Venezuela 101: It's the Oil, Stupid

Perhaps lost in the cacophony of belicose militarists and political pundits loudly collecting bets on the exact date and time of Trent Lott's resignation, the fourth-largest exporter of oil to the United States and the world's 5th largest exporter of oil, is quite busy itself these days fending off imminent collapse.

Venezuela, escaping all but the most astute news radar, has been embroiled in a national strike against President Hugo Chavez's rule that has crippled South America's largest oil producer, slashing output to less than 15 percent of normal levels and sending shock waves through world oil markets. The strike -- in its 17th day -- has reduced oil output from nearly 3 million barrels per day to 400,000, sending the world price of crude oil above $30 a barrel and depriving the country of $50 million a day in export income.

The opposition -- which consists of the main Chamber of Commerce Fedecameras, the union federation CTV, the coalition of opposition parties and organizations gathered under the “Coordinadora Democratica,” and the private mass media --
accuses Chavez of polarizing Venezuelan society and subverting democratic rule and wants the elected president to resign or submit to a referendum on whether he should remain in office. Chavez, of course, who was elected in 1998 and survived a coup in April, is refusing opposition calls to quit and stage early elections. He has vowed to break the strike.

The OAS (Organization of American States) has reaffirmed its support of Chavez's government and "reject(s) categorically any attempt at a coup d’état or unconstitutional alteration of the Venezuelan constitutional regime that seriously impairs the democratic order.”

In a previous coup attempt against Chavez, in April of this year, following an oil industry strike organized by the bosses and a big antigovernment demonstration in Caracas that ended in violence, Chávez was arrested, and Pedro Carmona, the head of Venezuela’s main business organization, was installed in power. Officials at the Organization of American States and other diplomatic sources, talking to The Observer, asserted at the time that the US administration was not only aware the coup was about to take place, but had sanctioned it, presuming it to be destined for success.

This time around the Bush administration is only saying it supports a referendum on embattled Venezuelan President Hugo Chavez, backing away from calls for immediate elections that could violate the country's constitution. Last Friday, the White House increased pressure on Chavez, saying that early elections were the only viable solution to Venezuela's political turmoil.

So, as usual, the primary question is: Who is telling the truth?

Well first, let's look at why the US wouldn't want to support Chavez, jettisoning, of course, any silly notions that the US Government actually cares whether or not Venezuela is a democracy or a autocracy, so long as they like us and give us lots of oil on the cheap:

For starters, Chavez branded the US attacks on Afghanistan as "fighting terrorism with terrorism"and demanded an end to "the slaughter of innocents"; holding up photographs of children killed in the American bombing attacks, while saying their deaths had "no justification, just as the attacks in New York did not, either." A real no-no.

In addition, Chavez is very friendly with Fidel Castro and sells oil to Cuba at discount rates. He has allegedlhy refused to provide US intelligence agencies with information on Venezuela's large Arab community. He has questioned the sanctity of globalization and has promoted a regional free-trade bloc and united Latin American petroleum operations as a way to break free from US economic dominance. In other words, he is not a very good puppet.

Ok, so it's pretty clear why the US Government doesn't support Chavez, but why don't some of these pesky Venezuelans he governs support him? His opponents accuse him of ruining the economy, being a dictator and of dragging Venezuela toward a Cuban-styled communism. Yet, there are plenty of chavistas who still support him.

On the 8th day of the strike, they surrounded the headquarters of all of the major television stations in the capital and of several in the rest of the country, staging loud pot-banging “"cacerolazos". (The opposition had already pioneered such protests on a regular basis at the building of the state-run television channel, ever since the two-day coup in April, but this never received any media attention, not even from the affected station.) After a couple hours of pot-banging, the demonstrators withdrew, at the behest of pro-Chavez legislators and OAS general secretary Cesar Gaviria.

While the strike has been relatively ineffective in the general population and especially among the poor, it has had its most devastating effect in the state-owned oil company, PDVSA. With the complete shut-down of Venezuela’s main oil refinery, which is also one of the largest in the world, the walk-out of key dock workers, and the anchoring of tankers off of Venezuela’s main ports, the supply of oil has been halved, from 3 million barrels per day (bpd) to 1.5 million bpd.

What's next? Well first of all, they need to get on with baseball. Clearly, there will be no lucid discussions about anything until the absurd postponement of the Venezuelan Baseball League has concluded and fans can go back to cheering strikes instead of going on them.

Until then, they'd better get that oil moving because it represents 50 percent of the government's operating revenue. Chavez is going to face serious issues. He's not going to have funds even to pay salaries of the military that support him. So the oil picture is going to put them under great pressure, and the longer there is a work stoppage in the oil sector, the more and more pressure that's going to be brought to bear on the country in all sectors.

Besides, if they don't solve it soon, even less than the near nobody that currently cares about their crisis, is going to care at all later on. While Venezuela is torn to shreds by extremists on both sides, the rest of the world will be busy with arranging their ring side seats for their own extremist heavyweight bout to come.