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Venezuela's Hugo Chavez versus the USA

By Alexandra Beech, veninvestor.com

With a proclivity to think in Biblical terms, Hugo Chavez would likely describe himself as David and the United States government as Goliath. Like David, Chavez seems to beating the northern giant. Or at least he seems to think so.

For one, the US led free trade agreement is languishing. The Washington Post (Reuters) reports that “Venezuelan President Hugo Chavez said on Friday a U.S. plan to create a Free Trade Area of the Americas was ‘dead after the suspension of scheduled talks on the project he fiercely opposes.” In fact, “formal trade negotiations between the 34 Western Hemisphere nations were to have been held in late April but officials said Thursday they were being suspended due to slow progress on sensitive issues like farming, services and market access. No new date was set.” The talks have already been scheduled and cancelled twice, and no new date has been set for future negotiations. In the past, Chavez has said that the FTAA “will put Latin America's unprepared economies at the mercy of powerful U.S. corporations.”

In addition, “Venezuela appears to be picking a fight with private oil firms,” reports Dow Jones. Many of those firms are American. “Foreign firms operate a total of 33 oil fields in Venezuela and signed preferential tax deals with previous governments.” However, the Venezuelan government now wants to change those deals. Oil Minister Rafael Ramirez said that the government is “going to reverse a series of laws that have been damaging the country.” Thus far “oil firms operating here have said that neither the oil ministry or the Seniat have requested any information on the taxes yet.” Critics view the measure as a desperate attempt to access addition funding for social programs, at a time when Hugo Chavez is fighting a recall referendum against his mandate. "It is obvious that the government is looking for more revenue from oil," said Luis Vicente Leon, the head of the Datanalisis polling and consulting firm. "The state needs more funding."

Finally, as Americans complain about the price of gasoline, the Venezuelan government insisted that Opec should cut production. Reuters reports that “OPEC's decision to cut oil production in April is firm and should be respected, Venezuelan Energy Minister Rafael Ramirez said Monday as he insisted cartel members should stand fast on the move.” Needless to say, Opec’s decision to cut production by one million barrels upset the US government. “The U.S. administration said last week it was disappointed with the cartel's move to reduce production. U.S. lawmakers have accused OPEC, and the Saudis in particular, of gouging American consumers at the gasoline pump.” The Venezuelan government also depends on high oil prices for its social spending. Bloomberg News interviewed several sovereign investors who said that they remained bullish on Venezuela as long as oil prices remained high. “As long as the oil price is high and reserves are stable, we're bullish on Venezuela,” said Belinda Van Wyk, who helps manage $650 million of emerging market debt, including Venezuelan bonds, for Rand Merchant Bank in South Africa.” Others were more blunt. ``If oil prices or production fall sharply, the government could very easily default,'' Richard Francis, associate director of sovereign ratings at Standard & Poor's ``I don't expect oil prices to fall dramatically within the next year so the government is in a good position for now.'' Chavez knows he needs high oil prices to succeed.

On Thursday, Army General James T. Hill, commander of SouthCom, testified before the United States Senate Armed Services Committee on the “increasing threat to U.S. interests” posed by “negative developments in Bolivia, Venezuela, and Haiti”. He said that traditional threats, such as “narcoterrorists and their ilk...and a lesser but sophisticated threat from Islamic radical groups in the region...are now complemented by an emerging threat best described as radical populism, in which the democratic process is undermined to decrease rather than protect individual rights.” The radical populism to which General Hill obtusely refers is Hugo Chavez’s brand of democracy; Chavez recently succeeded in prodding the electoral authorities to invalidate enough opposition-collected signatures to block a recall referendum against his mandate. Other Latin American leaders, such as Lula and Kirshner, have succeeded thus far in addressing popular needs without becoming radical. The only truly radical, failed, and incendiary populist in Latin America today is Hugo Chavez. General Hill also expressed concern that regional leaders are “tapping into deep-seated frustrations over the failure of democratic reforms to deliver expected goods and services. By tapping into these frustrations, which run concurrently with frustrations caused by social and economic inequality, the leaders are at the same time able to reinforce their radical positions by inflaming anti-U.S. sentiment.” Again, General Hill is referring to Chavez, who has recently attack the US government to garner domestic support. As his cries against the US have increased, banners against the US have increased at pro-government rallies. Chavez’s attacks have ranged from calling President Bush names to threatening to cut oil supplies if the US were to invade Venezuela.

In prior testimonies, General Hill linked the Chavez government to the FARC terrorist organization in Colombia, a claim which the Venezuelan government has consistently denied. On Friday, Tampa, Florida authorities announced the arrest of a Colombian “who allegedly tried to buy more than 6,000 machine guns, rifles, grenades, grenade launchers and pistols for the FARC guerrillas,” reports the Miami Herald. “He gave the agents map coordinates for a clandestine airstrip in Venezuela, where he said FARC representatives would receive the weapons for later shipment to neighboring Colombia.” What is a clandestine FARC airstrip doing on Venezuelan soil?



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