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Mar1520078:19amHigh Energy Thursday: Venezuela’s endgame
Posted by Daniel Altman in High energy
I see a new customer…. (Nicaragua Presidency/AP)As several commentators were careful to point out in the the past week, the enmity President Hugo Chavez has been trying to generate with President George W. Bush is somewhat belied by the economic relationship between the two countries. Venezuela has a heavy, dirty crude oil that requires a special type of refinery, one that exists primarily in the United States. For that reason, most Venezuelan oil ends up stateside. And, to some degree, the countries are interdependent.
But China is Venezuela’s great hope for escaping that relationship. The Chinese are apparently planning some refineries that could use Venezuela’s oil, and, given his attitude towards the United States, Chavez might well choose to punish the White House by sending his oil elsewhere. Aligning himself with China would be a logical step, and not just because they already have allies like Iran in common; the Chinese promise to be the main global counterweight to American power in the future, something Chavez hopes to be within his own hemisphere.
If he does sell exclusively to China, though, he might have to accept a lower price than the market would bear; there will, after all, be fewer bidders for his product. It’s also worth considering that Chavez is unlikely to have so perfect an enemy as Bush after the elections of 2008. What if Hillary Clinton or John McCain were president? Could Chavez muster as much hatred for either of them, if only for his own political ends? I doubt it.
2 CommentsThe situation with Hugo Chavez illustrates yet again and in a quite explicit fashion, the consistent downfall of American foreign policy implementation: a failure to value and employ serious, strategic public relations strategies alongside our military and diplomatic initiatives. As in Iraq, our ability to follow-through on developing and sustaining diplomatic relationships and general trajectories has been hindered by our simple failure to recognize the vast democratization of information (and subsequent democratization of influence) that has emerged with the internet revolution.
In New York, to coincide with the President’s foray through Latin America, Hugo Chavez financed a series of commercials to spotlight the assistance he has supplied to America’s poor through subsidized oil and gas. The commercials end with a tag-line to lead the viewer to believe he cares more than our own President about poor American’s welfare.
I cannot speculate as to how effective these commercials are in persuading the average public that Chavez is a leader with noble intentions; however, it leads me to ponder just how effective Chavez’s PR campaigns must be with the less-informed constituencies of Cuba, Venezuela, and the region at-large. Irrespective of who the President is, it is the characterization of the President that weighs in with foreign constituencies and lays the foundations for natural hostilities or alliances to be engendered.
McCain or Clinton or otherwise, the power of the public word must be rediscovered by our diplomatic arm. With the case of oil and Latin America, China’s diplomatic overtures in the region make rediscovering the power of strategic communications ever more crucial.
China has made no effort to hide its resource shopping diplomacy nor its desire to posture itself as the counterweight to the U.S. in all things global. We have no reason to believe the China-oil scenario would belie this behavioral trend, and with Venezuela as the current 3rd largest supplier of oil to the U.S., the future is not only economically but likewise politically disastrous for the United States.
It is inevitable that China and Venezuela will link-up as oil trading partners, and we, in attempting to stall, if not circumvent, this reality, will find ourselves ransomed into less than optimistic political and economic arrangements. China and its command economy, is advantaged over the U.S.; it can finance construction projects with vast risk and vast upfront loss, such as building a refinery, on a rapid and immediate time-line. This is not so in the U.S. where profit-margins of independent corporations dictate the majority of infrastructure construction. Risk-aversion is a true calculus here.
Ultimately, China’s past leads one to believe the nation will offer prices equivalent to or higher than those in the U.S. even if economically irrational. However, it is more practical to assume that China’s demographic growth will translate into equivalent, if not higher, demand for this limited resource and thereby lead to feasibly higher oil prices than current export markets are generating. In excluding the US as a feasible export market, prices will overall be lower than possible but the strategic gains for Venezuela of a Chinese alliance appear far greater than anything currently being offered by the U.S. This applies both in terms of blunt economics and in political clout (one must only cite the recent campaign to entrench the Chavez dictatorship in the Venezuelan constitution).
Posted by: Laura Little — 15 March 2007 11:07 pmHugo Chavez is the leader of Venezuela. He has the right to choose which model of government he wants to install for the people of the country and the welfare of the country itself. Diplomacy between countries is a given. Unfortunately relying on media as source of information is not trustworthy. Many opinions are formed from such untrustwory media (media is mostly used as an ad). Blogs as such might be a bit less ad-like. We all should know by now there are many sides to a story. Are we all open to hearing/reading all the stories and what makes us pick one story over another?
Let Hugo reign - you never know - he may have a better model than we currently have and could be an example for the rest of the world to follow. Is everyone convinced that the current model is the all-time epitome of all models? Does everyone think we are at the point of epitome already? Are we all living in a paradise world NOW?
Posted by: J St Clair — 16 March 2007 7:10 pm
