Monday, February 27, 2006

Even More Threats

Yet another threat from Venezuela to cut off oil exports to the United States. To make it work, Chávez would need China “to configure more of its refineries to process Venezuela's particular type of crude. Venezuela also would have to increase its fleet of tankers and build a pipeline to Colombia's Pacific coast.” So it would certainly cost Chávez. The benefit is spitting in the eye of Mr. Danger and establishing a closer relationship with China, at a time when the U.S. government is wary of its growing presence in Latin America. Or perhaps a largely symbolic goal of demonstrating his political and economic independence, thus enhancing Venezuela’s place in the region (and the world). Personal glory is all wrapped up in this as well.

Maybe he’s bluffing about cutting the U.S. off entirely, maybe he’s not. Normally with threats (and he is making a lot of them) there is the idea that some behavior/policy must change, or the threat will be carried out. It’s not clear to me what Chávez wants specifically, or whether he really wants anything at all.


John Weeks 3:26 PM  

Of course, I have no idea what Chávez truly wants, but I do wonder one thing. We keep hearing that Venezuela accounts for 10% of US imports. What percentage of Venezuelan exports does the US account for? If it is very high, then it could be that the aggressive bluster is hiding a much more defensive move. Chávez's concern may not be to disrupt the US as to make sure the US can't disrupt Venezuela by changing suppliers. By doing what is necessary for Venezuela to be able to sell to other buyers, he avoids this and by dressing it up with threats he avoids admitting he is reacting to a fear of US monopsony power.

In the global economy, countries that run up big deficits are dependent on the countries they buy from, but those exporting countries are often more dependendent on the importing countries to keep buying their goods and commodities. It reminds me of the old saying among bankers not to kid yourself that when you loan somebody money you automatically have power over him. From the moment you say Yes to the loan, it is the other way around: he now has power over you.

Greg Weeks 3:44 PM  

A quick (and admittedly superficial) search finds a WP article ( claiming that Venezuela exports about 2/3 of its oil to the U.S.

So a reasonable hypothesis is that Chavez wants to reduce the country's dependence on the U.S. I would ask, though, what other suppliers would the U.S. go to? And if he wants to reduce dependence only for symbolic reasons, why not just do it without all the hyperbole that mostly makes things worse? On the other hand, maybe it is just his style.

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