U.S.-Venezuelan Relations

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What recent developments have upset U.S.-Venezuelan relations?

Venezuelan President Hugo Chavez made headlines at the November Summit of the Americas by helping to undermine a U.S.-backed "Free Trade Zone of the Americas." Chavez—the self-styled enemy of "American imperialism"—used the summit as a platform to push his populist socialist agenda, speaking for two hours before 25,000 protesters at a "counter summit" on fighting poverty and U.S.-style capitalism. Though few expected a free trade deal to be reached at the Summit of the Americas, the meeting was a "great barometer" of the already strained U.S.-Venezuelan relationship, says Julia Sweig, the Council’s Nelson and David Rockefeller senior fellow for Latin American Studies. The United States is overly focused on trade in South America, she says, and Chavez was able to "step into a political vacuum the U.S. has left by virtue of having such a myopic agenda for the hemisphere."

Who is Hugo Chavez?

Chavez, a former army colonel, led a failed 1992 coup against the government of then-President Carlos Andres Peréz. Chavez came back to win the 1998 presidential elections on a platform promising anti-corruption measures, social and political reform. He subsequently introduced a new constitution that enabled him to call and win another election in June 2000. Chavez now enjoys a strong majority in parliament, but has had to beat back a number of attempts to remove him from office. In December 2001, Chavez introduced new laws—including land and oil industry reforms—that led to a widespread uprising against his government. He was ousted from power five months later by a group of discontented senior military officers. Although the United States condemned the takeover, Washington appeared quick to welcome the transitional government. When Chavez returned to the presidency two days later, he believed the United States provided covert support for the coup and continues to allege Washington is planning for his ouster. In May 2003, the opposition instigated a referendum to remove Chavez from power for failing to improve Venezuela’s worsening economy and fulfilling promises of democratic reform. Chavez won the referendum with an unassailable 58 percent majority in August 2004 and the opposition was left severely weakened and fragmented, increasing Chavez’s reelection chances at the end of 2006.

Chavez, who governs with a combination of nationalist and populist policies that make up his "Bolivarian revolution," inherited a country wracked by corruption and poverty. The two main political parties that had ruled Venezuela from 1958 were accused of squandering the country’s vast oil wealth. But his "revolutionary" social policies, ostensibly designed to bridge the huge gap between the country’s rich and poor, have done little to relieve Venezuela’s economic and social woes, experts say. Despite the country’s oil wealth—Venezuela enjoyed 16 percent GDP growth in 2004 because of high oil prices—75 percent of Venezuelans are poor and 40 percent live in extreme poverty. Many experts say these numbers will likely increase if current political and economic trends continue. Chavez’s refusal to consider diversifying Venezuela’s economy, which is almost completely dependent upon oil, and his decision not to reinvest oil revenues in infrastructure improvements, risks repeating the errors of past Venezuelan leaders, the Economist argues.

How strained are U.S.-Venezuelan relations?

Experts say U.S.-Venezuela relations prior to Chavez’s rise were relatively smooth. But since becoming Venezuela’s leader, Chavez has made a practice of challenging Washington’s policies, and is critical of what he sees as U.S. interference in Venezuela’s domestic politics. In the last two years, experts say, Chavez has upped his criticisms, calling President Bush "Mr. Danger" and blaming the United States for a myriad of plots against Venezuela, including assassination attempts, a campaign to sabotage Venezuela’s oil production, and plans to invade his country. Chavez also has made a point of standing side-by-side with Cuba’s aging communist leader, Fidel Castro. Washington, in turn, has been more openly critical of the Venezuelan leader than ever before, sending U.S.-Venezuelan relations into a tailspin.

What challenges does Venezuela pose?

To many in the United States, Chavez’s rhetoric and strong-arm tactics in domestic politics pose a serious threat. Bush administration officials view him as a destabilizing force in the region and accuse him of using Venezuela’s oil windfall to gain friends and influence abroad, especially in Latin America. One way Chavez has managed to grab his neighbors’ attention is through the creation of Telesur, a new regional television channel that gets 70 percent of its funding from Caracas, leading many critics to say the channel serves only as a propaganda tool for Chavez. News reports allege he has also supported radical movements from Nicaragua to Bolivia, including Colombia’s FARC terrorists. However, the Economist points out that many of the parties Chavez is accused of helping, such as Nicaragua’s Sandinistas, are legal political parties. Chavez also raised U.S. eyebrows when he signaled his desire to redirect some of his oil exports away from the United States to China, announced his intention to import nuclear power technology from Argentina, and made a decision to seek aircraft and other military supplies from Russia.

Chavez’s critics also condemn Caracas for crushing democracy in his country. In November 17 testimony before the House International Relations Committee, newly appointed Assistant Secretary of State for Latin America Thomas Shannon said Chavez was "subverting democratic institutions by using them to restrict the rights of those who disagree with [him], slowly undermining economic freedoms, and rejecting the opportunities of globalization." Since winning the 2004 referendum, Chavez has led a crackdown on democratic freedoms—systematically removing all the checks on his power, undermining property rights, and placing curbs and controls on private businesses. Local elections in October 2004 left his allies in control of twenty of Venezuela’s twenty-three states, plus the capital, Caracas.

How dangerous are Chavez’s threats?

Experts say that while Chavez is an annoyance, he is not as serious a threat as critics claim. Most of Washington’s retorts to Chavez’s insults are part of what Sweig calls an ongoing "rhetorical tit for tat" between Caracas and the White House. Many experts say the U.S. government has, over the years, preferred to discount Chavez’s harangues and focus on American business interests and investments in Venezuela. Caracas is one of the top four suppliers of foreign oil to the United States. About 50 percent of Venezuela’s oil exports go to the United States—10 percent of all American oil imports—and many of Venezuela’s refineries, which serve international oil companies like Chevron Texaco, Exxon, and Conoco Philips, produce gas especially for American markets and U.S. environmental regulations. Further linking the two countries, in the 1990s, Petroleos de Venezuela, S.A., Venezuela’s national oil company, purchased Houston-based CITGO, one of the world’s leading oil refiners.

Many analysts also warn against depicting Chavez as the hemispheric "nightmare" detractors in the United States claim him to be. Venezuela is certainly engaged in intensive international diplomacy aimed at reducing U.S. influence in the region, and oil has bestowed on Caracas some political leverage. But a recent Zogby poll of six Central and South American countries finds that only 29 percent of those polled rank Chavez as the most popular leader in the region, ranking far below Chile’s Ricardo Lagos, Spain’s Rodriguez Zapatero, Brazil’s Luiz Inacio Lula da Silva—known as Lula—Mexico’s Vicente Fox, Argentina’s Nestor Kirchner, and Colombia’s Alvaro Uribe. Latin America might love to see Chavez sticking the "diplomatic finger in America’s eye," says Sweig, but "there is a difference between diplomatic regional leadership and mercantile diplomacy, and I don’t see the latter translating into the former."