The US and Venezuela: More Than Just A Gun Show

Hugo Chávez’s presidency has prompted a growing concern over a country to which little attention was previously paid. Nevertheless, as Chairman Eliot L. Engel of the House Foreign Affairs Subcommittee on the Western Hemisphere described it, “There is plenty of passion surrounding the Venezuela policy debate.” Venezuela was once known solely for its oil deposits and compliant trade relations with the United States; Washington’s interest in the country was largely limited to the economic ties between the two countries. Only when Chávez became the leader of what was beginning to become an important trading partner and threatened to destabilize a status-quo that was not in Venezuela’s favor, did the United States express much concern over the well-being of the latter’s population. The sudden concern that then followed seems directly tied to the U.S.’s economic interests, glazed over by a revival of a heavy dose of Cold War-era ideology.

The commercial ties between the U.S. and Venezuela are deep if not broad. Venezuela is one of the largest Latin American investors in the U.S. and one of its top four foreign oil suppliers. In 2007, bilateral trade between the countries totaled U.S. $50 billion, consisting of $10 billion in U.S. exports and $40 billion coming from Venezuela. The U.S is Venezuela’s most important trading partner, representing about 22 per cent of its imports and approximately 60 per cent of Venezuelan exports. Ninety-five per cent of Venezuelan oil is exported to the U.S., establishing it as Venezuela’s principal energy client. Venezuela is the U.S.’s second largest Latin American trading partner, purchasing U.S. machinery, transportation equipment, agricultural commodities, and auto parts. Thus, the rhetorical battles between the two nations carried very little heft due to the importance of the petroleum trade relationship to their joint economic stability.

The Chávez Rhetoric
Since Chávez took office in 1998, his fighting words have contributed heavily to forging an inevitably hostile path for U.S.-Venezuelan relations. While Chávez tarnished his credibility in the eyes of White House policy makers, it was mainly Washington’s negative reaction to his commitment to socialism that made the conflict inevitable. Chávez is principally known for his “anti-empire” remarks and his demands that Washington end its interventionism. Further, he has consistently railed against the Bush administration’s strong-armed practices. On a number of occasions, he has accused the U.S. of infiltration, invasion, and assassination plots. Chávez claims that the U.S.-led invasions of Afghanistan and Iraq are evidence of the “Empire” flexing its muscles. For this reason, he insists that any improvement of relations with Washington will have to wait for the next administration. In fact, he argues that the U.S.’s professed embrace of liberal democracy is aimed at protecting corporations and traditional elites from his efforts to make decision-making more responsive to the nation’s poor majority.

Venezuela’s antagonism towards the U.S. has escalated since the April 2002 attempted coup against Chávez, which allegedly was backed by the U.S. In January 2006, the Chávez government expelled a militant attaché from the U.S. embassy in Caracas, claiming that he had been spying on the Venezuelan armed forces; Washington was quick to respond that the accusation was concocted. In May 2008, a U.S. fighter plane “inadvertently” violated Venezuelan airspace due to an acknowledged navigation error. Despite U.S. air-traffickers contacting the Venezuelan tower to report the accidental incursion while it was occurring, the Venezuelan Defense Minister Gustavo Reyes Rangel characterized the action as “deliberate on the part of the North American Navy… It is nothing but another link in the chain of provocations in which they are trying to involve our country.” When the U.S. later accused Chávez of collaborating with the FARC in June 2008, Chávez replied that it was a ploy by Washington to spread violence and disunity in the Andes.

Threatening U.S. Interests
Based on Chávez’s indifference regarding the pursuit of amicable relations with Washington, it wasn’t clear whether it was a matter of bark or bite when it came to his threatening gestures to U.S. interests in his country. While his rhetoric was decidedly bite, his actions generally were bite. The populist leader’s militant socialism, his anti-Americanism, his clashes with the Venezuelan elite, his efforts to build alliances with his neighbor and even with distant rogue nations like North Korea and Iran, his resolve to strengthen OPEC as an economic power inevitably eroded relations between the two countries. Not only did he nationalize the holdings of such major U.S. corporations like Exxon Mobile and Conoco Phillips, but he also ended intelligence liaison relationships and shut down military and anti-drug cooperation in an attempt to show his disdain for the “empire” and its imperialistic footprints.

In addition to these measures, U.S. political figures, especially among the ranks of Washington Republicans, condemned Chávez’s unwillingness to cooperate in the fight against drug-trafficking. In 2005, the Venezuelan National Guard removed its experienced members from the U.S. Prosecutor’s Drug Task Force and Caracas ended formal cooperation with the U.S. Drug Enforcement Administration (DEA) after accusing it of domestic espionage. As a result, DEA agents have found it increasingly difficult to obtain entry visas into Venezuela. The last was a clear gesture on Chávez’s part to make cooperation between the two countries more burdensome. Due to these circumstances, the White House officially has “determined that the Government of Venezuela has ‘failed demonstrably’ in meeting its obligations under international counter-narcotics agreements and U.S. domestic counter-narcotics requirements.” The State Department has stated that its occasional efforts to improve relations in other areas that are mutually beneficial, such as energy and commerce, have been consistently cast off by Chávez—a contention which Caracas is quick to reject.

The Enemy of My Enemy is My Friend
As was previously mentioned, Chávez has persistently pursued alliances aimed at diluting the U.S.’s international authority. Not only is Venezuela intent on diversifying its oil clientele to reduce dependence on the U.S. market, but it also has pressed OPEC to back policies that have restricted production and increased oil prices on the world market. In August 2000, as OPEC’s leader through rotation, Chávez became the first head of state to meet with the late Saddam Hussein since the Gulf War, an action that many deemed as an act of defiance of U.S. policy. Following Colombia’s March 1, 2008 incursion into Ecuadorian territory to raid a FARC camp, Chávez vehemently criticized President Uribe’s infringement upon Ecuador’s sovereignty, taking issue with the U.S.’s most important ally in South America. Additionally, Hugo Chávez’s significant trade relations, and his general closeness with Havana has undermined Washington’s attempts to isolate the island and coerce the Castro brothers to democratize according to a U.S.-drafted script. His ties with the Castro regime represent one face of his struggle toward Latin American integration consistent with his idea of “21st Century Socialism.” As such, he has become one of the main leaders of the leftist resurgence in Latin America, whose main goal is to reduce the U.S.’s longtime influence and interventionism in Latin America’s domestic affairs, while defiantly creating new regional, economic, political and military bodies outside of Washington’s orb.

Chavez’s relationship with the President of Iran, Mahmoud Ahmadinejad, is especially aggravating to the United States. Washington perceives this heightened effort on the part of the Iranians as an attempt by Tehran to deliberately infiltrate and engage a region traditionally under Washington’s watch. As founding members of OPEC, Iran and Venezuela have constantly engaged in dialogue regarding oil pricing and sales and production policies since 1960. Under Chávez, moreover, there have been broadened relations with the Islamic country on such issues as culture and information technology, largely as a demonstration of the Venezuelan leader’s opposition to the U.S.-led invasion of Iraq.

Venezuela has repeatedly supported the development of peaceful nuclear technology and requested the help of countries like Iran to assist it to lay the groundwork to inaugurate nuclear research in Caracas. Considering Washington’s hard-line stance against Tehran’s uranium enrichment program, Venezuela’s benign attitude towards Iran, with whom it has 181 agreements, in effect, signifies a carefully planned attack against U.S. foreign policy interests.

Iran, a major oil producer, has promised tens of millions of dollars worth of economic assistance to pro-Chávez governments in the region such as those of Nicaragua, Ecuador, and Bolivia. These enhanced recently nursed relations have been solidified in the opening of direct flights between Caracas and Tehran. According to the Department of State, Iranians arriving in Venezuela undergo extremely lax customs checks and an easy-pass process for those desiring to obtain Venezuelan citizenship.

In an even more controversial move, Venezuela and Tehran are now engaging in two banking ventures that many believe will allow Iran to evade U.S.-led sanctions aimed at strangling the Iranian financial structure and its access to outside capital. These sanctions are aimed at undermining its support of what the U.S. and much of the international community see as international terrorism and nuclear proliferation. The first such bilateral venture was the creation of the Banco Internacional de Desarrollo established in Caracas in September 2007. This financial institution’s funding was authorized within 72 hours, even though the process normally takes months. The second joint venture occurred in May 2008 with the creation of a binational bank, Banco Binacional Irani-Venezuela, to which each country will contribute at $600 million. The Venezuelan National Assembly also authorized the formation of an investment fund called Fondo Binacional Venezuela-Irán, with a influx of U.S. $500 million from each respective country.

Considering Iran’s abiding hostility towards the West, and the United States in particular, it is understandable that some in this country would fear the close relationship between Venezuela and Iran as being unnatural. According to State Department sources, these banks will not only allow both counties to freely move funds with little accountability, but their officers will enjoy legal immunity in Venezuela. Noting the obscurity and scant public information often characterizing such ventures, U.S. State Department officials have claimed that these institutions will not be forced to uphold the normal and rigorous transparency standards required of such bodies. As Norman A. Bailey from the Institute for Global Economic Growth pointed out in a testimony before a Congressional hearing, if hostilities were to break out between the United States and Iran, its presence in the Western Hemisphere would be to Iran’s advantage. Those hardliners in the Bush administration who favor including Venezuela on the state-sponsored terrorist list believe that doing so would make the U.S. better prepared to ward off such a blow coming from Caracas.

Cold War: A Sequel?
Most recently, the Venezuelan president traveled to Moscow to formalize the “Alianza Estratégica,” a military and defense alliance deemed necessary by Chávez in order to “guarantee Venezuela’s sovereignty, which is now threatened by the United States.” Though it may seem that there is some evidence of U.S. offensive plans against Venezuela, it seems highly unlikely that Washington would even consider taking such an explosive step after its failed coup attempt against Chávez in 2002 which it abetted, and the near-universal, international criticism elicited by its unilateral decision to invade Iraq. Washington’s public response was merely to voice its belief that Venezuela’s stepped-up pace of arms purchasing from Spain, China and Russia goes beyond its defensive needs. Precisely due to the tense relations between the two countries, Venezuela’s desire to build up its military capacity, faster than any apparent legitimate need, makes the U.S. government more than a little apprehensive. Yet, Caracas can argue that being on the wrinte side of the barrel with the world’s sole surviving superpower is somewhat disconcerting.

The “Alianza Estratégica” with Russia was accompanied by a series of agreements regarding trade, weapons purchases, coordinated energy policies, oil exploration, and the expansion of joint financial services. The two countries are expected to reach several agreements in the near future in which the South American country will buy up to U.S. $2 billion worth of Russian military hardware in an attempt to modernize its military, as part of its U.S. $2.6 billion defense budget. When the U.S. stopped supplying weapons to Venezuela in 2006, it was Russia which filled the void and began to sell military supplies and weapons to Chávez, while maintaining a constant capacity for training of military personnel. However, Russian-Venezuelan relations are going beyond the military arena. Just last year, bilateral trade between both countries already had reached U.S. $1.1 billion, double that of 2006. In addition, the state-run Venezuelan oil company has signed deals with three different Russian energy companies.

The United States’ Role
Not only has Washington denounced Venezuela’s failure to cooperate with the U.S. in counternarcotics efforts, it also had “rescinded Venezuela’s eligibility to purchase most types of U.S. weapons and weapons systems; closed Venezuela’s Military Acquisition Office in Florida; arrested unauthorized Venezuelan agents; denied Venezuela access to Export-Import Bank financing and Overseas Private Insurance Corporation coverage; designated several Venezuelan nationals under Executive Order 13224 and the Narcotics Kingpin Act for its support provided to Hezbollah and for trafficking illicit drugs.” These measures were enacted in an effort to compel Chávez to submit to U.S. standards of democracy because, as Washington perceives the situation, U.S. interests will best be served under a capitalist economic system. The problem is that, rather than making a serious case against Venezuela, Washington has had a good deal of success in making its charges stick, even though specialists see them as political propaganda meant to advance Washington’s ideological propensities.

The Case Against the U.S.
United States actions have precipitated an aggressive response by Chávez. There is a clear cause-effect relationship between Washington’s strictures and its harsh language directed towards Caracas and Chávez’s hostility toward the U.S. The hypocrisy with which the Bush Administration has handled its relations with Venezuela has massively contributed to a lack of cooperation and dialogue between the two countries. When Venezuela asked the U.S. to extradite Venezuelan citizen Luis Posada Carriles in 2005 for the alleged bombing of a Cuban passenger liner in 1976, Washington adamantly refused, saying that he would be denied a fair trial there. The Bush Administration claims to act under the moral confines of a fair and just democracy serviced by an egalitarian legal system and yet, by refusing to extradite, has obstructed justice by politicizing its decision. As a Venezuelan citizen, Posada Carriles should be held accountable to the laws of his country for a crime purportedly committed in his country. While the United States insists that Venezuela’s relationship with Iran can be deemed as facilitating terrorist activity, it operates under a specious double-standard by harboring this world-class Venezuelan terrorist. While some U.S. officials would like to label Venezuela a terrorist state, one must ask what Caracas has done to warrant such distrust.

U.S. efforts to influence Chávez’s policies have not only failed, but, in some instances, have given the Venezuelan government further examples of U.S. interventionism in hemispheric hot spots rather than seeking constructive bridges to reconcile a string of negative strategies. U.S. government officials continue to devise strategies about how to deal with the “Chávez problem.” In a Subcommittee Hearing on July 17, Representative Connie Mack, a Republican extremist on Latin American issues, voiced the opinion of many Bush administration officials when he cited Venezuela’s questionable relationship with the Iranian government as sufficient reason to put Venezuela on the very controversial state-sponsored terrorist list compiled by the State Department. Chávez has repeatedly deemed such a threat as a U.S. attempt to destabilize his government and has, in fact, dared the U.S. to take this action by saying, “Let them make that list and shove it in their pocket…We shouldn’t forget for an instant that we’re in a battle against North American imperialism.”

On the other hand, more enlightened U.S. officials like Assistant Secretary of State Thomas Shannon have insisted along with Subcommittee Chairman Engel, at a House Hearing, that it is necessary to maintain diplomatic ties with Chávez through patience and dialogue. At the July 17 Subcommittee Hearing, Representative William Delahunt (D-MA) discussed the need to respect the sovereign rights of a country like Venezuela, whose citizens democratically voted to elect their leader; failure to do so would be viewed as an insult to the intelligence of Venezuelan citizens. As the world’s surviving superpower, the United States, at times, thoughtlessly delegitimizes countries with which it does not share the same ideology. However, the Bush administration fails to adequately realize that different countries, having different cultures, express conflicting values. The fact remains that even though he has sponsored many controversial measures and often has resorted to impolite rhetoric, Chávez’s era in power has been almost entirely legitimate. Including Venezuela on a self-serving U.S. terrorist list would be a sorely misguided move due to the strong existing economic and social ties between both countries. The U.S. must be patient and understand that prevailing tensions will only dissipate when Chávez feels confident enough to sit down and talk with one of its senior officials, under no limiting preconditions.

Eliminating Misconceptions and Barriers to Improvement
Venezuela has long been plagued with widespread poverty and a hugely disparate income gap as is often found in many Latin American countries. When Chávez came onto the political scene, he began to show those at the bottom of the income ladder that it was possible for them to improve their living standards. He was able to convince a clean majority of his fellow citizens that progressive change was possible, and, at least for the time being, the majority of Venezuelans decided that they no longer would settle for the status quo.

Director of The Carter Center’s Americas Program, Jennifer McCoy stated, “We need to understand the hunger for recognition and inclusion by populations marginalized from economic and political power. Procedural democracy is not a priority for many in this situation. Having greater control and participation in the forces that determine their daily lives is.” Thus, while many in the U.S. government complain that the erosion of the separation of powers in today’s Venezuela is a violation of the country’s fundamental tenants of democracy, it should also understand that the country has experienced a vastly different history and, thus, the current situation there responds to different needs. Sometimes the need to eat will overwhelm the need for government checks and balances and other constitutional prescriptions, as seen from the perspective of the average citizen living at the poverty line.

Despite the enmity between the two countries, the harsh rhetoric and the clashing ideologies have had little impact on their economic relations. There have, however, to a great extent, damaged Venezuela’s credibility and trustworthiness in the eyes of some countries, while proving of no particular benefit to the U.S. In a break from tradition, the U.S. has been unable to effectively intervene in Venezuelan affairs or deter the socialization of the country due to its lack of leverage over a number of resource-rich nations in the immediate region and its own singular dependence on Venezuelan oil. Thus, Chávez has never been under extreme pressure to accommodate the U.S. However, it seems that the tide might be changing. The Venezuelan state is presently facing a complicated and challenging domestic situation. The failure of the December 2007 constitutional reform, Chávez’s difficulties in consolidating his political party’s power, the emergence of a semi-effective civil society, and the upcoming Venezuelan November local elections have created a number of political difficulties for the populist leader. These challenges are reflected in the recent food shortages, rising crime rates, declines in medical care, and deterioration of the physical infrastructure. This situation has forced Chávez to, for the first time in years, express a willingness to improve relations with the U.S., which has the technical capabilities to provide significant aid to Venezuela in these and many other areas.

At this pivotal point in the Chávez presidency, the next U.S. administration should seek to more actively transform its relations with Venezuela in a constructive direction. The current policy has been dominated by barnyard exchanges that have contributed to bilateral tensions and suspicions that have resulted in perpetuating aggressive attitudes on both sides. However, Assistant Secretary of State Shannon has indicated the possible beginning of the end of the U.S. hard-line approach to the country by stating, “We [are] committed to a positive relationship with the people of Venezuela and have the patience and the persistence necessary to manage our challenging relationship.” Placing Venezuela on the state-sponsored terrorist list, as threatened by such hard-line policymakers as Representative Mack, would only prove detrimental to both countries’ economic and geo-political interests. Only through diplomacy and basic respect can the U.S. attempt to overhaul the image of an American empire in the eyes of Chávez and so much of Latin America. The fact that most Latin American countries have refused to take sides, even when one side is the global giant, makes it all the more evident that hostility towards Chávez’s Venezuela has not and is likely to not work in Washington’s interests; a more diplomatic approach is likely to prove more effective in bringing the desired results to both countries.

This analysis was prepared by COHA Research Associates Monica Narula and Michelle Quiles
August 12th, 2008
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