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.

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.

Venezuela, often described as the region’s most stable and successful democracy, is now in a political quagmire testing the endurance and stability of its system. What have been the forces pushing the country into crisis? How democratic is Venezuela today?

Venezuela’s elected president, Hugo Chávez, won free democratic elections with 56 percent of the votes in December 1998 and was reelected with 60 percent of the votes in December 2000. In spite of these unquestionable electoral results, his popularity has been collapsing since July 2001, driving opposition to the streets in protest against a government they consider illegitimate. Last April 11, thousands marched to the presidential palace demanding his resignation in a climactic development after a series of civic protests. Late that evening, after a bloody afternoon, President Chávez’s resignation was announced by his highest ranking general. A transitional government was formed but was immediately rejected by the same people who had marched the day before. They, together with Chávez followers, considered it unconstitutional. After 48 hours, President Chávez was back in office. And yet the crisis continues, political unrest increases, and polarization deepens. Venezuela’s democracy confronts one of its greatest challenges in history.

There are two basic paradigms to analyze the current political situation in Venezuela:

Paradigm 1: the Chávez government is just another chapter in Latin American history in which a leftist, popular president is confronted by a selfish elite unwilling to give up its historic privileges for the benefit of the majority.

Paradigm 2: Chávez is an authoritarian revolutionary who is being constrained by a traditionally democratic civil society.

In other words, is the conflict being triggered by self-interested groups cornering a popular president or is there a majority fighting to save democracy from President Chávez’s authoritarian desires? As often happens, reality has more nuances than any particular form of interpreting facts. Though I think that paradigm two is a better description of what is happening in Venezuela today, it falls short of explaining what caused Chávez’s initial popularity and his electoral success. Therefore, if there is truth to both positions, what happened in the process to change so dramatically the country’s mood?

THE REVOLUTIONARY MOOD

Here is where the nuances begin. In 1998, angry and frustrated with traditional political parties, citizens rejected everything that “looked, sounded or smelled” like an old politician. Venezuelans in a “revolutionary mood” knew what they didn’t want so Chávez based his campaign on their anger and hate. The angrier he sounded, the higher he went in the polls. In fact, Chávez got a negative mandate. He was elected to eliminate traditional political parties, to eradicate a corrupted leadership and to destroy the ancien regime. Unfortunately, not too many people worried about what would come next.

Another less obvious cause for this revolutionary mood could be the country’s economic performance and its political interpretation. From 1977–1998, per capita income in Venezuela fell to 1950 levels. Corruption was seen as the underlying cause of the economic mess, hence the attack on the political class.

Chávez postponed the economic agenda and barged ahead with a radical political reform. He destroyed the old leadership and changed the constitution. The idea of electing a Constituent Assembly to give birth to a new leadership was attractive and popular at the time. Also, since the writing of the constitution promised to be open and participatory, transparency was not an issue then.

Through these constitutional changes, Chávez accumulated more power than any other democratic president in the history of the country. But Venezuelans were still in their “revolutionary mood” so they did not worry about the creeping dangers of the emerging authoritarianism and the lack of checks and balances which emerged in the process.

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