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: Fighting Narco-terrorism in Latin America: time to put the hot potato down

Originally published by The Commentator, May 20th, 2011

Achieving equilibrium between security, governance and development will be the difference between decisively dealing with narco-terrorism across a restless continent, and continuing to pass the hot potato on next-door...

Details of a gruesome massacre at a ranch in Guatemala’s Peten province emerged earlier this week that revealed a narrative of 27 victims, bound, hacked by machetes and the majority eventually decapitated.  Sadly, such a tale is all too familiar in Latin America.

This restless continent has, throughout its modern history, embodied the protagonist in Aristotle’s precept of tragedy like no other; steeped in traditions of romanticism and grandeur, yet tainted by stagnation through a penchant for populism, dictatorship and brutal violence, and now left reeling decades, if not centuries behind, in its course of development.

Perhaps unremarkably, the prime suspects in Saturday’s heinous crime are the notorious Zetas - one of Mexico’s most powerful drug cartels.  Together with seven other major mafia organisations, los Zetas have managed to plunge a state once considered an outpost of civilisation at the head of more fiery climes to the south, into an abyss of violence.  Incredibly, over 35,000 people have been killed since Mexico’s War on Drugs began in 2006.

Yet, somewhere beneath the obvious element of humanitarian tragedy, there is a clear strategic lesson to be taken from this macabre tale.  Succinctly, it reveals how a purely militarised response to the phenomenon of narco-terrorism is a double edged sword in that it may help to clear up your own dwelling, but more often than not, it does so at the expense of the neighbourhood.

Should Calderon continue to apply military muscle with little else to compliment the heavy stuff, Latin America’s criminal entrepreneurs will continue to scramble operations out of Mexico’s borders and deeper into the likes of Guatemala.  Ironically, an almost identical sequence of events helped to spark Mexico’s own narcotics exportation culture.  As I have observed elsewhere, Colombia’s heavy-handed clamp down on the Cali and Medellin cartels throughout the 1980s and 1990s didn’t so much eradicate the problem as much as it simply pushed it away; forcing production units to scatter south, principally to Peru, and into the Central American isthmus to the north.

Not to labour the point, but tackling narco-terrorism with firepower alone is therefore a rather more complex and expensive means of passing a hot potato across sovereign borders.  It’s the problem no one wants to handle.

But if Mexico, and indeed the US are serious about putting this problem down once and for all -- and the US should be seeing as it is responsible for the lion’s share of refined imports, shares a 1,969 mile border with its Southern neighbour, and could quite frankly do without a failed state next door -- then the answer lies not with military muscle (at least not entirely) but with a heightened dedication to a liberal agenda for Latin America.

Only through democracy, respect for individual rights, rule of law with independent judiciaries, effective law enforcement agencies, the promotion of a culture of lawfulness within civil society, and not least prosperity through positive liberal market reforms, will this culture of grotesquely violent entrepreneurialism truly begin to disappear in favour of more virtuous means of making ends meet.  After all, to boil it down to the crudest of concoctions, this is what the drug game is really all about: making ends meet.

To be sure, consider the following nugget of wisdom from security expert, Phil Williams (himself borrowing wittingly from Carl von Clausewitz).  Transnational organised crime is simply a continuation of business by other means.  An irritatingly simple maxim it may be, yet true nevertheless.  And as any scholar of Clausewitz will tell you, in war (or be it a frightening merger of war and business in this instance), military means must be both subordinate to, and guided by the hand of the state so as to maximise ones chance of translating available means into desired goals.  That, as they say, is strategy.

This is not to discredit the military’s utility within this international predicament.  Indeed, Mexico’s military must play a major role in providing security amidst a pack of fierce gangs that, by and large, enjoy de facto control over masses of territory.  But it is imperative that this approach is part of a multi-pronged attack that keeps in touch with strategy by creating durable and effective linkages with development and governance.  Put simply, security through military predominance is not an end itself, but a means of creating the necessary breathing space required for governance and development to cultivate peace -- the ultimate end in any war.

In realising good governance and development, a range of other institutions, principally Mexico’s executive and legislative branches, must make the necessary socio-political and legal adjustments.  Suitable initiatives might include the regeneration of poorer areas, such as Mexico’s Pacific Coast states, and the decriminalisation of certain physician-prescribed drugs, through to fighting corruption at the highest levels, and acquiring diplomatic, law enforcement and military support from Mexico’s Latin neighbours.  Invariably, of course, this process will also require said support from Mexico’s giant northern neighbour throughout.

Beating Los Zetas and company in Mexico, and indeed, putting rest to the phenomenon in the entirety of Latin America, will be no small feat.  Crucially though, achieving the equilibrium between security, governance and development described here, will be the difference between decisively dealing with narco-terrorism across a restless continent, and continuing to pass the hot potato on next-door. 

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: How to Lose Friends and Alienate People

Following my rambling thoughts yesterday, I put together a more coherent blog for The Henry Jackson Society which I'll share here...

What do the notorious drug trafficker, Walid Makled Garcia, Barak Obama, and Hugo Chávez all have in common?  They are all, either directly or indirectly, contributing toward the loss of the key US ally in Latin America.

Barak Obama has kept Colombia at arms length throughout his time in the White House.  While the free trade agreement between Bogotá and Washington seems to have enough left in the tank to crawl over the finish line, Obama’s recent tour of Latin America made no time for a trip to El país del Sagrado Corazón.  The days of Uribe and his close relationship with the Bush administration are gone.  In their place, a cooler climate has emerged in which Juan Manuel Santos has understandably allowed realism to creep in. 

Santos’ stand-out foreign policy agenda has been the warming of the relationship between Bogotá and Caracas; from foes to friends in roundabout a year.  The showpiece of this renaissance is the decision to extradite Walid Makled Garcia, the drug trafficker who has shot to fame by claiming collaboration with some of Chávez’s most senior staff, to Venezuela, and not the US as originally scheduled.   In return for this cover-up opportunity, Chávez has offered payment of circa $1 billion Venezuela owes to Colombian exporters and to end the foreign policy crisis between the two countries once and for all.

The rationale behind Santos’ shift is clear: he is seeking to reintegrate Colombia back into the Latin American neighbourhood since playing the right-hand-man to the US under the Obama administration is proving a gamble. 

Obama has been weak on the Chávez issue, disappointing once again on his recent Latin American tour, this time in failing to even mention the crackpot authoritarian.  And his weak leadership is costing the US.  As the security situation in Colombia clears drastically (an achievement in which the US can claim a great deal of credit), could it be Chávez who takes advantage of the opportunity to invest?  After years of heavy hand-outs, don’t blow it now Obama.