Friday, March 19, 2004

Vzla: Chavez endorses Kerry

[T]op-level delegations from the Peoples' Republic of China have visited Venezuela recently to negotiate supply contracts which could relieve Venezuela of its customer-relationship dependency on North American markets.

It is known that while there is a lot of pressure on the Chavez Frias administration to simply walk away from North American crude oil markets in view of the rapidly devalued US$, Chavez Frias is personally waiting for an electoral win by US presidential candidate John Kerry to remove George W. Bush from office before signing irrevocable long-term supply contracts with the Chinese.
If Venezuela signs long-term oil contracts with China, then Venezuela does not have to rely solely on the U.S. for oil sales. Part of the problem with high oil prices is the increased Chinese use of oil as China's industries start booming. In fact, increased Chinese consumption has also produced scarcity and concomitant higher prices in the steel market. If John Kerry is elected president, Chavez seems to be implying, Venezuela will continue to sell oil to the U.S. If GWB is re-elected, then Chavez will sell its oil to China and the U.S. will be left looking for a supplier for the 15% that comes from Venezuela.

So, what can the U.S. do? Either the U.S. elects Kerry so that Venezuela may continue to sell us oil; or the U.S. re-elects GWB and look for another oil provider. Alternatively, the U.S. could overthrow Chavez, to protect its oil supply. (Well, gee, the U.S. is always being accused of doing things like this for oil, you know. Why not overthrow Chavez for oil? You have the name, you might as well have the game.)

If the U.S. overthrows Chavez before the elections, there may be no economic repercussions from China because Chavez is waiting until Nov 2, election day, to determine whether he will agree to "signing irrevocable long-term supply contracts with the Chinese." China won't be able to bitch because, being pragmatists, they may still have the possibility of a deal with the new government. If the over-throw occurs after Nov 2, when the contracts with the Chinese are signed, then the Chinese come into play as defenders of Venezuela its trading and, possibly, military partner. Remember, Jimmy Carter allowed the Chinese to gain a foothold in this hemisphere, in Panama.

If John Kerry is elected in November, then Chavez may not sign the irrevocable long-term contract with China in favor of the U.S. This means that Chavez will expect some yet to be determined concessions on yet to be determined issues. If the Kerry administration complies, the U.S. will have a sweet relationship with the socialist bloc forming in South America, which is allied with Cuba. Kerry, then, will be forced to relax sanctions and restrictions on travel to Cuba. There will then be a tremendous in-flow of American dollars going in to Cuba. Consequently, instead of the communist regime, now being propped up by Venezuela, dying out for lack of funds, it will be reinvigorated by American dollars. More importanly, Castro, the aging communist lion will be in a prime position to challenge the U.S. because he will be supported by the socialist bloc in South America and a weak American president.

If the U.S. does not overthrow Chavez and GWB is re-elected, the U.S. will have to find a provider for that 15% of its oil supply which it currently obtains from Venezuela. The increased costs of shipping will raise the price of fuel and other petroleum based products slightly. Chavez, however, will have an adversary in the White House, one who may doing a count-down to Chavez's overthrow. Moreover, Cuba will continue to be choked, so Castro will continue to be reliant on Venezuela. Though Castro may continue to spout socialist rhetoric and foment unrest in South America, he is in his 70s and may likely die or be overthrown before GWB's second term is up. Thus, history will regard Castro as a failed president of a failed political ideology. His image will be further tarnished when the jails are opened and the stories of his oppression and tortures are brought to light. An aside here: why is oppression and torture always a feature of socialist and communist governments?

The other significant thing is that Chavez's socialist-communist credentials will be enhanced by his connection with China. The oil contracts may presage a closer China-Venezuela relationship that may not work to the U.S.'s benefit. However, the upside is the balance of trade between the U.S. and China. The U.S. can derail the Chinese economy without much effort. Yes, the U.S.'s own economy will take a huge hit, but China's could be destroyed. Thus, though the Chinese might play patty-cake with Chavez, they may not be willing to act against their own interests by forming any alliances with him that could damage the U.S. At least, not right now.

Now, given that the U.S. is forging strategic allies with oil producing countries in Africa (Nigeria, Mali, Cameroun, to name a few) as part of the ongoing fight against terror -- just recently, the Malienne government called on the U.S. for help in coping with Islamic terrorist. Note, they did not call France, though Mali had French ties once. -- then it is quite likely that the 15% loss from Venezuela will be replaced by oil supplies from these new trading partners. The interesting thing about this is, Africa has a very favorable impression of the U.S., and their governments are keen to be allied with this government. These countries recognize that U.S. involvement in their countries yields rewards in terms of economic growth, political and social stability, and technological advancement.

This is something that Iraq is still learning. This is also something that Europe and South America and the Caribbean are all despising.

Okay, so what does Chavez's endorsement of John Effin Kerry ultimately mean? Nothing much, as long as GWB is re-elected. Disaster, if Kerry takes the White House in 2004.

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