July 1, 2007  

Flashpoint: Venezuelan vagaries

Chavez is flush with oil money and eager to spend it on weapons

If you think the passing of Cuban President Fidel Castro — the larger-than-life leader of the anti-Yanqui, Latin left for almost 50 years — will eliminate a major problem for us in the Americas, think again.

Champing at the bit to replace the aging Cuban leader as the vanguard of 21st-century socialism in the region is his firebrand understudy, Venezuela’s caudillo (strongman) president, Hugo Chavez.

Chavez, who fancies himself a reincarnation of Simon Bolivar, who liberated 19th-century Latin America from Spanish rule, has made it his mission in life to spread a Bolivarian revolution to balance — make that, unbalance — the U.S. Although more Don Quixote than Simon Bolivar, the populist Chavez — and trademark Chavismo ideology — could be a significant source of mischief-making, undermining stability and U.S. interests in this region — and beyond.

One of the most eye-popping elements of Chavismo is Venezuela’s arms purchases. Flush with oil profits, Chavez, a former army lieutenant colonel, has been buying as much shiny military hardware as possible.

Since 2005, he’s spent more than $4 billion on foreign weapons, making tiny Venezuela one of the world’s most aggressive arms purchasers. In 2006 alone, arms spending was up 13 percent, according to some estimates.

Some analysts project that if oil prices remain high, say, at more than $50 a barrel, Venezuela could spend as much as $30 billion on arms by 2012, the end of Chavez’s third term in office. Caracas is already the largest arms buyer in the region — and is expected to be so for the foreseeable future.

Russia is Chavez’s favorite arms outlet. Having spent more than $3 billion, Caracas is already under contract to buy 24 Su-30 fighters, 50 helicopters/gunships and 100,000 AK103 (AK47 follow-on) assault rifles from Moscow. It has also inked a deal to build the Kalashnikov rifle under Russian license in Venezuela.

Caracas is also interested in Russian air defense systems and diesel submarines, which Moscow would likely be more than happy to provide. In addition to Russia, Venezuela has had preliminary discussions with Belarus and Iran about surface-to-air missile systems.

As few as nine diesel submarines, which could also be provided by Germany or France, would make Venezuela the proud owner of the region’s largest submarine fleet, withstanding the U.S., of course. Venezuela has also sought arms from Spain, Sweden and Brazil, which have declined for the moment as a result of U.S. pressure over tech transfer issues. As China develops its advanced weapons industry, it will likely become a source for Venezuela’s military.

Gen. Bantz Craddock, former commander of U.S. Southern Command, said he finds Venezuela’s weapon extravaganza worrisome because its motives are unclear.

“We’re wondering just what the intent here is,” the general told the Senate in testimony last year. Craddock is being circumspect, as one in his position might be when appearing publicly before Congress. But he probably has a pretty good idea of the intentions of Venezuela’s military buildup under Chavez.

Chavez, of course, claims the arms purchases are to thwart an American invasion. U.S. officials dismiss these continuing claims as preposterous, but Chavez cites U.S. (moral) support for a failed 2002 coup d’etat plot by the political opposition as proof.

Venezuela, a country of 26 million, can’t stand up to the U.S. militarily, even with its projected arms purchases. But it can certainly intimidate a lot of its neighbors with an arsenal of advanced weapons.

Indeed, Venezuela has supposedly reinforced the 1,400-mile border with neighboring Colombia, seeing it as a possible corridor for a U.S. invasion, or a proxy action by Bogota against Caracas on behalf of Washington.

But one of Washington’s main concerns about Venezuela’s military modernization is the possibility of a conventional war between Venezuela and neighboring Colombia or Guyana, where Venezuela has some long-standing recidivist territorial claims.

The issue of greatest worry for the short term is Venezuela’s acquisition of small arms, which the current commander of U.S. Southern Command, Adm. James Stavridis, called “weapons of micro-destruction” in recent congressional testimony. Since Venezuela’s army is rather small — totaling 34,000 — the assault rifles are likely for the 1.5 million-man militia of loyalists and paramilitaries Chavez is assembling to prevent the supposed forthcoming U.S. invasion. The real concern is that some of these small arms will find their way — through a lack of security or corruption — to the international black market, where they could come into the possession of terrorist, criminal or insurgent groups around the world. This could include local terrorist-insurgent groups such as the Revolutionary Armed Forces of Colombia (FARC) or the National Liberation Army (ELN) that have been fighting a protracted campaign against neighboring Venezuelan rival, Colombia.

Chavez has already promised to export guns and ammunition to Bolivia and other allies once the Kalashnikov plant is built. At some point, once its own needs are met, Venezuela could also get into the small-arms export business.

Like any security dilemma, at a minimum, Venezuela’s oil-induced weapons buying binge could set off an arms race — for those that can afford it. But considering Latin American and Caribbean development challenges, this is the last thing the region needs.


Chavez is chummy with almost anyone who opposes the U.S. — plain and simple. Some of these ties are quite troubling. He clearly idolizes Castro the most, inspiring some to dub him Castro’s Mini-Yo (Mini-Me).

Venezuela is helping to keep the failed Cuban system on life support by providing some 50,000 barrels of oil per day at concessionary prices in exchange for a bevy of Cuban teachers, doctors and sports instructors. Chavez seems willing to increase oil deliveries to Cuba with every photo op he gets with his valued mentor and strategic adviser, Castro, to burnish his leftist Latino credentials. As such, some expect oil deliveries to Cuba to double this year.

But Cuba is also providing intelligence and security officers to Venezuela. They’ve helped Chavez develop an improved intelligence capability — and undermine the political opposition in true Cuban style.

Cuban military advisers are also present, making Venezuelan officers increasingly anxious about the creeping influence of Havana in military matters. Caracas is also sending officers to Cuba for training — and, undoubtedly, political indoctrination.

Like Castro, who partnered with the Soviet Union during the Cold War, Chavez is making common cause with other American enemies — including the world’s most active state sponsor of terrorism, Iran.

Chavez meets with Iranian president Mahmoud Ahmadinejad regularly in Venezuela and Iran. Last year, they revealed plans for a $2 billion joint fund, part of which will be used as a “mechanism for liberation” against U.S. allies. The concern in the relationship is Caracas may be looking to Tehran for help with a so-called “peaceful” nuclear program. In addition to supporting Iran’s nuclear bid in international forums, Chavez has publicly expressed interest in nuclear energy.

Thankfully, other regional states with civilian nuclear power programs, such as Argentina and Brazil, have shunned Venezuela, seeing helping Chavez as risky. But Iran, ever eager to keep the U.S. off-balance, might just be willing to lend a hand.

And don’t forget about (already) nuclear North Korea. Venezuelan and North Korean military delegations have traipsed back and forth on numerous occasions between Caracas and Pyongyang. Both sides deny anything other than routine exchanges. Although nothing has yet materialized, North Korean ballistic missiles could be on Venezuela’s shopping list. Pyongyang is the world’s most prodigious proliferator of missiles; Venezuela might be in the market for short-range Scuds or medium-range No-Dongs.

Venezuela isn’t known to be supporting Islamic terrorism — at the moment. But it does seem to turn a blind eye, at a minimum, to the FARC and ELN narco-terrorists and other regional paramilitary groups that cross the border to regroup and resupply in Venezuela.

Support, of course, in the future may go well beyond the provision of safe haven. Venezuela has been accused of providing both the FARC and ELN with older-model small arms and ammunition.

Making matters worse, the U.S. Drug Enforcement Administration (DEA) believes Venezuelan airports and ports have become major cocaine trafficking routes from Colombia into the Caribbean, and onward to both the U.S. and Europe.

Although not pointing a finger at the central government, the DEA believes that these drug flights to the Caribbean from Venezuela have doubled in recent years. Counterpunching, Chavez recently charged the DEA with trafficking drugs.


Venezuela is the world’s eighth-largest oil exporter. In addition, it may have the world’s fifth-largest known oil reserves, meaning it has more petroleum potential than any country in the Western Hemisphere. Not a dubious honor, by any means, these days.

Some experts believe the Orinoco Belt, an energy-rich region southeast of Caracas, has as much — or more — energy potential than Saudi Arabia, a country known to possess 25 percent of the world’s known oil reserves.

Unfortunately, the U.S. likes its Venezuelan heavy crude oil. Venezuela is the United States’ fifth-largest foreign oil supplier, providing 10 percent to 15 percent of our oil imports at roughly 1.5 million barrels a day.

The U.S. imports more than 60 percent of its oil, making our economy vulnerable to shocks in the international energy market. Chavez knows this. He once said: “We have invaded the United States, but it’s with our oil.”

Chavez has vowed to use oil as a weapon, promising to play his “strong oil card” to “finish off the U.S. empire.” On May 1, he got started on his plan by announcing his intention to nationalize Venezuela’s oil industry.

Venezuela is now in the process of transitioning from dependence on the long-dominant western energy firms, including some American, to ownership by the state-owned oil company, Petroleos de Venezuela (PDVSA).

Although this move is not promising for American energy security, it is fortunate that Venezuelan oil is of the heavy crude variety. It’s highly acidic and difficult to refine. That’s good news for the U.S. Why? At the moment, most of the oil refineries capable of processing Venezuelan heavy crude oil happen to be in the U.S., because Caracas has failed to invest sufficiently in petroleum processing capabilities.

Venezuela sends the majority of its petroleum exports, about 60 percent, to the U.S. So, in the short-term, cutting off oil shipments to America would be, at best, a pyrrhic victory for Chavez because he needs access to American refineries — and so does his Bolivarian revolution.

In the longer term, that situation may change drastically. Caracas may, over time, develop domestic refining capability for its heavy crude oil — and look elsewhere for eager buyers of its thick, black gold. Indeed, it already is.

Enter China, another of Venezuela’s new extra-hemispheric friends. China is now the world’s second-largest consumer of energy — and imported oil, too. And Beijing is eager to find new energy sources.

With no Pacific seaports to transport oil from, it costs about $15 more per barrel to transport oil to China from Venezuela. Despite this, China is now the fastest-growing destination for Venezuelan oil.

Eager to buy oil that might otherwise be bound for the U.S., China is working on significant investments in the Venezuelan energy sector, including developing heavy crude refineries there.

Chavez doesn’t just use oil as a foil against enemies like the U.S. He also uses the windfall profits to help friends, including other regional leftist politicians running for election, especially high office. For example, he unabashedly bankrolled successful presidential candidates in Bolivia (Evo Morales), Nicaragua (Daniel Ortega) and Ecuador (Rafael Correa). To Chavez’s disappointment, his candidates fell short in Peru and Mexico.

Chavez is using the expropriation of Venezuelan energy assets as a means of consolidating not only his political power at home, but projecting power abroad as well through arms purchases, political campaigns and manipulating oil markets.

But the real question is whether PDVSA, an increasing source of Chavez’s revenue — and thereby his influence — can actually handle the departure of Western oil firms and their highly skilled technocrats. Early indicators aren’t good. It’s risky. At the moment, oil typically generates 80 percent of the country’s export income, provides more than half of the central government’s revenue, and is responsible for about one-third of the country’s gross domestic product.

In the end, Hugo Chavez defines himself in opposition to the U.S. His agenda — a troubling military buildup, connections with countries of concern, political meddling abroad and oil machinations — is bad news for everybody.

As the director of national intelligence testified to Congress in February: “Chavez is among the most stridently anti-American leaders anywhere in the world, and will continue to try to undercut U.S. influence in Venezuela, in the rest of Latin America and elsewhere internationally.”

Chavez clearly plans to challenge the status quo, wielding a multifaceted, asymmetric campaign akin to a political, economic, security and social insurgency in Latin America and the Caribbean at the expense of the United States’ influence and interests.

It’s tempting to write off Chavez simply as Latin America’s latest tin-pot strongman, but he shouldn’t be taken lightly. Venezuela’s Chavismo has the potential to cause real trouble for the U.S. and Latin American democracies.

The best approach will include working with other regional leaders to contain and isolate Chavez, being careful to avoid public confrontations that would inflame popular support and increase his stature at home — and abroad.

Peter Brookes is a Heritage Foundation senior fellow and a former deputy assistant secretary of defense who also served in the Navy, with the CIA and on Capitol Hill.