To Bush Admin’s Chagrin, Chavez Helps the Poor in the U.S.

The Mouse on Steroids

30 May 2006 |

by William Fisher

We can’t be blamed if Venezuela’s mini-public diplomacy program reminds us of “The Mouse That Roared” – and we can almost hear the gnashing teeth in the White House SitRoom.

I refer to the program being waged in the US by Venezuela’s President Hugo Chávez. Under that program, Citgo, Venezuela’s wholly-owned gas and oil subsidiary, provides discounts up to 60 per cent on heating oil to poor communities in the US.

Known as petro-diplomacy, the program is currently operating in Maine, Massachusetts, Pennsylvania, Delaware, Vermont, Connecticut, and Rhode Island. Local politicians, desperate for ways to reduce energy costs for their constituents, have welcomed it with open arms. In New York, Harlem congressman Charles Rangel announced expansion of the program into upper Manhattan, and Citgo struck a deal with three nonprofit organizations in the Bronx to deliver five million gallons of heating oil at 45 percent below the market price. Citgo says the deal will amount to a savings of $4 million for the 8,000 low-income households slated to benefit from the plan.

Citgo says the program has benefited more than 180,000 households – and is now attracting some big-name supporters (though Condoleezza Rice is not one of them).

Citgo says it initiated the heating oil program late last year in an effort to help low-income families in the US to cope with the cold winter and high oil costs. The Venezuelan government says the program costs Citgo relatively little because the oil is being supplied directly, without middlemen, who usually make substantial profits.

But Venezuela’s “oil for the poor” program has also met with opposition from some local politicians. Last October, Citgo proposed to substitute diesel fuel for home heating oil, which is used only by a small number of Chicagoans. It offered a 40 percent discount on 7.2 million gallons of diesel if it was used for Chicago’s public buses. Though the deal could have saved the city approximately $15 million, the offer was rejected over the objections of other elected officials and labor groups.

Undeterred, Chavez is now proposing a second phase of the program. He told a delegation of beneficiaries of the program that in addition to the 40% discount, only 30% would go towards Citgo’s expenses and the remaining 30% would be set aside for a special local development fund, to help unemployed in the communities to set up cooperatives. The products of such cooperatives could then be sold to Venezuela, Chavez suggested.

The idea was immediately embraced by former Massachusetts Representative Joe Kennedy, a member of the US delegation and a key figure in facilitating the heating oil program in Boston via his Citizens Energy Corporation.

“This concept allows families to work out of poverty; it helps them by giving them the tools such as money to build a roof over their head, instead of just a one-shot benefit,” said Kennedy.

Chavez also announced that the program will be doubled next year from its current level of 40 million gallons. “No one should believe that this is just a momentary interest,” Chavez told the group. “Leave at ease and tell your neighbors of the communities you represent that the program will continue; it has just begun,” he said.

Chavez insisted that the program was not designed to buy support in the US, as many critics claimed, but is rather an example of corporate responsibility, because Citgo, which is now making large profits in the US, is now giving back to communities in which it does business. “Citgo has done good business in the US. We believe companies, along with making a profit. need to have social responsibilities for the people they sell to,” said Chavez.

Chavez pointed out that in the 20 years Venezuela has owned Citgo, it never paid dividends to the Venezuelan state. Only in 2004 and 2005 has it begun to repatriate some of its profits to Venezuela, he said.

He also cited the program as “an example of his government’s efforts to move towards socialism, in which countries relate to each other on the basis of cooperation, solidarity, and complementarity.” Venezuela also provides discounted fuel to other countries in Latin America.

Meanwhile, despite a State Department spokesman’s comment that the US has “no objections” to Citgo’s offers, the Bush administration continues to ramp up its war of words – and equipment – on Chavez and his buddies, Iran, Cuba and Bolivia.

Chavez has certainly been pushing all the right buttons in the White House and the State Department. He proposed a new free trade pact between Venezuela, Cuba, and Bolivia, and pledged to help Bolivia’s new President, Evo Morales, with $1.5 billion in energy investments. Bolivia has the second-largest natural gas reserves in South America after Venezuela. Venezuela’s state-owned oil company, PDVSA, and Bolivia’s state-owned YPFB are expected to produce natural gas in a joint venture. Chavez has also pledged to be a reliable oil-supplier to his mentor, Fidel Castro.

He recently said he does not believe that Iran ‘s nuclear program is a front for secret efforts to produce an atomic bomb. “I don’t believe that the United States or anyone else has the right … to prohibit that a country has nuclear energy,” Chavez said at a news conference in London. He repeated a warning that any military strike against Iran would send the price of crude oil soaring above US $100 a barrel and trigger an enormous military escalation in the Middle East. He also called Bush a “terrorist.”

This kind of rhetoric is unlikely to win Chavez many friends in the US – at least not in the White House or the State Department or the US Congress.

The Bush administration’s retaliation has bordered on the petty. The US recently announced it would cease to sell American-made military hardware to Venezuela, citing what it claims is a lack of support by Chavez for counter-terrorism efforts, a State Department official said. Venezuela lost no time in countering that it would buy from the Russians and sell off its fleet of American-made fighter planes – which are little more than a pile of scrap metal, since the US has been withholding spare parts for the planes for some time.

And you really can’t have an authentic international incident without someone in Congress calling for an investigation.

Enter Congressman Joe Barton, the powerful Texas Republican who is chairman of the House Energy and Commerce Committee. This stalwart recipient of some $2 million in campaign contributions from the energy industry announced he would launch an investigation into possible antitrust violations by a major oil company.

No, not ExxonMobil or Chevron, but – wait for it – Citgo.

As reported in the New York Daily News, in a letter to the Houston-based Citgo, Barton demanded that company officials produce all records, minutes, logs, emails and even desk calendars related to Citgo’s novel program of supplying discounted heating oil to low-income communities in the United States.

“The bellicose Venezuelan decided to meddle in American energy policy, and we think it might prove instructive to know how,” Larry Neal, deputy staff director for Barton’s committee, told the Daily News.

According to the newspaper, Barton’s letter lists “a bunch of questions” he wants Citgo to answer, including “how and why were the particular beneficiaries of this program selected” and whether the program “runs afoul of any US laws, including but not limited to, antitrust laws.”

But Congressman Ed Markey, a Massachusetts Democrat, said he was flabbergasted by Barton’s investigation. “The Republicans are on another planet when it comes to energy policy,” Markey said.

Instead of doing something about skyrocketing oil prices, Markey said, the Republicans are probing “a charitable donation of heating oil to relieve the suffering of a few thousand American families.”

US Energy Secretary Samuel Bodman seemed to agree. He told CNN that the US government has no problems with Venezuela’s “oil for the poor” offer. “We view it, as corporate philanthropy. We’re all for that. Nobody in the Energy Department, or in the government for that matter, is going oppose that. If that’s what Mr. Chavez and his colleagues who own CITGO choose to do, I’m certainly not going to criticize,” Bodman said.

Sounds like Mr. Bodman left his talking points in his other suit.

Where all this is heading should be well known to US policymakers – we’ve been there before. It’s not like Latin American populism is anything new. And we have all the tools and all the experience – if not the will – to be trying to bring the countries of Latin America together to address real and urgent needs. It’s time for America – and Mr. Chavez – to abandon the current tit-for-tat diplomacy that can only further separate us from our troubled backyard.

Yet we seem to be hell bent on elevating populists to heroes by backing Big Oil and acting as though every rhetorically over-the-top utterance from folks like Chavez is another Cuban Missile Crisis.

It would be instructive if someone in the State Department remembered that the road we’re traveling looks very much like the one that took us to our insane Cuba policy.

William Fisher has managed economic development programs in the Middle East and in many other parts of the world for the US State Department and USAID for the past thirty years. He began his work life as a journalist for newspapers and for the Associated Press in Florida. Go to The World According to Bill Fisher for more.

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