Saturday, March 10, 2012

Venezuela's Chavez might be on his way out

By Steve LeVine - Foreign Policy


Venezuela President Hugo Chavez's disclosure that his cancer has recurred raises hard questions about his ability to campaign for re-election in October. If he lacks the stamina or is incapacitated, what happens next - will fair elections proceed, or will his ruling circle frustrate any potential transfer of power?

In short, if there is new leadership, can one imagine a shift in which Venezuela stops using its oil wealth to support a violent Colombian guerrilla movement? And will Venezuela lift constraints on oil production, and become a tipping point in the fast-changing geopolitics of oil?

The evidence to date is that Chavez, who has led Venezuela for 13 years, has prepared a tough strategy "to defend the revolution," says Stephen Johnson, director of the America's Program at the Center for Strategic and International Studies. The most recent datapoint came Monday, when a congressman's son was injured in a shooting by red-shirted Chavez supporters at a rally for opposition candidate Henrique Capriles Radonski.

The 39-year-old Radonski, who is governor of Miranda state, appears to represent a serious popular threat to Chavez. He was elected as the united opposition candidate by a resounding majority last month. Among his platforms is a new day for the Venezuelan economy, fueled by a modern export oil industry pumping out far more crude.

Quite apart from the greater economic diversity that Radonski plans at home, the geopolitical impact could be considerable. Combined with petro-events already in motion in Canada, North Dakota and the Gulf of Mexico, a Venezuelan bonanza could tip the balance and make the region awash in oil.

The buildup of the North and South American oil supply is a new dimension in a changing energy picture in which the Middle East's global economic centrality is becoming less fixed. Instead, the Middle East is becoming one of a clutch of energy hubs that include Australia and Africa, in addition to the Western Hemisphere.

Venezuela has the largest official reserves on the planet - 296 billion barrels of oil. Much of this is locked up in goopy heavy oil in the Orinoco Basin that would cost a bundle to produce and transport to market. But like the region's other so-called "unconventional oil" reserves - the Alberta sands, the Bakken shale oil and the deepwater Gulf - these volumes are next door to the United States, by far the world's largest market for gasoline.

Venezuela currently produces a bit over 2 million barrels of oil a day. The question is whether oilmen can work more freely in the Orinoco, and add another million barrels a day or more of production, said David Pumphrey, deputy energy director at the Center for Strategic and International Studies.

Venezuela "could be another of the unconventionals that change the dynamics of global markets," Pumphrey told me.

Radonski has attempted to prepare for any official effort to undermine his campaign. He has worked to marginalize the more extremist members of Chavez's circle by suggesting that he will be "sensitive to the feelings and desires of the more mainstream Chavistas," Johnson said.

Yet military appointments by Chavez suggest that he is prepared to pull around the wagons to keep power within his structure.

In January, Chavez elevated a highly controversial general - Henry Rangel Silva - as defense minister. In 2010, Silva said in an interview that he would not support any opposition figure who won the 2012 elections. In terms of biography, Silva is on a U.S. "Foreign Narcotics Kingpins" list for alleged involvement in cocaine trafficking, one of four members of Chavez's ruling circle listed.

Says Johnson:

"Guys like that have a reason to stay in power. He and others would be likely to defend the regime in order to save their own hides."
Steve LeVine is the author of Foreign Policy's "The Oil and the Glory" blog and a longtime foreign correspondent.

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