The passing of Hugo Chavez has prompted the usual 21st century cycle of news coverage and commentary that follows the death of a polarizing figure: the breaking news on Twitter, followed by the news obits, followed by the hosannahs from supporters, followed by denunciations of the figure, followed by official statements, followed by mealy-mouthed op-eds, followed by hysterical, unhinged criticism of standard diplomatic language.
Now that the first news cycle has passed, we can get to the more interesting question of assessing Venezuela's future. There was always a fundamental irony to Hugo Chavez's foreign policy. Despite his best efforts to chart a course at odds with the United States, he could never escape a fundamental geopolitical fact of life: Venezuela's economic engine was based on exporting a kind of oil that could pretty much only be refined in the United States.
So, with Chavez's passing, it would seem like a no-brainer for his successor to tamp down hostility with the United States. After all, Chavez's "Bolivarian" foreign policy was rather expensive -- energy subsidies to Cuba alone were equal to U.S. foreign aid to Israel, for example. With U.S. oil multinationals looking hopefully at Venezuela and Caracas in desperate need of foreign investment, could Chavez's successor re-align foreign relations closer to the U.S.A.?
I'm not betting on it, however, for one simple reason: Venezuela might be the most primed country in the world for anti-American conspiracy theories.
International relations theory doesn't talk a lot about conspiracy thinking, but I've read up a bit on it, and I'd say post-Chavez Venezuela is the perfect breeding ground. Indeed, the day of Chavez's death his vice president/anointed successor was already accusing the United States of giving Chavez his cancer.
Besides that, here's a recipe for creating a political climate that is just itching to believe any wild-ass theory involving a malevolent United States:
1) Pick a country that possesses very high levels of national self-regard.
2) Make sure that the country's economic performance fails to match expectations.
3) Create political institutions within the country that are semi-authoritarian or authoritarian.
4) Select a nation with a past history of U.S. interventions in the domestic body politic.
5) Have the United States play a minor supporting role in a recent coup attempt.
8) Finally, create a political transition in which the new leader is desperate to appropriate any popular tropes used by the previous leader.
Venezuela is the perfect breeding ground for populist, anti-American conspiracy theories. And once a conspiratorial, anti-American culture is fomented, it sets like concrete. Only genuine political reform in Venezuela will cure it, and I don't expect that anytime soon.
Oh, and by the way: Those commentators anticipating a post-Castro shift by Cuba toward the U.S., should run through the checklist above veeeery carefully.
Am I missing anything?
I've been reading a raft of books recently arguing that authoritarian capitalism is a more sustainable model than us in the West appreciate. According to this meme, entities like sovereign wealth funds, state-owned enterprises, and national oil companies will be carving up ever-greater slices of the global economy.
Whenever I read these arguments, the question that gnaws at me is how these authoritarian capitalist institutions will operate in other authoritarian capitalist countries. See, this kind of argument presumes a harmony of interests that doesn't necessarily exist between authoritarian states. It also presumes a standard of competency and efficiency - or, at least, efficient corruption -- that makes these firms and institutions able to compete with private sector firms.
For see what I'm talking about, see this Washington Times story by Kelly Hearn on China's growing frustration with Venezuela:
China has poured billions of dollars into Venezuela’s oil sector to expand its claim over the country’s massive oil reserves.
But Beijing is getting relatively little for its investments, and Chinese officials are increasingly frustrated with Venezuelan President Hugo Chavez, according to energy analysts and former managers of the state oil company, Petroleum of Venezuela, or PDVSA as it’s known by its Spanish acronym....
In 2010, CNPC signed a deal to help Venezuela develop a major Orinoco oil field known as Junin 4, which includes the construction of a facility to convert heavy oil to a lighter crude that could be shipped to a refinery in Guangdong, China.
“Although the contract was signed in December 2010, not one barrel of oil has yet been produced, much less upgraded,” said Gustavo Coronel, a former PDVSA board member.
“So far, nothing much seems to be happening, except for the arrival of a large group of Chinese staff to the CNPC’s Caracas office,” he added, referring to the Venezuelan capital, Caracas.
“Apart from money, there seems to be little that China can offer Venezuela in the oil industry,” he said, adding that a “culture gap will make working with China very difficult for Venezuelan oil people, who were mostly trained in the U.S.”....
The Chinese also seem to be increasingly wary.
Internal PDVSA documents released by a Venezuelan congressman show that the Chinese balked at a $110 billion loan request by Mr. Chavez in 2010, after PDVSA officials failed to account fully for where the money would go.
Venezuela is not the only place that Chinese foreign direct investment in energy is running into bottlenecks and roadblocks. There was Myanmar last year:
fter five years of cozy cooperation with Burma’s ruling generals, China Power Investment Corp. got a shock in September when it sent a senior executive to Naypyidaw, this destitute Southeast Asian nation’s showcase capital, a Pharaonic sprawl of empty eight-lane highways and cavernous government buildings.
Armed with a slick PowerPoint presentation and promises of $20 billion in investment, Li Guanghua pitched “an excellent opportunity,” a mammoth, Chinese-funded hydropower project in Burma’s far north.
Then came the questions: What about the risk of earthquakes, ecological damage and all the people whose homes would be flooded? Is it true that most of the electricity would go to China?
Two weeks later, Burma, also known as Myanmar, scrapped the cornerstone of the project. President Thein Sein, a former general who took office in March, announced that he had to “respect the people’s will” and halt the $3.6 billion dam project at Myitsone, the biggest of seven planned by China Power Investment, or CPI.
As the world’s biggest consumer of energy, China has hunted far and wide in recent years for sources of power — and of profit — for state-owned corporate behemoths such as CPI. The result is a web of deals with often-repressive regimes, from oil-rich African autocracies such as Sudan and Angola to river-rich Burma.
But coziness with despots can also backfire.
Amid a dramatic, though still fitful, opening in Burma after decades of harsh repression, public anger has swamped China’s hydropower plan. The deluge threatens not only hundreds of millions of dollars already spent but also China’s intimate ties to what had been a reliably authoritarian partner, its only East Asian ally other than North Korea.
Beijing still has big interests in Burma, including a multibillion-dollar oil and natural gas pipeline that is under construction. But a partnership forged with scant heed to public opinion has been badly jolted by a barrage of no-longer-taboo questions.
These are just isolated cases -- I have no doubt that China has a boatload of successful FDI projects in energy. What's telling, however, is that regardless of whether the host regime is democratizing or reverting to autocracy, the political economy of these investments is far from problem-free.
One must sympathize with the Chinese firms here. China's domestic politicsal economy of investment aren't this messy. Oh, wait...
Earlier this week moderate Henrique Capriles Radonski won a primary election to challenge Venezuelan strongman Hugo Chávez for the presidency in October. The New York Times notes that Capriles is the most popular opposition candidate in quite some time.
This popularity seems to have caused both Chávez and the Venezuelan state media to turn things up a notch. The Guardian's Rory Carroll explains:
President Hugo Chávez on Thursday called the opposition's presidential candidate a "low-life pig", signalling a caustic start to Venezuela's election campaign.
The socialist leader vowed to crush Henrique Capriles in October's vote, branding him an agent of imperialism and oligarchy hiding behind a mask of moderation.
"Now we have the loser, welcome! We're going to pulverise you," he told an audience of medical students. "You have a pig's tail, a pig's ears, you snort like a pig, you're a low-life pig. You're a pig, don't try and hide it." He avoided calling Capriles by name, referring instead to "el majunche", slang for "the crappy one".
The speech, which all radio and television stations were obliged to broadcast live, followed Capriles's victory last Sunday in opposition primaries. The state governor won almost two-thirds of 3m votes cast, a higher than expected turnout which jolted the government.
Since then state media have launched multiple accusations at the wealthy 39-year-old challenger, calling him, among other things, a mendacious gay Nazi Zionist (emphasis added).
Your humble blogger cannot confirm that last claim -- it's possible that the Guardian just mashed together a long litany of insults against Chávez. Still the hard-working staff here at FP needs to pause for a moment and gasp in awe at the bolded insult above. I mean, compared to "mendacious gay Nazi Zionist," calling Captiles a pig seems pretty tame. That combination of adjectives is just so... so... contradictory that, on some da-da level of absurdism, one has to admire it. The next thing you know, Chávez and his media cronies will accuse Capriles of being a "warthog-faced buffoon" or a "scumbag f***face d**khead" or having a father who smelled of elderberries or one of a hundred other insults.
One would hope that Capriles and the opposition would match Chávez's level of insults, but, alas, it appears that he is taking the "high road" and decided to talk about "issues" and stuff. So, for quality invective like this, we're going to have watch the Venezuelan state media more closely.
I'm worried, however, that the Chávezistas might have peaked too soon with "mendacious gay Nazi Zionist." In the interest of adding yet more priceless insults to the toolkit of over-the-top political rherotic, I therefore call upon all of my readers to help out the Venezuelan leader. In the comments, try to suggest insults that, somehow, can top what Chávez and his allies have delivered to date.
I think it's safe to say that Venezuela's economy has seen better days. The government has been issuing something that looks an awful lot like food rationing cards. Now the Financial Times' Benedict Mander reports that Venezuela's new currency controls are affecting its import sector in a really sensitive area:
Unable to access enough dollars, local importers are feeling the pinch across a wide range of goods, from Scotch whisky, the nation’s favourite drink, to luxury foods and swanky cars....
Each month, whisky importers – some of the worst hit – say they can legally get only as much foreign currency as they would normally use in a day. Bars and restaurants fear the reaction when they run dry. “We’ve got enough boxes to last a few more weeks, but after that, I’m worried about what will happen,” said the manager of one bar.
The irony, of course, is that Venezuela is doing to itself what the United States has been trying to do to North Korea for years (and re-emphasized in the past few months) -- denying access to luxury goods for the elites.
Let's call these kind of measures Mad Men sanctions, shall we? Anything that embargoes sumptuous indulgences -- including alcohol, cigarettes, and Christina Hendricks -- counts as a Mad Men sanction. The question is, whether self-imposed or externally imposed, do they make a difference?
With respect to North Korea, I think the answer is pretty clearly no. This is mildly surprising. Even though I'm pretty skeptical about these kind of sanctions in general, the DPRK is one of the few countries where Mad Men sanctions truly are "smart." The North Korean elite leads a very segmented life, and making it harder to get Johnny Walker Blue affects very few average North Koreans. That said, while the North Korean elite appears to be tottering just a little, it's not because they're going into Scotch withdrawal.
Of course, there is a difference between an external actor imposing a Mad Men embargo and an internal actor screwing up the economy to the point that a petrostate needs to husband foreign exchange reserves. For IR grad students out there, it's a good test: is a regime hurt more from an externaly-created embargo or from an internally-created one?
[And what about the IR effects of Christina Hendricks?--ed. Definitely a question that begs for further research. Dibs!!--ed.]
Michael Buckner/Getty Images for Belvedere Vodka
Over at the Foreign Policy Association's website, Sean Goforth has ginned up a handy new acronym to describe the latest constellation of threats to U.S. national interests:
Ever since "axis of evil," broad characterizations of geopolitical threats have been considered impolitic, if not ignorant.... The hesitation to label a global threat as such is now sacrificing substance for political correctness. Venezuela, Iran, and Russia constitute a VIRUS of instability that threatens the United States and Western order. This recognition is needed, but the US should learn from past mistakes and avoid a hard-line path similar to the one that resulted from branding "axis of evil."
Clearly, there's some rhetorical tension in that paragraph. One the one hand, VIRUS is just an awesome acronym, and Goforth deserves some props for coming up with it. Seriously, it's catchy, it effectively captures the relationship between the salient actors, and it sounds quite menacing. I can already picture the cable news teasers and one-liners:
"After the break: can the Obama administration combat the VIRUS?"
"When we come back: is the VIRUS running rampant across Latin America?"
"Coming up: forget Tiger Woods, Sean Penn is in danger of spreading the VIRUS!"
The thing is, Goforth concludes with his recommended policy responses to the VIRUS coalition. And they appear to be.... pretty much what's being done right now:
[T]he VIRUS alliance is playing a sophisticated game of brinksmanship. Venezuelan government documents suggest that Chavez hopes to get the US to perceive an immediate threat and overreact, igniting a series of events that will eventually collapse "the empire." More realistically, if Colombia or Israel, key American allies, were to misstep and launch a limited-scale attack against Venezuela or Iran it would further boost anti-Americanism and add weight to claims of imperialism. A final objective appears to be presenting a dilemma that will drive a fissure between the US and Israel, a prospect that Iran's nuclear program may well realize.
Responding to the VIRUS needn't require one bold policy. Talk of regime change should be scuttled for sure-it only justifies more arms purchases and feeds anti-American rhetoric. And focusing just on Iran is feckless. Iran is embedded in an alliance that cobbles Russia's diplomatic protection with a network that spreads "business" investments across three continents to serve strategic purposes.
Instead of antagonizing the VIRUS the United States should seek inoculation through savvy diplomacy that breaks the bonds between its constituent members, which is a realistic objective because Venezuela, Russia, and Iran don't share deep-seeded cultural or economic ties. Luckily for Western security, the VIRUS' venom is being diluted by economic realities on the ground: unemployment is extremely high in all three nations, and Iran and Venezuela have the world's highest rates of inflation. If oil trades at moderate prices, Chavez and his "brother" Ahmadinejad will be left to account for their failure to bring development, though Putin's popularity seems assured no matter how badly the Russian economy sours.
So, according to Goforth, the proper U.S. response to VIRUS appears to be:
A) Don't overreact or overreach;
B) Try to split the constituent members of the VIRUS through assiduous diplomacy; and
C) Be patient and let these economies collapse under their own weight.
Is there anything different betwqeen these policy recommendations and what the Obama administration is currently doing? The only new thing here is the idea of letting oil prices stay relatively low to prevent new infusions of cash into the coffers of these regimes -- although, truth be told, this isn't really that new an idea.
I suspect, however, that Goforth's policy recommendations will not garner much attention. I expect the VIRUS acronym, on the other hand, to spread across the foreign policy community like... well, you know.
I, for one, am glad that the foreign press is brave enough to cover what America's mainstream media is not -- the U.S. government's complicity in causing the Haitian earthquake. Never mind that the foreign media echo chamber aparentluy started with a false rumor -- with luck, our MSM will now start asking the tough questions.
Why, you might ask? What is America's motivations to trigger Haiti's earthquake and then intervene with massive aid in the hemisphere's poorest country? Well, there are different theories bandied about.
Venezuelan leader Hugo Chavez suggests that this was a practice "drill," designed to test the earthquake weapon before targeting Iran (though see the update below). Very clever!! It is unclear whether Chavez believes that this is a test of the "demonstration effect" variety or not. It is also unclear just how such an earthquake would actually destroy Iran's nuclear program -- the 2003 Bam earthquake certainly didn't.
This Canadian-based Centre for Research on Globalization's Ken Hildebrandt offers the following ingenious explanation:
You've likely guessed my suspicions about recent events. I'm not saying this is what occurred, though it's sure a possibility to be considered in my view.
This could hardly have happened at a more convenient time. The president's ratings are plummeting, and his bill to subsidize the insurance industry has essentially divided the nation in two.
What better way to lead the people into believing we're one big happy family than to reunite former Presidents Clinton and George W. Bush along with Obama in a joint humanitarian effort?
This is so convenient... and brilliant!! It makes perfect sense that the Obama administation would try to kill upwards of 200,000 Haitians in order to bring the country together as one! Because, clearly, in recent years, natural disasters have bolstered the standing of U.S. presidents!! Certainly, a calamity in Haiti would work even better! If only Rush Limbaugh had played ball....
What I love about conspiracies like these is the careful balancing of smart and stupid that the key actors have to possess in order for the plan to work as described.
Question to readers: how far and how wide will this meme travel?
UPDATE: I just received the following from a atrategic communications advisor to the Venezuelan Embassy in the United states:
In response to your recent post on Foreign Policy’s website, I just wanted to clarify that President Hugo Chavez never associated himself with the theory that a
U.S.weapon had caused the earthquake in . Haiti
The claim was made by a blogger on the website of a state-run yet independent television station. At some point thereafter, someone jumped to the conclusion that President Chavez had agreed or repeated the claim, which is absolutely not true. President Chavez did argue against an increased
U.S.military presence in , but at no point did he question what had caused the earthquake or aligned himself with any conspiracy theories to that effect. Haiti
The New York Times' Simon Romero reports that Venezuelan leader Hugo Chávez is doing a 180 on allowing investment from
evil rapacious capitalist pig-dogs Western oil companies:
President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.
Until recently, Mr. Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.
But faced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.
Their willingness to even consider investing in Venezuela reflects the scarcity of projects open to foreign companies in other top oil nations, particularly in the Middle East.
Chávez's actions pleasantly surprise me, because retrenchment and realpolitik were not the only option. One could have envisioned Chávez reacting by ratcheting up tensions with neighbors as a short-term solution. Although I suspect most Americans would prefer to see the back of Hugo, this kind of behavior suggests that Venezuela is never going to rise to the problem level of, say, Iran.
The willingness of the oil companies to re-enter the fray in Caracas is more intriguing. In recent years there has been a lot of loose talk about how holders of capital also hold the levers in a bargaining situation with debtors, because the latter must do what they can to please the former.
In fact, recent research suggests that when debtors violate their contracts, the price to be paid is often much less than anticipated. Chávez certainly seems quite aware of this fact.
What puzzles me is that Chávez's reputation does suggest that the moment oil prices go up again, he'll reverse course yet again and put the screws on his foreign investors. In understand that exploration opportunities are scarce, but the willingness of these firms to go back is item #345 on Things I Do Not Understand About Energy Markets.
Houston-based Citgo Petroleum Corp., the U.S. fuels and refining unit of Venezuelan state oil company PDVSA, plans to suspend its program to provide discounted heating oil to poor U.S. communities, according to Citizens Energy, a nonprofit which helps Citgo distribute the heating oil.
Citizens Energy chairman Joseph Kennedy said in a statement Monday that Citgo was calling off its heating oil aid programs in the United States due to "falling oil prices and the world economic crisis."
Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.