Oil Wars

As if it isn't enough that the U.S. is tapping peoples phones, intercepting their e-mails, and, it now turns out, monitoring their financial transactions, it is also closely monitoring Iran's and Venezuela's growing commercial relationships:

CIUDAD BOLIVAR, Venezuela — The VenIran low-rise tractor factory in remote eastern Venezuela is one of the signs of Iran's growing presence in Venezuela, which is being monitored by a U.S. government on alert for any evidence that Iran may be exporting terrorism.

Such evidence would come in handy to the United States, which is engaged in a pull-out-the-stops campaign to prevent Venezuela from securing the rotating Latin American seat on the United Nations Security Council. The vote is scheduled for October.

The United States has said Venezuela would be a "disruptive" and "non-consensus-seeking" force on the Security Council. As evidence, officials point to Venezuela's refusal, along with North Korea's, to support the U.N. International Atomic Energy Agency board of governors' resolution in March criticizing Iran's nuclear-material development program.

That same month, the first bright-red tractors rolled out of the factory in this sprawling industrial town on the massive Orinoco River. Now producing 40 tractors a week, the plant will be followed by a bus factory and a cement plant involving joint Iranian-Venezuelan ventures.

Venezuelan officials say it is merely an extension of the friendship between the two members of the Organization of the Petroleum Exporting Countries, and that the host country has a lot to learn from Iran's formation of its many socialist cooperatives, a central part of the new economic model being followed by President Hugo Chavez.

The tractor factory is a so-called Nucleus of Endogenous Development, the term for the state-sponsored job-creation program that Chavez is pushing to lure workers away from overcrowded, traffic-choked cities such as Caracas and Maracaibo. Iran has formed dozens of hybrid worker-state companies such as VenIran, said a Venezuelan government official.

U.S. government officials say they are monitoring the Iranian presence and watching for nefarious activities.

There may be much to monitor before long. On a visit to Venezuela this month, an Iranian industry vice minister said his country planned to invest $9 billion in 125 projects here. Among them is the cement factory under construction in Monagas state, along with 2,500 nearby housing units for workers.

As for the tractor factory, U.S. officials joke about what it is really producing — an example of the mistrust and rancor permeating United States-Venezuela relations in recent years.

Chavez has railed against U.S. "imperium," whereas top American officials paint Chavez as sympathetic to terrorists, namely the biggest Colombian rebel group, known by its Spanish initials FARC and officially branded as a terrorist group by the U.S. State Department.

U.S. officials suspect that Chavez affords guerrilla groups rest-and-recreation space along his country's border with Colombia. A Venezuelan cattlemen's association in western Venezuela this week said that the FARC was rustling significant numbers of cattle while the Venezuelan military looked the other way.

Chavez has strenuously denied giving aid to Colombian leftist guerrillas.

U.S. officials acknowledge that there is no evidence of Chavez engaging directly in terrorism. They dismissed as unfounded a rumor that Venezuela was or soon would be selling uranium to Iran. Venezuela is known to have uranium deposits in Amazon state but the mineral is not being mined, they said.

The tractor factory is in an industrial park in underpopulated Bolivar state, of which Ciudad Bolivar is the capital. About 70 Venezuelan workers are on the payroll here, with eight Iranian managers. The building sat abandoned for 30 years after another state-sponsored job-creation program, also to build tractors, collapsed months after the factory opened in the mid-1970s, local officials said.

Despite low-key projects such as this one, Western diplomats in the region are clearly uneasy about Iran establishing a commercial beachhead in Venezuela, fearing the Islamic Republic's designs in the region may not be strictly business. Some have said that Iran's increasing links with Venezuela already have helped make the South American country a center of intrigue.

Although it has no proof that Hezbollah, a Lebanese militant organization, has set up operations in Venezuela, U.S. government sources note that Iranian embassies have funded, accommodated and, in some cases, housed Hezbollah operations. The group, labeled a terrorist organization by the U.S. and Israel, is suspected of involvement in the 1994 bombing of a Jewish community center in Buenos Aires.

"It would be an unfortunate thing if the Iran-Venezuelan alliance were to create a base of operations closer to the shores of the United States," a U.S. official said. "Iranian embassies and Hezbollah seem to go together."

U.S. officials are also worried about whether Iran will share its know-how on jury-rigging U.S.-made jets, which it has been doing since the U.S. hostage crisis in 1979 when U.S. diplomatic relations and military aid were cut off, leaving Iran with numerous U.S. military aircraft to maintain.

The U.S. has refused to give Chavez spare parts for the 24 F-16 fighters his country acquired in 1982, and is worried that Tehran may show him how to keep them flying without them, as Iran's military seems to be doing with its fleet of F-111s, F-14s and F-5 fighter jets purchased when the shah was in power.

The BBC reported this week that, according to a U.S. diplomatic note it had obtained called "Defeating Venezuela in the 2006 non-permanent seat on the U.N. Security Council," the United States fears that Venezuela would use the seat for "ideological grandstanding."

The Bush administration is campaigning for Guatemala to get the open seat and is putting pressure on other Latin American nations to support it as well, U.N. sources told The Times this week.

Venezuelan Foreign Minister Ali Rodriguez said that Venezuela's would be an independent voice on the council and that it would not automatically vote against the U.S. on issues of international importance.

"We will use our position there to support peace in the world and refuse all kinds of attacks on peaceful countries," Rodriguez said.

U.S. Ambassador to the U.N. John R. Bolton has criticized Venezuela's campaign for a seat, saying it would not contribute to the effective operations of the Security Council.

"I think we're making our position very clear, very persuasively too," Bolton said when asked Wednesday whether the U.S. was encouraging other countries not to support Venezuela.

Given the recent discussion regarding foriegn investment in Venezuela Iran's plans to invest $9 billion in Venezuela certainly sounds good. In fact, while the opposition often jumps all over any investments Venezuela makes in other countries they completely ignore these multi-billion dollar investments. One has to wonder why they view trade and cross border investment good except when it involves countries like Venezuela, Iran, China, Argentina, and Brazil.

And the tractor factory sure sounds like a good idea. Agricultural equipment is an important part of land reform. One of the problems with previous land reform efforts in Venezuela was that the farmers were given land, but nothing else. This time around the government is determined to avoid that mistake and ensure that the farmers have what they need to successfully raise crops and bring them to market. Truth be told, thats probably what the tractor factory is all about - not giving terrorists a foothold in the Americas.
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Of late I've been inundated at work so the blog has necessarily suffered. Hopefully this is a temporary situation.

But be that as it may, just because I don't have time to write about all of them it doesn't mean good things aren't happening. For example, it the new unemployment numbers came out today and showed the unemployment rate in May was 10.2%. But within the report there was an even more important set of numbers. And that is that the number of formal sector jobs in May 2006 was 5,836,163 versus 5,401,526 in May 2005. In other words, 434,637 new jobs were created last year in Venezuela last year. So the notion that Venezuela is experiencing "jobless growth" is simply false.
So there you have it, short but sweet.
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There is a very interesting little post over at Lubrio blog entitled "Lets fix our University before it screws up the country". It turns out that the Universidad Central de Venezuela, the same ones who would pretend to audit the Venezuelan governments electoral registry and give lessons on how things should be done have their own issues. For example, while they insist that the national voting process be manual or that all the paper ballots emitted by the compture be counted the University itself uses, you guessed it, a computerized voting system and doesn't bother to count the paper ballots.

Morever, as is rather comically pointed out, the University doesn't have international observers nor the audits that the National Electoral Council has. I guess the opposition is composed of people who are too important to be bothered to follow the rules they insist upon for others.
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Last year president Chavez gave a speech at the United Nations in New York where he claimed the organization was obsolete and should be replaced. Yet less than a year later Venezuela is actively campaigning for a position on the U.N. Security Council. That campaign has become something of a tug of war with the U.S. engaging a lot of high level arm-twisting as outlined in this article:

In another sign of the growing animosity between Caracas and Washington, the US is lobbying South American countries in an effort to prevent Venezuela from being named to a two-year term on the United Nations Security Council.
The Los Angeles Times reports the US is concerned that Venezuelan leader Hugo Chávez could interfere with plans to step up pressure on Iran. Under current UN rules, Latin American countries are entitled to choose the country that would fill the rotating seat for the region. Venezuela has been actively campaigning for the seat.
...the Bush administration is urging Latin American countries to vote for a US ally, Guatemala, instead, warning that the populist government of Venezuelan President Hugo Chavez cannot be trusted on crucial issues such as Iran's nuclear program, given its "disruptive and irresponsible behavior" in international organizations.
Behind the scenes, US officials have been applying pressure, even to close allies, Latin American diplomats say. For example, Washington has agreed to sell F-16 fighter jets to Chile, but are warning that Chilean pilots will not be trained to fly them if the government supports Venezuela's Security Council bid, the diplomats said.
One Latin American delegate interviewed by the Times said that no one in the region wants to choose between the US and Venezuela, but that the US has told countries that "this is a top priority."

First, it is interesting to note how, well, “gringo” this threat is. God forbid some military contractors lose sales, so no matter what the U.S. will sell F-16s to Chile. It just won’t train any Chilean pilots how to fly them!!!

But that is not the real point here. The real question is why is Venezuela even seeking a Security Council seat? What is to be gained from it?

I have to say, I agree with Chavez’s comments of last year that unless the U.N. is radically transformed the organization is worse than worthless. It’s not just that the organization doesn’t do much to make the world a better place. It’s that it actually enables the world’s hyper-power to make things worse.

The U.N. is not a democratic collective of countries where everyone gets an equal say and vote. The five permanent members of the Security Council are effectively running the show as they can veto any action they don’t like. But as undemocratic as that is, even votes in the General Assembly are hardly free and fair. No votes are secret and any country that crosses the U.S. on an important vote risks cuts in aid, elimination of trade benefits or even worse. Not to mention the U.N. has no real military power of its own so nothing that isn’t supported by the U.S. will ever happen.

All of this means that the U.N. hasn’t done anything to resolve longstanding injustices and problems no matter how many resolutions it passes. Just ask the Palestinians. But that isn’t the worst of it. The worst it the U.N. provides cover and legitimacy for the imperial actions of the U.S. The U.N. provided cover for the first Gulf War of 1991. It provided cover for the dismemberment of Yugoslavia. And most recently, and worst, it has provided cover for an illegal take over of a sovereign state, Iraq, but another country, the United States. Even if the U.N. neither voted for nor participated in the invasion its numerous and overly vague resolutions (ie, “severe consequences”) provided the intellectual cover that the U.S. government very much wanted to legitimize its war moves.

Given this the question that comes to the fore is why do countries of good faith, like Venezuela, even participate in this charade? At the end of the day, even with a Security Council seat, they will have no real power to effect change – the permanent members, and in particular the United States, will do what they are going to do. And by being part of the organization Venezuela will be giving it the legitimacy it doesn’t deserve.

Rather than seeking this Security Council seat Venezuela should call a spade a spade and withdraw from the U.N. That makes this case one where Venezuela will more likely win by losing.
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Ok, I know I've probably put more than a few people to sleep on this blog with all the rather pedantic discussion of what is going on with the Venezuelan oil industry (for those who missed it please read here and here). But I thought this article from Forbes was right on the money:

A number of factors contribute to the high degree of uncertainty about the Venezuelan oil industry:

1. Oil production. Oil has always been a highly political subject. Recent history explains why the Venezuelan picture is especially complicated. Crude oil production numbers became highly politicized in late 2002 during the strike at state oil company PDVSA. This debate continues, with antagonists bringing to the table a confusing range of numbers:

--Although current production levels are uncertain, according to the BP Statistical Review, the figure for 2005 was just over 3 million barrels per day (b/d). Assuming just below 600,000 b/d of synthetic crude, this suggests production of 2.4 million b/d of conventional oil by PDVSA and foreign oil companies.

--Other views indicate that total crude production is 2.6 million b/d, of which PDVSA produces 1.3 million and foreign-operated fields another 1.3 million.

These two sets of numbers are difficult to reconcile. In any case, the judgment of what to include or exclude in any stated total production number may be driven by the politics of the communicator in question.

I particularly liked "crude oil production numbers became highly politicized in late 2002 during the strike at state oil company PDVSA" and "the judgment of what to include or exclude in any stated total production number may be driven by the politics of the communicator in question." Boy, did they ever get THAT right.

Anyways, its good to see the PDVSA numbers vindicated by yet another outside agency, this time British Petroleum.
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