Comrade Chavez  

Posted by Big Gav

"Peak Oil Optimist" Rob has thankfully stopped ranting about his machine gun based final solution to the "eco-anarchist problem" and instead optimistically fixed his sights on Venezuela's Hugo Chavez who appears to be the next demon that needs to be slain. (Note the obligatory pineapple-faced Noriega clone picture in Rob's post just in case you can't work out who the bad guy is.)

He isn't the only one - the headlines seem to be filling up with speculation about the fate of Venezuela's oil, with the New York Times publishing a slightly hawkish article recently "U.S. Considers Toughening Stance Toward Venezuela".

The United States, he said, is particularly concerned because Venezuela is one of four top providers of foreign oil to the United States. "You can't write him off," the aide said of Mr. Chávez. "He's sitting on an energy source that's critical to us." A main problem for the United States is that Washington has little, if any, influence over Caracas. The high price of oil has left Venezuela with no need for the loans or other aid that the United States could use as leverage.

Nor does the Bush administration have much support in Latin America, where left-leaning leaders now govern two-thirds of the continent. Secretary of State Condoleezza Rice is expected to raise concerns about Venezuela in a four-country tour through the region this week. Political analysts say she will have a hard time finding support. Defense Secretary Donald Rumsfeld, on a recent trip to Brazil, publicly raised concerns about Mr. Chávez. Days later, President Luiz Inácio Lula da Silva of Brazil, in a meeting in Venezuela with Mr. Chávez and the leaders of Colombia and Argentina, pointedly said, "We don't accept defamation and insinuations against a compañero," meaning a close friend.

"Venezuela has the right to be a sovereign country, to make its own decisions," he added.

For his part, Mr. Chávez, who is famous for his rambling, often outrageous speeches, has grown more belligerent, using his anti-American posturing to bolster his popular support. He has accused the United States of planning an invasion, prompting a threat to cut oil sales, and has hurled sexually tinged insults at Secretary Rice.

While other Venezuelan officials stress that oil sales to the United States would never cease, Venezuela's new energy ties with China have worried Washington, as did Mr. Chávez's recent meeting with President Mohammad Khatami of Iran, which he declared "has every right" to develop its atomic energy program.

Mr. Chávez is also forming a popular militia that he says will eventually have two million members and has plans to buy 100,000 AK-47 assault rifles from Russia and fighter jets from Brazil.

"All governments recognize the democratic character of the Venezuelan government, its peaceful vocation, and they want to establish relations with Venezuela, with just one exception, the United States," Alí Rodríguez, the Venezuelan foreign minister, said in an interview. "It has gone to great lengths to isolate Venezuela, but no government is playing along. It has failed, and that's because there is no reason to isolate Venezuela."

Many influential Democrats in Congress also oppose a more aggressive approach.

"I think it creates further estrangement," said Representative Bill Delahunt, a Massachusetts Democrat and a member of the House International Relations Committee who has met many times with Mr. Chávez. "One cannot get around the fact that Hugo Chávez is a democratically elected president."

As Lula and others pointed out - regardless of what you may think of Hugo's politics (or socialism in general) Chavez is democratically elected, its Venezuela's oil and they are a sovereign nation and should be able to do whatever they want with their own natural resources.

Unlike Canada and Mexico (and possibly Australia ? I really should read the FTA in detail one day), Venezuela hasn't signed up to provide its energy reserves to the US no matter what - and given US backed coup attempts against Chavez its not surprising he's looking for friends elsewhere.

This is one of a spate of articles on Venezuela appearing lately, such as the India Daily asking "Is Venezuela the next Iraq ?" (as well as bizarre rumours about a Venezuelan nuclear program).

Maybe Iran appears to be a harder target than the US military can currently chew on - but then again, perhaps they lining up all their ducks in a row ?

Of course, even if the US does successfully invade and occupy Venezuela, there is no guarantee they will be able to take control of the actual oilfields.

The India Daily article (and I'm not sure how serious a newspaper this is) notes the obvious problem with all the sabre rattling as we approach the peak:
According to sources, China and Russia both are keen on supporting Venezuela and have enormous interest in the Venezuelan Energy resources. India and Venezuela have started working on joint projects on the energy sector.

We may be looking into another Iraq where American Oil companies force the American Government to take some action. But this time it may be a little different. The energy world war that started in 1991 never manifested its teeth so badly till America invaded Iraq and Oil prices reached $55 per barrel.

Brazil, Russia, India and China (the BRIC alliance) may not let another Iraq happen so easily. India and Brazil have a lot of influence on the American policies being close allies to Washington. China and Russia possess enormous geopolitical strength. In the coming energy world war, the Europeans will side with the Americans but with a lot of reservations. They may not support unnecessary confrontation with Venezuela.

However, the energy crisis will take a nasty turn for one simple reason in the next one-year. India and China have not increased the domestic oil prices for their own citizens although energy prices have gone up 60% over one year period. People in India, for example, enjoys 2003 oil prices. The Indians and Chinese keep buying cars and other equipments that need more energy. With more than two and a half billion people in India and China, the energy crisis will spike. At that moment all hell will go loose. Countries will go after energy resources by force and with all fiscal reserves they have.

I'm not quite sure how strong the mortar is in the "BRIC" alliance, but the more the US tries to corner world oil reserves the stronger these ties are likely to grow.

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Look, Gav: I'm putting it to the primitivists in plain language even those chimps can understand. If they really, really think the earth is better off minus six billion or so humans, let them start the cleansing. Frankly, I think they're sociopathic pussies who can't stomach the implications of their own ideas. Put up or shut up, that's it.

As to Venezuela -- my point is that if Chavez decides, as with Mexico, that their oilfields amount to patronage and not a going concern (i.e., that resources will have to be plowed back into the fields to maintain production), the rest of the world won't be able to tolerate that kind of behavior, the US least of all. Elected he may be, but that's his only talent; fools get elected all the time (viz. George W. Bush).

And finally -- in case you didn't read the NYT article -- the picture came from the Times.

Typical. Pointing out corruption in other countries (e.g. Canada and now Venezuala) while we can't keep our house in order.

I don't mean to pick on you Rob (and I do like reading your blog, even if I'm occasionally moved to bag some of your posts) - so please don't take what I said personally.

But - you've totally failed to understand my point here - which is - if Venezuela's democratically elected government decides to turn its national oil company into a great big workers paradise where all the money gets put into the pockets of the employees, that's their business.

We might choose to run oil companies based on shareholder friendly, neoliberal economic norms - but we're not them.

Also, the US has no right to determine what other countries do with their oil - the US needs to address its own gross energy deficiency, not rely on access to other people's oil. The Carter doctrine (and whatever the equivalent applied to Venezuela is called) is fundamentally immoral - the world doesn't owe you a guaranteed supply of oil, and you don't have the right to just go and take it by force.

(my comments apply to most of the western world here too of course)

On a per capita basis the US uses 20 times as much oil as China or India - and as these countries industrialise this disparity will shrink. Given an imminent peak and subsequent decline, that means we're going to have to get used to using a *lot* less oil - and time, money and energy should be devoted to working out how to handle this - not to crushing every populist who rises up in the third world and states the obvious about ownership of national resources.

We actually turned the U.S. into a socialist workers paradise in the 1950's.

We had oil wealth and a manufacturing sector, and we plowed it into education, home loans for vets, huge construction projects (highways) designed in part to meet FDR's mandate of full employment.

We did fine with it until 1971.

Socialism works fine in limited forms, particarly when propped up by outside wealth. What is good for the goose is good for the gander.

Just an observation. I like markets too. Chavez may or may not live out the year, but I suspect we will never control V's oil by force.

The cat is out of the bag regarding the delicate nature of oil infrastructure.

This comment has been removed by a blog administrator.

I Guess the is a mistake on the title of this post. I guess you want to write the word(COMPADRE) in spanish, because COMRADE has no meaning in spanish.

Congratulations for the blog from Barcelona.

Chavez can stick it to the man by taking Venezuela's oil off the market.

I think it is great that the workers in Venezuela are the ones gaining from the oil fields they work.

I'm sure Chavez can go to them for a loan if the infrastructure needs capital improvements not immediately possible with cash flow.

He is not going to get the money from international investors who see property rights declining in V.

Probably he never read DeSoto. I think Bush has.

Capital makes labor more productive. Both deserve their rewards as determined by the market. If capital does not get its reward neither will labor.

m. simon - I think "My Pet Goat" is more to Bush's liking then DeSoto - but who knows, you may be right.

But you misunderstand, I think, what Chavez is trying to achieve, which is a Venezuelan oil industry that provides benefits to Venezuela's citizens rather than international investors. He is a democratically elected leader so we should respect that choice.

Now we are near the peak he'll have no problem finding investors (the Chinese and Indians are queueing up to provide money already) and the rapidly rising cashflow from existing operations would probably fund whatever investment needs they have regardless.

Please think before you comment.

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