Venezuela is world widely known primarily through the popularity of a person by the name of Hugo Chávez – his Bolivarian revolution and his project of „Socialism of 21st century“. It is also known because of high production and export of oil abroad using their advocated „oil diplomacy“ and for their confrontational approach to the USA and imperialism.
Workers at a PDVSA facility
Venezuela was one of the full members of the Andean Community of Nations more than 33 years, starting from its entry on February 13, 1973 until the fateful day of April 20, 2006 when the then Venezuelan president and leader of the country Hugo Rafael Chávez Frías officially announced its withdrawal from this integration group. During 33 years of its activity in the Andean Community of Nations, Venezuela had extended competencies in all decision-making processes within the community. Like each member state of the grouping Venezuela too has been sending out its diplomatic delegations to the meetings of the Andean Community and to the various conferences as well. In relation with the other integration groups, it has strenghtened its position within the geopolitical region of Latin America, has intensified closer relations with its member colleagues within the community and of course with the other countries of South America. Venezuela‘s essential pillar of its export strength is called „oil diplomacy“. Venezuela is one of the few countries in the world which can boast of a fact that its policy is based on oil and gas. Not for nothing the drivers in the country tank in their cars with fuel for the cheapest price in the world. Chávez's efforts during the first months of his government tended to be in closer relationship with the Arabic world, making oil a real tool for implementing his foreign policy. It seems the country lets its oil wealth escape between its own fingers when it comes to dwindling daily exports and low domestic prices, but on the other hand this is their forward premeditated policy, as the current ruling socialist party PSUV declares (Partido Socialista Unido de Venezuela led by Hugo Chávez, currently by the president Nicolás Maduro).
Venezuela until recently had both enough and even a surplus of wealth as a result of its oil diplomacy. Every year Venezuelan oil business represents appx. 87% of its total export. One of the Venezuelan disadvantages, as many analysts point out, is a low potential of non-oil products produced in the country and thus a high concentration of revenue from natural resources, such as oil mentioned above. The representatives of the Venezuelan government have been aware for decades of this significant disadvantage compared with the other Latin American countries, but up until now a production of the other commodities in the country has not moved ahead significantly, although the country surely has a potential to achieve it, but the only brake is the Venezuelan political system.
Oil vendor at a petrol pump in Venezuela
Since its independence Venezuela has tried to be always present in the attempts to integrate the South American continent, to cooperate with the other neighbours and partners with a vision to achieve the development of the Latin American population. It's necessary to underline that its foreign policy was constantly beholden to an adverse political, economic and social situation within the state. Nevertheless, its major economic and export weapons are cocoa, coffee and oil. Since the beginning of 20th century this „black gold“ is just what made Venezuela to be Venezuela at its finest – it started getting considered as an oil-rich country and a global oil superpower practicing the art of oil diplomacy. In the 70's the country was even assigned to an attribute „Saudi Venezuela“ for its inexhaustible oil reserves comparable to Saudi Arabia and Middle Eastern countries. During the presidency of Carlos Andrés Pérez in the 70's Venezuela suddenly jumped to a higher and more dominant position in the region precisely because of its oil exports and oil diplomacy. Venezuela recorded the best performance of all the Andean Community members which also happened to be a reason why other Latin American countries also wanted to sign an agreement for their full membership in the community. It was a period of enhanced Venezuelan achievements, developed integration, accelerated processes on the respective continent.
In case Venezuela didn't have any oil potential, it would be difficult to compete with the other emerging countries (e.g. Peru in South America), because the country doesn't have enough parameters, resources and a market supporting political party to achieve the ascent to economic power. The oil wealth shouldn't be abused as a weapon to achieve hegemony, but to serve the state interests. Increase of international oil prices and its economic impact gave Chávez a solid platform to make his foreign policy as a tool for promoting the Bolivarian revolution in international relations. Benefitting from rising oil prices – so called „oil dollars“ („petrodólares“) allowed Chávez to follow his geopolitical ambitions, to grant subsidies left-oriented governments in South America and to literally buy their support for the enforcement of his requirements. Oil diplomacy is mainly practised by the countries which are full members of the Organization of the Petroleum Exporting Countries – OPEC: Saudi Arabia, Kuwait, Qatar, the United Arab Emirates, Iraq, Iran, Libya, Indonesia, Algeria, Nigeria, Ecuador and Venezuela.
Hugo Chavez with PDVSA workers
In 2005, Venezuela signed an agreement with neighboring countries in the region led by Cuba, Jamaica and Dominican Republic and together they created a company PetroCaribe – the international oil trade program with superlative ambitions in the respective areas. Oil company PDVSA (Petróleos de Venezuela, S.A.) gradually started to cooperate with the rafineries in Cuba (Cienfuegos), Brazil (Pernambuco), Argentina and Colombia (pipelines). The other oil initiatives besides PetroCaribe were PetroSur and PetroAndina. Venezuela grants its oil for symbolic preferential prices or exchanges it for livestock, agricultural machinery and IT programs and all of that is carried out only with the countries which Venezuela consideres to be their ideological allies – applying so called clientelism and selective cooperation. In case of countries belonging to different ideological persuasions the country has no chance to obtain the mentioned advantages or to receive such benefits from Venezuela. As an example we can mention two countries. Immense oil supplies wander right to Cuba, a country favoured by Venezuela, and some part of those Venezuelan supplies are paid back in the form of money and the remaining part is paid-up by sending their health, educational and sports staff to Venezuela. The second country is Chile not favoured by Venezuela because of the fact that Venezuela considers Chile to be belonging to the so called „Axis of Pentagon“. Hugo Chávez divided geopolitical region of Latin America into two opposing axes: the first one are „countries controlled by Pentagon“ or „Axis of Pentagon“ including Colombia, Peru, Ecuador and Chile; the second one represents Brazil, Argentina, Venezuela and later joined by Uruguay. This second left-oriented axis should serve as a counterweight to the US influence in the region aiming to disrupt the first hostile axis and to unite South America.
Hugo Chavez with Fidel Castro in Cuba
As regards to countries not located in American continent, we could surely underline China's rising and increasing role in the export of goods and services to Venezuela. Both countries consider each other as strategic partners and since 1990 they have signed more than 300 agreements on energetics, infrastructure, agriculture or technology. China not only imports Venezuelan oil, but also introduces foreign direct investments to Venezuela placing Chinese products into the Venezuelan market. In May 2010 they even incorporated their Chinese branch to Zulia, one of the Venezuelan states located in the northwest of the country. In a period 2006-2010, Venezuela has formed several companies dedicated to oil production with China in a zone of Orinoco river: Petrolera Sino-Venezolana (2006), Petrozumano (2007), Sinovensa (2008), Petrourica (2010). Venezuela profits and gains significant benefits because of China and this relationship helps the country to increase oil production and capacity of the refineries. The main products imported to Venezuela are as follows: cars, tractors, land vehicles, radio-telephone, radio-telegraphic, radio and televisional transmitters, telecameras and videocameras, pharmaceuticals, floating constructures, whiskey, soybean oil and others. In the opposite direction wander Venezuelan products for export to the USA, European Union, the Netherlands Antilles, the Caribbean, Andean Community of Nations, MERCOSUR, China, Cuba and some parts of Asia, Africa and Oceania. The totem that Venezuela will increase its export to MERCOSUR countries significantly depends on how much Brazil and Argentina need in terms of oil and natural gas supplies.
Compared to South American economic dragons, Venezuela is a major oil producer and exporter with the largest natural gas supplies in South America with its potential to produce electric energy. Venezuela has three ongoing projects connected with natural gas on the coast: Rafael Urdaneta project in the gulf located in the nothwest of the country, Mariscal Sucre project in the eastern part and Delta Platform project located southeast of Trinidad and Tobago. Venezuelan non-oil export specializes in iron, low-cost products made of metals, chemical products, fertilizers, in lower rates also agricultural and farm needs. These mentioned comodities have a huge opportunity to be exported to the other MERCOSUR countries and in case of a political will and after signing of relevant trade agreements, their competitiveness could be strengthened and thereby all the opportunities that are possible could be used within the offered free trade and services area. The main Venezuelan products which are exported to different countries of MERCOSUR are as follows: Argentina – oil, minerals; Brazil – hydrocarbons, electric energy, chemical industry products, sardines, metals (oil supplies to the country however have been decreased and Brazil has even declared its self-sufficiency in the future when it comes to the oil); Paraguay and Uruguay – smaller amount of products because of their smaller economies as compared to Argentina and Brazil. Venezuela besides its oil also owns great wealth of iron, carbon, gold, diamonds, aluminium and bauxite. If it can tap into these resources to expedite its process of integration with other South American, Asian and African economies Venezuela can move beyond its only weapon of oil diplomacy.
Faculty of Political Science
and International Relations
Matej Bel University