Mr. Chavez's Bluff

Friday, February 15, 2008

ONE OF the more regrettable ironies of international relations is that the United States, through its voracious consumption of oil, underwrites President Hugo Chávez's regime in Venezuela. In November alone, the United States bought more than 41 million barrels of Venezuelan crude, roughly 10 percent of all U.S. oil imports that month. If the Bush administration were really as committed to overthrowing Mr. Chávez as Mr. Chávez claims, the administration might be tempted to declare a boycott of Venezuelan oil. That would make a small but easily repaired dent in the U.S. economy, but it would devastate Venezuela, since it produces high-sulfur oil that, for the most part, can be refined only in special U.S.-based refineries.

So imagine our astonishment when Mr. Chávez himself threatened this week to cut off exports of crude oil to America. Perpetually angry at the United States, Mr. Chávez made this particular outburst because of his conflict with Exxon Mobil, the American oil multinational whose operations in Venezuela he nationalized last year. While other oil companies accepted Mr. Chávez's compensation terms and went quietly, Exxon Mobil fought the takeover through international arbitration and courts around the world. Last week, the company successfully moved to freeze $12 billion of Venezuelan assets, pending the outcome of the dispute. Enraged, Mr. Chávez announced: "If you end up freezing [Venezuelan assets] and it harms us, we're going to harm you. Do you know how? We aren't going to send oil to the United States." In an interview published Tuesday in the Venezuelan newspaper Ultimas Noticias, Energy Minister Rafael Ramirez declared the country "ready" to make good on the threat.

But someone apparently explained to Mr. Chávez that Venezuela's oil industry, already in decline because of Mr. Chávez's mismanagement, might collapse if he actually carried out his threat. And without oil money, Mr. Chávez, who lost a referendum on extending his rule two months ago, cannot finance the subsidies and social spending that buy what's left of his popular support in Venezuela. Mr. Chávez has now announced a modified, limited boycott: Henceforth, his state oil company will no longer sell crude directly to Exxon Mobil. This gesture will eventually prove meaningless as third parties come forward to buy the oil and then resell it to Exxon Mobil for refining. Also, Mr. Chávez's government declared that the boycott does not apply to high-sulfur oil from the Cerro Negro field, which can be refined only at a facility that Venezuela and Exxon Mobil jointly operate in Chalmette, La. Two cheers for Exxon Mobil. In standing up to Mr. Chávez through peaceful, legal means, it has once again exposed the hollowness of the anti-imperialism with which he justifies his rule.

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