Tuesday, July 22, 2008
Updated at 22 July 2008 3:40 Moscow Time.

Chavez Likely to Get Weapons, Not Support

http://www.themoscowtimes.com/article/600/42/369078.htm
22 July 2008By Max Delany / Staff WriterVenezuelan President Hugo Chavez looks set to put pen to paper on a number of major arms deals during an official visit to Moscow on Tuesday but is unlikely to gain Kremlin support for his trademark attacks on the United States.

Flush with record oil revenues, Venezuela has become a regular buyer of Russian arms, and any new deals would further strengthen ties between the two countries and irk the United States, which stopped selling weaponry to the Latin American country in 2006.

Chavez will hold separate meetings with President Dmitry Medvedev and Prime Minister Vladimir Putin on Tuesday. While in Moscow, the Venezuelan delegation will discuss setting up joint banking and investment funds and hold talks with leading Russian firms keen to expand their operations in the country.

A limited number of reporters will be accredited to cover the meeting between Medvedev and Chavez, a Kremlin spokesman said, citing limited space.

Meeting an outspoken leftist leader whom even Kremlin officials describe off the record as “controversial” may not sit well with the liberal image of Medvedev, whose administration is eager to keep the visit low-key.

“Venezuela is quite an important partner for Russia in South America,” Putin’s spokesman Dmitry Peskov said Monday. “We have quite ambitious plans for working on the Venezuelan market.”

The Russian visit is the first leg of a European tour that will see Chavez head to Minsk for talks with his Belarussian counterpart, Alexander Lukashenko, whom the United States has branded Europe’s last dictator.

Originally penciled in for Monday evening, Chavez’s arrival was postponed without explanation until Tuesday, Interfax reported, citing an unnamed diplomatic source in Moscow.

During his time in the country, Chavez will order more than $1 billion worth of Russian arms, including up to 20 Tor-M1 missile-defense systems and three Varshavyanka diesel submarines, Interfax reported.

“All questions have already been agreed on for a number of arms contracts, and it’s entirely possible that their signing will coincide with Chavez’s arrival in Moscow,” an unnamed defense industry source said, Interfax reported.

Venezuela is also eyeing up a deal for another six non-nuclear submarines, several dozen military boats and Ilyushin reconnaissance aircraft, the source said. Contracts will also be signed to set up technical centers to service Russian equipment already in Venezuela, he said.

Ahead of the trip, Chavez said he wanted to buy Russian tanks, describing them as “very modern and fast,” in an interview with Itar-Tass in Caracas. National media have reported that Russia could offer Venezuela up to $800 million to fund any potential deals.

In May, Kommersant reported that the arms deals could reach $2 billion and include Mi-28 combat helicopters and Ilyushin airplanes. An order has been received for the helicopters and delivery would start in the second half of 2009, Interfax reported.

A spokesman for Russian Technologies, the parent company of state arms exporter Rosoboronexport, refused to comment on the specifics of any deals Monday. He said senior company officials would most likely attend the talks.

Officials at the Federal Service for Military and Technical Cooperation declined to immediately comment and asked for questions to be sent by fax.

The Venezuelan Embassy in Moscow did not comment on any possible arms deals.

Since 2003, Venezuela has bought about $4.4 billion of military hardware from Russia, making it the third-biggest foreign buyer of Russian arms worldwide. The growing trade with Latin America comes as some of Russia’s traditional clients, such as India, express worries over the quality of Russian deliveries. Algeria returned 15 MiG jets on technical grounds earlier this year.

Russia has delivered 100,000 Kalashnikov rifles to Venezuela and last year agreed to build two plants producing the assault rifles under license in the country. A total of 24 Sukhoi fighter jets and about 50 attack helicopters are also on their way to Venezuela.

Despite obvious political undercurrents, Venezuela has become an increasingly important business partner for the Russian arms industry, said Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies. Russia is eager to help countries that share its policy of a multipolar world, but is not out to arm enemies of the United States, Pukhov said.

The Venezuelan armed forces are undergoing a massive rearmament program, funded by record oil revenues, that is set for completion by 2012. Chavez claims that new weaponry is needed to stave off a potential attack from the United States or neighboring Colombia, which has received billions of dollars in U.S. military assistance over the past few years.

In March, Chavez ordered Venezuelan troops up to the border with Colombia after Colombia launched a strike against a FARC rebel base inside Ecuador. Colombia has accused Venezuela of arming the leftist FARC rebels, a claim that Chavez has dismissed.

Representatives at both LUKoil and embattled Russian-British joint venture TNK-BP will also hold meetings with the Venezuelan delegation, Interfax reported, citing unnamed sources inside the companies. Both companies have been involved in exploratory work and evaluation in Venezuela.

LUKoil spokesman Dmitry Dolgov said Monday that “he could not rule out” the possibility that Chavez will meet with company officials. The company has done exploratory work in Venezuela, he said.

“We want to continue and develop our work in the country,” Dolgov said.

Chavez will also meet with Mayor Yury Luzhkov, Itar-Tass reported, citing an unnamed “informed” source.

Chavez’s visit comes soon after the inauguration of Dmitry Medvedev as president. During Chavez’s last trip to Russia in June 2007, then-President Vladimir Putin refused to endorse some of Chavez’s more radical verbal attacks on the United States.

While Putin and Chavez addressed a gaggle of reporters during their meeting in 2006, their 2007 meeting in Moscow was not widely publicized ahead of Putin’s scheduled meeting with U.S. President George W. Bush in Kennebunkport, Maine.

Chavez still used an opportunity to attack Bush at the opening ceremonies for a Latin American cultural center at Moscow’s Library of Foreign Literature during his visit last year. A spokeswoman for the Venezuelan Embassy in Moscow said she was not aware of any cultural events scheduled during Chavez’s visit this time.

Staff Writer Anna Smolchenko contributed to this report.

Venezuela: Looking Ahead
Thomas A. Shannon, Assistant Secretary for Western Hemisphere Affairs
Statement before the Subcommittee on the Western Hemisphere of the House Foreign Affairs Committee
Washington, DC
July 17, 2008

Mr. Chairman, thank you for the opportunity to appear before this Committee today to address the theme: “Venezuela: Looking Ahead.”

My remarks will look at this theme from three vantage points. First, the historic context of our relationship with Venezuela. Second, the current state of our relationship and the challenges it faces. And finally, what we can look forward to in the remaining months of this Administration.

TIES THAT BIND…

Our relationship with Venezuela is longstanding, broad, and deep, encompassing everything from commerce and culture to education and sports. Our histories have been intertwined since our wars of independence. Francisco Miranda, one of Venezuela’s founding fathers, fought in the Continental Army during our revolution and was a colleague and friend of George Washington and Thomas Jefferson. In their turn, Americans fought alongside Miranda and Simon Bolivar during Venezuela’s struggle for independence. The names of some of these “American heroes” of Venezuelan independence are inscribed at the “Los Próceres” monument in Caracas.

Our economies have also been closely linked. American mining engineers played an important role in the discovery and development of Venezuela’s petroleum wealth. American corporations and investors helped develop Venezuela’s automobile, banking, manufacturing, and agricultural sectors. Venezuela, for its part, has been one of the largest Latin American investors in the United States. Venezuela, through PDVSA and CITGO, owns refineries, asphalt, and petrochemical plants, and one of the largest gasoline distribution networks in our country.

Today, our two countries enjoy a growing economic and commercial relationship. Bilateral trade between the United States and Venezuela exceeded $50 billion in 2007. The United States exported $10 billion worth of goods to Venezuela last year, an increase of over 13% from 2006. Venezuela’s exports to the United States of $40 billion — 95 percent of which is oil — represent a 7% increase over the previous year. We are Venezuela’s largest trading partner by a factor of two. Venezuela is our second largest Latin American trading partner, exceeded only by Mexico. Venezuela is among our top five foreign oil suppliers, and we remain Venezuela’s principal customer and energy partner.

We also enjoy extensive cultural and people-to-people ties with Venezuela. The youngest director ever to lead the Los Angeles Philharmonic — the 27-year-old Gustavo Dudamel, who assumes the role next year — is Venezuelan. There are 50 Venezuelans playing on major league baseball teams, nearly 800 in the minor leagues, and distinguished Venezuelans in academia, foreign policy circles, and the media. And Americans have played an important role in helping to build Venezuelan universities, political consultancies, and polling institutions.

… BUT A CHALLENGING RELATIONSHIP

Such a rich tapestry of human connection would seem to indicate a positive and friendly bilateral relationship. While this was the case for many years, it is regrettably no longer true. Our bilateral relationship today is troubled, characterized by resentment, suspicion, and misunderstanding.

For its part, the Government of Venezuela claims we have practiced interventionism in its political and economic life. It regularly refers to us as an “Empire,” opposes our initiatives in the Americas, and seeks out our adversaries as friends and allies. It has broken off cooperation with us on counter-drug and counter-terrorism activity, ended long-standing intelligence liaison relationships, shut down military cooperation and security assistance programs, and nationalized the holdings of some American corporations.

From our point of view, the Venezuela Government has added a needless and complicating ideological overlay to a relationship that was characterized historically by fluid and productive dialogue. This has made it difficult to address bilaterally our concerns about the Government of Venezuela’s behavior. These concerns are well known, and relate to authoritarian tendencies and human rights violations domestically; and, internationally, meddling in the affairs of its neighbors and promoting a diplomacy designed to undermine our interests. As a result and over time, we have taken specific actions to make clear our concerns and limit our engagement with Venezuela. These steps are substantive, and not rhetorical. Specifically, we have:

* declared Venezuela to be “not fully cooperating” in the fight against terrorism;
* determined that the Government of Venezuela has “failed demonstrably” in meeting its obligations under international counternarcotics agreements and U.S. domestic counternarcotics requirements.
* rescinded Venezuela’s eligibility to purchase most kinds of U.S. weapons and weapons systems;
* closed Venezuela’s Military Acquisition Office in Florida;
* arrested unauthorized Venezuelan agents;
* denied Venezuela access to Export-Import Bank financing and Overseas Private Investment Corporation coverage;
* designated several Venezuelan nationals under Executive Order 13224 and the Narcotics Kingpin Act for support provided to Hizballah and for trafficking illicit drugs.

Venezuela’s response to our actions has been to retreat into a distant, sullen relationship. Our occasional efforts to explore the possibility of improved relations focused on areas of clear mutual benefit – such as energy, commercial, and counter-drug cooperation – were rebuffed. The Government of Venezuela’s unrelenting anti-American rhetoric and the absolute control exercised by President Chávez over all aspects of our relationship have prevented, until recently, even the most tentative exploration of dialogue.

The resulting stand-off has caused great discomfort within the region. Countries with close historic ties to Venezuela and the United States have had to learn how to navigate around our relationship. Most have resisted Venezuela’s efforts to enlist them in a larger crusade against us. With only a few exceptions, the Government of Venezuela’s anti-American rhetoric has not resonated well. Over time, it has become tired and ritualistic.

LOOKING AHEAD

This does not mean that Venezuela’s aggressive and erratic behavior has not been a cause of concern in the Hemisphere. However, countries around the region have seen the political space open to Venezuela shrinking. There are several reasons for this. To begin with, the re-emergence of countries that have traditionally been regional leaders has constricted Venezuela’s diplomatic movements. Second, Venezuelan setbacks in key international arenas – such as losing its bid for a seat on the United Nations Security Council – were seen as clear evidence of overreach. Third, some of Venezuela’s closer allies have found themselves bogged down in their own internal difficulties and unable to help. Fourth, the emerging story of Venezuela’s illicit relationship with the FARC and Colombia’s recent successes has undermined Venezuela’s credibility. These factors have contributed to a growing international perception that Venezuela has hit the limits of its international influence.

Venezuela’s neighbors have watched with interest the obvious political challenges that President Chávez faces at home today. These include the failure of the December 2007 constitutional referendum, current difficulties in consolidating his single political party, and the upcoming November 2008 gubernatorial and mayoral elections. Also, they have noticed the emergence and initial consolidation of an effective civil society. The student movement has become an important counterpoint to the government on the issue of civil and political rights. Parents have twice defeated government efforts to impose changes in educational curricula. Popular rejection of a harsh Cuba-style intelligence law forced President Chavez to send the law back to the National Assembly for reconsideration. While President Chávez continues to enjoy strong support among important political constituencies, he faces a more complicated internal scenario and must contemplate the possibility of an election in 2012 in which he cannot be a candidate.

In this environment, Venezuela has, for the first time in many years, expressed a willingness to explore improved relations with the United States. President Chávez recently told our Ambassador that he wanted to improve our counter-drug cooperation, and remembered with fondness when he could meet with the U.S. Ambassador to discuss bilateral issues. This comment was repeated through Venezuela’s official news agency.

We have told Venezuela that we would like to explore this diplomatic opening. Cooperation in the counter-drug fight would be familiar ground for both governments, and would be well received in the region. It would resonate especially well in Hispaniola. The Dominican Republic and Haiti have been the recipients of most of the clandestine aircraft departing Venezuela with cocaine headed for the United States and Europe, and especially West Africa where the drug trade is exploding and causing instability to the region.. Ambassador Duddy recently sent Foreign Minister Maduro a letter reiterating our desire to work together to confront this challenge.

Mr. Chairman, as we look forward we operate under no illusions. The rhetoric and reflexive anti-Americanism of the Venezuelan government has damaged the ability of Venezuela to communicate effectively with us and many of its neighbors. However, we remain committed to a positive relationship with the people of Venezuela and have the patience and the persistence necessary to manage our challenging relationship. In so doing, we will remain focused on our larger, positive hemispheric agenda to consolidate democratic institutions and ensure that the benefits of democracy and open markets reach all citizens.

Released on July 17, 2008

Many people have asked me for my curriculum vitae: here it is

CURRICULUM VITAE
ANA JULIA JATAR

e-mail: anajuliajatar@gmail.com

EDUCATION
1991: Ph. D, in Industrial and Business Studies, Warwick University, Coventry, England.
1980: M.B.A., York University, Toronto, Canada.
1977: B.Sc. in Economics, Universidad Católica Andrés Bello, Caracas, Venezuela.


PROFESSIONAL EXPERIENCE
September 2007-June 2008. Fellow at the Carr Center for Human Rights Policy. Other professional activities since January 2006, member of the editorial committee at El Nacional, A prestigious Venezuelan newspaper and member of the editorial committee at analiticapremium.com, a well known, internet publication in Venezuela.
January 2005- April 2007. Member of the Executive Committee and Director of the Political Discrimination Project at Súmate (NGO which mission is the defense of political rights in Venezuela).
September 2003- December 2004. Director, Descifrado, Online News, Director, Hispanic News. Other professional activities: Coordinating the advice that Greenberg Quinlan Rosner and Penn, Schoen and Berland Associates were giving to the Venezuelan opposition for the presidential recall referendum against president Hugo Chavez.
August 2001 until July 2003. Visiting Scholar, David Rockefeller Center for Latin America Studies at Harvard University.
September 1994- July 2001. Senior Fellow at the Inter-American Dialogue, Washington DC. Other professional activities: Executive Director of the Group of Fifty, a network of Latin American CEO’s who meet in Washington under the organization of The Carnegie Endowment for International Peace.
World Bank consultant on competition policy and judicial reform. Also anti-trust consultant to The Coca-Cola Company, Gerber, Kimberly Clark and Frito-Lay on multimillion merger transactions in Venezuela. Host of CNN’s “Choque de Opiniones,” a weekly news show which debates issues of importance to the US and Latin America.

April 1992 – January 1994. Head of the anti-trust agency in Venezuela: The Superintendence for the Promotion and Protection of Free Competition. Main responsibility: to set up the newly created agency.

1986-1992. Full time researcher and assistant professor for graduate level courses in Marketing and Industrial Organization. Instituto de Estudios Superiores de Administration (IESA).

1985-1986. Assistant Manager for Economic and Marketing Planning at Cerveceria Polar C.A., designing scenarios for corporate investment decisions in different product and geographic divisions at the most important Venezuelan brewery and second largest in Latin-America.

1984-1985. Director for Medium-Term Planning, and Coordinator of the VII Plan of the Nation at Oficina Central de Control y Planificación de la Presidencia de la República (CORDIPLAN), the Venezuelan planning ministry.

1982-1984. Economic Analyst at the Corporate Planning Division, Cervecería Polar, C.A., responsible for designing corporate strategy.

SELECTED RESEARCH WORKS AND PUBLICATIONS

-Blog: anajuliajatar.com
- June 2003-present: Op-ed column in the Venezuelan newspaper: El Nacional.
- Apartheid in the XXI Century: Information Technology at the Service of Political Discrimination in Venezuela. December 2006.

- “Deciphering Venezuela: A Historical and Contemporary Perspective” in ReVista, Harvard Review of Latin America, Fall 2002.

-Passionate Politics: the Nature of Cuban-Venezuelan Relations. Cuba Briefing Paper Series, Georgetown University. February 2002.

-“Competition Policy in Venezuela: The promotion of a Social Change” and “Competition Policy in the European Economic Community: Lessons for Latin America” in Competition Policy, Deregulation and Modernization in Latin America. Edited by Moises Naim and Joseph S. Tulchin. (1999) Lynne Rienner Publisher, Boulder, Colorado.

-The Cuban Way: Capitalism, Communism and Confrontation. (1999) Kumarian Press, Inc. Hartford, CT. USA. Choice Award as Outstanding Academic Book.

-United States: Cuba Policy Shift. Oxford Analytica, August 20, 1999.

-Integrating the Hemisphere: Perspectives from Latin America and the Caribbean. (1997) Inter-American Dialogue Publication, Washington D.C., Eds. with Sidney Weintraub.

-Through the Cracks of Socialism: The Emerging Private Sector in Cuba. Presented at the Annual Conference of the ASCE (Association for the Study of the Cuban Economy) Miami, Florida. Aug. 1996.

-“Competition Policy in the European Economic Community: Lessons for Latin America”. Presented at a OECD/World Bank Conference. Buenos Aires, Argentina. 1996.

-Competition Policy in Latin America”: presented at the annual meetings of the American Economic Association, 1995.

-"Implementing Competition Policy in Recently Liberalized Economies: the Case of Venezuela", Annual Fordham Corporate Law Institute, Chapter 5, 1995.

-"Rivalry, Competition and Public Policies", IESA Working Paper Series, 1994.

-“Comment on R. Willig’s Public vs. Regulated Private Enterprise” Proceedings of the Annual Conference on Development Economics, 1993, pp.171-174.

-"Discussion of the Venezuelan Anti-Trust Law", Working Paper, 1991.

-"Determinants of Vertical Integration and Control in Distribution Channels". University of Warwick, Ph. D. Dissertation, 1991.

-The Tourism Industry: More than a Charter, with Norelis Betancourt, 1990, Caracas: Ediciones IESA.

-"The State and the New Social Contract: A New Industrial Policy for Venezuela", in La Reforma del Estado, Caracas: Comisión Presidencial para la Reforma del Estado (COPRE), 1986.

-"The Economic Impact of the Restitution of the Constitutional Economic Rights", Working Paper, Comisión Presidencial para la reforma Del Estado (COPRE), 1986.

-"How does Marketing Theory Apply to Venezuela?, IESA Working Paper, 1986.

-"Economic Strategy and Short-Term Policy", IESA Working Paper, with Ricardo Hausmann, 1986.

LANGUAGES : Spanish as a first language. Fluent in English.

Friends,
The blogger (who shall hopefully remain anonymous) behind www.caracasgringo.blogspot.com/ is a well-known reporter who’s spent much of the last five years getting to the bottom of the events of April 11-13, 2002, and he’s using this medium to disclose his findings.
http://caracasgringo.blogspot.com/2008/05/operation-knockout-secret-history-of_12.html and
http://caracasgringo.blogspot.com/2008/05/operation-knockout-secret-history-of.html

Interspersed with this reportage you’ll find commentary and analysis regarding Venezuelan political news. It’s been up for less than a month. Bookmark it. If you have a blog, consider linking to it. And pass it on.

A majority of American voters say that the furor over the relationship between Senator Barak Obama and his former pastor Rev. Jeremiah Wright Jr. has not affected their opinion of Mr. Obama.
Remember that last week Obama called a press conference in which he renounced Rev. Wright for making incendiary comments about race and religion which Obama defined as “divisive".
Nevertheless, according to a New York Times/CBS poll, a substantial number of Americans also believe that the “Wright affair” could influence voters next November if Obama ends up being the democratic nominee.

U.S. terror report cites Venezuela, Venezuelan president not cooperating with anti-terrorism efforts, U.S. report says Iran “remained the most active state sponsor of terrorism,” report claims Syria criticized for its support of Palestinian groups like Hamas

WASHINGTON (CNN) – Venezuela’s associations with terror states, Iran’s meddling in Iraq and the resurgence of al Qaeda in Afghanistan top the concerns in a new State Department report on terrorism threats in countries around the world.

A U.S. report on terrorism notes Venezuelan President Hugo Chavez’s “sympathy” for Colombian rebels.

Venezuelan President Hugo Chavez is not cooperating with U.S. anti-terror efforts and has “deepened Venezuelan relationships with state sponsors of terrorism Iran and Cuba,” the annual report says.

The report notes Chavez’s “ideological sympathy” for the Revolutionary Armed Forces of Colombia and the Colombian-based National Liberation Army, which “regularly crossed into Venezuelan territory to rest and regroup.”

While the report says it “remained unclear to what extent the Venezuelan government provided support to Colombian terrorist organizations,” it notes that Venezuelan weapons stocks have turned up in the hands of Colombian terrorist organizations.

It also notes that Iran and Venezuela began weekly flights between their capitals, and the passengers were not subject to proper checks. Among the passengers was a suspect in the plot to bomb New York’s John F. Kennedy International Airport.

“Venezuelan citizenship, identity, and travel documents remained easy to obtain, making Venezuela a potentially attractive way station for terrorists,” the report says.

Bernardo Albarez Herrera, Venezuela’s ambassador to the United States, told CNN that the criticism of Venezuela in the report is “a political decision motivated by politics.”

“The accusations are mostly motivated by political disagreements,” he said. “The US decided for political reasons they are going to name a country, and then try and collect information to support their thesis. It is almost ridiculous.”

Albarez Herrera said that Venezuela has relationships with many countries in the world, and its cooperation with Iran is not different. The recent flight from Tehran to Venezuela is a once-a-week joint venture between the Venezuelan airline and Iran Air. He said that everyone has to follow “normal procedures at the airport, including complying with immigration law.”

“This is ridiculous that we would have a commercial plane coming from another country in a joint venture and not comply with international law,” he said. He added that concerning the allegation of passport fraud, Venezuela has had problems in the past but has moved to biometric passports and is “moving very aggressively” to correct the problem.

Concerning Iran, the report says that once again, the nation “remained the most active state sponsor of terrorism.”

“Elements of its Islamic Revolutionary Guard Corps were directly involved in the planning and support of terrorist acts throughout the region and continued to support a variety of groups in their use of terrorism to advance their common regional goals,” it says, citing the group’s support for Hezbollah, Hamas, Iraq-based militants, and Taliban fighters in Afghanistan.

The report says that despite promises to stabilize Iraq, Iran “continued to provide lethal support, including weapons, training, funding, and guidance, to some Iraqi militant groups that target coalition and Iraqi security forces and Iraqi civilians.”

“In this way, Iranian government forces have been responsible for attacks on coalition forces. The Islamic Revolutionary Guard Corps-Quds Force continued to provide Iraqi militants with Iranian-produced advanced rockets, sniper rifles, automatic weapons [and] mortars that have killed thousands of coalition and Iraqi Forces,” it says.

The report says that Iraq “remained at the center of the war on terror,” with al Qaeda in Iraq and other insurgent groups battling coalition and Iraqi forces.

It also criticizes Syria, another U.S.-designated state sponsor of terrorism, for allowing foreign fighters into Iraq, citing U.S. government reports that found “nearly 90 percent of all foreign terrorists known to be in Iraq had used Syria as an entry point.”

“The Syrian government could do more to stop known terror networks and foreign fighter facilitators from operating within its border,” it adds.

Although it notes that no Syrian official has been implicated in bombing attacks in Lebanon, the report says that Damascus “continued to undermine Lebanon’s sovereignty and security through its proxies,” including Hezbollah.

Syria is also criticized for its weak treatment of terrorist financing and its continued support of Palestinian terror groups such as Hamas, including providing safe haven to its leader, Khalid Mishal. It notes that “Palestinian groups with leaders in Syria have claimed responsibility for anti-Israeli terrorist attacks.”

The report notes that the Sudan, North Korea and Cuba, all designated as state sponsors of terror, had not actively supported terrorist groups inside their countries over the past year.

The report once again found al Qaeda and its affiliated networks “remained the greatest terrorist threat to the United States and its partners” last year, reconstituting some of its pre-9/11 operational capabilities in Pakistan’s tribal areas. It also found a resurgence of the Taliban in Afghanistan and voiced concern about a rash of bombings by militants, including the one that killed former Prime Minister Benazir Bhutto last year.

“Despite the efforts of both Afghan and Pakistani security forces, instability, coupled with the Islamabad brokered cease-fire agreement in effect for the first half of 2007 along the Pakistan-Afghanistan frontier, appeared to have provided AQ leadership greater mobility and ability to conduct training and operational planning, particularly that targeting Western Europe and the United States,” the report says.

The report again notes that al Qaeda continued to exploit local grievances for larger terrorist purposes and “seeks weapons of mass destruction in order to inflict the maximum possible damage on anyone who stands in its way, including other Muslims and/or elders, women, and children.”

Al Qaeda operatives in East Africa and al-Shabaab militants in Somalia once again posed “the most serious threat to American and allied interests in the region,” the report says.

Somalia’s weak central government and lawlessness “make Somalia a permissive operating environment and a potential safe haven for both Somali and foreign terrorists already in the region,” it found.

“Somalia remains a concern, as its unsecured borders and continued political instability provide opportunities for terrorist transit and/or organization. AQ is likely to keep making common cause with cells of Somali extremists in an attempt to disrupt international peacemaking efforts in Somalia,” it adds.

The report also voices concern about insurgent terror tactics in Algeria over the last year and calls Yemen’s counterterrorism efforts last year “mixed” with “significant setbacks,” including releasing all returned Guantanamo detainees and instituting a surrender program for terrorists with “lenient requirements.” It also criticizes Yemen’s weak counterterrorism laws and an “ineffective” justice system.

The report notes that human rights organizations have accused China of using counterterrorism in the run-up to the Olympics as a pretext to suppress ethnic Uighurs in the Xinjiang Autonomous Region. Although the Chinese have claimed they are terrorists, the report found no concrete evidence of that.

It also notes a spread of radical Islam in Europe, where several “significant terrorist plots” were foiled.

A new national poll by Harvard University’s Institute of Politics (IOP), located at Harvard Kennedy School, finds 18-24 year-olds who plan to vote for the Democratic candidate in November strongly prefer U.S. Senator Barack Obama over U.S. Senator Hillary Clinton (70% to 30%) to be the Democratic Party’s presidential nominee. The poll also finds a majority of likely young voters favor Obama (53%) in a hypothetical head-to-head contest against U.S. Senator John McCain (32%) but give Clinton a much smaller lead (44% to 39%) when matched up against the Arizona Senator.

Interesting research tool: Facebook rising as political organizing tool. Spring 2006 IOP polling showed 76 percent of college students had Facebook accounts, and 14 percent had used it to promote a political candidate, event or idea. Today, 86 percent of college students have access to Facebook and 37 percent have used it to promote a candidate or issue.

By Jackson Diehl
Monday, March 10, 2008; A15

Latin American nations and the Bush administration spent the past week loudly arguing over what censure, if any, Colombia should face for a bombing raid that killed one of the top leaders of the FARC terrorist group at a jungle camp in Ecuador. More quietly, they are just beginning to consider a far more serious and potentially explosive question: What to do about the revelation that Venezuelan President Hugo Chávez forged a strategic alliance with the FARC aimed at Colombia’s democratic government.

First reports of the documents recovered from laptops at the FARC camp spoke of promises by Chávez to deliver up to $300 million to a group renowned for kidnapping, drug trafficking and massacres of civilians; they also showed that Ecuadoran President Rafael Correa was prepared to remove from his own army officers who objected to the FARC’s Ecuadoran bases.

But in their totality, the hundreds of pages of documents so far made public by Colombia paint an even more chilling picture. The raid appears to have preempted a breathtakingly ambitious “strategic plan” agreed on by Chávez and the FARC with the initial goal of gaining international recognition for a movement designated a terrorist organization by both the United States and Europe. Chávez then intended to force Colombian President Álvaro Uribe to negotiate a political settlement with the FARC, and to promote a candidate allied with Chávez and the FARC to take power from Uribe.

All this is laid out in a series of three e-mails sent in February to the FARC’s top leaders by Iván Márquez and Rodrigo Granda, envoys who held a series of secret meetings with Chávez. Judging from the memos, Chávez did most of the talking: He outlined a five-stage plan for undermining Uribe’s government, beginning with the release of several of the scores of hostages the FARC is holding.

The first e-mail, dated Feb. 8, discusses the money: It says that Chávez, whom they call “angel,” “has the first 50 [million] available and has a plan to get us the remaining 200 in the course of the year.” Chávez proposed sending the first “packet” of money “through the black market in order to avoid problems.” He said more could be arranged by giving the FARC a quota of petroleum to sell abroad or gasoline to retail in Colombia or Venezuela.

Chávez then got to the plans that most interested him. He wanted the FARC to propose collecting all of its hostages in the open, possibly in Venezuela, for a proposed exchange for 500 FARC prisoners in Colombian jails. Chávez said he would travel to the area for a meeting with the FARC’s top leader, Manuel Marulanda, and said the presidents of Ecuador, Nicaragua and Bolivia would accompany him. Meanwhile, Chávez said he would set up a new diplomatic group, composed of those countries and the FARC, plus Mexico, Brazil and Argentina, for the purpose of recognizing the FARC as a legitimate “belligerent” in Colombia and forcing Uribe into releasing its prisoners.

In “the early morning hours,” the FARC envoys recounted in a Feb. 9 e-mail, Chávez reached the subject of whether the release of Ingrid Betancourt, a former Colombian presidential candidate who is the FARC’s best-known hostage, would complicate his plan to back a pro-FARC alternative to Uribe. “He invites the FARC to participate in a few sessions of analysis he has laid out for following the Colombian political situation,” the e-mail concluded.

Assuming these documents are authentic – and it’s hard to believe that the cerebral and calculating Uribe would knowingly hand over forgeries to the world media and the Organization of American States – both the Bush administration and Latin American governments will have fateful decisions to make about Chávez. His reported actions are, first of all, a violation of U.N. Security Council Resolution 1373, passed in September 2001, which prohibits all states from providing financing or havens to terrorist organizations. More directly, the Colombian evidence would be more than enough to justify a State Department decision to cite Venezuela as a state sponsor of terrorism. Once cited, Venezuela would be subject to a number of automatic sanctions, some of which could complicate its continuing export of oil to the United States. A cutoff would temporarily inconvenience Americans – and cripple Venezuela, which could have trouble selling its heavy oil in other markets.

For now, the Bush administration appears anxious to avoid this kind of confrontation. U.S. intelligence agencies are analyzing the Colombian evidence; officials say they will share any conclusions with key Latin American governments. Yet those governments have mostly shrunk from confronting Chávez in the past, and some have quietly urged Bush to take him on. If the president decides to ignore clear evidence that Venezuela has funded and conspired with an officially designated terrorist organization, he will flout what has been his first principle since Sept. 11, 2001.

THINK TANK

EVENT: A US federal court yesterday confirmed an order freezing 315 million dollars in a bank account held by Venezuelan state oil company PDVSA, in the context of its contractual dispute with ExxonMobil.

SIGNIFICANCE: With global demand supporting oil prices close to 100 dollars per barrel, developments in Venezuela (claiming the world’s largest oil reserves with its heavy oil) can exert an impact on the global picture and will be closely watched.

ANALYSIS: The Venezuelan hydrocarbons sector has been undergoing a period of substantial change. In 2006, foreign investors were obliged to surrender their majority equity stakes in and control of conventional oil operations, and enter into ‘empresas mixtas’ controlled by state oil company PDVSA. Similar action on the four major heavy oil upgrading projects in the Orinoco Belt followed in 2007.

In May 2007, PDVSA took over operational control of the four heavy oil projects, valued in excess of 30 billion dollars. The six foreign oil company investors were given until late June to reach agreement on PDVSA taking a 60% stake in these projects. Chevron, BP, Total and Statoil accepted the deals on offer, while ExxonMobil and ConocoPhillips refused, opting to negotiate for compensation . The book value of ExxonMobil’s 41.7% stake in the Cerro Negro project was about 750 million dollars at the time but their fair market valuation is perhaps three times this sum.

Asset freeze. Having failed to reach agreement with Caracas on the value of its Cerro Negro assets, in September 2007 ExxonMobil filed a request for arbitration with the International Centre for Settlement of Investment Disputes (ICSID) in Washington. Thereafter, on February 7 the company announced that it had secured court orders in the United States, United Kingdom, Netherlands and the Netherlands Antilles freezing up to 12 billion dollars of PDVSA’s assets (including 315 million dollars in a US bank account) in these jurisdictions, thus preventing PDVSA from selling or transferring assets.

These latest legal moves, to prevent assets being transferred to jurisdictions beyond the reach of enforcement of any future arbitration award, appear to have surprised PDVSA, although not the industry, which expects ExxonMobil to take a tough line on contractual issues.

Consequences. A number of consequences are likely:

Ø Country risk will increase – the price of Venezuela’s dollar-denominated bonds has already fallen – and PDVSA’s borrowing costs will rise.

Ø If these orders are sustained, PDVSA’s ability to dispose of/transfer assets in the normal course of business will be severely impaired, with potential buyers, investors and partners moving very cautiously until these matters are resolved.

Ø This could force PDVSA to use the cash flow and asset base of its US subsidiary, Citgo (whose assets are not attached) to fund its activities, potentially ‘hollowing out’ Citgo.

Ø With PDVSA expected to appeal, this could be a long and expensive process; arbitration hearings alone could take 3-4 years.

Ø Were ExxonMobil to win a major arbitration award and recover full compensation, the four companies that settled – reportedly at less than half their stakes’ estimated market value – may be tempted to review their agreements and call for equal treatment.

Ø ConocoPhillips, with assets whose net book value reached 4.5 billion dollars, could follow a similar path, although it currently appear to be taking a more conciliatory approach.

Ø ExxonMobil probably warned the US government of its planned course of action, which will undoubtedly exacerbate already severely strained bilateral relations. Caracas has accused Washington of being behind the ExxonMobil lawsuit, and President Hugo Chavez has halted oil sales to ExxonMobil and threatened to cut off supplies to the United States (though this appears impracticable).

Hydrocarbon production. Reliable published statistics on oil production are scarce. Although the Central Bank reported that crude oil production fell by 5.3% in 2007, high-end production claims by the Venezuelan authorities – around 3.3 million barrels per day (b/d) – contrast with much lower estimates from the IEA (International Energy Agency) and Cambridge Energy Research Associates (around 2.3 million b/d). Some reports suggest that Venezuelan crude production has declined by nearly 30% since Chavez took office in 1999.

Other evidence tends to support the view that production is falling:

ü Last year, PDVSA said it needed nearly 200 rigs but, at the end of the year, only some 70 were active – and the number of wells drilled declined by some 30% between 2001 and 2005.

ü Venezuela, along with Iran, consistently opposes any increase in OPEC production and reacts to modest falls in the oil price by advocating production cuts. While unwelcome to consumer countries, this is an entirely logical stance for a producer unable to maintain its output.

Investment burden. Venezuela now directly controls all conventional and heavy oil production, with foreign investors allowed at most a 40% stake in oil exploration, development and production. However, there are costs attaching to this policy:

Þ One estimate suggests that foreign investment is as much as 6 billion dollars below the level anticipated under the national strategy.

Þ Foreign investors will have to be compensated for their lost equity. Where there is disagreement, arbitration and even court action could persist and possibly discourage new foreign investment.

Þ Some important foreign investors have left the country and despite Venezuela’s obvious resource attractions, may not return under the current regime. With the international oil industry struggling to replace production, the loss of oil production in Venezuela last year will not be quickly forgotten.

Þ Remaining foreign investors are likely to resist investment beyond necessary maintenance and contractual obligations. Total recently signed heavy oil study agreements with PDVSA to appraise reserves and examine a production project – a relatively low-cost way of keeping an option open.

Þ PDVSA will have to bear at least 60% of all future oil investments – a challenge that will increase if anticipated moves to take a similar level of control in the gas industry transpire.

PDVSA priorities. With continuing high oil prices, a conventionally managed PDVSA could probably meet its investment needs largely from its own resources. However, non-oil demands are rising, with reports of a new structure being introduced, with seven new subsidiaries covering agriculture, services, industrial, naval, communal gas, engineering and construction, and urban development.

PDVSA had 48,000 employees in 1998-99, just under 75,000 in late 2007, with 110,000 forecast by end-2009. Working directly through PDVSA allows the government to re-direct oil revenues to meet domestic and foreign policy objectives within the company, without checks and balances or external scrutiny. This makes it difficult for PDVSA to maintain the necessary focus on its core business. Even a modest reduction in oil prices will have a significant impact on PDVSA’s revenues. Unless prices continue to rise, revenues will fall. PDVSA may lack funds to meet its ’stay in business requirements’, let alone grow production and invest in major new developments.

With oil revenues accounting for an increasing percentage of national income, the future of the country becomes ever more closely tied to oil production. This is falling and the political imperatives now driving PDVSA’s non-oil priorities run the risk of accelerating this decline.

CONCLUSION: There is a significant risk that headline numbers on economic performance supported by high oil prices could be masking serious challenges to Venezuela’s longer-term viability. Any modest downward pressure on the oil price could force Chavez to make difficult choices between domestic social spending, international commitments and hydrocarbon investment. The ratcheting up of ExxonMobil’s dispute with PDVSA would intensify these potential dilemmas.

The Washington Post, November 15, 2007

A constitutional ‘reform’ could complete Venezuela’s transformation into a dictatorship.

A24

TENS OF thousands of Venezuelan students marched to the Supreme Court in Caracas last week to protest the new “socialist” constitutional reform that President Hugo Chavez is preparing to impose on the country. On their return, students from the Central University of Venezuela were fired on by gunmen who roared onto the campus on motorcycles. Nine were hurt; university officials later identified the shooters as members of government-sponsored paramilitary groups. That’s just one example of the ugly climate of intimidation Mr. Chavez is creating in advance of a Dec. 2 referendum that he expects will formally confirm him as de facto president for life and give him powers rivaling those of his mentor, Fidel Castro.

Mr. Chavez’s apologists like to dismiss the Venezuelan forces opposing his deconstruction of democracy – which include the Catholic Church, the private business community and labor unions as well as students – as a corrupt elite. So it’s worth noting what some of Mr. Chavez’s long-standing allies are saying about his constitutional changes. The political party Podemos, whose members ran for parliament on a pro-Chavez platform, call it “a constitutional fraud.” Mr. Chavez’s recently retired defense minister, Gen. Raul Isaías Baduel, said it was an “undemocratic imposition” and that its approval would amount to “a coup.”

In fact, Mr. Chavez’s rewrite would complete his transformation into an autocrat. It would lengthen his presidential term from six to seven years and remove the current limit of two terms, allowing him to serve indefinitely. He would have broad powers to seize property, to dispose of Venezuela’s foreign exchange reserves, to impose central government rule on local jurisdictions and to declare indefinite states of emergency under which due process and freedom of information would be suspended. As a populist sop, one provision would reduce the workday from eight to six hours; that benefit, the state’s control over national television and the voting process, and the apparent intention of many Venezuelans to stay away from the polls are expected to deliver the necessary ratification.

The strength and courage of the resistance to Mr. Chavez is nevertheless growing. Despite the attacks by government goons, students have continued to march by the thousands. Bloggers have posted photos and videos of the government-sponsored violence. Opposition leaders have continued to speak out despite being labeled “traitors” by Mr. Chavez and harassed with death threats. Venezuela is on the verge of succumbing to a dictatorship that will isolate and retard the country, maybe for decades. It’s encouraging that so many of its people aren’t prepared to give up their freedom without a fight.