- The Washington Times - Sunday, May 28, 2006

BUENOS AIRES — Venezuelan President Hugo Chavez is spending billions of dollars to build a socialist bulwark in the Western Hemisphere, turning windfall oil profits into energy deals and political clout for his “Bolivarian revolution.”

But an intense 2006 election season has become a test of Latin America’s willingness to march to his populist beat.

Ideological allies of Mr. Chavez’s who had been expected to win the presidencies in Mexico and Peru have plummeted in polls, as voters take offense at the Venezuelan leader’s public campaigning as an insult to their respective nations’ independence and sovereignty.

Moreover, the backlash is threatening to spread to other nations, including Venezuela, and Mr. Chavez’s checkbook diplomacy is adding to suspicions of a man who fashions himself as a 21st-century version of South America’s liberator, Simon Bolivar.

“The real size of the Venezuelan government is three feet high — the size of a barrel of oil,” said Diego E. Arria, former Venezuelan ambassador to the United Nations.

Mr. Chavez has spent between $18 billion and $25 billion on foreign projects since taking power in 1999 — on everything from paying off Argentina’s debt to the International Monetary Fund to underwriting a popular samba festival in Brazil.

In recent weeks, Mr. Chavez’s spending and his use of the bully pulpit to back leftist political candidates in other Latin American nations has caused diplomatic spats with Nicaragua, Peru and Mexico, all of whom accuse the Venezuelan of meddling in their affairs.

On May 4, Nicaraguan Foreign Minister Norman Caldera asked Mr. Chavez to end his interfering in Nicaragua’s election after Caracas agreed to provide 10 million barrels of oil annually to 51 Nicaraguan communities whose leftist mayors are sympathetic to presidential candidate Daniel Ortega.

Mr. Ortega, a former president and a Chavez favorite, fought a war against U.S.-backed Contra rebels in the 1980s before being voted out of office.

Even Mr. Ortega is said to fear that Mr. Chavez’s public support for his candidacy threatens to derail his comeback.

Similarly in Peru, Mr. Chavez caught heat for publicly backing leftist presidential hopeful Ollanta Humala. Mr. Humala, a former colonel who fits the Latin American mold of populist strongman, is considered key to Mr. Chavez’s plan to link the resource-rich Andean nations as a buffer against Colombia, Washington’s key ally in the region.

Peru withdrew its ambassador to Caracas earlier this month to protest Mr. Chavez’s campaigning in its election. But what may be more significant, Mr. Humala, once a clear front-runner, is scrambling to distance himself from Mr. Chavez as his lead evaporates in an upcoming election against former President Alan Garcia.

In Mexico, campaign ads branding left-wing candidate Andres Manuel Lopez Obrador as a puppet of Mr. Chavez’s have helped erase what was once considered an insurmountable lead for Mr. Lopez Obrador in upcoming presidential elections.

“For Chavez, Latin American integration is not economic, but political,” U.S. Assistant Secretary of State Thomas Shannon said at a recent luncheon with editors and reporters at The Washington Times. “His aim is to make South America different from North America, and to offer protection against the great hegemon of the north.”

The moderate left

In contrast, other left-leaning leaders in the region, such as Brazilian President Luis Inacio Lula da Silva and Chilean President Michelle Bachelet are pushing regional alliances as a first step toward greater consolidation and trade with the United States.

Between those two strategies, “there is a competition for the future of South America,” said Mr. Shannon, who heads the State Department’s Bureau for Western Hemisphere Affairs.

One key to Mr. Chavez’s agenda is weaving South America’s energy-rich countries into a regional bloc, while increasing South America’s capacity to refine Venezuela’s heavy crude, which requires special processing to make gasoline and other petroleum products.

Oil-rich Venezuela is sometimes called the Saudi Arabia of the Western Hemisphere, and with record oil prices, Mr. Chavez has plenty of cash to promote his agenda.

In 2005, he pledged $1 billion to upgrade a Uruguayan refinery, La Teja, with the goal of processing 50,000 barrels of Venezuelan crude per day. Venezuelan also has said it would buy 36 oil tankers from Brazilian shipyards for $3 billion, reportedly Brazil’s largest-ever ship order.

Mr. Chavez is pushing regional energy projects such as a 5,000-mile pipeline that would run through the dense Amazon jungle, connecting Venezuela, Brazil and Argentina.

Critics such as Luis Giusti, a former president of Venezuela’s state oil company, PDVSA, say that Mr. Chavez’s oil machine has serious problems that are being masked by high oil prices, primarily from mismanagement and the lingering effects of a crippling labor strike in 2002.

The Chavez government violates Venezuelan law by taking money directly from PDVSA to feed social and political funds, Mr. Giusti says. “PDVSA has gone from being a protected and respected entity under Venezuelan law to being a mere appendage of the government and the revolution.”

One irony is that the United States remains the biggest customer for Venezuela’s oil. Mr. Chavez would like to change that, and he has worked to build relations with China, a huge potential market.

China’s role

The State Department’s Mr. Shannon, who recently visited Beijing, said Chinese officials told him that they were keenly interested in Latin America’s energy reserves but had no interest in being drawn into Venezuela’s political clash with the United States.

“The Chinese said they made it very clear to Venezuela that they did not want to see Caracas trying to play the China card against us,” the U.S. diplomat said.

The Chavez agenda got a big boost this month when neighboring Bolivia nationalized its natural gas and oil fields. The move by Bolivia’s newly elected president, Evo Morales, shook international markets and gave Mr. Chavez an opening to mediate tensions with Bolivia’s main gas customers — Argentina and Brazil.

Mr. Shannon said U.S. officials are well aware of Venezuela’s record, but the Bush administration is leery of being drawn into public spats that Mr. Chavez clearly craves to boost his own standing.

“It is a mistake for U.S. policy to be overly concentrated on one guy,” Mr. Shannon said. “If we allow ourselves to be continually trapped into confrontations with Chavez, it lessens our influence in the region as a whole.”

But the confrontations keep coming.

U.S. intelligence czar John D. Negroponte told a congressional hearing in February of Mr. Chavez’s politically guided spending abroad while his own country’s needs go unmet. Secretary of State Condoleezza Rice has spoken of “inoculating” the region against Mr. Chavez, and Defense Secretary Donald H. Rumsfeld in February compared Mr. Chavez to Adolf Hitler, saying both had been elected democratically but then methodically moved to consolidate power.

Stephen Johnson of the Heritage Foundation said U.S. officials are right not to respond to Mr. Chavez’s outlandish verbal attacks.

Instead, they should “make sure there is enough rope” for Mr. Chavez to fashion his own end, he said.

Popular at home

In Venezuela, Mr. Chavez enjoys a 55 percent to 60 percent approval rating.

Greg Wilpert, editor of Venezuela Analysis, a Venezuela-based Web site, said Mr. Chavez has boosted social spending “tremendously” on clinics, schools, literacy programs and food subsidies for the poor.

“To say he’s neglected needs of the poor is quite false,” Mr. Wilpert said.

But polling done by the opposition has found increasing frustration at Mr. Chavez’s foreign spending, even among his supporters.

One survey by Greenberg Quinlan Rosner, a U.S. polling firm hired by Venezuela’s opposition, said that despite Mr. Chavez’s personal popularity, many are tired of the president’s penchant for divisive confrontations, especially with Washington. And the stories of Venezuelan money spent on projects outside the country are also unpopular.

“The samba school really upset people,” said Mark Feierstein, one of the firm’s analysts.

“Chavez is seeking to confront the United States, thinking it will boost support at home,” Mr. Feierstein said. “But the way he does it hurts him. We are seeing that people are tired of confrontation internationally and externally, especially with the U.S.”

Opponents accuse Mr. Chavez of seeking to dominate the major branches of government and trying to create a cult of personality.

Earlier this month, Mr. Chavez hinted he might seek an initiative that would allow voters to keep him in power for the next 31 years.

“Our campaign theme is ‘Venezuela First,’ ” Julio Borges, an opposition leader running against Mr. Chavez in December elections, told The Times.

“People are tired of him dividing our country and damaging relations with our neighbors. Mr. Chavez cares nothing about trade and economics. He only cares about politics,” Mr. Borges said.

One former Venezuelan diplomat who opposes Mr. Chavez, the president’s own increasingly wealthy cronies may resist any effort to roll back private-property rights. And Brazil, which sees itself as a regional power, will eventually recoil at attempts by Mr. Chavez to become the region’s political touchstone.

Courting Iran

Particularly sensitive are recent feelers by Caracas put out to the Islamic regime in Iran, currently locked in a battle of wills with Washington and other powers over suspected military nuclear programs.

Mr. Chavez, who has spoken of pursuing his own civilian nuclear-power program, has backed Iran’s right to enrich uranium. In February, an Iranian official visiting Caracas said Tehran would consider helping Venezuela build a civilian nuclear capacity within the confines of international treaties.

Meanwhile, as The Times reported in February, a group of formerly high-ranking Venezuelan military officers say Mr. Chavez could be mining uranium in Venezuela’s remote Amazonian rain forests for shipment to the Middle East.

Mr. Chavez has publicly denied sending uranium to the Middle East, and Venezuelan officials pointed out the impossibility of hiding the infrastructure required to mine uranium even in remote jungles.

Mr. Shannon said Mr. Chavez had allowed his country’s intelligence service to become “a clone” of Cuba’s, while sheltering groups with ties to Middle East terrorist organizations.

The Bush administration on May 16 announced a ban on weapons sales to Caracas after saying it could no longer certify that Venezuela was cooperating on counterterrorism efforts.

In comments last week directed at Mr. Chavez, President Bush said: “I’m going to remind our people that meddling in other elections to achieve a short-term objective is not in the interests of the neighborhood.”

True to form, Mr. Chavez replied: “We’ll have to tell the U.S. president that we are very worried because his imperialist, war-mongering government is dangerously eroding the possibility of peace and life on this planet.”

David R. Sands contributed to this article from Washington.

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