Countries within the Southern Hemisphere are on the move.

This past weekend member states of UNASUR and the African Union met on Margarita Island, Venezuela, in order to strengthen ties between their countries and continents. One of the ideas proposed by President Hugo Chávez, as well as Moammar Gadhafi, of Libya, is an alliance among countries in the South, a southern NATO of sorts. More information can be found in this NPR story.

Meanwhile, a major outcome of the G-20 in Pittsburgh last week was the acceptance that it will now serve as the world’s major economic organization. This grants greater recognition to other nations such as Brazil and India, whose economies and populations are significant and are yielding greater influence. The G-8, organized in 1975, now fails to represent the demographic and economic realities of the 21st century. The expanded set of countries accounts for 5/6 of global GDP and 2/3 of its population.

Chávez continues efforts to position himself as a leader of countries opposing the historical dominance of the United States and Europe. He is charismatic and can be inspiring, but one wonders if he is truly the best man to lead the charge in this cause?

Brazil’s population and GDP make it the rising South American powerhouse, while Venezuela’s clout rises and falls with the price of oil. Over the long-term it seems that Brazil is in a better position, as its economic strength is based on diversified sources, rather than relying solely on global demand for energy. Notably, while the Presidents of Venezuela, Brazil and Argentina all traveled to the UN General Assembly last week, only Lula and Kirchner continued on to Pittsburgh.

Will the IAEA some day have to shift its attention to northern South America? In a move bound to attract US attention, Venezuelan officials have declared that they are conducting further exploration for uranium deposits. This, combined with President Hugo Chávez’s close ties with Iran and Russia, leads to concerns about transfer of the material for fuel, perhaps in exchange for nuclear technology.

How should the stated desire by Chávez to develop nuclear energy be viewed by the rest of the world? Even oil rich countries will some day have to look elsewhere for its energy needs, but at present Venezuela has no lack of oil resources. The country has sufficient reserves (99.4 billion barrels), based on current production estimates, to last approximately a century.

Might Venezuela one day push beyond the desire for nuclear energy and seek to possess nuclear weapons? Chávez has spent billions on conventional weapons and so seems to have the financial resources, if he wishes, to pursue nukes. At the same time, the Venezuelan government has consistently expressed fears of a foreign invasion and could see the bomb as the ultimate deterrent.

Any move taken by Venezuela to pursue nuclear weapons, however, would go against existing international law. The Treaty of Tlatelolco, drafted in 1967, prohibits the possession of nuclear weapons in the Caribbean and Latin America. Venezuela signed the convention that year and ratified it in 1970. Argentina was the last country in South America to pursue nuclear weapons (nearly three decades ago), but soon halted its efforts and only uses its reactors for energy production.

Yesterday Hugo Chávez, President of Venezuela, gave a more tempered speech to the United Nations General Assembly. He said the smell of sulfur (his reference to George W. Bush in 2006) had dissipated, and that instead he sensed new hope with President Barack Obama in office. Further description of the speech by the Associated Press can be found here.

What can one make of the change in tone by Chávez? Although he called for an end to what he sees as US imperialism in the region, perhaps his tone softened somewhat after the long-winded diatribe offered up by Gadhafi of Libya the previous day. Perhaps he truly sees the possibility of improved relations with Obama, whereas it was only too easy to criticize Bush? It may be that Chávez recognizes an opportunity to actually dialogue with the current US President, and therefore, while remaining critical, wants to avoid any statements that completely disrupt relations.

Still, the Venezuelan President reserved some harsh words for the United States, asking “what would it be like in Latin America today if the Americans had not imposed their model with firepower and blood?” Resentment remains strong even though many years have passed since 1) US military intervention and support of dictators in Latin America and 2) the imposition of the Washington Consensus, a series of economic policies intended to improve the economies of lesser-developed nations. One wonders when, if at all, the US image can be completely restored in the region. International politics are no different than personal relations in this way – it appears much easier to tarnish than to strengthen one’s reputation.

With a meeting of global leaders at the United Nations General Assembly this week, one wonders what Venezuelan President Hugo Chávez will say. During his speech in 2006 he referred to US President George W. Bush as the devil.

This time around, will he critique Barack Obama in the same way? In late March, after the US President criticized the Venezuelan government for supporting terrorism, Chávez fired back, calling him “a poor ignoramus”. In April, at the Summit of the Americas, Chávez took a softer approach, and presented Obama a copy of Eduardo Galeano’s Open Veins of Latin America.

The opportunity for Chávez to speak on such a public stage in New York enables him to criticize the United States as nothing more than an imperialist power. While brash comments by the Venezuelan president may not be well received by all, his focus on an external enemy enables him to solidify support amongst loyal supporters at home. There appears, however, much to question in his own country, including the rapid rise in inflation, and a high murder rate.

Chávez is often charismatic, and knows how to use publicity to his advantage. Tomorrow, the press will wait to see what he does with his time in the spotlight.

Last week Venezuela’s Minister of the Interior, Tareck El Aissami, publicly denounced a July 20 report released by the US Government’s General Accounting Office (GAO) which labeled his country as “one of the major drug transit countries in the Western Hemisphere”.

The struggle over public perception between Washington and Caracas continues. The US government states that the amount of cocaine passing through Venezuela more than quadrupled from 2004 to 2007. President Hugo Chávez considers the GAO report, as well as the accusations of his government’s failure to stop human trafficking, as nothing more than political tools of the United States. In turn, he also criticizes the US as being the largest destination for cocaine.

Who is one to believe? Each side may have valid points.

The July 20 GAO report can be found here, with a response by Venezuela’s Embassy in the United States posted here.

The 2009 Trafficking in Persons Report can be found here, along with the Chávez administration’s critique.

The Venezuela Information Office releases statements on behalf the government in Caracas, and according to its website “is dedicated to informing the American public about contemporary Venezuela, and receives its funding from the government of Venezuela.” More of its viewpoints, including a previous opinion piece labeling US drug reports as “a political weapon”, can be found at: www.rethinkvenezuela.com.

It remains possible to disagree with the Venezuelan government over its policies. It appears more difficult to do so within the country.

Yesterday one more opposition leader sought asylum from what he considers oppression from the Chávez administration. Oscar Pérez, who is part of the Alianza Bravo Pueblo (ABP) party, is now charged by the government for participating in a September 22 march against the Reforma Educativa (Education Reform).

One might wonder if Mr. Pérez is overreacting, and whether it is truly necessary to leave the country.

The Venezuelan government has a history of cracking down on opposing opinion. The country directors of Human Rights Watch were forced out after the release of a report critical of the Chávez administration. Other opposition leaders, Richard Blanco and Julio César Rivas, have been jailed under charges similar to those for Pérez. In April, Manuel Rosales, the mayor of Maracaibo (which is the second largest city in the country), fled to Peru.

To be fair, existing opposition to the national government and the ruling United Socialist Party of Venezuela (PSUV in Spanish) is often tolerated. Attempts are made, however, to reduce the strength of any challengers, as well as their ability to govern.

For example, the mayor of Caracas, Antonio Ledezma, held a somewhat-dramatized 6-day hunger strike in July to draw attention to his political marginalization. Elected to office in November 2008, his capacity to govern has been consistently limited by both the direct policies and indifference of the administration of Venezuelan President Hugo Chávez.

As reported by CNN, “chief among Ledezma’s complaints was the creation in April of a ‘head of government,’ appointed by Chávez, who took over many of the metropolitan mayor’s duties, in addition to offices and budget.” To date Ledezma, a leading opponent of PSUV, has not been allowed to fulfill his mayoral duties. Armed supporters of Chávez occupied his office, while graffiti scrawled on the building’s exterior called for him to leave the country. Computers and official vehicles were destroyed or stolen, and records showed that the previous PSUV-aligned mayor illegally used thousands of workers on city payrolls for campaign activities. One might wonder, are these events in Caracas isolated, or do they fit into a regular pattern?

El Universal reported that a decline in revenue from oil sales caused imports into Venezuela to drop by 49% during the first six months of 2009. Despite a recent increase the value of petroleum, Venezuela has experienced a sharp reduction in available funds since the price of a barrel of oil is just over $65, about half of the peak price in 2008.

More specifically, the newspaper article explains that there has been a dramatic drop in the foreign currency available to a wide variety of sectors. For example, the decline in monies was measured at 78% in telecommunications, 54% in machines and equipment, and 35% in the health sector.

The impact on such a strong consumer country as Venezuela is clear – it is now more difficult to purchase foreign goods that remain in high demand. During my travel through the airport in April I was surprised to see a duty free store whose shelves were completely bare of perfumes and other beauty products. In part, this was due to the fact that given its financial limitations, the Venezuelan government required many businesses to purchase products from overseas at the official exchange rate, set at 2.15 Bolivars Fuertes (BsF) to the Dollar. This creates a tremendous disincentive for stores making purchases, as consumers holding foreign currency can trade it on the parallel market and receive more than two times that amount per dollar. The rate for a dollar has remained above 6 BsF for months, and only recently dropped to around 5.5 BsF.

Not all imports are captured by official statistics. During my travel home to the United States during the holidays, I received requests from friends to bring them back tech products, ranging from a laptop, to an iPod, to a fashionable Blackberry Pearl. This situation is not uncommon, as Venezuelans who have relatives traveling overseas often make similar requests for consumer goods. It makes me think of the fact that people, referred to as “mules”, are used to illegally transport cocaine northwards to the United States and Europe. Could we say that there are also “technology mules” traveling in the opposite direction, returning to Latin America with the latest cameras, phones and computers?

Russian oil companies, including Gazprom and Lukoil, will pay $1 billion to Venezuela for the chance to develop oil reserves along the Orinoco. Even though Caracas and Moscow are allies, I still have doubts about the final payout for these businesses. In 2006 the Venezuelan government pushed out some foreign oil companies, and forced others to agree to terms that favor PDVSA, the national oil company. These changes came at what appeared to be a convenient for Venezuela, when oil prices were high, and after foreign companies had spent millions in exploration projects.

One wonders, where will this huge amount money from the Russian companies go? The mission of PDVSA states that it is dedicated to serving the Venezuelan people. According to its website:

“In order to put oil resources to the service of the wider population and create a new economic model, putting an end to the social inequalities so apparent in Venezuela in the last decades, PDVSA promotes Fondespa (The Fund for Social and Economic Development within the Country), which has the task of promoting social development through a transparent and fair distribution of oil revenues.”

It is not clear how much of the new influx of oil-related funds will go to the general public, or whether the majority will support the lifestyles of officials tied to the company. (This inquiry is based on general conversations with Venezuelans, but a further blog entry is needed to fairly investigate this situation.)

What can be said of PDVSA’s past management its resources? When oil was at a lower price per barrel earlier in the year, PDVSA did not have the funds to pay the contractors working on its behalf. These service providers went on strike in February of this year before they finally received their wages.

On the internet, PDVSA states that as a new, national organization it “is a testament to the new spirit of public accountability” and will “permit the effective use of resources”, experience shows this is questionable. However, in 2007, Venezuela as a whole ranked 162 out of 179 nations in Transparency International’s Corruption Perception Index (CPI). This meant it was sandwiched between Turkmenistan and the Democratic Republic of Congo.

There is a maxim in Spanish, “dime con quien andas y te digo quien eres”, roughly translated as: “tell me with whom you walk with and I will explain who you are”. When it comes to corruption in Venezuela, not much more needs to be said.

Yesterday, President Hugo Chávez continued his travels overseas, spending the day in Russia. During his time there he announced that Venezuela will recognize Abkhazia and South Ossetia as independent states. A brief war with between Russia and Georgia in August 2008 led to the separation of these two regions. More information is available in today’s NYT article, “Chávez Backs Moscow on Rebel Regions”.

This serves as further evidence that Chávez is drawn to countries who in some way or another oppose the United States and might counter its authority. These nations include, for example, Libya, Iran, and Belarus. The Venezuelan president also hopes to reduce US influence in Latin America, but by building a strong relationship with Russia is he just replacing one foreign power with another?

This alliance with Moscow is also based on the procurement of weapons, as “Russia and Venezuela have in recent years signed agreements worth over $4 billion for deliveries of fighter jets, helicopters, automatic weapons, among other systems.”

Will this lead to an arms race in South America? An MSNBC article describes this distinct possibility. In 2008, weapons purchases on the continent rose 30% over the previous year, to a total of $51 billion. Despite new purchases, however, Venezuela dedicates a lower percentage of its GDP (5.2%), to defense spending than its neighbors, Colombia (9.3%) and Ecuador (10.7%).

And how does the United States compare? The US remains far and away the largest arms distributor in the world. Last year it sold $37.8 billion worth of hardware, making up 68.4% of global sales. If one considers the political stance of the weapons recipient, it might be possible to critique Russian support for an increasingly autocratic Venezuelan regime. On the other hand, who were some of the largest arms-purchasers from the United States? They include Saudi Arabia, India, the United Arab Emirates, Egypt, Brazil, Iraq, South Korea and Morocco. Not all of these nations are known for their political openness.

When he first ran for office, Hugo Chávez declared that he wanted to reduce the size of government, and to make it more efficient. However, Venezuela’s National Institute of Statistics released figures showing that there are now 2,372,587 government workers, an increase of 70% during Chávez’s time in office. The percentage of all persons employed by the government rose from 15.5% in 1999 to its present level of 20%. More information is available within an article in El Universal, a major Venezuelan newspaper.

For the sake of comparison, consider public sector employment in the United States. According to the US Department of Labor, the US government employs 1.8 million (not including military), or just over 1% of the total of 154 million workers. There are often complaints of bureaucracy in Washington, but what would we say if one in every five US workers, or more than 30 million people were employed by the government?

How else can one interpret these recent statistics? The influence of the Venezuelan government, as the country’s primary employer, cannot be over-emphasized. It appears that it is extending influence not only through control of even greater portions of the economy and industry, but within the population as a whole. By creating a society that is more directly dependent on its policies, the administration will have workers who avoid biting the hand that feeds them.

The Venezuelan government’s control is exhibited in other ways: some employees are required to participate in marches supporting Chávez, and one of my contacts said she has a closet full of red shirts, attesting to the events she had to attend when working for a ministry.

When a friend applied for a job with PDVSA, the state-owned oil company, she more or less had to pass a loyalty test. For three hours separate interviewers reviewed her knowledge about Venezuelan independence heroes like Simón Bolívar, Sebastián Francisco de Miranda, and Juan Manuel Sucre, and asked about her opinion on the current administration. Only for the final hour did the interviewers discuss her work qualifications.

The interviewers also wanted to know if she had signed the 2004 referendum that served as a potential recall of President Chávez. The record of persons who signed against the government was later published on the internet by Luis Tascón, a National Assembly member who supported the president at that time. Any signatories are now blacklisted and unable to work for the government.