Has Chavez Given the Farm to China?
Image Credit: Venezuela en la Expo Shanghai 2010

Has Chavez Given the Farm to China?


Venezuelan President Hugo Chavez has frequently raised eyebrows around the world with his apparent determination to create alliances with nearly every country that is, by Washington’s definition at least, a rogue: From Iran to Syria to Belarus. But one of Venezuela’s allies has always seemed a little out of place on the list: China.

Chavez’s embrace of China has certainly been enthusiastic. On a visit to Beijing in 1999, for example, Chavez told his Chinese hosts, ‘I think if Mao Zedong and Bolivar had known each other, they would have been good friends because their thinking was similar.’ More recently, Chavez vocally opposed the Nobel Peace Prize being given to Liu Xiaobo, saying, ‘Viva China! And its sovereignty, its independence and its greatness.’ And he’s been openly rooting for China to take over from the United States as the world’s most powerful country. ‘During the financial crisis, China’s actions have been highly positive for the world. Currently, China is the biggest motor driving the world amidst this crisis of international capitalism,’ he said on another visit to China.

But China, not particularly Maoist these days, has been more reticent about establishing a strong political relationship the South American nation, apparently unwilling to sign on to Chavez’s mission to weaken US hegemony.

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This hasn’t stopped China eagerly trying to develop commercial relations with Venezuela, the world’s fourth-largest oil producer. That imbalance has led many in Venezuela to wonder if Chavez, in his zeal to court Beijing, isn’t driving a strong enough bargain in commercial deals, and is instead giving China discounted oil and getting nothing in return.

Trade between the two countries has increased dramatically since Chavez took office, from $85 million in 1999 to nearly $9 billion in 2008, according to Venezuelan government figures. China is particularly keen on Venezuela’s oil and other natural resources, investing heavily in the oil-heavy Orinoco Belt region. It has also discussed building a rail link between the Caribbean and Pacific coasts of neighbouring Colombia to create an alternative to the Panama Canal, which would greatly ameliorate the biggest hurdle of Venezuelan oil exports to China: the enormous distance. ‘China needs energy security and we’re here to provide them with all the oil they need,’ Chavez said last year.

But the single most significant element of the China-Venezuela relationship so far has been a $20 billion loan that Beijing offered to Caracas, partly repayable in oil. The deal is part of Chavez’s avowed goal to break the mutual dependence that the United States and Venezuela have on the latter’s oil: Venezuela is the United States’ fourth-largest supplier, and the US is by far Venezuela’s most important customer, importing about 60 percent of Venezuela’s oil.

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