Oil and Gas

Exxon Flap Illuminates Brittle US-Chavez Ties


An escalating battle with U.S. oil giant ExxonMobil shows Venezuelan President Hugo Chavez's ties with Washington will likely keep deteriorating even after President Bush leaves the White House.

All the U.S. presidential front-runners view Chavez as an anti-American agitator while Chavez's loathing of U.S. influence goes deeper than his personal contempt for Bush, whom he has called "the devil", "a donkey" and "Mr. Danger."

Gas Pump
Mark Lennihan

This week Chavez halted oil sales to Exxon . It was his first limited action after threatening for years to stop sending crude to the U.S.

The feud has intensified because Exxon recently won court orders to freeze $12 billion of assets held by Venezuela in a compensation battle over Chavez's nationalization of an oil project. Venezuela is the fourth largest exporter of oil to the U.S.

Rather than treating it as a corporate fight, Chavez said Exxon was acting as an "American outlaw" in an economic plot to overthrow him. Over the years, Chavez has often used foreign disputes to divert attention from domestic problems like milk shortages.

The U.S. government says it backs Exxon's efforts to get justice but maintains it is not involved in the court case.

Even if Democrat Barack Obama, who has expressed a willingness to meet Chavez, or Hillary Clinton come to power next year, they will struggle to mend relations with a man who constantly rails against American capitalism.

"There may be a better, more civil tone at the outset of the next administration but it is unlikely to last long," said Michael Shifter, a Latin America expert at the Inter-American Dialogue think tank in Washington.

Republican favorite John McCain calls Chavez a dictator who wants to emulate Cuban leader Fidel Castro. Democrats are no kinder. House Speaker Nancy Pelosi has called him a "thug."

Baseball-crazy Venezuela is ironically one of the most Americanized parts of Latin America and has a long history of working with U.S. companies like Exxon, which first pumped oil here in the early 20th century.

But Chavez has frequently clashed with the U.S. since taking office in 1999 and his international reputation is largely built on brazen jibes at Bush.

Initially, Washington said it would wait to see Chavez's actions rather than pro-actively downgrade cooperation. But since a brief 2002 coup -- which Washington initially welcomed and Chavez says the U.S. actively supported -- ties have steadily deteriorated despite a more recent U.S. policy of trying to avoid a war of words.

Venezuela now routinely opposes Washington at international bodies. Even in areas of mutual interest such as fighting drug trafficking, it refuses to sign a basic cooperation accord. The two governments disagree over everything from oil prices to free trade.

On Wednesday Secretary of State Condoleezza Rice, a former board member of Chevron, said she was looking into claims a U.S. subsidiary of Venezuela's state oil company was violating economic sanctions with Iran.

This week, a group of Republican lawmakers called for Venezuela to be listed as a state supporter of terrorism, alleging Chavez allows Colombian rebel fighters to operate in his territory.

Chavez retorted that Washington should head the list.

Chavez, a proponent of what he calls a multipolar world, spends time and money on projects to unite Latin American countries in a bloc opposed to American influence and is friendly with U.S. antagonists such as Russia and Iran.

"There are fundamental differences especially in strategic vision, about free trade for example, that are going to create divisions between Venezuela and the United States no matter who wins the presidential elections," said Daniel Hellinger, a political scientist at Missouri-based Webster University.