Saturday, June 24, 2006

The Venezuela and US feud

(Source Article: Venezuela fights US bid to keep it off UN panel - MSNBC)

President Chavez is struggling to obtain a seat on the UN’s Security council, while the US aims to prevent that from happening via lobbying in favor of Guatemala. This year, an open seat will become available, and Venezuela has garnered support from countries such as Argentina, Brazil and Syria. To counter such efforts, the US has raised concern that Venezuela’s ties with Iran could hinder current efforts to have the latter halt its nuclear program.

Chavez insists that Venezuela’s presence on the council will allow it to represent the interests of developing economies in South America, and his UN ambassador stated that “[t]he position stated by...the US government – that countries should not vote for us because we represent a danger – shows a lack of respect.” The feud between the two countries continues this week as Chavez announced that oil prices would rise $20 to $30 dollars a barrel if his country implemented an embargo on supplies to the US. (see Venezuela embargo – Reuters)

While, according to Venezuela’s ambassador, the US wields much power in terms of the UN (holding a permanent seat and veto power), Venezuela itself wields considerable power over the global markets in its position as the world’s 5th largest oil exporter. Recently, a US Congressional study announced that the US is not adequately prepared for an embargo by Venezuela—Chavez has threatened to implement such an embargo if the US “continues to ‘plot’ his overthrow”. (see US not ready for Chavez oil ban – MSNBC)

Meanwhile, Chavez continues to search for alternative markets for Venezuela’s crude, in the event it would lose, or stop supplying oil to, the US. However, US officials have stated that attempts by Chavez to find markets elsewhere—including China—would be futile, since Chinese refineries, unlike those Venezuela has in the US, are not configured to process the heavy crude Venezuela produces.

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