Caudillos with crude can pose a challenge
Published: November 7 2005 02:00 | Last updated: November 7 2005 02:00
Oil wealth is always a tempting source of corruption inside countries. But it also becomes, at times of high crude prices, an important instrument of foreign influence and leverage, as the US has been discovering, to its discomfort, in the case of Venezuela and Iran.
The most striking exponent of energy-based populism is Hugo Chávez, president of Venezuela, who used the weekend Summit of the Americas to try to rally his fellow Latin Americans against the US. In this, he deliberately echoes Fidel Castro's attempts in the early 1960s to spread revolution in Latin America. But with only sugar cane to offer, Cuba was easy to cordon off with regional sanctions. By contrast, Venezuela, as the world's fifth largest oil exporter, has both money and oil to offer its neighbours. Under its Petrocaribe initiative, it has agreed to sell oil to 13 Caribbean countries on credit terms as low as 1 per cent and as long as 25 years. The Chávez government has been re-ordering its finances to sell US Treasuries and buy Argentine bonds. It has baited Washington with talk of building a nuclear power reactor, so raising the same suspicion as Iran as to why a big oil exporter could possibly want another energy source. Its troops have also recently practised resisting a mock US invasion.
Yet the idea of the US, even under the Bush administration, imposing any sanctions that could threaten its oil purchases from Venezuela, let alone mount a Bay of Pigs-style invasion of the country is absurd. Iran is an even more illustrative case of how oil ties the international community's hands. Tehran is much further down the road to a real confrontation with the international community, not just with the US. It has cheated on treaty obligations by keeping part of its nuclear programme secret. It has so far failed to respond to European diplomatic mediation and to satisfy international inspectors fully. And it has elected a new president, who is in the process of stuffing his government and embassies with fellow hardliners. Yet no one wants to contemplate what heights the oil price would rise to if Iranian oil were blocked off from the world market by sanctions. Yes, there is plenty of talk in Washington about taking Iran to the United Nations Security Council, but the aim of this would be to put the highest level squeeze on Iran to open all nuclear facilities to inspection.
Oil producing countries can also ignore issues such as tariffs because their staple commodity is so rarely subjected to them. So Mr Chávez can blithely campaign against the US-sponsored Free Trade Area of the Americas, knowing it would not benefit Venezuela much anyway (just as Iran can take a relatively relaxed attitude to World Trade Organisation membership). But Mr Chávez's neighbours should realise they do not have the same luxury of dispensing with free trade concessions, because they cannot count on his largesse for ever.
http://news.ft.com/cms/s/884970d2-4f33-11da-9947-0000779e2340.html
Oil wealth is always a tempting source of corruption inside countries. But it also becomes, at times of high crude prices, an important instrument of foreign influence and leverage, as the US has been discovering, to its discomfort, in the case of Venezuela and Iran.
The most striking exponent of energy-based populism is Hugo Chávez, president of Venezuela, who used the weekend Summit of the Americas to try to rally his fellow Latin Americans against the US. In this, he deliberately echoes Fidel Castro's attempts in the early 1960s to spread revolution in Latin America. But with only sugar cane to offer, Cuba was easy to cordon off with regional sanctions. By contrast, Venezuela, as the world's fifth largest oil exporter, has both money and oil to offer its neighbours. Under its Petrocaribe initiative, it has agreed to sell oil to 13 Caribbean countries on credit terms as low as 1 per cent and as long as 25 years. The Chávez government has been re-ordering its finances to sell US Treasuries and buy Argentine bonds. It has baited Washington with talk of building a nuclear power reactor, so raising the same suspicion as Iran as to why a big oil exporter could possibly want another energy source. Its troops have also recently practised resisting a mock US invasion.
Yet the idea of the US, even under the Bush administration, imposing any sanctions that could threaten its oil purchases from Venezuela, let alone mount a Bay of Pigs-style invasion of the country is absurd. Iran is an even more illustrative case of how oil ties the international community's hands. Tehran is much further down the road to a real confrontation with the international community, not just with the US. It has cheated on treaty obligations by keeping part of its nuclear programme secret. It has so far failed to respond to European diplomatic mediation and to satisfy international inspectors fully. And it has elected a new president, who is in the process of stuffing his government and embassies with fellow hardliners. Yet no one wants to contemplate what heights the oil price would rise to if Iranian oil were blocked off from the world market by sanctions. Yes, there is plenty of talk in Washington about taking Iran to the United Nations Security Council, but the aim of this would be to put the highest level squeeze on Iran to open all nuclear facilities to inspection.
Oil producing countries can also ignore issues such as tariffs because their staple commodity is so rarely subjected to them. So Mr Chávez can blithely campaign against the US-sponsored Free Trade Area of the Americas, knowing it would not benefit Venezuela much anyway (just as Iran can take a relatively relaxed attitude to World Trade Organisation membership). But Mr Chávez's neighbours should realise they do not have the same luxury of dispensing with free trade concessions, because they cannot count on his largesse for ever.
http://news.ft.com/cms/s/884970d2-4f33-11da-9947-0000779e2340.html
No comments:
Post a Comment