Can China cut out the U.S. via Venezuela?

Venezuelan politics and economics have been a topic of debate for the last couple of decades. Venezuela is one of the few countries in the west that sits on a large oil despite, making it very wealthy in oil, and the largest oil producer in the west, Venezuela has also been under the debatable presidency of Hugo Chavez, who came to power through a coup in the early 1990’s. He has been president in Venezuela ever since until his death in 2013, in which case his vice president, Nicolas Maduro, came to power. Chavez was known for having a very socialist and corrupt government, much like Cuba, always trying to antagonize the U.S. What is very interesting about this socialist regime, unlike Cuba’s, is that due to the oil wealth Chavez was able to get away with a lot of negative comments and remarks against the U.S.

Though Venezuela is an oil rich country, price ceilings on very basic goods and very strict import regulations have caused their currency, the Bolivar, to depreciate a lot, even leading to a black-market rate to appear, causing overall inflation in the country, and a very unstable economy. Due to its limited resources Venezuela can only extract the crude oil. They can not process it into anything useful so they have to send it away, mostly to the U.S., only to be brought back as processed oil. This interaction between the two countries causes a very interesting relationship seeing as the U.S. has to bare with Venezuela for a cheap source of oil, as were Venezuela has to put up with the U.S. if they want to be able to export useful oil.

Venezuela is now leaning in a different direction to try to keep their country economically steady. “Venezuela’s political system is based on three foreign imports: socialist rhetoric from Cuba, weapons from Russia, and money from China”(Mallen) In the last couple of years Venezuela and China have become very close in trade, in particular in the type of investments that China is making in Venezuela. They are paying China back in the form of oil, showing the U.S. that they can do business without them. Venezuela is also producing at a much smaller rate than it once was, up to 75% less than what they would produce in 1998. This is the reason why has gone into business with China. Both of these countries have a similar background in terms of politics and ideology, making them a perfect match in terms of political and economic partners.

The U.S. might not be so thrilled about the business partnership that China and Venezuela are undergoing. “China has a big foreign policy interest in stabilizing Latin America. Unlike the US, which is a global hegemon with hundreds of military bases around the world, China has no foreign military bases and no empire.”(Weisbrot) The U.S. would lose some of its hold on Latin America to the Chinese, which I am sure they are not thrilled about. This deal being struck with Venezuela to extend a credit line out to them would only strengthen their relationship, and would only serve to cut the U.S. out of the equation.

Mallen, Patricia Rey. “China’s paying Venezuela to stay afloat. Now madura wants to be Friends.” International Business Times. April 15, 2014

Oppenheimer, Andres. “Should U.S. cut Venezuelan oil imports”  Miami Herald. February 26, 2014

Weisbrot, Mark. “US foreign policy in Latin America leaves an open door for China” The Guardian. January 31, 2014.

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