U.S. foreign policy with Venezuela is based upon political containment of Hugo Chavez and his influence on South America and the world due to his promotion of a multipolar world system.
The political containment effort’s ultimate goal is for Venezuelan political isolation. However given the rising economic power of Venezuela due to the rise of oil prices the policy mission’s is impossible. Venezuela has emerged as an active political force in the current polarized world system.
The recent diplomatic missions by Secretary of State Condoleezza Rice in South America in promotion of the U.S. backed Free Trade Area of the Americas over Venezuela’s trade agreement, the Bolivian Alternative for the Americas have not produced any tangible results. The U.S.’s lack of progress in developing an overarching umbrella trade organization for Latin America, as it did for North America with NAFTA, is representative of its declining influence in South America.
Military security measures have been taken through the passing of an arms embargo on Venezuela, and the creation of a new intelligence post for Venezuelan affairs within U.S. intelligence agencies, but militarily a Venezuelan security threat is not imminent due to geopolitics. The rhetoric battle between Hugo Chavez and the current US administration is founded on Chavez efforts to garner international anti-Americanism under a Venezuelan flag in order to bring about a multipolar world system apart from the militCentury and economic influence of the U.S., and not representative of a pending crisis or major shift in policy status due to the current economic relationship between the US and Venezuela.
Oil economics bind the countries together. Venezuela currently exports 1.3 million barrels a day to the U.S., supplying just over 10 percent of U.S. crude imports. However Venezuela is more reliant upon the U.S. for an export market currently then the U.S. is upon Venezuelan oil.
Oil exports to the U.S. at $60 a barrel generate $28 billion and account for 70% of all Venezuelan government spending annually. Conservative Venezuelan oil reserve estimates predict over 235 billion barrels of oil in Venezuela’s Orinoco Belt region, which would equal 20% of current global proven reserves.
However, the oil is a heavy form of crude oil, containing high amounts of sulfur and metals that require advanced refinery expertise. This limits the ultimate value of the oil as the refineries to handle this form of crude operate only in the United States and in Saudi Arabia. However, if Chavez did decide to cut US exports as he has threatened, a government investigation in June into the effects of a Venezuelan induced crude oil shortage concluded that gasoline prices would spike for only a period of a few months before other supplies would be able compensate for the gap.
Venezuelan efforts to shake its reliance on the U.S. market have brought it into partnership with China through signing eight separate agreements in an attempt to build stronger economic ties through joint ventures in Venezuelan oil fields and Chinese investment into Venezuela’s infrastructure. While these deals totaling $11 billion seek to establish more necessary capital, technology and expertise for Venezuelan industryand serve to strengthen Venezuelan multipolar efforts China is currently a marginal economic partner for Venezuela importing only 100,000 barrels per day. Agreements to increase imports to 500,000 barrels a day in five years, would only represent 1/3 of total current U.S. imports.
China also lacks the current technology to refine Venezuela’s massive reserves of crude, limiting its partnership overall once current oil reserves run low. The fact that change in economic status quo with Venezuela is improbable maintenence of political status quo.
