Venezuela: The petroleum leadership of Chávez

Andrés Cañizález

The idea of petroleum as a diplomatic weapon is not new in Venezuela. It
had perhaps its most symbolic expression during the first administration
of Carlos Andrés Pérez(1974-79). He launched a skillful international
strategy which took advantage of high crude oil prices and a strong OPEC
on the one hand, and on the other, the international climate which was
increasingly in favor of South-South cooperation and the Venezuelan role
as a major player in the realm of Latin America and the Caribbean.

Today, under Hugo Chavez's administration, this idea of petroleum
diplomacy is regaining strength in Venezuela, and is a position openly
defended by the Minister of Exterior Relations, journalist José Vicente
Rangel.

Peréz's second administration (1989-93) and that of Rafael Caldera (1994-
99), like the transitional government of Ramon J. Velasquez - who held
office in the interim following the judgement against Pérez -, coincided
in distancing themselves from OPEC. They maintained oil policies that
often conflicted with the common vision of the organization, and even
considered the scenario of Venezuela's leaving the very entity it had
helped to found 40 years ago.

This position, which was also applied to the area of petroleum
production, had negative consequences: the price of petroleum at the
beginning of 1999 was at its lowest level since the 70s. This was a
consequence of the overproduction embarked upon by several OPEC members
and other producers, in a clear violation of the quotas established by
OPEC itself for its 11 member countries.

Strengthening OPEC

Chavez's rise to power and the nomination of Alí Rodriguez as Minister of
Energy meant the return of closer relations and friendlier dialogue,
which have converged in a real political desire to strengthen OPEC. The
gradual recovery of prices throughout 1999 and 2000 (excluding, of
course, the recent prevalence of speculation and disturbance factors such
as the Middle East conflict), are a consequence of the new policy which
Venezuela has spearheaded.

In 1999, Venezuela and Saudi Arabia reconvened a dialogue in order to
reduce production, into which Mexico was integrated, and through which
they were able to build bridges with non-OPEC producers such as Norway
and Russia.

This notable role was a major motive for Chavez's convening the second
OPEC Summit of sovereigns, heads of State and government. It is
significant that this was only the second such meeting in 40 years and
that it had been 25 years since the first, in Argel (1975).

The very fact of the summit can itself be considered a diplomatic success
for Chávez and for Minister Rodríguez, currently president of OPEC. The
media and the major Venezuelan pundits have underplayed importance of
this fact, and focused on the specifics of the meeting rather than the
significance of its occurrence.

There was, as always, the "family photo". Chávez is the principal figure
in this image, on the back of which could be written that it is the
second in 40 years, a fact whose significance has already been mentioned;
we are looking at the first image of unity of the organization since the
80s, and the summit served as an excuse for, for example, a private
meeting of Iraqi and Irani leaders in a timely diplomatic move prompted
by Venezuela.

The tone of the "Caracas Declaration" is decidedly in favor of dialogue
with consumer countries, and this is also a milestone, in addition to
restoring OPEC to its role as a key player on the global scene. This is
evidenced by the possible opening of dialogue with the European Union or
with the group of the world's most industrialized countries, the G-7.

Marking distances

If the summit was a success, in terms of a relaunching of OPEC (whose
members have made it clear that the Caracas meeting was not for debating
prices), this is intimately related to Chavez's strong personality. We
should not forget the trip, intense and exhausting if we consider the
days and kilometers covered, which he made at the end of July to each of
the other 10 countries in the organization in order to extend a personal
invitation to the meeting in Caracas. Venezuela is the only OPEC member
in the Western hemisphere, which meant that Chavez had to visit not only
several Middle Eastern countries, but also Africa and Asia in order not
to exclude anyone.

In the process of this trip he demonstrated an important diplomatic
independence with his historic visit to Iraq, as well as with the no less
symbolic visit to Libya. With these two meetings Venezuela put a marked
distance between itself and the influence of the US in foreign policy, as
the international press recognized at the time.

Criticized for his overtures toward this world "where democracy is not
respected", Chávez was clearly ironic in saying that OPEC was not a club
for defending democracy, but a coordinating body for petroleum policies
for countries whose economies are closely tied to oil.

He is now on the brink of being criticized once again for his petroleum
diplomacy. After spending 1999 pressuring Mexico to amplify the San Jose
Accord, which for 20 years has guaranteed a petroleum supply with special
payment conditions to the countries of Central America and the Caribbean,
Venezuela has launched its Caracas Energy Accord.

The biggest novelty of this accord is that it will permit Cuba's
inclusion among those countries which receive a guaranteed petroleum
supply with advantageous terms of payment, given that the majority of
the Antilles are not part of the San Jose Accord, and Mexico did not
accept Venezuela's offer of integration.

In addition to the criticisms which will arise for supplying petroleum to
Cuba, which still flies the banner of socialism, Venezuelan diplomacy
must act cautiously in the face of Mexico's eventual negative reaction
and possible pressure from the English-speaking Caribbean countries
because of Guyana's exclusion from the energy plan. But of course these
are the risks of any foreign policy with personality, and this is what
Chávez undoubtedly has in using petroleum as the axis of this diplomacy.

One final indication of the role petroleum plays in Chavez's policy was
the surprising appointment of General Guaicaipuro Lameda as head of the
state-owned Venezuelan Petroleum (PDVSA). The active military man is not
an expert on petroleum, but has the complete confidence of the Chief of
State and has been a part of his government from the beginning, as
director of the Central Budgeting Office.