Morning Bell: The Axis of Oil

Conn Carroll /

Venezuela’s leftist leader Hugo Chavez isn’t set to arrive until tomorrow to meet with Russian Prime Minister Vladimr Putin and President Dmitry Medvedev, but two Russian media outlets are already claiming that Chavez will buy $1 billion to $2 billion worth of subs, helicopters and airplanes while in Moscow. Since 2003, Chavez has bought more than $4.4 billion in arms from Russia. Last year Russia announced plans to build two Kalashinkov assault rifle factories in Venezuela. Unfortunately, arms sales are just a small part of the Russian-Venezuelan axis that is looking more and more like a 21st-century throwback to the Cold War Soviet-Cuban alliance.

With oil selling at record high prices, both Russia and Venezuela have begun to practice very similar forms of “resource nationalism” that threaten energy security and freedom worldwide. At home, both governments have launched systematic and sustained efforts to drive out foreign investors and solidify state control of the economy. Russia has forced Western energy companies out of massive development projects in Siberia and the Far East, pressured British Petroleum to sell a major stake in a large Siberian gas field to Gazprom, and squeezed Royal Dutch Shell in the giant Sakhalin Island project. Just this past May, Chavez nationalized the last privately run oil fields in his country.

These practices, along with sustained assaults on the rule of law in both countries, have made the two countries among the least free places in the world. According to Heritage’s 2008 Index of Economic Freedom, Russia and Venezuela rank 134th and 148th respectively out of 157 ranked nations.

Both countries are also bent on leveraging their oil wealth into influence abroad. Russia has been the most willing to use energy as a weapon, cutting off supplies to six countries over the past seven years. But the Russians can be more subtle, too, often using lucrative Gazprom jobs to buy off key European politicians.

Chavez has also been more than willing to use oil dollars to bolster his popularity. He has already pledged more assistance in the Western Hemisphere than the United States, with even democratic Costa Rica receiving discount energy. Chavez has not been afraid to buy support in the U.S. either as Democrats such as ex-Rep. Joe Kennedy have been more than willing to appear in commercials promoting Chavez’ benevolence. Rep. William Delahunt (D-Mass.) has been supportive of Chavez’s intervention in Colombia’s battle with the leftist terrorist organization FARC (Revolutionary Armed Forces of Colombia) and a lap top found by the Colombian military suggests Rep. James McGovern (D-Mass.) has been working with an American go-between, who has been offering the rebels help in undermining Colombia’s elected and popular government.

The United States buys 1.36 million barrels of oil a day from Venezuela. According to the Energy Information Administration, drilling in domestic waters off all the coasts except Alaska’s would increase annual production by about 200,000 barrels a day. Opening ANWR would bring in another 700,000 barrels a day. Any significant decline in incoming oil revenues would cripple these autocratic regimes.

Quick Hits:

No related posts.