1AC
Plans – Choose One
Condition on Oil Privatization
Plan: The United States Federal Government should offer to normalize trade
relations with Venezuela if the Government of Venezuela agrees to privatize
Petroleos de Venezuela (PDVSA).
Plan solves – Now is the key time to use leverage to change internal Venezuelan
policy, only oil privatization can solve for economic stability.
Roberts ‘13 (James Roberts, master’s degree in international and development economics from
Yale University and also holds a master of business administration from the University of
Pittsburgh, Research Fellow For Economic Freedom and Growth, Center for International Trade
and Economics (CITE), and Sergio Daga, Visiting Senior Policy Analyst, Center for International
Trade and Economics (CITE) “Venezuela: U.S. Should Push President Maduro Toward Economic
Freedom,” Issue Brief #3911, 4-15-13)
Hugo Chavez’s hand-picked successor, former trade union boss Nicolás Maduro, appears to have defeated Governor Henrique
Capriles by a narrow margin in a contentious and hard-fought special election on April 14. Venezuela
is in such shambles
ultimately be
forced to pursue more moderate policies and seek help from the U.S. to restore stability. The
Obama Administration and Congress should exploit this opening by using U.S. leverage to push
Venezuela to turn from Chavez’s failed experiment in oil-cursed[1] “21st-century socialism” toward economic
freedom. An Economy in Ruins The foundations of economic freedom in Venezuela have
crumbled. When Chavez took office in 1999, Venezuela scored 54 out of 100 possible points in The Heritage Foundation/Wall
after 14 years of seat-of-the-pants mismanagement that Maduro—assuming his victory is confirmed—may
Street Journal’s annual Index of Economic Freedom. Today, however, after 14 years of Chavez’s soft authoritarian populism,
Venezuela merits a score of just 36 points. This nearly 20-point plunge is among the most severe ever recorded by a country in the
history of the Index. Its 2013 rank—174th out of 179 countries—places Venezuela among the most repressed nations in the
world.[2] Venezuela’s dismal economic freedom score is reflected in statistics that translate into real-time hardship for Venezuelans,
who must spend more of their incomes on higher prices for necessities—if they can find them on empty store shelves. There are
scarcities of nearly all staple food and fuel products. In fact, according to the Banco Central of Venezuela’s (BCV) shortages index,
Venezuela faces the most severe food shortages in four years.[3] And what food is available comes at a price: Mary O’Grady reports
in The Wall Street Journal that “over the past 10 years inflation in food and nonalcoholic beverages is 1,284%.”[4] Financial
disequilibrium in Venezuela is the result of a sharply widening fiscal deficit that reached almost 15 percent of gross domestic product
(GDP) last year.[5] Government control of the formerly independent BCV also contributed to a massive expansion of the money
supply. There are anecdotal reports in Caracas of people paying as much as 23 bolívars for one U.S. dollar in the black market as of
early April. The official rate is just 6.3 bolívars per dollar—and that is after a significant 32 percent devaluation in February.[6] These
problems were aggravated by Chavez’s foreign adventurism—which drained billions of petrodollars from the economy to keep afloat
the failed economy in Fidel Castro’s Cuba—as well as generous subsidies to his Chavista cronies in the region through such schemes
as ALBA and PetroCaribe. Corruption and Weak Rule of Law As reported in the Index, political interference in Venezuela’s judicial
system has become routine, and corruption is rampant. The landscape in Caracas and elsewhere in the country is littered with halffinished, publicly funded infrastructure and housing projects. The government funds needed to complete them often disappear. As
government expanded under Chavez, corruption became institutionalized. Chavez doubled the size of the public sector, many of
whose 2.4 million[7] employees have no real job other than to work to keep the regime in power. A World Economic Forum (WEF)
survey found little trust among businesses, politicians, the judicial system, and the police in Venezuela.[8] The
tragic result is
that Venezuela is now one of the most dangerous countries of the world. According to the Venezuelan
Violence Observatory, in 2012 nearly 22,000 people were murdered.[9] An inefficient and non-transparent
regulatory environment that is hostile to private foreign direct investment obstructs long-term
development and hampers entrepreneurial growth. The investment regime is tightly controlled by the state and
favors investors from China, Russia, Iran, and other democracy-challenged countries.[10] Investor protection in
Venezuela is ranked at 140 out of 144 countries, according to the WEF report.[11] In 1998, before Chavez took
power, there were more than 14,000 private industrial companies in Venezuela; in 2011, after 13 years of extensive nationalizations
and expropriations, only about 9,000 remained.[12] The Chavez government did make one product very inexpensive for
Venezuelans: Generous energy subsidies mean a car can be filled up with 15 gallons of gasoline for less than one U.S. dollar.[13]
Although that might buy short-term political advantage for the Chavista government, in the long term these energy subsidies are
very destructive to future economic growth, since Venezuelan companies have a distorted cost base and thus cannot compete
globally. Operations of the state oil company, PDVSA, have also deteriorated significantly under
Chavez. When he took office, PDVSA was producing 3.5 million barrels per day (bbl/d); today, it is down to 2.5 bbl/d.[14] Social
Programs and Inequality Ironically,
Chavez’s years in power did not result in much reduction of poverty
and inequality. Although some measures of income inequality (such as the Gini coefficient) did improve under Chavez,[15]
according to a recently published research paper by Darryl McLeod and Nora Lustig[16] that used data for 18 Latin American
countries, market democracies such as Chile and Brazil were far more successful at reducing inequality and poverty than the populist
Chavista regimes. Despite
its vast oil wealth, Venezuela’s economic growth performance has also
been poor. Between 1999 and 2012, average annual per capita growth was just 1.1 percent, while in the top four Latin American
countries (Panama, Peru, the Dominican Republic, and Chile) the rate was 3.6 percent.[17] Not surprisingly, the rate of
private investment in Venezuela—under 5 percent—is also one of the lowest in the region. In Peru and
Chile, it is almost 20 percent.[18] U.S. Policy Toward the New Maduro Government Washington should insist on
strict conditionality before sending a new U.S. ambassador to Caracas or assenting to any new
lending to Venezuela by international financial institutions until the new government: Produces a
comprehensive plan for reform that reduces the size of the public sector, reverses
nationalizations and expropriations of land and enterprises with just compensation to owners, restores the independence of
the central bank and judicial institutions, reforms the electoral system, and submits to an internationally supervised audit of the
government’s books during the Chavez years; Takes
steps to privatize PDVSA to bring in international equity
partners with the expertise and financial capacity to restore PDVSA to the high level of
professional operational and managerial expertise for which it was widely respected prior to
1999; Immediately stops all subsidies to Cuba and terminates wasteful and economically destabilizing subsidy programs such as
PetroCaribe and ALBA; Ceases cooperation with international state sponsors of terrorism (such as Iran) and joins the international
community’s cooperative efforts in the fight against transnational crime, narco-trafficking, and terrorism; and Restores freedom of
the press and access to information for all Venezuelans. Use
U.S. Leverage The foundations of economic
freedom in Venezuela were severely weakened during the 14-year misrule by Chavez. Although
Chavez’s death may aggravate instability and further polarize Venezuela, it need not be that way. Venezuela is in need of
immediate and sweeping reforms, but these changes will take time, effort, determination, and, above all, dedicated
reformers in Venezuela. The Obama Administration should step into the breach with active and forwardlooking policies to bring Venezuela back into the globalized economic system.
Offering normalized trade relations in exchange for privatized economic reform
solves US influence, Venezuela stability, and trade.
Pagano ‘13 (James, contributing writer to the Truman Doctrine, “Moving Venezuela to the
Center,” 3-18-13, http://trumanproject.org/doctrine-blog/moving-venezuela-to-the-center/)
After over a decade in power, Hugo
Chavez is now dead, providing U.S. policy makers an opening to
mend fences and steer Venezuela’s next president towards the center. With smart policy and a
light touch, the United States can help Venezuela’s next president lead his country out of the mess that Chavez built.
Chavez won the presidency in 1999 on a promise to “sow” the oil wealth of Venezuela into its social program. Bolstered by record
high oil prices, Chavez spent billions on such programs. While millions of Venezuelans were able to obtain healthcare and an
education, the poorly designed programs left little money to reinvest in oil exploration; output in Venezuela declined threatening
the longevity of all Chavez’s initiatives. Meanwhile, Chavez became an increasingly authoritarian leader,
consolidating power in the executive. He blacklisted opposition figures, altered the constitution and unevenly enforced laws for
personal benefit. By creating a steeply slanted playing field, Chavez was able to retain power. Venezuela’s
next president
will have to decide whether to reverse these trends, or continue the slide to outright
authoritarianism. The United States can and should influence this decision. The United States
must support the democratic process and engage the likely winner of April’s election, Chavez’s chosen successor, Nicolás
Maduro. He will have a real opportunity to put Venezuela back on the path to a free-market
democracy. The next president will face an extremely politicized Supreme Court and military and reforms are likely more
palatable if made by Maduro. Changes to apportionment, food subsidies or tax rates coming from Enrique Capriles (the opposition
candidate) could spark a legal challenge from the supreme court; or worse, opposition from the military. What
should the
U.S. role be? It must work with its Latin American allies in the region, Chile, Brazil, Colombia and Mexico to gently
pressure Maduro into making the types of institutional and economic changes necessary for
Venezuela to prosper. Failure to do so could lead to the reemergence of authoritarianism in
Latin America, instability in world oil markets and serious regional security repercussions. Chavez
was infamous for his anti-American tirades. George W. Bush’s poor global standing gave Chavez an easy target. With a more positive
global image, the most important step President Obama can take is to normalize relations with Cuba. As Venezuela’s closest ally,
Cuba has remained a persistent problem in U.S.-Latin American relations. By normalizing relations, Obama would take a huge step in
reducing anti-Americanism in Venezuela. Simultaneously, Obama would ingratiate himself to the rest of the region by ending the
dated embargo. Perhaps most importantly, eliminating this issue would give Venezuela’s next president the political cover necessary
to mend relations with the United States. The U.S. should push for economic reform with the help of Brazil which
seeks a greater role in international and regional politics. Former Brazilian President Lula da Silva has close ties to Venezuela, and
touting the recent successes of his center-left government in Brazil could help persuade Maduro to moderate his government. Brazil
has made huge societal gains without suffering the kind of economic setbacks seen in Venezuela. Friendly
cajoling, along
with the promise of closer economic ties could help lead Maduro onto a path of economic
reform necessary to extend certain “Chavista” social programs. Colombia, Brazil and the U.S. also have a shared interest in
improving Venezuelan security. Under Chavez, Venezuela became on the most violent countries in Latin America, as drug related
crimes skyrocketed. Violence is the number one concern of Venezuelans, and significant reductions would be a major political
victory for whoever is in power. Brazil and Colombia together should pressure Venezuela to accept sorely needed D.E.A assistance
with the tacit acceptance of modest political reforms, most importantly freer press. The
death of Chavez is a critical
juncture in U.S.-Latin American relations and it is important the United States not miss this
opportunity. Having a stable trustworthy Venezuela would allow the United States to continue
to draw down operations in the ever-volatile Middle East, fight narcotrafficking and expand
trade. Careful, well thought-out overtures and policy changes will help quell lingering antiAmericanism while also improving regional stability. Ending the Cuban embargo would provide absolute
economic gain for all parties, while providing cover for Maduro to thaw relations with the United States and receive aid to stop
uncontrollable violence. Strategic engagement
with regional allies could help spur the economic and
institutional reforms necessary for Venezuela to prosper moving forward. The situation in
Venezuela could be potentially destabilizing to the region. The United must act deliberately to make Hugo
Chavez’s passing an unmitigated positive development.
Unconditional Investment
Plan: The United States Federal Government should substantially increase its
investment in Venezuelan oil infrastructure.
Plan solves – Only a massive investment from the US can stabilize Venezuela’s
oil sector and improve relations.
Fillingham ‘13 [Zachary, Managing Editor and Asia Analyst for Geopolitical Monitor, holds an
MA in Chinese Studies from the School of Oriental and African Studies in London, England and a
BA in International Relations from York University in Toronto, Canada, has studied extensively in
China, “Post-Chavez US-Venezuelan Relations: Headed for a Thaw?”
http://www.geopoliticalmonitor.com/post-chavez-us-venezuelan-relations-headed-for-a-thaw4790/]
And by all indications, Venezuela’s finances aren’t going to hold out for very long. The country is currently
running a deficit of over 20 percent, and its national inflation rate fluctuates between 20 and 30 percent. Though it presides over
one of the world’s largest oil reserves and is a card-carrying member of OPEC, Venezuela’s oil yields
have been
dropping throughout the Chavez era due to a lack of foreign investment. The same is true of Venezuela’s food
industry. A lack of foreign investment, inefficiency, and costly subsidies have stunted overall output, resulting in food shortages that
are now showing themselves in the huge lineups spilling out of government food depots nationwide. A
reoccurring theme
of Chavez’s economic policy was a willful ignorance regarding the creation of infrastructure and
social capital that could drive economic growth beyond the era of direct government handouts. Given the
structural challenges that the Venezuelan economy now faces, challenges that will preclude the
government’s ability to continue Chavez-era patronage ad infinitum, a Maduro government will
inevitably be faced with an economic reckoning of sorts. In the aftermath of this economic reckoning, there
will be an opportunity for both domestic opposition forces within Venezuela, and American foreign
policy to make inroads. Just to recap: what we are likely to see is a Maduro win, followed by a politico-economic crisis that
ushers in either a return to credible multi-party democracy or a descent into conspicuous authoritarianism. But how will this
impact US-Venezuelan relations? Given its precarious economic situation, Venezuela will need
outside assistance in the near future. And while some would say that China is best suited to step up and bail out Caracas,
there are a few reasons to question whether this will actually come to pass. First of all, The Chinese Development Bank has already
provided a huge amount of money to the Chavez government, about $40 billion between 2008 and 2012 alone. Thus, if Venezuela
were to be faced with a default, it would be Chinese investors with their money on the line. Any debt renegotiations would surely
include provisions that didn’t sit well with the Venezuelan public. After all, there have already been agreements reached between
Venezuela and the Chinese state-owned company Citic Group that have raised populist alarm bells regarding the signing of mineral
rights over to foreign companies. In this context, a
limited rapprochement makes sense from a Venezuelan
point of view, as it would balance against a preponderance of Chinese economic influence. Now that the “Bolivarian
Revolution” is all but discredited, and countries like Brazil have proven that it’s possible to alleviate poverty through trade and keep
US influence at arm’s length, a US-Venezuelan thaw is theoretically possible. However, authorities in Washington
will likely have to endure another round of vitriol and wait until the dust settles in Venezuelan domestic politics before their window
of opportunity presents itself.
Investing in oil is the key internal link to relations and the economy – Maduro
will say yes because he has to.
Metzker 6/17 (By Jared Metzker Jun 17 2013, reporter for InterPressService “Analysts Say Oil
Could Help Mend U.S.-Venezuela Relations” http://www.ipsnews.net/2013/06/analysts-say-oilcould-help-mend-u-s-venezuela-relations/)
WASHINGTON, Jun 17 2013 (IPS) - A shift in U.S. foreign policy towards Venezuela may be pending as a
bilateral rapprochement suddenly appears more possible than it has in years. On the sidelines of talks
held earlier this month in Guatemala by the Organisation of American States (OAS), U.S. Secretary of State John Kerry met with
that relations could be heading
in a friendlier direction. “We agreed today – both of us, Venezuela and the United States – that
we would like to see our countries find a new way forward, establish a more constructive and
positive relationship and find the ways to do that,” Kerry said following the meeting with Jaua, which was
Venezuelan Foreign Minister Elias Jaua, with Kerry’s subsequent statements indicating
reportedly requested by the Venezuelans. The meeting happened on the heels of the release of Timothy Tracy, a U.S. filmmaker
whom Venezuela had been holding on accusations of espionage. His release was interpreted by many as an “olive branch” being
offered by the new Venezuelan government of Nicholas Maduro, whose presidency Washington still has not formally recognised.
Only months ago, before the death of Venezuela’s long-time socialist leader Hugo Chavez, any normalisation of relations between
Venezuela and the United States seemed highly unlikely. In 2002, Chavez was briefly removed from power by a military coup d’état
that the U.S. Central Intelligence Agency (CIA) had known was imminent. Chavez immediately accused the United States of having
played a part in the event. After his suspicions were confirmed partly valid, his rhetoric grew more scathing. In 2006, he famously
told the United Nations General Assembly that then-U.S. President George W. Bush was “the devil himself”. Following Chavez’s
death from cancer in March, however, his hand-picked successor, Maduro, the former vice-president, has not been as vitriolic in his
posturing vis-à-vis the United States. According to Michael Shifter, president of the Inter-American Dialogue, a Washington-based
think tank, Maduro has offered “conflicting signals”. “Maduro
has so far shifted in his position toward the U.S.
between a moderate approach and a more hard-line one,” Shifter told IPS. "Venezuela cannot
confront its economic crisis and the United States at the same time." -- Diana Villiers Negroponte The
new president’s waffling may be a reflection of his tenuous grip on power. By many accounts, Maduro lacks the political prowess
and rabble-rousing charm of Chavez, who enjoyed military backing as well as fervent support from the lower classes. In addition to a
strong anti-Chavista opposition that openly challenges the legitimacy of his narrowly won election, Maduro has had to deal with a
split within Chavez’s own former political base. Shifter pointed out that among the military, which was once a source of significant
strength for Chavez, more support is given to Diosdado Cabello, currently head of Venezuela’s parliament and whose supporters
believe he was the rightful heir to the presidency. Maduro’s legitimacy stems largely from his perceived ideological fidelity, the
reason for his selection by Chavez to lead in the first place. Shifter said this leads him to “emulate” his predecessor and makes
rapprochement with the United States less probable. Still, ideological concerns may not ultimately decide the issue. Venezuela has
inherited from Chavez an economy in difficult straits, which continues to suffer from notorious shortages and high inflation. Oil
economy Over half of Venezuela’s federal budget revenues come from its oil industry, which also accounts for 95 percent of the
country’s exports. Estimated at 77 billion barrels, its proven reserves of black gold are the largest of any nation in the world.
Despite a troubled political relationship, its principal customer is the United States, which
imports nearly a million barrels a day from Venezuela. Venezuela’s oil industry has been officially nationalised
since the 1970s, and, as president, Chavez further tightened government control over its production. His government took a greater
chunk of revenues and imposed quotas that ensured a certain percentage would always go directly towards aiding Venezuelans via
social spending and fuel subsidies. While these measures may be popular with Venezuelans, who pay the lowest price for gasoline in
the world, critics argue such policies hampered growth and led to mismanagement of Petroleos de Venezuela, S.A. (PdVSA), the
main state-run oil company. The same critics also point to increasing debt levels, slowdowns in productions and accidents stemming
from faulty infrastructure. In order to boost production, PdVSA agreed in May to accept a number of major loans. This includes one
from Chevron, one of the largest U.S. oil companies, which will work with Venezuelans to develop new extraction sites. Related IPS
Articles UNASUR Backs Venezuelan President-elect and Calls for Peace Tension Surrounds Start of Venezuela’s Post-Chávez Era OPED: Stability Will Mark Post-Chávez Venezuela “The
oil sector is in deep trouble in Venezuela – production is
down and the economic situation is deteriorating,” explained Shifter. “They know they need foreign
investment to increase production, and this is in part what has motivated Maduro to reach
out.” If its economy continues to falter, Venezuela may be further tempted to embrace the
United States, which has the largest, most sophisticated fossil fuel industry in the world. Kerry’s
recent words suggest that the administration of President Barack Obama would be waiting with open arms.
“Venezuela cannot confront its economic crisis and the United States at the same time,” Diana
Villiers Negroponte, a senior fellow at the Brookings Institute, a Washington think tank, told IPS, “and we are a pragmatic country
which will deal with Maduro if it is in our interests.” Indeed, Negroponte
said she was “optimistic” about the
possibility of rapprochement between the two countries within the next six months. She notes a
“troika” of issues on which the United States is looking for Venezuelan cooperation: counter-terrorism, counter-narcotics and
assistance in ridding Colombia of its FARC rebels. Nonetheless, major actions remain to be taken if normalisation is to even begin,
such as the exchange of ambassadors and official U.S. recognition of the Maduro government. Shifter (who regards the Kerry-Jaua
meeting as “a small step”) was not optimistic that these larger requirements will be completed in the short term. “I don’t think
Washington is going to push hard to send an ambassador to Caracas,” he said. “It will probably take more time to observe the new
government and see where it is going.”
Energy investment is uniquely critical – Maduro will say yes.
Shifter ‘13 - President of the Inter-American Dialogue and an Adjunct Professor of Latin
American Studies at Georgetown University's School of Foreign Service (3/11, “The Empire
Makes Nice,” Foreign Policy
http://www.foreignpolicy.com/articles/2013/03/11/the_empire_makes_nice_venezuela_hugo_
chavez?page=0,0.)
Four years ago, when the first Obama administration was still
hopeful about the prospects of resetting
relationships with U.S. adversaries in the world, Venezuela was high on the list. "Eight years of isolation has resulted in
the kinds of outreach that, I think, both you and I find troubling," then Secretary of State Hillary Clinton told the Senate in 2009. "Our
belief is, if it hasn't worked, why keep it going? Let's see what else might be possible." Things haven't turned out quite as planned,
but following
the death of Hugo Chávez, the United States may get a new opportunity to improve
one of its most frustrating relationships, and find out if a new way of operating might indeed be possible. Some
progress has been made, of course. The Obama administration learned some important lessons from the George W. Bush years. It
wisely avoided becoming embroiled in rhetorical tit-for-tats -- a game Chávez played with relish and of which he was the undisputed
master. In 2006, for instance, then-Defense Secretary Donald Rumsfeld likened Chávez to Adolf Hitler. The Venezuelan president
responded in kind at a rally in Caracas, "The imperialist, genocidal, fascist attitude of the U.S. president has no limits. I think Hitler
would be like a suckling baby next to George W Bush." The Obama White House also seemed to accept the fact that, for all his faults
and the problems he posed for the United States, Chávez was Venezuela's legitimately elected president. Had there been another
attempt to oust him, Obama officials would, one hopes, not have expressed undisguised glee, as the Bush White House did during
the brief putsch of 2002. Seven years after that failed coup attempt, and three months into his presidency, Obama shook hands and
bantered a bit with Chávez at a hemispheric summit in Trinidad and Tobago. (Chávez, ever the showman, gave Obama a copy of a
book by leftist historian Eduardo Galeano, a gift presumably aimed at enlightening the incoming president about the evils of U.S.
imperialism.) True, Obama has eschewed Bush's military adventurism, which touched a deep nerve in Latin America. But a more
restrained U.S. foreign policy and a commitment to "engage" with the region as "partners" did little to persuade Chávez that
Washington had changed its tutelary ways. "Obama, to me, until now, has been a great disappointment." Chavez told CNN in 2010,
comparing the U.S. president to a highly rated baseball pitching prospect who "end up being wild." Today, three months into
Obama's second term, Washington will have to deal with a Venezuela -- a country with the world's largest oil reserves that accounts
for roughly 10 percent of U.S. imports today -- without Chávez. No one can match the riveting theater Chávez reliably provided -- his
trademark, strident rhetoric and audacious, provocative moves on the regional and global stages, so often targeted at Washington.
Still, after 14 years of distancing and mutual suspicions, the U.S.-Venezuela relationship is sure to be very difficult. Though
uncertainty abounds in the country that Chávez so thoroughly dominated for so long, the most likely scenario is that acting President
Nicolás Maduro, Chávez's designated successor, will win the election scheduled for April 14. He will benefit from an emotional boost
from Chavez's death and a demoralized opposition that that was thrown off balance by major defeats in presidential and
gubernatorial elections in late 2012. Maduro will preside over a government made up of diverse factions that, absent Chávez's
charisma and political shrewdness, will have a hard time staying together -- particularly as the country's already serious economic
conditions worsen. The
Obama administration should take two critical facts about Venezuela's postChávez political reality into account. First, since Maduro is not Chávez, he will have little choice
but to govern in a different fashion than his predecessor. Lacking comparable magnetism and resources,
Maduro will likely be somewhat more accommodating to those Chávez treated with utter intransigence, such as
the private sector, foreign investors, and the opposition. Maduro, acting out of self-interest, will need, and look
for, political oxygen. The second is simply the risk of turbulence in Venezuela, especially after
the upcoming electoral cycle. To be sure, analysts' occasional predictions about political violence during the Chávez years
were (happily) not borne out. And given the extent of rancor and polarization in the society, it is striking how little political violence
there has been (common crime, on the other hand, has skyrocketed). Still, the security situation is far from settled -- a militia force
of 125,000 answered directly to Chávez -- and it would be a mistake to rule out chaotic and perilous scenarios that should be of
great concern to the entire hemisphere. What
Chávez, the Obama
does this mean for Washington? Assuming that Maduro succeeds
administration should be amenable to taking steps toward establishing a better
relationship with Caracas. Since the relationship today is practically nonexistent, that would not
require a big leap. It might simply entail opening up channels of communication and seeking to establish an ambassadorial
presence in both capitals which -- absurdly, given the strong commercial relationship between the two countries -- have not existed
since 2010. Beyond that, depending on how Venezuela's economic situation unfolds, it
might be worth exploring some
degree of cooperation and support in energy. Under Chávez, Venezuela's state oil company PDVSA
has suffered from declining production and investment and heavy politicization. Maduro may not want
to change that right away -- he will need to show that he is a loyal Chávista. But if the country's fiscal pressures prove
untenable, he may have few options, and the United States should be open to helping out.
Collaboration on counternarcotics and law enforcement would also be desirable but for the time being are probably non-starters
politically, given the depth of mutual mistrust (not to mention that seven Venezuelan officials are on a Treasury Department blacklist
for their alleged involvement in drugs and arms dealing). To its credit, the State Department reached out to Maduro several months
ago, and following Chávez's death the Obama administration has expressed an interest in improving the tense bilateral relationship.
Its entreaty was surely not helped by Maduro's broadside against the United States, just hours before he announced that Chávez
had died -- a move right out of Hugo's playbook. Maduro not only expelled two military attaches from the U.S. Embassy but also
intimated that Washington might have been responsible in some way for Chávez's death. Absent a shred of evidence, Maduro's
words were outrageous, but aimed at proving to the base that he was a worthy heir to Chávez before the election. But it's
far
too early for the United States to give up hope on Maduro. Despite his reckless words in recent
days, his ideologically hard-line views, and close relationship with Cuban leaders, Maduro's style contrasts sharply
with Chávez's. Chávez was a military man, a former paratrooper who attempted a coup in 1992. Maduro was not only foreign
minister and head of the National Assembly, but earlier in his career was a union official who negotiated deals. He will be
tough rhetorically, but some give-and-take behind the scenes seems feasible -- a balancing act
Washington will have to understand and deal with. Maduro will likely also confront more dire economic
circumstances than Chávez ever did. Politically, he will not be able to afford to reject communication and
some accommodation with the private sector.
Assistance in Liberalization
Plan: The United States Federal Government should assist Venezuela in the
liberalization of its oil sector.
US assistance is critical to liberalizing Venezeula’s oil sector – expertise,
resources, and rule of law.
Farnsworth ‘13 (Eric Farnsworth vice president of the Council of the Americas and Americas
Society 4/11/2013, “ENERGY SECURITY OPPORTUNITIES IN LATIN AMERICA AND THE
CARIBBEAN, HEARING BEFORE THE HOUSE COMMITTEE ON FOREIGN AFFAIRS SUBCOMMITTEE
ON THE WESTERN HEMISPHERE,
http://docs.house.gov/meetings/FA/FA07/20130411/100622/HHRG-113-FA07-20130411SD002.pdf)GNL
Nonetheless, traditional fuels will remain critical to meet both regional and global energy needs for the foreseeable future. And
here, too, Latin
America and the Caribbean boast significant resources. Unfortunately, politics, including
suboptimal investment climate in a
number of nations, specifically including a weak and malleable rule of law, has led to a sectoral underdevelopment
and unnecessary inefficiencies. At the same time, the United States is not the only Nation that sees the potential for
populist governance and regional rivalries between and among states, and a
cooperation in Latin America, Caribbean, and Canadian energy. China, for example, which is now the world’s top ¶ energy consumer,
is a relatively recent, but very active participant in the development of regional energy resources, as are other nations, including
India and Russia. This is a region that is now in play. In my view, the
United States must, therefore, do a better job
making the case for regional partnership, because alternatives for the region exist today which simply did not exist a
decade ago. With this in mind, the United States can and should become more proactively engaged in
regional energy issues, serving as a resource and a partner for nations that seek engagement with us. In the first instance,
we must take several steps in the near term that will show a seriousness of purpose and
leadership in hemispheric energy matters. Three come right to mind, and we have discussed all of them to a greater
or lesser extent already this afternoon: Approval of the Keystone XL Pipeline as soon as reasonable environmental concerns are
addressed; implementation of the pending transboundary Hydrocarbons Agreement with Mexico; and greater alacrity in the effort
to approve exports of natural gas. We should begin to view energy, in my view, and specifically natural gas, as a potent new tool of
regional foreign policy, particularly in the Caribbean Basin, including Central America. The Caribbean Basin faces economic
challenges unlike the rest of the hemisphere due to small and less competitive economies. As security gains are made in Mexico and
increasingly Central America, drug traffickers will change their routes back into the Caribbean, where they came from originally.
Those realities coupled with Venezuela’s growing economic challenges and political transition,
which may cause Caracas to reduce its provision of subsidized energy under the Petrocaribe
program, suggest that now would be an opportune time for the United States to help build will
Caribbean competitiveness and job creation in the formal economy. The export of cleaner natural gas and
the focus on regional electricity connectivity should, therefore, in my view, underlie such an initiative. More broadly, the United
States has a strategic interest in working with willing nations in the hemisphere to develop their
own energy resources effectively, while promoting models that reduce the negative if
unintended consequences of regional energy development, including a lack of transparency and
official corruption, the distorting impact of consumption subsidies, an over-reliance on a single
commodity or sector, environmental concerns, and a concentration of wealth and political
power around the sector. In order to develop their respective industries, nations need U.S. technology,
management expertise, and investment dollars. They need our education system to develop
their engineers and seismologists, they need help to understand regulatory, tax, and policy
models that work, they need to be exposed to best practices in environmental mitigation, and
they need our technical assistance to improve the investment climate and the rule of law . And in
this regard, let me just raise very briefly one country in particular, because it is so much important in terms of hemispheric energy
trends, and that is Brazil, which I believe offers a case study for consideration. Major discoveries in the pre-salt fields off the coast
may soon catapult Brazil into the ranks of the global energy superpowers. Energy cooperation with Brazil is thus a prime opportunity
for the United States, as the President said when he traveled there in 2011. At the same time, despite massive potential,
development has been slower than predicted due to a number of governmentmandated requirements, complicated rule of law, and
continued uncertainty in terms of elements such as the sharing out of royalties. These issues are not unique to Brazil. The purpose in
raising them, however, is to suggest that great opportunities in hemispheric energy come with certain challenges as well.
Exchange Diplomats
Plan: The United States Federal Government should officially recognize the
Maduro government in Venezeuala and offer to exchange ambassadors.
Plan solves – Official recognition and an exchange of diplomats is the first step
to normalized trade relations.
Metzker ‘13 (By Jared Metzker Jun 17 2013, reporter for InterPressService “Analysts Say Oil
Could Help Mend U.S.-Venezuela Relations” http://www.ipsnews.net/2013/06/analysts-say-oilcould-help-mend-u-s-venezuela-relations/)
WASHINGTON, Jun 17 2013 (IPS) - A shift
in U.S. foreign policy towards Venezuela may be pending as a
bilateral rapprochement suddenly appears more possible than it has in years. On the sidelines of talks
held earlier this month in Guatemala by the Organisation of American States (OAS), U.S. Secretary of State John Kerry met with
that relations could be heading
in a friendlier direction. “We agreed today – both of us, Venezuela and the United States – that
we would like to see our countries find a new way forward, establish a more constructive and
positive relationship and find the ways to do that,” Kerry said following the meeting with Jaua, which was
Venezuelan Foreign Minister Elias Jaua, with Kerry’s subsequent statements indicating
reportedly requested by the Venezuelans. The meeting happened on the heels of the release of Timothy Tracy, a U.S. filmmaker
whom Venezuela had been holding on accusations of espionage. His release was interpreted by many as an “olive branch” being
offered by the new Venezuelan government of Nicholas Maduro, whose presidency Washington still has not formally recognised.
Only months ago, before the death of Venezuela’s long-time socialist leader Hugo Chavez, any normalisation of relations between
Venezuela and the United States seemed highly unlikely. In 2002, Chavez was briefly removed from power by a military coup d’état
that the U.S. Central Intelligence Agency (CIA) had known was imminent. Chavez immediately accused the United States of having
played a part in the event. After his suspicions were confirmed partly valid, his rhetoric grew more scathing. In 2006, he famously
told the United Nations General Assembly that then-U.S. President George W. Bush was “the devil himself”. Following Chavez’s
death from cancer in March, however, his hand-picked successor, Maduro, the former vice-president, has not been as vitriolic in his
posturing vis-à-vis the United States. According to Michael Shifter, president of the Inter-American Dialogue, a Washington-based
think tank, Maduro has offered “conflicting signals”. “Maduro
has so far shifted in his position toward the U.S.
between a moderate approach and a more hard-line one,” Shifter told IPS. "Venezuela cannot
confront its economic crisis and the United States at the same time." -- Diana Villiers Negroponte The
new president’s waffling may be a reflection of his tenuous grip on power. By many accounts, Maduro lacks the political prowess
and rabble-rousing charm of Chavez, who enjoyed military backing as well as fervent support from the lower classes. In addition to a
strong anti-Chavista opposition that openly challenges the legitimacy of his narrowly won election, Maduro has had to deal with a
split within Chavez’s own former political base. Shifter pointed out that among the military, which was once a source of significant
strength for Chavez, more support is given to Diosdado Cabello, currently head of Venezuela’s parliament and whose supporters
believe he was the rightful heir to the presidency. Maduro’s legitimacy stems largely from his perceived ideological fidelity, the
reason for his selection by Chavez to lead in the first place. Shifter said this leads him to “emulate” his predecessor and makes
rapprochement with the United States less probable. Still, ideological concerns may not ultimately decide the issue. Venezuela has
inherited from Chavez an economy in difficult straits, which continues to suffer from notorious shortages and high inflation. Oil
economy Over half of Venezuela’s federal budget revenues come from its oil industry, which also accounts for 95 percent of the
country’s exports. Estimated at 77 billion barrels, its proven reserves of black gold are the largest of any nation in the world. Despite
a troubled political relationship, its principal customer is the United States, which imports nearly a million barrels a day from
Venezuela. Venezuela’s oil industry has been officially nationalised since the 1970s, and, as president, Chavez further tightened
government control over its production. His government took a greater chunk of revenues and imposed quotas that ensured a
certain percentage would always go directly towards aiding Venezuelans via social spending and fuel subsidies. While these
measures may be popular with Venezuelans, who pay the lowest price for gasoline in the world, critics argue such policies hampered
growth and led to mismanagement of Petroleos de Venezuela, S.A. (PdVSA), the main state-run oil company. The same critics also
point to increasing debt levels, slowdowns in productions and accidents stemming from faulty infrastructure. In order to boost
production, PdVSA agreed in May to accept a number of major loans. This includes one from Chevron, one of the largest U.S. oil
companies, which will work with Venezuelans to develop new extraction sites. Related IPS Articles UNASUR Backs Venezuelan
President-elect and Calls for Peace Tension Surrounds Start of Venezuela’s Post-Chávez Era OP-ED: Stability Will Mark Post-Chávez
Venezuela “The oil sector is in deep trouble in Venezuela – production is down and the economic situation is deteriorating,”
explained Shifter. “They know they need foreign investment to increase production, and this is in part what has motivated Maduro
to reach out.”
If its economy continues to falter, Venezuela may be further tempted to embrace the
United States, which has the largest, most sophisticated fossil fuel industry in the world. Kerry’s
recent words suggest that the administration of President Barack Obama would be waiting with open arms. “Venezuela
cannot confront its economic crisis and the United States at the same time,” Diana Villiers Negroponte,
a senior fellow at the Brookings Institute, a Washington think tank, told IPS, “and we are a pragmatic country which will deal with
Maduro if it is in our interests.” Indeed, Negroponte
said she was “optimistic” about the possibility of
rapprochement between the two countries within the next six months. She notes a “troika” of issues on
which the United States is looking for Venezuelan cooperation: counter-terrorism, counter-narcotics and assistance in ridding
Colombia of its FARC rebels. Nonetheless, major
actions remain to be taken if normalisation is to even
begin, such as the exchange of ambassadors and official U.S. recognition of the Maduro
government. Shifter (who regards the Kerry-Jaua meeting as “a small step”) was not optimistic that these larger requirements
will be completed in the short term. “I don’t think Washington is going to push hard to send an ambassador to Caracas,” he said. “It
will probably take more time to observe the new government and see where it is going.”
Establishing an ambassador presence solves relations and paves the way for
productive economic ties.
Shifter ‘13 - President of the Inter-American Dialogue and an Adjunct Professor of Latin
American Studies at Georgetown University's School of Foreign Service (3/11, “The Empire
Makes Nice,” Foreign Policy
http://www.foreignpolicy.com/articles/2013/03/11/the_empire_makes_nice_venezuela_hugo_
chavez?page=0,0.)
Four years ago, when the first Obama administration was still
hopeful about the prospects of resetting
relationships with U.S. adversaries in the world, Venezuela was high on the list. "Eight years of isolation has resulted in
the kinds of outreach that, I think, both you and I find troubling," then Secretary of State Hillary Clinton told the Senate in 2009. "Our
belief is, if it hasn't worked, why keep it going? Let's see what else might be possible." Things haven't turned out quite as planned,
but following
the death of Hugo Chávez, the United States may get a new opportunity to improve
one of its most frustrating relationships, and find out if a new way of operating might indeed be possible. Some
progress has been made, of course. The Obama administration learned some important lessons from the George W. Bush years. It
wisely avoided becoming embroiled in rhetorical tit-for-tats -- a game Chávez played with relish and of which he was the undisputed
master. In 2006, for instance, then-Defense Secretary Donald Rumsfeld likened Chávez to Adolf Hitler. The Venezuelan president
responded in kind at a rally in Caracas, "The imperialist, genocidal, fascist attitude of the U.S. president has no limits. I think Hitler
would be like a suckling baby next to George W Bush." The Obama White House also seemed to accept the fact that, for all his faults
and the problems he posed for the United States, Chávez was Venezuela's legitimately elected president. Had there been another
attempt to oust him, Obama officials would, one hopes, not have expressed undisguised glee, as the Bush White House did during
the brief putsch of 2002. Seven years after that failed coup attempt, and three months into his presidency, Obama shook hands and
bantered a bit with Chávez at a hemispheric summit in Trinidad and Tobago. (Chávez, ever the showman, gave Obama a copy of a
book by leftist historian Eduardo Galeano, a gift presumably aimed at enlightening the incoming president about the evils of U.S.
imperialism.) True, Obama has eschewed Bush's military adventurism, which touched a deep nerve in Latin America. But a more
restrained U.S. foreign policy and a commitment to "engage" with the region as "partners" did little to persuade Chávez that
Washington had changed its tutelary ways. "Obama, to me, until now, has been a great disappointment." Chavez told CNN in 2010,
comparing the U.S. president to a highly rated baseball pitching prospect who "end up being wild." Today, three months into
Obama's second term, Washington will have to deal with a Venezuela -- a country with the world's largest oil reserves that accounts
for roughly 10 percent of U.S. imports today -- without Chávez. No one can match the riveting theater Chávez reliably provided -- his
trademark, strident rhetoric and audacious, provocative moves on the regional and global stages, so often targeted at Washington.
Still, after 14 years of distancing and mutual suspicions, the U.S.-Venezuela relationship is sure to be very difficult. Though
uncertainty abounds in the country that Chávez so thoroughly dominated for so long, the most likely scenario is that acting President
Nicolás Maduro, Chávez's designated successor, will win the election scheduled for April 14. He will benefit from an emotional boost
from Chavez's death and a demoralized opposition that that was thrown off balance by major defeats in presidential and
gubernatorial elections in late 2012. Maduro will preside over a government made up of diverse factions that, absent Chávez's
charisma and political shrewdness, will have a hard time staying together -- particularly as the country's already serious economic
conditions worsen. The
Obama administration should take two critical facts about Venezuela's postChávez political reality into account. First, since Maduro is not Chávez, he will have little choice
but to govern in a different fashion than his predecessor. Lacking comparable magnetism and resources,
Maduro will likely be somewhat more accommodating to those Chávez treated with utter intransigence, such as
the private sector, foreign investors, and the opposition. Maduro, acting out of self-interest, will need, and look
for, political oxygen. The second is simply the risk of turbulence in Venezuela, especially after
the upcoming electoral cycle. To be sure, analysts' occasional predictions about political violence during the Chávez years
were (happily) not borne out. And given the extent of rancor and polarization in the society, it is striking how little political violence
there has been (common crime, on the other hand, has skyrocketed). Still, the security situation is far from settled -- a militia force
of 125,000 answered directly to Chávez -- and it would be a mistake to rule out chaotic and perilous scenarios that should be of
great concern to the entire hemisphere. What
does this mean for Washington? Assuming that Maduro succeeds
administration should be amenable to taking steps toward establishing a better
relationship with Caracas. Since the relationship today is practically nonexistent, that would not
require a big leap. It might simply entail opening up channels of communication and seeking to
establish an ambassadorial presence in both capitals which -- absurdly, given the strong commercial
Chávez, the Obama
relationship between the two countries -- have not existed since 2010.
Venezuela is willing to work with the United States – diplomatic exchanges are
crucial to overall cooperation.
AFP ‘13 (Agence France Presse, “Venezuela’s new government ‘open’ to resuming U.S.
diplomatic relations,” 5-19-13, http://www.rawstory.com/rs/2013/05/19/venezuelas-newgovernment-open-to-resuming-u-s-diplomatic-relations/)
Venezuela on Sunday made a rare diplomatic overture to the United States, suggesting it could
be time for better ties. “We are going to remain open to normalizing relations with the United
States,” Foreign Minister Elias Jaua said on Televen television Sunday. “The first thing would be to resume
diplomatic representation at the highest level,” he said. The country’s late socialist president Hugo Chavez was a
staunch critic of the United States, and his successor Nicolas Maduro is still feeling out its footing with
Washington. Chavez for more than 14 years unleashed verbal broadsides on US leaders before his death in March. The
United States and Venezuela since 2010 have not even had ambassadors in their embassies in
their respective capitals. Maduro, who earlier said his government would like to increase
dialogue with the United States, has selected lawmaker Calixto Ortega as its potential US envoy.
US President Barack Obama however has not congratulated Maduro for his controversial, razorthin April 14 election, as Maduro’s opposition rival Henrique Capriles presses claims that the Venezuelan presidential election was
marred by irregularities. Maduro
meanwhile slammed Obama “the top leader of devils” after he
commented on post-election unrest in Venezuela.
It’s topical – Engagement is about exchange relationships.
Resnik ‘1 – Assistant Professor of Political Science at Yeshiva University (Evan, Journal of
International Affairs, “Defining Engagement” v54, n2, political science complete)
Engagement is a quintessential exchange relationship: the target state wants the prestige and
material resources that would accrue to it from increased contacts with the sender state, while
the sender state seeks to modify the domestic and/or foreign policy behavior of the target state.
Solvency
Generic Solvency
Current relations undermine US’s diplomatic projection—fights with Venezuela
wreck credibility in Latin America
Griffin 4/3 (By JOHN GRIFFIN April 3, 2013 John A. Griffin III ’16 is a Crimson editorial writer,
“Engage with Venezuela” http://www.thecrimson.com/article/2013/4/3/Harvard-VenezuelaChavez-death/)
When Venezuelan President Hugo Chávez died in early February, his country was thrown into a period of national mourning as the
political equilibrium in Latin America hung in the balance. As
Venezuela chooses its next president, Washington
should seek to reverse the current trend of acrid relations between the two nations and engage
with the Venezuelan government in Caracas toward stability and prosperity in the Western hemisphere. While it
might seem likely that relations between the United States and Venezuela would naturally
improve after the death of the combative Chávez, the opposite now seems more likely. Before
passing away, Chávez had handpicked a successor in Nicholas Maduro, who has assumed power in the interim before the
presidential election in April. As Chávez’s handpicked successor, Maduro has already continued with his mentor’s trend of using antiAmerican rhetoric to bring popularity to his government, even declaring that American agents may have infected Chávez with the
cancer that killed him. While
Washington has officially declared that it is committed to a more
functional relationship with Venezuela, its actions have not been consistent with this idea: The
United States offered no official condolences for Chávez’s death, and both nations have started expelling diplomats
from the other. Neither nation, it seems, is steering toward more congenial relations with the other. Admittedly, the United
States has good reason to be less than enthused about more Chávez-style governance in Venezuela. Calling himself a 21st-century
socialist, Chávez nationalized the lucrative oil industry, developed strong trade and diplomatic relationships with Iran and Cuba,
repeatedly decried the United States as an imperialist force, and cooperated with the Iranians in developing nuclear technology.
Engaging in petty diplomat-expulsion spats, however, is no way to deal with any of these problems, and it in fact only strengthens
the Chavistas’ hold on their country. The
diplomatic and economic opportunities that would stem from
greater engagement would far outweigh the meager benefits reaped from our current policies.
Diplomatically, positive engagement with Venezuela would be a major step toward building American
credibility in the world at large, especially in Latin America. Chávez (along with his friends the Castros in Cuba)
was able to bolster regional support for his regime by pointing out the United States’ attempts to forcibly intervene in Venezuelan
politics. Soon, a number of populist governments in Latin America had rallied around Chávez and his anti-American policies. In 2004,
Bolivia, Ecuador, Nicaragua, and three Caribbean nations joined with Venezuela and Cuba to form the Bolivarian Alliance for the
Peoples of our America, an organization in direct opposition to the Free Trade Area in the Americas proposed (but never realized) by
the Bush administration. Chávez galvanized these nations—many of whom have experienced American interventionist tactics—by
vilifying America as a common, imperial enemy. Unfortunately for the United States, its general strategy regarding Venezuela has
often strengthened Chávez’s position. Every
time Washington chastises Venezuela for opposing American
interests or attempts to bring sanctions against the Latin American country, the leader in
Caracas (whether it be Chávez or Maduro) simply gains more evidence toward his claim that Washington
is a neo-colonialist meddler. This weakens the United States’ diplomatic position, while
simultaneously strengthening Venezuela’s. If Washington wants Latin America to stop its current trend of electing
leftist, Chavista governments, its first step should be to adopt a less astringent tone in dealing with
Venezuela. Caracas will be unable to paint Washington as an aggressor, and Washington will in
turn gain a better image in Latin America. Beyond leading to more amicable, cooperative relationships with Latin
American nations, engagement with Venezuela would also be economically advisable. With the world’s largest oil reserves,
countless other valuable resources, and stunning natural beauty to attract scores of tourists, Venezuela has quite a bit to offer
economically. Even now, America can see the possible benefits of economic engagement with Caracas by looking at one of the few
extant cases of such cooperation: Each year, thousands of needy Americans are able to keep their homes heated because of the
cooperation between Venezuela and a Boston-area oil company. Engagement with Venezuela would also lead to stronger economic
cooperation with the entirety of Latin America. It was mostly through Venezuela’s efforts that the United States was unable to
create a “Free Trade Area of the Americas,” an endeavor that would have eliminated most trade barriers among participant nations,
thereby leading to more lucrative trade. In a world where the United States and Venezuela were to enjoy normalized relations, all
nations involved would benefit from such agreements.
For both diplomatic and economic reasons, then,
positive engagement is the best course of action for the United States. As it stands, the negative
relationship between the countries has created an atmosphere of animosity in the hemisphere, hindering dialogue and making
economic cooperation nearly impossible. While there is much for which the Venezuelan government can rightly be criticized—
authoritarian rule, abuse of human rights, lack of market-friendly policies—nothing that the United States is doing to counter those
drawbacks is having any effect. The
United States should stop playing “tough guy” with Venezuela, bite
the bullet, and work toward stability and prosperity for the entire hemisphere. We aren’t catching any
flies with our vinegar—it’s high time we started trying to catch them with honey.
Venezuelan Oil Advantage
Advantage ( ): Venezuelan Oil
Venezuelan oil production is on the verge of complete failure – employees
haven’t been paid and reinvestment is unlikely
Landislaw & Verrastro 3/6 (Sarah O. Ladislaw, Frank A. Verrastro MAR 6, 2013, “Post-Chavez
Outlook for Venezuelan Oil Production,” Center for Strategic and International Studies,
http://csis.org/publication/post-chavez-outlook-venezuelan-oil-production)kw
Despite its enormous oil resources, Venezuela's
oil production (regardless of whose figures you use) has long been in
steady decline. In 2011 liquids production was 2.47 million barrels per day (mmbd) , down a
million barrels per day since 1999. Some of this is reflects the changing cost and economics of Venezuelan oil
production but field decline is significant and expertise and reinvestment are questionable and
looking harder to come by. The internal technical and managerial capabilities of state run oil and gas company PDVSA
have deteriorated since the 2002 strike and aftermath. Increasingly, PDVSA relies on contractors, as well as other
private company partners, to keep the fields in production but reports state that contractors
have not been paid in months and that the political uncertainty in the country has even driven
routine decision making to a halt. The sustained political uncertainty has also slowed investment; Russian and Indian
companies were planning to invest in Venezuela's oil fields but so far have withheld incremental new money. China has not
announced a new line of credit or extensions on its development-linked financing since last April. At the same time that
production is dropping, highly subsidized domestic consumption of oil is increasing while
revenue from exports is also declining. The United States remains the largest recipient of
Venezuelan oil exports at 950,000 barrels per day in 2011, roughly 40 percent, plus another
185,000 barrels per day from the Caribbean that was Venezuelan sourced but those volumes area down
as U.S. demand has declined and other crudes have become available. Venezuela's next largest export destinations are the
Caribbean (31 percent) and then China (around 10 percent). Venezuela sells to many of its Caribbean neighbors at below market
rates due to extremely preferential financing relationships, including additional heavy subsidies for Cuban exports. All
of this
culminates in an outlook for continued decline in oil production and a worsening economic
outlook for Venezuela during a politically difficult time.
Oil controls their entire economy – absent change, it will collapse.
Tulchin ‘13 - Visiting Fellow at the David Rockefeller Center for Latin American Studies at
Harvard University, Latin American scholar, member of the task force on Hemispheric Security
Issues at the Center for Hemispheric Policy of the University of Miami (Dr. Joseph S. “Oil price is
key to success for Venezuela’s President Maduro” World Review April 24 2013
<http://www.worldreview.info/content/oil-price-key-success-venezuelas-president-maduro>
6/27/13)//AH
Mr Maduro now has to follow in some large footsteps. Charismatic Mr Chavez was a regional leader who created the
Latin American Bolivarian Alliance (ALBA) within which populist and progressive regimes could express their aspirations as well as their anger with the
US. Mr Chavez was also instrumental in creating the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean
States (CELAC). UNASUR has a modest infrastructure which might become a significant international forum for South America. Mr
Chavez and
his charisma created something between a political movement and a personality cult in
Venezuela, establishing an emotional link with the people, especially the underclass. Mr Maduro will have difficulty
maintaining this. The Chavez governments increased social spending to three per cent of gross
domestic product (GDP). Inequality, measured by the Gini Index, declined by 10 index points. Extreme
poverty was reduced. The Chavista movement - the followers of Mr Chavez - was a politically effective, well-oiled machine. But Mr
Chavez’s legacy also includes the failure to establish the participatory democracy that he called part of Socialism of the 21st Century. Political freedoms
have declined, the space for debate has been reduced, and the rule of law has deteriorated. Mr Chavez carries the blame for the terrible
macroeconomic policies his government imposed which have brought Venezuela to the verge of dysfunction. Public administration has become a bad
Maduro
has to deal with three problems from the moment he assumes power. First is the petroleum industry. The
social model built by Mr Chavez will collapse very quickly without increased production. No
Venezuelan government can survive long with the price of oil below US$90 per barrel or if
production continues to decline even at higher prices. Second is inflation. The economy is seriously dysfunctional,
largely because of Mr Chavez’s wild spending spree in the year prior to last October’s elections and his
dependence on oil revenue. Third is the crime rate which makes Venezuela one of the most violent countries in the world. This is itself
joke. The state simply does not work. The net judgment on the legacy of Hugo Chavez is that his regime represents a lost opportunity. Mr
symbolic of a more general problem of social cohesion. Today, Venezuelan society is deeply divided. Civil discourse has disappeared, personal freedoms
have been severely curtailed, the rule of law is uncertain. It will be a challenge for the new government to avoid civic discord and violence and deal with
widespread crime. A rising proportion of this is connected to international traffic in drugs. But it
is petroleum which has dominated
Venezuela’s economy for nearly a century. Petroleum revenue equals 82 per cent of Venezuela’s
GDP. PDVSA was turned into Venezuela’s largest social benefits ministry using virtually all its
petroleum sales revenue to pay for the ambitious government social programmes carried out by
Mr Chavez when he was president. The variables that will determine the future capacity of the Venezuelan
government to pay its debts, control inflation, and pay for its social welfare programmes are the
international price of oil; the level of oil production; and the level of investment in Venezuela’s
petroleum industry. The interplay between these determines the scenarios for Venezuela’s
future.
Scenario One – Regional War
Venezuela economic collapses cause civil war.
Pravda.Ru ‘13 (Reputable Russian News Source, Will Venezuela Collapse and Die With
Maduro’s Help? 4/15/13, http://english.pravda.ru/news/world/15-04-2013/124282venezuela_maduro-0)BS
"Nothing positive should be expected, because the country has split almost in two. The difference of 1.4 percent is not
a victory for Maduro - it is a victory for the administrative resource, for his team. Nicolas Maduro had a powerful resource, in
contrast to Capriles. Almost all media outlets were controlled by the government, the entire campaign, which Maduro conducted,
exceeded the opportunities of Capriles ten times. Still, opposition figures and the figures of the ruling elite aligned. Now President
Maduro will not be able to call Capriles and his followers outcasts, because his words would be addressed to a half of the country,
which is more than 8 million voters. "What kind of legacy has Maduro received? I said in one of my interviews that if I were in
Capriles' shoes, I would not want to win the election. At first, there is a very powerful administrative resource, which the opposition
could not oppose, and yet Capriles scored so many votes. And secondly, the
economic situation of the country if
severe, if not terrifying. The incompleteness of social programs that Hugo Chavez started, a high crime
rate, one of the highest levels of inflation. The 38-percent devaluation of the national currency, conducted by Nicolas
Maduro a few months ago, struck a severe blow on common consumers. Empty shelves in shops, food is mostly
imported, because agriculture hardly works in Venezuela, and the agrarian reform has not been conducted.
There is a great deal of problems. And if Maduro blindly follows the course of Chavez, which has
nearly destroyed the nation's economy, maybe due to very bad economic advisers, will will finish off antagonized
businesses, students, churches, etc. "As for the economy, one cannot live like that. Therefore, despite the fact that Maduro says that
he will blindly follow the advice of his teacher, Hugo Chavez, he will not be able to do this for more than two or three months,
because the treasury is empty. "In foreign policy, his statement of Venezuela's intention to supply 100,000 barrels of oil to Cuba
daily, pursue the policies of Chavez, confront the U.S. and so on, I think that in a few months, he
will not be able to do it
physically. "He will need to find a compromise with the opposition, this is a half of the country.
Otherwise, if he only strengthens the military component, a civil war will be inevitable.
Regional wars spill over and cause great power conflict.
Rochlin ‘94 [James Francis, Professor of Political Science at Okanagan U. College, Discovering
the Americas: The Evolution of Canadian Foreign Policy Towards Latin America, 130-131, Wake
Early Bird File]
While there were economic motivations for Canadian policy in Central America, security considerations were perhaps more
important. Canada possessed an interest in promoting stability in the face of a potential decline of U.S. hegemony in the Americas.
Perceptions of declining U.S. influence in the region – which had some credibility in 1979-1984 due to the wildly inequitable divisions
of wealth in some U.S. client states in Latin America, in addition to political repression, under-development, mounting external debt,
anti-American sentiment produced by decades of subjugation to U.S. strategic and economic interests, and so on – were
linked
to the prospect of explosive events occurring in the hemisphere. Hence, the Central American imbroglio was viewed
as a fuse which could ignite a cataclysmic process throughout the region. Analysts at the time worried that in a worstcase scenario,
instability created by a regional war, beginning in Central America and spreading elsewhere in Latin America,
might preoccupy Washington to the extent that the United States would be unable to perform
adequately its important hegemonic role in the international arena – a concern expressed by the director of
research for Canada’s Standing Committee Report on Central America. It was feared that such a predicament could
generate increased global instability and perhaps even a hegemonic war. This is one of the motivations
which led Canada to become involved in efforts at regional conflict resolution, such as Contadora, as will be discussed in the next
chapter.
Venezuelan instability spills over causing global problems
Manwaring 05 (Max G., Retired U.S. Army colonel and an Adjunct Professor of International
Politics at Dickinson College, VENEZUELA’S HUGO CHÁVEZ, BOLIVARIAN SOCIALISM, AND
ASYMMETRIC WARFARE, October 2005, pg. PUB628.pdf)
The Issue of State Failure. - President Chávez also understands that the process leading to state failure
is the most dangerous long-term security challenge facing the global community today. The
argument in general is that failing and failed state status is the breeding ground for instability,
criminality, insurgency, regional conflict, and terrorism. These conditions breed massive
humanitarian disasters and major refugee flows. They can host “evil” networks of all kinds, whether they involve
criminal business enterprise, narco-trafficking, or some form of ideological crusade such as Bolivarianismo. More specifically, these
conditions spawn all kinds of things people in general do not like such as murder, kidnapping,
corruption, intimidation, and destruction of infrastructure. These means of coercion and
persuasion can spawn further human rights violations, torture, poverty, starvation, disease, the recruitment and use of
child soldiers, trafficking in women and body parts, trafficking and proliferation of conventional weapons
systems and WMD, genocide, ethnic cleansing, warlordism, and criminal anarchy. At the same
time, these actions are usually unconfined and spill over into regional syndromes of poverty, destabilization,
and conflict.62 Peru’s Sendero Luminoso calls violent and destructive activities that facilitate the processes of state failure “armed
propaganda.” Drug
cartels operating throughout the Andean Ridge of South America and elsewhere
call these activities “business incentives.” Chávez considers these actions to be steps that must
be taken to bring about the political conditions necessary to establish Latin American socialism
for the 21st century.63 Thus, in addition to helping to provide wider latitude to further their tactical and operational
objectives, state and nonstate actors’ strategic efforts are aimed at progressively lessening a targeted regime’s credibility and
capability in terms of its ability and willingness to govern and develop its national territory and society. Chávez’s
intent is to
focus his primary attack politically and psychologically on selected Latin American governments’
ability and right to govern. In that context, he understands that popular perceptions of corruption, disenfranchisement, poverty,
and lack of upward mobility limit the right and the ability of a given regime to conduct the business of the state. Until a given
populace generally perceives that its government is dealing with these and other basic issues of political, economic, and social
injustice fairly and effectively, instability and the threat of subverting or destroying such a government are real.64 But failing and
failed states simply do not go away.
Virtually anyone can take advantage of such an unstable situation.
The tendency is that the best motivated and best armed organization on the scene will control
that instability. As a consequence, failing and failed states become dysfunctional states, rogue states, criminal states, narcostates, or new people’s democracies. In connection with the creation of new people’s democracies, one can rest assured that
Chávez and his Bolivarian populist allies will be available to provide money, arms, and leadership
at any given opportunity. And, of course, the longer dysfunctional, rogue, criminal, and narco-states and people’s
democracies persist, the more they and their associated problems endanger global security, peace, and prosperity.65
Scenario Two – The Economy
Venezuelan oil improvements stabilize global oil prices, eliminates US
dependence on the Middle East, and solves growth.
Weafer ‘13 (Chris Weafer is chief strategist at Sberbank Investment Research, BBC Monitoring
Former Soviet Union – Political, “No business as usual for Russia in Venezuela – paper,” 3-12-13,
Supplied by BBC Worldwide Monitoring)
Despite assurances from government officials in Caracas that it will be business as usual after the death of Venezuelan President
Hugo Chavez last week, his passing
will almost certainly lead to the start of political and social changes
in that country. The only question is the time frame. Chavez's death and the emergence of a new
presidential administration will surely have a significant impact on the global oil industry and
price of oil, although perhaps on an even longer timeline. According to the BP Energy Review, Venezuela sits on the
world's largest exploitable reserves of oil. Chavez's policies have led not only to no significant
exploitation of those reserves but have actually directly led to a cut in the country's average daily oil output by one-third
in the 14 years he served as president. In 1999, the country produced an average of 3.5 million barrels per day, while the current
average output has dropped to 2.5 million barrels. With
the right investments, the country may easily support
average daily oil output of 5 million barrels and probably higher, according to industry estimates.
There can be little doubt that as of last week, Venezuela has become the most important target location for
foreign oil majors, especially US companies. Russian oil majors still have a small advantage, and senior executives
from state-owned Rosneft and Gazprom will be eager to ensure good relations with the next administration. But they must know
that there is now a limited window to convert promised cooperation with the Venezuelan state-owned oil company, PDVSA, into
actual projects. Oil
executives from Houston will soon be descending on Venezuela with lucrative
alternatives, and PDVSA, in dire need of capital investment, will surely be listening to their
offers. For Russia, that means three risks. First, Gazprom and Rosneft will have more competition for joint-venture deals in that
country. Second, Venezuela is an easier alternative to the hostile and unpredictable Russian Arctic for US oil companies, which may
make it harder for Moscow to attract joint-venture deals. Finally, the
prospect of more oil coming out of
Venezuela adds to the growth projections for shale oil as a significant longer-term threat to the
price of oil, and therefore, to the Russian economy. None of this will be lost on the Kremlin. It means that there
will have to be greater urgency to convert promised deals into real projects in Venezuela. At the same time, the Kremlin will want to
conclude more joint ventures to exploit the Arctic. It also means that the clock counting down to lower oil revenues is now ticking,
increasing the need for more urgent progress in economic reforms. The Venezuelan constitution mandates that a new election must
take place within 30 days. As it stands today, the current vice president, Nicolas Maduro, is expected to be elected to replace
Chavez. Maduro said he intends to stick with the economic and political policies and ideologies of his former boss, but since Maduro
is no Chavez, this will be virtually impossible to achieve. Chavez was a hugely charismatic, larger-than-life leader who managed to
maintain unity of purpose among the many vested interests in the country. At the same time, he stayed popular with the people
even as the economy slid further into trouble. With oil averaging over 110 dollars per barrel last year, the Venezuelan state budget
ran a deficit of close to 20 per cent of gross domestic product. Now that Chavez is gone, the soon-to-be-elected president Maduro
will come under increasing pressure to take actions to start improving the economy. No different from President Vladimir Putin's
situation when he took over an ailing economy in Russia in 2000, the only place that the new Venezuelan president can get revenue
is from the oil sector. But after Chavez practically destroyed PDVSA when he fired 20,000 skilled engineers and other workers in
2002, PDVSA will need a huge boost to capital spending and joint-venture partnerships. Although politically risky, Maduro may have
no other choice than to ask ExxonMobil and Chevron, two of the US majors that had their local projects nationalized by Chavez, to
come back. Venezuela is certainly an attractive option for the world's big oil majors. Recoverable reserves are now put at just under
300 billion barrels, compared to about 265 billion in Saudi Arabia and less than 100 billion in Russia. Most of Venezuelan oil is heavy
and more expensive to refine, but it lies only a few hundred meters below the Orinoco Belt. That makes it a lot more attractive than,
for example, speculatively drilling in the hostile Russian Arctic while dodging icebergs. The Orinoco Belt is an extremely important
natural environment, and the inevitable objections from domestic, regional and international environmentalists will slow any
development. But as has happened in similar situations elsewhere, the quest for the prize will almost certainly prevail.
Venezuela needs the money. Venezuela has also very likely moved to near the top of the US
government's list of geopolitical priorities. The US is set on a course to become energy
independent, and the International Energy Agency calculates this may take two to three decades based on current trends and
with optimistic assumptions for US shale oil production. Such assumptions have always been speculative when it comes to the oil
industry. But
a more achievable target for the US is to become regionally oil independent -that is,
to only source its oil requirements domestically and from Canada, Mexico and now perhaps from
Venezuela. That would allow the US to become completely independent of Middle East oil within
10 years or so. A change in Venezuela's political and economic priorities would also weaken the Cuban economy since Chavez
supplied Cuba with almost free oil. That would hasten the inevitable regime change there as well, an extra bonus for Washington.
But while
such an outcome would be very favourable for the US economy, it would accelerate the
game change already started in the global oil industry with the rapid growth in shale oil volumes.
No matter how you work the assumptions, the world is heading for a lot more oil supply over the balance of this decade. New
major oil production will come from North America, Iraq and the Caspian Sea, where Kazakhstan's giant Kashagan field
starts to produce from this year, almost certainly from Venezuela if a new administration takes concrete steps
to increase foreign investment and production in the oil sector. This may be the real reason Russian officials
shed a few tears at Chavez's funeral on Friday.
High oil prices leads to a depression.
Tverberg ‘13 Gail Tverberg is a casualty actuary whose prior work involved forecasting and
modeling in the insurance industry. Starting in 2005-2006, she decided to apply her skills to the
question of how oil and other limits would affect the world. Besides writing on her own blog,
Our Finite World, she is also an editor at The Oil Drum., 3/30/13, Christian Science Monitor,
“How high oil prices lead to financial collapse”,
http://www.csmonitor.com/Environment/Energy-Voices/2013/0330/How-high-oil-prices-leadto-financial-collapse
Resource limits are invisible, so most people don’t realize that we could possibility be approaching them. In fact, my analysis
indicates resource limits are really financial limits, and in fact, we seem to be approaching those limits right
now.Many analysts discussing resource limits are talking about a very different concern than I am talking about. Many from the
“peak oil” community say that what we should worry about is a decline in world oil supply. In my view, the danger is quite different:
The real danger is financial collapse, coming much earlier than a decline in oil supply. This
collapse is related to high oil price, and also to higher costs for other resources as we approach limits (for example,
desalination of water where water supply is a problem, and higher natural gas prices in much of the world).¶ The financial
collapse is related to Energy Return on Energy Invested (EROEI) that is already too low. I don’t see any particular
EROEI target as being a threshold–the calculations for individual energy sources are not on a system-wide basis, so are not always
helpful. The issue is not precisely low EROEI. Instead,
the issue is the loss of cheap fossil fuel energy to
subsidize the rest of society. If an energy source, such as oil back when the cost was $20 or $30 barrel, can produce a
large amount of energy in the form it is needed with low inputs, it is likely to be a very profitable endeavor. Governments can tax it
heavily (with severance taxes, royalties, rental for drilling rights, and other fees that are not necessarily called taxes). In many oil
exporting countries, these oil-based revenues provide a large share of government revenues.
The availability of cheap
energy also allows inexpensive roads, bridges, pipelines, and schools to be built. ¶ As we move to
energy that requires more expensive inputs for extraction (such as the current $90+ barrel oil), these
benefits are lost. The cost of roads, bridges, and pipelines escalates. It is this loss of a subsidy fromcheap fossil fuels that
is significant part of what moves us toward financial collapse.¶ Renewable energy generally does not solve this
problem. In fact, it can exacerbate the problem, because the cost of its inputs tend to be high and
very “front-ended,” leading to a need for subsidies. What is really needed is a way to replace lost tax revenue,
and a way to bring down the high cost of new bridges and roads–that is a way to get back to the cost structure we had when oil (and
other fossil fuels) could be extracted cheaply.¶ The Way Resource Extraction Reaches Financial Limits¶ When
a company
decides to extract a resource such as oil, gold, or fresh water, it looks for the least expensive source
available. After many years of extraction, the least expensive sources become depleted, and the
company must move on to more expensive resources. It always looks like there are plenty of resources left; they
are just increasingly expensive to extract. Eventually an extraction limit is reached; this limit is a pricelimit.¶
As easy to extract resources become more depleted, it becomes necessary to invest more resources of every type in extraction (for
example, manpower, oil, natural gas, fresh water), in order to extract a similar amount of the resource. I have called this the
Investment Sinkhole problem. The
need to use greater resources in the process of resource extraction
leaves fewer resources available for other purposes. Prices adjust to reflect this out of balance. If there is no
substitute available for the resource that is reaching limits, the economy adjusts by contracting
to match the amount of resource that is available at an affordable price. Some economists might call the
situation “reduced demand at high price”. What the situation looks like, in terms most of us are used to using, is
recession or depression.
Even if it doesn’t affect the price oil dramatically, supply disruptions
independently trigger economic collapse.
Erwin ’12 [Sandra, editor of National Defense Magazine, “30% Cut in U.S. Oil Imports Would
Avert Future Catastrophe, Study Warns,” 11-1-12,
http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=577]
Unless the United States curtails its consumption of petroleum, these military greybeards caution, any
future crisis that
disrupts oil supplies could hamstring the nation’s economy and cause global instability. “We
have seen oil shocks before … But at today’s level of U.S. consumption, a sustained disruption
would be devastating – crippling our very freedom of movement,” said retired Army Gen. Paul Kern, chairman of the military
advisory board of CNA Corp., a government-funded think thank. In a report released Nov. 1, a group of 13 generals and admirals are
calling for "immediate, swift and aggressive action" over the next decade to reduce U.S. oil consumption by 30 percent. Of nearly 88
million barrels of oil consumed worldwide every day, the United States eats up the biggest share, with 20 million barrels. Slightly
more than half of the petroleum the United States consumes comes from foreign countries: Two-thirds from the Middle East, and
the rest from Canada and Mexico. “You could wake up tomorrow morning and hear that the Iranians sense an attack on their
nuclear power plants and preemptively take steps to shut off the flow of oil in the Gulf,” retired Marine Corps Gen. James T. Conway
says in a CNA news release. “The U.S. would likely view this as a threat to our economy, and we would take action. And there we are,
drawn into it.” Even
a small interruption of daily oil supply can have huge ripple effects, the study
though just 2 percent of U.S. oil supplies come from Libya, the military campaign
there this summer prompted the U.S. Department of Energy to release 30 million barrels of oil from
the Strategic Petroleum Reserve. A larger crisis could disrupt the entire fabric of the U.S.
economy, the CNA analysis concludes. If America reduces its current rate of oil consumption by 30 percent and diversifies its fuel
contends. Even
sources, the study says, the U.S. economy would be relatively insulated from such upheaval, even in the event of a complete
shutdown of a strategic chokepoint like the Strait of Hormuz, the international passageway for 33 percent of the world’s seaborne
oil shipments. The report, titled, “Ensuring America's Freedom of Movement: A National Security Imperative to Reduce U.S. Oil
Dependence,” was sponsored by the San Francisco-based Energy Foundation, a partnership of major donors interested in solving the
world's energy problems. CNA
analyzed the potential economic impact of a future oil disruption. Under a
U.S. would lose nearly $75 billion
worst-case scenario 30-day closure of the Strait of Hormuz, the analysis finds that the
in GDP. By cutting current levels of U.S. oil dependence by 30 percent, the impact would be nearly zero.
Economic decline causes war – studies prove
Royal, Department of Defense Cooperative threat reduction director, 2010
[Jedediah, Economic Integration, Economic Signaling and the Problem of Economic Crises, in
Economics of War and Peace: Economic, Legal and Political Perspectives, p.213-4, TAP]
Less intuitive is how periods of economic decline may increase the likelihood of external conflict. Political
science literature has contributed a moderate degree of attention to the impact of economic decline and the security and defence
behaviour of interdependent stales. Research in this vein has been considered at systemic, dyadic and national levels. Several
notable contributions follow. First, on the systemic level, Pollins (2008) advances Modelski and Thompson's (1996) work on
leadership cycle theory, finding that rhythms in
the global economy are associated with the rise and fall of
a pre-eminent power and the often bloody transition from one pre-eminent leader to the next.
As such, exogenous shocks such as economic crises could usher in a redistribution of relative
power (see also Gilpin, 1981) that leads to uncertainty about power balances, increasing the risk of
miscalculation (Fearon, 1995). Alternatively, even a relatively certain redistribution of power could lead to a permissive
environment for conflict as a rising power may seek to challenge a declining power (Werner, 1999). Separately, Pollins (1996) also
shows that global economic cycles combined with parallel leadership cycles impact the likelihood of conflict among major, medium
and small powers, although he suggests that the causes and connections between global economic conditions and security
conditions remain unknown. Second, on a dyadic level, Copeland's (1996, 2000) theory of trade expectations suggests that 'future
expectation of trade' is a significant variable in understanding economic conditions and security behaviour of states. He argues that
interdependent states are likely to gain pacific benefits from trade so long as they have an optimistic view of future trade relations.
However,
if the expectations of future trade decline, particularly for difficult to replace items such
as energy resources, the likelihood for conflict increases, as states will be inclined to use force to
gain access to those resources. Crises could potentially be the trigger for decreased trade expectations either on its own
or because it triggers protectionist moves by interdependent states.4 Third, others have considered the link between economic
decline and external armed conflict at a national level. Bloomberg and Hess (2002) find a strong correlation between internal conflict
and external conflict, particularly during periods of economic downturn. They write, The
linkages between internal and
external conflict and prosperity are strong and mutually reinforcing. Economic conflict tends to spawn
internal conflict, which in turn returns the favour. Moreover, the presence of a recession tends to amplify the extent to which
international and external conflicts self-reinforce each other (Bloomberg & Hess, 2002, p.89) Economic decline has also been linked
with an increase in the likelihood of terrorism (Blomberg, Hess, & Weerapana, 2004), which has the capacity to spill across borders
and lead to external tensions. Furthermore, crises generally reduce the popularity of a sitting government. ‘Diversionary
theory’ suggests that, when facing unpopularity arising from economic decline, sitting
governments have increased incentives to fabricate external military conflicts to create a 'rally around
the flag' effect. Wang (1996), DeRouen (1995), and Bloomberg, Hess, and Thacker (2006) find supporting evidence showing that
economic decline and use of force are at least indirectly correlated. Gelpi (1997), Miller (1999), and Kisangani and Pickering (2009)
suggest that the tendency towards diversionary tactics arc greater for democratic states than autocratic states, due to the fact that
democratic leaders are generally more susceptible to being removed from office due to lack of domestic support. DeRouen (2000)
has provided evidence showing that periods of weak economic performance in the United States, and thus weak Presidential
popularity, are statistically linked to an increase in the use of force. In summary, recent economic scholarship positively correlates
economic integration with an increase in the frequency of economic crises, whereas political
science scholarship links
economic decline with external conflict at systemic, dyadic and national levels.5 This implied connection between
integration, crises and armed conflict has not featured prominently in the economic-security debate and deserves more attention.
Relations Advantage
Advantage ( ): Relations
Relations with Venezuela are low but Maduro’s election makes a diplomatic
reset possible
Fabian 3/6 (Jordan Fabian is the political editor for ABC News-Univision. March 6, 2013 “Hugo
Chávez Death: Fixing the U.S.-Venezuela Relationship Won't Be Easy”
http://abcnews.go.com/ABC_Univision/Politics/hugo-chavez-death-fixing-us-venezuelarelationship-easy/story?id=18668275#.UeR7aT7wKq9)
The death of Venezuelan President Hugo Chávez removes one of the United States' foremost
geopolitical foes from Latin America, sparking hope among U.S. officials that the ensuing
changes could lead to improved relations in the region. But it won't be easy. The United States and
Venezuela have shared a rancorous relationship since Chávez was first elected in 1998. Chávez angered multiple U.S. presidents by
establishing ties to regimes in countries like Cuba and Iran that are hostile to the United States, and for fomenting anti-U.S.
sentiment in other nations in the Western Hemisphere. And the Chávez regime repeatedly accused the U.S. of plotting to overthrow
his rulership, fueling distrust between the two countries. See Also: 10 Outrageous Quotes by Hugo Chavez Relations have become so
frayed that the U.S. and Venezuela have not exchanged ambassadors since 2010. Those tensions were evident even on Tuesday, the
final day of Chávez's life. Venezuela expelled two U.S. embassy officials from the country on allegations they tried to destabilize the
country. Upon their ejection, Venezuelan Vice President Nicolás Maduro even suggested that U.S. interests were behind the cancer
that eventually claimed Chávez's life. But now that Chávez has passed away, elected officials see an opening to reestablish ties with
Venezuela. See Photos of Hugo Chavez Through the Years "Hugo
Chávez ruled Venezuela with an iron hand and
his passing has left a political void that we hope will be filled peacefully and through a
constitutional and democratic process," Senate Foreign Relation Committee Chairman Bob Menendez (D-N.J.) said in a
statement. "With free and fair elections, Venezuela can begin to restore its once robust democracy and ensure
respect for the human, political and civil rights of its people." "It is my sincere hope that Venezuela's leaders will seek to
rebuild our once strong friendship based on shared democratic and free enterprise principles,"
added Sen. Marco Rubio (R-Fla.), a member of the Senate Foreign Relations Committee. The path, however, could be difficult.
Venezuelan officials have said a new election will be called within 30 days. That contest will likely pit Maduro against Henrique
Capriles Radonski, an opposition leader who touts free market policies and is perceived as friendlier to the U.S. But it's not clear that
Capriles will fare better than he did in October, when he was defeated by Chávez. The former president sparked a passionate and
loyal following among Venezuela's poor and lower-classes that's morphed into a strong social movement, known as chavismo.
Maduro, who will lead the country on an interim basis and is considered the front runner, has pledged to continue
Chávez's work. But experts are divided on whether chavismo can outlive its charismatic
namesake. Some foreign policy observers believe that, even if Maduro wins, ties could improve between the
U.S. and Venezuela. "I think it is an opportunity for us to step into a new relationship with
Venezuela," Former U.N. ambassador Bill Richardson, who met with Chávez in 2008, said on MSNBC. "The opposition candidate
Capriles is pro-U.S. The vice president Maduro is not pro-U.S., but is, I think, going to be more pragmatic than Chávez." Still, the U.S.
will have to work to improve its image and standing in Venezuela following nearly a decade-and-a-half of anti-U.S. sentiment being
imbued into the country's government and political culture. Dan Restrepo, a former senior Latin American affairs advisor in the
Obama administration, told Univision that Maduro's decision to expel U.S. embassy officials on the day of Chávez's death "doesn't
bode particularly well that the current Venezuelan government is particularly interested in a different relationship with the United
States." "Now
you're going to have a different political dynamic in Venezuela. The system without
Chávez is going to be different. Nobody knows exactly how different and what direction that's going to go," he added.
"There is a change coming and it could take a bunch of different forms." Eric Farnsworth, vice president of the Council of the
Americas and Americas Society, said that it's in Maduro's political self-interest to maintain Venezuela's current tack against the
United States. "My strong belief is that Maduro is going to keep relations with the U.S. in the deep freeze because he has to
establish his own legitimacy," he said in an interview with ABC/Univision. "He doesn't have his own base of support. He's got to keep
tensions high with the United States." Tried and true tactic." In a statement, President Barack Obama said his administration would
seek to build a "constructive relationship with the Venezuelan government" moving forward, adding that the U.S. supports policies
that "promote democratic principles, the rule of law, and respect for human rights." That's a long road, given how deep the divide
runs. Venezuela has some of the richest oil and natural gas reserves in the world and Chavez spread that wealth to many countries in
Latin America and the Caribbean enabling him to curry influence. For example, in 2001 the Chávez government helped bail out
Argentina, a regional power, from a financial crisis, a move that helped him gain popularity there. He has also built ties with left-wing
governments Bolivia and Ecuador and helped financially backstop the Castro government in Cuba. During his presidency, Chávez
earned the scorn of U.S. officials for cracking down on his political opposition and hostile media outlets. He also had a knack for
spinning conspiracy theories against the American government. For example, in 2002 he accused the U.S. of being involved in a
failed coup attempt. Chávez also made overtures to Cuba's Fidel Castro and to Iran's Mahmoud Ahmadinejad, who lead
governments that are also hostile toward the United States. A Univision documentary that aired last year revealed that a Venezuelan
consulate official in Miami was involved in plotting cyber attacks on the U.S. that allegedly involved agents from Iran and Cuba. The
U.S. government expelled the Venezuelan official, Livia Acosta Noguera, from the country and Venezuela eventually shuttered its
Miami consulate. But
on a key economic front, Venezuela's government has taken a pragmatic
approach to the United States. The South American nation remains one of the top contributors to the U.S.'s oil imports,
ranking in the top four last year, according to the U.S. Energy Information Administration. "Oil is their political weapon,
but with the U.S., they never used it," Richardson said. Eric Farnsworth added that the Venezuelan people have not
traditionally been anti-American throughout their history and it may be possible for a leader to eventually bridge the gap between
the two nations. And it is uncertain whether Venezuela can sustain its efforts to enrich its neighbors with its oil wealth. The
country has a gaping budget deficit, which was exacerbated by the millions of dollars in foreign aid doled out by
Chávez. That has done damage to the nation's domestic economy. But regardless of what happens next, any healing process will will
take time. See Photos of Venezuelans Mourning the Death of Hugo Chavez "This
isn't going to change one day to the
next, you're going to build out a constructive relationship piece by piece starting with small
things if you have a willing partner in Venezuela," said Restrepo.
Scenario One – Hegemony
Current relations undermine US’s diplomatic projection—fights with Venezuela
wreck credibility in Latin America
Griffin 4/3 (By JOHN GRIFFIN April 3, 2013 John A. Griffin III ’16 is a Crimson editorial writer,
“Engage with Venezuela” http://www.thecrimson.com/article/2013/4/3/Harvard-VenezuelaChavez-death/)
When Venezuelan President Hugo Chávez died in early February, his country was thrown into a period of national mourning as the
political equilibrium in Latin America hung in the balance. As
Venezuela chooses its next president, Washington
should seek to reverse the current trend of acrid relations between the two nations and engage
with the Venezuelan government in Caracas toward stability and prosperity in the Western hemisphere. While it
might seem likely that relations between the United States and Venezuela would naturally
improve after the death of the combative Chávez, the opposite now seems more likely. Before
passing away, Chávez had handpicked a successor in Nicholas Maduro, who has assumed power in the interim before the
presidential election in April. As Chávez’s handpicked successor, Maduro has already continued with his mentor’s trend of using antiAmerican rhetoric to bring popularity to his government, even declaring that American agents may have infected Chávez with the
cancer that killed him. While
Washington has officially declared that it is committed to a more
functional relationship with Venezuela, its actions have not been consistent with this idea: The
United States offered no official condolences for Chávez’s death, and both nations have started expelling diplomats
from the other. Neither nation, it seems, is steering toward more congenial relations with the other. Admittedly, the United
States has good reason to be less than enthused about more Chávez-style governance in Venezuela. Calling himself a 21st-century
socialist, Chávez nationalized the lucrative oil industry, developed strong trade and diplomatic relationships with Iran and Cuba,
repeatedly decried the United States as an imperialist force, and cooperated with the Iranians in developing nuclear technology.
Engaging in petty diplomat-expulsion spats, however, is no way to deal with any of these problems, and it in fact only strengthens
the Chavistas’ hold on their country. The
diplomatic and economic opportunities that would stem from
greater engagement would far outweigh the meager benefits reaped from our current policies.
Diplomatically, positive engagement with Venezuela would be a major step toward building American
credibility in the world at large, especially in Latin America. Chávez (along with his friends the Castros in Cuba)
was able to bolster regional support for his regime by pointing out the United States’ attempts to forcibly intervene in Venezuelan
politics. Soon, a number of populist governments in Latin America had rallied around Chávez and his anti-American policies. In 2004,
Bolivia, Ecuador, Nicaragua, and three Caribbean nations joined with Venezuela and Cuba to form the Bolivarian Alliance for the
Peoples of our America, an organization in direct opposition to the Free Trade Area in the Americas proposed (but never realized) by
the Bush administration. Chávez galvanized these nations—many of whom have experienced American interventionist tactics—by
vilifying America as a common, imperial enemy. Unfortunately for the United States, its general strategy regarding Venezuela has
often strengthened Chávez’s position. Every
time Washington chastises Venezuela for opposing American
interests or attempts to bring sanctions against the Latin American country, the leader in
Caracas (whether it be Chávez or Maduro) simply gains more evidence toward his claim that Washington
is a neo-colonialist meddler. This weakens the United States’ diplomatic position, while
simultaneously strengthening Venezuela’s. If Washington wants Latin America to stop its current trend of electing
leftist, Chavista governments, its first step should be to adopt a less astringent tone in dealing with
Venezuela. Caracas will be unable to paint Washington as an aggressor, and Washington will in
turn gain a better image in Latin America. Beyond leading to more amicable, cooperative relationships with Latin
American nations, engagement with Venezuela would also be economically advisable. With the world’s largest oil reserves,
countless other valuable resources, and stunning natural beauty to attract scores of tourists, Venezuela has quite a bit to offer
economically. Even now, America can see the possible benefits of economic engagement with Caracas by looking at one of the few
extant cases of such cooperation: Each year, thousands of needy Americans are able to keep their homes heated because of the
cooperation between Venezuela and a Boston-area oil company. Engagement with Venezuela would also lead to stronger economic
cooperation with the entirety of Latin America. It was mostly through Venezuela’s efforts that the United States was unable to
create a “Free Trade Area of the Americas,” an endeavor that would have eliminated most trade barriers among participant nations,
thereby leading to more lucrative trade. In a world where the United States and Venezuela were to enjoy normalized relations, all
nations involved would benefit from such agreements.
For both diplomatic and economic reasons, then,
positive engagement is the best course of action for the United States. As it stands, the negative
relationship between the countries has created an atmosphere of animosity in the hemisphere, hindering dialogue and making
economic cooperation nearly impossible. While there is much for which the Venezuelan government can rightly be criticized—
authoritarian rule, abuse of human rights, lack of market-friendly policies—nothing that the United States is doing to counter those
drawbacks is having any effect. The
United States should stop playing “tough guy” with Venezuela, bite
the bullet, and work toward stability and prosperity for the entire hemisphere. We aren’t catching any
flies with our vinegar—it’s high time we started trying to catch them with honey.
Latin American influence determines the direction and effectiveness of overall
US hegemony.
Barshefsky et al ‘8 (Charlene Barshefsky, James T. Hill, and Shannon K. O’Neil, Council on
Foreign Relations, http://www.cfr.org/mexico/us-latin-america-relations/p16279, “U.S.-Latin
America Relations: A New Direction for a New Reality”, May 2008)
For over 150 years, the Monroe Doctrine provided the guiding principles for U.S. policy toward
Latin America, asserting U.S. primacy in the foreign affairs of the region. Over the past two
decades, those principles have become increasingly obsolete. Washington’s basic policy
framework, however, has not changed sufficiently to reflect the new reality. U.S. policy can no longer be
based on the assumption that the United States is the most important outside actor in Latin America. If there was an era of
U.S. hegemony in Latin America, it is over. In most respects, this shift reflects positive developments within Latin
America itself. The region has undergone a historic transformation politically, with military-authoritarian rule giving way to vibrant, if
imperfect, democracy in almost every nation. Economically, Latin America is
now one of the more open
market regions in the world and a crucial global provider of energy, minerals, and food. None of
this is to say that Latin America has entirely overcome its history of political tumult or done enough to alleviate poverty, improve
competi- tiveness and human capital, or correct extreme inequality. But it does mean that
U.S. policymakers must
change the way they think about the region. Latin America is not Washington’s to lose; nor is it Washing- ton’s to
save. Latin America’s fate is largely in Latin America’s hands. A failure to acknowledge how Latin Americans define their own
challenges has created new political strains in recent years. It has also caused U.S. policymakers to overlook the ways in which the
United States can meaningfully contribute to Latin America’s progress—fur- thering the United States’ own interests in the process.
By truly beginning to engage Latin America on its own terms, Washington can mark the start of a
new era in U.S.-Latin America relations. It is a cliche´ to bemoan Americans’ lack of interest in
Latin America. Still, this disinterest remains vexing given the region’s proximity to the United States and the remarkable
interconnectedness of U.S. and Latin American economies and societies. In recent years, as Washington’s attention has been
focused on crises elsewhere in the world, the connec- tions have only deepened. From 1996 to 2006, total U.S. merchandise trade
with Latin America grew by 139 percent, compared to 96 percent 1 for Asia and 95 percent for the European Union (EU). In 2006,
the United States exported $223 billion worth of goods to Latin American 2 consumers (compared with $55 billion to China). Latin
America is the United States’ most important external source of oil, accounting for nearly 30 percent of imports (compared with 20
percent from the Middle East), as well as its main source of illegal narcotics. And as a result of both conditions in Latin America and
demand for workers in the United States, migration from the region has accelerated. Latinos
now account for 15
percent of the U.S. population, nearly 50 percent of recent U.S. population growth, and a
growing portion of the elector- ate—allowing Latino voters increasingly to shape the U.S.
political agenda. Cross-border community and family ties, as well as the Spanish- language media, mean that Latin America
remains part of many Latinos’ daily lives and concerns. For all of these reasons, Latin America’s well- being directly affects the United
States. But
even with such integration, the opening of Latin American economies and the
globalization of Latin American societies means that U.S. policy is now but one of several
competing factors capable of influencing the region. Latin American states, especially the larger ones, do not
consider their interests to be primarily determined by diplomatic, trade, or security ties with the United States. Brazil has made
inroads into groupings such as the South-South Dialogue with South Africa and India and the Group of 20 (G20), while countries such
as Chile and Mexico have struck trade and investment agreements with the EU and a number of Asian countries, China most
prominently. The economic and political diversification of Latin America is reflected in Latin American attitudes as well. Esteem
for U.S. global and hemispheric leadership is at its lowest level in the region in recent memory. In
2002, according to the Pew Global Attitudes Project, 82 percent of Venezuelans, 34 percent of Argentineans, and 51 percent of
Bolivians had a favorable view of the United States; those numbers had fallen to 56, 16, and 43 percent by 2007. The percentage of
Latin Americans who approved of U.S. ideas on democracy decreased from 3 45 percent in 2002 to 29 percent in 2007. This general
distrust of the United States has allowed Presidents Hugo Cha´vez of Venezuela, Evo Morales of Bolivia, Rafael Correa of Ecuador,
and even Felipe Caldero´n of Mexico to bolster their domestic popular support by criticizing Washington. Most Latin Americans still
prefer a mutually respectful and productive relationship with the United States, but the factors driving Latin America’s desire for
greater independence are likely to shape the region’s posture toward the United States well into the future.
US hegemony prevents world wars and deescalates all conflict.
Brooks, Ikenberry, and Wohlforth ’13 (Stephen, Associate Professor of Government at Dartmouth College, John
Ikenberry is the Albert G. Milbank Professor of Politics and International Affairs at Princeton University in the Department of Politics
and the Woodrow Wilson School of Public and International Affairs, William C. Wohlforth is the Daniel Webster Professor in the
Department of Government at Dartmouth College “Don’t Come Home America: The Case Against Retrenchment,” International
Security, Vol. 37, No. 3 (Winter 2012/13), pp. 7–51), accessed 1/18/13,WYO/JF
A core premise of deep
engagement is that it prevents the emergence of a far more dangerous global
security environment. For one thing, as noted above, the United States’ overseas presence gives it the
leverage to restrain partners from taking provocative action. Perhaps more important, its core alliance
commitments also deter states with aspirations to regional hegemony from contemplating
expansion and make its partners more secure, reducing their incentive to adopt solutions to their
security problems that threaten others and thus stoke security dilemmas. The contention that engaged
U.S. power dampens the baleful effects of anarchy is consistent with influential variants of realist theory. Indeed, arguably the
scariest portrayal of the war-prone world that would emerge absent the “American Pacifier” is provided in the works of John
Mearsheimer, who forecasts dangerous multipolar regions replete with security competition,
arms races, nuclear proliferation and associated preventive war temptations, regional rivalries,
and even runs at regional hegemony and full-scale great power war. 72 How do retrenchment
advocates, the bulk of whom are realists, discount this benefit? Their arguments are complicated, but two
capture most of the variation: (1) U.S. security guarantees are not necessary to prevent
dangerous rivalries and conflict in Eurasia; or (2) prevention of rivalry and conflict in Eurasia is not
a U.S. interest. Each response is connected to a different theory or set of theories, which makes sense given that the whole
debate hinges on a complex future counterfactual (what would happen to Eurasia’s security setting if the United States truly
disengaged?). Although a certain answer is impossible, each of these responses is nonetheless a weaker argument for retrenchment
than advocates acknowledge. The first response flows from defensive realism as well as other international relations theories that
discount the conflict-generating potential of anarchy under contemporary conditions. 73 Defensive
realists maintain that
the high expected costs of territorial conquest, defense dominance, and an array of policies and
practices that can be used credibly to signal benign intent, mean that Eurasia’s major states
could manage regional multipolarity peacefully without the American pacifier. Retrenchment would be
a bet on this scholarship, particularly in regions where the kinds of stabilizers that nonrealist theories point to—such as democratic
governance or dense institutional linkages—are either absent or weakly present. There are three other major bodies of scholarship,
however, that might give decisionmakers pause before making this bet. First is regional expertise. Needless to
say, there is
no consensus on the net security effects of U.S. withdrawal. Regarding each region, there are optimists and
pessimists. Few experts expect a return of intense great power competition in a post-American Europe, but
many doubt European governments will pay the political costs of increased EU defense
cooperation and the budgetary costs of increasing military outlays. 74 The result might be a
Europe that is incapable of securing itself from various threats that could be destabilizing within
the region and beyond (e.g., a regional conflict akin to the 1990s Balkan wars), lacks capacity for global security missions in
which U.S. leaders might want European participation, and is vulnerable to the influence of outside rising powers. What about the
other parts of Eurasia where the United States has a substantial military presence? Regarding
the Middle East, the
balance begins to swing toward pessimists concerned that states currently backed by
Washington— notably Israel, Egypt, and Saudi Arabia—might take actions upon U.S.
retrenchment that would intensify security dilemmas. And concerning East Asia, pessimism
regarding the region’s prospects without the American pacifier is pronounced. Arguably the
principal concern expressed by area experts is that Japan and South Korea are likely to obtain a
nuclear capacity and increase their military commitments, which could stoke a destabilizing
reaction from China. It is notable that during the Cold War, both South Korea and Taiwan moved
to obtain a nuclear weapons capacity and were only constrained from doing so by a still-
engaged United States. 75 The second body of scholarship casting doubt on the bet on defensive realism’s sanguine
portrayal is all of the research that undermines its conception of state preferences. Defensive realism’s optimism about what would
happen if the United States retrenched is very much dependent on its particular—and highly restrictive—assumption about state
preferences; once we relax this assumption, then much of its basis for optimism vanishes. Specifically, the prediction of postAmerican tranquility throughout Eurasia rests on the assumption that security is the only relevant state preference, with security
defined narrowly in terms of protection from violent external attacks on the homeland. Under that assumption, the security
problem is largely solved as soon as offense and defense are clearly distinguishable, and offense is extremely expensive relative to
defense. Burgeoning
research across the social and other sciences, however, undermines that core
assumption: states have preferences not only for security but also for prestige, status, and other
aims, and they engage in trade-offs among the various objectives. 76 In addition, they define security not
just in terms of territorial protection but in view of many and varied milieu goals. It follows that even states that are
relatively secure may nevertheless engage in highly competitive behavior. Empirical studies
show that this is indeed sometimes the case. 77 In sum, a bet on a benign post retrenchment Eurasia is a bet that
leaders of major countries will never allow these nonsecurity preferences to influence their strategic choices. To the degree
that these bodies of scholarly knowledge have predictive leverage, U.S. retrenchment would
result in a significant deterioration in the security environment in at least some of the world’s
key regions. We have already mentioned the third, even more alarming body of scholarship. Offensive realism predicts that
the withdrawal of the American pacifier will yield either a competitive regional multipolarity
complete with associated insecurity, arms racing, crisis instability, nuclear proliferation, and the like, or
bids for regional hegemony, which may be beyond the capacity of local great powers to contain
(and which in any case would generate intensely competitive behavior, possibly including regional great power war). Hence it is
unsurprising that retrenchment advocates are prone to focus on the second argument noted above: that avoiding wars and security
dilemmas in the world’s core regions is not a U.S. national interest. Few
doubt that the United States could survive the
return of insecurity and conflict among Eurasian powers, but at what cost? Much of the work in this area has focused
on the economic externalities of a renewed threat of insecurity and war, which we discuss below. Focusing on the pure security
ramifications, there are two main reasons why decision makers may be rationally reluctant to run the retrenchment experiment.
First, overall higher levels of conflict make the world a more dangerous place. Were Eurasia to return to
higher levels of interstate military competition, one would see overall higher levels of military spending and innovation and a higher
likelihood of competitive regional proxy wars and arming of client states—all of which would be concerning, in part because it would
promote a faster diffusion of military power away from the United States. Greater regional
insecurity could well feed
proliferation cascades, as states such as Egypt, Japan, South Korea, Taiwan, and Saudi Arabia all might
choose to create nuclear forces. 78 It is unlikely that proliferation decisions by any of these actors would be the end of
the game: they would likely generate pressure locally for more proliferation. Following Kenneth Waltz, many retrenchment
advocates are proliferation optimists, assuming that nuclear deterrence solves the security problem. 79 Usually carried out in dyadic
terms, the debate over the stability of proliferation changes as the numbers go up. Proliferation optimism rests on assumptions of
rationality and narrow security preferences. In social science, however, such assumptions are inevitably probabilistic. Optimists
assume that most states are led by rational leaders, most will overcome organizational problems and resist the temptation to
preempt before feared neighbors nuclearize, and most pursue only security and are risk averse. Confidence in such probabilistic
assumptions declines if the world were to move from nine to twenty, thirty, or forty nuclear states. In addition, many of the other
dangers noted by analysts who are concerned about the destabilizing effects of nuclear proliferation—including the risk of accidents
and the prospects that some new nuclear powers will not have truly survivable forces—seem prone to go up as the number of
nuclear powers grows. 80 Moreover, the risk of “unforeseen crisis dynamics” that could spin out of control is
also higher as the number of nuclear powers increases. Finally, add to these concerns the enhanced danger of nuclear leakage, and a
world with overall higher levels of security competition becomes yet more worrisome. The argument that maintaining Eurasian
peace is not a U.S. interest faces a second problem. On widely accepted realist assumptions, acknowledging
that U.S.
engagement preserves peace dramatically narrows the difference between retrenchment and
deep engagement. For many supporters of retrenchment, the optimal strategy for a power such as the
United States, which has attained regional hegemony and is separated from other great powers by oceans, is
offshore balancing: stay over the horizon and “pass the buck” to local powers to do the
dangerous work of counterbalancing any local rising power. The United States should commit to onshore
balancing only when local balancing is likely to fail and a great power appears to be a credible contender for regional hegemony, as
in the cases of Germany, Japan, and the Soviet Union in the midtwentieth century. The
problem is that China’s rise
puts the possibility of its attaining regional hegemony on the table, at least in the medium to
long term. As Mearsheimer notes, “The United States will have to play a key role in countering China,
because its Asian neighbors are not strong enough to do it by themselves.” 81 Therefore, unless China’s
rise stalls, “the United States is likely to act toward China similar to the way it behaved toward the Soviet Union during the Cold
War.” 82 It follows that
the United States should take no action that would compromise its
capacity to move to onshore balancing in the future. It will need to maintain key alliance
relationships in Asia as well as the formidably expensive military capacity to intervene there.
The implication is to get out of Iraq and Afghanistan, reduce the presence in Europe, and pivot to Asia—
just what the United States is doing. 83 In sum, the argument that U.S. security commitments are
unnecessary for peace is countered by a lot of scholarship, including highly influential realist
scholarship. In addition, the argument that Eurasian peace is unnecessary for U.S. security is weakened by the potential for a
large number of nasty security consequences as well as the need to retain a latent onshore balancing capacity that dramatically
reduces the savings retrenchment might bring. Moreover, switching
between offshore and onshore balancing
could well be difficult. Bringing together the thrust of many of the arguments discussed so far underlines the degree to
which the case for retrenchment misses the underlying logic of the deep engagement strategy. By supplying reassurance,
deterrence, and active management, the United States lowers security competition in the world’s key
regions, thereby preventing the emergence of a hothouse atmosphere for growing new military capabilities.
Alliance ties dissuade partners from ramping up and also provide leverage to prevent military transfers to potential
rivals. On top of all this, the United States’ formidable military machine may deter entry by potential
rivals. Current great power military expenditures as a percentage of GDP are at historical lows, and thus far other major powers
have shied away from seeking to match top-end U.S. military capabilities. In addition, they have so far been careful to avoid
attracting the “focused enmity” of the United States. 84 All of the world’s most modern militaries are U.S. allies (America’s alliance
system of more than sixty countries now accounts for some 80 percent of global military spending), and the
gap between the
U.S. military capability and that of potential rivals is by many measures growing rather than
shrinking. 85
Scenario Two – NarcoTerror
US-Venezuela relation key to prevent authoritarianism in Latin America and
global narcoterrorism.
Pagano ‘13 (James, contributing writer to the Truman Doctrine, “Moving Venezuela to the
Center,” 3-18-13, http://trumanproject.org/doctrine-blog/moving-venezuela-to-the-center/)
What should the U.S. role be? It must work with its Latin American allies in the region, Chile, Brazil, Colombia and
Mexico to gently pressure Maduro into making the types of institutional and economic changes
necessary for Venezuela to prosper. Failure to do so could lead to the reemergence of
authoritarianism in Latin America, instability in world oil markets and serious regional security
repercussions. Chavez was infamous for his anti-American tirades. George W. Bush’s poor global standing gave Chavez an easy
target. With a more positive global image, the most important step President Obama can take is to normalize relations with Cuba. As
Venezuela’s closest ally, Cuba has remained a persistent problem in U.S.-Latin American relations. By normalizing relations, Obama
would take a huge step in reducing anti-Americanism in Venezuela. Simultaneously, Obama would ingratiate himself to the rest of
the region by ending the dated embargo. Perhaps most importantly, eliminating this issue would give Venezuela’s next president the
political cover necessary to mend relations with the United States. The U.S. should push for economic reform with the help of Brazil
which seeks a greater role in international and regional politics. Former Brazilian President Lula da Silva has close ties to Venezuela,
and touting the recent successes of his center-left government in Brazil could help persuade Maduro to moderate his government.
Brazil has made huge societal gains without suffering the kind of economic setbacks seen in Venezuela. Friendly cajoling, along with
the promise of closer economic ties could help lead Maduro onto a path of economic reform necessary to extend certain “Chavista”
social programs. Colombia, Brazil and the U.S. also have a shared interest in improving Venezuelan security. Under Chavez,
Venezuela became on the most violent countries in Latin America, as drug related crimes skyrocketed. Violence is the number one
concern of Venezuelans, and significant reductions would be a major political victory for whoever is in power. Brazil and Colombia
together should pressure Venezuela to accept sorely needed D.E.A assistance with the tacit acceptance of modest political reforms,
most importantly freer press. The
death of Chavez is a critical juncture in U.S.-Latin American relations
and it is important the United States not miss this opportunity. Having a stable trustworthy
Venezuela would allow the United States to continue to draw down operations in the evervolatile Middle East, fight narcotrafficking and expand trade. Careful, well thought-out
overtures and policy changes will help quell lingering anti-Americanism while also improving
regional stability. Ending the Cuban embargo would provide absolute economic gain for all parties, while providing cover for
Maduro to thaw relations with the United States and receive aid to stop uncontrollable violence. Strategic engagement
with regional allies could help spur the economic and institutional reforms necessary for
Venezuela to prosper moving forward. The situation in Venezuela could be potentially
destabilizing to the region. The United must act deliberately to make Hugo Chavez’s passing an unmitigated positive
development.
Maduro will turn to the narcotics in an attempt to maintain stability
Shinkman 13 (Paul D. Shinkman, National Security reporter for USN, 24 April 2013, “IranianSponsored Narco-Terrorism in Venezuela: How Will Maduro Respond?” US News,
http://www.usnews.com/news/articles/2013/04/24/iranian-sponsored-narco-terrorism-invenezuela-how-will-maduro-respond)kw
At a conference earlier this month, top U.S. military officers identified what they thought would be the top threats to the U.S. as it
draws down from protracted wars in Iraq and Afghanistan. Gen. James Amos, commandant of the Marine Corps, was unequivocal
about a largely unreported danger: "Narco-terrorism
just on our south border: [it is] yet to be seen just
how that is going to play out in our own nation, but it is an issue and it is something that our
nation is going to have to deal with." "Colombia is doing particularly well, but there is an insurgency growing," Amos
continued. "They have been fighting it, probably the greatest success story in this part of the world." The commandant's remarks
came a week before the April 14 election where Venezuelans chose a successor to the wildly popular and charismatic Hugo Chavez,
who died March 5. Amos indicated the outcome of this election would define much of future relations between the U.S. and
Venezuela, located on a continent that has rarely appeared on America's foreign policy radar in the last decade. Experts, analysts
and pundits could not have predicted the election outcome: The establishment's Nicolas Maduro beat reformer Henrique Capriles by
a margin of roughly 1 percent. Chavez's
hand-picked successor inherited the presidency, but he would
not enjoy a broad public mandate to get a teetering Venezuela back on track. The situation in
the South American nation remains dire amid skyrocketing inflation, largely due to Chavez's
efforts to nationalize private industry and increase social benefits. [PHOTOS: Venezuela Mourns Hugo
Chavez] Maduro's immediate attention after claiming victory was drawn to remedying widespread
blackouts and food shortages. One expert on the region says the new leader may need to tap
into a shadow world of transnational crime to maintain the stability his countrymen expect.
"Venezuela is a really nice bar, and anybody can go in there and pick up anybody else," says Doug Farah, an expert on
narco-terrorism and Latin American crime. He compares the country to the kind of establishment
where nefarious actors can find solutions to a problem. Anti-American groups can find freelance
cyber terrorists, for example, or potential drug runners can make connections with the FARC,
the Colombian guerilla organization, he says. "Sometimes it creates a long-term relationship, and sometimes it creates
a one-night stand," says Farah, a former Washington Post investigative reporter who is now a senior fellow at the Virginia-based
International Assessment and Strategy Center. [BROWSE: Political Cartoons on Iran] Under Chavez, Venezuela also created strong
ties with Cuba, which for decades has navigated treacherous financial waters and desperate economic straits, all while dodging U.S.
influence. But the help Venezuela receives is not limited to its own hemisphere.
Farah produced a research paper for
the U.S. Army War College in August 2012 about the "growing alliance" between statesponsored Iranian agents and other anti-American groups in Latin America, including the
governments of Venezuela and Cuba. This alliance with Iran uses established drug trade routes
from countries in South and Central America to penetrate North American borders, all under a
banner of mutual malevolence toward the U.S. The results of this access are largely secret, though security
experts who spoke with U.S. News believe the attempted assassination of the Saudi Arabian
ambassador in Washington, D.C.'s Georgetown neighborhood was carried out by Iranian
intelligence operatives.
Narco-Terrorism fueled by FARC causes WMD use in the Americas
NTA 8 (National Terror Alert, “U.S. Officials Worry Terrorists Could Align With Drug Cartels,” 109, http://www.nationalterroralert.com/2008/10/09/us-officials-worry-terrorists-could-alignwith-drug-cartels/)
There is real danger that Islamic extremist groups such as al-Qaeda and Hezbollah could form
alliances with wealthy and powerful Latin American drug lords to launch new terrorist attacks,
U.S. officials said Wednesday. Extremist group operatives have already been identified in several Latin
American countries, mostly involved in fundraising and finding logistical support. But Charles Allen, chief of intelligence
analysis at the Homeland Security Department, said they could use well-established smuggling routes and drug
profits to bring people or even weapons of mass destruction to the U.S. “The presence of these
people in the region leaves open the possibility that they will attempt to attack the United
States,” said Allen, a veteran CIA analyst. “The threats in this hemisphere are real. We cannot ignore
them.” Much as the Taliban tapped Afghanistan’s heroin for money, U.S. officials say the vast profits available
from Latin American cocaine could provide al-Qaida and others with a ready source of income.
The rebel group known as the Revolutionary Armed Forces of Colombia, or FARC, has long used drug money to pay
for weapons, supplies and operations — and is also designated as a terrorist organization by the U.S. “We’ve got a
hybrid that has developed right before our eyes,” Braun said. Latin America’s drug kingpins already have wellestablished methods of smuggling, laundering money, obtaining false documents, providing safe
havens and obtaining illicit weapons, all of which would be attractive to terrorists who are
facing new pressures in the Middle East and elsewhere.
Narco-terror will lead to nuclear proliferation—terrorists and rogue states use
drug profits to fund efforts
Farah ‘3 (Joseph Farah is a journalist who has been developing sources around the world for
the last 25 years. 07/23/2003 at 1:00 AM “NARCO-TERROR FUELING
FUTURE NUCLEAR TERROR?” http://www.wnd.com/2003/07/19867/)
Narco-terrorism costs more lives and more money than the Islamo-terror sponsored by people like Osama bin Laden and
Saddam Hussein, say Western intelligence and law-enforcement sources. But it also provides the money for those
terrorists and increasingly rogue regimes like North Korea hell-bent on developing and using
weapons of mass destruction. While the American public hasn’t been paying much attention lately to the world war
against illicit drugs, it is a conflict now decades long. It is waged in the Third World and even more so
in the streets of U.S. cities. More Americans lose their lives, health or livelihood under attacks of
the drug trade than in the streets of Baghdad or in the Hindu Kush mountains of Afghanistan.
Official figures put the U.S. 2000 death toll due to drug use at 19,698, an increase from 16,926 in
1999 (16 percent more). Drug-related emergency episodes monitored between January and June 2002 put the number of
victims involved in drug episodes at 308,558 cases. Annual damage to the U.S. economy as a result of drug
abuses in 2002 was $169.7 billion. The office of National Drug Control Policy has stated $36 billion was spent on cocaine
and $10 billion on heroin alone. These numbers relate to the import of 260 metric tons of cocaine and 13.3 metric tons of heroin. By
comparison, U.S. estimates of reconstructing Iraq are at annual cost of at least $52 billion. It is important to note that those alarming
figures do not have the same psychological impact on the American public as figures related to terrorism such as the Sept. 11
massacre. Statistics of the Substance Abuse Mental Health Service Administration for 2001 show 15.9 million drug users during the
months of the survey were between 12 and 24 years old. Not many Americans are aware the
State Department and the
Department of Justice currently are trying to bring to justice a number of Mexican drug barons.
The story of the Arellano Felix brothers is just one illustration of the problem. The U.S. Attorney General’s office is preparing charges
of racketeering and trafficking against the brothers and 11 other individuals from the Tijuana area. The Arellano Felix organization is
allegedly behind more than 100 drug-related murders in Mexico and the U.S. As the governments of the U.S. and Mexico are
cooperating in the Arellano case, the war goes on with little public coverage. “The reality is that you learn more on the war against
drugs from Hollywood than from the government or media sources,” said a Drug Enforcement Administration agent talking to G2B.
Observers of U.S. policies, especially those looking at the U.S. from the outside, wonder why the U.S. is ready to fight to protect the
integrity of Kuwait, to destroy the Taliban or to topple the Saddam tyranny, while at the same time not having the same zeal to fight
The overall drug damage is mindboggling. The facts, many argue, should alarm American lawmakers no less than the danger of a
nuclear North Korea or the shaky peace process in the Middle East. Russia, with its own tough guerrilla and
a clear and present danger threatening to maim and ruin more and more Americans.
anti-terror campaign, especially in the northern Caucasus, uses the military on a routine basis to fight drug growing and trade.
Reviewing the Russian scene reveals officials call the threat by its true name – narco-terrorism. Moscow clearly does not separate
between the two, directly connecting, within and around her borders, narco-terrorism to Islamic militant terrorism.
Analysts
believe the drug threat emanating from Central and South America requires the U.S. to treat the
matter with at least the same decisiveness as that of the Russians. U.N. publications and follow-ups based
on the 1961 Vienna Convention on illicit drugs indicate a steady growth in the production and trafficking of cocaine. The primary
market for cocaine and other drugs is North America. However, U.N. efforts including many Security Council resolutions on narcotics
are regarded as a dismal failure. Other reports reveal U.S. efforts in the battle to destroy the “narco flagship” in Colombia do not
achieve appropriate results, even when some experts are claiming a 30 percent decline in export. For nearly 20 years, the U.S. has
been involved with the Colombia Plan, allocating over $1 billion a year in the last two years alone. These funds go mainly to
strengthen the national police and army of Colombia. The plan is designated to stop drug growing and trade, not falling, however,
under the policy of war against terrorism. It includes questionable programs like aerial herbicide spraying with chemicals such as
Roundup Ultra, manufactured by Monsanto of St. Louis, which during the Vietnam War produced the infamous Agent Orange. The
plan included some 70,000 gallons a year of chemicals sprayed over 53,000 hectares and costing between $35 to $46 per gallon.
Objection to the aerial herbicide spraying began to come from indigenous Colombians and environmentalist groups claiming severe
health hazards. This
single program was one of the most important weapons in a war crucial to the
future of Americans today and definitely in the coming generations. The anti-narco-terror
campaign is actually only a byproduct of the Colombia Plan. It is being carried out by Colombian soldiers and
policemen assisted by a handful of American military advisers and less than 400 civilians, most of whom are contracted pilots and
mechanics. A relative of a captured American contracted anti-drug warrior, who is being held as a hostage by the Revolutionary
Armed Forces of Colombia, complained that few in the U.S. realize the complexity of the situation. He told the media how civilians,
at times labeled by Latin American media as “gringo mercenaries,” are actually fighting a war vital to every American. In addition to
FARC, the narco-warriors are also faced with the left-wing National Liberation Army and the right-wing United Self Defense Forces of
Colombia. These contracted civilians remain in the shadows, away from the media. When, from time to time, some of them are
killed, injured or captured, there are no yellow ribbons, VIP treatment or a national mourning when their coffins are brought back
home. In July 2001, five Americans were killed when their intelligence plane crashed. More Americans were killed, captured and
injured since. A former helicopter pilot with experience in Central America, refusing to reveal his full name, told G2B: “Flying over
Colombia I knew I’m fighting for my country and when fired upon I asked myself – where is the cavalry?” Since the beginning of
2003, as the State Department has been planning to expand the Colombia Plan to other countries, more information has become
available about the dimensions of the narco-terror danger in countries such as Peru, Bolivia, Brazil and others. These countries are
commonly described by intelligence analysts as “The Coca Club,” where the use of coca leaves is part of the culture. However, the
distilled and purified product, destroying the lives of so many Americans, is meant mainly for export. Some analysts
assess
that following the reality of the wars in Afghanistan and Iraq the administration will invest more
time and resources south of the border rather than in dealings with Iraq, Afghanistan and North
Korea. As the grim picture of drug reality unfolds, Peru, which during the ’80s and ’90s carried with U.S. help a successful
campaign against narco-terrorism, is reporting renewed emergence of narco-terror threats. The Sendero
Luminoso (Shining Path), a Maoist group, is resurfacing with narco-terror activities. According to one
report, there are 17 drug areas in Peru alone. It is also becoming more evident narco-terrorism is spilling
over from Colombia to other neighboring countries such as Venezuela and Brazil. Both countries are
doing their utmost to send more troops to remote border regions where drug cartels are now shipping tons of cocaine or purified
heroin destined to Mexico or via sea en route to U.S. streets. Russia and China are busy with their own internal affairs, fighting
Islamic terrorism and Asian narco-terrorism. The Russians encourage their military to combat narco-terrorism in the Caucasus as
part of their main objectives there. A recent Russian military paper says 13 Afghani warlords produce no less than 5,400 tons of
ready to use opium per year. This situation is also a Pakistani problem as drugs grown in Pakistan, or moving through Pakistan to
European destinations, also serve as a source for financing terrorist activity. Countries in Africa and the Middle East are also
increasing drug production, sometimes coached not only by organized crime but by terror organizations as well. This business
includes money-laundering schemes and money funneling to terrorists. Although Islam does not approve the use of narcotics
outwardly, it is an acceptable trade to support the movement’s goals. In the wake of the narco-trade phenomena come the almost
weekly executions in Saudi Arabia, Jordan, Malaysia and other countries. Their judicial systems are busy delivering capital
punishment to drug traders. Scores of Westerners have been arrested and severely punished, including life terms in jail with horrible
and almost diabolical conditions in third-world countries. The recent beheading of four Pakistani and Yemeni drug dealers in Riyadh
and Mecca was linked by a number of intelligence agencies to the attempts of the Saudi government to stop narco-terrorism. One
expert discussing the situation with G2B said: “Drugs and terror are inseparable, co-joined deadly twins.” U.S.
interests
should be more focused on narco-terrorism in the Western hemisphere. It is difficult, though, to separate
between Western narco-terrorism dangers and those in other parts of the world. An intelligence expert specializing in narcotics told
G2B clearly the tentacles of the narco-octopus know no boundaries. He used the example of North Korea, which together with its
traditional blackmail diplomacy is using drug trade to finance plans for weapons of mass destruction. The Australian lawenforcement establishment has proved this connection by intercepting and arresting drug dealers importing their deadly goods on
North Korean cargo ships. The expert also says the U.S. should not spread its global efforts too thin. According to him and others, the
U.S. should encourage regional governments and powers to cooperate to deliver deadly blows to the drug trade and narco-terror –
from the Golden Triangle to the Andes. Terror
analysts are convinced the term “narco-terrorism” will
regain its infamous prominence, predicting the U.S. will not have a choice but to redefine
President Bush’s war on terrorism and to include within this concept also the war on narcotics.
2AC
Iran Add-On
Stronger trade relations with Venezuela is key to counterbalance Iran influencemaintaining oil ties is vital
Fite ’12 [Brandon, Burke Chair at the Center for Strategic and International Studies, “U.S. and
Iranian Strategic Competition: The Impact of Latin America, Africa and Peripheral States,” April
4, http://csis.org/files/publication/120404_Iran_Chapter_XIII-Peripheral_States-Revised.pdf]
Iran’s closest relationship is with Venezuela. Although both countries have very different ¶ guiding ideologies and
political structures, they are bound by a common rejection of US ¶ leadership in the international system and by
their significant petroleum exports, signified by ¶ their dual membership in OPEC. The State Department has
determined Venezuela to be “not ¶ cooperating fully United States antiterrorism efforts” since 2006.
Distinct from the designation ¶ of “state sponsor of terrorism”, this classification nevertheless resulted in an US arms embargo, ¶
which was extended in May 201118¶ . In the past decade Tehran
and Caracas have engaged in a ¶ broad
spectrum of commitments ranging from mutual diplomatic support to military exchange. ¶ Venezuelan President Hugo
Chavez has shown himself to be committed to Iranian sovereignty—¶ supporting Iran’s nuclear program at the IAEA—and to Iran’s
vision of an anti-Western coalition ¶ of developing states.¶ As
long as Venezuelan President Hugo Chavez—or some
successor with a similar ideology and ¶ hostility to the US—continues to define his role as one of opposition to
the US, Washington has little hope of bettering its political position with Caracas or diminishing
Iran’s close affiliation. ¶ That being said, US-Venezuelan commercial ties are strong and provide links between both ¶
countries which help maintain an undercurrent of stability in the relationship. At present, the US ¶ need not be too concerned about
US-Venezuelan
energy dependence mitigates the possibility of a more serious breach in relations.
this Iran-Venezuelan relationship, despite the threatening ¶ language used by both presidents. Mutual
Post-Chavez, the US wants to be more active. Improved US-Venezuelan ties would scuttle Iranian prolif efforts.
Jones ‘13
Steve Jones is a professor of history at Southwestern Adventist University. He specializes in American foreign policy and military
history. Steve has fifteen years editorial experience in newspapers and magazines and another sixteen as a college professor. He
regularly teaches a class in foreign policy. He is the author of The Right Hand Of Command: Use And Disuse Of Military Staffs In The
Civil War, and several book chapters and encyclopedia entries on elements of warfare and its relation to foreign policy and social
change. Steve received a B.A. in journalism from Northwestern Oklahoma State University in 1988. He earned an M.A.(1990) and
Ph.D.(1997) in American history, both from Oklahoma State University. He did post-doctorate work in political science at the
University of Texas at Arlington. “Does Chavez' Death Mean Better Relations Between U.S. and Venezuela?” – US Foreign Policy –
About.com – March 7th – http://usforeignpolicy.about.com/od/alliesenemies/a/Does-Chavez-Death-Mean-Better-RelationsBetween-U-s-And-Venezuela.htm
Venezuela And Iran¶ While the U.S. State Department isn't holding its collective breath, it would like to see better relations
between the two countries in the post-Chavez era. That would enable the United States to leverage Venezuela against Iran as it
continues attempts to prevent Iran from achieving nuclear weapons.¶ Venezuela and Iran became allies during the Chavez' tenure,
and Iranian President Mahmoud Ahmadinejad visited Venezuela in 2012. The two countries signed various trade and financial
agreements.¶ The U.S. has deployed an array of sanctions against Iran. Venezuela's help could help strangle resources that support
Iran's nuclear program. According the the State Department, the United States sanctioned Venezuela in 2011 for "delivering at least
three cargoes of reformate, a blending component for gasoline, to Iran between December 2010 and March 2011."¶ U.S. and
Venezuelan Trade¶ Nevertheless, the United States and Venezuela do carry on bi-lateral trade. The State Department explains that
the U.S. is Venezuela's "most important trading partner," with shipments including "machinery, organic chemicals, agricultural
products, optical and medical instruments, autos and auto parts."
Iran Prolif causes Mideast nuclear arms race. Results in nuclear war
Allison ‘6
Graham, Prof of Government at Harvard, “The Will to Prevent”, Fall, Harvard International Law Review, page lexis
Meanwhile, Iran is testing the line in the Middle East. On its current trajectory, the Islamic Republic will become a nuclear weapons
state before the end of the decade. According to the leadership in Tehran, Iran is exercising its “inalienable right” to build Iranian
enrichment plants and make fuel for its peaceful civilian nuclear power generators. These same facilities, however, can continue
enriching uranium to 90 percent U-235, which is the ideal core of a nuclear bomb. No one in the international community doubts
that Iran’s hidden objective in building enrichment facilities is to build nuclear bombs. If Iran crosses its nuclear finish line, a Middle
Eastern cascade of new nuclear weapons states could trigger the first multi-party nuclear arms race, far more volatile than the Cold
War competition between the United States and the Soviet Union. Given Egypt’s historic role as the leader of the Arab Middle East,
the prospects of it living unarmed alongside a nuclear Persia are very low. The IAEA’s reports of clandestine nuclear experiments hint
that Cairo may have considered this possibility. Were Saudi Arabia to buy a dozen nuclear warheads that could be mated to the
Chinese medium-range ballistic missiles it purchased secretly in the 1980s, few in the US intelligence community would be surprised.
Given Saudi Arabia’s role as the major financier of Pakistan’s clandestine nuclear program in the 1980s, it is not out of the question
that Riyadh and Islamabad have made secret arrangements for this contingency. Such a multi-party nuclear arms race in the Middle
East would be like playing Russian roulette—dramatically increasing the likelihood of a regional nuclear war. Other nightmare
scenarios for the region include an accidental or unauthorized nuclear launch from Iran, theft of nuclear warheads from an unstable
regime in Tehran, and possible Israeli preemption against Iran’s nuclear facilities, which Israeli Prime Minister Ehud Olmert has
implied, threatening, “Under no circumstances, and at no point, can Israel allow anyone with these kinds of malicious designs
against us to have control of weapons of destruction that can threaten our existence.”
Proliferation causes nuclear war
Monroe 9-12-12 [Robert, vice admiral, U.S. Navy (Ret.), “Nonproliferation requires
enforcement,” http://thehill.com/blogs/congress-blog/foreign-policy/249049-nonproliferationrequires-enforcement]
Proliferation of nuclear weapons among nations is the gravest threat facing the US and the
world. For twenty years two irresponsible and belligerent rogue states have been working intensely to develop nuclear weapons
production capabilities. The world has protested and wrung its hands. North Korea has now tested primitive weapons, and Iran is
close to producing them. When North Korea succeeds in weaponizing its designs, it will sell them to anyone desiring to buy –
including terrorists. Neighboring states such as South Korea and Japan will be forced to go nuclear in self-protection. Iran’s
acquisition of nuclear weapons – and its likely willingness to give them to proxies such as
Hezbollah, Hamas, and Al Qaeda for use – will stimulate another regional surge of proliferation
as Saudi Arabia, Egypt, Turkey, and others follow suit. In no time the cascade will be global, as
states like Venezuela, Germany, Brazil, and Argentina, rush to protect themselves. With nuclear weapons
widespread, and nuclear material even more readily available, terrorist acquisition of nuclear
weapons will not be difficult. We’re moving toward a world of nuclear horror and chaos, a
return from which appears impossible.
Cuba Add-On
a. Venezuelan economic strength key to Cuban Stability
Arlidge 13 (John, The Sunday Times, London, “Viva la revolucion: Cuba turns capitalist; Raul
Castro, Fidel's brother, hopes that a liberalised private sector will prevent economic collapse,” 513-13)
Cuba is changing. Raul Castro, 81, who took over as president from his ailing brother Fidel, 86, in 2008, has introduced laws
enabling Cubans to set up small businesses, hire staff and pay what they want. Previously, everyone worked for the state and
salaries were limited to a meagre $20 ((EURO)15) a month. This
being Cuba, Raul cannot bring himself to utter
the "c" word - capitalismo. Instead, he insists he is "welcoming socialist entrepreneurs into the broader nonstate sector".
In the sunscorched streets around the Capitolio in central Havana, meanwhile, Marie-Helena Barrios hawks glittery bras, nail polish
and guayabera, traditional linen shirts. On the tree-lined Prado, Jorge Martorell, a budding estate agent, offers homes for sale at
(EURO)10,000 to (EURO)300,000. It's
not hard to explain Cubans' new-found passion for the once-reviled
art of making money. The economy has collapsed. Wages are less than half their 1989 level in real terms.
Unemployment is officially a record 3.8% but judging by the number of people on the streets in Havana, the real figure is much
higher. Food
production has withered. Fifty years ago, the largest, most fertile country in the Caribbean grew one-third of
the world's sugar. Today, Cuba imports more than half of its food, including sugar, at a cost of almost $2bn a year,
forcing its balance of payments into the red. The country only functions at all thanks to a
sweetheart deal with Venezuela. Havana supplies about 50,000 doctors and intelligence and security experts to
Caracas. In return, Caracas provides cheap oil - 115,000 barrels a day, about two-thirds of Cuba's
consumption, worth some $3.5bn a year. Additional investment takes Venezuela's overall
support for Cuba to about $5bn a year. The deal was agreed by Fidel Castro and former Venezuelan president Hugo
Chavez, who died in March. If Venezuela's new president, Nicolas Maduro, renegotiates the agreement - and many analysts say that
with Venezula's economy slumping he has no choice - Cuba will grind to a halt.
b. Cuban instability spills over into multiple hotspots and leads to global conflict
Gorrell 5 (Tim Gorrell, Lieutenant Colonel, “CUBA: THE NEXT UNANTICIPATED ANTICIPATED
STRATEGIC CRISIS?” 3/18/05, http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA433074, AD
7/11/13, AK)
Regardless of the succession, under the current U.S. policy, Cuba’s problems of a post Castro transformation
only worsen. In addition to Cubans on the island, there will be those in exile who will return claiming
authority. And there are remnants of the dissident community within Cuba who will attempt to
exercise similar authority. A power vacuum or absence of order will create the conditions for
instability and civil war. Whether Raul or another successor from within the current government can hold power is
debatable. However, that individual will nonetheless extend the current policies for an indefinite period, which will
only compound the Cuban situation. When Cuba finally collapses anarchy is a strong possibility if the
U.S. maintains the “wait and see” approach. The U.S. then must deal with an unstable country 90 miles off its
coast. In the midst of this chaos, thousands will flee the island. During the Mariel boatlift in 1980 125,000 fled the island.26 Many were criminals;
this time the number could be several hundred thousand fleeing to the U.S., creating a refugee
crisis. Equally important, by adhering to a negative containment policy, the U.S. may be creating its next series of
transnational criminal problems. Cuba is along the axis of the drug-trafficking flow into the U.S. from Columbia. The Castro government as a
matter of policy does not support the drug trade. In fact, Cuba’s actions have shown that its stance on drugs is more
than hollow rhetoric as indicated by its increasing seizure of drugs – 7.5 tons in 1995, 8.8 tons in 1999, and 13 tons in
2000.27 While there may be individuals within the government and outside who engage in drug trafficking and a percentage of drugs entering the U.S. may pass through
the Cuban government is not the path of least resistance for the flow of drugs. If there
were no Cuban restraints, the flow of drugs to the U.S. could be greatly facilitated by a Cuba
base of operation and accelerate considerably. In the midst of an unstable Cuba, the
opportunity for radical fundamentalist groups to operate in the region increases. If these
groups can export terrorist activity from Cuba to the U.S. or throughout the hemisphere then
the war against this extremism gets more complicated. Such activity could increase direct
attacks and disrupt the economies, threatening the stability of the fragile democracies that are
budding throughout the region. In light of a failed state in the region, the U.S. may be forced
to deploy military forces to Cuba, creating the conditions for another insurgency. The ramifications of this
action could very well fuel greater anti-American sentiment throughout the Americas. A proactive policy now can
Cuba,
mitigate these potential future problems. U.S. domestic political support is also turning against the current negative policy. The Cuban American population in the U.S. totals
1,241,685 or 3.5% of the population.28 Most of these exiles reside in Florida; their influence has been a factor in determining the margin of victory in the past two
presidential elections. But this election strategy may be flawed, because recent polls of Cuban Americans reflect a decline for President Bush based on his policy crackdown.
There is a clear softening in the Cuban-American community with regard to sanctions. Younger Cuban Americans do not necessarily subscribe to the hard-line approach.
These changes signal an opportunity for a new approach to U.S.-Cuban relations. (Table 1) The time has come to look realistically at the Cuban issue. Castro will rule until he
The U.S. can little afford to be distracted by a failed state 90 miles off
its coast. The administration, given the present state of world affairs, does not have the luxury or the resources
to pursue the traditional American model of crisis management. The President and other government and military
leaders have warned that the GWOT will be long and protracted. These warnings were sounded when the administration did not anticipate
operations in Iraq consuming so many military, diplomatic and economic resources. There is justifiable concern that Africa and the Caucasus region
are potential hot spots for terrorist activity, so these areas should be secure. North Korea will continue to be
an unpredictable crisis in waiting. We also cannot ignore China. What if China resorts to
aggression to resolve the Taiwan situation? Will the U.S. go to war over Taiwan? Additionally, Iran could conceivably
be the next target for U.S. pre-emptive action. These are known and potential situations that
could easily require all or many of the elements of national power to resolve. In view of such global issues,
can the U.S. afford to sustain the status quo and simply let the Cuban situation play out? The U.S. is
dies. The only issue is what happens then?
at a crossroads: should the policies of the past 40 years remain in effect with vigor? Or should the U.S. pursue a new approach to Cuba in an effort to facilitate a manageable
Bolivar Add-on
Status quo oil exports lead to mismanagement of Venezuelan currency- derails
their economy and leads to devaluation
Nagel, 2/22 (Juan, Professor of Economics at the Universidad de los Andes in Santiago, February 22,
2013, “Living through Venezuela's currency madness”,
<http://transitions.foreignpolicy.com/posts/2013/02/22/living_through_venezuela_s_currency_madness
_0>)ZB
The U.S. dollar is facing competition from other currencies, but there is still one place, ironically,
where the greenback is king: the streets of socialist, anti-imperialist Caracas. Everyone here wants dollars -from the importer looking to stay in business, to the mid-level professional wanting to save his Christmas bonus. Venezuela has had
a fixed exchange rate of 4.3 Bolivars (BsF) per dollar for years. By
selling dollars in exchange for so few Bolivars,
the local currency was severely overvalued. Propped up by oil exports (hence the term "petrodollars"),
the government was effectively subsidizing imports and travel abroad. A few weeks ago, the
government decided to devalue to 6.3 BsF per dollar. But devaluation was not the only thing
rocking the market. The official dollar is only available for procurement if you are buying some
imports -- food, medicine, airplane tickets, and the like. You can't get them unless it's for one of those approved
purposes, leaving out many people who need them. The artificially low prices, combined with the scarcity of
dollars, creates the perfect opportunity for a black market where you can buy USD at the official
rate, and then sell them underhandedly at a jacked-up price for an easy profit. In the last few weeks,
following the devaluation, the price of the dollar in the black market has shot up to BsF 22 per dollar, up from BsF 18 the week prior
to devaluation.
and, that creates a mass spillover effect to the US economy - purchasing power,
tax loss, and the auto industry
Agence France-Presse, 2/17 (Agence France-Presse, France’s largest nonprofit news agency,
February 17, 2013, “Devaluation of Venezuelan currency expensive for some US firms”, Arab News,
<http://arabnews.com/economy/devaluation-venezuelan-currency-expensive-some-us-firms>)ZB
NEW YORK: The
recent devaluation of the Venezuelan bolivar was a blow to some major US
companies, highlighting the importance of financial ties between the two nations despite their
political disagreements. Venezuela devalued the bolivar by 32 percent against the US dollar earlier this
month, feeding public fears that prices would rise further amid already soaring inflation. The change
in the official exchange rate from 4.3 bolivars to the dollar to 6.3, was published in the Official Gazette. Economist Jose Luis
Saboin of the consultancy Econalitica said consumers’ purchasing power will likely erode by 7.2
percent this year. Devaluation will make imports more expensive in Venezuela, where inflation
stands at 20.1 percent — the highest in Latin America, based on official data. President Hugo Chavez’s government put in
place an exchange rate control mechanism in 2003 seeking to throw the brakes on capital flight. In January 2011 it set the rate at
4.3. But the hunger for dollars and euros fuels a black market with a much higher exchange rate which by law cannot be published.
The United States is the main purchaser of Venezuelan oil and thus its largest trading partner.
Despite political disagreements between the two countries’ governments, trade relations between the US and Venezuela have
blossomed in recent years, thanks to rising oil prices over the past 10 years. Some
500 US companies operate in the
country, according to the US State Department. Win Thin, a senior economist at Brown Brothers Harriman, said
Venezuela does not produce much of anything except oil — and imports most other products. That is why,
he explained, US multinationals are broadly represented in many sectors of the economy:
pharmaceuticals, energy, cosmetics, etc. But they are not in a position to keep pace with inflation as prices
of certain categories of products are strictly controlled. Because of that, economists say, the devaluation
of the bolivar has negatively affected their earnings. This was evident in financial reports
published by some of these companies in recent days. US hygiene and cosmetics products manufacturer Procter
& Gamble (P&G) lowered its earnings forecast Thursday, taking into account of the devaluation of the bolivar. P&G will
have
to absorb in fiscal 2012-13 an exceptional after-tax loss of $ 200 million ro $ 275 million, and its
competitor, Colgate-Palmolive, announced an anticipated an exceptional after-tax loss of $ 120
million in the first quarter. Automakers Ford and GM have also been affected, along with
cosmetics giant Avon, among others.
Oil Advantage
Venezuelan Econ/Oil Low
Venezuelan econ failing- inflation and food shortages
Roberts and Daga 13 (James M. Roberts, 25 year veteran of the State Department as well as
pursuing a doctorate in public policy at the Alexandria campus of Virginia Tech, Sergio Daga,
Masters in economics from the University of Chile, 15 April 2013, “Venezuela: U.S. Should Push
President Maduro Toward Economic Freedom,” The Heritage Foundation,
http://www.heritage.org/research/reports/2013/04/venezuela-us-should-push-presidentmaduro-toward-economic-freedom)
The foundations of economic freedom in Venezuela have crumbled. When Chavez took office in
1999, Venezuela scored 54 out of 100 possible points in The Heritage Foundation/Wall Street
Journal’s annual Index of Economic Freedom. Today, however, after 14 years of Chavez’s soft
authoritarian populism, Venezuela merits a score of just 36 points. This nearly 20-point plunge is
among the most severe ever recorded by a country in the history of the Index. Its 2013 rank—
174th out of 179 countries—places Venezuela among the most repressed nations in the
world.[2] Venezuela’s dismal economic freedom score is reflected in statistics that translate into
real-time hardship for Venezuelans, who must spend more of their incomes on higher prices for
necessities—if they can find them on empty store shelves. There are scarcities of nearly all
staple food and fuel products. In fact, according to the Banco Central of Venezuela’s (BCV)
shortages index, Venezuela faces the most severe food shortages in four years.[3] And what
food is available comes at a price: Mary O’Grady reports in The Wall Street Journal that “over
the past 10 years inflation in food and nonalcoholic beverages is 1,284%.”[4] Financial
disequilibrium in Venezuela is the result of a sharply widening fiscal deficit that reached almost
15 percent of gross domestic product (GDP) last year.[5] Government control of the formerly
independent BCV also contributed to a massive expansion of the money supply. There are
anecdotal reports in Caracas of people paying as much as 23 bolívars for one U.S. dollar in the
black market as of early April. The official rate is just 6.3 bolívars per dollar—and that is after a
significant 32 percent devaluation in February.[6] These problems were aggravated by Chavez’s
foreign adventurism—which drained billions of petrodollars from the economy to keep afloat
the failed economy in Fidel Castro’s Cuba—as well as generous subsidies to his Chavista cronies
in the region through such schemes as ALBA and PetroCaribe.
Venezuelan Oil unsustainable now
Sarah O. Ladislaw and Frank A. Verrastro 3/6(Sarah O. Ladislaw is co-director and senior
fellow with the Energy and National Security Program at the Center for Strategic and
International Studies (CSIS) in Washington, D.C. Frank Verrastro is senior vice president and
James R. Schlesinger Chair for Energy & Geopolitics at CSIS. http://csis.org/publication/postchavez-outlook-venezuelan-oil-production)CC
The winds of change are once again blowing in Venezuela. The recent announcement of Hugo
Chavez’s passing has opened up a host of questions about the future leadership of Venezuela
and the potential impact this leadership transition could have on Venezuelan oil production and
global oil markets. Venezuela is one of the largest oil and natural gas resource holders in the
world. It is among the world’s largest oil producers (13th) and exporters (10th) and has historically been one of the
United States’ largest sources of oil imports (4th behind Canada, Saudi Arabia and Mexico). Ever since the failed
coup and the subsequent strike that brought about a short collapse in oil production in 2002, followed by nationalization of the oil
sector, onlookers have been waiting for indications that the regime’s approach to energy production would either fail once and for
A political transition in
Venezuela is now upon us but how it evolves could mean a lot for the energy sector and global
energy markets. Despite its enormous oil resources, Venezuela's oil production (regardless of
whose figures you use) has long been in steady decline. In 2011 liquids production was 2.47 million barrels per
all or that some political change would bring about reform and rejuvenation of the energy sector.
day (mmbd) , down a million barrels per day since 1999. Some of this is reflects the changing cost and economics of Venezuelan oil
production but field decline is significant and expertise and reinvestment are questionable and looking harder to come by. The
internal technical and managerial capabilities of state run oil and gas company PDVSA have deteriorated since the 2002 strike and
PDVSA relies on contractors, as well as other private company partners, to
keep the fields in production but reports state that contractors have not been paid in months
and that the political uncertainty in the country has even driven routine decision making to a
halt. The sustained political uncertainty has also slowed investment; Russian and Indian
companies were planning to invest in Venezuela's oil fields but so far have withheld incremental
new money. China has not announced a new line of credit or extensions on its developmentlinked financing since last April. At the same time that production is dropping, highly subsidized
aftermath. Increasingly,
domestic consumption of oil is increasing while revenue from exports is also declining.
Venezuelan econ headed for collapse- needs new oil investment
EuroNews 3/15 (http://www.euronews.com/2013/04/15/big-challenges-for-venezuela-s-oildependent-economy/) cc
Oil is key for Nicolas Maduro the man who is set to rule Venezuela. It was literally black gold for Hugo
Chavez, bankrolling his socialist dream and paying for hefty government spending that spurring economic
growth of 5.6 percent last year in the run-up to Chavez’s election in October, just months before
his death. His successor now faces a raft of economic difficulties in the OPEC member nation
that exports 430,000 barrels of crude and products and other oil products to China every day
and at home sells subsidised petrol for pennies. Economists predict Venezuela’s economy will grow this year at
two percent or below as the government is forced to slow spending and reduce borrowing due to overstretched state finances.
Chavez’s wave of nationalisations also severely weakened the private sector and business
leaders are reluctant to make new investments. Inflation this year is predicted to at least match
last year’s 20 percent level due to a currency devaluation and expanding money supply. Consumer
prices rose five percent in the first two months of this year alone. Maduro’s narrow victory gives him little room for pragmatic
measures such as unwinding the Byzantine system of price and currency controls that have created economic distortions. However,
there are few signs that the situation could descend into a full-blown crisis or force Venezuela to default on its debt.
Venezuela’s econ is crumbling- need more oil exports
James Hider 6/6, 2013 (Reporter from The Times,
http://www.thetimes.co.uk/tto/news/world/americas/article3783556.ece)
Venezuela has the largest proven oil reserves in the world and was once the source of much of Britain's meat
imports, but its crumbling economy has now led to food rationing in its most populous state. To
counter shortages of the most basic goods, the government of the farwestern state of Zulia, home to 3.7 million people, has
introduced strict controls on the purchase of 20 staples. Price controls will be slapped on items such as toilet paper and chicken, as
the statecontrolled economy shrinks and supermarket shelves are frequently bare. Last
month the Government
ordered an emergency purchase of 40 million toilet rolls after complaints that shoppers could
find none. The Roman Catholic Church has said that it will have to restrict Mass because of a lack of Communion wine and flour
for the Eucharist. The Government of the Socialist President, Nicolás Maduro, who narrowly won April's elections, denied
that the measure amounted to food rationing, and said it was aimed at curbing smuggling of
subsidised goods from Zulia into its neighbour Colombia. Blagdimir Labrador, a senior official in Zulia, said that
the state would start issuing smartcards cards next week that will allow only a limited purchase of staples such as rice, flour, cooking
oil, sugar and powdered milk. The system would apply to 65 supermarkets in two cities and would ensure that "the same person
can't go to a different store on the same day and purchase the same product". Mr
Maduro has been trying to breathe
life into a struggling economy that is almost entirely dependent on oil exports, while fending off
challenges to his legitimacy from the opposition, who claim that they won the elections. The
Government was at pains to stress that the measure was not nationwide. "This is only in Zulia state and it
is not rationing," said Raimundo Urrechaga, a spokesman for the Information Ministry. "It is focused only on Zulia, to control
contraband." Many economists have blamed constant shortages on the state's existing price controls, a move aimed at ensuring that
the poor can afford staples. But the artifically low cost of basics, including petrol, has also led to rampant smuggling to neighbouring
countries. Many storekeepers ignore the price controls and hoard goods to sell at higher prices in times of scarcity. Economists
predict that the oil-dependent economy is contracting and will be in recession this year.
Inflation reached almost 30 per cent in April and many people worry about how much they will
pay for everyday goods, or even whether they will be available at all. Meanwhile, Venezuela said yesterday that it had
deported an independent American film-maker arrested after April's elections for spying. Timothy Tracy, 35, had been working on a
film about the divisions in Venezuelan society when he was accused of inciting opposition members to violent protests against Mr
Maduro's victory.
Production of Oil is failing- Needs to change to survive
CLIFFORD KRAUSS 3/8/13 (a correspondent for “The New York Times” since 1990, He currently
is a national business correspondent based in Houston, covering energy
http://www.nytimes.com/2013/03/09/world/americas/venezuelas-role-as-oil-powerdiminished.html?_r=1&)cc
President Hugo Chávez relished using Venezuela’s oil wealth to project power internationally,
nudging OPEC to raise oil prices when he could, showering allies like Cuba and Nicaragua with
subsidized oil shipments, and mocking the United States while selling it his crude. But Mr. Chávez’s death on
Tuesday has had surprisingly little impact on global oil markets, highlighting how Venezuela’s dwindling crude
production and exports have undercut its global power in recent years. International oil prices have barely moved
since Mr. Chávez died. OPEC has decided to increase shipments to the United States and Europe this month, using oil from
Saudi Arabia and other Gulf states. Oil company executives, long frustrated by Mr. Chávez’s nationalizations, are voicing only tepid
hopes that they could possibly return in full force to what was once one of their crown jewels. Venezuela’s
annual oil
production has declined since Mr. Chávez took office in 1999 by roughly a quarter, and oil
exports have dropped by nearly a half, a major economic threat to a country that depends on oil
for 95 percent of its exports and 45 percent of its federal budget revenues. “Venezuela’s clout on OPEC
and on world oil prices has been greatly diminished because of its inability to exploit its enormous resources,” said Michael Lynch,
president of Strategic Energy and Economic Research, a consultancy. “In
the 1990s, their production was booming
and they could thumb their nose at Saudi Arabia and get away with it, but now they have
become OPEC’s poor cousin.” In a fundamental geopolitical turn, Venezuela now relies far more
on the United States than the United States relies on Venezuela. Venezuela depends on the
United States to buy 40 percent of its exports because Gulf of Mexico refineries were designed to process lowquality Venezuelan and Mexican crudes that most refineries around the world cannot easily handle. But in recent years, the United
States has been replacing its imports of Latin American crudes with oil from Canadian oil sands fields, which is similarly heavy.
American imports of Venezuelan oil have declined to just under a million barrels a day, from 1.7 million barrels a day in 1997,
according to the Energy Department. And while Venezuelan exports of oil are in decline, its dependency on American refineries for
refined petroleum products has grown to nearly 200,000 barrels a day because of several recent Venezuelan refinery accidents.
Experts expect Venezuela to send barrels no longer needed in the United States to China, as payments in kind under oil-for-loans
contracts. Venezuela’s
broken refinery sector has left shortages of gasoline and diesel in parts of
Latin America, opening the door for valuable markets to American refiners. Over his 14 years in power,
Mr. Chávez relied heavily on oil revenues to finance his social programs. Energy experts say his gasoline subsidies
doubled domestic consumption, cutting deeply into exports, but that his hostility to foreign
investment and mismanagement of the state oil company Petroleos de Venezuela were the
primary reasons for the steep decline in production. A strike and the firing of management
talent and 20,000 workers at the oil company in 2002 led to a steep decline in the company,
which has been underscored by the refinery accidents. “Venezuela is a fraction of what it used
to be,” said Sadad Ibrahim al-Husseini, a former head of Saudi Aramco’s exploration and production division, “and
that’s really because Venezuela’s technocrats have scattered over the world and are no longer active in Venezuela.” Mr. Chávez
further overhauled oil exploration and production with a nationalization program in 2006 that ordered a renegotiation of contracts
with foreign companies, mandating that Venezuela’s oil company get a minimum 60 percent share in all production projects. Sixteen
foreign companies, including Royal Dutch Shell and Chevron, went along with the new rules, while Exxon Mobil, Conoco Philips and
other companies resisted, and their holdings were nationalized. Venezuela
has huge reserves, including its
Orinoco heavy oil belt, which the United States Geological Survey estimates to have 513 billion
barrels of recoverable oil — enough potentially to make Venezuela one of the top three world
producers. But foreign oil companies have been wary of investing. Jose Valera, a Houston energy lawyer,
said that if Nicolás Maduro, Mr. Chávez’s vice president until he was sworn in as president on Friday, or another member of
the Mr. Chávez’s movement was elected president in a special election “it is reasonable to
expect continuity of a substantial portion of the policies.” But as for Venezuela’s economy, he
argued, “the situation right now is not sustainable and it’s only a matter of time before some
significant changes will have to be instituted.”
Venezuela has massive oil reserves at the Orinoco River but needs foreign
investment to begin the extraction process
Belsie, 3/7 (Laurent, Business Editor and the Christian Science Monitor, March 7, 2013, “What will
Venezuela do with its oil? Top five energy challenges after Chàvez.”,
<http://www.csmonitor.com/layout/set/print/Environment/2013/0307/What-will-Venezuela-do-with-itsoil-Top-five-energy-challenges-after-Chavez/The-Orinoco-Belt>)ZB
The biggest issue for Venezuela is what to do with its immense deposits of tar sands (also known as
oil sands). If one counts the technically recoverable oil estimated to lie in a 375-mile stretch of land along
the Orinoco River, then Venezuela has bigger oil reserves than anybody, including Saudi Arabia – some
296.5 billion barrels of oil, by one estimate. The big question: Is it economically feasible to produce that oil?
The process is energy intensive, costly, and environmentally questionable. Environmentalists have
attacked Canada for producing oil from its tar sands – and have mounted a highly visible campaign to stop a planned pipeline that
would carry its oil product to US refiners in the Gulf of Mexico. Venezuela's effort could turn out to be even bigger. Venezuela
needs to do something. Under Mr. Chávez, its economy became even more reliant on the oil
industry even as production fell. In the mid-1990s, Venezuelan production peaked at around 3.5
million barrels of oil a day. Today, it's closer to 2.5 million barrels a day. In the 1990s, Venezuela created
four projects to begin to convert its tar sands into a lighter crude, known as syncrude. The facilities have the capacity to produce
600,000 barrels per day, according to the US Energy Information Administration, but they are estimated to be producing less than
500,000 a day. Venezuela could use
require outside help.
more investment to develop its tar sands, but that would
Oil Key To Venezuela
Oil extraction is key to stability – the impact is a failed state
Nagel 5/16 - Writer for Foreign Policy, (Juan, 5/16/2013. “Is Venezuela Becoming a Failed State”
http://transitions.foreignpolicy.com/posts/2013/05/16/is_venezuela_becoming_a_failed_state) //MJ
Furthermore, the country's current power clique seems particularly inept in dealing with the
complicated economic and political conditions it has inherited. Nicolás Maduro's only claim to
legitimacy is that Hugo Chávez chose him. Now he is left with the thankless task of dealing with
the Chávez mess. He has surrounded himself with a Cabinet composed of many of the same old
faces, and neither his policies nor his rhetoric suggest any shift toward the type of solutions that
could steer Venezuela away from the precipice. The problem for Venezuelans is that there is no
great reformer in the governing party. And while opposition leader Henrique Capriles would
undoubtedly steer Venezuela toward greater economic freedoms, there is little he would be
able to do if the price of oil were to tank. A long period of low oil prices spells doom for
Venezuela's political sustainability. Without high oil revenues, basic services would practically
disappear, and the potential for instability would be enormous. Already the country is stuck in
a state of undeclared in civil war, and there are claims that drug smuggling has permeated the
higher echelons of the government. Venezuela has so far avoided the fate of its neighbor
Colombia, a country still deep in a long civil war with Marxist guerrillas and drug cartels. This is
largely due to the deep pockets oil has afforded the government, which allowed for state
presence even in the most remote corners of the country. It is hard to see how that presence
could be maintained if oil rents were to dry up significantly, and for a prolonged period. This
could lead to the type of problems that have bedeviled Colombia, or even poorer neighboring
failed states such as Haiti. Even though its problems are of its own making, the thought of a
large, failed state in the heart of the Western Hemisphere should trouble the continent's
leaders.
Empirics prove oil is the foundation of Venezuela’s economy
Moscona-Skolnik 13 (6/12, Jacob, “A New Doctrine for Sustainable Development: Case Study in
Venezuela”, Harvard International Review, , http://hir.harvard.edu/blog/jacob-moscona-skolnik/a-newdoctrine-for-sustainable-development-case-study-in-venezuela)
On Friday, UN Secretary General Ban Ki-Moon was presented with the proposed set of Sustainable Development Goals (SDGs). This
new Development agenda will serve as a replacement of the Millennium Development Goals (MDGs), a set of eight initiatives
designed in 2000 to reduce global poverty and increase quality of life by 2015. Anticipating the end of the established timetable for
completing the MDGs, in August of 2012 the UN Secretary-General established the Sustainable Development Solutions Network
(SDSN), a body representing all branches of civil society and academia, intended to work closely with the UN on a new global
development plan. A primary focus of the new plan is to “decouple economic growth from unsustainable patterns of production and
consumption,” that is allow for continued economic development without harming the environment. What happens when we
consider this goal in the context of oil-wealthy Venezuela? This article focuses on two claims made in the SDSN Report and on the
ways in which they relate to one another: (1) that all countries can and must achieve development “within planetary boundaries”
and (2) that all countries have the “right to development.” The Report argues that high-income countries may not use environmental
concerns as an excuse to limit development in low-income regions. But what happens in an instance where economic prosperity in a
developing country (that, as in the second claim, is endowed with the right to individual development) hinges on practices that may
not promote healthy global practice? Venezuela presents an illustrative example. ¶ In 2011, former President Hugo Chavez reported
297 billion barrels of oil in Venezuelan reserves, which (assuming this statistic is valid) would place Venezuela above Saudi Arabia as
the country with the largest national oil reserves. In January of 2013, Venezuela shipped 898,000 barrels per day to the United
oil sales to the US have dropped, the drop is largely explained by
Venezuela’s shifting economic ties in the direction of the Asian market. Venezuelan oil, the “black
gold” of Chavez’s administration, is the foundation of Venezuela’s economy and is largely responsible for recent
economic improvements there, including last year’s 5.6% national economic growth. Indeed, in 2002, a dire economic
States; while subsequent
downturn followed the attempted coup against Chavez and the subsequent strike of state-run
oil company workers, conveying the broad importance of the oil industry to Venezuela's
economy. Despite increased economic diversification, exemplified by a 10.6% increase in the non-oil sector of the Venezuelan
economy in 2005, high oil sales are still considered essential to the economy by the Council on Foreign
Relations (CFR). Many claim that maintaining high oil sales will be an essential element for new
president Nicholas Maduro's ability to maintain popular support and legitimacy. Thus, oil
exportation may be a key component of any reasonable plan for economic and social
development in Venezuela.
The Venezuelan economy and stability are dependent on sustained oil
production
CFR 2009 (Cesar J. Alvarez, and Stephanie Hanson, 2/9, “Venezuela's Oil-Based Economy,”
Council on Foreign Relations http://www.cfr.org/world/venezuelas-oil-based-economy/p12089)
Venezuela's proven oil reserves are among the top ten in the world. Oil generates about 80
percent of the country’s total export revenue, contributes about half of the central
government’s income, and is responsible for about one-third of the country’s gross domestic
product (GDP). Increases in world oil prices in recent years have allowed Venezuelan President
Hugo Chavez to expand social program spending, bolster commercial ties with other countries,
and boost his own international profile. Though Chavez has threatened to stop exporting
Venezuelan oil and refined petroleum products to the United States, its biggest oil-trading
partner, experts say a significant short-term shift in oil relations between Venezuela and the
United States is unlikely. The medium-term outlook for state oil company PDVSA is
questionable, however, and analysts draw links between PDVSA's profitability and the political
stability of the country. Analysts say the recent global financial crisis and sudden drop in oil
prices are adding to the oil company's financial turmoil.
High Oil Bad
High oil prices collapse economic recovery
Alexander 12 (Samuel Alexander works at the University of Melbourne-Office for
Environmental Programs; Simplicity Institute, August 1st, “Degrowth, Expensive Oil, and the New
Economics of Energy”, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2153342)Nuck
In order to grow, industrial economies require a cheap and abundant supply of energy,
especially oil. When the costs of oil increase significantly, this adds extra costs to transport,
mechanised labour, and industrial food production, among many other things, and this pricing
dynamic sucks discretionary expenditure and investment away from the rest of the economy,
causing debt defaults, economic stagnation, recessions, or even longer-term depressions. That
seems to be what we are seeing around the world today, with the risk of worse things to come.
Since crude oil production has been on an undulating plateau since 2005 while demand has
increased, this has put huge upward pressure on the price of oil, and several commentators
have drawn the conclusion that these high oil prices signify the end or at least the twilight of
economic growth globally. If the world is to deal effectively with the ecological and economic
problems it is facing, we urgently need to infuse a new economics of energy into our economic
thinking and economic systems, both at the local and macro-economic levels.
High oil prices and Middle East dependence increases the US trade deficit which
collapses the economy.
Morici ‘11 (Peter, The Street, Professor Peter Morici, of the Robert H. Smith School of Business
at the University of Maryland, is a recognized expert on economic policy and international
economics, director of the Office of Economics at the U.S. International Trade Commission, “U.S.
Trade Deficit Rises With Increasing Oil Prices And China Imports,” 4-11-11,
http://www.businessinsider.com/trade-deficit-is-sign-of-economys-problems-2011-4)
NEW YORK (TheStreet) -- On Tuesday,
the Commerce Department plans to report the international trade
deficit in goods and services for February, and analysts expect the number to come in at $44.0 billion. That would
be up from $27 billion in mid-2009, when the economic recovery began. The trade deficit
subtracts from demand for U.S.-made goods and services, just as a large federal budget deficit
adds to it. Consequently, a rising trade deficit slows economic recovery and jobs creation and limits how much Congress and the
President may cut the deficit without sinking the economic recovery. Rising oil prices and imports from China are
driving the trade deficit up, and these are major barriers to creating enough jobs to pull
unemployment to acceptable levels over the next several years. If the Obama Administration
and Republican leadership in Congress addressed the trade deficit, economic growth, jobs creation
and tax revenue would increase dramatically, and the federal deficit could be cut to manageable
levels without fear of killing jobs creation. Jobs Creation The economy added 216,000 jobs March, but 360,000 jobs
must be added per month to bring unemployment down to 6% over the next 36 months. With federal and state
governments trimming civil servants, private sector jobs growth must exceed 360,000 per
month to accomplish this goal. Americans have returned to the malls and new car showrooms but too many
dollars go abroad to purchase Middle Eastern oil and Chinese consumer goods that do not
return to buy U.S. exports. This leaves too many Americans jobless and wages stagnant, and
state and municipal governments with chronic budget woes. Now, the increase of gasoline prices to $4.00 a
gallon threatens to further reduce spending on homes and discretionary items made in the U.S. -- leaving many
U.S.
businesses again scrambling for customers and pressured to layoff workers. Simply, policies
regarding energy and trade with China are not creating conditions for the 5% GDP growth that is
needed and easily could be achieved to bring unemployment down to acceptable levels. In March,
the private sector added 230,000 jobs, but many were in government-subsidized health care and social services, and temporary
business services. Netting those out, core private sector jobs have increased only 157,000 in March. That comes to 50 permanent,
non-government-subsidized jobs per county for more than 5,000 job seekers per county. Early
in a recovery, temporary
jobs appear first, but 21 months into the expansion, permanent, non-government-subsidized
jobs creation should be much stronger.
Venezuelan oil decline collapses the Latin American economy- they’ll accept
new investment
Helios Global 4-29-13 [Research organization based in Washington, DC, “Change in Venezuela
Yields Political and Economic Uncertainty,” http://www.heliosglobalinc.com/world-trendswatch/?p=152]
Nicholas Maduro’s narrow electoral triumph over opposition leader Henrique Capriles Radonski in Venezuela’s April 14 elections to
serve out the remainder of the late president Hugo Chavez’s current presidential term signifies a turning point in Venezuelan
politics. Maduro’s victory has also reverberated beyond Venezuela’s borders. Due
to its role as a major source of oil,
the course of political events in Venezuela also has important implications for the world economy. The death
of Hugo Chavez has also raised concerns about the prospects of social, political, and economic stability in Venezuela. The victory of
Chavez’s heir apparent – Chavez and his supporters went to great lengths to ensure the survival of the Bolivarian Revolution
launched by Chavez’s United Socialist Party of Venezuela (known by its Spanish acronym PSUV) – in a politically charged and
polarized climate has already resulted in unrest and violence between Maduro’s supporters and his opponents. Venezuela’s
increasingly dire economic predicament has further exacerbated tensions across the country.¶ Despite a contentious bilateral
relationship, Venezuela remains the fourth-largest supplier of imported oil to the United States. Given the peculiarities of its oil,
namely, the category of relatively low quality heavy crude oil that represents the bulk of its oil capacity, Venezuela relies heavily on
U.S. refineries located in the Gulf of Mexico that were designed to refine oil from Venezuela (and Mexico). Roughly forty-percent of
Venezuela’s oil exports are delivered to the United States. Consequently, the United States is Venezuela’s top trade partner. This is
the case even as U.S. imports of Venezuelan oil have steadily declined in recent years. In 1997, the United States imported about 1.7
million barrels of oil per day (bpd) from Venezuela. In contrast, only about 1 million bpd of Venezuelan oil makes its way to the
United States today. Venezuela also boasts major natural gas reserves, possibly the second-largest natural gas reserves in the
Western Hemisphere. At the same time, Venezuela’s oil
production capacity continues to deteriorate due
to mismanagement, corruption, and antiquated infrastructure.¶ With its emphasis on South-South cooperation, Latin
American integration, and opposition to what it refers to as U.S. imperialism, Venezuela’s foreign policy has largely reflected its
Bolivarian Revolutionary principles. Even as it has continued to serve as a major source of crude oil to the United States, Venezuela
has also devoted significant diplomatic and economic resources toward checking U.S. influence in the Americas. Initiatives such as its
Bolivarian Alliance for the Americas (known by its Spanish acronym ALBA) have served to expand Venezuela’s influence across the
region. This support has come in the form of diplomatic and, especially, economic assistance to governments led by leftist political
parties and movements that are often enmeshed in their own disputes with the United States, including Cuba, Nicaragua, and
Bolivia. Venezuela has also supported a number of militant groups in the region, most notably, the leftist Revolutionary Armed
Forces of Colombia (known by its Spanish acronym FARC) in neighboring Colombia. Venezuela has also engaged closely with other
left-leaning governments across the region, including Brazil, a rising regional and geopolitical power in its own right that is slowly
emerging as a challenger to the United States.¶ ¶ Outlook¶ Chavez’s appointment of Nicolas Maduro, a trusted loyalist, as Vice
President was emblematic of efforts by the incumbent regime to ensure ideological and political continuity in any post-Chavez
scenario. At the same time, despite its popularity among a sizable segment of the Venezuelan populace, it is unclear whether the
PSUV will be able to retain its dominant role in Venezuelan politics without Chavez in the long-term. Maduro’s narrow victory in this
month’s elections – Maduro is reported to have defeated his opponent by less than 2 percent of the total vote – reflects a shift in
Venezuelan public sentiment.¶ The removal of Chavez from the political equation will also have an important geopolitical impact
that will be felt beyond Venezuela’s borders. Venezuela
remains an important supplier of discounted oil for
its regional partners and a source of other vital economic support. On the surface, Maduro’s decision to
travel to Cuba for his first foreign trip in late April reflects his determination to continue the populist and activist foreign policy
forged by his late predecessor. Venezuelan largesse in the form of discounted oil and other benefits has helped sustain Cuba’s
Communist Party. Yet it appears that Maduro is operating under a weaker popular mandate. This raises important questions about
his ability to maintain his late predecessor’s approach to foreign affairs, especially given the presence of an increasingly organized
and emboldened opposition.¶ ¶ Risks¶ Operating under a weaker popular mandate and in a politically charged and polarized climate
raises the specter of widespread disturbances in Venezuela. Capriles announced on April 25 that his movement plans to boycott an
official audit of the election results due to concerns relating to voter registration irregularities. He has also called for a new
presidential vote. Capriles and his supporters seem determined to step up pressure on the fledgling Maduro presidency.¶
Countries that depend on Venezuelan largesse to support their economies through the receipt
of subsidized oil and preferential trade access to the Venezuelan market, including Cuba,
Nicaragua, and Bolivia, among others, stand to lose a great deal should Maduro choose to shift
Venezuelan foreign policy, however slightly, from the Bolivarian Revolutionary ideals enshrined during Chavez’s rule.
Having to contend with their own economic troubles, the loss of subsidized oil or other benefits provided by
Venezuela, for example, can destabilize fragile polities, impoverishing millions in the process. This
raises the potential of social, political, and economic instability throughout the region.¶ ¶
Opportunities¶ Despite his declared commitment to toe his predecessor’s ideological line, the gravity of the economic
problems affecting Venezuela may force Maduro to depart from some of Chavez’s policies,
especially those governing foreign direct investment (FDI) in Venezuela. Maduro may elect to liberalize
certain sectors of the Venezuelan economy and institute other economic reforms in a possible bid to cater to his
more moderate opponents, undercutting segments of the opposition and bolstering his own credentials in the process.
Relations Advantage
Rapprochement Possible
Venezuelan talks- friendlier relations ahead
Metzker 6/17 (Jared Metzker, IPS contributor, 17 June 2013, “Analysts Say Oil Could Help
Mend U.S.-Venezuela Relations,” Inter Press Service,
http://www.ipsnews.net/2013/06/analysts-say-oil-could-help-mend-u-s-venezuelarelations/)kw
WASHINGTON, Jun 17 2013 (IPS) - A shift in U.S. foreign policy towards Venezuela may be
pending as a bilateral rapprochement suddenly appears more possible than it has in years. On
the sidelines of talks held earlier this month in Guatemala by the Organisation of American
States (OAS), U.S. Secretary of State John Kerry met with Venezuelan Foreign Minister Elias Jaua,
with Kerry’s subsequent statements indicating that relations could be heading in a friendlier
direction. “We agreed today – both of us, Venezuela and the United States – that we would like
to see our countries find a new way forward, establish a more constructive and positive
relationship and find the ways to do that,” Kerry said following the meeting with Jaua, which
was reportedly requested by the Venezuelans.
Cooperation imminent- benefits for both countries
Metzker 6/17 (Jared Metzker, IPS contributor, 17 June 2013, “Analysts Say Oil Could Help
Mend U.S.-Venezuela Relations,” Inter Press Service,
http://www.ipsnews.net/2013/06/analysts-say-oil-could-help-mend-u-s-venezuelarelations/)kw
Over half of Venezuela’s federal budget revenues come from its oil industry, which also
accounts for 95 percent of the country’s exports. Estimated at 77 billion barrels, its proven
reserves of black gold are the largest of any nation in the world. Despite a troubled political
relationship, its principal customer is the United States, which imports nearly a million barrels a
day from Venezuela. Venezuela’s oil industry has been officially nationalised since the 1970s,
and, as president, Chavez further tightened government control over its production. His
government took a greater chunk of revenues and imposed quotas that ensured a certain
percentage would always go directly towards aiding Venezuelans via social spending and fuel
subsidies. While these measures may be popular with Venezuelans, who pay the lowest price for
gasoline in the world, critics argue such policies hampered growth and led to mismanagement of
Petroleos de Venezuela, S.A. (PdVSA), the main state-run oil company. The same critics also
point to increasing debt levels, slowdowns in productions and accidents stemming from faulty
infrastructure. In order to boost production, PdVSA agreed in May to accept a number of major
loans. This includes one from Chevron, one of the largest U.S. oil companies, which will work
with Venezuelans to develop new extraction sites. Related IPS Articles UNASUR Backs
Venezuelan President-elect and Calls for Peace Tension Surrounds Start of Venezuela’s PostChávez Era OP-ED: Stability Will Mark Post-Chávez Venezuela “The oil sector is in deep trouble in
Venezuela – production is down and the economic situation is deteriorating,” explained Shifter.
“They know they need foreign investment to increase production, and this is in part what has
motivated Maduro to reach out.” If its economy continues to falter, Venezuela may be further
tempted to embrace the United States, which has the largest, most sophisticated fossil fuel
industry in the world. Kerry’s recent words suggest that the administration of President Barack
Obama would be waiting with open arms. “Venezuela cannot confront its economic crisis and
the United States at the same time,” Diana Villiers Negroponte, a senior fellow at the Brookings
Institute, a Washington think tank, told IPS, “and we are a pragmatic country which will deal
with Maduro if it is in our interests.” Indeed, Negroponte said she was “optimistic” about the
possibility of rapprochement between the two countries within the next six months. She notes a
“troika” of issues on which the United States is looking for Venezuelan cooperation: counterterrorism, counter-narcotics and assistance in ridding Colombia of its FARC rebels.
NarcoTerror
U.S. support key to leading the change in efforts to build lasting programsempirical evidence like the Merida Initiative and CARSI
The Heritage Foundation Economic Freedom Task Force 13 (“2013 Global Agenda For Economic
Freedom”, http://www.heritage.org/research/reports/2013/07/2013-global-agenda-for-economic-freedom)
The U.S. should continue to support efforts that enhance security and rule of law in the region.
As the U.S. moves beyond the “war on drugs” paradigm, toward a broader strategy aimed at
building citizen security, it must continue to support multipronged efforts to build law
enforcement institutions, courts, and corrective facilities with follow-ons to key programs, such
as the Merida Initiative (Mexico) and the Central American Regional Security Initiative (CARSI).
The U.S. must work to reduce demand for illicit drugs and spearhead efforts to combat money
laundering.
Narcotics in Venezuela lead to violence and regional instability which also
decreases supports of US policy in the region
Fukumi 13 (Sayaka has a Ph.D in international policy, “Cocaine Trafficking in Latin America: EU and US Policy Responses”,
http://books.google.com/books?hl=en&lr=&id=foSCMuVrPpEC&oi=fnd&pg=PR7&dq=u.s.+policy+towards+venezuela&ots=65vTPt7F
ch&sig=EtzKOWK2KapzJyMXWYYwbrSY80g#v=onepage&q=u.s.%20policy%20towards%20venezuela&f=false)
The cocaine trade, as discussed in chapter 3, has been recognized as a ‘threat’ to the United
States due to the large sums of money at the disposal of drug trafficking organisations and their
capability to exert influence on the political and economic systems. In addition, there is the
potential that insurgency groups empowered by narco-dollars could cause regional instability.
The nexus of drug trafficking organisations and insurgency groups can be a predicament to law
enforcement operations in the Andean states due to the violent attacks agents might face
during the operations. The growing influence of the drug trafficking organisations might lead a
state to become uncooperative towards the US drug control policy. It is partly in considering
such possible dangers, the origin of cocaine and the nationalities of those who engage in the
cocaine trade that cocaine trafficking was categorized as a national security threat from foreign
states- an alien conspiracy to harm the social fabric and economic well-being of the US. This
notion of a foreign conspiracy established a priority in the fight against cocaine trafficking,
focusing on the external enemy (the supply of cocaine) rather than internal problem (the
demand for cocaine).
U.S. action against supply of drugs would reduce demand
Fukumi 13 (Sayaka has a Ph.D in international policy, “Cocaine Trafficking in Latin America: EU and US Policy Responses”,
http://books.google.com/books?hl=en&lr=&id=foSCMuVrPpEC&oi=fnd&pg=PR7&dq=u.s.+policy+towards+venezuela&ots=65vTPt7F
ch&sig=EtzKOWK2KapzJyMXWYYwbrSY80g#v=onepage&q=u.s.%20policy%20towards%20venezuela&f=false)
The US government has decided to control the supply of drugs because of the nature of the
capitalist economy. There are two ways to control the cocaine market: one is to reduce demand,
because if there is no demand, then there will be no supply. The other is to reduce supply in
order to increase the price at the market and discourage consumers from purchases, following
the rule of ‘invisible hand’. The US argument on demand reduction is that by reducing supply:
the price will rise and the consumers will not be able to afford cocaine. In the case of illicit
commodities, this argument is much more difficult, as US officials admit, because the reduction
of cocaine production is not easy to achieve.
Venezuelan cocaine funds Middle Eastern terrorism- both Hezbollah and Al
Qaeda
Neumann 11 (Vanessa, Senior Fellow of the Foreign Policy Research Institute and is co-chair,
with FPRI Trustee Devon Cross, of FPRI’s Manhattan Initiative, THE NEW NEXUS OF
NARCOTERRORISM:
HEZBOLLAH AND VENEZUELA, 12/1/2011,
http://www.fpri.org/enotes/2011/201112.neumann.narcoterrorism.html, AN)
Press stories, as well as a television documentary, over the past two months have detailed the
growing cooperation between South American drug traffickers and Middle Eastern terrorists,
proving that the United States continues to ignore the mounting terrorist threat in its own
“backyard” of Latin America at its own peril. A greater portion of financing for Middle Eastern
terrorist groups, including Hezbollah and Al Qaeda, is coming from Latin America, while they
are also setting up training camps and recruiting centers throughout our continent, endangering
American lives and interests globally. Some Latin American countries that were traditional
allies for the U.S. (including Venezuela) have now forged significant political and economic
alliances with regimes whose interests are at odds with those of the U.S., particularly China,
Russia and Iran. In fact Iran and Iran’s Lebanese asset, “the Party of God,” Hezbollah, have now
become the main terror sponsors in the region and are increasingly funded by South American
cocaine. Venezuela and Iran are strong allies: Venezuelan President Hugo Chávez and Iranian
President Mahmoud Ahmadinejad publicly call each other “brothers,” and last year signed 11
memoranda of understanding for, among other initiatives, joint oil and gas exploration, as well
as the construction of tanker ships and petrochemical plants. Chávez’s assistance to the Islamic
Republic in circumventing U.N. sanctions has got the attention of the new Republican leadership
of the House Foreign Affairs Committee, resulting in the May 23rd, 2011 announcement by the
US State Department that it was imposing sanctions on the Venezuelan government-owned oil
company Petróleos de Venezuela (PDVSA) as a punishment for circumventing UN sanctions
against Iran and assisting in the development of the Iran’s nuclear program. Besides its
sponsored terrorist groups, Iran also has a growing direct influence in Latin America, spurred
by three principal motivations: 1) a quest for uranium, 2) a quest for gasoline, 3) a quest for a
base of operations that is close to the US territory, in order to position itself to resist
diplomatic and possible military pressure, possibly by setting up a missile base within striking
distance of the mainland US, as the Soviets did in the Cuban Missile Crisis. FARC, Hezbollah and
Al Qaeda all have training camps, recruiting bases and networks of mutual assistance in
Venezuela as well as throughout the continent. I have long argued that Latin America is an
increasing source of funding for Middle Eastern terrorism and to overlook the political
changes and security threats in the region with such geographic proximity to the US and its
greatest source of immigrants is a huge strategic mistake. It was inevitable that South
American cocaine traffickers and narcoterrorists would become of increasing importance to
Hezbollah and other groups. While intelligence officials believe that Hezbollah used to receive
as much as $200 million annually from its primary patron, Iran, and additional money from Syria,
both these sources have largely dried up due to the onerous sanctions imposed on the former
and the turmoil in the latter.
Hezbollah will attack Israel
Devenny 6 (Patrick, Henry M. Jackson National Security Fellow at the Center for Security Policy
in Washington, D.C, Hezbollah's Strategic Threat to Israel, Winter 2006,
http://www.meforum.org/806/hezbollahs-strategic-threat-to-israel, AN)
In May 2005, as international pressure increased for Hezbollah's disarmament,[1] the group's
spiritual leader, Sheikh Hassan Nasrallah, announced, "They say [we have] 12,000 rockets ... I
say more than 12,000 rockets."[2] It was the first time Nasrallah had ever publicly quantified
Hezbollah's arsenal. The risk of escalation has increased in recent years as internal events in
Lebanon become less predictable and as Iranian and Hezbollah activities and interests have
come into greater conflict with U.S. and Israeli security concerns. A number of scenarios exist in
which Hezbollah might order a missile strike against Israel. As the Iranian government works to
develop nuclear weapons, both the U.S. and Israeli leadership may consider a military strike to
delay achievement of that capability. Hezbollah may also be tempted to apply its deterrent to
Israeli actions in any renewed conflict with Palestinian groups or strike at Israel as it lays a
claim to a greater regional role or to Jerusalem. The Threat The Hezbollah missile threat to
Israel has expanded not only in quantity but also in quality. In recent years, the group's
operational artillery reach has grown. Experts and analysts generally put the Hezbollah rocket
force somewhere between 10,000 and 12,000 missiles.[3] The heart of this arsenal remains
rooted in Hezbollah's massive stocks—perhaps 7,000 to 8,000—of 107mm and 122mm Katyusha
rockets, virtually all of which were supplied directly from existing Iranian army stocks.[4] In the
past, these were used to attack Israeli border towns and settlements. Hezbollah wields two
variations of the 107mm rocket, one man-held while the other is fired from the approximately
144 Haseb-type multi-barrel rocket launcher mobile systems provided to Hezbollah by Iran. The
107mm has a small payload and an effective range of just over 5 miles. Most of Hezbollah's
more deadly 122mm rockets are man-portable, but the organization does field over 70 mobile
Noor, Hadid, and Awash multi-barrel rocket launcher systems which fire heavier rounds with
warheads weighing over 100 pounds capable of reaching targets up to 20 miles away.[5] Of far
greater concern to Israel than these antiquated and relatively short-range projectiles are
Hezbollah's growing stocks of Fajr-3 and Fajr-5 rockets. Iran began large-scale delivery of the
Fajr-3 in 2000 and the Fajr-5 in 2002, with the approval of Syrian president Bashar al-Assad.[6]
Iranian cargo and passenger jets transport the weaponry from Iran to Damascus International
Airport where they can be off-loaded by Hezbollah agents and members of the Iranian
Revolutionary Guard Corps. The weapons are then trucked to the Bekaa Valley. Other reports
suggest some Iranian cargo flights land at Beirut International Airport, providing Hezbollah with
a more direct supply route although this process may have changed with the Syrian withdrawal
from Lebanon and the change in Lebanese government.[7] The Fajr-type rocket represents a
significant upgrade to any threat assessment of Hezbollah. Designed by Iran with aid from
China and North Korea, both classes of weapons are fired from mobile launchers, including
customized Japanese trucks, and carry 200 pound high-explosive payloads. The Fajr-3 has a
range of 25 miles while its more powerful upgrade, the Fajr-5, has a range of 45 miles.
Accordingly, the Fajr extends Hezbollah's strike range well beyond Haifa. While the number of
Fajr missiles in Hezbollah's possession is unclear, Israeli estimates suggest an arsenal of at least
several hundred.[8] In addition, Hezbollah has an unknown number of other missiles such as
Syrian reproductions of Soviet BM-27 220mm rocket systems, which also can carry a warhead of
220 pounds to a range between 30-45 miles. How Would Hezbollah Attack Israel? Hezbollah's
augmented arsenal has transformed it, from an Israeli perspective, from a manageable border
menace to a strategic threat. Traditionally, Israel's northern administrative region has borne the
brunt of rocket attacks across the Lebanese frontier. First, Palestinian terrorists and, later,
Hezbollah have launched shells and rockets into the towns and kibbutzim (collective farms and
settlements) near the border. While disruptive, civilians living in Israel's northern regions have
adjusted to the threat, keeping shelters well stocked and accessible. A concentrated barrage of
122mm rockets further south, for example, on a town like Safed, could be far more destructive
and render the town unable to function. Heavy damage would lead to breakdowns in regional
power supply, communication, and transportation. Adding the Fajr rockets to the mix, however,
raises the threat. Haifa, Israel's third largest city with a population of some 270,000 people,
now lies within Hezbollah range. Even a modest barrage of 75 Fajr-5 rockets hitting the city
would represent 15,000 pounds of high explosives detonating in the midst of a densely
populated cosmopolitan area. The coastal cities of Acre and Nahariya—with populations of
55,000 and 41,000 respectively—might expect an even heavier assault due to Hezbollah's
ability to target them with both the Fajr-3 and Fajr-5 models. While the Fajrs are not very
precise—the sheer number of rockets at Hezbollah's disposal makes Israel vulnerable. Any
Hezbollah barrage will not likely be random, however. The group's external intelligence
service has concentrated recently on targets and trajectory algorithm selection. In January
2005, Israeli security detained Danish citizen Iyad ash-Shua after he was caught filming northern
Israeli military installations on behalf of Hezbollah.[9] The arrests of other Hezbollah agents
have indicated the group's special interest in fuel refineries and military bases around Haifa.
Moreover, Hezbollah no longer depends exclusively on human intelligence. The group now has
access to Iranian-designed and controlled Mirsad One unmanned aerial vehicles. While crude
and rudimentary, the Mirsad is able to transmit live video footage, a capability instrumental in
scouting targets that were previously inaccessible to Hezbollah human intelligence agents.[10]
In addition to the Mirsad, Hezbollah planners now have access to commercially available, highresolution satellite photographs and open-source geographical imagery offered by companies
such as GlobeXplorer and Google. These may enhance Hezbollah's targeting ability.
A terrorist attack against Israel would escalate to global nuclear war
Morgan in 2009
(Dennis Ray, Professor of Foreign Studies at Hankuk University, December, “World on fire: two
scenarios of the destruction of human civilization and possible extinction of the human race”
Futures, Vol 41 Issue 10, p 683-693, ScienceDirect) MG
In a remarkable website on nuclear war, Carol Moore asks the question "Is Nuclear War
Inevitable??" [10].4 In Section 1, Moore points out what most terrorists obviously already know
about the nuclear tensions between powerful countries. No doubt, they've figured out that the
best way to escalate these tensions into nuclear war is to set off a nuclear exchange. As Moore
points out, all that militant terrorists would have to do is get their hands on one small nuclear
bomb and explode it on either Moscow or Israel. Because of the Russian "dead hand" system,
"where regional nuclear commanders would be given full powers should Moscow be
destroyed," it is likely that any attack would be blamed on the United States" [10]. Israeli
leaders and Zionist supporters have, likewise, stated for years that if Israel were to suffer a
nuclear attack, whether from terrorists or a nation state, it would retaliate with the suicidal
"Samson option" against all major Muslim cities in the Middle East. Furthermore, the Israeli
Samson option would also include attacks on Russia and even "anti-Semitic" European cities
[10]. In that case, of course, Russia would retaliate, and the U.S. would then retaliate against
Russia. China would probably be involved as well, as thousands, if not tens of thousands, of
nuclear warheads, many of them much more powerful than those used at Hiroshima and
Nagasaki, would rain upon most of the major cities in the Northern Hemisphere. Afterwards,
for years to come, massive radioactive clouds would drift throughout the Earth in the nuclear
fallout, bringing death or else radiation disease that would be genetically transmitted to
future generations in a nuclear winter that could last as long as a 100 years, taking a savage
toll upon the environment and fragile ecosphere as well.
Russia Advantage
Russia Influence Bad
Russia is using economic contacts in Latin America to establish geopolitical
dominance and challenge U.S. hegemony
Blank, 10 (Research Professor of National Security Affairs Strategic Studies Institute U.S. Army War
College (4/13/2010, Stephen J., “Russia and Latin America: Motives and Consequences,”
https://umshare.miami.edu/web/wda/hemisphericpolicy/Blank_miamirussia_04-13-10.pdf, JMP)
However, none
of the expanding economic ties should disguise Moscow’s fundamentally
geostrategic orientation. Medvedev wants the BRIC countries (Brazil, Russia, India and China) to bring
about a genuine multipolarity and weaken U.S. hegemony in international financial institutions
and the global economic order.54 He and Argentina’s President Cristina Kirchner advocated reforming international
financial institutions, a major thrust of recent Russian foreign policy, and Medvedev urged Argentina to recognize Russia as a market
economy.55 Medvedev and subordinate officials have also urged Brazil to coordinate foreign policy with Russia to foster the
multipolar world.56 Indeed, in 2006, then-Prime
Minister Mikhail Fradkov openly admitted that successful
business contacts are crucial to Russia’s geopolitical cooperation with other governments when
he said, “I would not set higher targets for geopolitical relations without making a success in the
economy first.”57 Similarly, Medvedev conceded that his own trip to Latin America was prompted by serious geopolitical
reasons.58 Venezuela and Cuba The dominance of geopolitics emerges quite strongly in Russian foreign
policy towards its main partners in Latin America, Venezuela and Cuba. Russia’s interests are
fundamentally geostrategic, not economic, and no Latin economy save perhaps Brazil can offer Russia much
tangible benefit. Therefore, geopolitical and strategic aims outweigh economic interaction with these states. For example, the BBC
reported that Patrushev told Ecuador’s government that Russia wanted to collaborate with its intelligence agency, “to expand
Moscow’s influence in Latin America.” 59 Moscow also signed an agreement to sell Ecuador weapons.60 Most probably Russia
wants to link Ecuador and Venezuela with Russian weapons and intelligence support against Colombia. Since they are both
antagonistic to Colombia, they can then support the Revolutionary Armed Forces of Colombia (FARC), threaten a U.S. ally and seek
to pin Washington down in another dirty war.61 Chávez’s open support of the FARC with Russian weapons strongly suggests that
Moscow knows all about his efforts and approves of them. The case of Viktor Bout, the notorious arms dealer who enjoys protection
from Russia’s government, reinforces this analysis. In 2008 Bout was arrested in Thailand for offering to deliver weapons to the FARC
as part of a sting organized by the United States. It may not be coincidental that Bout’s offers coincide with Russian support for
Chávez’s latest clash with Colombia.62 Once Bout was arrested and obliged to undergo an extradition hearing, Moscow brought
immense pressure to bear upon Bangkok so that he would not be extradited to the United States and forced to name names, dates,
places and people.63 Undoubtedly,
Moscow also fully recognizes Chávez’s conversion of Venezuela
into a critical transshipment center for narcotics from both Latin America and West Africa, his
support for insurgencies and terrorists throughout Latin America and his expansionist and
revolutionary dreams about Colombia, and seeks to exploit those factors for its own antiAmerican purposes.64 Therefore one must treat reports of actual or forthcoming Russian agreements with Nicaragua and
Venezuela on counter-drug cooperation with great wariness, as they could be smokescreens for Moscow’s conscious support for
drug running into America, Europe and Latin America.65 Indeed, reports from 2003 point to Russian criminal penetration of
Mexico’s narcotics gangs.66 More recently, in early 2009, a Russian and a Cuban citizen were both arrested for drug smuggling in
Yucatán.67 Simultaneously, Russia openly wants to increase cooperation among the BRIC members’ intelligence services and Latin
America in general. Clearly Moscow wants to establish permanent roots in Latin America and use those contacts as bases for
political influence to support those states and potential insurgent movements against the United States. 68 These are only some of
the reasons why Moscow’s arms sales to Venezuela, and projected sales to Cuba, are perhaps the only truly dangerous aspects of its
policies in Latin America. These sales aim to give Chávez much of what he needs to foment his Bolivarian Revolution throughout
Latin America, since Chávez is running or selling weapons to insurgents and left-wing regimes all over the region, and second,
because these weapons make no sense unless he is planning an arms race in Latin America. Chilean, Colombian and especially
Brazilian reports all raise the alarm about the $5.4 billion in Russian arms sales to Venezuela. These reports raise the specter of
Venezuela “detonating” a continental arms race, acquiring the largest Latin American fleet due to its purchase of submarines, the
comprehensive arming of Venezuela’s army, fleet and air forces with huge arms purchases, and the acquisition of hundreds of
thousands of Kalashnikovs, and an ammunition factory. These reports also point out that since 2003, if not earlier, these automatic
rifles and ammunition have migrated from Venezuela to the FARC. This causes great fear that Russian arms will underwrite armed
insurgencies and drug running (submarines being excellently equipped for that purpose, as well as to defend Venezuela’s coastline
from nonexistent threats).69 The
sheer scale of ongoing Russian arms sales to Venezuela since 2004
justifies these alarms, as they make no strategic sense given the absence of any U.S. or other
military threat. Even Chávez knows this, for he claims that the air defense missiles he ordered are meant to protect oil
derricks!70 Therefore there are purposes beyond the legitimate defense of Venezuela for these weapons. Moscow has sold
Venezuela $5.4 billion in weapons since 2004. Those systems include 24 Su-30 fighters, 100,000 Kalashnikov AK-47
rifles, Ak-103 assault rifles, BMP-3 infantry fighting vehicles. Venezuela also bought 53 Mi-17V-s and Mi-35M helicopters. In addition,
Russia has helped develop factories in Venezuela that can make parts for the rifles, their ammunition and the fighters, with an
announced goal of producing 50,000 rifles a year. Venezuela plans to buy 12 Il-76 and Il-78 tankers and cargo aircraft, or possibly 96300 military transport planes, Tor-M1 anti-air missiles, a fifth generation anti-air system equally effective against planes, helicopters,
UAVs, cruise missiles and high precision missiles, and Igla-S portable SAM systems. In September 2009, Moscow advanced Caracas a
$2 billion credit to buy more arms: 92 T-72 main battle tanks, Smerch rocket artillery systems, and the Antey 2500 anti-ballistic
missile system.71 Other Russian defense sources said that the tank deal could be expanded to include three diesel-powered
submarines “Kilo” class, combat helicopters Mi-28 and armored infantry vehicles BMP-3.72 Venezuela also seeks Mi-28n Hunter
high-attack helicopters and is discussing the possible purchase of submarines.73 There were
also earlier discussions
about selling project 636 submarines (among the quietest subs in the world) to Venezuela during 2011-13,
along with torpedo and missile ordnance for Venzuela’s navy. The $2.2 billion loan in 2009 will
go for 92 T-70 and T-72 tanks, BMP-3 Infantry Fighting Vehicles, Smerch anti-tank missiles,
multiple rocket launchers, S-300, Buk M-2 and Pechora anti-aircraft missiles, all systems usable
against Colombia. In return, Russia got access to join Venezuela’s national oil company, Petróleos de
Venezuela, S.A. (PDVSA), in exploring oil fields in the Orinoco River basin.74 The signed agreements make it clear
that each of the three Russian companies has staked its own bloc in the Orinoco oil belt. Thus, LUKOIL has received permission to
explore the Junin-3 block. In effect, it has extended its three-year-long contract with PDSVA on the block's evaluation and
certification. The new two-year agreement provides for the bloc's joint exploration and development. Once accomplished, the two
companies plan to establish a joint venture to develop the deposit. This will require billions of dollars in investment. The oil from this
project could then be sent to an oil refinery in Italy. LUKOIL has just bought 49.9% of its shares. TNK-BP and PDSVA signed an
agreement on the joint study of the Ayacucho-2 block in the wake of a framework memo signed last October. As with the LUKOIL
agreement, it provides for a second phase - the sale of the produced oil abroad.75 Venezuela’s
arms purchases make
no sense unless they are intended for purposes of helping the FARC and other similar groups,
fighting Colombia, projecting power throughout Latin America, drug running with subs that are
protected against air attacks, or providing a temporary base for Russian naval and air forces
where they can be sheltered from attacks but threaten North or South America.76 Since Putin
has said that permanent bases in Cuba and Venzuela are unnecessary, this leaves the door open
to temporary bases, including submarine bases as needed.77 Recently Bolivia, too, has offered its territory as a
base in return for arms sales and economic help on energy and other projects.78 Much of what Russia sells to Venezuela is
compatible with that idea, as is Putin’s call for restoring Russia’s position in Cuba and ongoing talks between Russian and Cuban
military officials (e.g., Sechin’s trips in 2008).79 The following facts are also particularly noteworthy. Chávez is not only arming the
FARC; he is also training other Latin American states’ military forces (e.g., Bolivian forces). 80 Venezuela aided Iranian missile sales to
Syria, Chávez told Iranian leaders about his desire to introduce “nuclear elements into Venezuela,” (i.e., nuclear weapons) and
Russia supports the allegedly peaceful Venezuelan development of nuclear energy and explorations for finding uranium and an
alternative nuclear fuel, thorium.81 Iran is now actively helping Venezuela explore for uranium.82 These developments
suggest the possiblity of Venezuela functioning as a kind of swing man or pivot for a RussoVenezuelan-Iranian alliance against the United States. Certainly elements in the Iranian press and
government believe that Tehran should further intensify its already extensive efforts here to
create the possibility of a “second front” in political or even in military terms against the United
States. Hizbollah already raises money and runs drugs in Latin America and many have noted the
growing network of ties between Iran and Latin American insurgents and terrorists facilitated by
Chávez.83
Russian influence destabilizes Latin America and prompts nuclear arms races
Blank, 11 (Stephen, Professor of Strategic Studies at the United States Army War College, August 18,
2011, “Russia’s Second Wind in Latin America”, <https://www6.miami.edu/hemisphericpolicy/Perspectives_on_the_Americas/Blank-Latam2011-FINAL.pdf>)ZB
In 2008 Russia generated many headlines by overtly angling for a big role in Latin America’s international politics. Although Russian
interest in Latin America seemingly waned after that, recent signs suggest Russia is gaining a second wind in Latin America. This new
upsurge begins from that 2008 baseline. Although
it utilizes the same instruments of arms sales and energy
exploration, Moscow appears to have refocused its priorities without sacrificing its friends in
Caracas and Havana. Thus, this new campaign validates President Dmitry Medvedev’s 2008 remarks that Russia was only
beginning to upgrade its ties with Latin America, which he and other officials recognize as a growing presence in world affairs. He
further emphasized that Russia
would undertake comprehensive and multidimensional relations with
Latin America. So we should not expect a full Russian retreat from Latin America, even if its
foreign policy retrenches. Instead, further advances and, to be frank, anti-American probes, should
be expected. Indeed, Russian policy is not driven by Latin America’s views, but by classical desires
for profit and influence, mainly at the expense of the United States, and a visceral antiAmericanism. Analysts like Fedor Lukyanov, Vladimir Shlapentokh and Leonid Radzhikhovky all
attest to the virtually obsessive anti-Americanism that drives much of Russian foreign policy.
Indeed, powerful people like Deputy Prime Minister Igor Sechin, Premier Vladimir Putin’s right-hand man,
apparently want to conduct a Latin American policy of anti-Americanism and destabilization
regardless of the consequences. Sechin reportedly promoted economic deals and arms sales to
Cuba, Venezuela and Nicaragua, and the formation among these three of an alliance as
“Moscow considers the formation of such a union a worthy response to U.S. activity in the former
Soviet Union and the placement of missile defenses in Poland and the Czech Republic.” Not surprisingly Sechin advised Putin that
Moscow should upgrade its relations with these countries in particular, and with Latin America in general. As Deputy Prime Minister,
Sechin appears to have encouraged Venezuelan president Hugo Chávez to develop a nuclear
program and Sechin negotiated the transfer of nuclear technology and weapons to Venezuela.
In July 2009 he arranged a deal with Cuba that allowed Russia to conduct deep-water drilling in the Gulf of Mexico.
Russian uses oil deals to stage containment of the US – only investment can
reassert leadership in the region
F. Michael Maloof 3/3/2013 - former Defense Department official (WND, “RUSSIA-CHINA
STANDOFF IN VENEZUELA,” http://www.wnd.com/2013/03/russia-china-standoff-in-venezuela/)
Sechin and Maduro finalized a number of agreements that help assure Russia’s future position
in Venezuela and keeps pace with China, which has loaned billions of dollars to the Chavez
government to help ensure security of its own oil investments in the country. Both countries are
in the process of helping develop Venezuela’s oil reserves, said to be the largest in the world at
an estimated 296 billion barrels. Regional sources say that Sechin negotiated almost $47 billion
in investments in the Venezuelan oil sector, including agreements to set up a joint RussiaVenezuela drilling and manufacturing company and to permit increased Russian access to
offshore oil reserves. However, both countries also have an ulterior strategic reason for
maintaining their position in Venezuela, and that is having a base from which to watch and
undertake a containment approach toward the United States Russia is using its investments as
a way to obtain more bases for its navy. In 2008, Russia sent in long-range bombers and a naval
squadron to Venezuela. While it hasn’t done a repeat of these deployments, Russia wants
permanent basing rights in Venezuela. Russia also has expanded its arms sales to Venezuela,
including more than 100,000 Kalashnikov rifles, Mi-35 helicopters, Su-30 jet fighters, air defense
systems, tanks and armored vehicles. If Chavez dies, there is a question as to what extent a new
leader will be as friendly to both Russia and China. Any new leadership probably will continue
working with them but could be friendlier to the United States, unlike the Chavez regime,
according to informed sources. In turn, this could create a climate for further American
investment which the Russians would then find competitive with their own interests.
Venezuela is key to Russian arms sale and diversification
Center for World Conflict and Peace, 3/9 (Center for World Conflict and Peace, independent,
non-partisan think tank, March 9, 2013, “Russia’s Uncertain Position in post-Chávez Venezuela”,
<http://centerforworldconflictandpeace.blogspot.com/2013/03/russias-uncertain-position-inpost.html>)ZB
After energy, Russia’s most valuable export is armaments and military hardware. Chávez
constantly feared a U.S. invasion of Venezuela, and had been engaged in a long-standing dispute
with neighboring Colombia over the presence of U.S. troops in Colombia (these U.S. troops including most notably the
U.S.’s élite Special Forces, whose purpose is to assist with counter-narcotics and counter-insurgency). This, in principle, was
the basis for his decision to enter into contractual agreements with Russia regarding arms sales.
Venezuela is the second-largest customer for Russian military hardware (after India), and as Russia’s
economy is famously lacking in diversity of exports outside of energy, a willing market for arms
is greatly welcomed (a situation only enhanced by the instability in another major importer of
Russian arms- Syria). In 2009, then-Secretary of State Hillary Clinton warned of a possible arms race between Colombia and
Venezuela. Since 2006, the gross income for Russian military sales abroad has doubled, and Russian
arms sales are now almost exclusively handled through state-owned company Rosoboronexport. Chávez’s death, however, could
reduce Russia’s client relationship with Venezuela in the arms industry, depending on how the succession plays out. It would be
easy to assume that Nicolás Maduro, Venezuela’s vice president, would succeed the late Chávez, yet Venezuela’s
opposition is relatively strong. The Venezuelan economy, despite the strength of the country’s crude reserves, is not entirely
healthy, and if the Venezuelan opposition ends up in power they may decide that it is not economically viable to have such contracts
arms with Russia. Viachelav
Nikonov, deputy chair of the Russian Parliament’s committee on foreign
affairs, has stated that he does not believe a new Venezuelan administration would be able to
opt out of currently existing contracts, but future contracts may not be pursued.
It’s reverse causal - Russian influence is multi-faceted and expanding
Blank, 9 (Stephan, Professor of Strategic Studies at the United States Army War College, April 2009,
“Russia in Latin America: Geopolitical Games in the US’s Neighborhood”,
<http://gees.org/documentos/Documen-03438.pdf>)ZB
In 2008, Russia, like Columbus, discovered Latin America. Or so Western and Russian media would have us believe. Leading
commentators speculated about the motives behind presidential and ministerial visits to and
from Russia; major arms, trade and energy deals; visits by Russian long-range bombers, and joint
naval exercises with Venezuela, and fleet calls to Nicaragua and Cuba occurred. Although the Pentagon professes no
alarm, Washington sent Thomas Shannon, the Assistant Secretary of State for Latin America, to Moscow to ascertain Russia's precise
aims. Having
expressed US concerns regarding the destabilizing effects of Russian arms sales to
Venezuela, Shannon's visit undoubtedly proved that Russia could get Washington's attention.‘
Moreover, for the first time in years, the Pentagon in 2008 stood up the Fourth Fleet in the South Atlantic. its formal missions are to
safeguard maritime routes, conduct disaster relief, engage in humanitarian operations, and conduct multilateral operations with
Latin American navies.2 Nevertheless, observers naturally see it as a response to heightened risk perception. However, Russia's
quest for influence in Latin America began in 1997 and its goals have been remarkably consistent. Russia
started seeing
Latin America as an area of increasing global economic importance in 2003 and began selling
weapons there in 2004 so current policy represents the continuation and expansion of an earlier
base, not a new initiative.’ What had changed, at least until the current global economic crisis beginning in 2008, was
Moscow's pability to implement its policies and its steadily growing anti-Americanism. Because the economic crisis has reduced
Russia's and Latin American states’ capabilities for joint action, most notably in Venezuela's case, the vigor of Russia's thrust into
Latin America will probably diminish accordingly. Russia's ability to obtain meaningful influence and a truly strategic position in Latin
America stems from its capacity for large-scale foreign policy initiatives. Therefore, 2009 should see a retrenchment from 2008's
more grandiose perspectives, but clearly those perspectives remain in place and will return if Russian capacities for action recover.
The Russian president, Dmitry Medvedev, implicitly acknowledged this when he said that in 2009, it
will be necessary “to ensure a worthy place for Russia in international relations,” followed by arguing
that, ‘today there is no more important task than to overcome the consequences of the global financial crisis.“ Nonetheless, during
his tour of the region in late 2008, he
said that Russia was only beginning to upgrade its ties with Latin
America, which he and other officials recognize as a growing international actor.‘ Medvedev even
called relations with Latin American countries privileged relations just like Russia's relations with the countries of the Community of
Independent States (ClS).°
Russian influence in Latin America seeks to undermine US hegemony
Blank, 9 (Stephan, Professor of Strategic Studies at the United States Army War College, April 2009,
“Russia in Latin America: Geopolitical Games in the US’s Neighborhood”,
<http://gees.org/documentos/Documen-03438.pdf>)ZB
Unfortunately Moscow's
current foreign policy—and that of supporters like president of Venezuela
Hugo Chavez, albeit for different reasons—aims to embroil the continent in a contest with Washington.
Russia still covets a global or even superpower status equal to that of the United States. Thus it
wants to be a member of every international organization that exists whether it has any real
interests in the area. Accordingly Russia expressed its interest in becoming an observer at the South American Defense
Council that is part of the Union of South American Nations (UNASUR). Russia also wants to be an observer in the Latin American
Association of Peace Operations Training Centres (ALCOPAZ)? This
craving for status lies at the heart of Russian
foreign policy.” In 1997 at the nadir of Russian fortunes, Sergey Rogov, Director of the Institute for US and Canadian Studies at
the Russian Academy of Sciences and an advisor to the government, wrote that: ‘Moscow should seek to preserve the special
character of Russian-American relations. Washington should recognize the exceptional status of the Russian Federation in the
formation of a new system of international relations, a role different from that which [...] any other center of power plays in the
global arena.'2‘ Consequently Russian
policy in Latin America is ultimately an American policy. It aims to
instrumentalize the region as a series of countries or even a weak but still discernible political
bloc to support Russian positions against US dominance in world affairs. Therefore Latin American states
that wish to challenge America need to rely on Moscow. Thus President Daniel Ortega pledged Nicaragua’s opposition to a
“unipolar” world and welcomed Russia's presence in Latin America.”
Solvency
Maduro Says Yes
Maduro will make the pragmatic decision
Ellner 7/11 (Steve Ellner, Steve Ellner, professor of economic history at the Universidad de
Oriente, Venezuela, is the editor of Latin America’s Radical Left: Challenges and Complexities of
Political Power to be published by Rowman and Littlefield in the Spring of 2013, "Just How
Radical is President Nicolás Maduro?”, NACLA, July 11th 2013)
AP writer Fabiola Sánchez,
Maduro is viewed “as a member of the radical left wing of the [Chavista
movement] and as the closest to the Cuban government.” Maduro’s trade union background
and his activism in various hard-left parties going back to his early youth reinforce his
credentials as a radical. Sánchez, however, overstates her case. The real radicals in Venezuela tend to be members of the rank and file of
the Chavista movement who to varying degrees distrust all politicians other than Chávez. Maduro will undoubtedly attempt to appeal to them but
various factors also hold back radical change. The most pressing problem faced by the Maduro government is acute shortages
of basic commodities. During this year’s presidential campaign, Capriles claimed that Venezuela “is facing the worst food scarcity in its history.”
Maduro’s government is considering different measures, each one of which presupposes a different reading of the problem and which implies a greater
or lesser advance on the road to far-reaching change. In recent months the consumer protection agency Indepabis has stepped up its activity to clamp
down on hoarding by raiding deposits of stored goods. The government-sponsored campaign to organize citizen groups to discover the locations of
hidden merchandise and report it to Indepabis often targets store owners, sometimes of Chinese descent. In another measure designed to combat
price speculation which is an offshoot of scarcity, Maduro announced his government’s intention to elaborate a list of “suggested prices” for all
imported goods paid for with dollars purchased from the government at special preferential rates. Other controls announced by Maduro are designed
to ensure that merchants use preferential dollars to import merchandise rather than selling the currency on the black market. ¶ The more far-reaching
approach consists of going after large-scale producers. The Chavista “radicals” blame the wholesalers rather than the small-scale merchants for the bulk
of the problem. Carlos Lanz, a 60s guerrilla who has always defended left-wing thinking within Chavismo, attributed the scarcity to a strategy of
“landholders who occupy dominant positions including control of inventories and channels of distribution or monopolies tied to agribusiness.” Lanz
added that there is a “correlation between [these] market manipulations and elections.” Lanz singled out the Mendoza family with a wide range of
products ranging from mayonnaise to precooked corn flour and beer (its famous Polar trademarks account for about 80 percent of the market). (2)
After talking to Polar workers in the industrial state of Carabobo, Maduro said ominously on the campaign trail, “Polar, Polar, Polar. Go ahead with your
sabotage of the people’s food. Everything in life has its hour.” The not-too-subtle threat of expropriation represents the government’s most radical
option and would be in keeping with Chávez’s reaction to the problem of scarcity when it intensified in 2007.¶ There is a limit, however, to Maduro’s
radicalism. Maduro, more than Chávez, is a man of the PSUV apparatus. He is less likely to defy the PSUV leadership in order to accelerate the process
of change or to side with those critical, discontent rank-and-file members who call for a party shakeup to clamp down on alleged corruption.
Significantly, in 2009 Maduro lashed out at a group of Chavista intellectuals known as the Centro Internacional Miranda (CIM) which published
constructive criticisms including what they called Chávez’s “hyperleadership .” Maduro reminded the CIM that there were more pressing tasks at hand
for intellectuals other than “putting forth opinions that damage the President’s leadership.” ¶ Nevertheless, Maduro understands the lesson of the
years 2007-2010 when the Chavista vote declined as a result of the sectarianism of the recently created PSUV, which attempted to become the Partido
Unico de la Izquierda (“Sole Party of the Left”). Chávez sought to correct the shortcoming in 2011 when he created the “Gran Polo Patriótico” as a
broad-based alliance taking in leftist parties and social organizations, which he called “an historical bloc” (a term used by Antonio Gramsci to refer to a
union of forces favoring revolutionary transformation). The PSUV’s allied organizations received 9.3 percent of the vote in April which made the
difference between victory and defeat for Maduro, just as it had for Chávez in the October 2012 elections. ¶ Maduro’s awareness of his need to retain
active support to his left and at the grassroots level was put in evidence at the outset of the campaign when he addressed a national conference of the
largest organization in the Polo bloc, the Communist Party (PCV). Situated to the left of the PSUV and critical of some of its decisions, the PCV issued a
document at the conference in which it stated that “the struggle against corruption and inefficiency is one of the fundamental tasks for the deepening
of the process of change.” (3) Maduro, for his part, lauded the PCV for its “glorious history” and detailed his own experiences alongside Communists in
different political struggles going back to his high school days. Maduro recalled that when Chávez first ran for president some members of his
organization favored keeping the PCV’s endorsement a secret, a stipulation that the Communists rightfully refused to go along with. “Let it be known,”
Maduro continued “that I publicly accept the backing of the PCV, which is the first party to support my candidacy.” ¶ The aggressive tone of the
presidential campaign consisting of endless personal insults between the two principal candidates would indicate that Maduro will be a “radical” in his
dealings with the parties of the opposition. In the closing days of the campaign, Maduro accused a confident of Capriles of bringing in to Venezuela a
group of mercenaries from El Salvador to inflict damage on the nation’s electrical system and commit other acts of sabotage. Regardless of the veracity
of the claim, the opposition was at least half to blame for the acrimonious relations. Capriles, shortly after Chávez’s death and without any concrete
proof, alleged that the Venezuelan leader had passed away weeks before March 5, thus implying that Maduro as well as Chávez’s family, all of whom
were at the bedside of the ailing president, were pulling the wool over the eyes of the entire country. ¶ The intensity of the mutual attacks dashed
hopes of a modus vivendi in the days after the October 2012 presidential elections when Chávez called Capriles by phone followed by cordial words
expressed by both. The short-lived thaw was greeted by some in the Chavista camp, such as José Vicente Rangel a former vice-president and long-time
leftist, who for some time had favored moderating the tone of statements about the opposition with the possibility of a future dialogue. Maduro has
explicitly rejected formal conversations with what he calls the “political elite.” Rather than reaching out to the parties of the opposition, the Chavista
movement under Maduro’s direction has attempted to encourage the defection of leaders in the anti-Chavista camp and has scored various notable
successes in this respect. When one of the leading opposition figures William Ojeda (who had supported Chávez at the outset) denounced its neoliberal
agenda late last year, Maduro exclaimed “Welcome William, one and a thousand times.” Applauding the return of anti-Chavistas back to the progovernment fold is not without its detractors on the left, particularly in the case of those (such as Didalco Bolívar, former governor of Aragua) who had
been accused of unethical conduct.¶ While intolerant toward an opposition that refuses to recognize the government’s legitimacy, President Maduro
has yet to define his attitude toward leaders and groups within the PSUV that might someday challenge his leadership. Over a period of years Maduro
along with National Assembly president Diosdado Cabello have placed their loyalists in positions in the government and the party. In the year or two
prior to his death, Chávez raised concern over the internal currents that existed particularly at the state level and raised the specter of a party torn by
factionalism. Over the recent past, PSUV leaders have pledged to put into practice Chávez’s slogan “unity, unity and more unity.” Thus Chávez’s trusted
leader Aristobulo Istúriz, elected governor of Anzoátegui in December, promised to eschew the practice of his predecessor in that state by not
endorsing aspirants to local public office in upcoming PSUV internal elections. Whether or not Maduro himself follows this line will heavily influence
national politics. A unified PSUV under the Maduro presidency is a sine quo non for effectively confronting resistance to the deepening of the process
of change. Maduro’s
foreign policy in Latin America is likely to be more pragmatic than “radical.” For
the six years that he served as Foreign Minister until 2012, Maduro promoted Latin American
unity
Maduro says yes to liberalization- lack of Chavez support and international
pressures
Halabi, 5/3 (Sammy, co-founder of Global Risk Insights and postgraduate student at the London School
of Economics, May 3, 2013, “Reasons for Optimism in Venezuela”,
<http://globalriskinsights.com/2013/05/03/spring-is-coming-we-should-be-optimistic-aboutvenezuela/>)ZB
But Maduro
is not Chavez. He is a man from the people, but not a man of the people. Though he may say the
same things, he does not talk the same way. The recent election results, where Chavez’s 11-point victory over
opposition leader Henrique Capriles was reduced to a disputed outcome, is symptomatic of this. Understanding this is fundamentally
important in predicting the coming trajectory of the Venezuelan state. Though Venezuela will continue to be able to export oil,
slightly mitigating some of Chavez’s more disastrous economic policies, Maduro sits on a ticking time bomb. Inflation is sky high,
moving past 30%. Murder rates are skyrocketing while foreign investment continues to plummet due to past expropriations. And
with increased American energy independence the era of $100 oil may be coming to an end. Chavez
had both the
ideological conviction and public support necessary to withstand pressures to liberalize and
integrate the Venezuelan economy in the face of such terrible indicators. Yet given his
weakened mandate, and the fractured political climate under which he operates, Maduro will not be able to
withstand such pressures for long. Already there have been signs that Venezuela is inching
towards change, with Maduro going so far as to temporarily open a back-channel with the US
State Department during Chavez’s cancer treatments. While it would be difficult to see an overnight reversal of USVenezuelan relations, these subtle steps are more indicative of a pragmatist than an ideologue. This is cause for optimism, and may
be the root of better ties with Venezuela’s biggest export market in the medium term. In
the short term, expect
Venezuela to pursue its liberalization on a more regional basis. Importantly, Brazil very quickly recognized
Maduro’s government in spite of the electoral controversies. Additionally, Brazil and Peru have shown that there is a
viable “third way” through which Venezuela can integrate into the international system. States like
these have contributed to the general decline in anti-American sentiment, and give Venezuela a workable model for change. For all
the fever and emotion associated with Latin America, the logic of Venezuela’s economic problems remains cold and calculating.
Maduro is not the reincarnation of Chavez and attempts to analyze Venezuela’s future on its Chavismo past are superficial at best.
In short, spring is coming.
US Key
US key—only the US can refine the crude oil
Krauss 3/8 (By CLIFFORD KRAUSS March 8, 2013 Clifford Krauss has been a correspondent for
The New York Times since 1990. He currently is a national business correspondent based in
Houston, covering energy. He covered the State Department, Congress and the New York City
police department before serving as Buenos Aires bureau chief and Toronto bureau chief.
“Dwindling Production Has Led to Lesser Role for Venezuela as Major Oil Power”
http://www.nytimes.com/2013/03/09/world/americas/venezuelas-role-as-oil-powerdiminished.html?_r=0)
HOUSTON — President Hugo Chávez relished using Venezuela’s oil wealth to project power internationally, nudging OPEC to raise oil
prices when he could, showering allies like Cuba and Nicaragua with subsidized oil shipments, and mocking the United States while
selling it his crude. International oil prices have barely moved since Mr. Chávez died. OPEC has decided to increase shipments to the
United States and Europe this month, using oil from Saudi Arabia and other Gulf states. Oil
company executives, long
frustrated by Mr. Chávez’s nationalizations, are voicing only tepid hopes that they could possibly
return in full force to what was once one of their crown jewels. Venezuela’s annual oil
production has declined since Mr. Chávez took office in 1999 by roughly a quarter, and oil exports have dropped by
nearly a half, a major economic threat to a country that depends on oil for 95 percent of its exports and 45 percent of its federal
budget revenues. “Venezuela’s clout on OPEC and on world oil prices has been greatly diminished because of its inability to exploit
its enormous resources,” said Michael Lynch, president of Strategic Energy and Economic Research, a consultancy. “In the 1990s,
their production was booming and they could thumb their nose at Saudi Arabia and get away with it, but now they have become
OPEC’s poor cousin.”
In a fundamental geopolitical turn, Venezuela now relies far more on the United
States than the United States relies on Venezuela. Venezuela depends on the United States to
buy 40 percent of its exports because Gulf of Mexico refineries were designed to process lowquality Venezuelan and Mexican crudes that most refineries around the world cannot easily
handle. But in recent years, the United States has been replacing its imports of Latin American
crudes with oil from Canadian oil sands fields, which is similarly heavy. American imports of
Venezuelan oil have declined to just under a million barrels a day, from 1.7 million barrels a day in 1997,
according to the Energy Department. And while Venezuelan exports of oil are in decline, its dependency
on American refineries for refined petroleum products has grown to nearly 200,000 barrels a
day because of several recent Venezuelan refinery accidents. Experts expect Venezuela to send
barrels no longer needed in the United States to China, as payments in kind under oil-for-loans
contracts. Venezuela’s broken refinery sector has left shortages of gasoline and diesel in parts of
Latin America, opening the door for valuable markets to American refiners. Over his 14 years in power, Mr. Chávez relied
heavily on oil revenues to finance his social programs. Energy experts say his gasoline subsidies doubled domestic consumption,
cutting deeply into exports, but that his hostility to foreign investment and mismanagement of the
state oil company
Petroleos de Venezuela were the primary reasons for the steep decline in production. A strike and
the firing of management talent and 20,000 workers at the oil company in 2002 led to a steep decline in the company, which has
been underscored by the refinery accidents. “Venezuela is a fraction of what it used to be,” said Sadad Ibrahim al-Husseini, a former
head of Saudi Aramco’s exploration and production division, “and that’s really because Venezuela’s technocrats have scattered over
the world and are no longer active in Venezuela.” Mr. Chávez further overhauled oil exploration and production with a
nationalization program in 2006 that ordered a renegotiation of contracts with foreign companies, mandating that Venezuela’s oil
company get a minimum 60 percent share in all production projects. Sixteen foreign companies, including Royal Dutch Shell and
Chevron, went along with the new rules, while Exxon Mobil, Conoco Philips and other companies resisted, and their holdings were
nationalized. Venezuela
has huge reserves, including its Orinoco heavy oil belt, which the United
States Geological Survey estimates to have 513 billion barrels of recoverable oil — enough
potentially to make Venezuela one of the top three world producers. But foreign oil companies
have been wary of investing. Jose Valera, a Houston energy lawyer, said that if Nicolás Maduro, Mr. Chávez’s vice
president until he was sworn in as president on Friday, or another member of the Mr. Chávez’s movement was elected president in a
special election “it is reasonable to expect continuity of a substantial portion of the policies.” But
as for Venezuela’s
economy, he argued, “the situation right now is not sustainable and it’s only a matter of time
before some significant changes will have to be instituted.”
US investment is key – specific refineries are needed to process Venezuelan
crude oil
EIA 2013 - U.S. Energy Information Administration, independent and impartial energy
information to promote sound policymaking, efficient markets, and public understanding of
energy and its interaction with the economy and the environment (1/22, “Political risks focus
attention on supply of Venezuelan oil to the United States,” U.S. Energy Information
Administration
Venezuela and the United States (the U.S. Gulf Coast in particular) are naturally attractive oiltrading partners because of their geographic proximity and a lack of transit chokepoints
between them. Furthermore, the robust trade in crude oil from Venezuela to the United States
is due to the compatibility between the configuration of some U.S. refineries and the quality
characteristics of Venezuelan crude, which is predominately sour (high sulfur content) and
medium or heavy (lower degrees of API gravity, meaning it has a higher density). The U.S. Gulf
Coast has a concentration of sophisticated refineries (including some wholly or partially owned
by Citgo Petroleum Corp., a subsidiary of the Venezuelan national oil company) that can
efficiently access and process Venezuelan oil. This partially explains why more than 95% of
Venezuelan crude oil exports to the United States are directed to the U.S. Gulf Coast (PADD 3).
Other significant export markets for Venezuelan crude include India, China, and various
countries in Central America and the Caribbean, including some that receive oil through the
preferential terms of the Petrocaribe initiative. EIA estimated that in 2011 Venezuela's total
crude oil exports were 1.7 million bbl/d.
Foreign Investment Key
New president won’t bring oil production- US is needed to solve
Cyrus Sanati 3/6/13(Writer for CNN http://finance.fortune.cnn.com/2013/03/06/hugo-chavezdeath-oil/)
The death of Venezuelan President Hugo Chavez is no panacea for the nation's dysfunctional
energy industry. Political and economic uncertainty will likely continue to deter foreign investors from fully committing the
necessary cash, resources, and expertise that are desperately needed to effectively tap the nation's oil wealth. Whoever takes
over the reins of the nation will need to dismantle the policies, structures, and rhetoric that
have made investing in Venezuela a fool's errand. It is not hyperbole to say that Hugo Chavez's death Tuesday
rocked the energy industry. The "Bolivarian" strongman has been the oil industry's biggest villain for over a decade. In his tenure as
president of Venezuela, Chavez
not only trashed contracts and expropriated lands and equipment from
foreign oil companies, like ExxonMobil (XOM) and ConocoPhillips (COP); he also managed to crush the
national oil company, Petróleos de Venezuela (PDVSA), by using it as a piggy bank to fund the programs
and policies associated with his nebulously defined "21st Century Socialism" experiment. There was
a time when Venezuela was seen as a bastion of liberalism -- an exception to the so-called resource curse, which posits that oil
wealth fosters corrupt and dictatorial regimes. Its
democratically-elected governments, while far from perfect, were
seen as more stable than other oil-rich nations, such as those in the Middle East. This stability
attracted foreign investors from around the globe, especially U.S. oil giants like ConocoPhillips and
Chevron (CVX).
PdVSA needs major investment to survive
Alic 4/15 (Jen, a geopolitical analyst, co-founder of ISA Intel (www.isaintel.com) in Sarajevo and the former editor-in-chief of
ISN Security Watch in Zurich, Foreign Oil & Gas Companies Look to Status Quo in Venezuela, 4/15/13,
http://oilprice.com/Geopolitics/South-America/Foreign-Oil-Gas-Companies-Look-to-Status-Quo-in-Venezuela.html, anuss)
Now that Nicolas Maduro—the late Hugo Chavez’s choice for successor—has narrowly won Sunday’s presidential
elections in Venezuela, oil and gas investors can expect a perpetuation of the status quo. In Sunday’s
vote, Maduro won with a very narrow 50.7% and a vow to continue with Chavez’s “revolution,” which has seen the oil industry nationalized and the
state-run PDVSA oil company funding social programs and voraciously courting China and Russia. Top of Form The narrow vote will not be without its
challenges. Opposition rival candidate Henrique Capriles has refused to recognize the results and is demanding a recount, though the electoral
commission is standing firm on Maduro’s victory. For
foreign oil and gas companies, we can expect more of the
same. There are no regulatory changes in the works, and an unattractive windfall tax system
announced in January will likely be pushed forward under Maduro. What Maduro is inheriting, though, is
a nightmare situation that will see him stuck between using PDVSA to fund expensive social
programs that cost it $44 billion last year alone diverted from oil revenues, and cutting social spending or allowing a rise
in the price of fuel that could spark regime-threatening unrest. If Maduro feels compelled to reduce fuel subsidies, it
could lead to riots as cheap fuel—which cannot be sustained—is one of the most crucial social benefits for Venezuelans, who pay around 6 cents per
gallon. Maduro has inherited a “sinking ship” and does not appear to have the political capital to make any short-term changes in Venezuela’s energy
policy, experts at Southern Pulse told Oilprice.com. “The
main energy issue for Venezuela is that oil production is
struggling, down from a peak of about 3.2 million barrels per day in 1998 to less than 2.8 million
bpd now. One would hope that fixing infrastructure, completing refinery repairs and construction, and
investing in exploration and new technology would be priorities but Maduro will not have funds
to invest unless he makes controversial cuts to social programs,” according to Southern Pulse, which does not believe that Maduro will attempt to
cut fuel subsidies any time soon. A top priority for Maduro will be boosting refining capacity, says Southern Pulse. Towards this end, Maduro may be
willing to negotiate if a partner steps forward to build a new refinery, which is a goal Chavez failed to realize. “If PDVSA fails to increase production,
PDVSA President Rafael Ramirez may be replaced this year. One
way for Maduro to keep his presidency afloat is to
bring new proven wells online in the Orinoco Belt; but that will require major investment.
PDVSA may need more than a minority-partner-with-a-service-contract at those fields if they
want to start pumping soon.”
Foreign investment is key to stimulating Venezuelan oil – that resurrects the
economy
Petroleum Economist, 13 (Petroleum Economist, journal focusing on the global energy market
written by a team of resource energy strategists, May 2013, “Toeing the party line”, lexis)ZB
Maduro is in an almost impossible position. He has to be pragmatic to deal with the country's
mounting economic problems. He also needs to establish, if not a friendly, at least a working
relationship with the investors, and foreign oil companies, he needs to help revive the main driver of
Venezuela's economy, the energy sector. At the same time he has pledged to continue Chavez's revolutionary policies, and clearly
has much work to do to establish his support among Chavez’s base. As it stands, analysts are generally agreed that the election
result does not spell good news for the country's moribund oil sector. "It's the worst possible scenario for the industry: a whole new
level of volatility," Carlos Bellorin, an analyst at IHS told Bloomberg. "I don't see any oil company committing a lot of resources to
Venezuela right now." In
his first days in office, Maduro has shown no sign of making nice with foreign
investors. After the Spanish government publicly supported Capriles' call for a recount, Maduro threatened Repsol's business in
the country. The company is developing a major offshore gas project, which Venezuela desperately needs to move forward to
address its electricity crisis, and a heavy-oil project in the Orinoco belt. Rafael Ramirez, reappointed oil minister and head of state oil
company PdV by Maduro, said after the election that "American multinationals" are the main enemy of Venezuela's oil policy. "They
want our oil." That may be true, but Venezuela's
oil sector desperately needs foreign investment. Oil
production is declining. The latest figures from the International Energy Agency put production
at 2.5 million barrels a day (b/d), around 700,000 b/d lower than when Chavez took office in 1999. The Orinoco belt, which
holds tens of billions of barrels of undeveloped heavy-oil reserves, offers the best hope for Venezuela to turn around its oil fortunes.
Chavez’s oil plan envisioned a string of new Orinoco belt projects lifting oil production capacity to 5.9 million b/d by 2019. All
indications are that Maduro intends to stick with that plan. Early small-scale production has started from some of those projects,
with output being trucked to existing heavy-oil upgrading infrastructure, but all are way behind schedule. The government is free to
squeeze every penny possible out of foreign companies, but it has to have a fiscal regime in place that makes the expensive and
complex heavy-oil projects attractive. The government eased the windfall profit tax last year, and it will need to offer further
incentives to get the Orinoco belt projects on track. Maduro
will also need to make changes at PdV. The
company is the engine of Venezuela's economy, but it is sputtering. Debt has soared in recent
years, production is declining, the company has lost much of its managerial and technical expertise and an
increasing amount of its revenues are being siphoned off by the government. PdV should contribute
significantly to the country's coffers, and all Venezuelans should share in the country's oil wealth. But the firm should not
be used as a piggy bank to fund politically beneficial - but economically dubious - social projects.
Conditions
Foreign investment will be conditioned on liberalization of the oil sectorotherwise the business climate turns away investors
Belsie, 3/7 (Laurent, Business Editor and the Christian Science Monitor, March 7, 2013, “What will
Venezuela do with its oil? Top five energy challenges after Chàvez.”,
<http://www.csmonitor.com/layout/set/print/Environment/2013/0307/What-will-Venezuela-do-with-itsoil-Top-five-energy-challenges-after-Chavez/The-Orinoco-Belt>)ZB
When Chávez re-nationalized his country’s huge oil company, Petróleos de Venezuela SA (PDVSA), it sent a
message to the international oil industry: no more business as usual in Venezuela. Instead of foreign companies
owning a majority share of development products, the PDVSA would get a minimum 60 percent
share. Royalty rates had already been raised. Companies who didn't agree to the new rules, such as Italy's Eni and France's Total,
saw their facilities taken over. Others, like the US-owned Exxon Mobil and ConocoPhillips, simply left. By 2009, it was clear
that Chávez's strategy had failed to stop the slide in Venezuela's oil production, and he began
allowing more foreign investment in the Orinoco Belt. China, India, Russia, Spain, Japan, Vietnam, and even
Chevron in the US gained access to six blocks in the belt as minority partners with PDVSA. If all these projects come on
stream, Venezuela projects that they would produce 2.1 million barrels of syncrude a day.
Western analysts are pessimistic that Venezuela will achieve that boost without liberalizing its
rules and opening up to more foreign investment. With a chaotic and arbitrary business
environment within the country, foreign producers may be reticent to commit large investment
sums to bring Venezuela's oil production back to pre- Chávez levels.
Lack of economic freedom is the root cause of economic troubles in Venezuelaliberalization is key
Roberts and Daga, 4/15 (James M. Roberts and Sergio Daga, of the Center for International Trade
and Economics, April 15, 2013, “Venezuela: U.S. Should Push President Maduro Toward Economic
Freedom”, <http://www.heritage.org/research/reports/2013/04/venezuela-us-should-push-presidentmaduro-toward-economic-freedom>)ZB
The foundations of economic freedom in Venezuela have crumbled. When Chavez took office in
1999, Venezuela scored 54 out of 100 possible points in The Heritage Foundation/Wall Street
Journal’s annual Index of Economic Freedom. Today, however, after 14 years of Chavez’s soft authoritarian
populism, Venezuela merits a score of just 36 points. This nearly 20-point plunge is among the most
severe ever recorded by a country in the history of the Index. Its 2013 rank—174th out of 179 countries—places Venezuela
among the most repressed nations in the world.[2] Venezuela’s dismal economic freedom score is reflected in
statistics that translate into real-time hardship for Venezuelans, who must spend more of their
incomes on higher prices for necessities—if they can find them on empty store shelves. There are scarcities of
nearly all staple food and fuel products. In fact, according to the Banco Central of Venezuela’s (BCV) shortages index,
Venezuela faces the most severe food shortages in four years.[3] And what food is available comes at a price: Mary O’Grady reports
in The Wall Street Journal that “over
the past 10 years inflation in food and nonalcoholic beverages is
1,284%.”[4] Financial disequilibrium in Venezuela is the result of a sharply widening fiscal deficit
that reached almost 15 percent of gross domestic product (GDP) last year.[5] Government control of the
formerly independent BCV also contributed to a massive expansion of the money supply. There are anecdotal reports in Caracas of
people paying as much as 23 bolívars for one U.S. dollar in the black market as of early April. The official rate is just 6.3 bolívars per
dollar—and that is after a significant 32 percent devaluation in February.[6] These
problems were aggravated by
Chavez’s foreign adventurism—which drained billions of petrodollars from the economy to keep afloat the failed
economy in Fidel Castro’s Cuba—as well as generous subsidies to his Chavista cronies in the region through such
schemes as ALBA and PetroCaribe.
Oil Liberalization Now
Venezuela open to oil cooperation in the region- May summit proves
UPI 7/2 (UPI, 2 July 2013, “Petrocaribe weighs Venezuela's post-Chavez oil diplomacy,”
UPI.com, Petrocaribe weighs Venezuela's post-Chavez oil diplomacy)kw
Can Maduro continue Chavez's generous oil diplomacy in the Caribbean and Central region the
late firebrand founded as Petrocaribe, a loosely defined union of states dependent on
Venezuela for cheap oil? This was a question paramount when the Petrocaribe region's leaders
met in Managua, Nicaragua, in late June. Venezuela supplied more than 100,000 barrels of oil
each day to Petrocaribe member states in 2012, despite a gathering crisis in Caracas over
Chavez's failing health. What's less clear is how much Venezuela got paid on terms ranging from
long-term deferment of payment to oil prices below market trends. At the Managua meeting,
Venezuela led a call to expand Petrocaribe into an economic union with goals beyond the supply
of cheap oil. At an earlier May summit in Caracas, Maduro said Petrocaribe could become a
trade bloc to complement and not compete with other cooperation pacts already in existence.
Nicaraguan President Daniel Ortega said a number of working groups created at the summit
would explore collaboration in areas "beyond the false concepts of free trade." Ortega said
"with these steps we are attacking extreme poverty, creating a regional brotherhood with a
trade zone to confront the problems facing Latin America and the Caribbean." At the May
summit, Venezuelan Oil and Mining Minister Rafael Ramirez called for expansion of Petrocaribe
beyond its initial focus of providing oil to member states at favorable prices. It's a proposal that
will allow member states to continue to strengthen Petrocaribe. Ramirez said. A key question
not discussed in public at the two summits was the proportion of cash contributions pledged by
Venezuela and other member countries. Petrocaribe members include Antigua and Barbuda, the
Bahamas, Belize, Cuba, Dominica, Dominican Republic, Grenada, Guatemala, Guyana, Haiti,
Honduras, Jamaica, St. Lucia, St. Kitts and Nevis, Saint Vincent and the Grenadines, Suriname
and Venezuela.
Oil trade with other nations now and will continue
Castro 6/30 (Ivan Castro, Attorney General of Nicaragua, 30 June 2013, “Petrocaribe leaders
agree to focus efforts on boosting trade,” Reuters,
http://www.reuters.com/article/2013/06/30/us-nicaragua-petrocaribeidUSBRE95T02I20130630)kw
At the close of the eighth-annual Petrocaribe summit hosted by Nicaraguan President Daniel
Ortega in this Central American capital, leaders agreed to focus efforts on boosting trade in
regional transportation, communication, agriculture, tourism and social service projects. "The
journey has been very encouraging because in short order ... we have organized the essential
components of a Petrocaribe economic zone," said Venezuelan President Nicolas Maduro at the
close of the summit. The trade agreement did not go into details, nor did the gathering formally
discuss changing Petrocaribe's existing oil deals. Maduro inherited leadership of the block after
his predecessor, leftist firebrand Hugo Chavez, died in March, and Maduro won the election a
month later to succeed him. Chavez founded Petrocaribe in 2005 as an alliance that allows its
current 18 member-states to buy oil from Venezuela at favorable rates and easy payment plans.
"Hugo Chavez's legacy will prevail," added Maduro. Besides Ortega and Maduro, Bolivian
President Evo Morales also attended the summit, as did Cuban Vice President Miguel Diaz-Canel
and Ecuadorean Foreign Minister Ricardo Patino.
A2: Corruption Kills the Plan
Fraud being dealt with in Venezuelan government- Maduro crackdown
Robertson 7/11 (Ewan Robertson, Masters in Latin American Studies from Aberdeen
University, 7/11/13, “Venezuela’s Maduro Strikes against Corruption, Appoints Radical Former
Minister,” venezuelanalysis.com, http://venezuelanalysis.com/news/9689)kw
Mérida, 11th July 2013 (Venezuelanalysis.com) – The Venezuelan government has exposed an
alleged extortion ring operating within the state agency which regulates price controls. On
Sunday morning police struck against alleged extortionists working within the Institute for the
Defence of People in Access to Goods and Services (Indepabis), the consumer protection agency
responsible for ensuring compliance with government price controls. The head of control and
inspection at Indepabis, Trino Martínez, was arrested after police reported finding a large sum
of money and a firearm inside his official car. The operation was executed following
denunciations to anti-corruption officials, which alleged that some Indepabis staff in Caracas
were demanding pay-offs from businesses under threat of unfair sanctions. Venezuelan
president Nicolas Maduro confirmed the operation through twitter on Sunday, declaring,
“We’re going full out against corruption”. The president of Indepabis, Consuela Cerrada, was
also dismissed.
A2: China CP
US key—, cultural differences and refining capabilities
Hearn ’12 (By Kelly Hearn - Special to The Washington Times Monday, March 12, 2012
“Venezuelan oil a risky investment for China”
http://www.washingtontimes.com/news/2012/mar/12/venezuelan-oil-a-risky-investment-forchina/?page=all#pagebreak)
BUENOS AIRES — China has poured billions of dollars into Venezuela’s oil sector to expand its claim
over the country’s massive oil reserves. But Beijing is getting relatively little for its investments,
and Chinese officials are increasingly frustrated with Venezuelan President Hugo Chavez, according to energy
analysts and former managers of the state oil company, Petroleum of Venezuela, or PDVSA as it’s known by its Spanish acronym. Mr.
Chavez, who is battling a life-threatening recurrence of cancer, said his goal is to send 1 million barrels of oil a day to China, which
has given Venezuela more than $30 billion in loans and promised billions of dollars more in energy investments by 2016. PDVSA
claims to send 410,000 barrels a day to Chinese markets, the bulk of which is used to pay back the loans. Already this year, PDVSA
has announced that Citic Group Corp., China’s largest state-owned investment company, will acquire a 10 percent stake in the
Petropiar heavy-crude project held with PDVSA and U.S.-based Chevron Corp. It also said that the China Development Bank will
spend $4 billion to help boost production in a joint venture with China National Petroleum Corp., or CNPC. The Chinese bank and the
Venezuelan government also have agreed to renew a $6 billion bilateral investment fund, of which $2 billion will help boost PDVSA
production. But Tom O’Donnell, an oil analyst who teaches at the New School University and writes an oil-industry blog, the Global
Barrel, said the payoffs of China’s loans amount to a “consolation prize.” He
said China’s goal is not to get oil for
loans, but to have its own national oil companies contract for major oil-production projects in
Venezuela’s Orinoco Tar Sands, the largest single known petroleum reserve in the world, with
513 billion barrels of heavy crude oil. Chinese displeased “The Chinese have not gotten the kind
of preferential access they want [to the tar sands], and my sources tell me they are extremely unhappy,” said Mr.
O’Donnell. In 2010, CNPC signed a deal to help Venezuela develop a major Orinoco oil field known as Junin 4, which includes the
construction of a facility to convert heavy oil to a lighter crude that could be shipped to a refinery in Guangdong, China.
“Although the contract was signed in December 2010, not one barrel of oil has yet been
produced, much less upgraded,” said Gustavo Coronel, a former PDVSA board member. “So far, nothing much seems to
be happening, except for the arrival of a large group of Chinese staff to the CNPC’s Caracas office,” he added, referring to the
Venezuelan capital, Caracas. “Apart
from money, there seems to be little that China can offer Venezuela
in the oil industry,” he said, adding that a “culture gap will make working with China very
difficult for Venezuelan oil people, who were mostly trained in the U.S.” Erica Downs, a former energy
analyst for the Central Intelligence Agency now with the Brookings Institution in Washington, said the Junin-4 project could be key to
China’s future in Venezuela. “If all that happens, China will be in a position to take substantial volumes of Venezuelan oil,” she said.
“The problem is that the project hasn’t gotten off the ground.” Ms. Downs said Venezuela is far from living up to Mr. Chavez’s export
goals for Beijing and that PDVSA’s claims of sending 410,000 barrels a day do not match Chinese customs data, which show 322,000
barrels per day of crude and fuel oil imported from Venezuela last year. “Although Venezuela’s oil exports to China have grown
along with the volume of oil-backed loans extended by China Development Bank to Caracas, the delivered volumes still fall short of
Chavez’s goal of eventually shipping 1 million barrels per day to China,” she said. Critics of the loans say Mr. Chavez is using the socalled “China fund” as his personal piggy bank. The Chinese also seem to be increasingly wary. Internal PDVSA
documents released by a Venezuelan congressman show that the Chinese balked at a $110 billion loan request by Mr. Chavez in
2010, after PDVSA officials failed to account fully for where the money would go. Problems with Orinoco The Chinese are now
pressing PDVSA to let them list some of their investments in the Orinoco region on the Hong Kong exchange, a move analysts say
would increase transparency and accountability in PDVSA’s spending. “Development of the Orinoco oil belt is only slowly taking
place because most of the companies — excluding Chevron, Repsol and China National Offshore Oil Corp. — either do not have the
cash or the technology,” said Oliver L. Campbell, a former finance coordinator at PDVSA. Unlike light and sweet crude from Saudi
Arabia, oil from Orinoco is tarlike. It is laced with metals and sits beneath deep jungles. Getting to the oil field means building roads,
electrical-power grids and other major infrastructure. Once the oil is extracted from the ground, it is technically difficult to process.
“One of
the major problems is that there are very few refineries outside the Gulf of Mexico that
can handle Venezuelan crude,” said Jorge Pinon, a former president of Amoco Oil Latin America. Years ago, U.S.
companies such as Shell and Exxon invested heavily in U.S. Gulf Coast refineries capable of processing heavy crude after they saw
that the world’s supplies of sweet crude were diminishing, Mr. Pinon said. “The
Chinese don’t have that kind of
capacity,” he said. But they are looking to get it by investing in oil infrastructure off Venezuela’s Caribbean coast. CNPC, for
example, has extended a line of credit to Cuba to upgrade a Soviet-built facility jointly owned by Venezuela and Cuba. The company
PetroChina also has taken over Saudi Aramco’s lease on a massive oil-storage facility at the strategically located Statia terminal on
the Dutch Caribbean island of St. Eustatius. PetroChina also has tried to buy an oil refinery on the island of Aruba owned by Texasbased Valero Energy Corp., according to news reports. Luis Giusti, a former president of PDVSA, said the Chinese market becomes
even more relevant for Venezuela in the face of a projected resurgence of domestic production in the United States, which currently
buys about 45 percent of all Venezuelan crude exports. “The U.S. Energy Information Agency has estimated that the U.S. could reach
a production of 20 million barrels per day by 2035, coming from shale oil in North Dakota, Arkansas, Oklahoma, Montana and
others,” he said in an email. “This would force exports from South America to look for other markets,” he said.
A2: China DA
Turn: Failure to rebuild ties on oil issues allows China to solidify its stronghold
and use oil as a diplomatic weapon against the U.S.
Hurst 08 --- political-military research analyst with the Foreign Military Studies Office and a
Lieutenant Commander in the United States Navy Reserve (9/8/2008, “China's Global Quest for
Energy; Rocky U.S. Relationship with Venezuela is Playing into China's Energy Policy Despite The
Ocean Between Them,”
www.thecuttingedgenews.com/index.php?article=740&pageid=&pagename=, JMP)
The U.S. rocky relationship with Venezuela is playing into China’s hands, perhaps better than
Beijing expected.¶ Venezuela exports approximately 60 percent of its oil to the U.S. However, since Hugo Chavez came into
power in Venezuela in 1999, the U.S. and Venezuela have maintained a tense relationship, paving a path of continuous energy deals
with China. Both
China and Venezuela have been striking "International cooperation deals" that
would not only not only provide increased oil exports to China, but also bolster Venezuela’s
economy and oil infrastructure. In 2004, Chavez, who has visited China at least five times since 1999, signed such eight
agreements on energy cooperation with the Asian country. According to China Daily, Venezuela currently ships nearly 300,000
barrels per day (bpd) of oil and fuel to China. 80,000 of this is crude oil, which is up from 39,000 bpd the year before.¶ In addition to
various business arrangements between Venezuela’s state-run oil company and China Petroleum that include purchasing
Venezuelan fuel oil and power plant fuel, Chinese
companies are seeking to invest in oil exploration and
production in the country. In return Chavez expects and is receiving Chinese assistance in the areas of telecommunications,
food production and culture.¶ The list of joint project is long, including not only oil sales from existing supply, but also the
exploration and development of new fields and the development of older fields. In fact, Chavez visited China in December 2004,
where he declared that Venezuela was ready to help China establish its own strategic petroleum reserve. He also spoke “of a
budding strategic alliance between the two countries, and signed an agreement that would allow Chinese companies to gain
developmental rights to 15 oil fields in eastern Venezuela. Although this would appear to be an excellent opportunity for China,
there are still a number of hurdles to overcome before the full export potential can be realized.¶ One issue facing China is
transportation. China and Venezuela have a big ocean between them. While Chavez is opening the doors and allowing China access
to Venezuela’s oil, transporting the oil is still costly. A tanker capable of hauling 500,000 barrels would be profitable on a short haul.
However, that same size tanker will undoubtedly lose money hauling oil all the way to Asia. Currently, supertankers are not
permitted to pass through the Panama Canal, which would save time and money by drastically cutting back the travel distance to
transport the oil. In September 2007, the Panamanian government began a massive effort to widen the 93-year old canal. But the
project is estimated to cost $5 billion and will take up to eight years to complete. The new canal will be able to accommodate
maximum capacity ships. China will likely benefit most as it ranks second to the U.S. as the canal’s biggest user. But that will be years
from now.¶ Another alternative to delivering the oil to China is to build a pipeline from Venezuelan oil fields across Colombia to
Pacific ports in Colombia or Ecuador. Unfortunately such a pipeline would currently be vulnerable to sabotage because it would run
across a war zone where rebels have long made a habit of attacking the country’s existing pipelines. Additionally, the necessary
Pacific port facilities currently do not exist and would have to be constructed.¶ A third alternative would be an existing, refurbished
inter-oceanic pipeline located in Panama. Large-scale oil shipments from Venezuela to China would dramatically increase the
pipeline’s use. Additionally, the Venezuelan and Panamanian governments have been negotiating the use of the pipeline to pump
the oil for quicker access to China. The pipeline reportedly has a capacity of 800,000 bpd. However, the pumps were installed to
move oil from the Pacific to the Atlantic and would require modification or reversal to send the fuel the other direction. ¶ Chavez has
also signed a contract to have China construct a number of supertankers, which will eliminate its dependency on renting these
tankers. It will also, according to Chavez, allow him to create one of the greatest fleets in the world. Additionally, Venezuela plans to
manufacture parts for the tankers, which will enable it to conduct much of its own maintenance.¶ China’s
interest in
Venezuela’s oil poses a potential threat to U.S. interests. Venezuela is the U.S.’s fourth largest oil supplier after
Canada, Mexico and Saudi Arabia. Tensions between the U.S. and Venezuela have been flaring since an April 2002 coup briefly
removed Chavez from office. Chavez put the blame on the U.S., accusing Washington of sponsoring the attempted overthrow as well
as a devastating oil lockout in 2002-2003. With a severe distrust of the Bush administration, and a marked “anti-imperialist
viewpoint,” Chavez has voiced concerns that President Bush had plans to have him assassinated, adding that if he were killed the
U.S. could “forget Venezuelan oil.”¶ As
the Venezuelan economy stands today, there is very little
likelihood that Venezuela would stop exporting oil to the U.S. Venezuela depends too heavily on
its oil industry. In one study it was estimated that over 60 percent of Venezuela’s population live in poverty, earning less than
$2 per day. Using the revenues from Venezuela’s oil industry, Chavez has been able to offer a number of programs promoting
literacy, job training, land reform, subsidized food and small loans. He has also used the revenue for health care and to import Cuban
doctors.¶ Once
Venezuela secures an alternate export partner in China to replace the U.S., it could
hurt the U.S., which depends on Venezuela to provide oil for 12 to 15 percent of its consumption
rate. Despite statements made by Venezuelan officials, such as Ali Rodriguez, president of Venezuela’s state-owned oil company,
PDVSA, who called the assumption of replacing its U.S. business with China “absurd,” Chavez has made a number of threats,
including that of putting an embargo on oil shipments to the U.S. The U.S. currently has the infrastructure in place, such as refineries
capable of processing Venezuela’s crude. Refineries in China are not currently capable of processing Venezuela’s heavy crude oil. In
May of this year, however, China and Venezuela agreed to build a refinery in China’s Guangdong province. The refinery will be
capable of processing up to 400,000 bpd and will make Chavez’s goal of shipping one million bpd of oil to china by 2011 a reality. As
China and Venezuela continue to work together, it will become easier for Chavez to use oil as a
geopolitical weapon.¶ China’s influence in certain countries could eventually backfire against the
U.S. as certain major U.S. oil supplying nations find an oil export substitute in China. The
Venezuelan government and its political disagreements and strong words with the Bush administration provides a perfect
example of a country that could potentially cut off the U.S. in favor of doing business with China. Should
China be able to carry the Venezuelan oil business with adequate purchases, oil could be used
as a weapon of diplomacy against the U.S. Finally China, knowing that it could face a bleak future if its appetite is
not curbed, is also searching for technology that will stretch its resources.
Negative
Oil Advantage Answers
No Impact to Oil
High Oil Prices don’t hurt the economy enough to trigger the impact
Economist 12 [3/10/12, “The New Grease?”, http://www.economist.com/node/21549949]
But the
impact on growth and inflation in individual countries will differ. In America, a net importer which
$10 increase in oil prices (which corresponds to a 25-cent rise in the price of
petrol) knocks around 0.2% off output in the first year and 0.5% in the second year. That would
taxes fuel lightly, the standard rule is that a
slow, but hardly fell, an economy that is widely expected to grow by more than 2% this year.
There are in any case several reasons why America may be more resilient to dearer oil than in
recent years. The jump in petrol prices has been far smaller than in 2011 or 2008. Rising
employment gives consumers more income with which to pay for fuel. And America’s economy is
becoming ever less energy-intensive, and less dependent on imports. Oil consumption has fallen
in the past two years, even as GDP has risen. Americans are driving less, and they are buying more
fuel-efficient cars. Net oil imports are well below their 2005 peak, which means more of the money
Americans spend on costlier oil stays within its borders. The development of copious amounts of natural gas
means gas prices have plunged. That, coupled with an unusually mild winter, has kept bills for
home heating unusually low. In January the share of consumers’ spending on energy products was the second-lowest in 50
years. These factors do not imply that America is impervious to spiking oil, but they do suggest the impact of price rises to
date will be modest.
High prices don’t hurt the economy – we’re prepared
Crook 07 Senior editor of The Atlantic Monthly, graduate of Oxford and the London School of
Economics, he has served as a consultant to the World Bank and worked as an official in the
British Treasury
(Clive, “Oil Shocks”, The Atlantic, December)
Even at that price, the economy
still wouldn’t seem as vulnerable to oil as it was in the 1970s. For one thing, as
importance to the economy has also fallen, and besides, car
makers now offer more small cars and fewer big ones—so consumers who fear high gas prices
can (and do) buy smaller models, rather than not buying at all. A recent paper by the economists Olivier Blanchard
and Jordi Gali attributes the resistance of the U.S. to the oil bug to three other things in addition. One is that previous oil
shocks happened alongside other bad surprises. In the 1970s and 1980s, in other words, we
were just unlucky. The economy also may be more flexible—a point also mentioned by the Congressional
Budget Office in its own recent study, citing deregulation (notably in transport), foreign competition, and advances
in information technology. Today’s economy just copes with shocks of every kind more smoothly
than it used to. Finally, the Federal Reserve is nowadays better equipped to do its job. The reason for
that, the argument goes, is the success of the Fed’s own past efforts in curbing inflation. Many economists
believe, as the CBO puts it, “that the deep recession of 1973 to 1975 and back-to-back recessions of 1980
and 1981 to 1982 were caused not by the energy price shocks as such but by monetary policy.”
In those previous recessions, inflation was already a problem before the oil price went up. Given
Hamilton points out, the domestic auto industry’s
the additional inflationary impact of dearer oil, restoring stable prices meant having to endure deep recessions. With the Fed’s
credibility in curbing inflation now established, the argument goes, gentler
tightening of monetary policy is enough
to neuter the inflationary impact of dearer oil. One of the more measured pessimists on oil and Iraq back in 2003
was Yale’s William Nordhaus. He too has lately revisited the issue in a paper entitled “Who’s Afraid of a Big Bad Oil Shock?” In this he
underlines another more speculative factor that could be the most important of all—namely, that “consumers,
businesses,
and workers may see oil-price increases as volatile and temporary movements rather than the
earth-shaking changes of the 1970s.” Firms and households have come to expect the oil price to
move around wildly, and they allow for that when deciding where to invest, or what kind of car
to buy, or whether they need to press hard for higher wages (which also can lead to inflation). “In the end,”
Nordhaus concludes, “…much of what we should fear from oil-price shocks is the fearful overreactions
of the monetary authority, consumers, businesses, and workers… [P]olicymakers should not be
afraid of a Big Bad Oil Shock.”
No Stability Impact
Latin America stable – no risk of widespread chaos
Graham 6 (Carol, Senior Fellow in Economic Studies and Global Economy and Development –
Brookings Institution, Ph.D. – Oxford University, author of multiple books on Latin American
political and economic development, “Is Latin America Going Radical?”, 3-1,
http://www.brookings.edu/views/op-ed/graham/20060301.htm)
With Hugo Chavez as an increasingly vocal critic of the United States, the electoral victory of Evo
Morales in Bolivia, continued political instability in Ecuador; and the recent emergence of
Ollanta Humala, an anti-market, extreme nationalist dark-horse political candidate in the
electoral race in Peru, there is much discussion of Latin America's looming lurch to the radical
left, with a host of negative implications for democracy, trade, and foreign investment in the region. Is this really
Latin America's future? An Humala victory in Peru's April elections would certainly support those who predict that
such a shift is in store. Such a change in the direction of the region's leadership would indeed be a chilling scenario,
particularly after years of failed experiments with populist governments and the time and effort that much of the
region's leadership and citizens have spent investing in democracy and markets in the past two decades. Yet a
broader view of economic and political trends in the region—as well as my own research—
suggest that these predictions of a region-wide shift to the radical left are far too pessimistic.
First of all, there are clearly radicals on the horizon—Chavez, Morales, and, in the worst
instance, a victorious Humala. Yet the broader regional picture does not fit this pattern. None of
the representatives of the established "left" in the region, who for the most part are also in
command of the economic powerhouses of the region—Lula in Brazil, Lagos and now Bachelet
in Chile, and even Kirschner in Argentina—are anti-market. Instead they more closely resemble
the "new left" of Tony Blair in England and Felipe Gonzales in Spain. The political dominance of
this "new left", coupled with Mexico's structured integration into the US market, Colombia's
long-term record of conservative fiscal policies, and Peru's ability to maintain prudent
macroeconomic management for over a decade, despite major political swings, all suggest that
the region will continue to embrace markets and democratic governments. Secondly, overtime trends in public opinion, as gauged by my analysis of the region-wide Latinobarometro poll,
suggest that support for markets and democracy remains solid. Just over a year ago I published
an article in the Financial Times highlighting that preference for democracy as a system of
government and for market policies had actually increased during the 2001-2002 economic
crisis in the region, even though satisfaction with how the systems were working had gone
down. Most recently, roughly 60 percent of the region's respondents reported that democracy is
preferable to any other system of government in the 2005 poll, a significant increase over
previous years.1 Thirdly, no doubt the US has been laggard indeed in meeting its promises on
free trade agreements. Yet in the meantime, many countries—and certainly the key economic
players—have wisely developed new trade ties with China, Europe, and a host of other
countries. Those ties—and their continued increase—are unlikely to be reversed, even in the
unlikely event that the Bush administration wakes up and begins to deliver on free trade in a
serious way. So what is in store? Bolivia and Venezuela are both a mess, no doubt. Short of a
miracle, Bolivia may implode politically, at high costs to that country's already impoverished
population. Meanwhile, Venezuela—and Chavez—can afford to stumble on with irresponsible
macroeconomic management and political rhetoric (at a cost of a gradually increasing poverty
rate) because it has oil. Neither country provides a credible or attractive model for others to
follow. None of the major leaders of the region's new left have gone out of their way to endorse
Chavez, despite numerous opportunities.
Solvency
Says No
Venezuela won’t allow U.S. investment – the U.S. will be locked out
Epperson & Domm 13 (Sharon & Patti, ‘With Hugo Chavez gone, US oil industry eyes
Venezuela’, Christian Science Monitor, March 6, 2013,
http://www.csmonitor.com/Environment/Latest-News-Wires/2013/0306/With-Hugo-Chavezgone-US-oil-industry-eyes-Venezuela)//MJ
Venezuela has more oil reserves than any other country thanks to massive deposits of asphaltlike crude in what’s called the Orinoco oil belt. Development of these deposits is both
technology- and capital-intensive.¶ Chávez’s push for more national control over the oil sector
in 2007 led Exxon Mobil Corp. and ConocoPhillips Co. to abandon big Orinoco projects. Other
international companies stayed, including firms from Russia, China and Vietnam, and the
Orinoco now accounts for about 20 percent of Venezuela’s oil production.¶ Mark McNabb,
director of the Emerging Markets Research Center at UTD’s Naveen Jindal School of
Management, said in a phone interview that he expects U.S. firms will remain on the outside
looking in.¶ “We’re kind of frozen out for the next three to five years,” he said.¶ Venezuela’s oil
sector has been in decline for a decade. In 2002, PDVSA employees went on strike and joined
in an anti-Chávez movement that briefly ousted the president. When he regained power,
Chávez fired many of his opponents in the firm and installed thousands of supporters.¶
“PDVSA’s been drained of its professionals,” said Eric Farnsworth, a vice president with the
Council of the Americas. “It’s now a political group that pumps oil.”¶ Venezuela’s Energy
Minister Rafael Ramirez said Wednesday that PDVSA workers would remain on the job.¶ “The
key to driving the oil industry is in the hands of the 100,000 valiant men and women who have
shown their loyalty to Commander Chavez in everything we have been through,” he said,
referring to PDVSA’s staff. “That situation will not change.”¶ Venezuela’s exports to the U.S. are
under pressure from Canada, which produces a heavy type of crude oil from Alberta’s oil sands
that is similar to Venezuela’s thick oil. Many Gulf Coast refineries prefer to use heavy oil because
it can mean higher profits for gasoline, diesel and other refined products.
Venezuela will say no --- anti-Americanism is too entrenched
Drezner 13 --- professor of international politics at the Fletcher School of Law and Diplomacy at
Tufts University (3/7/2013, Daniel W., “Why post-Chavez Venezuela won't be a U.S. ally anytime
soon,” http://drezner.foreignpolicy.com/category/wordpress_tag/venezuela, JMP)
The passing of Hugo Chavez has prompted the usual 21st century cycle of news coverage and commentary that follows the death of
a polarizing figure: the breaking news on Twitter, followed by the news obits, followed by the hosannahs from supporters, followed
by denunciations of the figure, followed by official statements, followed by mealy-mouthed op-eds, followed by hysterical, unhinged
criticism of standard diplomatic language. ¶ Now that the first news cycle has passed, we can get to the more interesting question of
assessing Venezuela's future. There was always a fundamental irony to Hugo Chavez's foreign policy. Despite his best efforts to
chart a course at odds with the United States, he could
never escape a fundamental geopolitical fact of life:
Venezuela's economic engine was based on exporting a kind of oil that could pretty much only
be refined in the United States. ¶ So, with Chavez's passing, it would seem like a no-brainer for his
successor to tamp down hostility with the United States. After all, Chavez's "Bolivarian" foreign policy was rather
expensive -- energy subsidies to Cuba alone were equal to U.S. foreign aid to Israel, for example. With U.S. oil
multinationals looking hopefully at Venezuela and Caracas in desperate need of foreign
investment, could Chavez's successor re-align foreign relations closer to the U.S.A.? ¶ I'm not
betting on it, however, for one simple reason: Venezuela might be the most primed country in the world
for anti-American conspiracy theories. ¶ International relations theory doesn't talk a lot about
conspiracy thinking, but I've read up a bit on it, and I'd say post-Chavez Venezuela is the perfect
breeding ground. Indeed, the day of Chavez's death his vice president/anointed successor was
already accusing the United States of giving Chavez his cancer. ¶ Besides that, here's a recipe for
creating a political climate that is just itching to believe any wild-ass theory involving a
malevolent United States:¶ 1) Pick a country that possesses very high levels of national self-regard. ¶ 2) Make sure that the
country's economic performance fails to match expectations.¶ 3) Create political institutions within the country that are semiauthoritarian or authoritarian. ¶ 4) Select a nation with a past history of U.S. interventions in the domestic body politic.¶ 5) Have the
United States play a minor supporting role in a recent coup attempt. ¶ 6) Make sure the United States is closely allied with the
enduring rival of the country in question.¶ 7) Inculcate a long history of accusations of nutty, American-led conspiracies from the
political elite. ¶ 8) Finally, create a political transition in which the new leader is desperate to appropriate any popular tropes used by
the previous leader. ¶ Venezuela
is the perfect breeding ground for populist, anti-American conspiracy
theories. And once a conspiratorial, anti-American culture is fomented, it sets like concrete.
Only genuine political reform in Venezuela will cure it, and I don't expect that anytime soon.
Maduro is clearly Chavez’s Protege
Ellner 7/11 (Steve Ellner, Steve Ellner, professor of economic history at the Universidad de
Oriente, Venezuela, is the editor of Latin America’s Radical Left: Challenges and Complexities of
Political Power to be published by Rowman and Littlefield in the Spring of 2013, "Just How
Radical is President Nicolás Maduro?”, NACLA, July 11th 2013)
On April 2, the first day of Venezuela’s 2013 presidential campaign, Nicolás Maduro committed
himself to “breaking with bureaucratism,” which he labeled “the mode of the petty
bourgeoisie.” In its place Maduro (a former bus driver) pledged to create a “government of the
streets” in which he would arrive to individual locations driving a bus along with cabinet
members in order to listen to the people and design policies with them. On that day, Maduro told his
audience in Zulia that their state would be his first stop. The next day, speaking at a campaign rally in neighboring Táchira, he
promised that his second stop would be in their state.¶ While
some may have brushed the statements off as
empty campaign rhetoric, they indicate Maduro’s intention to follow in the footsteps of his
mentor Hugo Chávez. During his 14 year rule, Chávez occasionally scolded the bureaucrats and
demanded that they get in tune with the people. The reproaches were accompanied by concrete actions in favor
of the workers in clashes with state managers and politicians and in favor of the rank and file of his Partido Socialista Unido de
Venezuela (PSUV) in disputes with party bosses.¶ Maduro’s
statements also point in the direction of a
continuation of the ongoing transformations of Chávez’s fourteen years as president, although at a
slower pace given the narrowness of Maduro’s electoral victory. Chávez began in 1999 with an emphasis on political reform
embodied in a new constitution and ended up embracing socialist rhetoric and promoting widespread expropriations. The process of
change was slowed down, but not halted, by several disappointing electoral results, such as the proposed constitutional reform
defeated at the polls in 2007 and the National Assembly elections of 2010.¶ Indeed, the
underlying message of
Maduro’s campaign was that he was closely tied to the Chávez legacy and would continue
where his predecessor left off. In rally after rally, the recording of Chávez’s last public
appearance in which he implored his followers to maintain unity and support Maduro’s
presidential candidacy was played. Maduro, who became provisional president following Chávez’s death on March 5,
received 50.8 percent of the vote as opposed to the 49.0 percent of his main rival Henrique Capriles. The 1.8 point margin compared
unfavorably with the 11.1 decimal points that separated Chávez and Capriles in the October 2012 presidential elections. The
heightened polarization has energized an intransigent opposition but could also have a radicalizing effect as well.
Investment Not Enough
Oil Collapse Inevitable – the industry is terminally doomed and US fracking
keeps oil prices low.
Nagel ‘13 (Juan Nagel, Foreign Policy, “Is Venezuela becoming a failed state?”
http://transitions.foreignpolicy.com/posts/2013/05/16/is_venezuela_becoming_a_failed_state?
wp_login_redirect=0, Thursday, May 16, 2013)
Venezuela remains mired in a political and economic crisis that shows no signs of letting up. But while
street protests, soaring inflation, scarcity, and skyrocketing crime are massive headaches, the government
can count on still-high oil prices to soothe the pain a bit. The question that begs asking is: How will Venezuela maintain stability if oil prices drop? ¶ A
recent report by the International Energy Agency underscores the challenges the country faces in the
short term. The United States has made huge progress in oil extraction thanks to fracking technology. It is
set to become the world's largest oil producer by the year 2020, and the global spread of
fracking is bound to significantly increase international recoverable oil reserves in the near future. The
agency crows that fracking is creating a "supply shock that is sending ripples around the world." ¶ This
obviously matters to Venezuela, a country that exports large amounts of oil and little else.
Venezuela is increasingly reliant on high oil prices to maintain some semblance of stability. A prolonged drop
in oil prices will undoubtedly shake the foundations of the petro-state to its core. ¶ Being an oil
producer, Venezuela can earn money in two ways: by sustaining high prices, or by increasing
production. (Obviously, if it can do both things, it has hit the jackpot). Fracking threatens the first, and the country
has seriously failed on the latter. ¶ Venezuela produces less oil now than it did in 1999, the year Hugo
Chávez first came to power. Worryingly, the IEA sees few prospects for increased production. For example, in spite
of increasing investment to $22 billion last year, Venezuelan production barely budged. State oil
giant PDVSA vows to increase production by 3 million barrels per day in the next six years, but
the IEA believes that a combination of the company's inefficiency and its heavy debt burden
means the increase will actually be a tenth of that amount. ¶ Two other developments conspire
against the future viability of Venezuela's oil industry. The country is increasing sales of crude oil
to China, as part of a geo-strategic move the Chávez administration embarked on many years ago. The problem is that
the oil being shipped has already been paid for, and the government has also already spent the
money. ¶ The other issue is Venezuela's creaking refining infrastructure. Last year, following several
accidents at its refineries, Venezuela became a net importer of gasoline and other refined products. In the last part of the year alone, PDVSA bought
refined products for $1.5 billion, only to turn around and give it away for practically nothing, thanks to the heavy subsidies that characterize its internal
market. ¶ The consensus is that Venezuela
needs high oil prices just to stay afloat. But if the fracking oil
boom results in low oil prices, what does the future hold for the South American country? ¶ Sadly, Venezuelans have
nothing else to fall back on. Its private industry is a shambles, and the country is even importing toilet
paper. Years of populism have left the state crippled and heavily in debt. The public deficit
reached a whopping 15 percent of GDP last year, even in the context of high oil prices. Most of
the spending came in the form of entitlements and subsidies that will not be easily eliminated.
Furthermore, the country's current power clique seems particularly inept in dealing with the
complicated economic and political conditions it has inherited. ¶ Nicolás Maduro's only claim to legitimacy is
that Hugo Chávez chose him. Now he is left with the thankless task of dealing with the
composed of many of the same old faces, and neither his
Chávez mess. He has surrounded himself with a Cabinet
policies nor his rhetoric suggest any shift toward the type
of solutions that could steer Venezuela away from the precipice. ¶ The problem for Venezuelans is
that there is no great reformer in the governing party. And while opposition leader Henrique
Capriles would undoubtedly steer Venezuela toward greater economic freedoms, there is little
he would be able to do if the price of oil were to tank. ¶ A long period of low oil prices spells
doom for Venezuela's political sustainability. Without high oil revenues, basic services would practically
disappear, and the potential for instability would be enormous. Already the country is stuck in a state
of undeclared in civil war, and there are claims that drug smuggling has permeated the higher echelons of the government. ¶ Venezuela
has so far avoided the fate of its neighbor Colombia, a country still deep in a long civil war with Marxist
guerrillas and drug cartels. This is largely due to the deep pockets oil has afforded the government, which
allowed for state presence even in the most remote corners of the country. It is hard to see how that presence could be
maintained if oil rents were to dry up significantly, and for a prolonged period. This could lead to the type
of problems that have bedeviled Colombia, or even poorer neighboring failed states such as Haiti. ¶ Even though its problems are of its own making,
the thought of a large, failed state in the heart of the Western Hemisphere should trouble the
continent's leaders.
Status Quo Solves
Status quo solves – China & Russia providing funding
Iwata 13 – (Mari, “Venezuela Secures $4 Billion Funding from China,” Wall Street Journal, 6/6/13,
http://online.wsj.com/article/SB10001424127887324798904578528922435217366.html)//SR
Venezuela has secured $4 billion in funds from China to be used for oil field development, Oil
Minister Rafael Ramirez said Thursday. The minister didn't give details of the new funding from China, which will add to at
least $35 billion of credit Beijing has provided to Venezuela, mostly in return for future oil
deliveries. The South American country's state energy company Petroleos de Venezuela SA, or PDVSA, said Wednesday that
Venezuela was negotiating a $4 billion credit line from Export-Import Bank of China. Mr. Ramirez was
speaking in Tokyo following a trip to Beijing for talks with Exim Bank President Li Ruogu and other officials. Venezuela has also
secured a number of financing agreements with its partners, ranging from Russia's Rosneft to
U.S. oil major Chevron Corp., CVX -0.06% during the past few weeks as it looks for funding for its plans to rapidly
boost oil production. The new Chinese funds add to a separate $4 billion loan that PDVSA will receive from the Chinese
government to boost oil production at Petrolera Sinovensa, a joint venture in Venezuela's between PDVSA and China National
Petroleum Corp. in Venezuela's rich Orinoco heavy oil belt. "We
plan to increase output to four million barrels a
day by 2014 and six million barrels a day by 2016. Only Asia can absorb these increases," Mr. Ramirez told
reporters. Venezuela currently produces about three million barrels a day of crude oil. Mr. Ramirez met Japanese Industry Minister
Toshimitsu Motegi and was later due to meet officials of Inpex Corp. 1605.TO +2.48% and state-funded Japan Oil, Gas and Metals
National Corp.
Market pressures will solve the case - will push Venezuela to change
González and Vyas 13 (4/4/2013, Angel González and Kejal Vyas, “Unlocking Venezuela’s vast
energy potential; Revival of the country’s oil sector post-Chávez on standby,”
http://www.businesswithoutborders.com/topics/opportunities/unlocking-venezuelas-vastenergy-potential/, JMP)
But declining oil output and rising shale-oil production in the U.S., Venezuela’s main market, may
force a redirection. Barring any new political or military shocks in the Middle East, global oil prices look like “a
balloon with a slow leak,” said Amy Myers Jaffe, executive director for energy and sustainability at the University of
California-Davis. The Venezuelan government can’t count on high oil prices to match rising public spending, she added. Anticapitalist
rhetoric heated up in the days leading to Mr. Chávez’s death. Venezuelan Acting President Nicolás Maduro accused Chevron Corp.,
the No. 2 U.S. oil company by market value behind Exxon, of aggression against Ecuador in a multibillion-dollar environmental
lawsuit pitting the company against Ecuadorean plaintiffs. Analysts said they were surprised by the comments, as Chevron, the only
major U.S. oil company to remain in Venezuela, was considered by Mr. Chávez as a key investor, and is lending Venezuela $2 billion
to increase output at a joint-venture oil development. A spokesman for Chevron declined to comment on Mr. Maduro’s assertion.
Despite the posturing, Mr. Chávez’s death presents an opportunity for a new administration to lift some of the burdens heaped on
PDVSA, which has supplied billions of dollars in cheap oil to Cuba and other friendly foreign governments, said Carlos Jordá, a
Houston-based oil consultant who was once a senior manager at the oil company. To reach its full potential, Venezuela´s entire oil
industry sector needs to be reinvented, something that is unlikely, said Luis Pacheco, a former PDVSA executive fired during the oil
strike of 2003 along with 20,000 other employees who opposed Mr. Chávez. In 2000, Mr. Chávez signed its first oil deal with Cuba,
providing the communist island with 53,000 barrels a day of cut-rate oil, a sum that has risen to 110,000 barrels now. In return, the
Cuban government has sent some 40,000 doctors and experts to support the popular social programs developed by Mr. Chávez. Mr.
Jordá, who called those oil deals unsustainable, said that domestic fuel prices, the world’s lowest at around 6 cents a gallon, will also
have to rise at some point. The cost to the country of the domestic fuel subsidies has also increased because refinery accidents
forced the government to import growing quantities of gasoline, according to the EIA. The Venezuelan government denies it imports
fuel. Worsening
fiscal conditions will also prompt Mr. Chávez’s successors to improve relations with
foreign investors—and eliminate bottlenecks created by the deceased leader’s highly-personal, hands-on
management style, said Jim Loftis, a partner with Vinson & Elkins LLC’s international arbitration
practice. The country also needs to increase oil production to pay for tens of billions of dollars in
Chinese loans it undertook to finance large social projects and a big boost in election spending last year. “Venezuelans see their
relationship with oil as if the nation’s virility is at stake,” Mr. Pacheco said. Until that perception changes, the oil industry will “keep
dancing in a circle around the fire, waiting for it to rain.”
Off Case
Oil DA Link
Oil engagement with Venezuela eliminates our dependence on the Middle East
& Russia.
Weafer ‘13 (Chris Weafer is chief strategist at Sberbank Investment Research, BBC Monitoring
Former Soviet Union – Political, “No business as usual for Russia in Venezuela – paper,” 3-12-13,
Supplied by BBC Worldwide Monitoring)
Venezuela is certainly an attractive option for the world's big oil majors. Recoverable reserves are now
put at just under 300 billion barrels, compared to about 265 billion in Saudi Arabia and less than 100 billion in Russia. Most of
Venezuelan oil is heavy and more expensive to refine, but it lies only a few hundred meters below the Orinoco Belt. That makes it a
lot more attractive than, for example, speculatively drilling in the hostile Russian Arctic while dodging icebergs. The Orinoco Belt is
an extremely important natural environment, and the inevitable objections from domestic, regional and international
environmentalists will slow any development. But as has happened in similar situations elsewhere, the quest for the prize will almost
certainly prevail. Venezuela needs the money. Venezuela
has also very likely moved to near the top of the US
government's list of geopolitical priorities. The US is set on a course to become energy independent, and the
International Energy Agency calculates this may take two to three decades based on current trends and with optimistic assumptions
for US shale oil production. Such assumptions have always been speculative when it comes to the oil industry. But a
more
achievable target for the US is to become regionally oil independent -that is, to only source its
oil requirements domestically and from Canada, Mexico and now perhaps from Venezuela. That would allow the
US to become completely independent of Middle East oil within 10 years or so. A change in Venezuela's
political and economic priorities would also weaken the Cuban economy since Chavez supplied Cuba with almost free oil. That would
hasten the inevitable regime change there as well, an extra bonus for Washington. But while such an outcome would be very
favourable for the US economy,
it would accelerate the game change already started in the global oil
industry with the rapid growth in shale oil volumes. No matter how you work the assumptions, the world is
heading for a lot more oil supply over the balance of this decade. New major oil production will come from North
America, Iraq and the Caspian Sea, where Kazakhstan's giant Kashagan field starts to produce from this
year, almost certainly from Venezuela if a new administration takes concrete steps to increase
foreign investment and production in the oil sector. This may be the real reason Russian officials
shed a few tears at Chavez's funeral on Friday.
China DA Link
Oil investment causes China freakout
Levi and Clayton ’12 [Michael Levi is the Michael A. Levi is the David M. Rubenstein Senior
Fellow for Energy and the Environment and Director of the Program on Energy Security and
Climate Change at the Council on Foreign Relations, and Blake Clayton is a Fellow for Energy and
National Security at the CFR, “The Surprising Sources of Oil’s Influence,” Survival, Vol. 54, No. 6,
online]
What about fights over investment? There is no question that cross-border investment in oil production
is often politically charged. In many ways, though, this does not make oil special. China, for example, discriminates
between domestic and foreign firms, and among foreign companies too, in determining when to allow investment in a host of
industrial sectors, from telecommunications to banking. That said, in some cases, oil investment is particularly touchy. In
Latin
America, for example, oil is typically seen as a country’s patrimony, and selling it to foreigners is
something that triggers deep emotional reactions.6 Oil investment decisions can thus take on a
special cast.3 It is important, though, not to push this too far. In some cases where one would expect international politics to
play a major role in shaping oil investment, it does not. Saudi Arabia, Kuwait, and Iraq, for example, all appear to select foreign firms
for inward oil investment more on the basis of contract terms and technological potential than on the bilateral relationship with
those firms’ home countries.7 Chinese
oil companies, meanwhile, appear to select their targets for outward
investment primarily based on assessments of commercial attractiveness, with foreign policy
objectives taking a decisive back seat. But that does not mean that politics has not have not
affected where these companies have deployed their capital. Chinese national oil companies
have opportunistically taken advantage of investment opportunities in places like Sudan and Burma,
where Western sanctions have kept Western oil majors at bay.
Consult Brazil
Consultation with Brazil over Venezuela action is critical to solve.
Shifter ‘13 - President of the Inter-American Dialogue and an Adjunct Professor of Latin
American Studies at Georgetown University's School of Foreign Service (3/11, “The Empire
Makes Nice,” Foreign Policy
http://www.foreignpolicy.com/articles/2013/03/11/the_empire_makes_nice_venezuela_hugo_
chavez?page=0,0.)
To anticipate potential turmoil in Venezuela in the coming period, Washington should be
consulting regularly and at the highest levels with South American allies, especially Colombia
and Brazil, who have the most at stake should the security situation deteriorate. Although many
commentators have drawn attention to Cuba's role in the Venezuelan transition, and have
particularly highlighted Cuba's huge dependence on Venezuelan oil and money, Brazil will
probably end up being just as influential as the situation unfolds. South America's undisputed
superpower -- whose leverage on Venezuela stems from key exports, especially food, and
political backing -- is chiefly interested in maintaining social peace within its own neighborhood.
In keeping with Brazil's own governance and political evolution in recent years, Brasilia will aim
to keep the situation in Venezuela under control and to encourage moderation, gradualism, and
communication on both sides. It does not want trouble on its borders. Venezuela's recent entry
into the Brazil-led MERCOSUR trade group will makes this issue of even greater concern for
President Dilma Rousseff's government. In this respect, there is ample coincidence of interests
between Washington and Brasília.