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Feb
7
2012
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Game Changer in U.S.-Venezuela Relations

DSC 0754 150x150 Game Changer in U.S. Venezuela RelationsJosé R. Cárdenas served in several foreign policy positions during the George W. Bush administration (2004-2009), including on the National Security Council staff. He is a consultant with Vision Americas in Washington, DC.

Bombshell testimony on Capitol Hill last week by U.S. Director of National Intelligence James Clapper has dramatically altered the stakes in Washington’s relations with the Hugo Chávez regime in Venezuela. Speaking before the Senate Select Committee on Intelligence for the annual Worldwide Threat Assessment, Clapper said that Iranian leaders had changed their calculus and are now prepared to respond to perceived threats with terrorist attacks inside the United States.

Clapper said: “The 2011 plot to assassinate the Saudi ambassador to the United States shows that some Iranian officials — probably including Supreme Leader Ali Khamenei — have changed their calculus and are now more willing to conduct an attack in the United States in response to real or perceived U.S. actions that threaten the regime. We are also concerned about Iranian plotting against U.S. or allied interests overseas. Iran’s willingness to sponsor future attacks in the United States or against our interests abroad probably will be shaped by Tehran’s evaluation of the costs it bears for the plot against the ambassador as well as Iranian leaders’ perceptions of U.S. threats against the regime.”

The implications for U.S.-Venezuela relations are clear. Now that it has been assessed that Iran is prepared to attack the U.S. homeland, focus must now be placed on its capabilities and means to do so. That Hugo Chávez has made Venezuela — less than a three-hour flight from Florida — one of Iran’s most important international allies is now a paramount concern to U.S. security agencies.

Indeed, Chávez’s deep-seated economic, military, and intelligence relationship with Iran, running into the tens of billions of dollars, provides an enormous cover for covert operations and other destabilizing activities. That relationship runs from establishing Venezuela’s Margarita Island as a center for Iranian and Hezbollah operations in the Americas and facilitating Iran’s development of a nuclear capability by helping it obtain uranium, to blunting  sanctions by providing Iran’s access to Venezuela’s banking system and jointly trafficking in weapons (here and here) and narcotics. The DEA believes a weekly flight between Iran and Caracas is used for, among other nefarious purposes, smuggling South American cocaine to the Middle East.

Moreover, we know already that a member of the terrorist network plotting to detonate fuel tanks at JFK International Airport in New York in 2007 was arrested on the run to Venezuela, where he planned to board a Venezuelan flight to Tehran.

Lastly, the explosive documentary aired last month on Univisión, “The Iranian Threat,” included not only incriminating information on Venezuelan and Iranian diplomats discussing cyberattacks on sensitive U.S. computer systems (The State Department subsequently expelled the Venezuelan diplomat from the United States, where she had been re-posted), but also compelling evidence on how young Latinos are targeted for recruitment and paramilitary training in Iranian and Venezuelan camps visited by Hezbollah, Hamas, and the Colombian FARC.

As the Chairman of the House Foreign Affairs Committee, Congresswoman Ileana Ros-Lehtinen, put it succinctly in another hearing last week, “The Iranian regime has formed alliances with Chávez, Ortega, Castro, and Correa that many believe can destabilize the hemisphere. These alliances can pose an immediate threat by giving Iran – directly through the IRGC, the Qods force, or its proxies like Hezbollah – a platform in the region to carry out attacks against the United States, our interests, and allies.”

In addition, Clapper told the Senate that the intelligence community remains concerned about Iran’s ties to governments in the region and was tracking the issue closely, adding, specific to Iran’s activities in the region, “there is more to unfold here.”

Clearly, Clapper’s testimony reflects a substantial change in the U.S. government’s own calculus about Iran, Venezuela, and the Western Hemisphere.  If Iran is now prepared to strike the U.S. homeland, then all actions need to be pursued to debilitate its capability to do so, and that means targeting its presence in Venezuela. Hugo Chávez made a very dangerous bet when he introduced Iran to the Western Hemisphere. Now, he should be made to pay the price.

 
Dec
9
2011
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In Case You Missed It… Articles Roundup Week of 12/9/11

In this week’s roundup…After nearly 13 years of “21st Century socialism,” Hugo Chávez wants to remain in power for 30 more years; a new regional body, CELAC, is born in Caracas; the Venezuelan economy continues to weaken with prices rising, investments falling and a staggering inflation rate; Venezuela’s opposition candidates agree on need to reform country’s judicial and law enforcement systems; and Russian state-owned oil behemoth Rosneft strikes a $2.6 billion deal to refine Venezuelan oil reserves.

Chávez’s 40-Year Plan to Conquer Vice, The Wall Street Journal

Venezuela’s Hugo Chávez says his Bolivarian Revolution needs more time to produce its utopian fruits. “We barely have 10 years here,” he told a crowd of supporters in Caracas last week. “We will take it to 10 more and 10 more and 10 more to construct the new social virtues.” In that time, Mr. Chávez pledged, “we will deepen the socialist revolution: socialism, socialism and more socialism. We have to deepen the struggle and defeat the vices of the past that still persists among us: violence, insecurity, corruption, selfishness, individualism.”Considering that the human condition hasn’t changed much since we got kicked out of the garden, a 40-year plan to conquer vice seems pretty ambitious. But Mr. Chávez has never suffered a lack of self-confidence. Of course being an individual is hardly a vice. On the other hand, notably absent from his list was another perennial transgression that has yet to be defeated in Venezuela: the central bank’s sinful practice of printing money to finance the government.

Celac: “giant” born in another’s shadow, The Financial Times

“A giant has been born,” declared Hugo Chávez in his usual understated style at the founding of the latest Latin American regional body, Celac, which was formed over the weekend in Caracas. The 33 member body pointedly excludes the US and Canada – which raises the question: is it a non-American or anti-American alliance? (Conservative Latin countries such as Mexico, Colombia and Chile would probably suggest the former; the likes of Venezuela and Cuba the latter). More pointedly, if it is a giant as Chávez suggested, for the moment it looks like a blind and one-legged colossus, with one arm tied behind its back. As noted here and here the body lacks a secretariat, a building, a funding structure, or even rules on how to reach its anyway non-binding decisions. Rather than tackling such meat and potato issues, which are presumably central to any functioning multilateral body, the meeting ended instead with a fiesta and a bland communiqué about the desire for more regional cooperation. Still, the summit did give Chávez the chance to flaunt his “recovery” from cancer.

Venezuela: paying the Chávez price, The Financial Times

Christmas has come early for many Venezuelans this year. Around the country, state-subsidised “fairs” have been springing up where imported Chinese “white goods” are being sold at bargain basement prices. In a country where annual inflation is running at 27.6 per cent, people have been leaping at the opportunity to buy cheap Haier fridges at what Venezuela’s bountiful president has called “the Chávez price”. Massive queues have been appearing out of nowhere as consumers try to ease the deleterious effects of inflation – prices rose by 2.2 per cent in November alone according to central bank figures released on Tuesday. According to the government, the items on sale are going for as much as 55 per cent less than what they would cost in a privately-owned store. There’s one very good reason for that: the government can afford to charge much less as it has unlimited access to foreign currency at the cheap official exchange rate.

Venezuela central bank: Private investment down 43% in 2007-2010, El Universal

After two years of recession, soaring oil prices have created momentum for the Venezuelan economy to resume growth. However, economic imbalances, such as the collapse of private investments, represent a major stumbling block. The Central Bank of Venezuela (BCV) reported that between 2007 and 2010, the private sector’s investment in machines, equipments, and buildings that are used to increase production declined 43.6% to the lowest level in the last seven years. The BCV has not yet published specific data on private investment in 2011 and only releases the public sector’s statistics. Nevertheless, everything suggests that there has been no change in the mood of the business sector.

Venezuela November CPI Rises 2.2% Vs 1.8% In October, The Wall Street Journal

Venezuela’s chronically high inflation rate picked up last month, with the consumer price index climbing in November by 2.2% from the previous month and registering a 12-month rise of 27.6%, the central bank reported Tuesday. The figures show prices rising in key categories like housing services and food as President Hugo Chavez’s government aims to increase housing construction and embark on measures to regulate consumer prices in a bid to curb one of the world’s fastest inflation rates. Expectations for increased spending on social programs ahead of next year’s presidential elections are also seen exacerbating the jump in inflation. The oil-rich South American country had posted a 1.8% rise in the national consumer price index in October and a 1.5% jump in November of 2010.

Chavez: Venezuela willing to talk with Exxon Mobil, Bloomberg Businessweek via The Associated Press

Venezuelan President Hugo Chavez says his government would be open to negotiating with Exxon Mobil Corp. in a dispute over the nationalization of an oil project in the country. Venezuelan officials have previously said Exxon Mobil’s compensation demands are excessive. The Irving, Texas-based oil company turned to international arbitration after refusing to accept the terms of the nationalization in 2007. Chavez says he would be willing to “sit down with them and seek a friendly settlement, but that’s up to them and not to us.” Exxon Mobil declined to comment. Chavez said during a news conference Tuesday that his government has always sought agreements in such cases when possible.

Opposition pre-candidates: Impunity needs to be uprooted, El Universal

When asked about personal insecurity, the five opposition presidential pre-candidates agreed on the need to end impunity, and to make in-depth changes in the Judiciary, the Attorney General Office, and police corps in order to secure law enforcement. Presidential hopeful Henrique Capriles Radonski that said more than 100,000 Venezuelans have been killed over the last decade. He added that dignified employment and quality education are of the essence to break the vicious circle of violence.

Putin continues to court Venezuela, The Financial Times

It’s not hard to see why Vladimir Putin saw fit to take precious time out today in the aftermath of Russia’s controversial parliamentary elections last Sunday to meet with Venezuela’s vice-president, Elias Jaua. Much to the discomfort of Washington, the two countries are developing an ever cosier bilateral relationship and Russia’s state-run oil giant Rosneft announced a $2.6bn deal today to develop Venezuela’s extra-heavy crude oil reserves in the Orinoco. The idea is for Rosneft to have a 40 per cent stake in the Carabobo 2 block in a joint venture with Venezuela’s state oil company, PDVSA, which will control the remaining 60 per cent. Carabobo 2 has estimated reserves of 40bn barrels of oil, and potential production capacity of more than 400,000 barrels per day. For the privilege, Rosneft must pay an initial $440m on approval of the project by the Venezuelan authorities, and a further $660m after the final investment decision. Rosneft has also agreed to lend $1.5bn to PDVSA, though no more than $300m a year.

 

 
Aug
17
2011
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ICYMI: Venezuela Plans to Move Reserve Funds

Venezuela Plans to Move Reserve Funds

The Wall Street Journal - August 17, 2011

By José de Córdoba and Ezequiel Minaya

CARACAS – Venezuela plans to transfer billions of dollars in cash reserves from abroad to banks in Russia, China and Brazil and tons of gold from European banks to its central bank vaults, according to documents reviewed Tuesday by The Wall Street Journal.

The planned moves would include transferring $6.3 billion in cash reserves, most of which Venezuela now keeps in banks such as the Bank for International Settlements in Basel, Switzerland, and Barclays Bank in London to unnamed Russian, Chinese and Brazilian banks, one document said.

Miraflores Press/Zuma Press
Hugo Chávez returned to Venezuela after completing another phase of his treatment for cancer in Cuba.

Venezuela also plans to move 211 tons of gold it keeps abroad and values at $11 billion to the vaults of the Venezuelan Central Bank in Caracas where the government keeps its remaining 154 tons of bullion, the document says.

Venezuelan officials were tight-lipped. Representatives of the ministry of finance and the central bank said there was no official comment, and no one was authorized to address the issue.

Lately, senior Venezuelan officials have criticized Venezuela’s dependence on the dollar. Last Saturday, Venezuelan Foreign Minister Nicolas Maduro said the world’s financial system, based on the dollar, “had entered into a crisis of uncertainty and we are planning to construct a new international monetary system, and especially in South America, protect ourselves from this situation,” he said.

The Bank of England recently received a request from the Venezuelan government about transferring the 99 tons of gold Venezuela holds in the bank back to Venezuela, said a person familiar with the matter. A spokesman from the Bank of England declined to comment whether Venezuela had any gold on deposit at the bank.

A spokesman for the Bank for International Settlements where Venezuela keeps $3.7 billion of its cash reserves, and 11.2 tons of gold, Venezuela svalues at $544 million, according to the document, also declined to comment.

Analysts said the planned move made little economic or financial sense, since Venezuela would be taking its money out of secure banks in safe countries and putting it in countries that are not as safe and perhaps in currencies such as the Chinese yuan or the Russian ruble, which are not reserve currencies. “It’s a big risk,” said José Guerra, a former official at Venezuela’s central bank. Mr. Guerra said he also had heard about the documents whose authenticity was confirmed to him by Central Bank officials.

Mr. Guerra said one possible reason for the planned moves could be that Venezuela is afraid it could be compelled to pay billions of dollars in compensations to foreign companies that have gone to court to recover damages for companies Venezuelan President Hugo Chávez has nationalized. Another reason could be that China may have asked for collateral for billions of dollars it has loaned Venezuela, Mr. Guerra said.

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