Venezuela represents everything that the U.S. opposes in the region: socialism, anti-imperialism, economic independence via energy exports and a viable ally for China, Russia, Iran and other countries that oppose the hegemonic designs of Washington.
by Eric Draitser
Part 4 - The Sino-Venezuelan partnership
For decades, corporations in the U.S. saw Venezuela as little more than an American possession, an oil colony whose dependence on U.S. exports made it little different from a true colony in the traditional sense of the word. However, with the ascendance of Hugo Chavez and the Bolivarian Revolution, Venezuela ceased to be a dependent client of the U.S., and instead became a political adversary.
One key aspect of Venezuelan economic relations with other countries that has undoubtedly rubbed strategic planners the wrong way has been its ongoing partnership with China. Under Hugo Chavez and Nicolas Maduro, Venezuela has signed countless deals with Beijing, many of which are based on an oil-for-credit framework wherein Venezuelan oil underwrites Venezuelan borrowing from Chinese banks. The Chinese cash has been used to stave off default and pay the financial obligations of the Venezuelan government.
Beyond that, Venezuela and China have inked agreements in the areas of energy, mining, finance, infrastructure and agriculture. There is also the Joint Chinese-Venezuela Fund, which finances infrastructure projects and economic development in the Bolivarian Republic.
In February 2017, China and Venezuela signed a raft of agreements, including the construction of a refinery in China that will process 400,000 barrels of crude per day, 70 percent of which will come from Venezuela. The deals totaled $2.7 billion.
China has also become one of the leading manufacturers of transportation in Venezuela, with taxis and buses being purchased or manufactured by the Chinese for the Venezuelan market. This tangible example of the Venezuela-China relationship illustrates the importance of Beijing to the daily life of Venezuela.
Unlike China, Russia has little need for Venezuelan oil. However, the one other area of Russian economic might is critical for the Bolivarian Republic: weapons.
According to Rostec, a Russian state corporation involved in the sale of military hardware to Venezuela, the estimated value of Russia-Venezuela arms contracts is roughly $12 billion. From 2005 to 2013, Venezuela was the largest buyer of Russian weapons in Latin America, with roughly $11 billion in purchase contracts.
But Russia’s ties to Venezuela are not simply about mutual enrichment, there is also a somewhat predatory aspect to the relationship, one that is likely making observers in both Washington and Caracas wary. Russia’s $1.5 billion loan to Venezuela in November 2016 came with the condition that the Venezuelan state oil company PDVSA pledge a 49.9-percent stake in Citgo, the U.S. subsidiary of PDVSA, as collateral for the loan.
This means that Russia’s state oil company Rosneft, run by Russian President Vladimir Putin’s close friend Igor Sechin, could control much of Venezuela’s economic clout. Translation: Russia wants Venezuelan oil to use as leverage against the U.S.
Venezuela has become a geopolitical flashpoint in recent years. As the country has moved forward on the path of socialism and anti-imperialism, it has increasingly been targeted by a wide range of destabilization tactics, as well as the collapse of global oil prices in 2014 and 2015 that crippled the Venezuelan economy.