Posted By Daniel W. Drezner

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.]

Developing....

Michael Buckner/Getty Images for Belvedere Vodka

Posted By Daniel W. Drezner

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.

This is a plan so brilliant that only the Evil League of Evil, in conjunction with the reverse vampires and the Obama administration, could have devised it.

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 Haiti, but at no point did he question what had caused the earthquake or aligned himself with any conspiracy theories to that effect.

 

Posted By Daniel W. Drezner

My latest bloggingheads with Matthew Yglesias is up.  Topics discussed include Obama's first month, why less earmarks means more grandiose slabs of pork, and how to do an end-run around Hugo Chavez. 

Go check it out

Posted By Daniel W. Drezner

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

Posted By Daniel W. Drezner

The global economic downturn is not just affecting manufacturing output or the financial sector. I'm afraid that shameless PR gestures by Latin American thugs are also going to be curtailed

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.

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