Venezuela's Petro-Diplomacy: Hugo Chávez's Foreign Policy

2. Conflicting Goals in Venezuela’s Foreign Policy

2 Conflicting Goals in Venezuela’s Foreign Policy Javier Corrales The United States is again nervous about Latin America. The consolidation of Venezuela’s Hugo Chávez, the most vehement U.S.-basher in the region since the Cold War, has caught the United States unprepared. Chávez issues threats against the United States almost daily, and the United States has begun to wonder whether any of these threats could materialize. Chávez has forced Washington to begin to draft all kinds of contingency plans, even “war” scenarios, in the Americas. These scenarios include Venezuela provoking a war against neighboring Colombia; spreading weapons and destabilizing democracies abroad; disrupting oil sales to the United States; providing financial support to Hezbollah, Al-Qaeda, or other fundamentalist movements ; observing lax border, passport, and drug controls; and even acquiring nuclear weapons. These are legitimate worries, but they miss a larger issue. The real challenge that Venezuela poses to the United States has less to do with aggressive actions that Venezuela could take against the United States than with something else in Venezuela’s arsenal: a foreign policy based on generous handouts peppered with a pro-poor, distributionist discourse. For the purposes of this discussion, we will call this weapon “social power.” In the United States we are used to discussing the requirements of “hard power” (military and economic might), and even “soft power” (the intrinsic appeal of values and institutions).1 We spend less time discussing the requirements of social power—either as something to project or something to contain. As a foreign policy tool, social power is a spectacularly effective way for world leaders to earn allies, and even admirers, abroad. Spending lavishly on social projects is a policy almost impossible to criticize. At a minimum, Conflicting Goals in Venezuela’s Foreign Policy 33 it serves to deflect potential criticism and scrutiny. Social power makes it essentially impossible to launch any type of multilateral initiative to contain the regime. Furthermore, social power is easy to emulate. Other regimes— with nastier, gutsier, and more competent leaders than Chávez—could replicate Venezuela’s social-power foreign policy model and improve on it. The result could be the rise of meaner rogue states masquerading as international humanitarians. For all its power, the United States is simply unprepared to meet this potential new development in international politics. Social Power as a Foreign Policy Tool Venezuela’s foreign policy under Chávez has undergone two major changes relative to previous administrations. First, Venezuela has declared the United States the country’s main adversary, and in response has adopted a policy of “soft balancing.” Soft balancing is the term used to describe efforts short of military action to frustrate the foreign policy objective of larger nations.2 Venezuela is, rhetorically at least, actively trying to counter and frustrate U.S. goals in the region.3 Second, Venezuela has declared an overt commitment to promote development and, especially, help the poor at home and abroad. To further these goals, the Chávez government has gone on an international spending spree. It has offered investment to as many nations as possible, most of it billed as development aid. Venezuela’s main innovation in foreign policy is to use this type of foreign economic largesse as a way to balance the United States. Few nations since the end of the Cold War have exploited this foreign policy tool to the same degree as Venezuela. Venezuela’s investments abroad have two salient characteristics. First, they are mostly carried out by the Venezuelan state (rather than private firms, as is typically the case with most FDI). Second, they include large sums for development projects. Gustavo Coronel estimates that Chávez has committed a total of US$43 billion in investments abroad. Of this total, perhaps US$17 billion (40.1 percent of the total) could be classified as social investments. This includes oil subsidies to Cuba and the members of PetroCaribe; the acquisition of Argentine commercial paper, which exempts the government from having to pay the IMF; cash donations to Bolivia; medical equipment for Nicaragua; even heating oil subsidies for more than one million U.S. consumers . Some estimates suggest that Chávez has provided or promised as much aid to Latin American countries, in real terms, as the U.S. spent on the Marshall Plan in Europe after World War II.4 PetroCaribe alone, which rep- 34 Javier Corrales resents...