Gonzaga Debate Institute 2013
Venezuela Starter Aff
Venezuelan Oil Aff
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Gonzaga Debate Institute 2013
Venezuela Starter Aff
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Gonzaga Debate Institute 2013
Venezuela Starter Aff
Advantage One: Oil
Venezuelan oil production is collapsing quickly—lack of foreign oil investment
guarantees swift collapse of production—that collapses Venezuela’s economy and
causes shocks
Ladislaw and Verrastro 2013(Sarah, co-director and senior fellow with the Energy and National
Security Program at CSIS, and Frank, senior vice president and James R. Schlesinger Chair for
Energy and Geopolitics at CSIS, March 6, " Post-Chavez Outlook for Venezuelan Oil
Production", http://csis.org/publication/post-chavez-outlook-venezuelan-oil-production)
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 all or that some political change would bring about reform and rejuvenation of the energy
sector. 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 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. However, conventional wisdom argues that maintaining oil
production is in the interest of any regime. Revenue from oil production is such a large part of
Venezuela’s government balance sheet that no leadership could survive for long without a
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sustained cash flow that oil exports bring . The converse of this argument is that revenues
generated by the energy sector are such an important source of power and influence in Venezuela
that there is potential for infighting over control of the sector. Moreover, the potential for strikes
or instability among groups involved in the sector (some of whom have not been paid) could have
additional negative impacts on production. While oil markets have so far taken the news of
Chavez’s demise in stride (many claim because the news was largely expected, others because the
political outcome is still so uncertain) an actual disruption in Venezuelan production
could add pressure to an already difficult market outlook. The last year has produced a
number of supply disruptions around the world from OPEC, the Middle East North Africa region,
as well as non-OPEC sources. If the economic outlook continues to improve and yield an increase
global energy demand, if Iran sanctions remain in place, and if Venezuelan production be
compromised, then oil prices would experience much more significant upside pressure from
any new disruptions.
Investment is key to production—U.S. refineries are key
Krauss 2013(Clifford, New York Times Staff, March 8, "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)
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 low-quality
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
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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.
US investment is key—we’re the largest importer, and the only ones who can
process the heavy crude they produce—but we’re transitioning away
Ladislaw and Verrastro 2013(Sarah, co-director and senior fellow with the Energy and National
Security Program at CSIS, and Frank, senior vice president and James R. Schlesinger Chair for
Energy and Geopolitics at CSIS, March 6, " Post-Chavez Outlook for Venezuelan Oil
Production", http://csis.org/publication/post-chavez-outlook-venezuelan-oil-production)
What about Venezuela’s relationship with the United States? Over the last ten years the sustained
trading relationship between the United States and Venezuela has been one of the stabilizing
forces in an otherwise contentious and sometimes volatile relationship. U.S. refineries in the Gulf
Coast are specifically designed to process Venezuela’s sour and medium to heavy crude and
serves as its natural market. Despite oil production being down, the United States still imports
just under a million barrels of crude per day from Venezuela (down from a peak of 1.4 mmbd in
1997) and, as stated earlier, the government of Venezuela is highly dependent on those revenues
for their ongoing stability, especially as revenue from other exports and domestic consumption
decline. As we look ahead to another period of transition in Venezuela it is important to be
mindful of the potential for disruption and to look for ways to mitigate the impacts of such
disruption, but it is equally important to remember the trade ties that bind the two countries for
the time being and to find opportunities to drive change in a positive direction. Time may be
limited in this regard because the U.S. domestic production outlook is changing thanks to tight oil
development in the United States and the influx of Canadian oil sands, both of which are giving
U.S. refiners more options in terms of the crudes they use and more decisions to make about how
they want to configure their refineries going forward. A future in which Venezuela is no longer as
competitive in its natural market in the United States would change the outlook for Venezuelan
crude marketing decisions. The long-term outlook for Venezuela’s continued oil market
production is changing both in commercial and political terms. The situation has looked
unsustainable for a long period of time but has managed to persist longer than most people though
it would. Only time will tell if the upcoming leadership changes will bring a new chapter for
Venezuela.
Shocks destabilize the economy—causes collapse
Erwin 2012(Sandra, National Defense Magazine Editor, November 1, “30% Cut in U.S. Oil
Imports Would Avert Future Catastrophe, Study Warns”,
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
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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 contends. Even 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 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 worst-case scenario 30-day closure of the Strait of Hormuz, the analysis finds
that the U.S. would lose nearly $75 billion 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 2010 (Jedediah, Director Cooperative Threat Reduction DOD, “Economic Integration,
Economic Signaling and the Problem of Economic Crises” in ‘Economics of War and Peace:
Economic, Legal and Political Perspectives’ ed. Goldsmith and Brauer, p. 213-215)
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 (20081 advances Modclski 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. 19SJ) that
leads to uncertainty about power balances, increasing the risk of miscalculation (Fcaron.
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
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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. Mom berg and Hess (2002)
find a strong correlation between internal conflict and external conflict, particularly during
periods of economic downturn. They write. The linkage, 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 selfreinforce each other (Hlomhen? & Hess. 2(102. p. X9> Economic decline has also been linked
with an increase in the likelihood of terrorism (Blombcrg. Hess. & Wee ra pan a, 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), DcRoucn (1995), and Blombcrg. Hess, and Thacker (2006) find supporting
evidence showing that economic decline and use of force arc at least indirecti) 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 lo an increase in the use of force. In summary, rcccni 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 al
systemic, dyadic and national levels.' This implied connection between integration, crises and
armed conflict has not featured prominently in the economic-security debate and deserves more
attention.
And a decline in Venezuelan production causes regional instability
World Trends Watch 2013(Helios Global's World News Site, April 29, " 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 fortypercent of Venezuela’s oil exports are delivered to the United States. Consequently, the United
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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 leftleaning 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
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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.
That causes global war
Rochlin 1994 (James,Professor of Political Science at Okanagan University College.
“Discovering the Americas: the evolution of Canadian foreign policy towards Latin America,” p.
130-131)
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 worst-case 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.
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Advantage Two: Latin American Relations
U.S.-Venezuelan relations are at a potential reset point—the plan is key to increase
relations and limit outside influence
Fillingham 2013(Zachary, contributor to Geopoliticalmonitor.com, March 10, "Post-Chavez USVenezuelan Relations: Headed for a Thaw?", http://www.geopoliticalmonitor.com/post-chavezus-venezuelan-relations-headed-for-a-thaw-4790/)
But to take the inevitability of another United Socialist government as proof of a perpetual
flatline in US-Venezuelan relations would be premature. It is a short-term consideration, and it’s
only in the medium term that things will likely get interesting. First off, Maduro will have to
grapple with the problem plaguing every political system that favors individual personality over
rule of law. A vacuum has opened up at the very top of Venezuelan politics, and it remains to be
seen whether Maduro has the charisma, and perhaps more importantly, the personal networks
with which to fill it. The Chavez-era Venezuelan state was one that operated on a complex system
of personal patronage that led all the way to the top; supporters were rewarded and detractors
were marginalized. It remains to be seen whether this system will function smoothly with its head
cut off. Political patronage goes hand in hand with Venezuela’s other pressing issue: an
increasingly dysfunctional economy. Many Chavez-era policies could be described as political
patronage on a mass scale, and while these policies did help Venezuela’s poor, they tended to be
inefficient and short-sighted. For example, the Chavez government’s adult literacy program cost
anywhere from $543 to $977 per adult learner. Compare that to Brazil’s program that uses preexisting educational infrastructure to achieve a cost of $2.50 per learner. In Venezuela’s case,
most of this money went into hiring adult literacy trainers, thus providing people with jobs- but
only for as long as the government’s finances can hold out. 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
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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.
Scenario one is China:
U.S. expanding relations in the region is key to prevent China from undermining
influence
Nolte 2013(Dr. Detlef, Ph.D. in Political Science from the University of Mannheim, Professor of
Political Science at the University of Hamburg, German Institute of Global and Area Studies,
"The Dragon in the Backyard: US Visions of China's Relations toward Latin America",
http://www.gigahamburg.de/dl/download.php?d=/content/publikationen/pdf/gf_international_1305.pdf)
Nonetheless, deepening economic relations between China and Latin American countries may
have an indirect, negative impact on US-Latin American relations (Ellis 2012a; Farnsworth 2012)
by undermining the ability of the United States to pursue its agenda in the region. These growing
relations with China send the signal to Latin American governments that economic development
can be achieved without adhering to Western proscriptions. Regimes hostile to the United States
can turn their backs on Western lending institutions such as the International Monetary Fund and
World Bank. Thus, countries could side-step the negative consequences of actions deemed hostile
to the interests of the United States and US companies – for example, defaulting on loans or
nationalizing industries, amongst other things. Conclusions While there are different
interpretations of the implications of China’s growing presence in Latin America, neither the
Bush administration nor the Obama administration viewed/view China as a major threat in Latin
America. This is a position shared by the majority of analysts linked to different US think tanks.
The United States’ loss of trade shares and presence in Latin America is more a result of its own
weakness and loss of initiative than of Chinese strength. It is also a result of a changing
international economic order. In general, there is a prevailing sense of resignation with regard to
China’s presence in Latin America, which is well captured in a statement by Stephen Johnson, an
analyst from the conservative Heritage Foundation, in a 2005 US Senate hearing: “In a globalized
world, the Monroe Doctrine has declining relevance. Democracies have relations with whom they
wish and nation competitors like China cannot be blocked from visiting the hemisphere.
However, the United States can be more proactive in consolidating relations with its neighbors
and promoting a truly open, competitive marketplace” (Johnson 2005). More recently, R. Even
Ellis (2012a: 13) of the Center for Hemispheric Defense Studies said that “the PRC’s economic
presence in and political impact on Latin America will continue. It will remain a permanent
fixture of the hemisphere, alongside that of the European Union, India and a host of other extraregional actors.”
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Latin America is a key battleground for hegemony—Chinese influence causes
decline
Cerna 2011(Michael, China Research Center, Graduate student in International Policy
Management at Kennesaw State, April 15, "China's Growing Presence in Latin America:
Implications for U.S. and Chinese Presence in the Region", http://www.chinacenter.net/chinasgrowing-presence-in-latin-america-implications-for-u-s-and-chinese-presence-in-the-region/)
With both the U.S. and China making gains in the region in different sectors, there is seemingly
room for each side to grow; which implies that, in fact, trade with Latin America is not a zerosum game. China presents an alternative to the United States, but that is not necessarily a bad
thing. The U.S. is much more diversified than China at the moment and therefore does not need to
enter into direct competition. However, as China responds to calls from Brazil and diversifies its
investments, there is increasing worry that China is going to outmatch U.S. trade in the region.
These fears may be economically based, but there are potentially harmful political consequences
– primarily, providing Latin America with a quasi-world power as an alternative to the U.S. Since
the Monroe Doctrine, Latin America has been considered a secure sphere of influence for the
U.S. The fact that China presents a less democratic alternative to U.S. influence presents a major
problem. The third BRICS summit in April provided more insight into the potential consequences
of China’s growing place in Latin America via its relations with Brazil. One proposal to emerge
from the summit of the five nations (Brazil, India, China, Russia and South Africa) was a broadbased international reserve currency system providing stability and certainty. The idea was to set
up a new exchange rate mechanism that would bypass the U.S. dollar as the reserve currency of
the world. In addition, banks of the five BRICS nations agreed to establish mutual credit lines in
their local currencies, not in U.S. currency. While the chances of such a proposal gaining support
are debatable, it sets a clear example of a possible shift in power away from the U.S. and toward a
more global organization, one that is arguably anchored by China. If China becomes a preferred
partner in Latin America, it will show that U.S. dominance around the globe also is at risk.
ConclusionSo what does China’s growing place in the region mean for the future? Depending on
whom this question is posed to, there are two probable answers. The first is that China’s
intensifying relations with Latin America offer a clear sign of the end of U.S. dominance in the
region, and in a greater sense, the entire world. There is enough evidence to show that the tides
have changed in favor of China. The other answer is that it means nothing. The U.S. is obviously
still the more dominant power in the region, and Chinese presence will eventually subside, again
leaving the United States as the region’s premier partner. The real answer probably falls
somewhere in the middle.Is China the preferred partner for Latin America? At this point, the
definitive answer is no. However, the United States should not take its place in the region for
granted. There is clear evidence of an increasingly symbiotic relationship with China throughout
Latin America. While the U.S. is the most dominant trade partner to the region as a whole, it is
losing ground in key countries, namely Brazil, which is blossoming on the world stage and is
emerging as the clear leader in the region. Increasing trade and investment can be beneficial for
all, but the power that China can derive from its growing economic influence could bring
increased political and ideological influence that the U.S. might find unnerving. China already
has replaced the U.S. as the largest trading partner for Brazil and Chile, and is on pace to do the
same in Peru and Venezuela. At the very least, this should cause the U.S. to pay more attention to
its southern neighbors and take steps to make sure that China only benefits economically and not
politically at the expense of the U.S. The world will be watching. As it stands, the Chinese are not
broadening their relations with the region in a way that directly competes with the United States.
China is strictly concerned with commodities, including oil. U.S. President Barack Obama
recently signed an agreement with Brazil’s Petrobras that will allow the oil company to drill in
the Gulf of Mexico. This symbolic move could cause tensions to increase as the world’s two
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largest oil consumers battle over rights to Brazilian oil. In that regard, the competition may go
beyond a race to Latin commodities and move into the realm of fighting for political influence. It
is odd to think that the United States would need to compete for hemispheric dominance with a
country on the other side of the globe, but China’s actions and increasing integration into the
region tell us that such a scenario may one day arise. Given the proximity and importance of
Latin America to the United States, this region could be the symbolic battle that best measures the
continued hegemony of the U.S. versus China.
U.S. heg key to promote peace and prevent power wars
Zhang and Shi 2011(Yuhan, researcher at the Carnegie Endowment for International Peace, and
Lin, Columbia University, consultant for the Eurasia Group and World Bank, January 22,
"America's Decline: A Harbinger of Conflict and Rivalry",
http://www.eastasiaforum.org/2011/01/22/americas-decline-a-harbinger-of-conflict-andrivalry/)jn
Over the past two decades, no other state has had the ability to seriously challenge the US
military. Under these circumstances, motivated by both opportunity and fear, many actors have
bandwagoned with US hegemony and accepted a subordinate role. Canada, most of Western
Europe, India, Japan, South Korea, Australia, Singapore and the Philippines have all joined the
US, creating a status quo that has tended to mute great power conflicts. However, as the
hegemony that drew these powers together withers, so will the pulling power behind the US
alliance. The result will be an international order where power is more diffuse, American interests
and influence can be more readily challenged, and conflicts or wars may be harder to avoid. As
history attests, power decline and redistribution result in military confrontation. For example, in
the late 19th century America’s emergence as a regional power saw it launch its first overseas war
of conquest towards Spain. By the turn of the 20th century, accompanying the increase in US
power and waning of British power, the American Navy had begun to challenge the notion that
Britain ‘rules the waves.’ Such a notion would eventually see the US attain the status of sole
guardians of the Western Hemisphere’s security to become the order-creating Leviathan shaping
the international system with democracy and rule of law. Defining this US-centred system are
three key characteristics: enforcement of property rights, constraints on the actions of powerful
individuals and groups and some degree of equal opportunities for broad segments of society. As
a result of such political stability, free markets, liberal trade and flexible financial mechanisms
have appeared. And, with this, many countries have sought opportunities to enter this system,
proliferating stable and cooperative relations. However, what will happen to these advances as
America’s influence declines? Given that America’s authority, although sullied at times, has
benefited people across much of Latin America, Central and Eastern Europe, the Balkans, as well
as parts of Africa and, quite extensively, Asia, the answer to this question could affect global
society in a profoundly detrimental way. Public imagination and academia have anticipated that a
post-hegemonic world would return to the problems of the 1930s: regional blocs, trade conflicts
and strategic rivalry. Furthermore, multilateral institutions such as the IMF, the World Bank or
the WTO might give way to regional organisations. For example, Europe and East Asia would
each step forward to fill the vacuum left by Washington’s withering leadership to pursue their
own visions of regional political and economic orders. Free markets would become more
politicised — and, well, less free — and major powers would compete for supremacy.
Additionally, such power plays have historically possessed a zero-sum element. In the late 1960s
and 1970s, US economic power declined relative to the rise of the Japanese and Western
European economies, with the US dollar also becoming less attractive. And, as American power
eroded, so did international regimes (such as the Bretton Woods System in 1973). A world
without American hegemony is one where great power wars re-emerge, the liberal international
system is supplanted by an authoritarian one, and trade protectionism devolves into restrictive,
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anti-globalisation barriers. This, at least, is one possibility we can forecast in a future that will
inevitably be devoid of unrivalled US primacy.
Scenario 2 is Iran:
Iran is utilizing Venezuela to gain a sphere of influence in America—American
influence is key check Iranian influence
Fite and Cordesman 2012(Brandon, CSIS, and Anthony, Arleigh A. Burke Chair in Strategy at
CSIS, April 4, "U.S. and Iranian Strategic Competition: The Impact of Latin America, Africa and
Peripheral States", http://csis.org/files/publication/120404_Iran_Chapter_XIII-Peripheral_StatesRevised.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 this Iran-Venezuelan relationship, despite the
threatening language used by both presidents. Mutual US-Venezuelan energy dependence
mitigates the possibility of a more serious breach in relations.
That causes Iran proliferation and terrorism
Brookes 2011(Peter, Senior Fellow for National Security Affairs and the Chung-Ju Yung Fellow
for Policy Studies at the Heritage foundation, December 16, " Iran’s Pernicious Influence in the
Western Hemisphere", http://blog.heritage.org/2011/12/16/iran%E2%80%99s-perniciousinfluence-in-the-western-hemisphere/)
There has been a lot of discussion recently of Iranian involvement in Latin America, especially
with the recent plot involving an assassination attempt against the Saudi ambassador to the United
States. Of course, a lot of people are going to Latin America these days: the Russians, the
Chinese— and even the Europeans. That’s because the region is abundant in natural resources,
especially energy, and it offers the potential of emerging markets. Unfortunately, Iran is looking
to make a less-than-friendly mark in Latin America, especially for the United States. Tehran has
economic ties with Latin America, especially Venezuela, where Iran claims it has invested $4
billion to $5 billion. But according to some analysts, the economic ties are likely a cover-up for
more troubling endeavors. For instance, Venezuela is helping Iran evade punitive economic
sanctions by providing international banking services for the Iranian regime, which is
increasingly isolated due to its nuclear weapons program. But the Tehran–Caracas axis goes
deeper than this. According to press reports, the two nations also inked a Memorandum of
Understanding, pledging full military support and cooperation that likely includes weapons sales
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and the exchange of Iranian advisors. One could easily see Tehran using Caracas as a stepping-off
point for attacking U.S. or other (e.g. Israeli) interests in this hemisphere—or even the American
homeland, especially if there is military action taken against Iran’s nuclear program. There is
concern that Iran and Venezuela are already cooperating on some nuclear issues. There have been
reports that Iran may be prospecting for uranium ore in Venezuela, which could aid both
countries’ nuclear programs, should Caracas proceed with its nuclear program. While still
prospective, of course, there is the possibility that Tehran, which has an increasingly capable
ballistic missile program, could sell or help Caracas develop ballistic missiles capable of reaching
American shores. It is noteworthy that the distance from Caracas to Miami is about 1,400 miles,
which nearly corresponds with the current range of Tehran’s medium-range Shahab-class ballistic
missile. (Iran, of course, is also developing an intercontinental ballistic missile.)But it is not just
Venezuela that Iran is courting. Iran has also enhanced its relations with other elements of the
anti-American Latin left in Nicaragua, Bolivia, Ecuador, and Nicaragua, which are countries
run—not surprisingly—by leaders close to Venezuela. Experts suggest that these relationships are
still managed largely by the Chavistas, who seek to develop an alliance that will serve as a
counterweight to Washington in the region. As a gesture to these new alliances, Bolivia, like
Venezuela, has reportedly lifted visa requirements for passengers arriving from Iran, opening the
door to an influx of troublesome travelers. According to congressional testimony, Iran is
providing “diplomatic training” of 30 to 90 days in Tehran to government workers from
Venezuela, Nicaragua, Bolivia, Ecuador, and the Communist Party of El Salvador. Instead of the
art of negotiating, international relations theory, and how to work a room at an embassy soiree,
the Latin visitors are reportedly instead being taught intelligence, counterintelligence, and crowd
control. The largest base for Hezbollah, the Iran- and Syria-backed terror group, outside the
Middle East was previously concentrated in the tri-border area of Paraguay, Brazil, and
Argentina, but experts now say Venezuela has become the largest. Other observers believe the
Chavistas may be welcoming Hezbollah operatives to assist the narcoterrorist group FARC,
which has found refuge in Venezuela and has been fighting U.S. ally Colombia for decades. The
Venezuelan regime would certainly welcome Hezbollah’s help in dealing with the United
States—and Hezbollah, for its part, would certainly appreciate a secure operating space close to
American interests and territory. In fact, Hezbollah is believed to have a growing relationship
with Mexican drug cartels, including benefiting from their smuggling routes into the United
States. The notion that Iranian involvement in this region is not a threat is a foolish one.
Revolutionary Iran has had a hand in shedding American blood for more than 30 years, most
recently in Iraq and Afghanistan. A failure to take measures to check Iran’s efforts in the Western
Hemisphere will only allow anti-American, terror-supporting, oppressive, non-free market
agendas to take root in our neighborhood.
Iran prolif causes cascading prolif and nuclear war
Cirincione 2007 (Joseph, Fellow at the Center for American Progress, “The Middle East Nuclear
Surge,” Center for American Progress, August 21,
http://www.americanprogress.org/issues/2007/08/nuclear_surge.html)
Iran is still probably five to 10 years away from gaining the ability to make nuclear fuel or
nuclear bombs. But its program is already sending nuclear ripples through the Middle East. The
race to match Iran's capabilities has begun. Almost a dozen Muslim nations have declared their
interest in nuclear energy programs in the past year. This unprecedented demand for nuclear
programs is all the more disturbing paired with the unseemly rush of nuclear salesman eager to
supply the coveted technology. While U.S. officials were reaching a new nuclear agreement with
India last month, President Nicolas Sarkozy of France signed a nuclear cooperation deal with
Libya and agreed to help the United Arab Emirates launch its own civilian nuclear program.
Indicating that this could be just the beginning of a major sale and supply effort, Sarkozy declared
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that the West should trust Arab states with nuclear technology. Sarkozy has a point: No one can
deny Arab states access to nuclear technology, especially as they are acquiring it under existing
international rules and agreeing to the inspection of International Atomic Energy Agency
officials. But is this really about meeting demands for electric power and desalinization plants?
There is only one nuclear power reactor in the entire Middle East—the one under construction in
Busher, Iran. In all of Africa there are only two, both in South Africa. (Israel has a research
reactor near Dimona, as do several other states.) Suddenly, after multiple energy crises over the
60 years of the nuclear age, these countries that control over one-fourth of the world's oil supplies
are investing in nuclear power programs. This is not about energy; it is a nuclear hedge against
Iran. King Adbdullah of Jordan admitted as much in a January 2007 interview when he said: "The
rules have changed on the nuclear subject throughout the whole region. . . . After this summer
everybody's going for nuclear programs." He was referring to the war in Lebanon last year
between Israel and Hezbollah, perceived in the region as evidence of Iran's growing clout. Other
leaders are not as frank in public, but confide similar sentiments in private conversations. Here is
where the nuclear surge currently stands. Egypt and Turkey, two of Iran's main rivals, are in the
lead. Both have flirted with nuclear weapons programs in the past and both have announced
ambitious plans for the construction of new power reactors. Gamal Mubarak, son of the current
Egyptian president and his likely successor, says the country will build four power reactors, with
the first to be completed within the next 10 years. Turkey will build three new reactors, with the
first beginning later this year. Not to be outdone, Saudi Arabia and the five other members of the
Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates) at the
end of 2006 "commissioned a joint study on the use of nuclear technology for peaceful purposes."
Algeria and Russia quickly signed an agreement on nuclear development in January 2007, with
France, South Korea, China, and the United States also jockeying for nuclear sales to this oil
state. Jordan announced that it, too, wants nuclear power. King Abdullah met Canada's prime
minister in July and discussed the purchase of heavy water Candu reactors. Morocco wants
assistance from the atomic energy agency to acquire nuclear technology and in March sponsored
an international conference on Physics and Technology of Nuclear Reactors. Finally, the Arab
League has provided an overall umbrella for these initiatives when, at the end of its summit
meeting in March, it "called on the Arab states to expand the use of peaceful nuclear technology
in all domains serving continuous development." Perhaps these states are truly motivated to join
the "nuclear renaissance" promoted by the nuclear power industry and a desire to counter global
warming. But the main message to the West from these moderate Arab and Muslim leaders is
political, not industrial. "We can't trust you," they are saying, "You are failing to contain Iran and
we need to prepare." It is not too late to prove them wrong. Instead of seeing this nuclear surge as
a new market, the countries with nuclear technology to sell have a moral and strategic obligation
to ensure that their business does not result in the Middle East going from a region with one
nuclear weapon state - Israel - to one with three, four, or five nuclear nations. If the existing
territorial, ethnic, and political disputes continue unresolved, this is a recipe for nuclear war.
Terrorist retaliation causes nuclear war – draws in Russia and China
Ayson 2010(Robert, Professor of Strategic Studies and Director of the Centre for Strategic
Studies: New Zealand at the Victoria University of Wellington, July, “After a Terrorist Nuclear
Attack: Envisaging Catalytic Effects,” Studies in Conflict & Terrorism, Volume 33, Issue 7,
Available Online to Subscribing Institutions via InformaWorld)
A terrorist nuclear attack, and even the use of nuclear weapons in response by the country
attacked in the first place, would not necessarily represent the worst of the nuclear worlds
imaginable. Indeed, there are reasons to wonder whether nuclear terrorism should ever be
regarded as belonging in the category of truly existential threats. A contrast can be drawn here
with the global catastrophe that would come from a massive nuclear exchange between two or
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more of the sovereign states that possess these weapons in significant numbers. Even the worst
terrorism that the twenty-first century might bring would fade into insignificance alongside
considerations of what a general nuclear war would have wrought in the Cold War period. And it
must be admitted that as long as the major nuclear weapons states have hundreds and even
thousands of nuclear weapons at their disposal, there is always the possibility of a truly awful
nuclear exchange taking place precipitated entirely by state possessors themselves. But these two
nuclear worlds—a non-state actor nuclear attack and a catastrophic interstate nuclear exchange—
are not necessarily separable. It is just possible that some sort of terrorist attack, and especially an
act of nuclear terrorism, could precipitate a chain of events leading to a massive exchange of
nuclear weapons between two or more of the states that possess them. In this context, today’s
and tomorrow’s terrorist groups might assume the place allotted during the early Cold War years
to new state possessors of small nuclear arsenals who were seen as raising the risks of a catalytic
nuclear war between the superpowers started by third parties. These risks were considered in the
late 1950s and early 1960s as concerns grew about nuclear proliferation, the so-called n+1
problem. t may require a considerable amount of imagination to depict an especially plausible
situation where an act of nuclear terrorism could lead to such a massive inter-state nuclear war.
For example, in the event of a terrorist nuclear attack on the United States, it might well be
wondered just how Russia and/or China could plausibly be brought into the picture, not least
because they seem unlikely to be fingered as the most obvious state sponsors or encouragers of
terrorist groups. They would seem far too responsible to be involved in supporting that sort of
terrorist behavior that could just as easily threaten them as well. Some possibilities, however
remote, do suggest themselves. For example, how might the United States react if it was thought
or discovered that the fissile material used in the act of nuclear terrorism had come from Russian
stocks,40 and if for some reason Moscow denied any responsibility for nuclear laxity? The
correct attribution of that nuclear material to a particular country might not be a case of science
fiction given the observation by Michael May et al. that while the debris resulting from a nuclear
explosion would be “spread over a wide area in tiny fragments, its radioactivity makes it
detectable, identifiable and collectable, and a wealth of information can be obtained from its
analysis: the efficiency of the explosion, the materials used and, most important … some
indication of where the nuclear material came from.”41 Alternatively, if the act of nuclear
terrorism came as a complete surprise, and American officials refused to believe that a terrorist
group was fully responsible (or responsible at all) suspicion would shift immediately to state
possessors. Ruling out Western ally countries like the United Kingdom and France, and probably
Israel and India as well, authorities in Washington would be left with a very short list consisting
of North Korea, perhaps Iran if its program continues, and possibly Pakistan. But at what stage
would Russia and China be definitely ruled out in this high stakes game of nuclear Cluedo? In
particular, if the act of nuclear terrorism occurred against a backdrop of existing tension in
Washington’s relations with Russia and/or China, and at a time when threats had already been
traded between these major powers, would officials and political leaders not be tempted to
assume the worst? Of course, the chances of this occurring would only seem to increase if the
United States was already involved in some sort of limited armed conflict with Russia and/or
China, or if they were confronting each other from a distance in a proxy war, as unlikely as these
developments may seem at the present time. The reverse might well apply too: should a
nuclear terrorist attack occur in Russia or China during a period of heightened tension or
even limited conflict with the United States, could Moscow and Beijing resist the pressures that
might rise domestically to consider the United States as a possible perpetrator or encourager of
the attack? Washington’s early response to a terrorist nuclear attack on its own soil might also
raise the possibility of an unwanted (and nuclear aided) confrontation with Russia and/or
China. For example, in the noise and confusion during the immediate aftermath of the
terrorist nuclear attack, the U.S. president might be expected to place the country’s armed
forces, including its nuclear arsenal, on a higher stage of alert. In such a tense environment, when
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careful planning runs up against the friction of reality, it is just possible that Moscow and/or
China might mistakenly read this as a sign of U.S. intentions to use force (and possibly nuclear
force) against them. In that situation, the temptations to preempt such actions might grow,
although it must be admitted that any preemption would probably still meet with a devastating
response.
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19
Plan
Plan: The United States federal government should substantially increase its economic
investment in oil infrastructure in Venezuela.
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Solvency
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A2: Venezuela Says No
Anti-U.S. rhetoric was just a political ploy—Maduro will cooperate with the U.S.
Neuman 2013(William, NYT Staff, April 14, "Venezuela Gives Chávez Protégé Narrow
Victory", http://www.nytimes.com/2013/04/15/world/americas/venezuelans-vote-for-successorto-chavez.html?pagewanted=all&_r=0)
Meanwhile, there were also signs that the strident, Chávez-style anti-American message that Mr.
Maduro used during the campaign would now be set aside to improve Venezuela’s strained
relations with the United States. Venezuela is a major oil supplier to the United States with
immense reserves, and under Mr. Chávez it has also been a major thorn in Washington’s side,
wielding its oil and its diplomatic muscle to oppose American policy everywhere from Cuba to
Syria. Mr. Chávez, who succumbed to cancer on March 5, built his political career on flaying the
United States and its traditional allies in the Venezuelan establishment, and Mr. Maduro followed
his mentor’s script throughout the campaign with an acolyte’s zeal. He accused former American
diplomats of plotting to kill him, suggested that the United States had caused Mr. Chávez’s
illness, and had his foreign minister shut the door on informal talks with the United States that
began late last year. A senior State Department official in Washington said the harsh rhetoric had
made the possibility of improved relations more difficult. But over the weekend, with his election
victory looking likely, Mr. Maduro sent a private signal to Washington that he was ready to turn
the page. Bill Richardson, the former governor of New Mexico, who was in Caracas as a
representative of the Organization of American States, said in an interview that Mr. Maduro
called him aside after a meeting of election observers on Saturday and asked him to carry a
message. “He said, ‘We want to improve the relationship with the U.S., regularize the
relationship,’ ” Mr. Richardson said.
Extending an olive branch is key to resolve relations—Maduro is willing to
cooperate
Fabian 2013(Jordan, ABC News Staff, March 6, "Hugo Chávez Death: Fixing the U.S.Venezuela Relationship Won't Be Easy", http://abcnews.go.com/ABC_Univision/Politics/hugochavez-death-fixing-us-venezuela-relationship-easy/story?id=18668275#.UbQrf-vJ9y5)
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.
Maduro is willing to cooperate with the U.S.
Ellsworth 2013(Brian, Reuters Staffwriter, May 19. "Venezuela says taking steps to restore U.S.
diplomatic ties", http://www.reuters.com/article/2013/05/20/us-venezuela-usaidUSBRE94J01R20130520)
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Venezuela's recent designation of an acting head of its diplomatic mission in the United States
shows the OPEC nation's desire to restore full diplomatic relations, the foreign minister said in an
interview broadcast on Sunday. Disputes between Caracas and Washington were common during
the 14-year-rule of late socialist leader Hugo Chavez, leaving both nations without ambassadors
in each other's capitals. Foreign Minister Elias Jaua suggested in a televised interview that the
move to name government ally Calixto Ortega as charge d'affaires in Washington could be a
prelude to restoring ambassadors. "This is a message for U.S. politicians so they understand
Venezuela's desire to normalize relations ... via the designation of the highest diplomatic
authorities," he said. "Why? Because the United States remains our top trade partner.
"Venezuelan President Nicolas Maduro has in recent months said he wants better ties with
Washington as long as the relationship is respectful. But he has also accused the United States of
seeking to destabilize the country.
Venezuela won’t say no—empirics
Fabian 2013(Jordan, ABC News Staff, March 6, "Hugo Chávez Death: Fixing the U.S.Venezuela Relationship Won't Be Easy", http://abcnews.go.com/ABC_Univision/Politics/hugochavez-death-fixing-us-venezuela-relationship-easy/story?id=18668275#.UbQrf-vJ9y5)
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 antiAmerican throughout their history and it may be possible for a leader to eventually bridge the gap
between the two nations.
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Oil Advantage
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Venezuelan Production Down Now
Venezuelan oil production is down and declining—new investment is key
Clayton 2013(Blake, Fellow for Energy and National Security at CFR, January 17, "Chavez’s
Troubled Legacy for Venezuela’s Oil Industry", http://blogs.cfr.org/levi/2013/01/17/chavezstroubled-legacy-for-venezuelas-oil-industry/)
Venezuela was the third-largest producer in OPEC when Chavez took office, its roughly 3.5
million barrels per day (mb/d) surpassed only by Saudi Arabia and Iran (see Figure 1). Output
was on the upswing, +1 mb/d since the start of the decade. But the country’s production has
trended steadily downward under Chavez—now 30 percent lower than it was in 1998—falling
victim to the mismanagement of PDVSA (Venezuela’s national oil company) to finance other
state projects, hostility toward foreign investment, and a mature production base where decline
rates at existing fields are as high as 25 percent, according to the U.S. Energy Information
Administration (EIA). The woeful production record under Chavez isn’t for lack of oil in the
ground. Venezuela sits on more proved reserves, according to BP’s estimate, than any other, at
297 billion barrels (Figure 2). Saudi Arabia comes closest, at 265 billion barrels, though the
kingdom is also less heavily explored and has a generally higher-quality resource base. Of
Venezuela’s proved reserves, most (some 220 billion barrels, per BP) are extra-heavy crude and
bitumen in the Orinoco Belt, but industry estimates suggest that even this low-quality oil can be
produced at as low as one-third the cost of its Canadian cousin, due to favorable fluid and
reservoir conditions that make for better per-well production rates. While production has fallen
under Chavez, consumption has risen (Figure 3)—up from about 490 thousand barrels per day
(kb/d) in 1998 to 850 kb/d today—biting into net exports, which poses a problem for the
country’s future fiscal health. Crude exports have collapsed since Chavez took power, down
nearly 40 percent to roughly 1.5 mb/d (Figure 4). Refined product export patterns are looking
increasingly shaky as well. Last September saw a sharp jump in U.S. gasoline and other refined
product exports to the South American country, some 196 kb/d, and some industry sources
estimate a reliance on net product imports as high as 300 kb/d. The proximate causes of the
September jump were accidents at the Amuay and El Palito refineries, which knocked out a
substantial portion of the country’s refining capacity. But the more troublesome underlying factor
is the slow deterioration of the country’s refining complex and oil-specific technical prowess,
causing a string of outages and unplanned stoppages in recent years.
The industry is in decline now—investment is key to a rebound
Gue 2013(Elliot, creator of the Energy & Income Advisor, an online newsletter dedicated to
investment in the energy sector, March 21, "Venezuelan Oil Production: No Overnight
Recovery", https://www.energyandincomeadvisor.com/venezuelan-oil-production-no-overnightrecovery/)
To fund these social programs, Chavez’s government relied primarily on cash from Petroleos de
Venezuela (PDVSA), the national oil company. According to the BP’s (LSE: BP, NYSE: BP)
most recent Statistical Review of World Energy, Venezuela’s oil reserves stood at 296.5 billion
barrels at the end of 2011–the largest in the world, eclipsing Saudi Arabia’s 265 billion barrels.
But unlike Saudi Arabia, heavy oil accounts for much of Venezuela’s resource wealth. Exploiting
these complex deposits requires significant investments in infrastructure and the technical
expertise of major international oil companies and services firms. Industry observers estimate that
maintaining production from Venezuela’s Orinoco Belt and other fields would require annual
capital expenditures of between USD3 and USD5 billion. But Chavez’s plethora of social
programs robbed PDSVA of the necessary capital to fund ongoing development of the nation’s
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considerable hydrocarbon resources. Under Chavez, the Venezuelan government has always had
a vexed relationship with the energy industry. When PDVSA workers went on strike in late 2002,
the country endured a severe economic downturn and the unemployment rate skyrocketed to
more than 20 percent. The state responded by firing 18,000 PDVSA workers, including many of
its most talented and experienced engineers and employees. In 2006 and 2007, Venezuela moved
to nationalize exploration and production, seizing assets held by foreign companies such as
ExxonMobil Corp (NYSE: XOM) and Italian energy giant Eni (Milan: ENI, NYSE: E). Although
Chevron Corp (NYSE: CVX) and a handful of other oil and gas companies opted to renegotiate
their agreements with PDSVA and continue to operate in Venezuela, the state’s increasingly
heavy-handed moves have discouraged foreign investment in the domestic energy industry.
Against this backdrop, it’s no surprise that Venezuela’s oil production has declined steadily since
Chavez became president in 1999. At the same time, Venezuela’s oil consumption has surged to
well over 800,000 barrels per day in 2012 from an average of about 560,000 barrels per day in
1998-99. Much of this increase reflects generous subsidies that have limited the domestic price of
gasoline to between USD0.04 and USD0.10 per gallon. To worsen matters, the nation transfers a
large portion of its hydrocarbon production to other nations as part of special arrangements that
generate minimal cash proceeds. For example, Venezuela sends about 100,000 barrels of oil per
day to Cuba in exchange for medical services for Venezuela’s poor. Cuba has even sold
discounted heating oil to parts of the US in recent years as part of a public relations ploy–you
may recall the television spots featuring Joseph Kennedy that advertised this program. Analysts
from Morgan Stanley (NYSE: MS) estimate that an astounding 43 percent of Venezuela’s total
oil exports aren’t sold at market-based prices. Meanwhile, a fire at one of Venezuela’s largest
refineries last year has increased the hydrocarbon-rich nation’s reliance on imported refined
products. In fact, US gasoline exports to Venezuela have jumped from zero in 2008 to 94,000
barrels per day at the end of 2012.Recent developments also suggest that PDSVA is strapped for
cash. Although the government’s nationalization of its oil resources has deterred foreign
investment, PDSVA has relied on international oil-field services firms to help the nation exploit
its vast resource base. In a conference call to discuss Schlumberger’s (NYSE: SLB) fourthquarter results, CEO Paal Kibsgaard noted that PDSVA had delayed payment on some of its
bills:In Venezuela, we have in recent years actively managed our activity levels relative to our
receivables balance. During the fourth quarter we saw a significant slowdown in the rates of
payment, and we are currently working closely with our customer to resolve the situation.
Massive government spending on social programs and yet another currency devaluation–the
seventh since Chavez took office–have pushed the inflation rate in Venezuela to 22.8
percent.Meanwhile, mandated price controls on basic goods have resulted in widespread
shortages of food and other household necessities. The government has attributed these problems
to hoarding by the wealthy and large companies, backing up these claims by televising raids of
well-stocked warehouses. These inflammatory actions are unlikely to encourage suppliers to keep
the nation stocked with basic goods. Ever since Hugo Chavez announced that doctors had
discovered a baseball-sized tumor in his pelvic region, investors have been bullish on Venezuelan
sovereign debt that’s denominated in US dollars. This rally reflects a belief that Chavez’s death
would hasten a return to market-friendly policies that would encourage foreign investment in
Venezuela’s floundering energy industry. Over the long run, this investment thesis should pan
out. Although Maduro will likely coast in the upcoming presidential election, the country can’t
afford to continue Chavez’s magnanimous social programs because PDSVA flagging
hydrocarbon output can no longer support these expenditures. However, the national oil company
can’t restore production growth overnight; reversing years of neglect will require significant
foreign investment in exploration and development. The idea that an upsurge in Venezuelan
hydrocarbon production in the aftermath of Chavez’s death will depress global oil prices in the
near term betrays a lack of familiarity with the recent history of the country’s oil industry. A more
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likely outcome: Murado will continue Chavismo until the situation truly becomes untenable and
the requisite foreign investment revitalizes Venezuela’s neglected oil fields.
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Investment Low Now
Lack of investment will crush Venezuela’s oil industry
Sanati 2013(Cyrus, CNN Staffwriter, March 6, "Chavez's death won't spur new Venezuela oil
drilling", http://finance.fortune.cnn.com/2013/03/06/hugo-chavez-death-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).By the 1990s PDVSA and its foreign partners, which at the
time included pretty much all the big U.S. and European oil giants, were pumping around three
million barrels a day of oil from Venezuelan fields, making it the third-largest oil exporter in
OPEC. PDVSA's long-term plan was to gradually increase its production capacity to around eight
million barrels a day, which would have put Venezuela on par with oil exporting giants like
Russia and Saudi Arabia. But the ineptitude and corruption of the Chavez kleptocracy have
contributed to a decline in overall Venezuelan oil output, which at last count came in at 2.4
million barrels a day, 25% less than what it was when Chavez took power 14 years ago. That
would have been excusable if Venezuela's oil reserves were rapidly depleting, but that isn't the
case -- not by a long shot. Indeed, in 2010, OPEC confirmed that Venezuela's Orinoco oil belt
contained tar sand deposits equivalent to around 300 billion barrels of oil, enough to fulfill
current world demand for 10 years. That would mean Venezuela would have the largest oil
reserves on the planet, outstripping Saudi Arabia's 260 billion barrel oil stash. With today's oil
price being 10 times higher than where it was when Chavez took power in 1998, one would
surmise that the Orinoco oil belt today would be littered with equipment and workers trying
furiously to tap its abundant oil wealth. But, of course, that isn't the case. During his reign,
Chavez instituted a series of devastating "reforms" to the nation's oil industry, which ended up
breaking its back. He ripped up production sharing contracts signed under the previous
government, forcing foreign oil companies to hand over more of their profit to the state.
Lows in investment risk collapse of Venezuelan production
Mufson 2013(Steven, Washington Post Staff, March 6, "Chavez successors likely to continue to
use Venezuela’s oil as political tool", http://www.washingtonpost.com/business/economy/chavezsuccessors-likely-to-continue-to-use-oil-as-political-tool/2013/03/06/9220bf4a-8656-11e2-98a3b3db6b9ac586_story.html)
The state oil company Petroleos de Venezuela SA (PDVSA), once regarded as one of the world’s
best, has become the government’s social-spending arm while investment in oil fields has lagged.
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The year before Chavez became president, Venezuela’s oil production reached 3.5 million barrels
a day. Then it slumped so badly that even after a modest recovery, it averaged only 2.5 million
barrels a day last year. Meanwhile PDVSA, even after purging thousands of experienced
engineers and managers during a labor dispute, has grown to about 99,000 employees, according
to a report from the Eurasia Group consulting firm. And half of its staggering $36 billion in debt
is held by China. “PDVSA is a shadow of its former self,” said David Goldwyn, a consultant and
formerly the State Department’s special envoy and coordinator for international energy affairs
under Hillary Rodham Clinton. “The refineries are [in] shambles. Fields are in decline. New
investment is stagnant.” Chavez also raised the state oil company’s share in production projects to
60 percent, and while most companies cut new deals, a couple, including Exxon Mobil, went to
court. Only historically high crude oil prices of about $100 a barrel have saved the country’s
economy from ruin. Revenue stayed high even though the heavily subsidized domestic
consumption has jumped 39 percent since 2001 and exports dropped by nearly half to 1.7 million
barrels a day.
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Now Key—U.S. Shift
And the U.S. is diversifying away from Venezuela now—that independently
collapses Venezuela
Meacham 2013(Carl, Director of the Americas Program at CSIS, April 11, " Venezuela’s
Presidential Election: How Significant is the Outcome for the United States?",
http://csis.org/publication/venezuelas-presidential-election-how-significant-outcome-unitedstates)
A1: Much has been said about the interdependence of the two countries, but recent figures show
this is becoming less and less so. Venezuela, through the state-owned oil company PDVSA, is the
fourth largest oil provider to the United States, trailing only Canada, Saudi Arabia, and Mexico.
At the end of 2011, Venezuela represented 11 percent of imports for the United States—the
world’s largest oil consumer. To be sure, 11 percent remains a significant share of the U.S.
market, but Venezuela’s share continues to decline. As recently as 2007, U.S. imports of
Venezuelan oil stood at 1.4 million barrels per day (bpd); by 2012, this number stood at 879,000
bpd, according to preliminary figures released by the U.S. Department of Energy’s Energy
Information Administration. Meanwhile, the United States continues to advance on its path of
increasing energy independence as production of shale gas and tight oil grows. Final approval of
the 2,000 mile Keystone pipeline, which would bring 700,000 bpd of oil from Canada to
refineries in Houston and the Gulf of Mexico, would increasingly delink the United States from
Venezuelan exports. Not to mention the possibility of increasing deep-water exploration in
Mexico as it begins to enact reforms of its energy sector. For Venezuela, the U.S. market will
remain the number one destination of oil exports, with roughly 40 percent of its oil going to the
United States, followed by the Caribbean and China. The oil sector accounts for 25 percent of
Venezuelan GDP and 80 percent of exports. Less demand from the U.S. market would hit the
Venezuelan economy with considerable force. The United States might see adverse effects from
rapidly decreasing Venezuelan supplies, such as higher fuel prices, and growth would slow, but
these effects would likely be transitory. What is more likely in the midterm is a rebalancing of the
U.S. energy basket. This is likely to include less dependence on Venezuelan oil because of the
changing energy scenario described above. If current trends continue, the Venezuelan economy is
likely to experience difficulty. Despite tight global supplies of oil, Venezuela may struggle to find
new buyers and to reorient infrastructure used to refine its oil to reach other markets, including
Asia, since today only the United States is well-equipped to refine Venezuela’s heavy, lowquality oil.
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Foreign Investment Key
Foreign investment is key to Venezuelan production—they want us to invest
Gardner and Doggett 2013(Timother and Tom, Reuters Staff, April 15, "UPDATE 3-Venezuela
oil minister seeks U.S. investment", http://www.reuters.com/article/2010/04/15/venezuela-oilopec-idUSN1523721520100415)
Venezuelan Oil Minister Rafael Ramirez on Thursday welcomed investment by U.S. oil
companies to help develop his country's vast crude reserves, as he held energy talks in
Washington for the first time in six years. Ramirez said Venezuela is signing agreements with
companies in Russia, China, Europe and Japan to develop its reserves and U.S. companies should
be there as well. "This United States cannot miss this opportunity," he told reporters on the
sidelines of a two-day conference of Western Hemisphere countries meeting to address energy
and climate change issues. Relations between the United States and Venezuela have long been
strained, hitting a particularly low point in 2006 when visiting Venezuelan President Hugo
Chavez took on then-President George W. Bush at the United Nations, calling him a "devil."
Ramirez said foreign oil companies wanting to do business in Venezuela would have to "respect"
the country's energy laws and policies. Venezuela has an estimated 99.4 billion barrels of proven
oil reserves, with last year's oil production averaging 2.2 million barrels per day, down 190,000
bpd from the year before. It is the world's eighth largest oil exporter and the fourth biggest
foreign oil supplier to the U.S. market. MONEY NEEDED TO TAP "HEAVY OIL" To boost its
sagging output from traditional wells, Venezuela needs foreign investment and technology to tap
the heavy oil of the Orinoco belt that requires much upgrading to turn into lighter crude.
Venezuela was criticized several years ago when it forced foreign companies to renegotiate their
oil development contracts, reducing their profits. Several companies, including those U.S.-based,
sold their stakes instead of following the Venezuelan government's new terms. Leading U.S. oil
companies Exxon Mobil (XOM.N) and ConocoPhillips (COP.N), left Venezuela in 2007 after
being pushed out of multibillion-dollar Orinoco projects. Before Thursday, Ramirez had not held
energy talks in Washington since 2004. He said Venezuelan-U.S. relations had been hurt by the
Bush administration, which he said had been "hostile" to his country. "There's no reason
whatsoever for this relationship to have been halted," he said. Ramirez said he expected to have a
private meeting with his U.S. counterpart, Energy Secretary Steven Chu, during the conference.
Patrick Esteruelas, Latin America analyst at Eurasia Group in New York, said he did not think
Ramirez's comments about U.S. firms was significant because Venezuela has not discriminated
against companies from specific countries. "It has just demanded an equally aggressive share of
the (oilfield) rent from all willing investors...very few U.S. companies have shown much
willingness to go in and swallow that pill," he said.
No one is investing—that prevents more production
AFP 2013(Agence France-Presse, March 15, Venezuela looks beyond US to China as customer",
http://www.rappler.com/world/23924-venezuela-united-states-china-oil)
Venezuela's problems in satisfying its new and traditional markets stem from a lack of investment
to boost production. It is stagnant at about 3 million barrels a day (mbd), Quiroz said, citing
official figures. OPEC puts it lower, at 2.3 mbd. The government had planned to raise production
to nearly 6 million in 2012, but that goal was changed to 2019. Investment has been delayed to
PVDSA and foreign joint ventures that operate as minority partners in the Orinoco Oil Belt, a
deposit along the river of the same name in eastern Venezuela which is rich in heavy crude.
Analysts say PDVSA, which was the driving force of the Venezuelan government, was forced to
finance Chavez's popular social programs for the poor, to the detriment of investing in the oil
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industry. Quiroz says the firm was distracted by activities that are not its core concern and "has
no cash flow or financial availability to make investments. "Foreign companies are also wary of
laying out loads of money. They do not like PDVSA's delays in payment and the control that the
state-run company requires in its decision making with regard to planning and contracts. "It is the
biggest bottle neck: trust in the rules of the game." said Pedro Luis Rodríguez, co-author of the
book "Oil as a Tool of Progress." "And as it is a sector that requires hefty investments over the
short term, but the returns come over the medium and long term, without that trust it is hard for
investments to be made."
Increased foreign investment is key to maintaining oil production
Sanati 2013(Cyrus, CNN Staffwriter, March 6, "Chavez's death won't spur new Venezuela oil
drilling", http://finance.fortune.cnn.com/2013/03/06/hugo-chavez-death-oil/)
It is difficult to see what, if anything, could change in Venezuela's oil industry in the next few
months. The political apparatus Chavez has set up seems fully entrenched. It would probably take
a full-fledged revolution for it to be wiped out at this point. Nevertheless, Venezuela is nearing a
breaking point when it comes to oil production. The government cannot continue to rely on
PDVSA to pay its bills. It needs real foreign partners with real experience to come in and help it
boost production. That means bringing back companies like ConocoPhilips, which before getting
the boot in 2007, was the largest foreign operator in the country. They have the engineers and
know-how to help Venezuela quickly get off the ground. Venezuela would be wise to also consult
with oil companies like Husky, Suncor (SU), Syncrude and Nexen, all of which have extensive
experience working in Canada's vast Athabasca oil sands.
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32
U.S. Investment Key
U.S. investment uniquely key—it’s the only consumer large enough to satisfy needs,
and we control key technology
AFP 2013(Agence France-Presse, March 15, Venezuela looks beyond US to China as customer",
http://www.rappler.com/world/23924-venezuela-united-states-china-oil)
But those exports have dropped, from 1.38 million barrels in 2007 to 906,000 in 2012, according
to figures from the US Energy Department. That poses a problem for Venezuela. The United
States pays cash, unlike countries of the Caribbean and South America which import Venezuelan
crude under preferential terms or even trade oil for services like doctors and teachers, said analyst
Diego Gonzalez. The US is importing less from Venezuela because it wants to diversify its
vendor portfolio, said Rafael Quiroz, former director of the state oil company PDVSA. In 2012,
Venezuelan exports to the US dropped 11% to $37.4 billion, amid higher prices for Venezuelan
crude and derivatives, according to Venamcham, the Venezuelan-American Chamber of
Commerce. The United States is seeking energy efficiency in consumption and has promoted
investment and technology in non-conventional oil fields. It will achieve energy independence in
around 2020, when it will be the world's top oil producer, says the International Energy Agency
(IEA)."It is not easy to substitute a client like the United States for any old client," said Gonzalez,
president of the Center of Energy Orientation. What is harder is to have Venezuelan crude keep
going to Venezuelan Citgo refineries in the US, as they do not exist in other countries. "That is
hard to transfer," said Gonzalez.
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Venezuelan Decline Causes Oil Shocks
Venezuelan collapse causes significant oil shocks
Sullivan 2013(Mark, Specialist in Latin American Affairs for the Congressional Research
Service, January 10, "Venezuela: Issues for Congress",
http://www.fas.org/sgp/crs/row/R40938.pdf)
Despite notable frictions in bilateral relations, Venezuela has continued to be a major supplier of
oil to the United States. On numerous past occasions, however, Chávez threatened to stop selling
oil to the United States, although Venezuelan officials maintained that Venezuela would only stop
sending oil to the United States if attacked by the United States. Because of Chávez’s strong
rhetoric, however, some observers raised questions about the security of Venezuela as a major
supplier of foreign oil. In June 2006, the Government Accountability Office (GAO) issued a
report, requested by then-Senate Foreign Relations Committee Chairman Richard Lugar, on the
issue of potential Venezuelan oil supply disruption. At the time, the GAO report concluded that a
sudden loss of all or most Venezuelan oil from the world market could raise world prices up to
$11 per barrel and decrease U.S. gross domestic product by about $23 billion. 116
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Shocks Cause Collapse
Oil shocks collapse the economy
Rubin 2012(Jeff, Bloomberg Staff Writer, September 23, "How High Oil Prices Will
Permanently Cap Economic Growth", http://www.bloomberg.com/news/2012-09-23/how-highoil-prices-will-permanently-cap-economic-growth.html)
There are many ways an oil shock can hurt an economy. When prices spike, most of us have little
choice but to open our wallets. Paying more for oil means we have less cash to spend on food,
shelter, furniture, clothes, travel and pretty much anything else. Expensive oil, coupled with the
average American’s refusal to drive less, leaves a lot less money for the rest of the economy.
Worse, when oil prices go up, so does inflation. And when inflation goes up, central banks
respond by raising interest rates to keep prices in check. From 2004 to 2006, U.S. energy inflation
ran at 35 percent, according to the Consumer Price Index. In turn, overall inflation, as measured
by the CPI, accelerated from 1 percent to almost 6 percent. What happened next was a fivefold
bump in interest rates that devastated the massively leveraged U.S. housing market. Higher rates
popped the speculative housing bubble, which brought down the global economy.
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Venezuelan Relations Advantage
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General
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Investment Solves Relations
Investment in Venezuelan production provides a new route to increased relations
Clarke 2013(Kevin, Associate Editor of America Magazine, March 25, "Chavez Death Brings
New Chance For U.S.-Venezuela Engagement", http://americamagazine.org/issue/chavez-deathbrings-new-chance-us-venezuela-engagement)
Father Carnes said Chávez’s passing offers an opportunity for the United States, politically and
economically, to revive its relationship with Venezuela. Occasionally “capricious and
doctrinaire,” Chávez was “someone the United States had a hard time negotiating with,”
according to Father Carnes. Whether his designated political heir, Vice President Nicholas
Maduro, or an opposition candidate, most likely Henrique Capriles Radonski, governor of the
Venezuelan state of Miranda, is elected to replace Chávez, Father Carnes expects a more
pragmatic and less confrontational leadership to emerge. That could mean improved ties not just
with Venezuela but throughout the region, he said, and a possible opening for renewed U.S.
investment and partnership with the Venezuelan state oil industry. Despite Chávez’s notorious
distaste for U.S. political leaders, under his leadership Venezuela remained one of the largest
suppliers of oil to the United States. This is likely to continue. Chávez died on March 5 of
complications from a respiratory infection nearly two years and four surgeries after his cancer
diagnosis was made public. He was 58. He will be remembered for improving the basic lot of
millions of Venezuelans, Father Carnes said, but more important, he offered to the traditionally
politically and materially impoverished of Venezuela “an idea of what society could and should
be and then in some ways delivered on that.” Whether or not his social successes can survive his
passing is an open question. Chávez, Father Carnes explained, treated his literary, housing or
antihunger campaigns as misiones, popular and well-publicized outreach efforts that did not
necessarily leave behind a bureaucratic or political infrastructure that could perpetuate social
progress. The relationship of the Catholic Church in Venezuela with the president was
complicated, if not at times downright nasty. “There were years that were difficult, tense,” said
Auxiliary Bishop González de Zarate, secretary general of the Venezuelan bishops’ conference.
“There were attacks and strong responses.... But I feel that there was a calming in the past year.”
He said that in the second half of 2012, the bishops’ conference held two meetings with top
Chávez government officials, including Vice President Maduro. Can Venezuelan socialism,
Chavismo, survive without Chávez? Certainly his personal charisma will be hard to replicate. “He
was always the spokesperson,” said Father Carnes, “He was always the focal point, always the
one on TV giving voice to this and, especially behind the scenes, the one pulling the political
strings to keep this moving inside of Venezuelan politics, and without that the idea can only go so
far.” Father Carnes said the United States should learn a lesson from its choppy history with this
polarizing Latin American figure. “One of the things he’s pushed us on is how little attention we
have given to our neighbors right here on the southern border,” said Father Carnes. “And that’s
something felt quite strongly throughout the region. ”While a parade of recent U.S. presidents
were diverted from the hemispheric south by engagement with Europe, Asia, conflict in the
Middle East and wars in Iraq and Afghanistan, U.S. relations with its closest neighbors and
trading partners moldered on the sidelines. “We’ve ignored some of these really vital
relationships right here on our borders that really do need more of our attention. That’s something
we can learn from the Chávez experience,” said Father Carnes.
Investment would drive U.S.-Venezuelan cooperation
Negroponte 2013(Diana, Non-resident Senior Fellow in Foreign Policy at Brookings, March 5, "
Hugo Chavez's Death an Opportunity for More Pragmatic Relationship with U.S.",
http://www.brookings.edu/blogs/up-front/posts/2013/03/05-chavez-venezuela-negroponte)
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The death of Hugo Chavez presents an opportunity for the new Venezuelan leadership to tone
down the rhetoric of anti-Americanism and put our bilateral relations on a pragmatic basis. The
U.S. remains the principal purchaser of Venezuelan oil which is refined in Gulf Coast refineries
for later export to China and other markets. Food and pharmaceutical products, cosmetics, spare
parts and electrical equipment are bought from the U.S. although payment for these goods is
delayed and consumers must wait 4 to 5 months for the new inventory to arrive at Venezuelan
ports. Venezuela is in the midst of an economic crisis with shortages of U.S. dollars, a
devaluation of 32 percent and the prospect of searing inflation. Furthermore, Venezuela needs
foreign direct investment, technical expertise and spare parts from the U.S. Rather than
demonizing Washington, an opportunity exists for Caracas to reframe the relationship to a
realistic mode.
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Relations Key—Laundry List
Solving Venezuelan relations key to the economy and U.S. soft power
Griffin 2013(John, Crimson Editorial Writer, April 3, "Engage with Venezuela",
http://www.thecrimson.com/article/2013/4/3/Harvard-Venezuela-Chavez-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 anti-American 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
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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.
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China Scenario
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Chinese Influence Expanding
China is expanding it’s sphere of influence to diversify oil supplies
Salameh 2011(Mamdouh, international oil economist, consultant to the World Bank on Energy
Affairs, Second Quarter, "China's Oil "Adventure" into Venezuela", International Association for
Energy Economics, 17-20)
China’s growing involvement in Venezuela is an integral part of its global oil diplomacy. China is
very aware that its robust economic growth would falter without secure oil supplies. China’s
global oil diplomacy is, therefore, geared towards ensuring that this never happens. The growing
dependence on oil imports has created an increasing sense of ‘energy insecurity’ among Chinese
leaders. The Chinese military argue that China’s energy security needs to be taken ‘seriously and
dealt with strategically’16 That means less reliance on the Middle East, less transportation of oil
via sea lanes policed by the U.S. Navy, more oil brought in by pipeline across Asia and by tanker
across the Pacific and more capability for the Chinese navy to protect Chinese tankers. Henry
Kissinger has warned of a potential great-power conflict over oil: this is it. For decades the
doctrine of peaceful rise has meant that China has tried to secure energy and raw materials
without confronting the United States and the West. China’s long-standing willingness to deal
with states that the West regards pariahs is in part a recognition that dealing with Sudan, Angola,
Iran or Uzbekistan allows China to avoid direct confrontation with Western interests. However,
the larger China has become, the sheer scale of its energy needs has forced it more and more to
intrude into areas that the United States regards as its own sphere of influence such as Venezuela.
China’s penetration into the U.S. backyard could have profound political and economic
implications for the U.S., as it is dependent for one-third of its oil on imports from South
American oil suppliers that it can’t afford to lose to China. China’s global oil diplomacy could
bring it into conflict with the United States unless both countries find a constructive
accommodation that allows them to do business.
China is using oil interests to expand its sphere of interest
Xiaoxia 2013(Wang, Economic Observer Staff, May 6, "In America's Backyard: China's Rising
Influence In Latin America", http://worldcrunch.com/china-2.0/in-america-039-s-backyard-china039-s-rising-influence-in-latin-america/foreign-policy-trade-economy-investmentsenergy/c9s11647/)
Over the past five years, Chinese businesses have been expanding their footprint in Latin
America in a number of ways, beginning with enhanced trade to ensure a steady supply of bulk
commodities such as oil, copper and soybeans. At this year's Boao Forum for Asia, for the first
time a Latin American sub-forum was created that included the participation of several heads of
state from the region. Since 2011, China has overtaken the Netherlands to become Latin
America’s second biggest investor behind the United States. China has signed a series of large
cooperation agreements with Latin American countries in such fields as finance, resources and
energy. According to the latest statistics of the General Administration of Customs of China,
Sino-Latin American trade grew in 2012 to a total of $261.2 billion, a year-on-year increase of
8.18%.This trend risks undermining the position of the United States as Latin America’s single
dominant trading partner. In 2011, the U.S.-Latin American trade volume was $351 billion. Some
prominent Chinese have condemned the United States' high-profile Return to Asia strategy, with
its intention of “containing China's front door.” Shouldn’t the United States, which put forward
the Monroe Doctrine two centuries ago, also question how China is quietly arriving in America’s
backyard?
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Chinese Influence Undermines Leadership
Chinese influence undermines U.S. leadership—especially in the context of oil
Nolte 2013(Dr. Detlef, Ph.D. in Political Science from the University of Mannheim, Professor of
Political Science at the University of Hamburg, German Institute of Global and Area Studies,
"The Dragon in the Backyard: US Visions of China's Relations toward Latin America",
http://www.gigahamburg.de/dl/download.php?d=/content/publikationen/pdf/gf_international_1305.pdf)
As Gonzalo Paz (2012: 20) emphasizes, perceived challenges to hegemonic power are almost as
important as real ones. Essentially, there are two approaches that can be taken in order to respond
to the rise of China (not only in Latin America), and both are linked to major international
relations theories. One position starts from the assumption that a conflict between the United
States and China is inevitable and that the United States should be prepared to react in time. The
counterposition is based on the assumption that conflict can be avoided by integrating China into
the framework of international institutions created by the West. In his theoretical framework of
“offensive realism,” John Mearsheimer (2001; 2005) postulates that great powers strive for
hegemony in their own region of reference. At the same time, they try to frustrate other great
powers’ efforts to gain hegemony in their respective regions. Great powers do not like peer
competitors; they prefer to ensure that several states compete for regional leadership in other
regions but not in their own. From a US point of view, it has been a great advantage that, in the
past, no state in the Western Hemisphere has posed a serious threat to US security or survival. For
this reason, the United States has been free to interfere in the backyards of other potential
regional hegemonic powers. Therefore, the United States suspects that emerging regional powers
could try to build beachheads in its own backyard. In this context, the growing economic
presence of China in Latin America is perceived as a challenge to US security. This is especially
the case with regard to the access to scarce raw materials, especially oil. On the other hand, there
are suspicions that some Latin American countries, while playing the Chinese card, could take a
more independent course in their relations with the United States. The Chinese presence in the
Western Hemisphere is perceived as a sign of the erosion of both the power and the geopolitical
position of the United States in the region. One should mention that offensive realism is also quite
influential among Chinese international relations scholars and their analysis of US policies
(Nathan and Scobell 2012; Noesselt 2012).
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Relations Solve Chinese Influence
China is threatening U.S. influence in Venezuela—economic engagement is key to
prevent loss of influence
Daly 2012(John, chief analyst at Oil Price, August 23, "Venezuela Ramps up China Oil Exports
Unsettling Washington", http://www.financialsense.com/contributors/oil-price/venezuela-rampsup-china-oil-exports-unsettling-washington)
The biggest geostrategic change of the past decade overlooked by Washington policy wonks in
their fixation on their self-proclaimed “war on terror” is that Latin America has been throwing off
the shackles of the Monroe Doctrine. These ignored developments may well soon refocus
Washington’s attention on the Southern Hemisphere, as Venezuela’s President Hugo Chavez
reorients his country’s to China. It is not an inconsiderable element of concern for the Obama
administration. According to the U.S. Energy Administration, the United States total crude oil
imports now average 9.033 million barrels per day, with the top five exporting countries being
Canada (2.666 mbpd), Mexico (1.319 mbpd), Saudi Arabia (1.107 mbpd), with Venezuela in
fourth place at 930 thousand barrels per day. Note that two of America’s top four energy
importers are south of the Rio Grande. Furthermore, Venezuela’s reserves according to OPEC
now top those of Saudi Arabia, with Venezuela now estimated to have the largest conventional oil
reserves and the second-largest natural gas reserves in the Western Hemisphere. Two years ago
OPEC reported that of the organization’s 81.33 percent of the globe’s known oil reserves
Venezuela had 24.8 percent, exceeding Saudi Arabia with 22.2So, why is Chavez in
Washington’s bad books? Well, among other reasons, for the company he keeps, as the Russian
Federation, Iran and Cuba are all allies. Note that the first two are also major oil exporters. Worse
however are the social programs that Chavez has implemented to benefit his people, which not
only smack of socialism but offer an alternative to Washington’s proscriptions. Case in point Venezuela’s health care system. A joint Cuban-Venezuelan medical program, “Barrio Adentro,”
has made health care free and accessible to all Venezuelans. Founded in 2003, Barrio Adentro
expanded Venezuela’s national health care system by employing more than 30,000 Cuban
medical professionals as the government equipped clinics and hospitals with advanced high
technology diagnostic and surgical equipment. Something that Americans might consider as the
presidential race heats up, with Medicare on the table. Such alternatives hardly please the powers
that be in Washington, but are increasingly considered in Latin America. But, back to energy.
Despite the primacy of Venezuelan oil sales to the U.S. Caracas is shifting gears, and China will
soon to become Venezuela’s main trade partner, with oil sales surging 60 percent in 2012.During
a recent interview Oil Minister Rafael Ramirez said, “We are selling 640.000 barrels of petrol per
day to China.” This is now equivalent to 2/3 of Venezuela’s oil exports to the U.S., up from
400,000 barrels per day in February. For those with a sense of history, before President Chavez
took office in 1999, Venezuela did not ship oil to China, but Chavez has stated that by 2015 he
intends to ramp up Venezuelan oil exports to China to one million barrels of crude per day.
According to Ramirez, the rise in exports will come from increased production in the natural
resource-rich Orinoco Oil Belt in the east of the country. It is hard to see this emphasis shift as
anything but a short-sighted diplomatic disaster for the U.S. Compounding the degradation of
Washington, which insists that China in Africa in particular exploits poor nations by buying
resources at rock bottom prices, Ramirez said simply, "We are selling oil to China at a better
price than what is sold in the U.S. market.'' And, given Washington’s foreign aid stinginess, last
week President Chavez announced that China Development Bank will bankroll $4 billion dollars
in development projects, to include housing, energy and industrial growth. Again, those with a
sense of history might note that the year Chavez took office, Venezuela exported to the U.S.
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market 1.5 million bpd.So, where does Washington go from here? If it wants to preserve its
increasingly tenuous foothold in a nation with the world’s largest oil reserves, it might begin by
engaging in some honest diplomacy.
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46
Iran Scenario
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Plan Crowds Out Iran
U.S. engagement is key to stop the spread of Iranian influence
Fite and Cordesman 2012(Brandon, CSIS, and Anthony, Arleigh A. Burke Chair in Strategy at
CSIS, April 4, "U.S. and Iranian Strategic Competition: The Impact of Latin America, Africa and
Peripheral States", http://csis.org/files/publication/120404_Iran_Chapter_XIII-Peripheral_StatesRevised.pdf)
Iran’s forays into Latin America, Africa, and elsewhere are the product of an aggressive
diplomacy geared towards alleviating the pressure of Western-led sanctions and more generally
combating the present international order, which Tehran views as hostile to its interests. At
present, Iran’s relationships with individual peripheral powers are not strong enough to achieve
its goals, and thus not of critical concern to the US. The present weakness of Iran’s alliance
network is brought about by divisions within Iran and its targeted partners, but also by sustained
engagement and pressure from the US. To prevent Iran from strengthening its bonds with
peripheral powers policymakers in Washington should consider the following three broad
strategies: Engage with peripheral countries, but do not meddle. Some analysts have criticized the
US for ignoring the periphery (especially Latin America) and thus allowing Iran to gain a
foothold. As Iran’s ambitious and geographically unbounded strategy in seeking partners and
“allies” demonstrates, the US cannot afford to completely ignore any region of the globe. That
being said, in countries of limited strategic interest it is beneficial to engage without
overreaching, especially when considering that Iranian commitments have a tendency to
eventually collapse under their own weight (e.g. Senegal’s Seniran Auto). US aid and commercial
interests provide strong incentives for peripheral nations to hesitate from full cooperation with the
IRI.
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Energy Industry Key
Energy cooperation is key—it allows Iran to generate leverage
Bailey 2012(Dr. Norman, President of the INstitute for Global Economic Growth and Adjunct
Professor of Economic Statecraft at the Institute of World Politics, February, "Iran's Venezuelan
Gateway", American Foreign Policy Council Publication)
Cooperation in energy lies at the heart of the economic ties between Caracas and Tehran. The
Venezuelan state oil company PDVSA and Iranian state oil company PetroPars, for example,
have formed a joint venture for the exploration of a block in Anzoategui state.16 Likewise, the
Venezuelan petrochemical company PEQUIVEN and the National Petrochemical Company of
Iran have formed a joint venture to manufacture plastics in Zulia state and construct a new petrochemical plant in Iran, supposedly with Venezuelan technical advice.17 Most significantly,
Venezuela has announced that it will ignore international sanctions and supply Iran with
gasoline—a move that weakens U.S. efforts to pressure Iran by leveraging its deep dependence
on foreign refined petroleum.18
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Venezuela Key for Iran
Venezuela is key for Iran—it’s their jumping off point for the Western hemisphere
Bailey 2012(Dr. Norman, President of the INstitute for Global Economic Growth and Adjunct
Professor of Economic Statecraft at the Institute of World Politics, February, "Iran's Venezuelan
Gateway", American Foreign Policy Council Publication)
The most dangerous threat to the U.S. from Venezuela, however, results from its facilitation and
encouragement of the penetration of the Western Hemisphere by the Islamic Republic of Iran.
Since 2005, with Venezuela’s assistance, Iran has created an extensive regional network of
economic, diplomatic, industrial and commercial activities, with significant effect. The sum total
of Iran’s declared investments in the region now stands at some $20 billion, at a time when the
Iranian economy itself is in exceedingly poor condition.1 The depths of Iran’s involvement in the
Western Hemisphere are all the more surprising—and significant—given that there is no
historical or cultural affinity whatsoever between Iran and the countries on this side of the
Atlantic. Nevertheless, the Iranian regime in recent years has exhibited an unprecedented level of
interest and involvement in the region, facilitated by its burgeoning strategic partnership with
Caracas. The most visible and pervasive feature of Iran’s regional presence stems from its
extensive web of economic contacts, using Venezuela as a beachhead. In April of 2009, Iranian
President Mahmoud Ahmadinejad and Venezuelan President Hugo Chavez met in Tehran and
inaugurated a binational Iranian-Venezuelan development bank. The institution, erected via an
alliance between the Banco Industrial de Venezuela and Iran’s Development and Export Bank,
was established “with the aim of supporting joint economic, industrial and mining projects as
well as speeding up the current projects” between Tehran and Caracas, Iranian state media
reported at the time.2 It likewise has facilitated the formation of an entirely Iranian-owned bank,
the Banco Internacional de Desarrollo, as well as a binational investment and development fund
and the opening in Caracas of offices of Iranian commercial banks.3 In addition, many promises
have been made by Iranian officials elsewhere in the “Bolivarian” world, including the establishment of a new port on the Caribbean coast of Nicaragua and industrial installations in Bolivia. In
most cases, however, little or nothing has actually been built, or even inaugurated—except in
Venezuela. This economic activism serves several clear strategic purposes for the Iranian regime.
First, it allows Tehran to circumvent financial sanctions imposed by the United States, the
European Union and the United Nations through the use of the Venezuelan financial system. In
doing so, Iran is exploiting an existing loophole in the application of U.S. economic penalties. To
date, the U.S. Treasury Department has sanctioned several Iranian banks and various individuals.
So far, however, it has not imposed similar restrictions on any Venezuelan banks. As a result,
Iran’s partnership with Venezuela effectively provides it with an ancillary avenue through which
it can access the international financial system despite Western pressure.
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A2: Relations Will Thaw
Iran will try to continue the relationship despite the transition
Davidovich 2013(Joshua, Times of Israel Staff, March 10, "Iran vows ties with Venezuela to
remain firm", http://www.timesofisrael.com/iran-vows-ties-with-venezuela-to-remain-firm/)
But Ahmadinejad, who is to step down later this year, said Tehran and Caracas would continue to
support each other no matter who was in charge. “The Iranian nation has strong bonds with
revolutionary nations and we do help to the strengthening of these ties so that no one can imagine
that a vacuum will be created in our relations due to the death of Chavez,” the Iranian president
said, according to the semi-official Fars News agency. Annual bilateral trade between the two
countries is estimated to be in the hundreds of million of US dollars, and Chavez and
Ahmadinejad were frequent visitors to each other’s countries. However, some Iranian pundits
have said that the two countries, who share little in common other than an anti-Western attitude,
could not continue to be such strong allies.
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51
Impact—Terrorism
Iran-Venezuelan relations drive terrorism
Bailey 2012(Dr. Norman, President of the INstitute for Global Economic Growth and Adjunct
Professor of Economic Statecraft at the Institute of World Politics, February, "Iran's Venezuelan
Gateway", American Foreign Policy Council Publication)
The second purpose is to facilitate the funding of radical organizations and guerrilla movements
in the Hemisphere. This includes, first and foremost, Hezbollah, the radical Lebanese militia that
serves as Iran’s principal terrorist proxy. Over the past three decades, the Iranian regime has facilitated the establishment by Hezbollah of a major regional presence throughout the Americas,
and aided and abetted the organization’s involvement in a range of illicit activities, from drug
trafficking to money laundering.4 (In 2008, for example, the Bush Administration accused
Venezuelan diplomat Ghazi Nasr al Din and Venezuelan-Arab businessman Fawzi Kanan of
laundering money as well as facilitating the travel of Hezbollah members from Iran to Venezuela.5) In the last few years, scholarly analysis has also revealed the use of radical mosques in
Caracas and elsewhere in Venezuela as a hub for Hezbollah fundraising activities, and more
notably the existence of Hezbollah “support cells” on Margarita Island.6 Hezbollah likewise is
known to have opened numerous military camps inside Venezuela, as well as in South Lebanon,
with the express purpose of training young Venezuelans to attack American targets.7 Iranian
sponsorship is not limited to Hezbollah, however; Hamas and even al-Qaeda have also benefited
from Iranian/Venezuelan sponsorship, especially in fundraising from the Islamic communities in
various regional states.8 Locally, Iran has also aided the Colombian FARC guerillas through the
provision of arms and training in both Iran and Syria, conducted by the Iranian Revolutionary
Guard Corps and its elite paramilitary unit, the Quds Force.9
Iranian influence in Latin America allows them to launch a terrorist attack on the
U.S.
Liana 2013(Sara, CSM Staff writer, January 7, "Is Iran's presence in Latin America a threat? The
White House says yes.", http://www.csmonitor.com/World/Americas/2013/0107/Is-Iran-spresence-in-Latin-America-a-threat-The-White-House-says-yes)
Iran is increasingly isolated as it forges ahead with a nuclear program that has raised alarm across
the globe. Iran says its nuclear development is for civilian purposes, like energy, while many
international observers believe it is working toward creating a nuclear weapon. In the same time
period, Iran’s growing influence in Latin America, especially within Venezuela, Bolivia, and
Ecuador, has generated suspicion among those who worry that, at worst, Lebanon-based
Hezbollah and supporters in Iran seek to attack the US from south of the American border. Many
have called on the US to prioritize this new international threat.
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52
Impact—Iran Prolif
Iran-Venezuelan relations allow Iran to develop nuclear weapons—U.S. relations
solve
Diehl 2009(Sarah, Research Associate, Monterey Institute of International Studies, May 7,
"Venezuela's Search for Nuclear Power - or Nuclear Prestige",
http://www.nti.org/analysis/articles/venezuelas-search-nuclear-power/)
Venezuela's close ties with Iran and the resulting U.S. disapproval seem to have discouraged
Brazil and Argentina from aggressively pursuing nuclear cooperation with Venezuela. As Claudio
Mendoza, the former head of physics research at the government-run Instituto Venezolano de
Investigacion Cientifica said, "Chávez's support for Tehran's nuclear ambitions has likely
undermined his government's chances of foreign co-operation with the exception of Iran."[31]
Venezuela, the fifth largest oil exporter, and Iran, the second largest oil exporter, began to build
stronger ties after Venezuela hosted the 2000 OPEC meeting in Caracas.[32] Iran and Venezuela
share an interest in maintaining the price of oil, developing Venezuela's oil-rich areas, and more
importantly in rejecting U.S. dominance and interference around the world.[33] As the United
States and other Western powers intensified their questioning of Iran's intention given its
incomplete reporting to the IAEA and evidence that it might be pursing nuclear weapons,
Venezuela came to Iran's defense and supported its policy of enriching uranium for peaceful
purposes.[34] The relationship between the two countries intensified as Chávez became a
vociferous supporter of Iran's nuclear program and critic of Western countries that have sought
UN Security Council resolutions requiring Iran to stop enriching uranium for power plant fuel. In
return for Venezuela's support at the IAEA and UN Security Council, Iran has entered into over
150 energy, development, commercial, and financial agreements with Venezuela and allegedly
has invested billions of dollars in joint projects.[35]In February 2006, when the IAEA Board of
Governors voted to refer Iran to the UN Security Council for sanctions, only Venezuela, Cuba,
and Syria opposed the decision.[36] At that time, the Iranian media hinted that Venezuela might
receive Iranian nuclear technology, and Chávez's opponents suggested that Venezuela might
export uranium in return.[37] An April 4, 2006 Washington Post story heightened concern about
the uranium mining rumor: "One serious question that needs to be posed is why would Iran,
which already has a uranium mining operation be interested in uranium deposits in Venezuela?
Potential answers all smack of nuclear proliferation." [38] However, both the Venezuelan
Defense Minister Raul Salazar and a U.S. State Department official denied that there was
evidence that Venezuela had cooperated with Iran on uranium mining activities.[39] Chávez has
called allegations concerning nuclear co-operation with Iran "part of a US-inspired campaign to
taint his government...." [40]While Venezuelan officials have generally denied nuclear
cooperation with Iran, they have intensified military, commercial, and political ties with the
Islamic Republic. In January 2007, Venezuelan Defense Minister Raul Isais Baduel announced
that Venezuela was working on technical military cooperation with Iran, which included plans to
build unmanned aircraft and refurbish the U.S.-made F-5 fighter jets that Washington will no
longer maintain because of a May 2006 ban on arms sales to Venezuela.[41] In 2007, Venezuela
signed several new agreements in different fields including agriculture, economic cooperation,
energy and oil development, heavy machinery factories, and mining.[42]Accounts vary on the
value of the trade between the two countries. According to Iran's Deputy Minister for Industry
and Mines, in 2007 the value of trade between Venezuela and Iran amounted to $17 billion. [43]
However, a year later, Venezuelan officials reportedly stated that Iran had "invested more than $7
billion in their country — in plants to assemble cars, tractors, farm machinery and bicycles, as
well as oil and that bilateral trade has reached $4.6 billion."[44] According to one journalist, these
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amounts may be too high as Venezuelan newspapers reported that many joint projects have been
delayed and local officials have skimmed off some of the funds.[45]In November 2007, the U.S.
House of Representatives took note of Iran's growing ties with Venezuela and approved a
resolution (H.Res 435) "expressing concern about Iran's efforts to expand its influence in Latin
America, and noting Venezuela's increasing cooperation with Iran."[46] Of particular concern to
U.S. representatives is Iran's dogged pursuit of a uranium enrichment capability despite UN
sanctions, and its support for Islamic militant groups like Lebanon's Hezbollah. In March 2008,
following a Colombia-led raid on a Revolutionary Armed Forces of Colombia (FARC) camp that
reportedly linked the Venezuelan government to the terrorist organization, Congressman Connie
Mack (R-FL) reintroduced a bill (H.Res. 1049) calling for Venezuela to be designated as a state
sponsor of terrorism.[47] The draft bill pointed to President Chávez's "strong relationship" with
Iran as demonstrated by: Venezuela's "200 bilateral agreements with Iran"; Iran's reported offer to
help Venezuela with a nuclear program; and Chávez's strong support for Iran's controversial
nuclear program. The bill also noted the possibility that Iran could use Venezuela to smuggle
terrorists, drugs, and weapons into the United States. The Venezuelan Embassy in the United
States posted a point-by-point denial of the resolution's charges, arguing that Chávez had
"emphatically condemned any kind of terrorism" and Venezuela had ratified 10 anti-terrorism
accords. With regards to Iran, the embassy stated: "Venezuela and Iran also have discussed
cooperation on nuclear energy, but we are not aware of any significant developments as a result
of these discussions."[48] While denying any plans to work with Iran on nuclear energy or to
exploit the country's uranium reserves for military purposes, the embassy did reiterate
Venezuela's position that "every country has the sovereign right to develop nuclear energy for
peaceful purposes."[49]Congress did not pass a resolution finding that Venezuela is a state
sponsor of terrorism. However, in August 2008, the Department of State under theIran, North
Korea, and Syria Nonproliferation Act imposed sanctions on the Venezuelan Military Industries
Companies (CAVIM), along with 12 other foreign companies, for the transfer of items either
barred by multilateral export control lists or otherwise "having the potential to make a material
contribution to the development of weapons of mass destruction of cruise or ballistic missile
systems."[50] Two months later in a further measure to stop WMD proliferation, the U.S.
Treasury Department designated the Export Development Bank of Iran (EDBI) as providing
financial services to Iran's Ministry of Defense and Armed Forces Logistics that allow this entity
to develop Tehran's alleged WMD programs. The Treasury Department, acting pursuant to
Executive Order 13382, also designated three other businesses owned or acting on the behalf of
EDBI, including Banco Internacional de Desarollo, C.A., a financial institution in Venezuela.[51]
These U.S. actions point to a concern that Venezuela will help Iran circumvent UN and U.S.
sanctions designed to prevent Iran and Syria from developing WMD and ballistic missile
programs. In December 2008, media reports stated that an Iranian firm, Shahid Bagheri, under
UN sanctions for furthering Iran's ballistic missile program had "used the Venezuelan airline
Conviasa to ship computers and missile engines" to Syria in exchange for elite Iranian military
forces providing law enforcement and intelligence training to Venezuelan troops.[52] While these
reports raise concerns about Venezuela's assistance to a possible WMD proliferator, April 2009
meetings between Chávez and new U.S. President Barack Obama suggest a rapprochement
between Venezuela and the United States that could lessen Chávez's interest in cooperating with
Iran.[53]
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Impact—U.S-Iranian Conflict
That causes US-Iran war
Berman 2012(Ilan, Forbes Staff, December 4, "Confronting Iran's Latin American Ambitions",
http://www.forbes.com/sites/ilanberman/2012/12/04/confronting-irans-latin-american-ambitions/)
Over the past year, policymakers in Washington have woken up to a new threat to U.S. security.
Since October of 2011, when law enforcement agencies foiled a plot by Iran’s Revolutionary
Guards to assassinate the Saudi ambassador in the nation’s capital, U.S. officials have begun to
pay attention in earnest to Iran’s growing activities and influence in the Western Hemisphere.
What they have found has been deeply worrisome. The Islamic Republic, it turns out, has made
serious inroads into Latin America since the mid-2000s, beginning with its vibrant strategic
partnership with the regime of Venezuelan strongman Hugo Chavez. Today, Iran enjoys warm
diplomatic ties not only to Venezuela, but to similarly sympathetic governments in Bolivia and
Ecuador as well. It has begun to exploit the region’s strategic resource wealth to fuel its nuclear
program. And it is building an operational presence in the region that poses a direct danger to
U.S. security. Exactly how significant this threat is represents the subject of a new study released
in late November by the U.S. House of Representatives Homeland Security Committee. That
report, entitled A Line In The Sand, documents the sinister synergies that have been created in
recent years between Iran and Hezbollah on the one hand, and radical regional regimes and
actors—from Venezuela to Mexican drug cartels—on the other. Some of these contacts, the study
notes, are financial in nature, as Iran seeks to leverage Latin America’s permissive political and
fiscal environments to skirt sanctions and continue to engage in international commerce amid
tightening Western sanctions. But these contacts could easily become operational as well. The
report suggests that “the standoff with Iran over its nuclear program, and the uncertainty of
whether Israel might attack Iran drawing the United States into a confrontation, only heightens
concern that Iran or its agents would attempt to exploit the porous Southwest border for
retaliation. ”The U.S. response, meanwhile, is still nascent. To date, only one piece of
Congressional legislation—the Countering Iran in the Western Hemisphere Act of 2012—has
seriously taken up the issue of Iran’s penetration of the Americas, and the potentially adverse
implications for U.S. security. Fortunately, the Act has found a receptive ear among many in
Congress, and is now likely to pass the Senate with only minor modifications during the current
lame duck session of Congress. Yet, in and of itself, the Act does not constitute a comprehensive
strategy for competing with Iran in the Americas—or for diluting its influence there. To the
contrary, America’s strategic profile in Latin America is now poised to constrict precipitously. As
a result of looming defense cuts, and with the specter of additional, and ruinous, “sequester”
provisions on the horizon, the Pentagon is now actively planning a more modest global profile.
To that end, back in May, General Douglas Fraser, the outgoing head of U.S. Southern
Command, the combatant command responsible for the Americas, told lawmakers that it plans to
retract to Central America and focus predominantly on the threats posed by the region’s rampant
drug and arms trades. In other words, the United States is getting out of the business of competing
for strategic influence in Latin America, and doing so at precisely the time that Iran is getting
serious about it. That could end up being a costly mistake. As the findings of the Homeland
Security Committee’s study indicate, Iran’s presence south of the U.S. border represents more
than a mere annoyance. It is, rather, a potential front for Iranian action against the United
States—one that could well be activated if and when the current cold war between Iran and the
West over the Islamic Republic’s nuclear program heats up in earnest. Washington needs to be
prepared should that happen. Better yet, it needs to craft a proactive approach to confronting Iran
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influence and activity south of our border. That, after all, is the surest way for us to avoid having
to face Iran and its proxies here at home.
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Topicality
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Counter-Interpretation—Investment is Economic Engagement
Economic engagement is investment, trade, and development of overseas business
operation
USAEngage 1997(Organization to promote U.S. economic engagement, Last date cited, "
Economic Engagement Promotes Freedom",
http://archives.usaengage.org/archives/studies/engagement.html)
III. Economic Engagement Advances Freedom, Democracy and Human Rights American values
and institutions are attractive throughout the world not because of our power, but because of our
prosperity and the appeal of freedom. While the shape of a nation's political and economic
institutions ultimately reflects the choices of its own people, American policy can support, or
hinder, such choices. Through engagement we advance economic growth and transmit
fundamental American values. The United States now has the ability to engage countries that for
years were closed to it. The opening of many of the world's economies has created a tremendous
opportunity. Poles, Chinese, Slovenes, and Indians all seek American trade, investment, and
technology, even though their markets for years were effectively closed to Americans. The World
Bank estimates that over 5 billion people -- 87 percent of the world's population -- now live in
economies driven by market forces. Just ten years ago the number was only 1 billion.13 By
exporting, by investing and operating overseas -- engaging -- American businesses, workers and
farmers promote freedom. Trade and the acceptance of democracy and free enterprise worldwide
has given hundreds of millions of people a chance to grow, prosper and build free institutions and
the rule of law. Through engagement, the United States has a rare opportunity to help build the
long term foundations for a better world. Change will not be rapid, and there will be reverses.
Oppression will continue for years in many parts of the world. But by engaging, the United States
contributes significantly to peace, freedom and the rule of law.
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