Sunday, March 04, 2007

President Chavez's Oil Largesse Winning Supporters Around the World

From the March 05, 2007 edition -

Chávez's oil largesse winning fans abroad

London is the latest city to get a fuel deal as part of the Venezuelan leader's '21st century socialism.'

By Sara Miller Llana and Mark Rice-Oxley

The London bus has come to symbolize many things over the years. It's a national icon, a picture postcard paragon of public transport, a byword for frustration and irregularity.

But a harbinger of international socialism? Far-fetched perhaps, but less so after the latest move by Venezuela's President Hugo Chávez to offer cut-rate fuel so that 250,000 Londoners on welfare can travel half-price throughout one of the world's most expensive cities.

The double-decker trademark isn't the only trace of Mr. Chávez's so-called "21st century socialism:" For the past year residents in New York, Boston, and other major US cities have scored cheaper heating bills, thanks to Venezuela. Chávez has also sent cheap oil to Cuba, Nicaragua, and more than a dozen other countries.

His offerings go beyond oil and have been announced with particular frenzy since he won a third term in December, promising $500 million in financing for Ecuador, $135 million for a dairy cooperative in Argentina, and a development plan in Nicaragua that includes generators to ease blackouts as well as a new development bank.

Analysts say his projects both in Latin America and beyond are singular among leaders sitting on vast energy reserves, as Chávez sets out to create a counterbalance to US dominance with a flurry of deals, measures, gifts, and grandiose schemes. To his harshest critics he's an egomaniac using an "energy bribe" to inflate his reputation. To fans he's the consummate humanitarian. Both agree that his moves have amounted to a PR coup, and some analysts even say the fallout could lead to a shift in social, economic, and political balances across the region.

"By situating Venezuela in these various international arenas of cooperation, the Chávez government is also attempting to limit what the US can do to isolate Venezuela," says Miguel Tinker-Salas, a Latin America oil and politics expert at Pomona College in California.

Certainly, providing subsidized oil to help residents pay bills and access public transportation has raised his visibility, cloaking him in the role of benefactor, says Larry Birns, director of the left- leaning Council on Hemispheric Affairs in Washington. "I think that these actions have projected an image for the average Latin American of great good will."

That has put pressure on other Latin American leaders, such as Brazil's Lula da Silva, for example. "I could easily see Lula throwing up his hands over Chávez's antics, but Lula regularly goes to Caracas hugging Chávez because he needs that for domestic consumption," says Mr. Birns.

It is this type of "demonstration effect," as Mr. Tinker-Salas calls it, that could ultimately prove lasting in the region and beyond.

In the US, Venezuela is sending oil subsidized at a 40 percent discount from the delivery price to 16 states – double from the year before – as well as 163 native American tribes. That represents 100 million gallons of fuel this winter. The program brochure describes it this way: "This is a people-to-people program that comes from the heart of Venezuela to the homes of American families who just can't pay their energy bills."

"In New York, residents wonder why a foreign country has to provide this. They want to know, 'Why can't you provide it? Or BP and Shell?' " says Tinker-Salas. "It's highlighting what those countries are not doing for their own populations."

That was the sentiment in November in a neighborhood called Las Torres, one of the poorest in Nicaragua's capital, Managua, which has been plagued by blackouts over the past year. "Light? Of course not," says Flor de Maria Flores, who regularly lights her home by candle, and, like so many of her neighbors, cooks over an open fire. She was vaguely aware of Chávez's plan to send discounted oil to her nation to help ease power blackout problems. "I'm glad someone is doing something about it," she says.

Chávez's latest scheme, signed by London's leftist mayor Ken Livingstone on Feb. 20, will save the city $32 million a year. In return, London transport chiefs will visit Caracas next month to advise on traffic management and urban planning. "The agreement with Venezuela is to use the energy cost contribution to alleviate the impact of high energy costs for some of the poorest Londoners," says a spokesperson for Mayor Livingstone.

But critics have questioned the logic of the deal. "I find it strange that the capital of a G-8 country is effectively receiving foreign aid from a poor country," says Richard Barnes, a Livingstone opponent in the Greater London Assembly. "Thirty-eight percent of [Venezuela's] people live below the poverty line and here [Venezuela] is subsidizing London's poor."

London joins a growing list of locales receiving Chávez largesse. Venezuela's oil has gone to at least 18 nations. Cheap oil is sent to needy Caribbean nations as part of Chávez's Petrocaribe initiative. Recently he pledged to send Nicaragua 10,000 barrels of discounted oil and oil products a day.

In its most obvious defiance against the US, Venezuela sends 100,000 barrels of oil a day to Cuba at subsidized rates. The projects go beyond oil. Venezuela gave Argentina $2.5 billion to pay off its debt to the International Monetary Fund (IMF) last year, and promised to help Bolivia to continue nationalizing key industries.

Programs strike a chord with the poor

Chávez's programs, especially in Latin America, have tapped into a widespread disenchantment with the free-market policies championed throughout most of the region in the past couple decades, a sentiment reflected by the recent electoral wins of Chávez allies, including longtime US foe Daniel Ortega in Nicaragua, Rafael Correa in Ecuador, and Evo Morales in Bolivia.

"I think that there has been significant erosion of US-Latin American dependence, psychological as well as actual dependence, on the US," says Birns.

Yet some say that his influence is overestimated. "He needs the US more than the US needs him," says Gal Luft, co-director of the conservative Institute for the Analysis of Global Security in Washington, an energy security think tank. "I don't think we should scare ourselves to death by what Hugo Chávez is doing," he says pointing out that Venezuela is the fourth biggest supplier of US crude imports.

An 'energy bribe'?

Mr. Luft dubs Chávez's moves an "energy bribe" and says that most leaders will leave his side when he runs out of money. "There is a great game going on now in Latin America, in which he is trying to pour a little oil money into every one of the chess squares," says Luft. "If someone offers you a gift, it's hard to turn down. Hugo Chávez does all kinds of things that make a lot of headlines but at the end of the day everyone knows who he is."

In fact, his popularity may have surged in pockets where residents are direct beneficiaries of his aid, but overall his popularity has not changed dramatically. According to a regional survey in late 2006 by Latinobarometro, a polling firm in Chile, respondents grouped Chávez, Cuba's Fidel Castro, and President Bush all as bad leaders.

Chávez's reputation also took a blow last fall when he failed to win a seat on the UN Security Council despite fierce lobbying, after he called President Bush "the devil" at the United Nations.

Michael Shifter, the vice president for policy at the Inter-American Dialogue in Washington who is coming out with a report this week on the challenges the Chávez administration poses to US policy makers, says that Chávez is able to point out what is wrong with Latin America, but his direction is not necessarily a solution. "He offers a seductive project, and his appeal is totally understandable. His gift is to tap into ... this resentment toward the US, which has a real basis," says Shifter. "But I don't think Chávez has an answer to the problems either."

Ms. Llana is Latin America correspondent for the Monitor and USA Today. Associated Press reports were used in this story.
Venezuela's oil diplomacy

President Chávez has set up deals to send cheap oil to 18 countries and 16 states, with 100 million gallons meant for the US alone.

New York: Will supply 100,000 households with 25 million gallons of Venezuelan fuel.

Boston: Citgo, a US subsidiary of Venezuela's state-run oilfirm, will sell 12 million gallons of heating fuel at a $10-milliondiscount.

London: Will halve bus fares for 250,000 people, saving up to $32 million a year.

Sources: AP, Citgo

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