Venezuela Oil Diplomacy: From Caracas To Cuba

Venezuela Oil Diplomacy: From Caracas To Cuba
April 12, 201312:00 PM
11 min 40 sec

The late Venezuelan president Hugo Chavez believed in sharing his
country's oil wealth with his Latin American neighbors. But now,
Venezuelans are electing a new leader, and there are questions about
whether the new president will continue those policies. NPR's Tom
Gjelten talks about the effects of Venezuela's oil diplomacy, from Cuba
to Connecticut.
MICHEL MARTIN, HOST:

This is TELL ME MORE from NPR News. I'm Michel Martin. Coming up, we'll
speak with the Reverend Jim Wallis. He's a well-known evangelical
leader. He's known for stepping into the political fray on issues he
cares about. So we'll ask him why he chose to step out of the spotlight
during last year's presidential campaign. That's later in the program.

But first we want to turn to presidential politics in Venezuela. Voters
there are selecting a successor to President Hugo Chavez this weekend.
You probably remember that Chavez died of cancer last month. The
election is being watched far beyond that country's borders, though,
because of some of the policies Chavez implemented about the country's
most valuable resource: oil.

Chavez shared the wealth with the Venezuelan people and also with his
Caribbean and Latin American neighbors. But whether the country's next
president can or will continue those policies is another question. We
wanted to talk more about this so we've called NPR's Tom Gjelten, who's
been following the situation there. Tom, thanks so much for joining us.

TOM GJELTEN, BYLINE: Hi, Michel.

MARTIN: So we understand that Chavez had designated Vice President
Nicolas Maduro as his successor. Is that about - am I phrasing it correctly?

GJELTEN: Oh, there is no question that Nicolas Maduro was Hugo Chavez's
choice. He made it very clear. He was, as you say, his vice president,
and while Chavez was sick he was actually made the acting president by
the powers that be in Venezuela because they knew that Chavez wanted him
to succeed him.

MARTIN: And why did he want him to succeed him?

GJELTEN: Because he was loyal. Because he believed in the Chavista
division. Because Chavez felt that this was the man that could carry on
the program, the ideology, the alliances that Chavez believed in. For
example, Maduro is very close to the government in Cuba and that
alliance between Venezuela and Cuba was very close to Chavez. Probably
there was no one else in the leadership, in the political leadership in
Venezuela, that was more closely aligned with Cuba, aside with Hugo
Chavez, than Nicolas Maduro.

MARTIN: So I think the question is, can he carry on these policies? I
mean one thing that a lot of people are talking about is that Maduro
lacks Chavez's charisma so just kind of as a leader he doesn't have one
of Chavez's kind of essential qualities. But there are other issues
beyond that. Could you talk more about that?

GJELTEN: Well, I think the big thing is that the environment in
Venezuela has changed a lot and it would've been even a challenge for
Chavez to maintain his popularity, which was phenomenal. I mean he was
really a very popular man. He defeated soundly Henrique Capriles, the
main opposition candidate in Venezuela in elections just last October,
almost without campaigning. Because he was already sick himself.

But Venezuela is facing just a series of really serious economic
problems. Inflation - we don't know how much inflation is. It's well
above 20 percent inflation. Also, for various reasons, even though
Venezuela is, as you said before, a rich country, there are shortages of
food. There are shortages of all kinds of basic items. There are long
lines, and that's obviously something that the Venezuelan people get
very upset about.

Crime is a terrific problem. So just generally the quality of life in
Venezuela has really deteriorated. And so, as you say, Maduro has to
confront a much more difficult situation than Chavez dealt with during
most of his 14 years, without Chavez's charisma.

MARTIN: And it's also true that one of Chavez's main sort of policy
tools, the oil prices or the oil wealth, is also in flux right now.
Isn't it too? I understand that oil production is going down even though
oil prices remain high. Why is that?

GJELTEN: Well, oil is by far the most important - really, the only
source of revenue for Venezuela as a country. I mean this is 90 percent
of its export earnings. The problem is that all of that oil wealth that
Chavez, you know, for political reasons, for ideological reasons, wanted
to share that wealth with the people. But that's not the way to really
ensure the future of your oil industry.

Any oil industry requires a lot of reinvestment. You've got to maintain
your fields. You've got to continue exploration. You've got to invest in
new technology. You've got to maintain your drilling infrastructure. You
need the technology and the expertise that foreign oil companies
represent. And instead of promoting that kind of reinvestment and
instead of inviting in the foreign expertise that Venezuela needed,
Chavez diverted a lot of that wealth to social programs.

You have ridiculously low gasoline prices in Caracas. We've heard from
NPR's Steve Inskeep, who's been visiting Venezuela this week, that gas
is 20 cents a gallon or less in Caracas. That is not a productive use of
your oil wealth. And, as you said before, he's been sharing this oil at
discounted prices with his neighbors.

So instead of reinvesting that money into - at least a portion of it -
into the oil industry, he's been diverting it to other places and that
means that oil production is going down. I mean in 2012, Michel, the
country earned $1 billion less from oil than it earned in 2011, and
already in the first quarter of this year oil production has gone down
by seven percent.

MARTIN: If you're just joining us, we are talking with NPR's Tom
Gjelten. We're talking about Venezuela's presidential elections this
weekend. We're also talking about what it could mean for the country's
oil diplomacy. Well, among the countries with which Venezuela has shared
its oil is the United States. I mean I think many people will remember
some of these ads that have run in certain markets around the country
where it's subtle but it is made clear that Venezuela is making oil
available to low income people at steep discount or for free.

But that's just - I assume that that's just for - mainly for ideological
reasons.

GJELTEN: Well, he's very - he was very clever politically, and you know,
the United States was making it very clear that U.S. governments,
whether it's the Bush administration or the Obama administration, made
it clear they did not like Hugo Chavez. They did not like the direction
that he was taking Venezuela in. They didn't like all the anti-U.S.
rhetoric.

I mean he always talked about the empire, you know, and North American
imperialism. So they didn't like that, but Chavez found a way to stick
it to the Americans by providing fuel to low income people in the
Northeast. And even here in the Washington, D.C. area there are families
that benefitted from this fuel oil program. So it was very astute on his
part.

MARTIN: Do you assume that those days are numbered, of a program like
that? But really, really more broadly, though, there are other countries
in the region who depended, I would argue, economically on this
discounted oil. Could you talk a little bit about that and what is the
future of those arrangements?

GJELTEN: Well, at the top of that list, Michel, is Cuba, which has
really - Venezuela under Hugo Chavez replaced the old Soviet Union for
Cuba as its main benefactor. Cuba has been getting something like 90,000
barrels of oil a day from Venezuela on steeply discounted terms,
actually reselling some of that oil on the open market for hard
currency, so earning money.

But not only Cuba. You also had 18 countries in the so-called
Petro-Caribbe Alliance, Caribbean and Latin American countries,
countries like Haiti, Jamaica, the Dominican Republic, Nicaragua,
Guatemala. These are countries that are energy poor. They don't have
their own sources of energy. If they have to buy energy on the world
market at these high prices, that's terrible for those countries.

And they were getting very discounted supplies of oil from Venezuela.
And it would've been very hard for them to sustain their economies
without that oil. Haiti, for example, had its entire oil debt to
Venezuela forgiven after the earthquake. So it was starting from
scratch. That was a very important boon to Haiti.

Now, however, as you say, I mean you can't do it all. You can't hand(ph)
almost free gasoline to Venezuelans. You can't spend a lot of money on
social programs coming from the oil industry. You can't give oil away to
people in Boston and Baltimore and Washington D.C. and to Cuba and to -
at some point...

MARTIN: And reinvest in the industry to keep it productive.

GJELTEN: And reinvest in the industry when oil production is going down.
At some point you have to make some choices. And who knows? Your
question was, what's the future of these grants to people in the United
States.

My guess is that, on the list of priorities, that's probably not very
high. He has to - Maduro, if he wins, and he's probably going to win. He
has to, first of all, pay attention to his own popularity at home, and
I'm not sure that homeowners in Washington, D.C. sort of rank that high.

MARTIN: That was where I was going to go next, and for the couple of
minutes that we have left, you know, I was wondering, in terms of the
voters in Venezuela, the people of Venezuela, what they think about the
strategy of oil diplomacy. I mean, you can imagine how, on the one hand,
it would be a source of kind of national pride for people, that they're
able to play this role in the region and kind of boost the standing of
the country and the region.

On the other hand, when there are shortages of food and basic goods - as
you've discussed, there is an exodus of skilled workers whenever people
can - if people can get out, they are leaving. Do you have a sense of
how the people of Venezuela, the voters, feel about the use of their oil
wealth in this way?

GJELTEN: I can't claim to have a firsthand sense of that, Michel. We do
know that Henrique Capriles, the opposition candidate, has been gaining
a bit on Maduro in polls recently, and he has made it very clear in his
campaign that he would curtail a lot of that diversion of oil to other
countries. So, apparently - I mean, if you're a Venezuelan voter, and
you have to choose between, you know, cheap gasoline at a time when
prices for everything else are rising and support for social programs in
Venezuela, if you have choose between those things and a government
program that subsidizes consumers in Haiti or Washington, D.C. or
somewhere else, you're probably going to prefer that that money stay at
home.

MARTIN: Before we let you go, tell us just a little bit, if you would,
about the opposition candidate. I mean, you've made it clear that Maduro
has kind of the imprimatur of Hugo Chavez, his - you know, Chavez
clearly designated him as his favorite successor, and his kind of
popularity has transferred to him, at least for now. But there is an
opposition candidate. Could you tell us a little bit more about him?

GJELTEN: His name is Henrique Capriles. He's a governor. He is, himself,
a fairly charismatic figure, probably more charismatic than Maduro. And
he recognizes the popularity of the Chavez program, and has actually
pledged to continue a lot of the priorities that the Chavez government
proposed. So he is, unlike some of the opposition candidates that
Venezuela has seen in the past, who just presented themselves almost as
kind of right-wing versions of Chavez, Capriles seems to be much
smarter, politically. He's still got the tremendous disadvantage of not
being the designated candidate of the machine. He has to really fight to
get air time and to get the kind of attention that Maduro, as the
government candidate, is getting. But he has run a fairly effective
campaign.

MARTIN: NPR's Tom Gjelten reports on global security and economic
issues. He was kind enough to join us in our Washington, D.C. studios -
our last broadcast, in fact, at our headquarters here.

Tom Gjelten, we'll see you on the other side.

GJELTEN: We'll see you on the other side, Michel.

MARTIN: Thanks for joining us.

http://www.npr.org/2013/04/12/177032265/venezuela-oil-diplomacy-from-caracas-to-cuba