venezuela qpq affirmative updates - hss 2013

8/13/2019 Venezuela QPQ Affirmative Updates - HSS 2013

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3-Week Venezuela Evidence

This file includes cards from the three-week Venezuela file that have beenused in the four-week Venezuela affirmative. We were asked to post them in

the 4-Week folder so that students do not need to look for them in the 3-Week

folder. None of these cards should create an unbalanced debate.



Off-Case



A2 China CP

Only US can solve- China fails- culture gap, lack of cash, lack of techHearn ’12 (Kelly Hearn, staff writer for the Washington Times, ―Venezuelan oil a risky investment for China‖, 3/12/2012,

The Washington Times, http://www.washingtontimes.com/news/2012/mar/12/venezuelan-oil-a-risky-investment-for-

china/?page=all)

In 2010, CNPC signed a deal to help Venezuela develop a major Orinoco oil field known as

Junin 4, which includes the construction of a facility to convert heavy oil to a lighter crude that could be shipped to a refinery in

Guangdong, China. ― Although the contract was signed in December 2010, not one barrelof oil has yet been produced, much less upgraded,‖ said Gustavo Coronel, a former PDVSA board member. ―So far,

nothing much seems to be happening, except for the arrival of a large group of Chinese staff to the CNPC‘s Caracas office,‖ he added,

referring to the Venezuelan capital, Caracas. ―Apart from money, there seems to be little that China canoffer Venezuela in the oil industry ,‖ he said, adding that a ―culture gap will make working

with China very difficult for Venezuelan oil people, who were mostly trained inthe U.S.‖ Erica Downs, a former energy analyst for the Central Intelligence Agency now with the Brookings Institution in

Washington, said the Junin-4 project could be key to China‘s future in Venezuela. ―If all that happens, China will be in a position totake substantial volumes of Venezuelan oil,‖ she said. ―The problem is that the project hasn‘t gotten off the ground.‖ Ms. Downs said

Venezuela is far from living up to Mr. Chavez‘s export goals for Beijing and that PDVSA‘s claims of sending 410,000 barrels a day donot match Chinese customs data, which show 322,000 barrels per day of crude and fuel oil imported from Venezuela last year.―Although Venezuela‘s oil exports to China have grown along with the volume of oil-backed loans extended by China DevelopmentBank to Caracas, the delivered volumes still fall short of Chavez‘s goal of eventually shipping 1 million barrels per day to China,‖ shesaid. Critics of the loans say Mr. Chavez is using the so-called ―China fund‖ as his personal piggy bank. The Chinese also seem to beincreasingly wary. Internal PDVSA documents released by a Venezuelan congressman show that the Chinese balked at a $110 billionloan request by Mr. Chavez in 2010, after PDVSA officials failed to account fully for where the money would go. Problems withOrinoco The Chinese are now pressing PDVSA to let them list some of their investments in the Orinoco region on the Hong Kong

exchange, a move analysts say would increase transparency and accountability in PDVSA‘s spending. ―Development of the

Orinoco oil belt is only slowly taking place because most of the companies — excluding Chevron,

Repsol and China National Offshore Oil Corp. — either do not have the cash or the technology ,‖ said Oliver

L. Campbell, a former finance coordinator at PDVSA. Unlike light and sweet crude from Saudi Arabia, oil from Orinoco is tarlike. Itis laced with metals and sits beneath deep jungles. Getting to the oil field means building roads, electrical-power grids and othermajor infrastructure. Once the oil is extracted from the ground, it is technically difficult to process. ―One of the major problems isthat there are very few refineries outside the Gulf of Mexico that can handle Venezuelan crude,‖ said Jorge Pinon, a former president

of Amoco Oil Latin America. Years ago, U.S. companies such as Shell and Exxon invested heavily inU.S. Gulf Coast refineries capable of processing heavy crude after they saw that the world‘s

supplies of sweet crude were diminishing, Mr. Pinon said. ―The Chinese don‘t have that kind of capacity ,‖he said.

China can’t solve- Venezuela distrusts China due to reselling of oil AFP ’10 (Agence France-Presse, ―China 'resold $5-a- barrel Venezuelan oil at a profit'‖, 10/16/2010, The National,

http://www.thenational.ae/news/world/americas/china-resold-5-a-barrel-venezuelan-oil-at-a-profit)

Venezuela President Hugo Chavez's government sold China oil for as little as US$5 a barrel and was upset that China apparently profited by selling fuel to other countries, according to a

classified US document released by WikiLeaks. The report about Chinese companies diverting oil was one of several newly released

documents that also describe falling crude output in Venezuela caused by a host of problems within the national oil company,Petroleos de Venezuela SA, or PDVSA. The documents, posted online by the Spanish newspaper El Pais, also showed that Americanofficials had managed to cultivate sources within the state oil company in spite of Mr Chavez's antagonism toward Washington. Theconfidential memo from the US Embassy in Caracas on February 26 said a PDVSA director revealed that the state company "hadanalysed its crude sales to China and determined that China had only paid $5/barrel of crude on a couple of deals" - a small fraction

of the market price. The document said that according to the official, Mr Chavez's government was "extremelyupset with Chinese companies due to the discrepancy between Chinese petroleumimport statistics that suggest [China] is profiting from Venezuelan oil purchases

by diverting the crude to third markets and earning a sizeable margin". The Venezuelan

official, whose name was not released, "intimated that tankers had been diverted to the US, Africa, and elsewhere in Asia". Neither



the Venezuelan government nor PDVSA reacted to the report. Calls to the Chinese Embassy in Caracas wentunanswered on Tuesday. In China, there were no immediate responses to requests forcomment from Sinopec, China's largest oil refiner; the China National Petroleum Corp; the Foreign

Ministry and the National Development and Reform Commission, the country's top economic planning body. Mr Chavez relies on oilsales to his top client, the United States, to help fund his socialist-inspired programmes. But he has been building up oil sales toChina, and in October he said that oil shipments to China had reached about 500,000 barrels a day, in spite of higher transport coststo reach Asia. Jorge Pinon, an energy expert and visiting research fellow at Florida International University in Miami, said hedoubted that Venezuela's heavy crude would have been resold by China elsewhere because specialised refineries were needed tohandle it. He said if there were any reselling by China, it would have been fuel oil and could have gone to Africa, Asia or theCaribbean "for blending and further re-export" to other markets. China, meanwhile, has also agreed to invest billions of dollars in a joint project to pump crude in Venezuela. Another embassy report on September 23, 2009, said a US diplomat had interviewed"PDVSA's senior executive director" when he was spotted in line at the embassy waiting for a US visa, and that the official revealed Venezuela had been manipulating its oil price index. It said the official confirmed that Venezuela "manipulates its Venezuelan CrudeOil basket index by including refined products in the mix". That method of calculating oil prices, which the official said "accuratelyreflected revenue from all of PDVSA's sales of crude petroleum and refined products", was responsible for narrowing the gap between prices for Venezuela's heavy sulphur-laden crude and benchmark light, sweet crude.

Venezuela says no to ChinaHearn ’12 (Kelly Hearn, staff writer for the Washington Times, ―Venezuelan oil a risky investment for China‖, 3/12/2012,

The Washington Times, http://www.washingtontimes.com/news/2012/mar/12/venezuelan-oil-a-risky-investment-for-china/?page=all)BUENOS AIRES — China has poured billions of dollars into Venezuela‘s oil sector to expand its claim over the country‘s massive oil

reserves. But Beijing is getting relatively little for its investments, and Chinese officialsare increasingly frustrated with Venezuelan President Hugo Chavez, according to energy analysts and

former managers of the state oil company, Petroleum of Venezuela, or PDVSA as it‘s known by its Spanish acronym. Mr. Chavez, who is battling a life-threatening recurrence of cancer, said his goal is to send 1 million barrels of oil a day to China, which has given Venezuela more than $30 billion in loans and promised billions of dollars more in energy investments by 2016. PDVSA claims tosend 410,000 barrels a day to Chinese markets, the bulk of which is used to pay back the loans. Already this year, PDVSA hasannounced that Citic Group Corp., China‘s largest state-owned investment company, will acquire a 10 percent stake in the Petropiarheavy-crude project held with PDVSA and U.S.-based Chevron Corp. It also said that the China Development Bank will spend $4 billion to help boost production in a joint venture with China National Petroleum Corp., or CNPC. The Chinese bank and the Venezuelan government also have agreed to renew a $6 billion bilateral investment fund, of which $2 billion will help boost PDVSA

production. But Tom O‘Donnell, an oil analyst who teaches at the New School University and writes an oil-industry blog, the

Global Barrel, said the payoffs of China‘s loans amount to a ―consolation prize.‖ He said China‘s goal is not to getoil for loans, but to have its own national oil companies contract for major oil-

production projects in Venezuela‘s Orinoco Tar Sands, the largest single known petroleum reserve in the world,

with 513 billion barrels of heavy crude oil. Chinese displeased ―The Chinese have not gotten the kind ofpreferential access they want [to the tar sands], and my sources tell me they are extremelyunhappy ,‖ said Mr. O‘Donnell.



A2 Politics

Oil lobby shields the linkFroomkin, 11 -- senior Washington correspondent for the Huffington Post

[Dan, previously wrote a column for the online version of The Washington Post called White House Watch, "How The Oil Lobby

Greases Washington's Wheels," Huffington Post, 4-6-11, www.huffingtonpost.com/2011/04/06/how-the-oil-lobby-greases_n_845720.html?view=print&comm_ref=false, accessed 3-19-13, mss]

Clout in Washington isn't about winning legislative battles -- it's about making sure that

they never happen at all. The oil and gas industry has that kind of clout. Despite

astronomical profits during what have been lean years for most everyone else, the oil and gas industry continues to benefit frommassive, multi-billion dollar taxpayer subsidies. Opinion polling shows the American public overwhelmingly wants those subsidieseliminated. Meanwhile, both parties are hunting feverishly for ways to reduce the deficit. But when President Obama called onCongress to eliminate about $4 billion a year in tax breaks for Big Oil earlier this year, the response on the Hill was little more than aknowing chuckle. Even Obama's closest congressional allies don't think the president‘s proposal has a shot. "I would be surprised ifit got a great deal of traction," Senator Jeff Bingaman (D-N.M.), chairman of the Senate energy committee, told reporters at theNational Press Club a few days after Obama first announced his plan. Rep. Earl Blumenauer (D-Ore.), co-author of a House bill thatclosely resembles Obama's proposal, nevertheless acknowledges that it has slim chances of passing. "It will be a challenge to getanything through the House that includes any tax increase for anyone under any circumstance," he told The Huffington Post. The listgoes on: "It's not on my radar," said Frank Maisano, a spokesman for Bracewell Giuliani, a lobbying firm with several oil and gasindustry clients. "It's old news and it's never going to happen in this Congress. It couldn't even happen in the last Congress." Indeed,

the oil and gas industry's stranglehold on Congres is so firm that even when the

Democrats controlled both houses, repeal of the subsidies didn't stand a chance.

Obama proposed cutting them in his previous two budgets as well, but the Senate -- where Republicans and consistently pro-oilLouisiana Democrat Mary Landrieu had more than enough votes to block any legislation -- never even took a stab at it. Now that theHouse is controlled by the GOP, Obama's proposal is deader than an oil-soaked pelican. Over the last decade in particular, theRepublican Party's anti-tax policies and pro-drilling campaign rhetoric have become nearly indistinguishable from those of Big Oil."Obama's been proposing to get rid of these subsidies since his first budget in February 2009," said Tyson Slocum, director of theenergy program for the consumer watchdog group Public Citizen. "The obstacle has been the petroleum industry. The AmericanPetroleum Institute has dug in their heels and is fighting tooth and nail to retain these subsidies." The American Petroleum Institute(API) is the industry's enormously powerful lobbying and trade association. "API is very focused on making sure that we have a voicein policy debates," said Martin Durbin, the organization's executive vice president for government affairs. "Certainly I hope we'rehaving some role in the debate here." Is he pleased at the industry's success in heading off this particular debate? "I feel that we aresuccessfully getting the point across, successfully educating policy-makers about the importance of our industry throughout theeconomy," he said. Even before Obama's 2011 State of the Union address, API president Jack Gerard used his "State of AmericanEnergy" speech to cast the repeal attempt as a tax increase and a job-killer. "The way I see it, our policy-makers are at a crossroads,"Gerard said. "They face two choices: One leads us forward and promotes jobs, investments, revenue and growth -- or one that takes

us backward, threatening the progress we've made and closing the door on future opportunities." Gerard was speaking to a receptiveaudience. As Time noted, "Republican Fred Upton, the new chairman of the House Energy and Commerce Committee, was in thefront row of the audience for Gerard's speech." Upton did not return calls for comment. A PAMPERED INDUSTRY In January,Obama previewed his 2012 budget proposal during his State of the Union address. "I'm asking Congress to eliminate the billions intaxpayer dollars we currently give to oil companies," he said. "I don't know if you've noticed, but they're doing just fine on theirown." The line got a laugh, and then Obama pointed out the trade-offs of giving public support to a powerful private interest:"Instead of subsidizing yesterday's energy, let's invest in tomorrow's." he said. With the actual budget proposal came more details: alist of tax breaks that, if eliminated, would generate $43.6 billion of additional revenue over the next 10 years. Two of the biggest breaks date back nearly a century, to a time when a young, untested industry needed incentives to drill. The API, after adding in thecost of some other proposed measures (including reinstating Superfund taxes and repealing two accounting gimmicks that wouldaffect other industries as well), concluded that Obama's FY 2012 proposed budget could cost the oil and gas industry $90 billion overthe next decade. The loss of subsidies would affect the industry's bottom lines, but would hardly, as Rep. Joe Barton (R-Tex),recently suggested, start driving companies out of business. That's because Obama was right; the oil companies are doing just fine.The big five -- BP, Chevron, ConocoPhillips, ExxonMobil and Shell -- made a combined total profit of nearly $1 trillion over the pastdecade, with ExxonMobil clearing $31 billion in profits this past year alone. And it's hardly the case that the oil industry needs addedincentives to drill. Former oilman George W. Bush made that point as clearly as anyone when he leveled with members of the American Society of Newspaper Editors in a 2005 address: "I will tell you with $55 [a barrel] oil we don't need incentives to oil and

gas companies to explore," he said. "There are plenty of incentives." Slocum, of Public Citizen, concurs: "With prices around $100 a barrel, it is asinine to suggest that $4 to $6 billion a year collectively is driving decisions about whether or not to pursue extractionopportunities in the U.S.," he said. "It is market prices that are driving investment decisions." While the oil industry warns thatrepealing the subsidies -- in addition to costing jobs -- would lead to higher gas prices, that too is hardly evident. Fuel costs largelyreflect the price of oil, and that price has little to do with how much it costs to produce it. According to a U.S. Energy Information Administration survey, between 2007 and 2009, major U.S.-based oil companies spent an average of $29.31 to produce a barrel ofoil. About one third of that amount went for extraction and taxes, and two thirds for exploration and development -- precisely whythose companies are making such a killing when prices are $100 a barrel or more. Rather than production costs, the price of oil is set by the global market, and is affected by multiple factors. Those can include financial speculation and geopolitical fears that latelyhave been causing wild price swings. The repeal of a few billion dollars in subsidies isn't enough to make more than a small ripple inan approximately $3 trillion-a-year global market. Blumenauer argues that subsidies aren't appropriate for any well-establishedindustry. Instead, he says, they should be used to support developing ones. "What's happened over the years, as the oil industry



matured, as the giants consolidated into global players, and as the price of oil has been on a pretty steady upward trajectory -- withsome hiccups along the way -- is that there ceased to be any rationale for providing these tax subsidies other than they were in thecode and they benefited some of these companies." By contrast, he points out: "The rationale for providing tax subsidies foremerging technologies and energy sources now makes perfect sense for solar, wind, and geothermal -- where helping them come toscale would help provide a better balance to our energy choices." Oil and gas subsidies don't appear to wash with the general public,either. In a February NBC/Wall Street Journal poll that proffered suggestions for things that might be cut or eliminated as a way toreduce the current federal budget deficit, "eliminating tax credits for the oil and gas industries" was considered acceptable by a whopping 74 percent of Americans. Nearly 50 percent called it "totally acceptable." The only policy proposals that were more

popular were raising taxes on the rich, eliminating earmarks, and canceling unnecessary weapons systems. The API says it hasgotten very different signals from people.. Durbin said API's own polls show otherwise. "If you ask people, 'Should we take awayunfair advantages to Big Oil,' then of course they'll say yes," he said. "If you ask a straight question, as we do... you get a muchdifferent answer." API's poll question asked "Do you support or oppose increased taxes on America's oil and natural gas industry?"ENERGY GIANTS ANTE UP With so much public opposition, why do subsidies remain? You might as well ask why there is no

carbon tax, or why there was no significant reform legislation passed after the BP oil spill. The answer is that one of themany things the industry can do with its fat pocketbook is hire a veritable armyof sharp lobbyists and back them up with big wads of cash in the form ofcampaign donations and spending. The end result is that the industry has aremarkable ability to get its way on Capitol Hill. According to the Center for Responsive Politics'

website, the oil and gas industry has spent more than $1 billion on lobbying since 1998,

including a jaw-dropping $147 million just last year. For comparison's sake, $147 million is about

equivalent to the total budget of 100 congressional offices. That's more than the $103 million spent in 2010 by the financial service industry, another

potent lobbying force -- but considerably less than the $240 million spent by the pharmaceutical industry. Among major industries, Opensecrets.org

ranked Big Oil fifth in terms of lobbying dollars spent, behind only Big Pharma, electric utilities, business associations and insurance. The oil and

gas industry used its $147 million to employ 788 individual lobbyists in 2010 -- some 500

(or almost two thirds) of whom, according to Opensecrets.org, are former federal employees who camethrough the revolving door particularly well versed in the ways of government. All

told, that's well more than one oil and gas lobbyist per member of Congress out there onthe Hill arming allies with talking points and briefing books, spinning theundecided and pressuring the opposition. And there's more of them every

year. Consider the trendlines. As recently as 2004, the oil and gas industry spent about $52 million a year in lobbying; by 2009, that figure was up

to $175 million -- or a 300 percent increase in just five years. The industry backs up its extraordinary lobbyingeffort with lavish spending on political campaigns. Candidates associated with oil and gas companies made

about $15 million in direct campaign donations during the 2010 mid-term election cycle ($26 million during the 2008 presidential cycle). The industry was also responsible for more than $10 million in donations through its political action committees, or PACs, in the 20 10 cycle. The trendlines arenotable here, as well. In the early ‘90s, oil and gas campaign spending favored Republicans over Democrats by about a 2 to 1 margin: For every $1 theindustry gave to Democrats, it gave Republicans $1.78. But starting in the 1996 election cycle (think Al Gore), that changed dramatically. Now, for every$1 the industry gives Democrats, it gives Republicans about $3.35. Among the top oil and gas industry donors in the 2010 cycle, Koch Industries andExxonMobil head the list. And Opensecrets.org's top 20 list of oil and gas money recipients is 4 to 1 Republican. In addition to contributions to

individuals and PACs, there's the whole new world of spending opportunities opened up byrecent Supreme Court rulings that essentially blew a hole through the post-Watergate campaignfinance laws. Super PACs are groups that can now accept unlimited contributions, though they must disclose their contributors. Opensecrets.org

calculates that companies with interests in the energy sector combined to give more than $5.6 million to Super PACs in the 2010 cycle. Former Bushpolitical guru Karl Rove's American Crossroads group, for one such Super PAC. It spent $21 million on political advertising in the 2010 cycle; oil andgas interests contributed just over $3 million of that amount. The recent court rulings also opened the way for nonprofit groups to spend unlimitedamounts of money on political campaigns -- and unlike the Super PACs, they don't have to disclose their donors. All they have to do is report how muchthey spent. These groups, led by the U.S. Chamber of Commerce, reported $140 million in campaign spending in the 2010 cycle, the vast majority of

which went to support conservative causes. There's no way to know how much of that money came from Big Oil. Adding yet more

firepower to its lobbyists‘ arsenal, API announced last month that it will start fundingpolitical campaigns directly through a new PAC of its own -- in addition to what its member

organizations give already. "API is very focused on making sure that we have a voice in policy debates," said its spokesman, Durbin. "We're always

looking at ways to improve the way we do our jobs here. This just adds one more tool to leverage our abilityto get the point across about the critical nature of this industry ." One more thing:

According to another study by the Center for Responsive Politics, oil and gas industryholdings are some of the most popular investments among lawmakers and theirspouses, and in recent years have grown in value, offering a bundle of potential



conflicts of interest problems. " Without question, among all the differentindustries that lobby the federal government, that make campaign contributions,

oil and gas is right at the top of the top," said CRP's Dave Levinthal. "They can invest incredibleresources into the political process that make so much of a difference in

Washington, at the cost of a fraction of a faction of their haul." And it's not just the breadth of their efforts

-- it's the ferocity and the effectiveness.



A2 Neoliberalism

Turn- Chavez’s alternative to neoliberalism will collapse without aid AND the

US can learn from Venezuelan alternatives- engagement is key

Schultz, 13 -- freelance writer and anthropologist[Kylie, "The Rocky U.S.-Venezuela Relationship: What Both Countries Could Learn," The International, 3-17-13, www.theinternational.org/articles/370-the-rocky-us-venezuela-relationship-wh, accessed 7-2-13, mss]On March 5, the Latin American world both mourned and spurned the death of Venezuela‘s enigmatic president, Hugo Chavez.Chavez, who died after a two year battle with an undisclosed type of cancer, was one of Latin America‘s most influential and admiredleaders, although his presidency caused deep and polarized divides among the population in his home country of Venezuela. As thenews of his death spread, condolences poured in and dignitaries from around the world, including Iranian president Mahmoud Ahmadinejad and Cuba‘s Raul Castro, arrived for his state funeral. While the United States sent a representative, Rep. GregoryMeeks (D-NY), the Obama administration itself offered no condolences. ―At this challenging time of President Hugo Chavez‘spassing, the United States reaffirms its support for the Venezuelan people and its interest in developing a constructive relationship with the Venezuelan government,‖ said a statement released by the White House. ―As Venezuela begins a new chapter in its history,the United States remains committed to policies that promote democratic principles, the rule of law, and respect for human rights.‖Criticized by many Chavez supporters for its unsympathetic and, some claim, contemptible tone, the White House statement and thereactions it has elicited are representative of the divide between the United States and Venezuela which emerged during Chavez‘spresidency. The influence and standing of the United States in Latin America has decreased in recent years as domestic inequalityand political polarization in America rise. There seem but few signs that Chavez‘s death will spark a shift in U.S.-Venezuelan

relations. As Venezuela enters into the post-Chavez era with a struggling economy,high inflation, and some of the worst crime rates in the world, why do bothcountries continue to demonize one another? Chavez, his politics, and his legacy Throughout his 14 year

presidency, Hugo Chavez was defined foremost as a revolutionary . Chavez believed that the inequalities of wealth

and power that plagued Venezuela during his childhood were a result of western imperialism and foreign ownership of local

resources. Calling himself a ―21st century socialist,‖ Chavez denounced and reviled imperialism, with

much of his rhetoric aimed at the United States. In line with his socialist ideology, Chavez instituted economicpolicies which took vast amounts of money from state-owned oil exports, Venezuela‘s primary resource and export, and used

the revenue to create and fund social projects called ‗misiones‘. These missions promoted literacy, freeeducation, subsidized food, free healthcare, and other social services which vastlydecreased inequality and gaps in Venezuelan wealth distribution, enhanced living standards, and promoted a

participatory style of government. In a roundtable discussion for the grassroots media station Democracy Now!, author andprofessor Miguel Tinker Salas noted that Chavez‘s rise to power helped Venezuela gain a presence and standing on the regional andinternational geopolitical stage. ―Just recall where Venezuela was in 1998. It had no real presence on the international stage.[Chavez] had this oil-producing country that had 60 percent of people living in poverty. Today, that has dramatically changed,‖ Salassaid. Eva Golinger, friend and advisor of Chavez, stated during the same roundtable discussion that Chavez was a ―champion for thepoor, for social justice, against imperialism, against aggression, against war. He‘s someone who has left an extraordinary legacy, not

just in his own country, but around the world.‖ Although Chavez passed tremendous social policiesand massively reduced the percentage of Venezuela‘s population living in poverty – from 42.8 percent in 1999, to

26.5 percent in 2011 – Chavez‘s immense spending, near sole economic reliance on oil, and lack of government

structuring has left a Venezuela with staggering crime rates, economic and socialinsecurity, crumbling infrastructure, shortages of basic goods, one of the highest inflation rates in the world, and a currency

that has recently been devalued for the fourth time. His mixed legacy has left many wonderingif Venezuela can survive by maintaining Chavez’s strict, nationalist

economic policies. Venezuela and U.S.‘s damaged relations While Chavismo, the term often given to describe

Chavez‘s social and political movement, was conceived with anti-imperialist and anti-capitalist rhetoric, it wasn‘t until a f ailed coupin 2002 that Chavez adopted explicitly anti-American rhetoric. Although evidence shows that America was not directly behind orinvolved in the 2002 attempted coup against Chavez, the Bush administration‘s detached reaction to the coup convinced Chavez thatthe United States was implicitly involved, the first cause of the struggles between the two countries. Relations between the twocountries remain strained as ambassadors have not been exchanged between the two nations since 2010, and on March 5 , interimpresident Nicolas Maduro, Chavez‘s hand-picked successor, expelled two U.S. diplomats from Venezuela, accusing them of trying to―destabilize‖ the country. The United States responded on March 11 by declaring two Venezuelan diplomats as personae non grataeand expelling them. U.S. State Department spokeswoman Victoria Nuland claimed that the Venezuelan diplomats were expelled because ―when our people are thrown out unjustly, we‘re going to take reciprocal action.‖ Similarly, another State Departmentspokesman said that the ―fallacious‖ accusations against the U.S. diplomats expelled from Venezuela leads the U.S. to ―conclude



that, unfortunately, the current Venezuelan government is not interested in an improved relationship.‖ Despite negative ―tit-for-tat‖relations and searing rhetoric on both sides, trade has never stopped between the two countries – unlike the U.S.‘s half decadeembargo on Cuba – leaving some to conclude that the harsh rhetoric between the two serves a different purpose. Author and journalist David Sirota wrote in Salon that although the U.S. media and government often criticize and portray Chavez as a despot with radical human rights violations under his belt, the American government continues to maintain friendly relations with thegovernments of Mexico and Colombia who have similar negative records. ―No, Chavez became the bugaboo of American politics because his full-throated advocacy of socialism and redistribution at once represented a fundamental critique of neoliberaleconomic, and also delivered some indisputably positive results,‖ wrote Sirota. For the United States, Chavez‘s successful socialist

policies can be perceived as a threat to the corporate capitalism now under scrutiny in the United States. On the other hand,Cha vez‘s radical leftist approach and highly centralized government inspired his ―21st century socialism,‖ which he believed was theonly system that could yield a ―genuine‖ society. These ideologies inspired a the complete denouncement of capitalism and free-trade policies which has limited Venezuela‘s economic avenues. A report from the Inter-American Dialogue notes that othergovernments in the region, like Brazil, who have not utterly denounced all free-trade policies and mandated privatization but haveembraced a nationalist government, have realized stabilized economies while also decreasing inequality, a feat that Venezuela is stilltrying to achieve. When other more pragmatic leaders in the region incorporated aspects of free-trade into their leftist andprogressive governments, Chavez had to work to maintain control over a population divided by his policies. Anti-American rhetoric worked to build support for Chavismo in opposition to a common enemy. Rory Carroll, a journalist for the Guardian‘s Caracas bureau, stated in an interview with Mother Jones that Chavez‘s ―anti-imperialist posturing so dazzled his cheerleaders that theyoverlooked his flaws, flaws which worsened over time.‖ While confrontational rhetoric towards one another might serve some

purpose for each country, the continued trade between the two countries, and the uniqueeconomic and social struggles facing each nation give both much more to gainfrom establishing a positive relationship than an oppositional one. Why

U.S. and Venezuela are wrong and how they can learn from each other The aforementioned

2012 report from The Inter-American Dialogue on remaking U.S. and Latin American relations states that the longer relations arestagnant, ―the harder it will be to reverse course and rebuild vigorous cooperation.‖ The United States has lost standing with Latin American countries who see political gridlock, poor immigration policies, and substantial inequality and wealth disparity in theUnited States as undermining its ―capacity to propose and carry out strategies to deal with the issues that most concern‖ Latin America. The United States has long been accused of putting Latin American relations on the backburner which has led many Latin American countries to remain economically connected with the United States, but politically detached. The Inter-American dialoguereport highlights the fact that the United States must be flexible, innovative and sensitive to different definitions of democratic idealsto reshape regional institutions and ―better align them with current realities and challenges to make them more effective.‖ TheUnited States has also seen a sharp increase in poverty, and as current discussions over the national budget consider cutting socialprograms like welfare, medicaid and social security, the government needs to consider the success of social programs throughoutLatin America and Venezuela which have vastly decreased those nations‘ poverty levels, lowered infant mortality andunemployment, increased literacy and availability of education, and increased living standards. Venezuela‘s extreme Chavez-erapolicies may prove to not be economically viable; instead Venezuela could look to more conservative leftist Latin Americangovernments, like Brazil, who have implemented policies which allow for some free-trade, privatization and foreign investment, inorder to ensure a more sustainable economy in the future. There is hope that Chavez‘s supposedly more pragmatic successor,Nicolas Maduro, if elected in next month‘s elections, might be open to a more positive relationship with the United States. Both sideshave expressed interest in open dialogue and perhaps the exchange of ambassadors, but the recent expulsion of diplomats from eachcountry seems to illustrate stubbornness from both parties. When it comes to Hugo Chavez and his legacy in Venezuela, opinionsremain divided. Whether he is remembered as a champion of the people, who trampled inequality and redistributed wealth whileopenly criticized the western policies which he believed promoted such inequality, or whether he is remembered as a radical leader who altered Venezuela forever through revolution but left it in shambles, the legacy of Chavez challenges the world, and the UnitedStates, to consider the effectiveness of their own governments and policies. In his Time magazine obituary for Chavez, journalist Tim

Padgett states that ― Washington and the rest of the world need to remember the unmistakable reasons for his rise

to power‖ which has been their failure to build institutions that can close the ―unconscionable

wealth gap.‖ It seems both countries have much to learn and gain from one another,

but seem unwilling to do so to the possible detriment of their own people and economies.



Venezuelan economic collapse coming now- oil is key and will fail nowMcArdle, 13 -- Newsweek special correspondent

[Megan, "Why Hugo Chavez Was Bad for Venezuela," Daily Beast, 3-7-13, www.thedailybeast.com/articles/2013/03/07/why-hugo-chavez-was-bad-for-venezuela.html, accessed 7-21-13, mss]

But in the course of these achievements, he severely compromised the engine of Venezuela'sfuture prosperity: its oil fields. And over the long run, the poor cannot thrive if the economy is failing. To be sure,

Venezuela's economy looks okay in many respects; it's growth is about average for the region, as you

can see in this graph from The Economist. But hey, wait a minute . . . shouldn't the country with some ofthe largest proven oil reserves in the world be doing better than the regionalaverage? Looked at in the context of Latin America as a whole, the poverty reduction achieved doesn't look so special either:

Oil prices are booming, but Venezuela is not. Why? Because they're pumping less oil than they used to. A couple of years after hetook power, Chavez moved to consolidate his power over PDVSA, the state-owned oil company that used to rival Saudi's Aramco asthe best-run in the world. It needed to be. Venezuela's heavy, sulfurous oil is hard to get out of the ground and refine; they had toinvest heavily just to keep production flowing. The power grab was not popular in the oil industry, and ended up being one of themotivations for a 2002 coup attempt. When that failed, a general strike followed, which temporarily shut down the oil industry.

After the smoke cleared, PDVSA was a changed entity. It had suffered a sizeable brain drain, sinceover a third of its workforce was fired by Chavez for dereliction of duty . And it became a

slush fund for those beloved social programs. Here's the result: Venezuela's oil output has fallen by almost

a third since Chavez took power. That's why Venezuelan economic growth is pretty underwhelming. Those socialprograms so beloved of Nation writers came out of investment funds that were previously used to keep oil production high--necessary, as we've discussed, because Venezuela's sludgy crude is hard to get out of the ground. Which gives us a paradox:

Venezuela's reserves are growing, but its production is in decline. The only reasonthat the economy isn't worse is that oil prices have stayed high. But withproduction falling, Venezuela doesn't just need high oil prices, but continuouslyrising oil prices, to keep funding all that government spending. This is why Venezuela has

been one of the hawkiest hawks in OPEC, always agitating for tighter quotas and higher prices. A country with falling productiondoesn't need to worry about tighter quotas. But they do need to worry that lower prices will throw their budget disastrously out of balance.

Chavez wrecked Venezuelan oil industrySanati, 3-6 (Cyrus Sanati, Contributor to Fortune Magazine, Education: Columbia University Business School, Columbia

University Graduate School of Journalism, University of California at Los Angeles, 3-6-13, CNN Money, Fortune, ―Chavez‘s Death Won‘t Spur New Venezuela Oil Drilling‖) http://finance.fortune.cnn.com/2013/03/06/hugo-chavez-death-oil/

Hugo Chavez obliterated Venezuela's credibility among the world's largest oilproducers, and it will take some time for the troubled nation to earn back thattrust.¶ FORTUNE -- The death of Venezuelan President Hugo Chavez is no panacea forthe nation's dysfunctional energy industry. Political and economic uncertainty will likely continue to

deter foreign investors from fully committing the necessary cash, resources, and expertise that are desperately needed to effectively

tap the nation's oil wealth. Whoever takes over the reins of the nation will need to dismantlethe policies, structures, and rhetoric that have made investing in Venezuela afool's errand.¶ It is not hyperbole to say that Hugo Chavez's death Tuesdayrocked the energy industry. The "Bolivarian" strongman has been the oil

industry's biggest villain for over a decade. In his tenure as president of Venezuela, Chavez not only trashed contracts and expropriated lands andequipment from foreign oil companies, like ExxonMobil (XOM) andConocoPhillips (COP); he also managed to crush the national oil company,Petróleos de Venezuela (PDVSA), by using it as a piggy bank to fund theprograms and policies associated with his nebulously defined "21st Century Socialism" experiment.



Chavez crushed Venezuelan oil economySanati, 3-6 (Cyrus Sanati, Contributor to Fortune Magazine, Education: Columbia University Business School, Columbia

University Graduate School of Journalism, University of California at Los Angeles, 3-6-13, CNN Money, Fortune, ―Chavez‘s Death Won‘t Spur New Venezuela Oil Drilling‖) http://finance.fortune.cnn.com/2013/03/06/hugo-chavez-death-oil/ With today's oil price being 10 times higher than where it was when Chavez took power in 1998, one would surmise that the Orinocooil belt today would be littered with equipment and workers trying furiously to tap its abundant oil wealth. But, of course, that isn't

the case.

During his reign, Chavez instituted a series of devastating "reforms" to thenation's oil industry, which ended up breaking its back. He ripped up productionsharing contracts signed under the previous government, forcing foreign oilcompanies to hand over more of their profit to the state.¶ Chavez then usedPDVSA as his own personal ATM, starving the company of the necessary investment capital needed to expand

its operations in the Orinoco. In 2011, PDVSA was left with just $11 billion, or 9%, of its totalincome, to fund future operations. That was barely enough to keep the lights on, let alone go out and enough to

drill. By contrast, Pemex, Mexico's state owned-oil company (and all-around bureaucratic basket case), spent around $19 billion, or 17%, of its income onoperations, while Brazil's Petrobras invested $42 billion, or 29%, of its income.

PDVSA says it will be investing some $140 billion in the Orinoco by 2015. It is hard to see how that can happen given how much thegovernment is siphoning off. In January, Chavez ordered PDVSA to increase its payments to his off-the-books slush fund, Fonden,

which is used to support the "revolution," further draining its resources. Lastly, the government has saddledPDVSA with around $35 billion in debt, slapping the company with fat interest payments, which will only

augment its money woes.¶ But probably the fatal blow to Venezuelan oil investment came in2007 when Chavez essentially "renationalized" the industry, booting out anumber of foreign oil companies who refused to (once again) renegotiate theircontracts, namely U.S. oil giants ExxonMobil and ConocoPhilips, which had each invested billions of dollars in the country

since the early 1990s.¶ The new rules, which are more or less the same today, require foreign investors to form partnerships with

PDVSA in which the state-owned oil company would have a 60% ownership. Theforeign company, which would have 40% ownership, would still have to fund100% of the investment. Furthermore, whatever the foreign company made

would be subject to a 50% tax rate and a 33% royalty (tax). Oh, and investors must agree thatany dispute that may arise in the future concerning their ownership with the government will be heard by Venezuelan courts, notthose pesky impartial international arbitration courts.

Venezuelan oil lacks investment and is decliningLadislaw and Verrastro ’13 (Sarah O. Ladislaw, co-director and senior fellow with the Energy and National

Security Program at the Center for Strategic and International Studies (CSIS) in Washington, Frank Verrastro, senior vice presidentand James R. Schlesinger Chair for Energy & Geopolitics at CSIS, ―Post-Chavez Outlook for Venezuelan Oil Production‖, 3/6/13,Center for Strategic and International Studies, http://csis.org/publication/post-chavez-outlook-venezuelan-oil-production)

The winds of change are once again blowing in Venezuela. The recent announcement of Hugo Chavez‘s passing hasopened up a host of questions about the future leadership of Venezuela and the potential impact thisleadership transition could have on Venezuelan oil production and global oil markets. Venezuela is

one of the largest oil and natural gas resource holders in the world. It is among the world‘s largest oil producers (13th) and exporters(10th) and has historically been one of the United States‘ largest sources of oil imports (4th behind Canada, Saudi Arabia and

Mexico). Ever since the failed coup and the subsequent strike that brought about a short collapse in oil production in 2002, followed by nationalization of the oil sector, onlookers have been waiting for indications that the regime‘s approach to energy production

would either fail once and for all or that some political change would bring about reform and rejuvenation of the energy sector. Apolitical transition in Venezuela is now upon us but how it evolves could mean a lot for theenergy sector and global energy markets. Despite its enormous oil resources, Venezuela's oilproduction (regardless of whose figures you use) has long been in steady decline. In 2011 liquidsproduction was 2.47 million barrels per day (mmbd) , down a million barrels perday since 1999. Some of this is reflects the changing cost and economics of Venezuelan oil production but field decline is



significant and expertise and reinvestment are questionable and looking harder to come by. The internal technical andmanagerial capabilities of state run oil and gas company PDVSA have deteriorated since the2002 strike and aftermath. Increasingly, PDVSA relies on contractors, as well as otherprivate company partners, to keep the fields in production but reports state thatcontractors have not been paid in months and that the political uncertainty in the country has even driven

routine decision making to a halt. The sustained political uncertainty has also slowed investment;

Russian and Indian companies were planning to invest in Venezuela's oil fields but so far have withheldincremental new money . China has not announced a new line of credit or extensions on

its development-linked financing since last April. At the same time that production is dropping, highly subsidizeddomestic consumption of oil is increasing while revenue from exports is alsodeclining. The United States remains the largest recipient of Venezuelan oil exports at 950,000 barrels per day in 2011,

roughly 40 percent, plus another 185,000 barrels per day from the Caribbean that was Venezuelan sourced but those volumes area

down as U.S. demand has declined and other crudes have become available. Venezuela's next largest export

destinations are the Caribbean (31 percent) and then China (around 10 percent). Venezuela sells to many of its

Caribbean neighbors at below market rates due to extremely preferential financing relationships, including additional

heavy subsidies for Cuban exports. All of this culminates in an outlook for continued decline inoil production and a worsening economic outlook for Venezuela during a politically difficult time.

However, conventional wisdom argues that maintaining oil production is in the interest of any regime. Revenue from oil productionis such a large part of Venezuela‘s government balance sheet that no leadership could survive for long without a sustained cash flowthat oil exports bring. The converse of this argument is that revenues generated by the energy sector are such an important source of

power and influence in Venezuela that there is potential for infighting over control of the sector. Moreover, the potentialfor strikes or instability among groups involved in the sector (some of whom have not been paid) could haveadditional negative impacts on production.

Lack of investment projects grim outlook for Venezuelan OilCarter ’13 (Jon Carter, analyst and reporter for Energy and Capital, ―Venezuela Oil Crisis‖, 3/14/2013, Energy and Capital,

http://www.energyandcapital.com/articles/venezuela-oil-crisis/3175)

Foreign investment has not exactly been smooth-sailing since Chavez nationalized the oil fields in

2007. Outside oil companies were encouraged to continue drilling, but the PDVSA wouldtake 60% of the profits, according to CNN. This forced a number of oil companies to pull out of contract agreements,

including oil giants ConcoPhillips (NYSE:COP) and ExxonMobil (NYSE: XOM). Regardless of new leadership, Venezuelanenergy policy caused many investors to leave on bad terms. And the nation's leaders are failing

to acknowledge the need for foreign business to boost oil production and national profit. However, foreign investmentis unlikely to happen any time soon because of Venezuela‘s rocky reputation among oil

companies, and the current political situation shows little reform in the energy sector.

Forbes mentions center-right candidate Henrique Capriles as the only legitimate opposition to Venezuela‘s socialist party, andsomeone who could open new doors for outside investment. However, his candidacy is considered a long-shot during a time ofmourning for Chavez, and even if there was a Capriles victory and forthcoming policy change, investors would still remain hesitant

in doing business with Venezuela based on its history. Unless Venezuela is able to secure more loans

and drilling operations from some of its allies—including Vietnam, China, Russia, and Cuba— Venezuela‘s energy crisis is inevitable. Foreign companies like India‘s Oil and Natural Gas Corporation are

holding off on drilling until the current political situation is fully assessed, as reported by CNN. Venezuela‘s energy outlook does notappear stable, but the transition of leadership could affect what little foreign investment there is left in the nation.



US Investment Key

US oil industries are the only ones who can extract Venezuelan oilClayton and Levi 12 [Blake Clayton and Michael Levi - Blake Clayton is fellow for energy and national security at

the Council on Foreign Relations in New York. He received a doctorate from Oxford University, where he studied business

economics and strategy. The recipient of the University of Chicago Endowed Fellowship, he holds dual master's degrees from theUniversity of Chicago and Cambridge University, Taylor and Francis Online; ―The Surprising Sources of Oil‘s Influence‖; Novem ber30th, 2012; http://www.tandfonline.com/doi/full/10.1080/00396338.2012.749637#.Uex-ho2Tg1A // 7/21/13/NL]

Refinery configurations also add some rigidity to markets. The common description of oil as a fungible good, where supplies can be

moved from one market to another with ease, is usually a good approximation to reality, but has important limits. Not all oilis the same. Different sources of crude vary primarily in their so-called gravity ,ranging from light to heavy , and in their sulfur content, which ranges from sweet to sour. Each refinery istuned to accept a particular source of oil and produce a particular slate of high-value products, including

gasoline, diesel, and jet fuel. Venezuelan crude, for example, is particularly heavy and sour,and refineries in the Gulf of Mexico are specially designed to process it. Were

Venezuela to refuse to sell oil to the United States, many U.S. refiners could be

left without attractive alternative sources. Venezuelan producers, though, mighthave parallel difficulties finding new customers for their oil. The samedynamic could also work in reverse, with the United States shunning Venezuelan oil during a crisis, with similar results.

Key to US Economy

Engaging Venezuela key to US-Latin American economic integrationGriffon, 13 -- Crimson editorial writer [John, "Engage with Venezuela," The Harvard Crimson,

www.thecrimson.com/article/2013/4/3/Harvard-Venezuela-Chavez-death/, accessed 7-20-13, mss]

Beyond leading to more amicable, cooperative relationships with Latin American nations, engagement with Venezuela would also be economically advisable. With the world‘s largest oil

reserves, countless other valuable resources, and stunning natural beauty to attract scores oftourists, Venezuela has quite a bit to offer economically . Even now, America can see the possible

benefits of economic engagement with Caracas by looking at one of the few extant cases of such cooperation: Each year, thousands ofneedy Americans are able to keep their homes heated because of the cooperation between Venezuela and a Boston-area oil company.

Engagement with Venezuela would also lead to stronger economic cooperation with the entirety of Latin America. It was mostly through Venezuela‘s efforts thatthe United States was unable to create a ―Free Trade Area of the Americas,‖ anendeavor that would have eliminated most trade barriers among participant nations, thereby leading to morelucrative trade. In a world where the United States and Venezuela were to enjoynormalized relations, all nations involved would benefit from such agreements.

That’s key to resilient US growth and competitiveness

Noriega, 12 -- former senior US State Department official

[Roger, visiting fellow at AEI and managing director of Vision Americas LLC, and Jose Cardenas, contributor to AEI‘s Venezuela-Iran Project and a director with Vision Americas., "An action plan for US policy in the Americas," 12-5-12, www.aei.org/outlook/foreign-and-defense-policy/regional/latin-america/an-action-plan-for-us-policy-in-the-americas/, accessed7-22-13, mss]

As US policymakers struggle to overcome sluggish economic growth while confronting

abiding security threats, there is a stronger argument than ever for fortifying USpartnerships with countries in the Americas whose economies and security are intertwined with America‘s own

economy and security. While the United States has been preoccupied with other regions, most Latin American nations



have continued to modernize their market economies; two nations in particular—Brazil and Mexico—are

emerging as global players. Therefore, the time is right to restore a strong bipartisan consensus in the United States that promotes a constructive, free-market growth agenda in the Americas. Practical initiatives—not rhetoric— will encourage America and its neighbors to find common ground for theircollective benefit. Key points in this Outlook: America‘s economic crisis and threats to US security have undermined its trad itional global-leadershiprole and weakened its connections to Latin American nations that continue to modernize their economies. The United States must recover its regionalcredibility by taking bold initiatives to restore its fiscal solvency, while aggressively promoting trade, energy interdependence, technology transfer, andeconomic growth. The United States must then retool its strategy for its partners in the Americas by working with them to combat threats such as cross- border criminality and radical populism, encouraging dialogue with regional leaders, and ensuring law enforcement cooperation to develop a mutually

beneficial relationship. A stable and prosperous Americas is indispensable to US economicsuccess and security. The region is home to three of the top four foreign sources ofenergy to the United States, as well as the fastest-growing destinations for US exportsand investment. Clearly, geography and shared values predetermine a united destiny for the United States and its neighbors in the

Americas. How positive and fruitful that destiny will be depends on whether US policymakers, private businesses, and civil society move with a greatersense of purpose toward seizing promising opportunities and meeting critical challenges. Times have changed. The US fiscal crisis and preoccupation with two distant wars have distracted policymakers in Washington and undermined US leadership in the A mericas. Although access to the US market,investment, technology, and other economic benefits are highly valued by most countries in the Western Hemisphere, today, the United States is nolonger the only major partner to choose from. Asia (principally China) and Europe are making important inroads. So, as US policymakers retool theirstrategy for the Americas, they must shelve the paternalism of the past and be much more energetic in forming meaningful partnerships with willingneighbors. Of course, the United States must recover its credibility by making bold decisions to restore its own fiscal solvency, while aggressivelypromoting trade, energy interdependence, technology transfer, and economic growth. Then, Washington will be better positioned to cultivate greatereconomic and political cooperation among its neighbors, beginning with an open and candid dialogue with the region‘s leaders about their vision, theirchallenges, and their priorities. Partnerships can thus be built on common ground. The security challenges in the Americas are very real and growingmore complicated every day. Illegal narcotics trafficking, transnational organized crime, and radical populism fueled by petrodollars and allied withdangerous extraregional forces pose daunting challenges. Although it is wise to prioritize a positive socioeconomic and political agenda, assessing andaddressing threats is an indispensable prerequisite to achieving US security and regional leadership. To make the most of their united destiny, theUnited States and its partners in the Americas should: Promote and defend democracy, the rule of law, and human rights and private property as the building blocks of just societies, accountable governme nts, and prosperous economies; Advocate and support the empowerment of indiv iduals throughthe development of strong free-market economies, healthy private sectors, and free trade among nations; Assist neighbors in addressing their essentialsecurity needs so they can grow in peace and be more effective allies to prevent or confront common threats; Incentivize capital markets and encouragenew and innovative technology cooperation to develop a regional community that is interdependent in the production and distribution of a range ofproducts and services—particularly energy; Confront international organized crime in Mexico and Central America by supporting effective law-enforcement institutions and competent judicial systems; Work with willing allies to restore the Organization of American States to its essentialmission of promoting and defending common values and meeting common threats; Address the role of China and Russia in the Americas byencouraging open and transparent regional investment and trade and rejecting exploitive policies that undermine local societies, regional security, andeconomic growth; Combat threats posed by authoritarian regimes and their ties with Iran, Hezbollah, and transnational criminal organizations; Assistthe Cuban people in transitioning to a post –Castro Cuba by helping to jump-start their private sector, rehabilitate their economy, and restore their

political freedoms when the dictatorship collapses. Maximizing Mutual Global Competitiveness Expanding regional economiccooperation is crucial to US economic growth. An aggressive trade promotion andinvestment strategy in today‘s hypercompetitive, globalized economy is not apolicy option; it is an imperative. Clearly, prosperity at home depends on success

abroad. The economic opportunities in the Western Hemisphere are enormous,

and US policy-makers and the private sector must recognize them as critical to US economic growth. In 2011, US exports reached a record $2.1 trillionin total value, despite the fact that only 1 percent of US businesses export their products to foreign markets. The United States must expand on theseopportunities. Exports benefit the US economy by offering companies opportunities to tap new markets, expand their production, and earn moreconsumer dollars. Today, 95 percent of the world‘s consumers live outside the United States, and the International Monetary F und predicts that,

through 2015, some 80 percent of economic growth will take place beyond US shores. It is indisputable that an aggressive US tradepolicy —meaning selling US goods and services in as many markets as possible—is essential for the US economy tohone its competitive edge in the 21st century. In this sense, America‘s future is inextricablylinked to the future of its neighbors in its own hemisphere. A prosperoushemisphere means a more prosperous United States. The Western Hemisphere‘s Moment. The United States

is strategically well-placed to begin a new chapter in trade relations with Latin America. The countries within the Americas are bound by close historical, cultural, familial, and geographic ties, linked by common values and

mutual interests. What also facilitates expanded economic engagement is the regional tradepartners‘ proximity to US shores, and the significant number of Hispanics living in the United States—some 50 million—

that provide an exceptional strategic advantage in doing business with their countries of origin. Equally important are theadvances that many countries within the region have made in establishingeconomic stability and growth in recent years as the roots of democracy and therule of law continue to take hold. Countries such as Mexico, Chile, Peru, Brazil, and Colombia have been at the forefront in

modernizing their economies and opening them to investment, liberalizing trade, and becoming more competitive overall. The numbers tell the story.Since 2003, an estimated 73 million Latin Americans have risen out of poverty. Moreover, between then and 2010, the average Latin American income



increased by more than 30 percent, meaning that currently, nearly a third of the region‘s some 570 million people are considered mid dle class. And in just the next five years, regional economies are projected to expand by one-third.That macroeconomic stability generates even greater opportunities for US

business. The Western Hemisphere already supplies a quarter of the world‘s crude oil, a third of the world‘s natural gas, nearly a four th of its

coal, and more than a third of global electricity, while offering tremendous potential for the development of renewable energy technologies. Certainly,many in the US private sector have already discovered the benefits of intrahemispheric economic relationships. In fact, Latin America has played a key

role in expanding US exports in recent years. The Congressional Research Service reports that from 1998 to 2009, US trade with Latin Americaincreased an average of 82 percent, more than 72 percent with Asia, 52 percent with the European Union, and 64 percent with the rest of the world. In2011 alone, trade with Latin America grew 20 percent. The economic growth in 2011 elevated trade between the United States and the region to ahistoric high of $772 million. Exports to the region grew 22 percent to $350 million, while imports increased by 20 percent to a total of $420 million. According to the US Department of Commerce, American companies now export more to the Western Hemisphere —some 42 percent of total USexports—than to any other part of the world, including China. Last year, US merchandise exports to Latin America totaled $367 billion, and the USprivate sector accounts for one-third of all foreign direct investment in the region. The United States now has trade agreements with 11 countries in the

Western Hemisphere, which the Depart ment of Commerce reports help to support nearly four million US jobs. Clearly, however, there ismuch more that can be done to fulfill the potential of intrahemispheric economicrelations in the hyper-competitive global economy. High-level official US engagement is imperative to

revitalizing existing alliances and developing new partnerships to boost mutual competitiveness. A reinvigorated US trade policy must transcend pastapproaches that have been too identified with solely US interests and too focused on bilateral relationships. A 21st-century approach necessitates moremultilateral engagement and cooperation, mutually beneficial information-sharing and support, and an inclusive vision. A complementary strategy toincrease demand for US goods and services requires mobilizing private capital, encouraging technology transfer, and leveraging existing US programsto strengthen the private sector throughout the Americas. Traditionally, private-sector growth has been held back by lack of investment and access to

credit. In a true win-win strategy, the United States can boost exports and investment

while strengthening regional producers and consumers. In summary, increased USgovernment initiatives to expand economic partnerships with the country‘s

Western Hemisphere neighbors are crucial to America‘s economic recovery andcompetitiveness. A prosperous hemisphere is also beneficial to US security concerns. The Americas is home to some of the most dynamic

markets in the world. The US administration must recognize this reality and take full advantage of the opportunities.



Investment Low Now

Foreign investors are skepticalSanati, 3-6 (Cyrus Sanati, Contributor to Fortune Magazine, Education: Columbia University Business School, Columbia

University Graduate School of Journalism, University of California at Los Angeles, 3-6-13, CNN Money, Fortune, ―Chavez‘s Death

Won‘t Spur New Venezuela Oil Drilling‖) http://finance.fortune.cnn.com/2013/03/06/hugo-chavez-death-oil/ While it makes sense to have a few foreign partners to help to spread out the risk, one can go too far, especially when those partnershave pretty much zero experience working with oil sands. Indeed, this split looks more like a bizarre public relations stunt than a

real division of labor. It should therefore come as no surprise to learn that there isn't toomuch drilling going on in the Orinoco right now. While PDVSA says that it hasstarted to drill wells with its Russian and Vietnamese partners, the initialproduction numbers reported are trivial. Meanwhile, India's ONGC and severalother companies are reportedly holding back from investing any more cash untilthere is some clarity as to the political situation in the country. You can bet eve

Venezuela's staunchest allies, like China, which has loaned the Chavez regimesome $46 billion in the last few years, will be among those taking a breather.

Venezuela will call for foreign oil companiesObel 3/7 — Mike Obel, editor/writer for International Business Times, worked on the Finance Desk of The Associated Press,

and United Press International, and the Oil & Gas Journal, and has written for BP PLC and ConocoPhillips, 3-7-13, InternationalBusiness Times, ―Analysis: What Will It Take To Restore Venezuela's Once Mighty Oil And Gas Business?‖,http://www.ibtimes.com/analysis-what-will-it-take-restore-venezuelas-once-mighty-oil-gas-business-1114204“On one hand, [Maduro] will need to continue the anti-imperialist rhetoric of Chavez,‖ if only to allay fears of some that Chavez‘s

policies may not survive him, Velasco said. ―On the other hand, if they are strapped for cash, they mighthave to make some deals with foreign companies.‖¶ These would be deals foraccess to onshore shale oil properties and Orinoco Belt, the world‘s single-largestcrude oil reserve.¶ "Foreign oil companies desperately want to get in on

Venezuelan oil, and, because of that, they‘re very likely to accept deals that are

not favorable on the assumption that this is a long-term gamble and over time terms mayimprove,‖ Velasco said. ―Right now, they just want to get in on the game. So in short term, they are willing to accept unfavorabledeals.‖¶

http://finance.fortune.cnn.com/2013/03/06/hugo-chavez-death-oil/


http://www.ibtimes.com/analysis-what-will-it-take-restore-venezuelas-once-mighty-oil-gas-business-1114204

http://www.ibtimes.com/analysis-what-will-it-take-restore-venezuelas-once-mighty-oil-gas-business-1114204




Oil Supply Key

Oil prices are fragile and determined by supplySmithson 7 (Robert Smithson, portolio manager at a London Investment fund-siting Professor Goose, economist, 6/19/7,

―Economics of Oil, Part I: Supply and Demand Curves‖, http://www.theoildrum.com/node/2899)

The market for oil is unusual, because – in the short-term – both demand and supply arehighly inelastic. Irrespective of what petrol costs, your car cannot easily switch to another fuel. Ships and aeroplanes

cannot move from diesel oil and kerosene for their propulsion. If it‘s freezing cold, and you need to heat your house, the only option may be to pay more for heating oil. Likewise, if the price of petrol

was to halve, you would not drive twice as far, or turn the thermostat up from 22 to 44.¶ In other words, a largechange in price only has a small impact on demand.¶ Supply of conventional oil isalso relatively inelastic, although for a different reason. The actual cost of pumping a marginal

barrel of oil is relatively low, once the capital expenses of prospecting and building an oil rig (and associated infrastructure) has been put in place. An oilfield will cost roughly the same to operate

whether it is producing at 50% of capacity or at full capacity. Given this, once you have an oil field in place,

producers will tend to pump at their maximum sustainable rate. Of course, there is alwayssome flexibility : old wells can be ―uncapped‖, scheduled maintenance can be postponed, and greater concentrations of gas can bepumped into the well. But these have costs, and oilfield owners are loath to do these, unless the price of oil is high enough to justify

it.¶ The result of this is that the oil market is one where small changes to the supplyor demand curve cause large changes to the clearing price.

Oil prices are dictated by supply and demand-economics 101Seeking Alpha 8 (Leading Economic News Source, 6/19/8, ―Oil‘s Supply and Demand‖,

http://seekingalpha.com/article/81979-oils-supply-and-demand)

In recent weeks, there has been widespread speculation on the reason for the mostrecent incredible rise in the price of oil. Speculation by hedge funds is one reason given while buying by

index funds is another possible reason. Finally, some people believe that there are fundamental supply and demand factors drivingthe rise in the oil price. While I do believe that the energy markets have been pushed around to a degree by their participants, as I

discussed here, I wanted to make it clear that I believe that there is currently a significantdemand/supply imbalance. ¶ To begin, I will say that speculation likely does have animpact on prices in the short term but over a long period of time speculators will make or lose

money depending on how fundamental supply and demand factors play out. Speculators may

frequently overestimate or underestimate where prices should be causing increased volatility but in the long term the impact onprices caused by speculators should be negligible. ¶ While we all want to pay less at the pump, higher prices in the short run are beneficial to long term supplies as they help to close the gap between supply and demand that exists at lower prices. Higher pricescause people to reduce their consumption of oil which saves more oil for the future when supplies are expected to be insufficient.Higher prices also entice producers to make the investments needed to expand production. If prices are too low for too long, a

shortage will undoubtedly develop, throwing a terrible wrench into the world's economy. ¶ The reason that the priceof oil is rising and will continue to rise in the long term is simple. The marketexpects that there will not be enough oil available in the future if prices are anywhere

significantly below current levels. The price level that is needed to bring supply and demand into balance will continue to change andcould drop if enough supply comes online in the future. ¶ Of course, the world will eventually run out of oil since oil is not arenewable resource. However, for right now it appears that only the most low cost oil reserves have been exploited and that most ofthese low cost reserves are as a result beginning to decline. There are many areas worldwide that can still be drilled or mined toproduce more oil. ¶ Most of these areas are however in hostile environments or require expensive recovery techniques that make theprocesses unviable at lower prices. Given some time and consistently higher prices, we can expect more high cost oil production tocome online. However, it will take years before a large amount of high cost reserves can provide significant production to help relievethe current supply demand imbalance in world oil markets. ¶ Worldwide oil production has barely risen since the middle of 2004.Meanwhile oil demand seems to be rising at an increasing rate as developing countries such as China and India rapidly increase theirconsumption. If the slowdown in the U.S. economy does not affect China and India significantly there is really no way for oil to move

significantly down over the longer term. ¶ The first part of the puzzle is that worldwide oil production has



barely risen since the middle of 2004. This is because the number of low cost oil deposits that are found that

can be profitably developed at low oil prices is decreasing dramatically with each passing year. There is a limitedamount of oil in the world and there are geological limitations to our ability toproduce oil. ¶ Even when oil is found that can be produced economically it can take years to build the necessary infrastructure

to get that oil to market. It will likely take years before the majority of the new high cost oil will enter the production phase of its lifecycle. The current high level of oil industry profits is without a doubt needed to finance the development of new oil reserves so that

more oil can be brought to market in the future.¶ Meanwhile global oil demand is rising at an increasing rate as developing countriessuch as China and India require increasingly large amounts of oil to continue their industrialization. While the drop in oilconsumption in the US last quarter is important, the fact that the oil markets did not react to the news suggests that U.S.

consumption habits are no longer driving the market. ¶ The main driving factor of the rising price of oilis clearly the ever increasing demand in the developing world, with the situation

being exasperated by the lack of increased production. For years the worldwidedemand for oil has been in excess of the supply of new oil. As worldwide oilinventories have slowly declined the price of oil has climbed.¶ The imbalance looks small while

the rise in the price of oil has been huge. But it is important to remember two things. First, oil demand is veryinelastic in the short term. Longer term oil demand is more elastic as people may choose to buy more fuel efficient

vehicles or to conserve in other ways.¶ Second, looking at past oil supply and demand figures is missing the biggest reason for the oilprice climb. As the primary reason for the surge in oil prices has been the rapidly increasing demand from China and India which is

not reflected in past data.¶ Currently, Chinese oil consumption is around 7 mb/d, but by 2030 Chinese oil demand is expected toexceed the current level of US oil demand. Similarly huge increases in consumption are expected in other developing countries. ¶ Thereason oil prices are skyrocketing is not because there isn‘t enough oil to satisfy demand right now but because the market expectsthat significantly more supply is going to be needed in the future to make up for new demand coming online from the developing world. These new oil supplies cannot be economically produced without significantly higher oil prices to make productioneconomical and higher oil prices are also needed for consumers to cut back on their own consumption of oil.¶ Another important

factor is that the production in many oil-exporting nations has been in decline due tounder investment in new drilling and infrastructure by state run oil companies.

Venezuela and Iran are two countries that fit into this category. Production in Venezuela and Iran is declining due to years of underinvestment as oil profits have been funneled into social programs designed to keep each country‘s ruling party in power. Recent

political instability in the Middle East has also contributed to the oil price rise. ¶ When the chances of significantsupply disruption increase, the market responds by raising the oil price. While these

geopolitical issues have also driven up the price of oil, the falling dollar has exacerbated the situation. The price of oil is dollardenominated, so as the dollar drops, the price of oil climbs even if oil stays constant in terms of other currencies. But, of course, theprice of oil has been climbing in terms of all currencies.¶ Markets never work perfectly and in rare circumstances can work quitepoorly. However, markets almost always work very well over the long term. Blaming the most recent rise purely on speculation is

missing the big picture as one would then be failing to give the required credence to the macro story. ¶ I think the bestpiece of evidence to support my fundamental supply and demand theory is thatthe price of oil is not the only commodity price that is skyrocketing. Food prices,metal prices and all energy prices in general are skyrocketing because thedeveloping world is rapidly increasing its consumption of all commodities.



Venezuela Solves Shocks

Oil engagement with Venezuela prevents oil shocksRasmussen and Roitman ’11 (Tobias Rasmussen, Senior Economist, Middle East and Central Asia

Department, IMF, Augustin Roitman, Economist, IMF, ―Oil shocks around the world: Are they really that bad?‖,8/25/2013, VOX,

http://www.voxeu.org/article/oil-shocks-around-world-are-they-really-bad)

The fact that the negative impact of higher oil prices has generally been quitesmall does not mean that the effect can be ignored. Some countries have clearly

been negatively affected by high oil prices. Moreover, our results do not rule out moreadverse effects from a future shock that is driven more by lower oil supply thanthe more demand-driven increases in oil prices that have been the norm over thepast two decades. In terms of policy lessons, our findings suggest that efforts to reduce dependence on oil could help

reduce the exposure to oil price shocks and hence costs associated with macroeconomic volatility. At the same time, given a certain

level of oil imports, strengthening economic linkages to oil exporters could also work as a natural shock absorber.

Venezuela has immense oil reservesSanati, 3-6 (Cyrus Sanati, Contributor to Fortune Magazine, Education: Columbia University Business School, Columbia

University Graduate School of Journalism, University of California at Los Angeles, 3-6-13, CNN Money, Fortune, ―Chavez‘s Death Won‘t Spur New Venezuela Oil Drilling‖) http://finance.fortune.cnn.com/2013/03/06/hugo-chavez-death-oil/

But the ineptitude and corruption of the Chavez kleptocracy have contributed to adecline in overall Venezuelan oil output, which at last count came in at 2.4million barrels a day, 25% less than what it was when Chavez took power 14 yearsago. That would have been excusable if Venezuela's oil reserves were rapidlydepleting, but that isn't the case -- not by a long shot. Indeed, in 2010, OPEC confirmed that

Venezuela's Orinoco oil belt contained tar sand deposits equivalent to around300 billion barrels of oil, enough to fulfill current world demand for 10 years.

That would mean Venezuela would have the largest oil reserves on the planet,outstripping Saudi Arabia's 260 billion barrel oil stash.



Other Case Materials



Democracy Add-on

Engaging Venezuela solves Latin American relations and democracy

promotion

Kragie, 12 -- Duke University [Andrew, "Venezuela's 2012 Presidential Election: Policy Recommendation,"sites.duke.edu/history136a_01_s2012_awk7/policy-recommendations/, accessed 7-19-13, mss]

The US stands to lose much or gain a bit based on its reactions in the post-election period. A reaction that seems to opposeChavez on ideological rather than democratic grounds could reinforce the historically rooted sensethe US only supports democracy when the elected leaders support the US. On the other

hand, a reaction guided by democratic principles and regional cooperation would bolster Latin American nations’ willingness to cooperate in many domains . The USreaction might help restore its role as a promoter of democracy and a respected

voice for liberty worldwide. Weeks highlights the memories of past instances of ―unilateral and indiscriminate uses

of force,‖ most recently the 1989 invasion of Panama, and argues that the US focused almost exclusively on security goals in Latin America during the Cold War (2008, 163-4). Today, the US focuses more on issues of freedom and democracy in policy discussions.The US State Department lists ―strengthening effective institutions of democratic governance‖ as one of its ―four main foreign policypillars in the Americas‖ (―Regional Topics‖).‘

Latin American democracy is key to global democracyHillman 2 — Richard S. Hillman, St. John Fisher College political science professor and director, 2, Democracy and Human

Rights in Latin America, pg. vii, google books

Latin American experiences, especially in the areas of democratization and human rights

protection, are particularly relevant for developing countries that are attempting to buildstable political and economic systems in order to provide a decent standard of living and incorporate previously

excluded populations into the national mainstream. The previous record, of course, is far from acceptable. The advent of thetwenty-first century , however, appears to be a time of great potential progress for theinstitutionalization of democratic human rights regimes that would reducehuman pain and suffering. The number of countries in Latin America andelsewhere that are experimenting with democracy has never been greater . Clearlythe path toward fulfilling the expectations raised by these experiments is not aneasy one; it is fraught with difficult obstacles deriving from the historical legacy as well as contemporary challenges.

Nevertheless, democracy and human rights have definitely entered the political lexicon

and discourse throughout the world.

Democracy is key to solve nuclear war and extinctionDiamond 95 — Larry Diamond, Hoover Institution Senior Fellow, 95

[Stanford Univ. Political Science and Sociology professor, former Baghdad CPA senior adviser,"Promoting Democracy in the 1990s," http://wwics.si.edu/subsites/ccpdc/pubs/di/fr.htm] This hardly exhausts the lists of threats to our security and well-being in the coming years and decades. In the former Yugoslavianationalist aggression tears at the stability of Europe and could easily spread. The flow of illegal drugs intensifies through

increasingly powerful international crime syndicates that have made common cause with authoritarian regimes and have utterly

corrupted the institutions of tenuous, democratic ones. Nuclear, chemical, and biological weaponscontinue to proliferate. The very source of life on Earth, the global ecosystem,appears increasingly endangered. Most of these new and unconventional threats to security areassociated with or aggravated by the weakness or absence of democracy, with its provisions for

legality, accountability, popular sovereignty, and openness. The experience of thiscentury offers important lessons. Countries that govern themselves in a truly

http://wwics.si.edu/subsites/ccpdc/pubs/di/fr.htm

http://wwics.si.edu/subsites/ccpdc/pubs/di/fr.htm



democratic fashion do not go to war with one another. They do not aggress against their neighbors

to aggrandize themselves or glorify their leaders. Democratic governments do not ethnically "cleanse" their own populations, andthey are much less likely to face ethnic insurgency. Democracies do not sponsor terrorism against one another. They do not build weapons of mass destruction to use on or to threaten one another. Democratic countries form more reliable, open, and enduring

trading partnerships. In the long run they offer better and more stable climates for investment. They are moreenvironmentally responsible because they must answer to their own citizens, who

organize to protest the destruction of their environments. They are better bets to honor internationaltreaties since they value legal obligations and because their openness makes it much more difficult to breach agreements in secret.Precisely because, within their own borders, they respect competition, civil liberties, property rights, and the rule of law,democracies are the only reliable foundation on which a new world order of international security and prosperity can be built.



Plan Key – LA Relations

Engaging Venezuela solves Latin American relations and democracy

promotion

Kragie, 12 -- Duke University [Andrew, "Venezuela's 2012 Presidential Election: Policy Recommendation,"sites.duke.edu/history136a_01_s2012_awk7/policy-recommendations/, accessed 7-19-13, mss]

The US stands to lose much or gain a bit based on its reactions in the post-election period. A reaction that seems to opposeChavez on ideological rather than democratic grounds could reinforce the historically rooted sensethe US only supports democracy when the elected leaders support the US. On the other

hand, a reaction guided by democratic principles and regional cooperation would bolster Latin American nations’ willingness to cooperate in many domains. The USreaction might help restore its role as a promoter of democracy and a respected

voice for liberty worldwide. Weeks highlights the memories of past instances of ―unilateral and indiscriminate uses

of force,‖ most recently the 1989 invasion of Panama, and argues that the US focused almost exclusively on security goals in Latin America during the Cold War (2008, 163-4). Today, the US focuses more on issues of freedom and democracy in policy discussions.The US State Department lists ―strengthening effective institutions of democratic governance‖ as one of its ―four main foreign policypillars in the Americas‖ (―Regional Topics‖).

Engaging Venezuela is key to US-Latin America relations- the offer makes it

impossible to paint the US negativelyGriffon, 13 -- Crimson editorial writer [John, "Engage with Venezuela," The Harvard Crimson,

www.thecrimson.com/article/2013/4/3/Harvard-Venezuela-Chavez-death/, accessed 7-20-13, mss] When Venezuelan President Hugo Chávez died in early February, his country was thrown into a period of national mourning as the

political equilibrium in Latin America hung in the balance. As Venezuela chooses its next president, Washington shouldseek to reverse the current trend of acrid relations between the two nations andengage with the Venezuelan government in Caracas toward stability and prosperity in the Western hemisphere.

While it might seem likely that relations between the United States and Venezuela would naturally

improve after the death of the combative Chávez, the opposite now seems more likely .Before passing away, Chávez had handpicked a successor in Nicholas Maduro, who has assumed power in the interim before thepresidential election in April. As Chávez‘s handpicked successor, Maduro has already continued with his mentor‘s trend of usinganti-American rhetoric to bring popularity to his government, even declaring that American agents may have infected Chávez with

the cancer that killed him. While Washington has officially declared that it is committed to a morefunctional relationship with Venezuela, its actions have not been consistent withthis idea: The United States offered no official condolences for Chávez‘s death, and both nations have started expelling

diplomats from the other. Neither nation, it seems, is steering toward more congenial relations with the other. Admittedly, the United States has good reason to be less than enthused about more Chávez-style

governance in Venezuela. Calling himself a 21st-century socialist, Chávez nationalized the lucrative oil industry, developed strongtrade and diplomatic relationships with Iran and Cuba, repeatedly decried the United States as an imperialist force, and cooperated

with the Iranians in developing nuclear technology. Engaging in petty diplomat-expulsion spats, however, is no

way to deal with any of these problems, and it in fact only strengthens the Chavistas‘ hold on their country. The

diplomatic and economic opportunities that would stem from greater engagement would far outweigh the meager benefits reaped

from our current policies. Diplomatically, positive engagement with Venezuela would be a major step toward building American credibility in the world atlarge, especially in Latin America. Chávez (along with his friends the Castros in Cuba) wasable to bolster regional support for his regime by pointing out the United States‘ attempts to

forcibly intervene in Venezuelan politics. Soon, a number of populist governments in Latin America had rallied

around Chávez and his anti-American policies. In 2004, Bolivia, Ecuador, Nicaragua, and three Caribbean nations joined with Venezuela and Cuba to form the Bolivarian Alliance for the Peoples of our America, an organization in direct opposition to the Free

Trade Area in the Americas proposed (but never realized) by the Bush administration. Chávez galvanized these



nations—many of whom have experienced American interventionist tactics— by vilifying America as a common,

imperial enemy. Unfortunately for the United States, its general strategy regarding Venezuela has often strengthened Chávez‘s position. Every time Washingtonchastises Venezuela for opposing American interests or attempts to bring sanctions against the Latin American country,

the leader in Caracas (whether it be Chávez or Maduro) simply gains more evidence toward his claim that

Washington is a neo-colonialist meddler. This weakens the United States‘ diplomatic position, while

simultaneously strengthening Venezuela‘s. If Washington wants Latin America to stopits current trend of electing leftist, Chavista governments, its first step should beto adopt a less astringent tone in dealing with Venezuela. Caracas will beunable to paint Washington as an aggressor, and Washington will inturn gain a better image in Latin America. Beyond leading to moreamicable, cooperative relationships with Latin American nations ,

engagement with Venezuela would also be economically advisable. With the world‘s largest oil reserves, countless other valuableresources, and stunning natural beauty to attract scores of tourists, Venezuela has quite a bit to offer economically. Even now, America can see the possible benefits of economic engagement with Caracas by looking at one of the few extant cases of suchcooperation: Each year, thousands of needy Americans are able to keep their homes heated because of the cooperation between Venezuela and a Boston-area oil company. Engagement with Venezuela would also lead to stronger economic cooperation with theentirety of Latin America. It was mostly through Venezuela‘s efforts that the United States was unable to create a ―Free Trade Area ofthe Americas,‖ an endeavor that would have eliminated most trade barriers among participant nations, thereby leading to morelucrative trade. In a world where the United States and Venezuela were to enjoy normalized relations, all nations involved would

benefit from such agreements. For both diplomatic and economic reasons, then, positive engagement is the bestcourse of action for the United States. As it stands, the negative relationship between the countries

has created an atmosphere of animosity in the hemisphere, hindering dialogue andmaking economic cooperation nearly impossible. While there is much for which

the Venezuelan government can rightly be criticized—authoritarian rule, abuse of human rights, lack of market-

friendly policies—nothing that the United States is doing to counter those drawbacks ishaving any effect. The United States should stop playing ―tough guy‖ with Venezuela, bitethe bullet, and work toward stability and prosperity for the entire hemisphere.

We aren‘t catching any flies with our vinegar—it‘s high time we started trying to

catch them with honey.

The plan overwhelms alt causes- lack of US presence makes minor squabbles

seem larger than they areRothkopf, 13 -- Foreign Policy editor-at-large

[David, "The Blind Spot," www.foreignpolicy.com/articles/2013/07/15/the_blind_spot_us_policy_latin_america, accessed 7-21-13,mss]

But mostly what has resonated in the Western Hemisphere during the past four yearsis a general lack of any U.S. interest or material activity in the region -- beyondregularly bumping heads with the Latin American left and patently dismissing the agenda items that

Latin Americans want to discuss when meeting in multilateral settings (a drug policy that addresses demand in the United States,

the flow of U.S. guns into the region, or a more rational Cuba policy). The administration should have seenthe death of Hugo Chávez as a chance to recast the relationship with that substantialgroup of left-leaning leaders in the region. After all, Obama and those around him not so secretly harbor

the desire to bring the U.S.-Cuba relationship into the 21st century by developing a road map to end the embargo, one of the all-timegreatest flops in U.S. foreign-policy history. That would win some points. And some of the region's top officials from the left, likeEcuadorean President Rafael Correa, have been more constructive on issues like drug-enforcement cooperation and even seemingly

more open to progress on some trade issues. And given that the left has so much clout in many of theregion's most important countries -- like Venezuela, Brazil, and Argentina, not to mention Ecuador,

Bolivia, Peru, Nicaragua, Cuba, and perhaps Chile, where former President Michelle Bachelet is poised for a comeback -- it



seems that would be worth the United States' while. (Not to mention the fact that making nice with the

Pacific half of Latin America to the exclusion of the Atlantic half seems strategically silly.) Since the United States is perfectly happyto work with left-leaning governments everywhere else in the world (and others that are authoritarian or worse -- yes, I mean you, Vladimir), we have to ask, why is the Latin America policy establishment having such a hard time getting over the 1980s? Or the1960s? (The joke in the community goes that there are two factions in the Latin America policy community -- those still living in the'60s and those still living in the '80s. But all seem more familiar with the Cold War's tactics and more inclined to discuss importsubstitution and old school North-South politics than they are with the new realities of this century.) If the answer is hard to fathom,

the consequences could not be more obvious. The absence of any real focus onthe region except to complain about trade disputes or quibble with the likes of Chávez (an

understandable pursuit but not a suitable basis for a regional policy) has created a void that means whensomething goes wrong, it actually is seen as the totality of U.S. policy in the

Americas. So it loomed larger than it otherwise might have when there was afiasco concerning the grounding of Bolivian President Evo Morales's flight in Europe

because he was thought to be ferrying Edward Snowden to a new destination. It inflamed Morales's

colleagues throughout the region. The big bully of the North was dissing them again, extralegally

violating their sovereign prerogatives. And then, when it was discovered that the National Security Agency was actively interceptingcommunications of millions of Brazilians, the United States actually succeeded in sending U.S. relations with the region hurtling back to the periods of the last century in which some U.S. policymakers seem most comfortable. It certainly hasn't helped that it hasalso been reported that the surveillance efforts extended to Mexico, Colombia, Argentina, Venezuela, Chile, Peru, Ecuador, Panama,

Costa Rica, and others. The U.S. intelligence community was in everyone's business again. The United States wastreating them like second-class citizens again. And it was hard to name major countervailing positive

initiatives -- as you might find in the case of China or even Russia -- that could counterbalance and at least keep the relationships

"complex" rather than just lousy. It is sometimes thought that the failure to pay muchattention to a region at least has the advantage of doing no harm. Not true. Itleaves the door open for the unexpected and uncomfortable to define the totalityof the relationship and gives the United States little leverage to offset problems whenthey do arise. It is akin to the U.S. stance in Syria, where doing nothing doesn't mean the United

States is off the hook. Sometimes you own a problem not because you "broke it," but because your neglect has exacerbated it or made it possible.



A2 July Announcment

The July announcement isn’t anything new- relations will always be on/off

without prior US engagement

Neuman, 13 -- Andes Region correspondent[William, "Venezuela Stops Efforts to Improve U.S. Relations," NY Times, 7-20-13, www.nytimes.com/2013/07/21/world/americas/venezuela-stops-efforts-to-improve-us-relations.html?_r=2&, accessed 7-22-13,mss]

This is not the first time that Venezuela has backed off the idea of renewedrelations with the United States. The two countries quietly began talks late last year

aimed at improving relations, although those ground to a halt after the health of Mr. Chávez, who

had cancer, deteriorated in December. After Mr. Chávez‘s death in March, a State Department official said the United States

hoped that the election to replace him would meet democratic standards — prompting Mr. Jaua to angrily announce that Venezuela

was halting the talks between the two countries. Venezuelan officials have repeatedly said relations with the United States should be conducted on a basis of respect.

Economic factors still matter moreTimes Argus, 13 ["Quit the Sniping," 7-22-13, www.timesargus.com/article/20130722/OPINION02/707229989,

accessed 7-22-13, mss]

The foreign ministry described Power‘s comments as ―interventionist‖ and boasted that

the UN had often recognized Venezuela‘s ―solid system of constitutional guarantees‖ that ensured its citizens‘ fundamental rights.―By contrast, the whole world is constantly expressing its concern over repressive practices carried out by the United States,‖ thestatement added. Maduro earlier angered Washington by offering asylum to the fugitive intelligence contractor Edward J. Snowden, who has been stranded in a Moscow airport while seeking a home where he‘d be able to avoid prosecution by the United States. All but two have rejected his request. ―I have decided to offer humanitarian asylum to the young American Edward Snowden,‖ Maduro had explained, ―to protect this young man from the persecution unleashed by the world‘s most powerful empire.‖ Washington mayappear understandably preoccupied with pending talks between Israel and Palestine, the continued unrest in Egypt, the worseningsituation in Syria and the sectarian violence in Iraq, but clearly the state department also must deal with hostility from certain partsof Latin America. One oddity: More than 100 players on America‘s Major League Baseball teams are natives of Venezuela, and theirperformances are closely watched by their friends, relatives and fans back home. And, unlike Cuban players, they didn‘t have to

defect to play in the United States. They‘re well paid in this country. Also, the United States is an important

customer for Venezuela‘s major export, oil. The two nations can keep sniping ateach other, but they also need each other, and that fact may help save their relationship.



Say Yes

Pragmatism will win out- their evidence relies on faulty assumptions about

Latin America

Halabi, 13 -- London School of Economics postgraduate fellow[Sammy, "Reasons for Optimism in Venezuela," Global Risk Insights, globalriskinsights.com/2013/05/03/spring-is-coming-we-should-be-optimistic-about-venezuela/, accessed 7-21-13, mss]

Maduro is a man who on the surface appears to fit quite nicely into Chavismo. From his humble

beginnings as a Caracas bus driver, Maduro rose to become something akin to Chavez‘s son. If one could permit such an analogy , heis what the ―Venezuelan dream‖ should represent as a product of a system notionally designed to give power back to the people.Throughout the recent election Maduro tried to play up these credentials, hoping to bank on his perceived populist appeal andChavez‘s messianic cult. His campaign slogan is quite emblematic of this: ―Chavez sets the route, Maduro takes the wheel!‖ they said.

But Maduro is not Chavez. He is a man from the people, but not a man of the people. Though he may say the

same things, he does not talk the same way . The recent election results, where Chavez‘s 11-point victory over

opposition leader Henrique Capriles was reduced to a disputed outcome, is symptomatic of this. Understandingthis is fundamentally important in predicting the coming trajectory of the Venezuelan state. Though Venezuela will continue to be able to export oil, slightly mitigating some of Chavez‘s more

disastrous economic policies, Maduro sits on a ticking time bomb. Inflation is sky high, moving

past 30%. Murder rates are skyrocketing while foreign investment continues toplummet due to past expropriations. And with increased American energy independence theera of $100 oil may be coming to an end. Chavez had both the ideological conviction and public support

necessary to withstand pressures to liberalize and integrate the Venezuelan economy in the face of such terrible indicators. Yet

given his weakened mandate, and the fractured political climate under which heoperates, Maduro will not be able to withstand such pressures for long. Already there have been signs that Venezuela is inching towards change, with Madurogoing so far as to temporarily open a back-channel with the US State Department duringChavez‘s cancer treatments. While it would be difficult to see an overnight reversal of US-Venezuelan relations,

these subtle steps are more indicative of a pragmatist than anideologue. This is cause for optimism, and may be the root of better ties with

Venezuela‘s biggest export market in the medium term. In the short term, expect Venezuela

to pursue its liberalization on a more regional basis. Importantly, Brazil very quickly recognized Maduro‘s government in spite of the

electoral controversies. Additionally, Brazil and Peru have shown that there is a viable ―third way‖ through which Venezuela can integrate into the international system. Stateslike these have contributed to the general decline in anti-American sentiment,and give Venezuela a workable model for change. For all the fever andemotion associated with Latin America, the logic of Venezuela’s economic problemsremains cold and calculating. Maduro is not the reincarnation of Chavez andattempts to analyze Venezuela’s future on its Chavismo past are

superficial at best. In short, spring is coming.Venezuela says yes- their evidence is about rhetoric not action Auken, 13 – political activist [Bill Van, "Venezuela‘s Maduro reaches out to big business and Washington," WSWS, 6-7-13,

https://www.wsws.org/en/articles/2013/06/07/vene-j07.html, accessed 7-19-13, mss]

After three months in office, Venezuelan President Nicolas Maduro, the handpicked successor of the late Hugo Chavez, has

put aside left rhetoric to seek accommodation with Venezuela‘s biggest capitalists as well as with the Obama administration in Washington. Maduro has repeatedly charged in recent months that



also one of the leading candidates to substitute Chavez should the president drop his re-election bid. When Chavez returned fromCuba March 16, Cabello greeted him at the airport and a day later joined him as he addressed supporters from the ―People‘s Balcony‖of the presidential palace. ―He‘s emerged as one of the most prominent figures within Chavismo and to the extent that there w ill be adiscussion about succession he‘ll play a very important role,‖ Francisco Rodriguez, a senior Latin America economist at Bank of America Corp., said in a phone interview from New York. Calls to Cabello‘s office at the National Assembly went unanswered, w hile

Chavez‘s information ministry didn‘t respond to a phone call and e-mail seeking comment. Pragmatist Businessleaders see Cabello as more of a pragmatist than the civilian, pro-Cuban wing

of the government. In 1999, as chief telecommunications regulator, he ended Cia. Anonima Nacional Telefonos de

Venezuela‘s monopoly on fixed-line phone service. ―People in business felt that Cabello was someone they could talk with,‖ said Rodriguez, who was an economic adviser to Venezuela‘s congress from 2000 to 2004. ―While I don‘t think that‘s currently the case it does appear toillustrate less of an ideological strain of thinking.‖

The anti-Americanism narrative is dead wrong- economic self-interest

overrides ideology every timeBaker, 13 -- University of Colorado Boulder political science professor

[Andy, and David Cupery, PhD Candidate in the Department of Political Science, University of Colorado Boulder, "Gringo StayHere!" Americas Quarterly, 7.2, Spring 2013, www.americasquarterly.org/gringo-stay-here, accessed 7-27-13, mss]

Anti-Americanism in the region isn't what you think. Here's why."Why do they hate us?‖ This question1, on so many U.S. citizens‘ minds over the decade following the September 11, 2001, attacks, isoften asked about Islamic extremists and even the broader Muslim world. Among the most common responses is that ―they‖ resent U.S. foreign policy in the Middle East. When the focus shifts to Latin America, U.S. foreign policy similarly appears to be theprincipal reason for anti-Americanism. This seems to make sense. One would be hard-pressed to find another world region withgreater and more long-standing grievances about Washington‘s actions. The Monroe Doctrine, Dollar Diplomacy and Cold WarContainment were euphemisms for imperial abuses committed against Latin America over the course of two centuries. However, as

we show here,Latin American citizens today are not overwhelmingly anti-American. In fact,

polling data suggest that on balance the opposite is true. Clear majorities of respondentsin nearly every Latin American country hold positive opinions of the United States.

Even more surprising, many of the countries where U.S. intervention has beenmost frequent and dramatic (e.g., the Dominican Republic, El Salvador, Guatemala, Nicaragua, Panama) are

also the countries where mass opinions about the U.S. are most favorable. The fact is,

the question at the start of this article should be turned on its head: ―Why don‘t Latin Americans hate us?‖ What accountsfor these puzzling findings? Economic self-interest offers one clue. The polling data indicate that the

stronger the economic ties between a Latin American country and the U.S.— whether related to trade, aid, migration, remittances, orinvestment—the more favorable are its citizens‘ opinions toward the ―Colossus of the North.‖ This explains why Caribbean andCentral American countries, despite being more historically victimized, are the most pro-American. Put another way, Latin Americans like the U.S. because of their stronger economic ties, relative to the rest of the world, with their northern neighbor.

Assuming Anti-Americanism … You would not know this from the rhetoric favored by some of

the region‘s intellectuals and political leaders. Historical events ranging from the annexation of half of Mexico‘s

territory (1848) to the deposition of democratically elected leaders (Guatemala in 1954) have, according to some Latin Americanelites and various scholars, built up a deep resentment in the region toward the United States. Leaders of Latin America‘s ne w Lefthave followed closely in their footsteps. Among his many colorful statements, the late Hugo Chávez noted that ―in all history, there was never a government more terrorist than that of the U.S. empire.‖2 When Nicaragua and 32 other countries created theCommunity of Latin American and Caribbean States (CELAC) in 2011, Nicaraguan leader Daniel Ortega boasted that the group‘screation amounted to ―sentencing the Monroe Doctrine to death.‖3 Many scholars believe anti-Americanism is deep-seated amongordinary Latin Americans as well. ―Latin Americans are disparate peoples, but there are few things that unite them more than theirshared resentment at the persistent record of U.S. high-handedness in the region as a whole,‖4 according to George Yúdice. Anotherprominent thinker, Alan McPherson, believes that the more significant and frequent the U.S. intervention, ―the more widespread,deep and visceral anti-U.S. sentiment became.‖5 This resentment continues today, McPherson added, because ―a generationalsedimentation of grievances shaped historical memories and national mythologies.‖6 Julia Swieg sees an ―instinctive anti-American

reflex‖7 in the region, and Michael Radu describes anti- Americanism as a ―deeply rooted disposition.‖8 Overall, the story is

simple and compelling: Latin Americans do hate us, and this resentment is richly deserved. The problem,

however, is that this story is categorically untrue. … but Observing Pro-Americanism Even a

cursory glance at public opinion data shows the alleged ―shared resentment‖ to be non-existent—certainly since the 1990s. According to data from the 18-country Latinobarómetro survey series, the average Latin American held a positive opinion of the U.S.in every year between 1995 and 2010.9 In all 18 countries, respondents holding favorable views of the U.S. outnumbered those



expressing negative views over this decade and a half. Typically, the former outnumbered the latter by a large margin. Figure 1depicts these straightforward results. More than 75 percent of those surveyed expressed favorable opinions of the U.S. in 10 of the 18countries, and in no country did negatively inclined respondents outnumber positively inclined ones. The average percentage ofLatin American respondents who expressed favorable opinions toward the U.S. (77 percent) was the same as the percentage whoexpressed favorable opinions toward China (77 percent), less than the percentage of respondents who expressed favorable opinionstoward the EU and Japan (87 and 86 percent, respectively), and more than the percentage who expressed favorable opinions towardCuba and Venezuela (55 and 51 percent, respectively). A point of comparison is the average degree of anti- Americanism in the ―restof the world,‖ based on a sample of 45 other countries gathered through the Pew Global Attitudes project between 2002 and 2010.

The average attitude in the rest of the world is more unfavorable to the U.S. than the most anti-American country in Latin America: Argentina. In short, Latin Americans are pro-American and, in most countries,

overwhelmingly so. A closer look at these results reveals a pattern that is even more surprising, and even more damning,

of the aforementioned assumptions about anti-Americanism in the region. The countries that are the most pro-American are allCaribbean or Central American nations. These are precisely those countries that have been the most victimized historically by theUnited States. The vast majority of U.S. interventions have occurred in the countries to its near south, while imperial interventionshave been a somewhat rarer occurrence in South America. The military occupations during the Banana Wars, the violentcontainment measures of the Cold War, and even the few visible post-1989 interventions mostly —though not exclusively —occurredin the Latin American nations of the northern hemisphere. (Recall, as another example, the Roosevelt Corollary‘s goal of turning the

Caribbean into an ―American lake.‖) All told, the findings leave us with two puzzles. First, why do Latin Americanslike the U.S., despite Washington‘s persistent pattern of violating Latin Americansovereignty over the past 200 years? Second, why are the most historically victimized countries today the most pro-

American? It‘s the Economy, Stupid Answering the question requires looking a little more closely at Latin American

attitudes and behavior. U.S. interventions, especially during the Cold War, were often welcomed by large segments of the societies in which they occurred (e.g., opponents of the Sandinistas or supporters of the Salvadoran military). After all, the U.S. almost always

took sides in a pre-existing ideological and political struggle. Memories are also short. Latin America is an

overwhelmingly youthful region, and most people under 40 have no vivid memories or experiences of the U.S. actions that enraged

their parents and grandparents. We find that for most Latin Americans, the more immediate realityis that of international economic exchange with the United States. For Latin Americancountries, economic exchange with the U.S.—conceived in an inclusive sense as trade, investment, aid,

migration, and remittance flows—coincides with positive thoughts toward El Norte. According topolitical scientists Joseph Nye and William Reed, strong bilateral economic ties between

countries promote goodwill between partners by increasing tolerance, mutual trust, andcross-cultural understanding.10 Economic interdependence also creates a class ofindividuals that benefits materially from the ongoing exchange and has objectiveexperiences to show for it. For example, in much of Central America, a large number of lower- and middle-class

citizens receive remittances from friends and relatives working in the U.S. Finally, the relative wealth of the U.S. associates it, in theminds of many Latin Americans, with material success and opportunity. Many Latin American consumers see U.S. brands—CalvinKlein, Hollywood, and even McDonald‘s—as symbols of quality and sophistication, something that helps explain the prevalence ofknockoffs like ―Kalvin Clein‖ in informal markets.12 Consider these statistics, reported by the Inter-American Dialogue last year:―the U.S. currently buys about 40 percent of Latin America‘s exports and an even higher percentage of its manufactured products. Itremains the first or second commercial partner for nearly every country in the region. And it provides nearly 40 percent of foreigninvestment and upwards of 90 percent of the $60 billion or so in remittance income that goes to Latin America.‖11 Being sophysically close to the U.S., Latin America‘s volumes of trade, migration, investment, and remittance flows with the northerncolossus are greater than those of other countries, and their citizens are more positive toward the U.S. Moreover, even within Latin America, it is those countries that are the closest to the U.S. that are the most pro-American. The reason why countries that were themost victimized—in Central America and the Caribbean—are the most pro-American is the greater economic interdependence theyenjoy with the U.S. That‘s borne out by the huge numbers of expatriates from those countries living in the U.S., and consequentlymore remittance flows—among other factors. Although advances in technology and policy changes have dramatically lowered thecosts of international exchange, physically proximate countries are still more likely to have higher degrees of economicinterdependence than distant ones. Figure 2 shows this to be the case for inter-American economic relations. The scatterplot depicts

18 Latin American countries according to the number of emigrants they send to the U.S. (x-axis) and the amount of trading they do with the U.S. (y-axis).13 The diagonal line in the plot traces out a natural breakpoint that illustrates the impact of distance. To theleft of the line are nine countries with relatively few emigrants to the U.S. and less trade with it, and they are all South American. Tothe right of the line are nine countries with a relatively large number of emigrants to the U.S. and a heavy volume of trade with it,and they are all Central American, North American or Caribbean (with the exception of Ecuador). In short, proximity to the U.S.correlates with a higher degree of bilateral trade and immigration. Figure 3 traces out a third dimension providing evidence for thecase that economic exchange with the U.S. creates massive goodwill even toward the region‘s historical bully. Here is arepresentation of pro-American attitudes corresponding to countries in Figure 1. On the left side of the scale are countries with arelatively low percentage of pro-American citizens. Again, the diagonal line provides a clear point of reference. Below it, in the South American countries where migrant and trade volumes to the U.S. are low, citizens are less favorable toward the United States. Abovethe line, in the Caribbean basin, favorability toward the northern colossus runs high.14 International economic exchange breedsgoodwill.15 The one glaring outlier in the region is Mexico. The country is toward the upper-right corner of the scatterplot due to the



well-known fact that Mexicans are tightly linked to the U.S. through their export markets, their relatives and friends who live there,and the remittances they receive back from them. Despite this, Mexicans are surpassed only by the Argentines in their lack ofgoodwill toward the United States. Does this cast serious doubt on our claims? We think not. Of all the countries in the region,Mexico has surely been the most wronged by U.S. imperialism. It is the only one to have fought a major war against the U.S., theonly one to have lost 50 percent of its land to the U.S., and currently the primary victim of U.S. demand for i llegal narcotics. And yetMexicans are, on balance, pro-American: 60 percent had a favorable opinion between 1995 and 2010. [See Figure 1.] If anything,international exchange between the U.S. and Mexico seems to be overcoming a goodwill deficit that otherwise would be muchdeeper. Implications and Conclusions The U.S. government has spent a lot of time and energy trying to shape how foreigners view

America. George W. Bush appointed advertising executive Charlotte Beers as Undersecretary for Public Diplomacy and Public Affairs in October 2001, just after the September 11 attacks on the World Trade Center—an effort in large part to counter thepropaganda of jihadists. Beers, and later appointees Margaret D. Tutwiler and Karen Hughes, worked diligently to improve the U.S. brand. But they all left the post after a short period of largely failed efforts. Our findings suggest that at least in the Western

Hemisphere, the energy involved in such activities could have been better spent elsewhere. The exchanges that take place

between U.S. and Latin American economic actors are a much more effective means ofpromoting pro-American sentiment. Better yet, this channel of goodwill promotion is virtually free for the

U.S. government, as it is driven by voluntary and daily incidences of what Adam Smith called the innate human ―propensity to truck,

barter and exchange.‖ This does not mean, however, that the U.S. can simply sit backand assume it needs to do nothing at all. There are numerous policyopportunities for deepening and humanizing international economic relations in the

region. Imports from the U.S. are a particularly effective mechanism of promoting

the ―U.S. brand.‖16 Armed with that knowledge, a first place to start in reinforcing positive perceptions toward the U.S. would be re-launching the moribund efforts to form a Free Trade Agreement of the Americas (FTAA). The remaining countries inthe region with which the U.S. does not have a free trade agreement (Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay, and Venezuela) are also, surely not coincidently, the ones that tend to have the least pro-American citizens.17 An FTAA for which theU.S. makes true concessions on agricultural protectionism could help to shift the calculations of countries that are genuinely holdingout based on economic calculations. Reform of U.S. immigration rules would also help. According to a report by the Inter-AmericanDialogue, ―Washington‘s failure to repair the United States‘ broken immigration system is breeding resentment across the region,nowhere more so than in the principal points of origin and transit: Mexico, Central America and the Caribbean.‖18 To reiterate, wefind little evidence of seething resentment in these countries, but we do agree that well-targeted immigration reform can only furthergoodwill toward the U.S. Of course, foreign attitudes will not and should not be the principal worry of U.S. policymakers, but the beauty of these measures is that they are good not just for building mass goodwill but for the hemisphere‘s economies as well.

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