Towards A 'Multipolar World': Using Oil Diplomacy to Sever Venezuela's Dependence
Ellner, Steve
SEPTEMBER/OCTOBER 2007 report: the multipolar moment? Iranian president mahmoud Ahmadinejad and Hugo Chávez during a meeting at the Fuerte tiuna military academy in Caracas, September 2006...
...Fellow OPEC nations have blocked Iran’s request on grounds that a polemical figure at the helm of the organization would undermine efforts to convince the world that its decisions are made on the basis of economic as opposed to political criteria...
...bombing of Afghanistan and subsequently lashed out at the invasion of Iraq...
...hassan ghaeDi A banner welcomes Chávez to Damascus, Syria, in 2006...
...More recently he has defended the Iranian nuclear energy program and denounced Israel’s bombing of Lebanon...
...The two goals are exemplified by accords Venezuela has reached with its neighbors, especially PetroCaribe, signed with Cuba, Jamaica, the Dominican Republic, and 10 other Caribbean nations in June 2005...
...Henry Ramos, president of Venezuela’s traditionally largest party, Acción Democrática, warned of “the high degree of danger” associated with Venezuela’s close relations with Iran, especially in light of possible sanctions by the international community.16 Chávez’s outspoken positions in favor of Arab causes in the Middle East has struck a responsive chord throughout the region, but is also not without its potential dangers...
...In Venezuela’s case, oil products account for almost 90% of exports, and its unconventional oil reserves require imported, state-of-the art technology...
...Chávez’s OPEC policy and his positions on Middle East politics exemplify the two sides of his diplomacy with other nations of the Global South: promoting government-to-government ties and using fiery rhetoric to appeal to the general population...
...Castro himself has abandoned that strategy and has indeed advised Chávez, as well as Bolivian leftist leader Evo Morales, to follow a more pragmatic approach to international relations.15 On the other hand, Chávez’s zealous rhetoric in favor of thoroughgoing change and his glorification of Che Guevara and other revolutionary icons have generated widespread support among social movement activists and rank-andfile leftists throughout the hemisphere...
...After two U.S.supported attempts to oust him in 2002, Chávez began using the term imperialism, and forging alliances with other nations became a political imperative...
...doctors to Venezuelan barrios as partial payment for the funds” for those displaced as a result of international 90,000 barrels of oil Venezuela now exports to that na-agreements...
...second, his trip to personally invite the heads of state to the OPEC summit...
...He immediately condemned the U.S...
...Four events during these early years demonstrated Chávez’s leadership capacity within OPEC and the respect he earned from the organization’s other governments: First was his effort to shore up prices at the 1999 OPEC meeting...
...His spontaneous impulse often manifests itself, such as when he threatened to withdraw his Mercosur membership application...
...Its Fundamental Principles affirm that “agriculture is a way of life and cannot be treated as just any form of economic activity...
...Angola was later admitted...
...By “multipolar world,” the Venezuelan president envisions the transformation of nations of the South into blocs, bound together geographically or economically, with political and economic clout...
...In subsequent months OPEC conservatives Saudi Arabia and the United Arab Emirates favored a wait-and-see policy...
...At the 2006 ceremony, with Ahmadinejad at his side, Chávez declared: “The Orinoco Oil Belt is being converted into the ‘Universal Belt,’ since it is facilitating the development of the Venezuelan people, the consolidation of the union of countries of Latin America, and South-South integration...
...Ideological distinctions have been set aside in the process...
...It also converts Chávez into a major actor on the international stage to a degree unmatched by Latin American leftist and radical populist governments in the past...
...In the words of Venezuela’s ambassador in Washington, Bernardo Álvarez, Chávez’s popularity in the Arab world “strengthens his hand within OPEC...
...Indeed, diversity and pluralism are the keys to reviving third worldism in the 21st century’s globalized world...
...Venezuela’s posture both as a moderate and a strikebreaker changed abruptly with Chávez’s advent to power...
...Chávez also stripped these firms of the special tax incentives granted by neoliberal governments in the 1990s and decreed that their workers would be on PDVSA’s payroll.2 While suggesting that the multinationals have the essential expertise that Venezuela’s new Third World partners lack, The Wall Street Journal recognized that “as long as oil prices stay high, Mr...
...He immediately condemned the U.S...
...12 At the same time, Ramírez argued that asserting state control over the oil industry was a necessary step to shore up prices...
...19 On the other hand, Chávez’s virulent attacks against Israel, his uninhibited style, and the efforts of his adversaries to isolate Venezuela could endanger his ambitious efforts to group the nations of the South into a bloc...
...In the words of Venezuela’s ambassador in Washington, Bernardo Álvarez, Chávez’s popularity in the Arab world “strengthens his hand within OPEC...
...Adversaries at home attacked the president for distancing Venezuela from democracies to its south while drawing close to nations in other continents, like Iran...
...These diplomatic efforts avoid the errors committed by the Castro government in the 1960s, when it encouraged insurgency throughout Latin America and in doing so forfeited the possibility of winning over, or neutralizing, democratic governments...
...Chávez recalled Capella shortly thereafter...
...He added that the Chávez government’s struggle to regain control of PDVSA was a “contribution” to OPEC and urged fellow member nations to take a close look at that process.13 At an OPEC meeting three months earlier in Caracas, Chávez pushed for the organization to incorporate new members, including Angola (an important and growing oil producer), Ecuador (which left in 1992), and the polemical Sudan.14 At the time, OPEC’s expansion was not at all a foregone conclusion...
...4 The effect of this strategy is already apparent...
...the Venezuelan Jewish community that he will not tolerate anti-Semitism in his movement.21 These positions have gone virtually unreported in the media...
...Citing this alternative source of technology, Venezuela has Steve Ellner teaches at the Universidad de Oriente in Puerto La Cruz, Venezuela...
...third, the unanimous approval by member nations of Venezuela’s price band...
...C hávez’s foreign policy victories, like his campaign against the Bush-promoted FTAA, have been made possible by tolerance toward, and friendly relations with, heads of state who adhere to a diversity of ideological positions...
...He edited, with Miguel Tinker Salas, Venezuela, Hugo Chávez and the Decline of an “Exceptional Democracy” (Rowman & Littlefield, 2007...
...Discussions were held there, as well as in Russia and Belarus, further boosting international cooperation in developing Venezuela’s immense Orinoco Oil Belt...
...One example of such a “slip” was a statement made by Roger Capella, Venezuela’s ambassador to Argentina and a controversial former minister under Chávez...
...Referring to Chávez’s initiatives and strategy, the president of a Washington-based think tank commented, “He’s playing treaty chess, whereas Cuba’s Fidel played checkers...
...Venezuela’s posture both as a moderate and a strikebreaker changed abruptly with Chávez’s advent to power...
...Capella’s remarks were inappropriate for a foreign diplomat, particularly in light of the cautious and discreet attitude Argentine president and Chávez ally Néstor Kirchner assumed on the matter...
...bombing of Afghanistan and subsequently lashed out at the invasion of Iraq...
...Chávez’s multipolar world concept—like the Non-Aligned Movement organized in the 1950s by Yugoslavia’s Tito, Ghana’s Nkrumah, Egypt’s Nasser, and India’s Nehru—presupposes submerging political differences in order to put up a united front to defend the South’s common interests...
...Thus during his first two years in office, Chávez mainly challenged U.S...
...Chávez’s rhetoric notwithstanding, the bartering arrangement with socialist Cuba is proving difficult to duplicate with privately produced merchandise from the 12 other Petro-Caribe nations whose economies are capitalist...
...In contrast, on both occasions Venezuela was at the forefront in calling for reducing production quotas to maintain prices between $50 and $60 per barrel...
...When prices exceeded $28, OPEC nations were to increase production by 500,000 barrels a day, and to do the opposite when prices went below $22...
...In this way, ALBA proposes preferential treatment for Southern nations and the underprivileged throughout the world as a corrective to the asymmetric relations between developed and underdeveloped countries...
...It is not enough that Chávez recognizes Belarus, and Russia, Chávez blamed the right in both Israel’s right to exist and that he has told members of countries for blocking Venezuela’s admission to Mercosur and announced that his government would withdraw its request for membership if the two congresses did not reach a decision within three months...
...Iran’s participation in the Venezuelan oil industry dates back to September 2006, when President Mahmoud Ahmadinejad presided over the initial perforation of a well in Ayacucho 7, one of 27 blocks in the Orinoco Belt, which some believe may be the world’s largest oil deposit...
...Both objectives are worthy of hard-headed diplomacy that steers clear of unnecessary confrontation with secondary actors on the world stage...
...Ecuador’s president, Rafael Correa, who maintains close ties with Chávez, is also committed to joining...
...Sectarian religious conflicts, often expressed along political lines, did not draw in Venezuela, one of the few non-Muslim member countries (and the only one after Gabon dropped out in 1995...
...9 Until Chávez, Venezuela had traditionally assumed a moderate position within OPEC...
...At a speech at the OPEC meeting in September 2006, he referred to PDVSA under neoliberal management as having been a “Trojan horse” for the multinationals...
...The country’s state oil company, Petropars, is now exploring the Orinoco, together with counterparts from Brazil, Argentina, and Uruguay, as well as from India, China, and Vietnam...
...His Rethinking Venezuelan Politics: Class, Conflict and the Chávez Phenomenon will appear in 2008 from Lynne Rienner Publishers...
...While ALBA criticizes the protectionist measures of the North, it defends the right of the South to protect farm production...
...The accord amounts to 198,000 barrels a day and has facilitated the deployment of more than 15,000 Cuban christopher Wilken SEPTEMBER/OCTOBER 2007 report: the multipolar moment...
...If he succeeds, Ecuador and Angola will restore OPEC’s size to 13 nations, after it lost two members in the 1990s...
...He later signed 13 agreements with president bashar Assad...
...1 OPEC position for As has always been the case with third Worldism going back to nkrumah, nasser, and nehru, Chávez’s multipolar world has signified neither uniformity nor harmony within third World blocs...
...Verbal clashes with Venezuela’s neighbors are an on the grounds that the nations of the South need to place example of how Chávez’s aggressive style can negatively political differences aside for the sake of unity.20 But his influence outcomes in concrete ways...
...The following year, Chávez made a historic trip to all 10 OPEC countries to personally invite the heads of state to OPEC’s second summit held in Caracas in September 2000...
...Most of these partners’ oil companies, like Petropars, are state-owned and as such do not systematically attempt to block the transfer of technology to other countries, as do private-sector companies...
...Venezuela is selling oil for the first time to various Latin American nations like Argentina and Uruguay, which along with Brazil signed an agreement with Venezuela called PetroSur that promotes cooperation among state oil companies.7 Another important hemispheric precedent for Venezuela’s international strategy is the Bolivarian Alternative for the Americas (Alternativa Bolivariana Para las Américas, or ALBA), which Chávez’s middle east policy exemplifies the two sides of his diplomacy: promoting governmentto-government ties and using fiery rhetoric to appeal to the general population...
...Minister of Energy Rafael Ramírez assured fellow OPEC nations that “unlike in the past, the cost of energy is not affecting the economy of the industrialized nations...
...On the one hand, Venezuela has strengthened OPEC by playing a major role in winning over other governments to measures that stabilize oil prices at upper levels...
...For Venezuela, these formations include both the hemispheric Common Market of the South (Mercado Común del Sur, or Mercosur) and, most significantly, OPEC...
...On the other hand, Chávez has taken political positions that have made him a popular figure among much of the general population in the Middle East...
...economic diversification and international I f solidarity are the twin goals of Chávez’s diplomacy, the latter is often overemphasized in rhetoric and action...
...In the 1990s Venezuelan neoliberal governments made plans to drastically increase the nation’s productive oil capacity, thus threatening to undermine OPEC’s efforts to control output for the sake of price stability...
...3 The article might have added that the prospect of eventually being displaced by countries like China in such immense reserves holds the multinationals back from snubbing the Venezuelan government...
...Saudi Arabia favorably viewed Venezuela’s shift, thus ensuring the success of the decision at OPEC’s March 1999 meeting to withdraw 2.1 million barrels a day from the world market.10 The new quotas signaled the beginning of price recovery after a two-decade slump...
...Chávez justifies his close relations with Iranian president Ahmadinejad –—an anti-Semite and Holocaust denier— neighbors and the South in general...
...of a band in which prices were allowed to oscillate between $22 and $28 a barrel...
...And for a leader of Chávez’s persona, subordinating discourse to fulfilling national goals is especially challenging...
...The practice, however, may grain of neoliberalism, ALBA calls for giving priority to be feasible only for goods and services produced by the state...
...Chávez’s firebrand side sometimes complements and other times undermines his diplomatic efforts to build ties with governments of the South...
...During the past two years, Venezuelan oil exports to the United States have declined 8.2%.5 Exports to China have spiked since 2003, from 12,000 barrels a day to 150,000...
...Tension between OPEC hardliners and softliners has hardly subsided in recent years...
...Capella claimed that the decision of Argentine prosecutors ordering the arrest of eight former Iranian ministers for their alleged participation in the 1994 bombing of a Jewish community center in Buenos Aires lacked solid evidence...
...And for a leader of Chávez’s persona, subordinating discourse to fulfilling national goals is especially challenging...
...ALBA also rules out the participation of the World Bank and other financial bodies in designing integration plans and proposes the creation of “compensation world,” a euphemism for U.S...
...After returning from his trip to Iran, in a major way...
...Venezuela was thus well positioned to play the role of conciliator between radicals like Iraq, Libya, Iran, and Algeria, which supported big price hikes, and conservatives like Saudi Arabia and Kuwait, 0 which were predominately concerned with maintaining stable prices...
...The summit approved Venezuela’s proposal pasqual gorriz A Chinese petrochemical plant on the orinoco oil belt, in San Diego de Cabrucita, venezuela continued from page 17 even the governments belonging to OPEC’s conservative wing have been receptive to Chávez’s initiatives...
...national firms and cooperatives and for exempting state companies from anti-monopoly legislation...
...Chávez labeled Israel’s July 2006 incursion in Lebanon “mass genocide” and ordered the withdrawal of Venezuela’s chargé d’affaires from Tel Aviv.17 Arab nationalist leaders applauded Chávez’s decision to suspend diplomatic relations and implored other nations of the South to follow suit, while Combining diplomatic moves to achieve national objectives with rhetoric for popular consumption is never an easy mix...
...Iranian president mahmoud Ahmadinejad and Hugo Chávez during a meeting at the Fuerte tiuna military academy in Caracas, September 2006 Toward a ‘Multipolar World’: Using Oil Diplomacy to Sever Venezuela’s Dependence by Steve ellner I n june, venezuelan president hugo chávez made his sixth diplomatic trip to Iran...
...SEPTEMBER/OCTOBER 2007 report: the multipolar moment...
...In “socialist” Venezuela, extending support to the underprivileged overshadows the practical consideration of implementing programs that are viable and workable...
...Venezuela was thus well positioned to play the role of conciliator between radicals like Iraq, Libya, Iran, and Algeria, which supported big price hikes, and conservatives like Saudi Arabia and Kuwait, 0 which were predominately concerned with maintaining stable prices...
...On the other hand, Chávez has taken political positions that have made him a popular figure among much of the general population in the Middle East...
...He also proposed cooperation among member nations to implement the Cuban-inspired mission program whereby doctors and educators provide free services to impoverished neighborhoods...
...After Chávez’s reelection in December 2006, he moved to take control of 60% of the multinational-dominated Orinoco enterprises...
...Never before had an OPEC government played such a proactive role on behalf of the organization...
...More recently he has defended the Iranian nuclear energy program and denounced Israel’s bombing of Lebanon...
...The latter was particularly significant in that Iran, another OPEC radical, has unsuccessfully attempted to obtain the no...
...Venezuela has greater reason to pursue this goal than its neighbors, since major oil-exporting states have always been subject to greater dependence on imported products, single-commodity exports, and sophisticated technology than elsewhere in the Third World...
...By way of underlining the popularity of Chávez’s move, Al Jazeera reported that many Palestinians have posters of the Venezuelan president in their homes, alongside those of Che.18 According to one Israeli Communist activist, “Arabs throughout the Middle East are comparing Chávez’s generosity in distributing oil income to the needy with the self-serving behavior of their own leaders...
...Chávez can probably afford to give [Third World] state firms an opportunity to learn...
...Indeed, the participation of energy-hungry economic powerhouses China and India in the Orinoco Belt may represent a great leap forward in Venezuela’s attempt to diversify, which is itself a crucial part of the country’s long-term strategy to sever economic and technological dependence on the United States...
...Combining diplomatic moves to achieve national objectives with rhetoric for popular consumption is never an easy mix...
...In the 1990s Venezuelan neoliberal governments made plans to drastically increase the nation’s productive oil capacity, thus threatening to undermine OPEC’s efforts to control output for the sake of price stability...
...These programs could be seen as a wish list were it not for Venezuela’s oil wealth, which enhances the feasibility of some of its proposals...
...9 Until Chávez, Venezuela had traditionally assumed a moderate position within OPEC...
...Finally, disputes with foreign corporations are to be resolved in national courts, and only as a final resort can they be brought to international tribunals...
...Venezuela and Cuba launched ALBA in Havana in 2005, and Bolivia and Nicaragua have recently become members, while Ecuador and various Caribbean nations have also drawn close to the project...
...Differences came to light when oil prices suddenly declined in August 2006, as the fighting in Lebanon began to abate and mild weather was forecast for the upcoming winter...
...driven a hard bargain with multinationals, which have invested in costly technology upgrades to produce more than 600,000 barrels per day of the Belt’s unconventional oil...
...At ALBA’s fifth meeting held in April, Chávez offered to extend the PetroCaribe oil deal to ALBA affiliates...
...Saudi Arabia favorably viewed Venezuela’s shift, thus ensuring the success of the decision at OPEC’s March 1999 meeting to withdraw 2.1 million barrels a day from the world market.10 The new quotas signaled the beginning of price recovery after a two-decade slump...
...Following Merco-friendly relations with the repressive government of Iran, sur’s approval of Venezuela’s membership request in July combined with any “slip” on the part of a chavista leader 2006, the congresses of Brazil and Paraguay delayed rat-or spokesman, will play into the hands of his enemies ifying the decision...
...Toward the end of the decade Saudi Arabia reacted to Venezuela’s unrestrained violation of OPEC quotas by dumping even larger amounts of crude on the world market...
...Under the arrangement, Venezuela allows 40% of the current price of oil to be paid off in 25 years either in cash or with products like sugar, rice, and bananas...
...As has always been the case with Third Worldism going back to Nkrumah, Nasser, and Nehru, Chávez’s multipolar world has signified neither uniformity nor harmony within Third World blocs...
...Toward the end of the decade Saudi Arabia reacted to Venezuela’s unrestrained violation of OPEC quotas by dumping even larger amounts of crude on the world market...
...Thus, for example, continued on page 20 A Chinese petrochemical plant on the orinoco oil belt, in San Diego de Cabrucita, venezuela continued from page 17 even the governments belonging to OPEC’s conservative wing have been receptive to Chávez’s initiatives...
...1 Venezuela’s new partners provide the Chávez government with important leverage in its risky strategy of challenging the multinational companies that have traditionally dominated the nation’s oil industry...
...Never before had an OPEC government played such a proactive role on behalf of the organization...
...And as in the case of ALBA and Mercosur, the blocs that Chávez promotes explicitly exclude the United States and thus serve as a corrective to the unipolar world of U.S...
...Sectarian religious conflicts, often expressed along political lines, did not draw in Venezuela, one of the few non-Muslim member countries (and the only one after Gabon dropped out in 1995...
...In another proposal that goes against the tion under the agreement...
...and fourth, Venezuelan minister of energy Alí Rodríguez’s appointment as OPEC secretary-general, three months after the 2000 summit...
...The summit approved Venezuela’s proposal pasqual gorriz SEPTEMBER/OCTOBER 2007 report: the multipolar moment...
...8 F rom the beginning of his presidency, Chávez has advocated a “multipolar world” as a corrective to the “unipolar may indeed serve as a model for South-South relations in general...
...As producers of a natural resource that is drying up,” he said, “we hope that the economies of the world will rationalize their use of energy...
...ALBA systematically critiques globalization, specifically the Bush-sponsored Free Trade Area of the Americas (FTAA), whose promotion of cutthroat competition is the very antithesis of solidarity...
...hegemony...
...interests through his concept of a multipolar world as applied to OPEC...
...more than 25 years...
...In another statement that hurt Venezuela’s case for membership, Chávez criticized the organization’s largest member, Brazil, for failing to lend a helping hand to tiny Uruguay and Paraguay...
...Until now, Chávez has avoided the isolation that Cuba was subjected to in the 1960s, as shown by the diverse heads of state who attended a Caracas-sponsored South American Energy Summit held in Venezuela in April...
...Chávez justifies the PetroCaribe deal by appealing to humanitarian sentiment...
...Chávez intends to increase the amount to 1 million by 2012.6 And diplomatic efforts have continued apace...
...After OPEC finally withdrew 900,000 barrels per day from the international market in November and December, both nations opposed additional cutbacks in early 2007 on the grounds that the market had already responded favorably...
...But too much is at stake to risk providing ammunition to those intent on isolating Chávez from his also rebuking Middle East nations for not taking similar measures...
...In the process he plays down the pragmatic argument that discounts or special terms of payment to clients are a viable strategy for any company interested in penetrating new markets...
...The following year, Chávez made a historic trip to all 10 OPEC countries to personally invite the heads of state to OPEC’s second summit held in Caracas in September 2000...
...Chávez’s South-South strategy has positioned Venezuela to achieve the all-important goal of economic diversification...
...11 He added that, if anything, higher prices would force the North to reduce consumption and in doing so avoid an economic crisis...
...domination...
Vol. 40 • September 2007 • No. 5
