Friday, October 6, 2006

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Let's stop the hyperventilating about Hugo Chavez

Earlier this week Clay Risen wrote an alarming story for TNR Online about Hugo Chavez's threat to the liberal world order:

Far from being a pariah, Venezuela is increasingly in step with the world. Thanks to deep wells of anti-Americanism and Chávez's dogged diplomacy among the developing world, he's managed to build a large, loose coalition of states aligned not just against the United States, but against the liberal world order that is the real bedrock of American hegemony. Chávez's goal is not to destroy the American economy--cutting off our supply of oil from Venezuela would do more harm to Caracas than to us--so much as to replace the structures by which we hold sway over the world economic community. And while it makes headlines to talk about Chávez's military (and paramilitary) aspirations, his real successes--and his real threats--exist in the economic, rather than the military, realm....

too many parts of the world are seeing uneven internal growth (benefiting the elite but not the general public) or no growth at all, even as they make painful budget reforms and market concessions. This breakdown has given rise to a powerful challenge to the liberal economic order--at the center of which sits Hugo Chávez.

The most significant challenge, arising from the slow collapse of the WTO's Doha Round of trade negotiations, is Venezuela's plan to replace the international trade structure with a series of trading blocs. Many of its efforts have been the banal sort of bilateral deals that would go unnoticed--if they weren't with an eyebrow-raising set of partners: Vietnam, Nicaragua, Russia, Libya, and other countries at the edges of the liberal economic order. Just days before his U.N. appearance, Chávez signed some 20 trade accords with Iran, totaling more than $200 million. Iranian tractors are already under production in Venezuela, and the Iranian national oil company has spoken of investing up to $4 billion there. Chávez has promised a $500 million oil refinery in Uruguay, a country the United States has been courting for its own trade deal. And he has pursued countless oil-related deals with China--with the expressed goal of disengaging his country's oil sector from the United States.

Alongside his bilateral efforts, Chávez has pursued a set of multilateral trade agreements with the intention of displacing American economic hegemony in the western hemisphere. In 2005 Cuba and Venezuela created the Bolivarian Alternative for the Americas (ALBA), also known as the People's Trade Agreement, which sets up zero-tariff trade among members. The ALBA has since expanded to Bolivia, and Nicaraguan presidential candidate Daniel Ortega has promised to join if he wins in November. Chávez has also signed onto Mercosur, the pact among several South American countries designed to challenge NAFTA and the EU. Mercosur is, for now, a fairly innocuous group, but Chávez has spoken frequently of transforming it into an anti-U.S. regional bloc. Trading blocs such as these, especially in light of the Doha collapse, not only undermine the structure and spirit of the liberal trading regime, but they also push the world back to the era in which politics, rather than growth-oriented national interest, determined trade policy, with all the economic and political instability that went with it.

Look, I can doom-and-gloom the demise of freer trade with the best of them, but in the thinking about existential threats to the world trading system, Hugo Chavez does not come to mind.

The key facts about Chavez's policy initiatives are as follows: 1) Sure, Chavez has signed a lot of trade deals -- but most of them are of the pissant variety. $200 million? Big whoop.

2) Sure, Chavez wants to diversify his imports and exports away from the United States -- but he's not going to succeed.

3) Sure, Chavez wants Mercosur to do his bidding -- but he can't, since Brazil is the key veto player in that trading bloc. Lula might not be America's biggest fan, but he's not really anti-American either.

4) For all of Chavez's wheelings and dealings, his foreign and economic policies alienate more politicians that they attract.

Hugo Chavez is an irritant, but it's silly to paint him as the big bad wolf of the global political economy.

posted by Dan on 10.06.06 at 08:43 AM


Chavez has a limited attention span. Ask those who get contracts to sell weapons, etc., to Venezuela.

posted by: Tom Holsinger on 10.06.06 at 08:43 AM [permalink]

It does seem that there's a certain element that sees anything less than universal admiration as an existential threat. To them, somebody like Chavez is an urgent problem. To those who can realistically assess his ability to hurt the US, not so much.

posted by: just sayin on 10.06.06 at 08:43 AM [permalink]

Good post and I'm certainly inclined to agree. Chavez effectively torpedoed Ollanta Humala's candidacy in Peru, didn't help AMLO in Mexico and is wearing out his welcome in many parts of Latin America.

I certainly don't think Lula is anti-American at all. By the same token, he, like a number of other Latin American leaders are not looking to define their role in the world solely in relation to the US. I believe that's a good thing.

posted by: Randy Paul on 10.06.06 at 08:43 AM [permalink]

Yeah, but an Iranian-sponsored nuclear device down in Caracas wouldn't be a good thing for international security. Some thought Hitler was a traditional statesman (and some scholars argued so after the war, like A.J.P. Taylor). Were British (Sir Robert Vansittart) and French (Charles DeGaulle, Joseph Paul-Boncour) anti-appeasers in the 1930's hyperventilating?

posted by: Donald Douglas on 10.06.06 at 08:43 AM [permalink]

Chavez certainly isn't dangerous. That should be sufficiently clear.. And if his economic policies do happen to work to the benefit of Venezuelans or even encourage his neighbours to move in similar directions, then its hard to see how its a big security threat that we all need to lose sleep over. I don't have a problem with Venezuela having more income equality or better social programs. On the otherhand, if the programs don't work, he will lose his popular support and simply fade away.

posted by: peter on 10.06.06 at 08:43 AM [permalink]

The United States can thank its own foreign policy for Chavez's appeal, who is much more than a mere "irritant" but maybe not quite a "big bad wolf".

Besides all the Bush Doctrine and other examples of foreign policy arrogance that we have all discussed ad nauseum, the hits just keep on comin'. Two recent examples:

1) the US backs Guatemala for the UN Security Council seat, which has perhaps the worst record of repressive military regimes (usually backed by Uncle Sam) in Latin America -- and that is saying a lot. Note that one of Guatemala's ex-leaders is now being prosecuted for genocide. The rest of Latin America has figured out that a Guatemala on the UNSecCoun is a US rubber stamp vote, whereas a Venezuela (however loudmouthed) is more likely to offer counterpoints, some of which may be worth pondering.

2) The White House has recently issued a report on foreign governments that have failed to actively support the war on drugs. Venezuela is shown an the extreme example of a country that has "demonstrably" failed to meet the test. The primary source for this accusation? A Venezuelan news article that talks about how a handful of government bureaucrats where in on drug deals. I guess that never happens along the US-Mexico border.

Now that we have a unipolar world, much of it doesn't like the new sheriff. What we're seeing is an active search for a counterweight to the US.

To the extent US foreign policy remains in its current direction, there will always be room for a Chavez. The problem is that the next one may indeed be the Big Bad Wolf.

posted by: St. James the Lesser on 10.06.06 at 08:43 AM [permalink]

The man has huge brass balls, there's no denying it. I wouldn't want him running my country, but the more speaking engagements he gets the happier I'll be. I mean, really, when was the last time the GA was as much fun as it was this year?

Between Ahmadinejad's smirking evil and Chavez's blustering anti-American populism, it felt like an episode of the Superfriends come to life.

The sad part is that we don't have anybody on our side who can sling words half so passionately, even if they are mostly BS.

posted by: Adrian on 10.06.06 at 08:43 AM [permalink]

"The United States can thank its own foreign policy for Chavez's appeal, who is much more than a mere "irritant" but maybe not quite a "big bad wolf"."

Yeah, that's also my sense, Chavez is somewhere in between. I think that Chavez *can* hurt us to an extent, Dan-- as a leading OPEC member and a kind of linchpin in these trading arrangements, he definitely can be decisive in steering deals away from us. While Lula is not specifically "anti-American" like Chavez, he's no friend of us, either-- quite a few of his speeches in Portuguese are edgy and say not-so-kind things about the USA, WTO and the World Bank. It's not the Che Guevara-esque talk of Chavez, but it's clear that there very much is a strong South American constituency in favor of pushing an anti-US-unipolar world order.

I don't really think Chavez's plans to shift his oil sales toward China is a very big deal-- since oil is a fungible commodity, we'd just get it elsewhere and the cost wouldn't be affected either way. It's just one big pool of oil, in effect. However, I think the trade deal changes can sting somewhat. That being said, I don't think these are significant enough to really merit freak-out reactions-- the one act in Venezuela that *would* be an unmitigated disaster would be a pro-US coup in Caracas. Even if the CIA had nothing to do with it, the perceptions (and the prior US rhetoric, including the tremendous blunder of recognizing the prior coup plotters so early) would lead to a very ugly reaction against us that would have teeth.

posted by: Volokhan on 10.06.06 at 08:43 AM [permalink]

I don't think Chavez's radical revolution will survive a prolonged slump in oil prices.

posted by: Gil Roth on 10.06.06 at 08:43 AM [permalink]

"... but against the liberal world order that is the real bedrock of American hegemony."

Okay, so let me get this: we must protect the liberal world order against 'evildoers' like Chavez to protect American hegemony?

Certainly glad to know that the purpose of the world economy is to prop up America. Suddenly Chavez's message seems a little less loony...

posted by: faux facsimile on 10.06.06 at 08:43 AM [permalink]

Maybe I'm just being provincial and ignorant, but what good does a "free trade" bloc do if there is nothing to trade and no one to buy it?

Oooh! Free trade with Cuba! Yippee! Duty-free cigars, sugar, and rum. Anything else there? Do they have any money to import anything?

There is a reason Africa is such a horrid mess: There is nothing there that anyone wants. AFAICT, South America runs a close second.

Who would have thought that China would liberalize before South America? The "communists" are doing more for their people than the "democrats". Strange times we live in.

posted by: mrsizer on 10.06.06 at 08:43 AM [permalink]

There is a reason Africa is such a horrid mess: There is nothing there that anyone wants. AFAICT, South America runs a close second.

From Africa, such items as coltan, diamonds, gold, cobalt and uranium just from the Democratic Republic of Congo, cotton from Burkina Faso and Mali (much more likely now that the US subsidies have been ruled illegal), oil from Libya, Angola, Gabon, Nigeria and Sao Tome & Principe, coffee from Kenya, Rwanda and Ethiopia, phosphates from Western Sahara are all widely sought.

China has invested in steel plants in Brazil including one in the state of Maranhao to place it nearer the Panama Canal, Companhia Vale do Rio Doce is the world's largest iron exporter, Brazil is fast approaching the number one spot for soybean exports, Chile is number one for copper and oil is exported from Venezuela, Ecuador and Colombia.

Yeah nobody wants anything from Africa and South America.

posted by: Randy Paul on 10.06.06 at 08:43 AM [permalink]

What I'm trying to decide is whether St. James's blustering rant against Guatemala(!) counts as a mere "irritant" or as a "big bad troll". Although I think we're all agreed (in this blog) that our Drug War has been a total SNAFU in the relevant sectors of that continent.

I think Chavez's real threat isn't against the "political economy" (whatever that means) so much as against the basis of politics itself, if we define politics as the process of decision-making within a nonviolent and constitutional order (if I'm remembering my Bernard Crick aright). Chavez and his acolytes (Humala, Obrador, Morales, etc) represent a replacement of politics with the rule of Caesar.

Yeah: the Peruvians have been able to see off Humala, and the Mexicans (barely) Obrador. But the eastern Bolivians have not been able to see off Morales. What if Morales exports his Aymara-Quechua obscurantism over to the Humala-voting parts of Peru?

Also, we have people in this country who do not believe in politics. This is most obvious in (say) your average northeastern US university; but I'd also say that politics has been faltering in - for example - Durham, North Carolina (as three innocent men are set to be jailed for a rape they didn't do, because they're of the wrong race). The elites don't believe in politics, because it gets in their way; ethnic groups who are not plugged into the global economy don't believe in politics, because they don't see how it helps them.

Popular and anti-American Caesars exert a pull on elite and non-market-dominant communities everywhere. That spells trouble for politics everywhere.

I do not know how long the US can remain an exception.

I am a libertarian who believes in constitutional order and a middle-class economy; I see Chavez's Caesarism as an existential threat to all of that which I hold dear.

posted by: David Ross on 10.06.06 at 08:43 AM [permalink]

David, I'm with you. Chavez is a classic Marxist with a big wad of cash thanks to Citgo stations and unique refineries that can crack Venezuela's sour, thick crude at a big markup for Citgo. Chavez intends to disrupt US supplies. He just signed a deal with China to supply 500,000 bpd in the coming years. They have to first build up their fleet of super tankers to get it there.

Join the Citgo boycott. See Let's leave Hugo Chavez high and dry with a dozen new super tankers and oil worth $25 a barrel.

posted by: Mick Gregory on 10.06.06 at 08:43 AM [permalink]

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