DC's Quest for Allies in its Battle Against Chavez

The U.S., with limited success, is using its diplomatic channels to urge nations to which it has privileged access to take a firm stand against Venezuela’s Hugo Chavez. In the meantime, the European Union (EU) is fast allowing its presence on the map of Latin America to fade. On the Chavez issue, the EU clamorously remains neutral, and in doing so, might be losing out on what could be important benefits emerging from a sharpening divide separating the U.S. from a progressive bloc of Latin America states.

Anti-American sentiments are on the rise in Latin America, which was demonstrated by the wave of unrest manifested during President Bush’s tour of the region in March. After six years of neglect as a result of its preoccupation with Iraq, the Bush administration’s interests in South America are only now being resurrected. The motive: the former military officer and now president of oil-rich Venezuela is providing Latin America’s discontent with U.S. unilateralism and its lack of respect for the region’s autonomy, a voice that threatens vital U.S. economic interests in the area. As of now, Chavez is an ebullient advocate for a Latin American regional economic integration rather than the Bush promoted trade pact with the region. Welcoming the leaders of South America to Caracas in late April for the ALBA (Alternativa Boliviariana Para Las Americas) Summit, Chavez stressed his alternative for the Bush-sponsored Free Trade Agreement of the Americas (FTAA). In pursuit of this goal, Chavez not only tried to check U.S. negotiations with Brazil, but motivated Bush to start talking about bio-diesel production in South America for the U.S. market in order to increase his influence over Brazil’s President Luiz Inacio Lula da Silva while decreasing U.S. oil dependence on countries like Venezuela. The commencing wave of withdraws by left-leaning governments from the World Bank and IMF (beginning with Venezuela and Ecuador) or intimations that such could occur may also be attributed to Chavez’s increasing influence in the region. It also could promote an enlargement of the list of his detractors. Mixed signals given that plans were in the works to nationalize banks and the country’s largest steel producer on May Day further outraged private stakeholders. While the Bush administration is trying to secure like-minded allies to discredit Chavez in order to secure its hemispheric economic interests, the EU seems to be practicing abstinence regarding the showdown now occurring in the Western Hemisphere, being no better than an observer to this process.

Focus on Internal Issues Rather Than Foreign Policy
Europe is distracted by its own internal problems, making it difficult for it to pay more than perfunctory attention to conflicts in Latin America. The European Union has to cope with serious internal issues, giving the highest priority to the managing the integration of member states coming from “new” Europe. Starting with a group of twelve nations, the Union now comprises 27 states. There exists the ongoing controversy over the adoption of new candidates, particularly Turkey, a country accused of unabashed human rights violations. The EU is also negotiating with Serbia, Montenegro, Bosnia, Macedonia, Croatia, Ukraine, Moldavia, and Georgia about prospective membership. Moreover, there is the ongoing struggle to write the EU constitution. German Chancellor Angela Merkel wants to finish it while her country still holds the EU presidency. The last trial attempt failed in 2005 when both the Netherlands and France rejected the proposed documents.

The Stakes are High
Europe imports about 7% of its total foreign oil purchases from Venezuela. While Venezuela is not heavily dependent on EU purchases, a deteriorating relationship with Chavez could have significant implications for the EU energy market if Chavez ever decides to restrain or cut off supply. From this perspective, the EU would be well advised to not needlessly offend the Venezuelan leader. At a May Day ceremony, Chavez announced that his country would be taking over majority control its last privately owned oil fields. This marked the final step towards the nationalization of the Venezuelan energy industry.

Energy is of particular concern for the European Union, as demonstrated at the last EU-Latin America summit in Vienna in May of last year, where energy policy was at the center of the discussion. British Prime Minister Tony Blair criticized the nationalization of the oil and gas industry in Bolivia and Venezuela by urging the two Latin American nations not to act irresponsibly. He argued: “What countries do in their energy policy when they are energy producers like Bolivia and Venezuela matters enormously to all of us. My only plea is that people exercise the power they have got in this regard responsibly for the whole of the international community.” Other European leaders at Vienna expressed fears that nationalization would destabilize global energy markets and push up prices. The Austrian Chancellor, Wolfgang Schuessel, said that nations had to answer the question whether they wanted open markets and increased foreign direct investment, adding that experience showed that “open market societies are better in their performance than closed, restricted structures.”

Foreign Direct Investment in Peril
According to the Venezuela Strategy Paper (2001-2006) issued by the European Union, “the EU is only a moderately important trading partner for Venezuela.” Approximately 8.3% of Venezuela’s total trade in 2000 was with the EU, compared to 46.1% with the United States. Venezuela accounts for 0.3 % percent of the total trade of the EU. The main product exported from Venezuela to the EU is, of course, energy, which represents 59.8% of its total exports to the EU.

Venezuela always has been a recipient of foreign direct investment from Europe (FDI). In 2004, EUR 702 million were allocated to the country. Complicating matters, a few days ago, Chavez announced that the government might take over Sidor, the country’s major steel producer owned by the Luxembourg-based Ternium SA, with heavy Argentine investment. His issue with Sidor was that it exported most of its output, obliging Venezuelan developers to import steel pipes from more distant sources. “If they do not accept right now a change in the process, then they are going to force me to nationalize the company just as I did with [the telephone company] CANTV.” As a consequence, Ternium’s U.S.-traded shares tumbled by nearly 3.9% on the New York stock exchange.

Furthermore, the Venezuelan president has threatened to nationalize the country’s banks if they do not contribute to his ‘socialist revolution of the 21st century,’ stating that “private banks have to give priority to financing the industrial sectors of Venezuela at low cost.” He continued, “if banks don’t agree with this it’s better that they go, that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits.” In particular, Spanish banks (Santander, BBVA and Banco Provincial) would be affected by such a move. Nevertheless, the serious consequences of taking retaliatory action against Chavez by the European business community should be viewed with hesitation when formulating the argument why Chavez should not be facing even harsher criticisms from the EU than what is now heard.

Seeking a Niche Opened by Chavez; EU Promotes Social Cooperation
Instead of more vociferously intervening into Caracas’ regional activities, the EU is seeking to strengthen its social cooperation with all of South America. At a recent meeting of foreign ministers from Latin America and Europe in April in the Dominican Republic, a degree of cooperation was achieved. Discussions focused on Haiti, energy, the environment, climate change and strengthening multilateralism, particularly collective action on issues of human rights, the drug war, and the fight against poverty.

The External Relations Commissioner of the EU, Benita Ferrero-Waldner, proposed an aid package of over 2.6 billion euro for 2007-2013 for Latin American countries. At successive ministerial meetings with the Andean Community, Central America, Mexico and Mercosur, Ferrero-Waldner highlighted the EU’s long term commitment to the region. “I believe that it is fair to say that the European Union and Latin America have made significant progress in the last few years,” referring to the successful Vienna Summit of 2006 and the establishment of the EU-Latin America Parliamentary Assembly. She added that the EU wishes to pick up the pace in the coming years: “The new aid programmes reflect the weight of our commitment to the region. We are determined to keep moving forward.”

The commissioner also outlined the group’s priorities for South America up to the year 2013. The top priority of EU aid programmes is to achieve social cohesion, in particular, the fight against poverty, social inequality and exclusion. This is to be followed by regional integration and economic cooperation. The EU is counting on the negotiation of an association agreement with Central America and the Andean Community, with the aim of setting up free trade areas. Other priorities include achieving mutual understanding between the EU and Latin America, support for human rights, and the creation of sustainable development, including the protection of forests, concern for biodiversity and good governance.

Moreover, a new Euro-Latin American parliamentary assembly (EUROLAT) was established in November 2006, with an inaugural session held at the European Parliament in Brussels. EUROLAT aims to attribute greater substance to political relations between Europe and Latin America by replacing the inter-parliamentary dialogue launched in 1974. “Our relations are not simply based on free trade, we aspire to an association for a common future based on shared values,” observed then EP President Josep Borrell at the inaugural session. The Joint Assembly brings together MPs from the European Parliament, as well as legislators from the Andean, Central American and Latin American parliaments, representatives of the national parliaments of Mexico and Chile and members of the MERCOSUR Parliamentary Commission. It has three permanent committees: one that deals with political affairs, security and human rights, another with economic, financial and commercial affairs, and one on social affairs, exchanges of people, the environment, education and culture. The trend towards further social, cultural, and economic integration between the two regions could spark an even faster pace in the coming year when Portugal will succeed Germany to the EU presidency in July. Portugal’s Prime Minister Jose Socrates highlighted what he called “a deeper dialogue between the EU and Latin America,” as a priority.

The popularity of Chavez among the Latin American public is a consequence of the daring nature of his social agenda and his firm condemnation of U.S. unilateralism. Instead of only standing shoulder to shoulder with the U.S., the EU deserves a modest amount of credit for also emphasizing social cooperation with the region, consequently gaining some appreciation as well as influence in South America as an independent source of leverage rather than simply a matter of “me too.”

Beyond the EU Governments: Chavez Evokes only Mixed Feelings in Europe
Despite a certain amount of sympathy with Chavez’s social agenda, the president of the European Commission, Jose Manuel Barroso, expressed the notion of many Europeans. “We are a Europe against populist tendencies,” Barroso said at the EU-Latin American Summit in Vienna in May 2006. The Spanish newspaper El Pais came forth with a sprawling editorial that made its sclerotic point: “[Chavez] is mixing demagogy, populism and a scandalous lack of tact concerning everybody - countries, persons, and institutions.”

Furthermore, many are concerned about the economic sustainability of Chavez’s social agenda. On May Day, Chavez announced a 20% increase in the minimum wage and plans to decrease the weekly work hours from its present 44 to 36 hours. In response, Wolfgang Kunath denounced the myopia of Chavez’s policies in the German newspaper Stuttgarter Zeitung. “Nothing can stop his revolution, says Chavez. Correct! [referring to recent changes of the constitution and restriction of the media]—with one exception. If the oil price is falling he will find himself immediately in a very different position.” Kunath continued that Chavez asserts that even if the middle class and the rich benefit from free health clinics and regulated food markets, Venezuela still has the highest inflation rate in Latin America as prices increase and many subsidized goods are out of stock and only appear on the black market.

Another chronic Chavez critic, The Financial Times, points to the negative implications of Chavez’s policies for foreign investors, which could cause a “continued deterioration in Venezuela’s country risk that will have implications on the overall health of the economy and possibly on its sovereign ratings.”

Chavez and Civil Society
When Chavez visited the Vatican in May 2006, Pope Benedict XVI told him about his concerns over the treatment of the Roman Catholic Church in his country and insisted on the total independence of the Catholic media as well. The Venezuelan bishops’ conference has frequently criticized Chavez for tinkering with the constitution to give him more power. Chavez has in turn accused individual bishops of interfering in politics.

The International Federation of Journalists (IFJ) argued that Chavez’s decision to close down RCTV, a television channel acerbically critical of the president, is potentially a “catastrophe for pluralism and social rights.” EU government officials have recently been present in Venezuela, requesting to talk to Chavez about the sensitive press issue as thousands were demonstrating against closing down RCTV. This could clearly be seen as a sign of Europe’s concern regarding Venezuela.

Labor experts in Burssels warned that Venezuela is guilty of “significant” trade union right violations. “This is of real concern to us,” said Tim Noonan of the International Trade Union Confederation. One recalls that some representatives of Venezuela’s heavily co-opted mainstream trade union movements were associated with the staging of the April 2002 attempted coup of Chavez.

Chavez and England
Not only in civil society, but also at the regime level, the discussion of Chavez is more lively in the EU than are other Latin American topics. Typically, it is about Chavez’s stylistic excesses. Since 9/11, the British government has been a close ally of the United States against the ‘War on Terror.’ Chavez recently called the Prime Minister Tony Blair an “imperialist pawn” who shares the same bed as President Bush. A recent BBC World Service poll suggested that nearly twice as many British citizens are hostile towards Venezuela than are positive. The London Assembly’s Conservative leader Bob Neill, said to the British newspaper The Mirror: “I am appalled that Londoners are paying to entertain this dictator [referring to a lunch hosted by London’s mayor Ken Livingstone]. I believe that this man should be shunned by every moderate regime in the world, not wined and dined like a legitimate world leader.”

Tony Blair has declared his concerns about Chavez’s close relationship with Cuba’s Fidel Castro, by saying that Venezuela “should abide by the rules of the international community,” referring to Chavez’s nationalization initiatives. Many say that the reason why Blair has never harshly criticized Chavez’s policies is because compared to the volumes of denouncements coming from the White House, many members of his Labour Party would oppose him. The fundamental values behind Chavez’s policies focused on the wellbeing of the working class, is exactly what Blair’s Labour Party should be about. Many Labour backbenchers don’t want to further delegitimize party ideals by taking a hostile stance against Chavez, just to maintain close ties with the United States. Ken Livingstone, who was the only government official Chavez requested to meet during his last visit to the UK, is one of them. He maintains that “it is the duty of all people who support progress, justice and democracy to stand with Venezuela,” as was noted in an interview with The Guardian in May 2006. Speaking on BBC Radio 4’s Today Programme, Livingstone added that Chavez had been responsible for significant social reforms and called him “the best news out of Latin America in many years.” Dismissing concerns of human rights groups about Chavez’s treatment of his political opponents, Livingstone said: “He’s won 10 elections for his party in the last decade and he’s pushed through a whole programme of social reform. ‘Venezuela was like a lot of those old Latin American countries - a small elite of super-rich families who basically stole the national resources. He’s now driven a new economic order through, you’ve got for the first time healthcare for poor people, illiteracy has been eradicated. It is encouraging to see … a government committed to the democratic and social transformation of one of the most important countries in Latin America.”

Playing the Spanish Card
Spain, in recent years, has given high priority to Latin American issues, in particular Venezuela. However, the Zapatero government has been relatively shy on the Chavez issue compared to other EU members, particularly hard-line Czech Republic and Slovakia. Over the last couple of years, Spanish foreign policy mainly has fallen hostage to domestic political strife. “Fierce disputes over Basque terrorism, regional autonomy, and culpability for the March 2004 attacks have polarized national discourse.” This might be an explanation for the Spanish inertia towards Latin America, wrote Peter H. Smith, professor of political science at the University of California, San Diego, in the German news magazine Der Spiegel. However, the probably mock threats of Chavez on May Day, that he could very well nationalize Venezuela’s major banks (some Spanish owned) might alter the relatively benevolent behavior of Zapatero towards the Venezuelan leader. Chavez’s recent comparison of the former rightwing Spanish prime minister José Maria Aznar with Hilter had further pressured Zapatero to abandon his neutral position towards the Venezuelan president, even though the former Spanish leader is grossly unpopular in all of Europe, including Spain.

Chavez is the Master of His Own Destiny in Europe
Chavez is seen by some as Europe’s megaphone for the legions of the continent’s residents who are discontent with American unilateralism. Moreover, the majority of Europeans are upset that the protests of “Old Europe” against the invasion of Iraq have been relatively stifled, while the Kyoto Protocol (which all European countries have ratified) as well as several other UN Conventions and institutions (”Rights of the Child”, International Criminal Court, The Ottawa Mine Ban Treaty) have hardly been addressed by the Bush White House. Many Europeans hold to the belief that egoistical U.S. foreign policy is fueling the influence of radical groups, such as al-Qaeda, and therefore are contributing to destabilizing their hemisphere as well as much of the rest of the globe. Furthermore, as Gordon Hutchison has observed in the British newspaper The Morning Star, “people are inspired by a process that puts human need before profit - such as introducing free health care to millions, eradicating illiteracy and supporting international solidarity initiatives like Operation Miracle, a project with Venezuelan funding and Cuban medical expertise that has restored the eyesight of 400,000 people.”

However, despite the admiration of Chavez’s social agenda and the denunciation of U.S. unilateralism, his raw populist style and some of the strongman characteristics attributed to him remind many Europeans of negative experiences with totalitarian leaders in the past. The German Newspaper Stuttgarter Zeitung points to the fact that “Chavez is becoming more and more an autocratic monarch” because the Venezuelan parliament is without the representation of the opposition due to the latter’s boycott of the last elections. Yet, when it comes to indicting Chavez with hard felonies, in most of the cases the evidence is wanting, with his critics often confusing his always harmless bark with his rarely exhibited bite. That is why many think that although scores of the region’s leaders in the past abused the powers Chavez now holds, he should not be convicted before he commits the crime. The fact is that up to now, he has run one of Latin America’s more robust democracies.

Nevertheless, his frequent insults towards other head of states, such as the comparison of Bush and former Spanish Prime Minister Aznar to Hitler and the denunciation of British Prime Minister Tony Blair as ‘Imperialist Pawn,’ who shares the bed of Bush do not sit well with Europeans. In addition, the short shrift he provided to the rights of private property and his cooperation and friendship with controversial figures like Iran’s President Mahmoud Ahmadinejad, are aspects that have cost Chavez huge chunks of support and credibility in Europe.

Yet there is the notion in Europe that when it comes to Hugo Chavez, there is more than meets the eye, and that he deserves the chance to end the country’s history of tiny elites exploiting Venezuela’s natural resources to the disadvantage of its poverty-ravaged population. For many, Chavez’s vision for Latin America’s future contains much more diamond than lead.

This analysis was prepared by COHA Staff Research
May 31st, 2007
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