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Venezuela: What Should the US Do?

Support democrats in Venezuela and free trade and small business in Latin America, experts propose.


While Venezuelan President Hugo Chavez attacks U.S. President George W. Bush and the United States (which he calls "the Empire") nearly daily, U.S. policymakers have been more reserved in responding.

One major exception occurred two weeks ago when US Secretary of State Condoleeza Rice criticized the RCTV shut-down. "We, the members of the OAS, must defend freedom where it is under siege in our hemisphere, and we must support freedom whenever and wherever it is denied," she said.

She urged on the OAS to send its General Secretary to investigate further and file a report that would form the basis of possible further actions, in accordance with the organization's article 18.

Her speech was met with overwhelming silence from a majority of the other OAS countries, while - not surprisingly - attacked harshly by the Venezuelan delegation.

So what should be the U.S. policy for Venezuela?  "The USA should push for an OAS trip and in-situ observation to Venezuela in order [to] monitor human rights violations and freedom of speech," says Jose Luis Cordeiro, a Venezuelan economist and author of The Great Taboo: A True Nationalization of the Venezuelan Petroleum. "The USA should also try to show the abuses of Chavez's regime in the United Nations and other international fora."

Robert Bottome, editor of VenEconomy, agrees. "In public - and in private - the U.S. should stand up for principles [for example] Secretary Rice at the OAS meeting, while avoiding spitting contests," he says. "Principles include democracy, human rights, the market economy and globalization, among others. A little more sensitivity on such issues as immigration would probably help."

The more public exposure, diplomatic pressure, and the greater the international perception that Venezuela is no longer a democracy, the easier it will be for individuals inside Venezuela to understand the importance of standing up for liberal democracy, argues Thor Halvorssen, president of Human Rights Foundation, a New York-based group specializing in Latin America.

Otto Reich, a former US ambassador to Venezuela, says the US needs to continue working with democrats in Venezuela. "Chavez has stated clearly that his plan for Venezuela is a "21st Century Socialism" which leaves no room for either free markets or democracy as practiced in free countries," he says. "The only way to promote democracy and freedom under these circumstances is either to peacefully persuade Chavez to change course or to work with freedom-loving Venezuelans and others to prevent him from extinguishing the flame of liberty which Simon Bolivar lit in the Andes two centuries ago."

Others favor a more pan-regional strategy aimed at containing Chavez' growing influence in Latin America.

"The U.S. can't do much within Venezuela, but it could much more seriously try to support the obvious non-Chavista, market options in other countries, hopefully to create productive conditions elsewhere that will serve as a contrast to inevitable deterioration in Venezuela and other countries that follow the Chavista route," proposes William Ratliff, research fellow at Stanford University's Hoover Institution.

Beatrice Rangel, managing director and president, AMLA Consulting, agrees. The U.S. should deploy a regional policy that nurtures participation in economic gains for the many through the creation of credit lines and technical support for medium-sized enterprises; the provision of top-quality educational services through distance learning and the creation of home-financing through securitization of taxes and fees, she argues.

"The United States needs a grand program for Latin America, one that can capture the imagination of those millions of people who used to see the U.S. as their friend and ally," argues Gustavo Coronel, a former board member of PDVSA and former official of the Inter-American Development Bank. He envisions a joint program between the European Union and the United States aimed at boosting entrepreneurship at the expenses of Latin America's dependence on welfare and populist or dictatorial regimes.

"This will take time but can be properly planned and can be done," Coronel says. "It would not be more difficult than sending a man to the moon and bringing him back alive. I am sure that only getting this program started would create much good will for the United States in the hemisphere, a good will that is sorely needed."

Such plans may not be too far-fetched.  Last week, US Treasury Secretary Henry Paulson announced a $200 million plan to boost small business financing in Latin America. The US will provide up to $50 million over five years to promote the spread of new lending models that fit the unique characteristics of smaller companies, he said. (See Supporting Small Business in Latin America) The funds will go through the Multilateral Investment Fund, (MIF) of the Inter-American Development Bank. An additional $150 million will be provided by banks that will assume a portion of the risks associated with the lending. Those risks will be supported by the Overseas Private Investment Corporation (OPIC) and the IDB Group's Inter-American Investment Corporation (IIC), he said.

However, there are some hurdles, experts warn. P
ast actions by the US government have led Ratliff, for one, to doubt that the effort will be sustained or very effective. "Unless Venezuelans can somehow rise up against Chavez soon, salvation will have to await the collapse, and may not come immediately even then," he says.

Another major hurdle, experts say, is the U.S. attention on Iraq, which is keeping US policymakers too busy to focus more on its backyard and Venezuela.

Until Iraq is solved, it would be unrealistic to expect much from the U.S., Bottome argues. Coronel agrees. "The United States is so over-extended, so busy elsewhere in the planet that, although Hugo Chavez already represents a serious threat to U.S. national security, U.S. response to this threat has been mostly rhetorical and non-systematic," he says.

Instead, the US can use free trade as a tool, he argues, echoing a similar policy proposed by Helle Dale of the Heritage Foundation earlier this year (See Countering Chavez With Free Trade). "The promotion of free market practices and democracy by the U.S. in Venezuela can best be done by promoting trade and expediting bilateral free trade agreements with Andean nations, Brazil and other Latin American nations," he says

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