Opinion: Time to call Chávez's oil bluff?

Washington has for some time been constricted in taking a tough stance against Venezuela’s Chávez by the threat it perceives to its security of oil supply. But what if that threat was little more than a bluff?

For many interested parties, upon hearing of the fresh consignment of US sanctions imposed on seven foreign firms (including Petróleos de Venezuela – PdVSA) for their supply of refined petroleum products to Iran, immediate thoughts would have gravitated toward two questions that have been well trodden since: will this halt Iran’s nuclear programme? And, will the sanctions hit PdVSA hard?

The short answer to both questions is a round-about no.

The slightly longer version reads that since Tehran has proved itself adept at circumventing weakly imposed sanctions up until now, it seems unlikely that slapping the wrists of these seven firms will buck that trend. And as for PdVSA, oil exports to the US will continue unaffected as will the activities of its subsidiaries, i.e. Citgo, meaning that business will likely continue as usual, save the newly enforced bans on US government contracts, import-export financing and US export licences -- none of which have particularly interested the Venezuelan oil giant in the recent past anyway.

But this exhibition of relative (though still fairly puny) diplomatic muscle from Washington also kicks up a third and less widely touted question: is now the time to start calling Hugo Chávez’s oil bluff?

In recent years, the firebrand has threatened to diversify Venezuela’s oil away from the US market, principally toward China, in a bid to secure new security of supply; making Washington think twice before dishing out demands and creating a bit of wiggle room in the process. But upon closer inspection, Chávez’s aggressive oil diplomacy is perhaps not as well grounded as he might have us believe.

If truth be told, it is actually the US that is better placed to play hardball. Indeed, one of the most curious aspects of the Washington-Caracas standoff is that while both states undoubtedly depend on the other’s custom, it is in fact Caracas whose dependency is more acute. In 2010, 8.3% of US oil imports arrived from Venezuela -- no small fry -- but in marked contrast, this 8.3% translated to fully 43% of Venezuelan oil exports. It should be clear who stands to take the larger hit.

As for the Chinese alternative, for Beijing to take the Venezuelan market seriously, it would require an astronomical investment in order to bridge the logistical gap, not only in terms of transportation, but also in acquiring the capability to process Venezuela’s characteristically thick crude. And the latter point is a particularly important one since the fungible nature of oil as a commodity is called into question when consumers with the ability to process one’s commodity are in short supply. Couple that economic expense with the inevitable political one attached to any move into the US’ ‘backyard’, long since considered its strategic preserve, and a long term strategic partnership between Caracas and Beijing appears unlikely while the latter has better options in Central Asia.

Short of revenue-sapping, politically-charged, regional energy schemes such as Petrocaribe then, Venezuela really has little room for meaningful diversification away from the US.

Taking stock of this reality is important for US policy makers as it essentially means that a significant departure from the trade status quo between Caracas and Washington would be in the interests of neither party and is therefore unlikely as such. Quite frankly, it pours a bucket of cold water on Chávez’s fiery oil-threat since, with paltry means of pulling the plug on US supply the threat becomes little more than a bluff.

With that room for manoeuvre established, what of Washington’s scope for pressing Chávez harder on the ideological line?

Let’s be clear, slapping a reducer on Chávez will be best achieved democratically. The failed coup of 2002, hastily endorsed by the Bush administration, showed in no uncertain terms that attempts at regime change only serve to fan the flames that have kept Chávez’s popular appeal burning. Hence, the focus in Washington has correctly shifted to sanctions -- the uncertain, yet politically safer middle-ground between austere words and boots on the ground.

There is, of course, a legitimate debate to be had on the utility of sanctions as a foreign policy tool in the first place. Indeed, if the proof of the pudding really is in the eating, then the new round of sanctions go some way to exposing the failures of the original Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA). That said, the newly revised stipulations in relation to PdVSA may be more useful -- as long as they are backed by a suitably aggressive approach moving forward -- in a secondary capacity, by drawing the relationship between Venezuela and Iran back into the international spotlight and providing a new set of red lines against which Caracas can be judged.

Washington needs to maintain this momentum by pushing a harder line (something that has in the past been constrained by the weighty oil millstone) and calling Chávez’s bluff since taking a tougher stance could help to fragment Chávez’s power. To cut a long story short, by forcing the authoritarian to choose between the two driving thrusts of his foreign policy agenda -- the economic pragmatism of oil, and his proclivity for anti-neoliberalism -- Washington can place its foe in a position he’d really rather not be.

Should Caracas take the first option, the US will score an important victory in making a further pariah of Iran, not to mention denting Chávez’s international standing as an anti-Western revolutionary.

And if Chávez opts for the second and probably more likely course, the US would then be positioned to hamper his ability to plough-back into his political project through further and harsher sanctions. In such an environment, the inevitable failure of Chávez’s unsustainable socialist program would likely be accelerated, perhaps too late to affect his run for another term in 2012, but certainly enough dent his aspirations for perpetual power.

Formulating a strategy around this central goal -- isolating Chávez’s foreign policy thrusts from one another -- should thus be a priority for the current administration in an environment where it needn’t worry excessively about the backlash. Smashing Chávez’s finely tuned balance between the fight against the ostensible ills of neo-liberalism (his raison d’être in the eyes of a significant percentage of Venezuela’s electorate) and reaping the rewards of an oil trade that funds it, could be the diplomatic reducer that Washington seeks.

Opinion: Where's Walid?

If Obama wishes to avoid playing the Wally, he needs to face up to the implications of Walid Makled Garcia's extradition to Venezuela, while, fortituously, new links between Chávez and the FARC may give Obama the second chance needed to check Bogota’s drift toward Caracas...   

Last month, in the Washington Post, Jackson Diehl asked a very valid question: why isn't Obama fighting Colombia's dirty deal with Venezuela?  The dirty deal was of course the extradition of drug lord, Walid Makled Garcia, to his native Venezuela, completed this Monday.  As Garcia flew back to be imprisoned in Venezuela, his alleged evidence of Caracas' compliance with the international drug trade shared a similar fate.  To come to the point, Washington missed a trick while Chávez wiped his brow and silenced the troublesome Garcia once and for all.

Colombia's Santos claimed that the decision was made on a first-come-first-serve basis; that Caracas had simply beaten Washington to the post with its paperwork.  Whether Bogotá genuinely assigns such importance to punctuality is doubtful, but what is clear is that the move is the latest in a line of developments that, on Obama’s watch, have seen Bogotá drift toward Caracas.

That said, a recent publication by the IISS shows that there is still at least one big thorn in the side of this relationship: the FARC.  Unsurprisingly, given that the FARC issue is a real deal breaker for diplomatic peace between Colombia and Venezuela, Venezuela’s UK embassy was quick to voice its objection to this report which has brought Chávez’s links with the left-wing rebels back into focus.  From Washington's point of view, however, these fresh revelations may mark the false-start in the Santos-Chávez lovefest that one would hope it has been looking for.

In being generally slow out of the blocks in tackling this particular geostrategic concern, Obama should be thankful for the false-start and use it as an opportunity to re-focus his own performance in the race to reinforce Washington’s alliance with Bogotá.  The struggle with Islamic extremism may currently dominate the White House's agenda, but crossing the finish line in this race may be significant if Obama wishes to maintain the US' influence in her own backyard and prevail in the less widely reported war of ideas she faces with 21st century socialism.

Opinion: Confronting Hugo Chávez

Just over two months ago, I wrote a piece that I called, ‘The Dictator Club’.  In it, I slammed Hugo Chávez for his utterly deplorable support for Muammar Gaddafi during, what was then, the embryonic stages of what has since become one of the most widely discussed human rights violations of this century.

Bequeathing Gaddafi the title of “Símon Bolivar of the Libyan people”, Chávez drew a parallel that even the most warped Chávista must have struggled to make sense of.  As the people of Benghazi were mowed down by the hundreds, here was Hugo Chávez praising their tyrannical ruler for supposedly playing the modern-day liberator; freeing his people from the ostensible clutches of the evil “neo-liberal” empire.  It sounds preposterous, quite simply because it is.

Hugo Chávez is an infamous demagogue.  His 21^st century socialism project relies heavily upon a specific brand of populism that has a significant portion of its own foundation laid into a bed of anti-Western rhetoric.  The formula is quite simple: Chávez has created the image of an “enemy”, projected most commonly upon the United States, in order to legitimise the centralisation of power that has occurred in Venezuela over the past 12 years.  

Absurd alliances with the likes of Gaddafi are a twisted feature of this phenomenon and help to create and retain a paradigm of “us” vs. “them”.  With it, he is able to masquerade as a defender of the people.  Without it, he is just another power-hungry autocrat.

And now he’s at it again.  Hosting a contingent of Libyans in Venezuela earlier this week, Chávez took the time out to criticize NATO intervention, dubbing it “madness”, before accusing the United States of being in it for the dirty black stuff.  It might seem logical that if the United States really were in it for oil, she would simply continue to opt for grubby contracts with oil-endowed despots, regardless of internal human rights records, as opposed to politically and economically costly intervention.  

This, of course, is the pattern currently conformed to by the Chinese, ironically, in Venezuela amongst other places.  For Chávez though, this argument doesn’t hold up; it can’t if he is to maintain the aforementioned paradigm.  The United States must therefore remain the flag-bearer for the evil empire, concerned with fattening her own belly at the expense of millions of underprivileged worldwide.  That it is she who endeavours to protect the thousands under siege from the war-machine of the Libyan state, is a postscript destined to be glazed over inChávista accounts of history.

But by today’s fast paced standards, Libya is no longer the flavour of the month.  Now is Syria’s turn.  And once again, this self styled man-of-the-people has come down hard on the side of his brethren; not Syria’s citizenry, but the dictator that subjugates them.  Since mid March, in excess of 400 Syrians have been killed at the hands of its barbaric security forces for the alleged crime of political protest.  Hundreds if not thousands more in Damascus, Deraa and elsewhere have been left wounded.  Yet, abominably, it is Assad who receivesChávez’s support while he has branded the people of Deraa as “terrorists”.

At times, Western commentary gets its kicks out of poking fun at the spectacle that is Hugo Chávez.  This eccentric screwball has often become a parody of himself and the perfect candidate to cast in satirical light.  But it is on occasions such as this that we must recognise that Venezuela’s authoritarian leader is so wildly out of sync with the virtues of liberal democracy that it makes even a wry smile hard to muster.  

It may be the case that we are able to detect demagoguery when we see it, but it makes Chávez’s tempestuous opposition to the West no less threatening in a climate where nascent aspirations for democracy are being cut brutally short.  Preposterous he may be, but downright dangerous too.

Originally published by The Commentator