management of PdVSA has been
politically compromised by corruption, mismanagement, and bad
actors as to cause harm to the interests of the Venezuelan
people and to the security interests of the U.S.
Understanding PdVSA will certainly challenge U.S. financial
forensic skills as it continues to track the money passing in and
out of Caracas that sustains corruption, drugs, political
instability, and, potentially, terror around the world.
ALBA: Autarky, Intervention, or
In 2004, Chávez joined with Cuban dictator Fidel Castro
to launch the Bolivarian Alternative for the Americas (ALBA). The
initial conception for ALBA was to make it an alternative for
profit-driven and allegedly unregulated free trade and a bulwark
against the U.S.-led Free Trade Area of the Americas. Since
then, Bolivia (2006), Nicaragua (2006), Dominica (2007), and
Honduras (2008) have signed up for membership in ALBA. Ecuador
under Rafael Correa has aligned itself with ALBA, but is not yet a
In the most recent gathering of ALBA heads of state in Caracas
on November 26, 2008, Chávez vowed to end the "hegemony of
the dollar" and proposed creating a "solidarity-based commercial
exchange system" centered on a single monetary zone and the
establishment of a joint currency, the "sucre," to be
established within two to three years. Chávez pressed for
ALBA members to loosen ties with the Inter-American Development
Bank (IADB) because it exerts political pressure on loan recipients
and endorsed Ecuadorian President Rafael Correa's idea of
conducting an audit or debt tribunal to determine which foreign
debts are legitimate.
While ostensibly an economic integration program, ALBA
views itself as representing an exportable ideology and is
working to support a political shift to the radical left. ALBA's
march, while erratic, has been persistent. One authoritative
confidential source claims that Chávez pumped as much as $18
million into the presidential campaign of ALBA partner Evo Morales
in Bolivia. He also injected himself into political campaigns in
Mexico, Nicaragua, and Peru in 2006. Gifts of cheap petroleum,
fertilizers, and promises of help with electrical energy helped
Daniel Ortega win Nicaragua's presidential election in
A current target for election support and potential
destabilization from the ALBA group is El Salvador, where in
March 2009 the Farabundo Marti National Liberation Front (FMLN)
stands a strong chance of unseating the ARENA party that has held
executive office since the mid-1980s. The electoral scene in Panama
is more complicated, where elections to replace Revolutionary
Democratic Party (PRD) leader Martin Torrijos are scheduled for May
2009. A former housing minister of one-time military strongman
Manuel Noriega, Balbina Herrera of the PRD is in a hotly contested
race with supermarket tycoon Ricardo Martinelli. The vital
Panama Canal, a booming financial sector, a strong Chinese
presence, growing narcotics ties, and the proposed free trade
agreement with the U.S. make Panama a country of interest to
Chávez. There is considerable speculation that Chávez
is prepared to back the more leftist candidate.
Peru, with its substantial indigenous population, vigorous if
not always equitable economic growth, serious governance problems,
and free-trade agreement with the U.S. is also a prime target
for ALBA members. With elections in Peru in 2010, concerns rise
regarding what lengths Chávez will go to support a
second bid by Ollanta Humala for the presidency, as he did in
Humala's 2006 bid for the Peruvian presidency. A continued
proliferation of so-called ALBA houses -- training and solidarity
centers for Chávez's Peruvian followers -- in Peru has caused
national alarm and prompted a legislative investigation of
their activities. It is a reasonable assumption that
Peru will be targeted for high-intensity electoral support in
FARC's Best Friend?
On January 11, 2008, in a major address to Venezuela's
National Assembly, Chávez lauded the FARC and a smaller
insurgent group, the National Liberation Army (ELN), as "true
armies" with a progressive political agenda and capable of
exercising control and governing a segment of Colombian
territory. Even if armed, deadly, and repugnant to the vast
majority of Colombians who must live with these violent groups in
their country, Chávez praised the FARC and ELN because they
fought for the Bolivarian cause, i.e., socialism, nationalism, and
"anti-imperialism." In the same speech, he denounced the elected
government of Colombian President Alvaro Uribe and demanded the
expulsion of "the U.S. imperialist" from Colombia. He urged
Europeans and others to remove FARC and ELN from their terrorism
lists and grant them belligerent status. The speech marked
an apogee of support for the FARC.
For years evidence has grown regarding the links between
Chávez and FARC. In 2007, as international attention
focused on FARC's holding of hostages and on Colombian
President Uribe's readiness to allow Chávez to act as an
emissary to FARC, contacts and ties between Chávez and
FARC grew. On the public level, Chávez's involvement in the
hostage negotiations helped to demonstrate an image of
conciliation and humanitarian concern. Beneath the surface,
Chávez was deepening channels of contact with the FARC
leadership and moved toward closer collaboration aimed at the
changing political landscape in Colombia. Chávez
offered FARC a hope of reviving its waning political fortunes,
helping it to escape the status of an international pariah with
recognition as a belligerent force, as well as logistical and
Chávez responded angrily to a March 1, 2008, Colombian
military raid on a FARC camp just within Ecuador's boarder that
resulted in the death of Raul Reyes, FARC's number two, and two
dozen guerrillas, with threats of war against Colombia, provoking a
brief but intense international crisis.
Recovered in the raid were laptop computers containing a wealth
of detail on FARC-Venezuelan ties. Central to the discussions
between FARC and Chávez's agents were apparent promises of
substantial financial and logistical assistance, which, had they
been granted, would have eased pressure on FARC and given it
improved capacity to wage continued war against the Colombian state
Following the death of FARC's historic leader Manuel Marulanda
in March 2008 and the Interpol authentication of the Reyes computer
files in May, Chávez announced that the era of the armed
guerrilla in Latin America has ended. The dramatic,
bloodless rescue of former Colombian presidential candidate Ingrid
Betancourt, three Americans, and other high-value hostages by
Colombian special military forces in early July 2008 also helped
dampen Chávez's interest in FARC.
In September 2008, the U.S. Department of the Treasury continued
its follow-up investigation of the FARC-Venezuela connection. On
September 12, 2008, it added the names of Hugo Carvajal, director
of Venezuela's Military Intelligence Directorate; Henry Rangel
Silva, director of the Venezuelan Directorate of Intelligence
and Prevention Service (DISIP); and Ramón Rodriguez Chacin,
former Minister of the Interior and Justice to its list of
specially designated foreign nationals and forbade U.S.
citizens from engaging in financial transactions with any of
the three men. The Treasury Department charged that all
three senior government officials had "armed, abetted, and
funded the FARC, even as it terrorized and kidnapped
innocents" and, in essence, blacklisted them. Since
September, fresh reports continue to circulate regarding
FARC's expanding presence in western Venezuela.
The Obama Administration can ill afford to lose sight of
Chávez's apparent ideological affinity for the FARC or
underestimate his readiness to lend logistical and political
support to FARC and its anti-American allies in Colombia as the
2010 elections approach.
Cocaine's Hottest Route
While Venezuela does not grow coca leaf or produce any
significant amount of cocaine, it has a rapidly growing drug
problem. Cocaine is arriving in increasing quantities from
neighboring Colombia for transshipment to foreign
destinations. U.S.drug-enforcement officials point to increasing
complicity between Colombian cocaine producers, FARC
middlemen, and Venezuelan military and civilian officials.
In 2006, Chávez ended cooperation with the U.S. Drug
Enforcement Administration (DEA) after he accused its agents of
spying. Venezuela claims it is pursuing active drug-control
efforts, but offers little in the way of independently
verifiable evidence. The amount of cocaine shipments believed to be
originating in Venezuela has continued to rise from approximately
50 metric tons [MT] in 2002 to more than 250 MT in 2007.
Chávez promotes this new spirit of non-cooperation
in matters relating to the drug trade. His opinions and
actions buttress decisions made by presidents Morales in Bolivia
and Correa in Ecuador. In Bolivia, Morales has advanced the
cause of the coca growers and drawn back from cooperating with the
U.S. on counter-drug efforts. On November 1, 2008, Morales ordered
the suspension of DEA operations in Bolivia.
In Ecuador, Rafael Correa is also moving to distance his
country from cooperation with the U.S. and will close the forward
operating aviation base for detecting drug shipments at Manta in
2009. Manta has been a key for advancing drug seizures in the
Andean and Pacific areas. Preserving an effective anti-drug
strategy for the region will face serious challenges as a
result of the distrust and distortions begun and encouraged by
Provoking a Regional Arms Race?
Of all its calamities in the 20th and early 21st
centuries -- civil wars, insurgencies, and devastating crime -- Latin
America has been largely spared inter-state conflict. The last
clash of military forces between nations took place in 1995 in a
short border conflict between Peru and Ecuador. In recent
years, Latin American nations have reduced the size and burden of
their military institutions, established greater civilian control
over their militaries, and made a broad commitment to preserving a
nuclear-weapons-free region and to preventing the pursuit of
weapons of mass destruction. Overall, Latin America's share of the
world arms market has remained low.
Regional diplomacy helped diminish potential conflicts as it did
when the Rio Group convened in March 2008 to reduce
Colombia-Ecuador-Venezuela border tensions and dampened
domestic tensions in the Bolivia political crisis in October
2008. Many Latin American states have accepted the need for
security concepts based on interdependence, transparency, conflict
resolution, and enhanced security cooperation.
Chávez and the Venezuelan government are working to
reverse this trend. Chávez's nationalism and his reassertion
of rights of unrestricted sovereignty, especially when dealing
with transnational threats -- the reluctance to deal with shared
challenges, such as control of FARC or to cooperate in a
meaningful way to curb narcotics trafficking -- are a step backward
from well-enshrined, cooperative security principles.
Chávez has also put Venezuela in the vanguard of a new
Latin American competition in arms. The Stockholm International
Peace Research Institute noted in its 2008 report that South
America has increased its defense spending by 33 percent, after
inflation, since 2000. This amounted to expenditures of $40
billion for armed forces in 2007. Venezuela increased its
military spending by 78 percent, followed by Ecuador and Chile with
53 percent and 49 percent, respectively. Brazil announced major
increases in arms expenditures, which it argues correspond to
its much larger national defense needs than any other South
American states. 
Venezuela's acquisition of arms, primarily from Russia, is
fueling new concerns and uncertainty among its neighbors about its
intentions. Chávez claims his country needs an infusion of
arms to defend itself against the prospects of a U.S. invasion.
Conflicting disputes over land and maritime borders with
Colombia and Guyana and Chavez's recent support for the
destabilizing FARC coupled with the increased militarization of
Venezuelan society is creating a climate of unease in South
America's northern countries.
Forgetting a promise made in 1999 not to waste resources on arms
purchases, Chávez is committing to build a more powerful
military to defend the Bolivarian revolution against supposed U.S.
imperialism. While arming his country may be a
sovereign right, Chávez is clearly leading Venezuela
down the wrong track. In an area of general peace and during an
economic downturn, the increased burden of arms
expenditures -- unlike Brazil, Venezuela must import all its
weapons -- will reduce resources for social programs and poverty
reduction, undercut more positive trends in hemispheric
security, and miss the main challenge entirely, which is citizen
Viva Fidel! Viva Hugo!
Following the failed 1992 coup and his two years of imprisonment
and subsequent pardon, Hugo Chávez turned to Fidel Castro.
After his release, Chávez immediately visited Cuba and began
an association with Castro that continues to deepen. Chávez
made Cuba's Communist dictator his mentor, strategic advisor,
and spiritual inspiration. He recently referred to Fidel Castro as
"Our Father Who Art in Havana."
Since Chávez became president, ties between Cuba and
Venezuela have continued to thicken, even after Fidel passed the
reins of power to his brother, Raul. Cuba's abysmal economic record
under Communist command economics makes Cuba heavily dependent on
foreign credits and on the export of its people rather than goods
or services, leaving one observer to note its status as a
"gigolo economy." Cuba has been a ready recipient of the relief
Chávez has provided.
The centerpiece of the Cuba-Venezuela alliance remains an
oil-for-services agreement between the two countries that sends
doctors, health workers, sports trainers, and Cuban
specialists in security and intelligence to Venezuela in
exchange for an estimated 92,000 barrels of oil per day. Cuba and
Venezuela have signed a reported 300 cooperation projects. Targets
for Venezuelan assistance include Cuba's unproductive and
beleaguered agricultural sector. Showcase projects in Cuba include
a proposed $5 billion petrochemical complex and renovated oil
refinery in Cienfuegos, a city that has languished following the
collapse of the Cuba-Soviet tie. Venezuela is also
reportedly putting $700 million into a nickel plant in eastern
Holguin province that will send raw materials to a stainless steel
plant in Venezuela. Estimates of the total value of the
economic exchanges run as high as $7 billion.
Although some experts predicted that because of his adulation of
Fidel, Chávez's ties with Fidel's less charismatic brother
Raul might weaken, there has been no evidence that this is
occurring. Chavez has continued to feature the Cuba-Venezuela
connection, and received Raul Castro in Caracas during the
Cuban leader's first foreign trip as president in December 2008.Inter-American dialogue scholar Dan
Erickson wrote in his recent book that, "Fidel Castro might have
retired, but Hugo Chávez was more than ready to play the
role of regional provocateur and adversary of Washington."
After 50 years of Castro's totalitarian rule, a transition
away from Communist rule to a more democratic society in Cuba
is long overdue. Venezuela's economic assistance and political
support extends the Cuban dictatorship's lease on life. The extent
to which Chávez retards democratic change and helps the
Communist gerontocracy retain power works against a long-stated,
bipartisan goal of a free, democratic Cuba.
Russia and Belarus
"How we have missed the Soviet Union," Chávez remarked
recently,prompting speculation as to whether Chávez is
nostalgic for the return of Joseph Stalin, purges, gulags, and the
Iron Curtain -- or whether he pines for the return of the aggressive
Soviet power projection into the Western Hemisphere, when arms
and advisers were flowing to Cuba, Peru, Nicaragua, and El
Salvador's guerillas. His remark echoed then-President Vladimir
Putin's famous 2005 assertion that the collapse of the Soviet Union
was "the greatest geopolitical tragedy of the [20th
What Chávez most likely means is that he misses the
presence of a rival to the U.S. able to contest American influence
and power around the world. The Soviet Union offered support and
security to its client states around the globe, support
Chávez would certainly find advantageous. Finally, for an
egocentric leader like Chávez, there is the nostalgia for
the drama and tension of the Cold War.
Asrelations between Venezuela and the U.S. soured after 2002,
Chávez charged in Russia's direction for arms, joint
energy and mining projects, and joint banking and investment
opportunities. He shares Prime Minister Vladimir Putin's and
President Dmitri Medvedev's hostility toward the U.S. In July 2008,
when Chávez visited Russia to meet with the two Russian
leaders, he spoke glowingly of a "strategic alliance" that "will
free him from Yankee imperialism."
Venezuela's appetite for Russian weapons attracts media
attention and generates regional insecurity. Between 2005 and 2007,
Russia and Venezuela signed 12 arms-sales contracts valued at an
estimated $4.4 billion. From AK-47s -- the
ubiquitous weapon of choice for insurgents and terrorists -- to
advanced fighter aircraft and tanks to attack helicopters and
submarines, Russian arms makers have found an eager client in
Yet, the Russia-Venezuela relationship is founded on more than
arms deals. Uncompetitive in a global, high-tech economy and
heavily dependent on oil, both nations are interested in exploiting
energy and mineral resources to advance state power. Despite the
current slide in world oil prices, Chávez and Russia's
leaders are banking on scarce oil and energy resources in the
future as keys to gain more power and international influence.
In the course of President Medvedev's historic visit to Caracas
on November 26 and 27, 2008, the first by a Russian leader, the
Russians and Venezuelans sealed a deal creating a $4 billion
development bank to finance a variety of manufacturing and
mining projects. A consortium of five Russian oil
companies is collaborating with Venezuela's nationalized oil
company, PdVSA, to develop the rich reserves of the Orinoco basin's
heavy oil. Venezuela is also turning to Russia's state monopoly
GAZPROM to develop and exploit its substantial reserves of natural
gas and form a gas cartel with Russia, Iran, and Qatar. A
final piece in the energy picture is Russia's apparent readiness to
lend Chávez a hand in developing nuclear power-generating
capability in Venezuela.
Aiding Chávez in developing nuclear power is both
dangerous and unnecessary, as Venezuela has abundant energy
resources, such as natural gas, to generate electricity, and lacks
technological basics and expertise to support a truly viable
nuclear program. Some U.S. security analysts worry that --
given Chávez's ambitions, his desire for political power,
and his hostility to the U.S. -- he has a hidden agenda and
wants to become the first South American nation with a nuclear
Venezuela has also forged economic, educational, and energy
agreements with the government of Belarus, another fellow traveler
in the relentless opposition to the U.S. The U.S. has imposed
sanctions on Belarus because of its refusal to free political
prisoners and allow basic democratic freedoms. Having been called
"Europe's last dictatorship" under authoritarian ruler
Alexander Lukashenko, Belarus is also selling arms to Venezuela and
is used by Russia as a way to supply controversial weapons
systems to Venezuela and other problematic customers.
Russia's new links with Venezuela exists foremost to annoy the
U.S. and to demonstrate pique with U.S. policies -- from the Balkans,
where the U.S. and the European allies recognized independence of
Kosovo, to NATO expansion, to ballistic missile defense and support
for a sovereign, pro-Western Georgia. These links add a layer of
unpredictability and uncertainty to the hemispheric security
equation. Russian sources discuss possibilities of
permanent Russian air and naval bases and intelligence
collection stations in Venezuela and Cuba. It is true that the
masters of the Kremlin may one day decide that the Venezuela
connection is not worth a clash with the U.S., but for the moment
they appear quite content to ride Chávez's anti-American
Ahmadinejad and Iran
When askedby a journalist to explainwhy he was working in
Venezuela, an Iranian engineer answered simply, "I think the two
presidents [Chávez and Ahmadinejad] don't like the United
States -- that's the only thing." Despite their limited
cultural ties, Iran's and Venezuela's leaders share a common
In the volatile Middle East, Chávez has found virgin
territory for a Latin American leader and a new and receptive area
of operation for his brand of anti-Americanism. He attracted
considerable notoriety when he visited Iraq and met with
Saddam Hussein in 2000, the first head of state to visit Iraq after
the 1991 Gulf War. The U.S. invasion of Iraq in 2003 cut short his
budding relationship with Iraq's late tyrant.
Chávez has made five official visits to Iran since coming
to power in 1998. When Iranian president Mahmoud
Ahmadinejad arrived in Venezuela in early 2007, Chávez
welcomed him as "one of the great fighters for peace."
Ahmadinejad was conducting a five-day trip to Venezuela,
Ecuador, and Nicaragua. Chávez and Ahmadinejad share
similarhistorical, strategic, and apocalyptic visions.
Iran finds other benefits in its relationship with Venezuela. In
September 2005, Venezuela was alone in opposing a resolution at the
International Atomic Energy Agency (IAEA) that found Iran in
violation of nuclear safeguards. Chávez has since backed
Iran's asserted right to enrich uranium. Support provided by
Chávez and Nicaragua's Ortega added dubious legitimacy to
Iran's claim of a right to develop a nuclear program free of
international supervision -- and the tacit right to develop a nuclear
Venezuela's relationship with Iran does not lack a commercial
dimension. Between 2005 and 2007, Venezuela and Iran claimed to
have signed 82 agreements stipulating Iranian investments in
Venezuelan energy, industry, and finances. The estimated value
of these agreements ranges between $5 billion and $20 billion,
making, if realized, Iran the second-largest investor in
Venezuela after China. Iran is reportedly constructing bicycle
and tractor factories, and even an automobile plant, in
Venezuela. The level of bilateral trade between the two
nations stands at $2.5 billion. Iran has also demonstrated
interest in mineral exports from Venezuela, including uranium. Iran
and Venezuela cooperate on oil pricing and other issues of OPEC
policy, seeking to steer the cartel toward higher oil prices
and restricted production.
Direct cooperation intensified in 2007 when Iran Air initiated
weekly air service between Tehran and Caracas through Syria's
capital, employing Airbuses and Boeing 747s. Flights arrive and
depart from a part of the Caracas international airport that
is exempt from normal customs and immigration control.
Few people in Washington are reassured by Chávez's selection
of Tarek El Aissami, a 28-year-old radical student leader with
previous links to Iraq and Islamist militants to replace
Ramón Rodriguez Chacin as interior minister in
September 2008. As minister, El Aissami wields authority over
passports and identity documents. His ministry works closely with
Cuban intelligence officials. General laxity in document controls
and potential criminal misuse of Venezuelan passports pose a
serious concern for U.S. immigration and counter-terrorism
On October 22, 2008, the U.S. Treasury Department
identified the Export Development Bank of Iran as supporting Iran's
nuclear proliferation efforts. It also named an affiliate entity,
the Banco Internacional de Desarrollo, a financial institution
located in Venezuela, as an arm of the Iranian bank.
The Banco Internacional de Desarrollo began operation in 2007 as
part of a bilateral agreement between Venezuela and Iran.
This highlights the fact that one of the presumed values of
closer ties between Iran and Venezuela lies in enlarging the
capacity of Iran to exploit and manipulate Venezuela's financial
system and to access an open, unsanctioned economy as a way to
obtain high-tech equipment and gain greater access to the global
financial system. With Chávez's enthusiastic support,
Iran has certainly been able to gain greater entry into Bolivia,
Nicaragua, Ecuador, and much of the rest of Latin America.
Harbingers of Terror: Hezbollah and
Hamas Move West
Islamist terrorists struck first in the Americas in
Argentina-even before the 1993 World Trade Center bombing. In
1992, Islamist terrorists bombed the Israeli embassy in Buenos
Aires, killing 30 people. Two years later, they bombed the
Argentine- Israelite Mutual Association (AMIA) in Buenos Aires,
killing 85. In November 2006, an Argentinean judge issued
arrest warrants in the AMIA case for a Lebanese member of Hezbollah
and eight Iranian officials, including former Iranian
President Hashemi Rafsanjani.
There is increasing evidence that Hezbollah is operating in
Venezuela, where it is able to draw on support from the Lebanese
diaspora. Hezbollah continues to look to Venezuela and South
America in general as a source of funding for its activities and
operations and as a potential theater of operations. International
attention has also focused on Hezbollah-linked communities
among Lebanese expatriates on the Isla de Margarita and on
efforts to spread a form of Shiite Islam to the scattered Wayuu
Indians of the Guajira region of Venezuela and Colombia,
often victimized and isolated by drug conflict in the region.
Israeli intelligence officials recently expressed concern that
Hezbollah operatives in Venezuela and elsewhere were conducting
surveillance and had potentially targeted wealthy Jewish
businessmen in South America with the idea of kidnapping them and
holding them for ransom. Given tensions in the Middle East,
Hezbollah and Hamas seek avenues of action elsewhere in the
In June 2008, the U.S. Treasury Department accused Ghazi Nasr al
Din, a Venezuelan diplomat of Lebanese descent, of using diplomatic
posts in the Middle East to assist in the financing of
Hezbollah and of "discuss[ing] operational issues with senior
officials" from Hezbollah. Nasr al Din "facilitated the travel" of
Hezbollah members to and from Venezuela for an unspecified
"training course in Iran." Al Din is also president of a Shiite
Muslim center in Caracas and served as a diplomat in Damascus
and later in Beirut.
Another Venezuelan, Fawzi Kan'an, a Caracas-based travel agent,
facilitated travel for Hezbollah agents. He also discussed
"possible kidnappings and terrorist attacks" with senior Hezbollah
officials in Lebanon. 
Hezbollah's interest in the Andean drug trade has also been
documented. Most recently, in mid-October 2008, a two-year drug
operation, Operation Titan, led to the arrest of 111
individuals worldwide. Of the 21 people arrested in Colombia, three
were men of Lebanese and Jordanian descent-Charky Mohamad Harb,
known as "Taliban"; Zacarias Hussein Harib, known as "Zac";
and Ali Mohamad Rahim, who were charged with providing
proceeds of drug transactions to Hezbollah.
Reports of possible training links betweenHezbollah and
Venezuelahave not been confirmed by U.S. government sources.
Chávez and the more ruthless members of his military elite
seek to replicate the fanaticism, élan, and
readiness for martyrdom associated with Islamic warriors in
asymmetric warfare, fulfilling the ideal of the dedicated
defenders of the Bolivarian Revolution.
Asia Rising: China and Vietnam
Chávez also recognizes China and Vietnam as emerging
markets, increasing economic players, and potential counterweights
to U.S. influence in Latin America. He relies on a rising China to
increasingly make its presence felt in the Western Hemisphere, and
aims to play the China card against the U.S.
While official Chinese-Venezuelan relations date back to 1974,
Chávez has made economic links with Beijing a cornerstone
for Venezuela's future economic development. Since 1999,
Chávez has visited China five times, most recently in
September 2008, just after expelling the U.S. ambassador in
Caracas. On September 25, Chávez announced in Bejing that he
had signed 12 agreements with China, including one that doubled a
"joint investment fund" of $12 billion, and another to update
a May 2008 energy cooperation agreement that includes the
construction of a four-tanker oil fleet and the construction of a
new refinery suited to Venezuela's heavy crude-in addition to an
already planned 400,000 barrel-per-day refinery in China's
Guangdong province. Venezuela reports it has signed a total
of 255 agreements with China and engaged in the development of 79
large-scale projects ranging from agricultural to technology
transfer including the establishment of computer, cell phone, and
domestic appliances plants, rail projects, and public housing.
China also engineered the launch of the first Venezuelan
commercial satellite on October 30, the "Satellite Simon Bolivar,"
which the Venezuelan government says will be used for broadcasting,
long-distance education, and to facilitate the provision of
medical servicesin the region. It will also give the
Venezuelangovernmentgreater command and control over its territory
and over the maritime approaches to Venezuela's coasts.
Trade between China and Venezuela approached $8 billion in 2008.
The centerpiece of the new relationship is a very realistic
goal of increasing Venezuela's oil exports to China to 1
million barrels a day by 2012, which would make China and the
United States roughly equal customers for Venezuelan crude. As
recently as 2005, Venezuela shipped only 39,000 barrels a day to
China, which doubled to 80,000 in 2006, and is now estimated at
331,000 barrels a day for 2008. Venezuela estimates this amount
will grow to 500,000 by 2010.
Until recently, the United States has had privileged access
to Venezuelan oil because of the oil's peculiarly thick
chemistry-the only refineries capable of processing it are in the
U.S. China, however, is in the process of constructing new
refineries to accommodate Venezuela's heavier crude, which are
expected to be completed early next decade. The first refinery to
be completed will be capable of handling about 400,000 barrels
per day. Chávez views a new oil-supply
relationship with China as a form of leverage against the U.S. as
he moves to reduce dependence on sales to the North American market
and redirect sales to China.
While most Venezuelan ventures appear essentially
commercial in nature, China reportedly plans to sell Venezuela 24
K-8 trainer jets and is also eyeing the possibility of selling
the more advanced, Chinese-made J-10A fighter in the future.
Venezuela is, according to Chávez, working with Vietnam
in order to "raise the flag of socialism." During a November
2008 visit to Caracas, Vietnamese President Nguyen Minh Triet
initialed an $11.4 billion agreement between PdVSA and the
state-owned Petro-Vietnam for exploitation in the Orinoco basin and
for the construction of a 200,000 barrel-per-day refinery in
Vietnam. Both sides agreed to a $200 million investment fund and on
the construction of a Vietnamese light truck factory in
Chávez plays the Asian card to escape his dependency
on the U.S. market and to tap into China's credit, investments, and
advanced technology. China uses Venezuela, along with Cuba, where
it maintains an intelligence collecting facility, as platforms
for commercial and political intelligence-gathering and as a
potential launch point for cyber-raids against the U.S. Venezuela
and China say they stand united against "imperialism, hegemonism,
and colonialism," which is diplomatic-speak for their mutual
rejection of the U.S.'s global leadership role.
Plenty of Vulnerabilities
While Venezuela's strength is its oil, it is also its weakness.
Oil accounts for 95 percent of foreign exchange earnings and 25
percent of gross domestic product. Under Chávez, Venezuela
has grown more dependent on its oil exports for survival.
Thecurrent steep decline in the global price of oil will hit hard.
Oil that sold for $142 a barrel decreased to $43 on December 5,
2008. Venezuela's budget for 2009 calls for a 23 percent increase
in public spending and is based on an oil price of $60 per barrel.
Devaluation, significant inflation, and other economic woes could
be headed Chávez's way in 2009.
Questions are being raised repeatedly about the flagship and
life blood of the Bolivarian Revolution, the PdVSA. Is it capable
of running as a growing energy giant and at the same time remaining
the spigot that Chávez opens and drains when he needs to
fund social programs, purchase arms, and aid clients such as
Cuba, Bolivia, and Nicaragua. Will turning to other state-run
energy giants, such as Russia's Gazprom, or diversifying markets to
China develop integration into the global energy market? Are
corruption and a loss of transparency undoing the company's
corporate culture and work ethic? Is PdVSA up to the task of
remaining on the cutting edge of the energy industry and generating
the resources needed to move Venezuela forward?
The Chávez project is not uniformly popular abroad,
either. Increased efforts to exert influence in countries, such as
Colombia, Panama, and Peru, will engender future backlash.
Venezuela may also have difficulty meeting the previous
commitments to Bolivia, Ecuador, Nicaragua, and Cuba.
Chavez is already scaling back previous offers to build refineries
in Nicaragua and in Ecuador. The attempt to create an
alternative to the International Monetary Fund, the Banco
Sur,appears stalled, and other ambitions, such as a Venezuela
to Argentina pipeline, appear mainly figments of Chávez's
active imagination. In short, the global downturn, the shortage of
international credit, and the decline in the price of oil will
severely test Chávez's ability to engage in "checkbook
Over time, most revolutions alter their course. Radicalization
gives way to moderation and a new center corrects deviations
caused by the extreme. The Bolivarian Revolution will likely be no
exception to the rule. Venezuelans have a long experience of
democracy and are accustomed to a culture and society of freedom
and liberty. Memories of democratic principles and concepts of
individual rights and political freedom remain living yardsticks by
which the likes of a Chávez are still measured. In the new,
more democratic Latin America, there is less room and opportunity
to suppress the opposition and impose a 50-year lock on political
life and personal freedom as Fidel Castro successfully
accomplished in Cuba. Nevertheless, Chávez represents a
real threat, which the U.S. ignores at its own peril.
What the U.S. Should Do
- In July 2008, Congress mandated a comprehensive national
intelligence assessment on national energy security, including a
study of the impact of Venezuela's oil flows on the U.S. That
assessment should be completed promptly and made available
- The Obama Administration should-quickly- develop a strategy for
addressing Andean security concerns raised by Chávez
- The Treasury Department, the National Counter-Terrorism Center,
the CIA, and the State Department should continue to assign a
high priority to acquiring and reviewing intelligence on
pro-terror, money-laundering, and drug-trafficking in
Venezuela, especially evidence of Venezuela's ties to FARC,
Hezbollah, and Hamas.
- Despite Chávez's consistent efforts to undercut and
demonize support for the democratic opposition, the Administration
should not be afraid to increase support for the political
opposition, especially in the area of party formation and
electoral observation. It should also identify and assist
opposition mayors and professional managers to improve
administrative capability and service delivery at the
municipal level. Such programs should also include selected members
of the United Socialist Party of Venezuela (PSUV).
- President Obama and Secretary of State Hillary Clinton should
not seek agrément for a new ambassador to Venezuela
until they are confident that Chávez is ready to address key
security concerns, for example, renewed action to prevent drug
trafficking (including cooperation with the DEA), an end to all
support for FARC, resumption of cooperation on anti-terrorism
measures, and an end to virulent anti-Americanism.
- If Chávez refuses to cooperate, the U.S. should
consider: 1) stepping up targeted sanctions against individual
government officials and unofficial agents of the Venezuelan
government, 2) sanctioning Venezuelan institutions, including
banks and, potentially, PdVSA, and 3) adding Venezuela to the
list of state sponsors of terrorism.
- The U.S. should develop a comprehensive contingency plan
for a possible disruption in oil supply from Venezuela.
- The Administration should seek to work directly with friends,
paying special attention to Colombia and Peru, particularly
passing the Colombia Free Trade Agreement in order to strengthen a
firm democratic counterpoint to the Chávez- ALBA
While threats from transnational criminal organizations,
drug cartels, and terrorist groups pose a major threat to the U.S.
and the Western Hemisphere,Venezuela, as currently led by Hugo
Chávez, poses the most significant, multifaceted,
state-based diplomatic and security challenge to U.S interests
in the hemisphere.
Ample points of contention and divergence will make it difficult
to forecast anything less than a bumpy relationship for the Obama
Administration. Chávez will likely continue to see the U.S.
as weak, distracted, and only modestly engaged in the Western
Hemisphere. He will be inclined to probe the limits of the possible
and work to shape the future of Latin America more closely aligned
to his brand of authoritarian populism and anti-American
nationalism than to a Latin America governed by free people and
free markets and linked together by a common spirit of cooperative
While President Chávez calls for a new relationship
with the U.S. "based on the principles of respect for sovereignty,
equality and true cooperation,"  the U.S. must judge him by
his actions, not his words.
Ray Walser, Ph.D., is Senior
Policy Analyst for Latin America in the Douglas and Sarah Allison
Center for Foreign Policy Studies, a division of the Kathryn and
Shelby Cullom Davis Institute for International Studies, at The
Carroll, "Venezuela: Hugo Chávez Expels U.S. Ambassador Amid
Claims of Coup Plot," The Guardian, September 12, 2008, at
3, 2009). Chávez promised in his best unilateral fashion,
"when there is a new government in the United States, we'll send a
Tariq Ali, Pirates of the Caribbean: The
Axis of Hope (London: Verso, 2006).
"Open Letter to Senator Barack Obama from a
Group of Scholars Specializing in Latin America," October 20, 2008,
4, 2009). While Chávez has spent lavishly on social programs
and has helped to improve conditions for millions of Venezuelans
and manages to obtain continued high approvals, few have been able
to express genuine confidence in the sustainability of his
socialist policies or to reconcile social betterment with a loss of
democratic governance. The cost-benefit analysis of Chavez's
socialist strategy is an unanswered question. There is little doubt
that Cuban Communism raised the living standards for many Cubans
over those of the Batista era, but at what human costs?
There is a clear tension between the
social-justice liberals and human-rights liberals. Chávez's
social-justice defenders post statements frequently on the
pro-Chávez Web site, Venezuelaanalysis.com. They were in the
forefront of defense against accusations of human-rights violations
of the Chávez regime by generally liberal critics, such as
the New York-based Human Rights Watch. See, for example, "More than
100 Latin America Experts Question Human Rights Watch Venezuela
Report," December 17, 2008, at http://www.venezuelanalysis.com/analysis/4051(February
10, 2009). Human Rights Watch personnel were expelled precipitously
from Venezuela following the issuance of "A Decade Under Chavez:
Political Intolerance and Lost Opportunities for Advancing Human
Rights in Venezuela," September 18, 2008, at http://www.hrw.org/en/reports/2008/09/18/decade-under-ch-vez(February
10, 2009). The last expulsion of the Human Rights Watch
representatives drew a condemnation by the European Parliament, but
not by the U.S. Congress.
PBS program titled "The Hugo Chávez Show" aired on November
25, 2008. It is a solid and balanced presentation and focuses on
Chávez's modern, media-driven style of governance. It is
available at http://www.pbs.org/wgbh/pages/frontline/hugochavez
(February 10, 2009). Also, a good overview on Chávez is
Andrés Oppenheimer, Saving the Americas: The Dangerous
Decline of Latin America and What the U.S. Must Do (Mexico
City: Random House Mondadori, 2007).
Oppenheimer, Saving the Americas, pp.
Enrique Krauze, El Poder y el Delirio,
(Mexico City: Tusquets Editores, 2008).
few examples of Chávez's Latin American critics: Alvaro
Vargas Llosa has drawn a distinction between the carnivorous Left
and the vegetarian Left in "Beware the Carnivores," The
Washington Post, August 6, 2006, at http://www.washingtonpost.com/wp-
(February 10, 2009); Mexican novelist Carlos Fuentes refers to
Chávez as a "tropical Mussolini" in "Chavez es un Mussolini
del Trópico," December 1, 2008, at http://www.mdzol.com/mdz/nota/87485-Fuentes-Ch%C3%A1v
ez-es-un-Mussolini-del-tr%C3%B3pico/ (February 10, 2009);
and Mexican historian Enrique Krauze called him the "the son of
Fidel" in his recent book El Poder y el Delirio. See also
Mario Vargas Llosa, "El Poder y el Delirio," El Pais,
December 14, 2008, in Spanish, at http://www.elpais.com/articulo/opinion/poder/delirio/elpep
iopi/20081214elpepiopi_13/Tes(February 10, 2009).
Carlos Rangel, The Latin Americans: Their
Love Hate Relationship with the United States (New York:
Harcourt Brace Jovanovich, 1977).
Most famous was Chávez's U.N. speech
in September 2006, but other comments by Chávez include
calling President Bush a "genocidal assassin" and "I think Hitler
could be a nursery baby next to George W. Bush."
Three current Latin American leaders have
engaged in military-revolutionary operations-Raul Castro,
Nicaragua's Daniel Ortega, and Hugo Chávez. They are all
exponents of the extreme anti-American Left.
Growing reports on the assault on democracy
and individual rights in Venezuela come not from the Bush
Administration, but from organizations such as Human Rights Watch,
the International Crisis Group, and Freedom House. For a scholarly
study, also see Jennifer L. McCoy and David J. Myers (eds.), The
Unraveling of Representative Democracy in Venezuela (Baltimore:
The Johns Hopkins University Press, 2004).
Tomás Eloy Martínez, "La
Ilusión de Ser Bolívar," La Nacion, March 7,
2008. See also James M. Roberts, "If the Real Simon Bolivar Met
Hugo Chávez, He'd See Red," Heritage Foundation
Backgrounder No. 2062, August 20, 2007, at http://www.heritage.org/Research/LatinAmerica/bg2062.cfm.
Frank Jack Daniel, "Big Spender Venezuela's
Chávez Shrugs Off Cheaper Oil," Reuters, November 4,
A bleak but forcefully argued assessment of
PdVSA is provided by Dr. Norman A. Bailey in his "Testimony Before
the Western Hemisphere Subcommittee of the Foreign Affairs
Committee, U.S. House of Representatives," July 17, 2008, at /static/reportimages/D3122828B014500F0C2499675E770860.pdf(February
3, 2009). Also of continued value is Gustavo Coronel, "Corruption,
Mismanagement, and Abuse of Power in Hugo Chávez's
Venezuela," The CATO Institute, November 27, 2006, at /static/reportimages/D10BB7F0DDD4E465D33E6CB54CDF1D82.pdf(February
Sandy Ulacio, "La$ Conexione$ de Alex del
Nogal," Versión Final, October 12, 2007, in Spanish,
conexiones-de-alex-del-nogal/(February 3, 2009). See also
Benedict Mander, "'Boligarchs' Rise to Top in Socialist Venezuela,"
Financial Times, December 2, 2008, at http://www.ft.com/cms/s/0/cd1bcace-c0b5-11dd-b
0a8-000077b07658.html(February 10, 2009).
Christopher Toothaker, "Chávez Praises
Rebels in Colombian Conflict As Being 'True Armies,'" The
Washington Post, January 12, 2008, p. A11, at http://www.washingtonpost.com/wp-
3, 2009). See also Ray Walser, "Terrorism, Insurgency, and Drugs
Still Threaten America's Southern Flank," Heritage Foundation
Backgrounder No. 2152, June 30, 2008, at http://www.heritage.org/Research/latinamerica/bg2152.cfm.
Patrick J. McConnell, "Bolivia Accuses DEA of
Spying, Halts Agents' Work," Los Angeles Times, November 2,
2008, p. A-3, at http://www.latimes.com/news/nationworld/world/la-fg-bolivia2-
2008nov02,0,1301705.story(February 3, 2009).
Venezuela, Bolivia, and Ecuador all argue
that they have continued the anti-drug fight independent of the
Oppenheimer, "Latin American Arms Buildup
The Cuban refinery at Cienfuegos was
completed with Russian help in 1991 and ceased operating in 1995.
Venezuela has stepped into the historic breach and promised to make
Cienfuegos the center point of its investment in Cuban oil refining
Daniel P. Erickson, The Cuba Wars: Fidel
Castro, the United States, and the Next Revolution (New York:
Bloomsbury Press, 2008), p. 276.
Chávez argues that attempts to
purchase parts for his aging F-16s and modern surface warships from
NATO member Spain as well as Brazil were blocked by the U.S., which
controlled rights over the export of military technology, forcing
him to turn to a more reliable supplier, Russia. These blocks went
into effect after Chávez ceased to cooperate with the U.S.
on anti-terrorism measures.
For a good summary of Russia's recent
relations with Latin America and Medvedev's visit to Venezuela, see
Simon Romero, Michael Schwirtz, and Alexei Barrionuevo, "Medvedev
Faces Hard Sell in Latin America," International Herald
Tribune, November 21, 2008, at http://www.iht.com/bin/printfriendly.php?
id=18049069(February 4, 2009). For parallels, see Ivan
Krastev, "Democracy's 'Doubles,'" Journal of Democracy, Vol.
17, No. 2 (April 2006), pp. 52-62.
Farnsworth, "The Company We Keep"; and Chris
Carlson, "Venezuela and Iran Strengthen 'Anti-Imperialist'
Alliance," Venezuelanalysis.com, November 20, 2007, at http://www.venezuelanalysis.com/news/2859(Feburary
4, 2009). Given the lack of transparency and the tendency for
constant reporting of agreements, it is difficult to make an
accurate inventory of commercial ties.
Iran has fully operational embassies in
Argentina, Cuba, Bolivia, Brazil, Mexico, and Nicaragua. In
November 2008, Brazilian defense Minister Amorim visited Tehran and
Brazilian officials hinted at a readiness to host a visit by
Ahmadinejad in the near future. Brazil, Ministry of External
Relations, "Minister Celso Amorim to Visit Iran," October 31,
Li Xiaokun, "Joint Fund, Energy Deals Inked
with Venezuela," ChinaDaily, September 25, 2008, at http://www.chinadaily.com.cn/china/2008-
09/25/content_7056945.htm(February 4, 2009). A $5 billion
China-Venezuela energy fund was launched in 2006. See "ChinaSets
$5 Billion for Venezuela to Lift Oil Supplier's Output," The
Wall Street Journal, August 29, 2006, p. A6. Prensa
Latina indicated in October 2006 that Chinawould contribute $4
billion, and Venezuela, $2 billion, to a $6 billion fund. See
"Venezuela-China Finance Fund," Prensa Latina, October 26,
2006, at http://www.plenglish.com/article.asp?
Chris Kraul, "Chinato Invest $5 billion in
Venezuela Oil Projects," Los Angeles Times, August 29, 2006,
/2006/aug/29/business/fi-venez29(February 4, 2009), and
"Chávez, ChinaAgree to Build Oil Refineries," The
Wall Street Journal, September 24, 2008, at http://online.wsj.com/article/SB122216282216966879.html(February
"Chavez Redirects Venezuelan Oil From the
United States to china," Kommersant, August 21, 2006, at http://www.kommersant.com/p6989
2009), and "U.S., Venezuela Diplomats Meet to Try to Ease Tension,"
Reuters, April 4, 2006.
H.R. 6510, "To Require the Director of
National Intelligence to Conduct a National Intelligence Assessment
on National Security and Energy Security issues Relating to Rapidly
Escalating Energy Costs," at http://www.thomas.gov/cgi-bin/bdquery/z?d110:HR06510:
(February 10, 2009).
Jack Chang, "Obama Win Brings High Hopes to
the Hemisphere," The Miami Herald, November 6, 2008.