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Venezuelan Oil Aff

1AC

Economy Adv
Advantage 1- The Economy Venezuelas economy is on the brink of collapse due to their declining oil sector. Nam, former Venezuela minister of Trade, 13 (Moiss Nam, a scholar at the Carnegie Endowment for
International Peace, former minister of Trade and Industry for Venezuela, and the former editor of Foreign Policy magazine, An Economic Crisis of Historic Proportions, Jan 8, http://www.nytimes.com/roomfordebate/2013/01/03/venezuela -postchavez/chavez-will-leave-behind-an-economic-crisis)
Last month, Jorge Botti, the head of Fedecmaras, Venezuela's business federation, explained that unless the government supplies more dollars to pay for imports, shortages -- from food to medicine -- would be inevitable. "What we will give Fedecmaras is not more dollars but more headaches," replied acting president Nicolas Maduro, the heir apparent to the Chavista regime (and Hugo Chvez's vice president).

Venezuela is consuming more than it is producing. This is due to enormous government spending, mounting foreign debt and the mismanagement of its oil industry . Maduro is correct. Crushing headaches will soon be inevitable across the country, including within the private sector but especially among the poor. President Chvez has bequeathed the nation an economic crisis of historic proportions. The crisis includes a fiscal deficit approaching 20 percent of the economy (in the cliff-panicking United States it is 7 percent), a black market
where a U.S. dollar costs four times more than the government-determined exchange rate, one of the world's highest inflation rates, a swollen number of public sector jobs, debt 10 times larger than it was in 2003, a fragile banking system and the

free fall of the statecontrolled oil industry, the country's main source of revenue . Oil-exporting countries rarely face hard currency shortages, but the Chvez regime may be the exception. Mismanagement and lack of investment have decreased oil production . Meanwhile oil revenue is compromised partly because of Chvezs decision to
supply Venezuelans with the country's most valuable resource at heavily subsidized prices. Thus a large and growing share of locally produced oil is sold domestically at the lowest prices in the world (in Venezuela it costs 25 cents to fill the tank of a mid-sized car). Another share of the oil output is shipped abroad to Cuba and other Chvez allies, and to China, which bought oil in advance at deeply discounted prices (apparently the revenue from China has already been spent). Most of the crude left to be exported at market prices is sold to Venezuela's best client, and, ironically, Chvez's main foe: the United States. Yet, as a result of America's own oil boom, U.S. imports of Venezuelan oil have recently hit a 30year low. Moreover, due to an explosion in its main refinery, Venezuela is now forced to import gasoline. The Financial Times reckons that for each 10 barrels of crude it sells to the US, it has to import back (at a higher price) two barrels of oil refined abroad. Meanwhile, the nation's total imports have jumped from $13 billion in 2003 to over $50 billion currently. Paying

for those imports and servicing its huge debt requires more hard currency than Venezuela's weakened economy can generate. Yes, huge headaches are looming.

And, oil production is key to the Venezuelan economy- lack of investment means inevitable economic collapse and instability Fournier & Fini, 01/29/2013 (Pierre Fournier, Michael Fini, GEOPOLITICAL HOTLINE:SCENARIOS FOR A POST-CHAVEZ
VENEZUELA, National Bank Financial, http://c3352932.r32.cf0.rackcdn.com/pdfa273955c03d7b131435d8e89c8ca1f4b.pdf)

Venezuela produces 2.47 million barrels of oil per day (mbd) and accounts for 3.85% of world supplies, the majority of which is destined for the United States and the Caribbean. Oil revenues are crucial for the economy and account for 94% of export earnings, 50% of budget revenues and 30% of GDP. Annual
production has, however, steadily fallen since the election of populist Hugo Chavez, with total exports declining 50% since peaking in the late 1990s (see Fig. 1). As we wrote in June 2012 (see our Geopolitical risks to oil production outside the Middle East),

declining oil

production is primarily due to a lack of investment in Venezuelas aging wells , but this is in turn a direct result of political mismanagement. Both the 2002 transformation of the national oil company Petrleos de Venezuela
S.A. (PDVSA) into a political tool of the Chavez government, as well as a wave of private-sector nationalizations, have limited local and foreign investments in the energy sector. Going forward, PDVSA must spend roughly $3 billion annually to maintain production levels at existing fields,

while simultaneously trying to reduce its mounting financial debt of $35 billion (a ten-fold increase from 2008 levels, with $20 billion due within five years). In

the absence of a significant shift in government policy and the regulatory climate, Venezuela will likely continue to fall short of its significant potential. Since consolidating his power following a failed coup
attempt in 2002, Chavez has treated PDVSA as a cash cow, using oil revenues to fund social programs that ensure loyalty from his base of urban and rural poor.1 In 2011, he reportedly spent $29 billion of PDVSAs $88 billion in revenues on social programs (versus $17.9 billion invested in maintaining/expanding core oil and gas businesses), while a full 97% of net income was transferred to the government in 2010, up from 93% in 2009. Chavez increased government spending by 67% in 2012 including the construction of 200,000 houses, up from 95,000 in 2011 and announced a 30% hike in the minimum wage in early April. These new expenses will more than likely be subsidized with PDVSA revenues, despite the urgent

need to enhance extraction technologies, boost production in aging fields and stabilize the countrys deteriorating socioeconomic conditions.

And, Venezuelan economic turmoil risks instability across the region. Stephen Johnson, 2-12-2003, Senior Policy Analyst for Latin America in the Kathryn and Shelby Cullom
Davis Institute for International Studies at The Heritage Foundation, Stability and Democracy, Not Oil, Are at Risk in
Venezuela, http://www.heritage.org/research/reports/2003/02/stability-and-democracy-not-oil Compared to Iraq's Saddam Hussein or North Korea's Kim Jong-il, Hugo Chvez may seem like a minor nuisance, but he admires those men and could become more like them as time goes by. Decrying capitalism and freedom of choice as "fascist neoliberalism," his demagogic speeches resonate with growing numbers of poor in Latin America who have lost hope in the slow evolution of democracy and market economies. The

chaos he has inspired in Venezuela could further depress commerce in the hemisphere and destabilize neighbors . Because of him, one of the world's most important petroleum producers faces prolonged turmoil and mismanagement under a budding dictator.
To avoid dependence on unstable regimes for critical resources, the U.S. should facilitate exploration elsewhere in the Caribbean Basin and in Alaska and welcome market-developed technologies that are less dependent on finite resources. Meanwhile,

by increasing

international pressure on Venezuela's president to agree to a constitutional, democratic decision on the future of his country with outside scrutiny to safeguard the process, the United States can help restore stability to this important energy producer and ally. Moreover, it can help the people of Venezuela retake their government, open up their economy, and work for the
kind of prosperity that has so far eluded them.

Latin American instability causes war and collapses hegemony Ellis, 2004 (R. Evan.,professor of national security studies, modeling, gaming, and simulation with the Center for Hemispheric Defense
Studies, with a research focus on Latin Americas relationships with external actors, including China, Russia, and Iran, The Impact of Instability in Latin America, http://www.systemdynamics.org/conferences/2003/proceed/PAPERS/119.pdf) The growing

disorder in the nations of the Andean ridge highlights a dangerous new phenomenon with

significant national security implications for the United States : Criminal organizations and armed groups in the region have fallen into new forms of collaboration that allow them to finance their own operations
without reliance on outside aid and its associated strings. The military and self-financing activities of groups, in turn, creates dynamics that ultimately could break down the economic and sociopolitical fabric of the countries in which they operate. As

illustrated by the FARC, ELN, and AUC in Colombia, these organizations leverage the weakness of the states in which they operate to survive and grow. Their activities are financed, in part, by taxing or directly engaging in criminal activity such as narcotrafficking, embezzlement, and extortion [11]. These criminal enterprises, in turn, leverage a unique combination of global commerce and information flows and the compromised character of the institutions within their own country. In short, criminal organizations conduct operations involving global shipments of narcotics and other goods, leveraging international banking, the international transportation infrastructure, and the ability to purchase specialized
human expertise for certain operations on global markets *12+. At the same time, the criminal activities depend on safe havens that they have created within compromised states to conduct key stages of their operationssuch as money laundering and narcotics production. Within their compromised societies, criminal organizations have enormous manpower needs, both to perform the daily physical labor required by their operations and to provide protection from the state (and from rivals) for their activities. Armed

groups on both the left and right serve the interests of criminal enterprises by physically protecting them in exchange for revenue.

This loose partnership between criminal organizations and armed political groups thus generates capabilities and promulgates incidents that contribute to the weakness of the statethus sustaining the space in which criminal activity can take place [13]. Both criminal organizations and armed groups thus are nourished byand systematically destroy the socioeconomic fabric of the state in which they grow. As the host state weakens, the activities of these organizations also infects and destabilizes neighboring states through flows of guerillas and refugees, and the violence and human suffering associated with them. Although a great deal has been written about narcotrafficking, the spread of insurgency, and socioeconomic problems in Latin America [14], the current confluence of events is new and different with respect to the way in which multiple phenomenon reinforce each other to produce a potential escalating spiral of violence and economic malaise in the region . The individual perpetratorssuch as drug cartels, terrorist cells, and insurgent groups may not be coordinated, yet the combination of their individual goal-directed actions produces systemic effects that could ultimately destabilize the region and undercut the basis for U.S. global power.

Hegemony solves great power war Khalilzad 11 Zalmay Khalilzad, the United States ambassador to Afghanistan, Iraq, and the United
Nations during the presidency of George W. Bush and the director of policy planning at the Defense Department from 1990 to 1992, February 8, 2011, The Economy and National Security; If we dont get our economic house in order, we risk a new era of multi-polarity, online: http://www.nationalreview.com/articles/259024/economy-and-national-security-zalmay-khalilzad
We face this domestic challenge while other major powers are experiencing rapid economic growth. Even though countries such as China, India, and Brazil have profound political, social, demographic, and economic problems, their economies are growing faster than ours, and this could alter the global distribution of power. These trends could in the long term produce a multi-polar world. If U.S. policymakers fail to act and other powers continue to grow, it is not a question of whether but when a new international order will emerge. The

closing of the gap between the U nited S tates and its rivals could intensify geopolitical competition among major powers , increase incentives for local powers to play major powers against one another, and undercut our will to preclude or respond to international crises because of the higher risk of escalation. The stakes are high. In modern history, the longest period of peace among the great powers has been the era of U.S. leadership . By contrast, multi-polar systems have been unstable, with their competitive dynamics
resulting in frequent crises and major wars among the great powers. Failures of multi-polar international systems produced both world wars. American retrenchment could have devastating consequences . Without an American security blanket, regional powers could rearm in an attempt to balance against emerging threats. Under this scenario, there would be a heightened possibility of arms races, miscalculation, or other crises spiraling into all-out conflict . Alternatively, in seeking to accommodate the stronger powers, weaker powers may shift their geopolitical posture away from the United States. Either way, hostile states would be emboldened to make aggressive moves in their regions.

As rival powers rise, Asia in particular is likely to emerge as a zone of great-power competition. Beijings economic rise has enabled a dramatic military buildup focused on acquisitions of naval, cruise, and ballistic

missiles, long-range stealth aircraft, and anti-satellite capabilities. Chinas strategic modernization is aimed, ultimately, at denying the United States access to the seas around China. Even as cooperative economic ties in the region have grown, Chinas expansive territorial claims and provocative statements and actions following crises in Korea and incidents at sea have roiled its relations with South Korea, Japan, India, and Southeast Asian states. Still, the United States is the most significant barrier facing Chinese hegemony and aggression.

And, the plan solves- energy cooperation stabilizes the Venezuelan economy and promotes regional stability. Nathaniel T. Edwards, xx-xx-2008, writer for JURO, University of Georgia, double-major in International
Affairs and Political Science, major in Japanese, student research intern in the Roosevelt Institution and Center for International Trade and Security, faculty advisor Dr. Christopher Allen, Increasing Trade Security:
United States-Venezuelan Trade Incentives, http://juro.uga.edu/2008/2008papers/Edwards2008.pdf

Economic globalization has both positive and negative effects on trade security. Globalization will erode funding sources for dissident and terrorist organizations by creating international pressure on countries in areas such as export controls and transactional transparency, bolstering national security.xxi Conversely, because terrorist organizations often depend on smuggling or money laundering and private donations as their main funding sources, globalization increases access to sources from which an organization might potentially acquire funds.

Strengthening the economic ties between Venezuela and the U nited S tates causes Venezuela to become more invested in preventing terrorist attacks on either trading partner. Although terrorism may seem to thrive in a globalized economy, increased trade creates strong incentives for each state to prevent attacksleading to the enactment of security measures that weaken rogue organizations. The U nited S tates also benefits from strong, stable trade relations with Venezuela in the area of energy cooperation. Energy cooperation includes assistance in developing and modernizing the technology to efficiently extract and utilize energy resources. Previous efforts to support modernization and bilateral investment, especially throughout
the 1990s, have failed as technology and information exchanges have become less frequent with the deterioration of the political relationship between the United States and Venezuela.xxii Stabilizing

the Venezuelan economy and establishing a normalized trade relationship would help to reverse declining energy cooperation. Bilateral energy cooperation translates into a stable energy infrastructure for Venezuela and the U nited S tates. A historical example of a successful trade expansion occurred between America and the Soviet Union during the Cold War, illustrating the level of stability and security that trade can achieve. During the Cold War, when diplomatic tensions were at their highest levels, trade between the two states neither promoted arms production nor detracted from each states national security.xxiii Rather, as each state perceived itself to be threatened by the other, trade policy increased non-threatening trade and decreased threatening trade of goods between them. The trade relationship between the United States and the Soviet Union provided an economic incentive to limit aggression and promote cooperation as the states become increasingly economically interdependent. In fact, Gift suggests that increased trade encouraged each state to comprehensively examine its trade deals and consequently, to increase its security by dictating what entered and exited each state.xxiv The U.S.-Soviet analogy provides an important illustration of the potential security benefits of tying the Venezuelan economy to that of the U nited S tates. In 2006, the United States and Russia signed a bilateral trade agreement.
The agreement details what measures the United States would require Russia to adopt before supporting its entry into the World Trade Organization (WTO) and serves as a model for a Russian draft of a Protocol of Accession. If Russia meets these requirements and joins the WTO, trade between the United States and Russia will be expanded greatly. Therefore, Russias entry into the WTO would provide multiple economic and economic and security benefits for the United States: expanded

access to non-agricultural goods markets, new service markets (such as banking, securities, insurance, telecommunications, energy , and audio-visual services), transparent and predictable tariff treatments for agricultural products, reduced non-tariff barriers, and improved Russian enforcement of intellectual property rights.xxv Existing bilateral trade between the United States and Russia has grown by 15 percent annually, valued at around $19 billion in 2005.xxvi Establishing far-reaching economic relationships yields significant benefits. Venezuela is already a member of the World Trade Organization and is thus primed for significant trade growth with the U nited S tates, as far as prerequisites for that trade. Trade with Venezuela may not return as large financial returns as trade with Russia, simply because of less capital and material trade available, but it would provide similar benefits to both the economy and national security.

And, the US is key- Venezuela cant reform its energy sector on its own
Sarah O. Ladislaw is co-director and senior fellow with the Energy and National Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Frank Verrastro is senior vice president and James R. Schlesinger Chair for Energy & Geopolitics at CSIS, Mar

6th, 2013, 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 Chavezs passing has opened up a host of questions about the future leadership of Venezuela and the potential impact this leadership 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 worlds 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 regimes 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 . A political transition in Venezuela is now upon us but how it evolves could mean a lot for the energy sector and global energy markets.Despite its enormous oil resources, Venezuela's oil production (regardless of whose figures you use) has long been in steady decline. In 2011 liquids production was 2.47 million barrels per day (mmbd) , down a million barrels per day 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 b y. The internal technical and managerial capabilities of
state run oil and gas company PDVSA have deteriorated since the 2002 strike and aftermath. Increasingly, PDVSA relies on contractors, as well as other private company partners, to keep the fields in production but reports state that contractors 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 withheld incremental 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 subsidized domestic consumption of oil is increasing while revenue from exports is also declining. 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 in oil 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 production is such a large part of Venezuelas government balance sheet that no leadership could survive for long without a sustained cash flow that 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 potential for strikes or instability among groups involved in the sector (some of whom have not been paid) could have additional negative impacts on production.While oil markets have so far taken the news of Chavezs

an actual disruption in Venezuelan production could add pressure to an already difficult market outlook. The last
demise in stride (many claim because the news was largely expected, others because the political outcome is still so uncertain) year has produced a number of supply disruptions around the world from OPEC, the Middle East North Africa region, as well as non-OPEC sources. If the economic outlook continues to improve and yield an increase global energy demand, if Iran sanctions remain in place, and if Venezuelan production be compromised, then oil prices would experience much more significant upside pressure from any new disruptions.Even under the best of circumstances,

reform in the energy sector will take a long time to emerge. The

damage that has been done to not only PDVSA but to the institutions of the state and civil society could take years to rehabilitate . A few key reasons for this include:revenue from the oil and gas sector that is diverted for political purposes and not reinvested in a way that will drive new production will be hard to direct back to
useful investment in the sector,much of the private sector has been driven away from investment in Venezuela and may be reluctant to return, or for the companies in country to re-invest in the short-term given their experience in the 2000s,oil

field mismanagement and damage may have likely occurred over the last decade and it will take time and investment to revitalize,many of Venezuelas core assets are in technologically complex and capital-intensive heavy oil projects that take time and
resources to develop and must now be viewed in light of the global array of upstream options that are now on the table for international oil investors as compared to a decade ago,some of Venezuelas current commercial relationships on the upstream or export side may have to be revisited in light of a more commercially-based hydrocarbon policy,Venezuelas energy sector is dominated by the states decisions and management and it will take time to replace the managerial competency that once existed,highly

subsidized oil is a key feature of Venezuelan society and the political will to reform the entire energy sector into one that is more market-based and open to private investment will necessarily have to feed into the domestic demand-

side of that equation. What about Venezuelas relationship with the United States ? Over the last ten years the sustained trading relationship between the United States and Venezuela has been one of the stabilizing forces in an otherwise contentious and sometimes volatile relationship. U.S. refineries in the Gulf Coast are specifically designed to process Venezuelas sour and medium to heavy crude and serves as its natural market. Despite oil production being down, the United States still imports just under a million barrels of crude per day from Venezuela (down from a peak of 1.4 mmbd in 1997) and, as stated earlier, the government of Venezuela is highly dependent on those revenues for their ongoing stability, especially as revenue from other exports and domestic consumption decline. As we look ahead to another period of transition in Venezuela it is important to be mindful of the potential for disruption and to look for ways to mitigate the impacts of such disruption, but it is equally important to remember the trade ties that bind the two countries for the time being and to find opportunities to drive change in a positive direction .

Iran Adv
Advantage 2- Iran Venezuelan-Iranian ties are increasing- the threat to US security is growing. Dr. Norman A. Bailey is President of the Institute for Global Economic Growth and Adjunct Professor of Economic Statecraft at the Institute
of World Politics in Washington, DC. He previously served at the National Security Council and in the Office of the Director of Na- tional Intelligence, February 20 For years, the

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media and the U.S. government have repeated a fa- miliar refrain: that the regime of now-ailing Venezuelan strongman Hugo Chavez, however annoying, poses no seri- ous threat to the national security of the United States. Compelling evidence, how- ever, suggests otherwise . Under Chavez, Venezuela has systematically opposed U.S. values and initiatives throughout the Western Hemisphere and the world in general. It has tried to influence political events in other Latin American countries, sometimes successfully. It has supported guerrilla movements and terrorist orga- nizations in other countries (most nota- bly Colombia). And it has facilitated
the activities of drug traffickers active in the region, even as it has destabilized the re- gional status quo through massive military purchases.

The most dangerous threat to the U.S. from Venezuela, however, results from its facilitation and encouragement of the pen- etration of the Western Hemisphere by the Islamic Republic of Iran . Since 2005, with Venezuelas assistance, Iran has created an extensive regional network of economic, diplomatic, industrial and commercial activities, with significant effect. The sum total of Irans declared
investments in the region now stands at some $20 billion, at a time when the Iranian economy it- self is in exceedingly poor condition.1 The depths of Irans involvement in the West- ern Hemisphere are all the more surpris- ingand significantgiven that there is no historical or cultural affinity whatso- ever between Iran and the countries on this side of the Atlantic. Nevertheless, the Iranian regime in recent years has exhib- ited an unprecedented level of interest and involvement in the region, facilitated by its burgeoning strategic partnership with Caracas.

And, the Iran-Venezuela axis risks regional proliferation and nuclear terrorism against the US.
Kristina Michele Fugitt, H.R Technician in the United States Army, 2012, Norwich University, The Export of Irans Nuclear Program to Latin America: Implications for United States Security, http://globalsecuritystudies.com/Fugitt%20Iran%20LA.pdf The disgust of the United States of America, shared by Chavez and Ahmadinejad, fuel their relationship. The two leaders have historically done what they can to be in an indirect conflict with us. Now they are supporting each other as members of an international outsiders club. Ahmadinejads last visit to Caracas resulted in playfully delivered threats from both he and Chavez. In this case, the United States waited for a problem to erupt before taking heed. Now that the leaders are using playful gestures, and applying indirect threats, the U.S. has started to wonder if Iran is exporting their

nuclear program to South America . Regrettably, Venezuela is in close proximity to our shores which poses a new threat. The history between Iran and Venezuela is quite strong and has been so for many decades. The beginning of this
alliance started when they founded the Organization of Petroleum Exporting Countries (Opec) to ensure themselves better terms from foreign oil companies. Venezuela

has enjoyed several benefits from this relationship with the promise of many more. It was reported in 2008 that the two nations have signed a variety of agreements in agriculture, petrochemicals, oil exploration in the Orinoco region of Venezuela, and the manufacturing of automobiles, bicycles, and tractors. Iran and Venezuela also reported in April 2009 that a there was a new development bank for economic projects in both countries, with each country reportedly providing $100 million in initial capital (Sullivan, 2010). More problematic for the United States is that the two countries began international flights connecting Iran and Syria with Caracas . Immigration
concerns have surfaced in light of 9/11 with many documented cases of terrorists gaining entry into the Americas with fake passports, visas, and other allegedly official documents. Now that there are flights leaving directly from hot-spots in the Middle East and going to Venezuela, there

are more lesscomplicated ways for terrorists to gain access to the U.S. Export of Irans

Nuclear Program. 66 Additionally, terrorists have attacked several targets in South America. Hezbollah
people in 1994 (Sullivan, 2010). Although these attacks occurred almost 20 years ago,

allegedly attacked the Israeli Embassy in Buenos Aires that killed 30 people in 1992, and the Argentine-Israeli Mutual Association (AMIA) in Buenos Aires that killed 85

one should not underestimate the new threats that post 9/11 terrorists pose. These direct flights cited above, would almost assuredly put Latin American nations at
higher risk for repeat attacks. Hezbollah is an Iranian proxy, and with the heightened tensions between the U.S., Israel and Irancompounded by the alliance between Ahmadinejad and Chavez-the U.S. State Department is growing weary of the flights. The

alliance that has grown increasingly stronger because of nuclear energy, could in turn violate the sanctions imposed on Irans ability to move nuclear materials. This is significant to us because if Iran tries to export their nuclear program to
South America, it places America dangerously inside the strike zone for a nuclear attack, just as Israel is at present. New sanctions could be applied to Iran, but that will increase the hardship on the population, thus instilling more hate towards us, while doing little to push the leaders into doing the right thing. However,

the probability of increased and more volatile terrorist attacks is very

high .

Another issue with the nuclear bond between Venezuela and Iran is that any uranium that is mined in Venezuela could possibly be

shipped to Iran, thus increasing their capabilities. This may seem off-beat but according to Rodolfo Sanz, Venezuelas minister of basic industries and mining, Iran is

helping Venezuela with geophysical aerial probes and geochemical analysesWe could have important reserves of uranium. Hence, this relationship is two-fold with both sides benefiting
greatly. Once again, despite the many reasons not to trust the relationship between Ahmadinejad and Chavez, we return to the claim that President Chvez whole-heartedly supports Irans development of nuclear energy for peaceful purposes. There are also plans for a nuclear village in Venezuela with Iranian assistance so that the Venezuelan people can count in the future on this marvelous resource for peaceful purposes, according to the president. This means that the locally mined uranium that Iran is assisting Venezuela in acquiring, would have to be used for the village, or else, Iran would be in violation of U.N. Security Council Resolutions 1737 (2006), 1747 ( 2007), and 1803 (2008) that imposed restrictions on Irans nuclear technology transfers (Sullivan, 2009). Because of the discussed activities, Venezuela

is also feeling the effects of U.S. sanctions. However, it is still allying with Iran, maintaining that they are doing nothing wrong. According to Foreign Policy magazine however, Chvez has been developing the *nuclear+ program for two
years with the collaboration of Iran, a nuclear rogue state, and that Venezuela is helping Iran obtain uranium and evade international sanctions The article goes on to say that in Fugitt 67 November 2008, Iranian and Venezuelan officials signed a secret "science and technology" agreement formalizing cooperation "in the field of nuclear technology." The two nations may be somewhat protected under the NPT for their peaceful nuclear projects but that protection does not override the sanctions emplaced. After supposedly signing the secret agreement, a source within the Venezuelan government, revealed that an Atomic Energy Committee has been managing the nuclear program since 2007 (FP). After almost five years, why then, is the U.S. inquiring about the program, and so concerned with Ahmadinejads visits? Perhaps, this

intense attention is due to new intelligence that encourages more action, or maybe it is simply because Iran is the culprit, and therefore Venezuela is guilty by association. Either way, the alliance between Venezuela and Iran is proving problematic.

A nuclear terrorist attack causes extinction Ayson 10 [Robert Ayson, Professor of Strategic Studies and Director of the Centre for Strategic Studies:
New Zealand at the Victoria University of Wellington,After a Terrorist Nuclear Attack: Envisaging Catalytic Effects, Studies in Conflict & Terrorism, Volume 33, Issue 7, July, Available Online to Subscribing Institutions via InformaWorld]
A terrorist nuclear attack, and even the use of nuclear weapons in response by the country attacked in the first place, would not necessarily represent the worst of the nuclear worlds imaginable. Indeed, there are reasons to wonder whether nuclear terrorism should ever be regarded as belonging in the category of truly existential threats. A contrast can be drawn here with the global catastrophe that would come from a massive nuclear exchange between two or more of the sovereign states that possess these weapons in significant numbers. Even the worst terrorism that the twenty-first century might bring would fade into insignificance alongside considerations of what a general nuclear war would have wrought in the Cold War period. And it

as long as the major nuclear weapons states have hundreds and even thousands of nuclear weapons at their disposal, there is always the possibility of a truly awful nuclear exchange taking place precipitated entirely by state possessors themselves. But these two nuclear worlds a non-state actor nuclear attack and a catastrophic interstate nuclear exchangeare
must be admitted that

not

necessarily

separable . It is just possible that some sort of terrorist attack, and especially an act of nuclear terrorism, could
two or more of the

precipitate a chain of events leading to a massive exchange of nuclear weapons between

states that possess them . In this context, todays and tomorrows terrorist groups might assume the place allotted during the early Cold War years to
new state possessors of small nuclear arsenals who were seen as

raising the risks of a catalytic nuclear war between the superpowers in the event

started by third parties. These risks were considered in the late 1950s and early 1960s as concerns grew about nuclear proliferation, the so-called n+1 problem. It may require a considerable amount of imagination to depict an especially plausible situation where an act of nuclear terrorism could lead to such a massive inter-state nuclear war. For example,

of a terrorist nuclear attack on the United States, it might well be wondered just how Russia and/or China could plausibly be brought into the picture, not least because they seem unlikely to be fingered as the most obvious state sponsors or encouragers of terrorist groups. They
would seem far too responsible to be involved in supporting that sort of terrorist behavior that could just as easily threaten them as well. Some possibilities, however remote, do suggest themselves. For example, how might the United States react if it was thought or discovered that the fissile material used in the act of nuclear terrorism had come from Russian stocks,40 and if for some reason Moscow denied any responsibility for nuclear laxity? The correct attribution of that nuclear material to a particular country might not be a case of science fiction given the observation by Michael May et al. that while the debris resulting from a nuclear explosion would be spread over a wide area in tiny fragments, its radioactivity makes it detectable, identifi able and collectable, and a wealth of information can be obtained from its analysis: the efficiency of the explosion, the materials used and, most important some indication of where the nuclear

if the act of nuclear terrorism came as a complete surprise, and American officials refused to believe that a terrorist would shift immediately to state possessors. Ruling out Western ally countries like the United Kingdom and France, and probably Israel and India as well, authorities in Washington would be left with a very short list consisting of North Korea, perhaps Iran if its program continues, and possibly Pakistan. But at what stage would Russia and China be definitely ruled out in this high stakes game of nuclear Cluedo? In particular, if the act of nuclear terrorism occurred against a backdrop of existing tension in Washingtons relations with Russia and/or China, and at a time when threats had already been traded between these major powers, would officials and political leaders not be tempted to
material came from.41 Alternatively, group was fully responsible (or responsible at all) suspicion

assume the worst ? Of course, the chances of this occurring would only seem to increase if the United States was already involved in some sort of limited armed conflict with
Russia and/or China, or if they were confronting each other from a distance in a proxy war, as unlikely as these developments may seem at the present time. The reverse might well apply too: should a nuclear terrorist attack occur in Russia or China during a period of heightened tension or even limited conflict with the United States, could Moscow and Beijing resist the pressures

Washingtons early response to a terrorist nuclear attack on its own soil might also raise the possibility of an unwanted (and nuclear aided) confrontation with Russia
that might rise domestically to consider the United States as a possible perpetrator or encourager of the attack?

and /or China . For example, in the noise and confusion during the immediate aftermath of the terrorist nuclear attack, the U.S. president might be expected to place the countrys armed forces, including its nuclear arsenal, on a higher stage of alert. In such a tense environment, when careful planning runs up against the friction of reality, it is just possible that Moscow and/or China might mistakenly read this as a sign of U.S. intentions to use force (and possibly nuclear force) against them. In that situation, the temptations to preempt such actions might grow , although it must be admitted that any preemption would probably still meet with a devastating response. As part of its initial response to the act of nuclear terrorism (as discussed earlier) Washington might decide to order a significant conventional (or nuclear) retaliatory or disarming attack against the leadership of the terrorist group and/or states seen to support that group. Depending on the identity and especially the location of these targets, Russia and/or China might interpret such action as being far too close for their comfort, and potentially as an infringement on their spheres of influence and even on their sovereignty. One far-fetched but perhaps not impossible scenario might
stem from a judgment in Washington that some of the main aiders and abetters of the terrorist action resided somewhere such as Chechnya, perhaps in connection with what Allison claims is the Chechen insurgents long-standing interest in all things nuclear.42 American pressure on that part of the world would almost certainly raise alarms in Moscow that migh t require a degree of advanced consultation from Washington that the latter found itself unable or unwilling to provide. There is also the question of how other nuclear-armed states respond to the act of nuclear terrorism on another member of that special club. It could reasonably be expected that following a nuclear terrorist attack on the United States, both Russia and China would extend immediate sympathy and support to Washington and would work alongside the United States in the Security Council. But there is just a chance, albeit a slim one, where the support of Russia and/or China is less automatic in some cases than in others. For example, what would happen if the United States wished to discuss its right to retaliate against groups based in their territory?

If, for some reason, Washington found the responses of Russia and China deeply underwhelming, (neither for us or against us) might it also suspect that they secretly were in cahoots with the group, increasing (again perhaps ever so slightly) the chances of a major exchange. If the terrorist group had some connections to groups in Russia and China, or existed in areas of the world over which Russia and China held sway, and if Washington felt that Moscow or Beijing were placing a curiously modest level of pressure on them, what conclusions might it then draw about their culpability? If Washington decided to use, or decided to threaten the use of, nuclear weapons, the responses of Russia and China would be crucial to the chances of avoiding a more serious nuclear exchange . They might surmise, for example, that while the act of nuclear terrorism
was especially heinous and demanded a strong response, the response simply had to remain below the nuclear threshold. It would be one thing for a non-state actor to have broken the nuclear use taboo, but an entirely different thing for a state actor, and indeed the leading state in the international system, to do so. If Russia and China felt sufficiently strongly about that prospect, there is then the question of what options would lie open to them to dissuade the United States from such action: and as has been seen over the last several decades, the central dissuader of the use of nuclear weapons by states has been the threat of nuclear retaliation. If some readers find this simply too fanciful, and perhaps even offensive to contemplate, it may be

Russia, which possesses an arsenal of thousands of nuclear warheads and that has been one of the two most important trustees of the non-use taboo, is subjected to an attack of nuclear terrorism. In response, Moscow places its
informative to reverse the tables. nuclear forces very visibly on a higher state of alert and declares that it is considering the use of nuclear retaliation against the group and any of its state supporters. How would Washington view such a possibility? Would it really be keen to support Russias use of nuclear weapons, including outside Russias traditional sphere of influence? And if not, which seems quite plausible, what options would Washington have to communicate that displeasure? If China had been the victim of the nuclear terrorism and seemed likely to retaliate in kind, would the United States

In the charged atmosphere immediately after a nuclear terrorist attack, how would the attacked country respond to pressure from other major nuclear powers not to respond in kind? The phrase how dare they tell us what to do immediately springs to mind. Some might even go so far as to interpret this concern as a tacit form of sympathy or support for the terrorists. This might not help the chances of nuclear restraint. Nuclear Terrorism Against Smaller Nuclear Powers There is also the question of what lesser powers in the international
and Russia be happy to sit back and let this occur? system might do in response to a terrorist attack on a friendly or allied country: what they might do in sympathy or support of their attacked colleague. Moreover, if these countries are themselves nuclear armed, additional possibilities for a wider catastrophe may lie here as well. For example, if in the event of a terrorist nuclear attack on the United States, a nuclear armed ally such as Israel might possess special information about the group believed to be responsible and be willing and able to take the action required to punish that group. If its action

involved threats of the use of nuclear force, or the use of nuclear force itself (perhaps against a country Israel believed to be harboring the nuclear terrorists), how might other nuclear armed countries react? Might some other nuclear powers demand that the United States rein in its friend, and suggest a catastrophic outcome should this restraint not take place? Or would they wait long enough to ask the question? Alternatively, what if some states used the nuclear terrorist attack on another country to justify a majorand perhaps even nuclearattack on other terrorist groups on the grounds that it was now clear that it was too dangerous to allow these groups to exist when they might very well also be planning similar nuclear action? (Just as Al Qaedas attacks on 9/11 raised some of the threat assessments of other terrorist groups, the same and more might occur if any terrorist group had used a nuclear weapon,) If a nuclear armed third party took things into its own hands and decided that the time for decisive action had now come, how might this action affect the nuclear peace between states? But it needs to be realized that a catalytic exchange is not only possible if the terrorists have exploded a nuclear device on one of the established nuclear weapons states, including and especially the United States. A catalytic nuclear war might also be initiated by a nuclear terrorist attack on a country that possesses a nuclear arsenal of a more modest scale, and which is geographically much closer to the group concerned. For example, if a South Asian terrorist group expl oded a nuclear device in India, it is very difcult to see how major suspicions could not be raised in that country (and elsewhere) that Pakistan was somehow involvedeither as a direct aider and abetter of the terrorists (including the provision of the bomb to them) or as at the very least a passive and careless harborer of the groups perpetrating the act. In a study that seeks to reduce overall fears of nuclear terrorism, Frost nonetheless observes that

if one of the

nuclear powers in South Asia was thought to be behind a terrorist nuclear attack in the region, the risks of the incident escalating into a full nuclear exchange would be high . 43 Kapur is equally denite on this score,
observing that if a nuclear detonation occurred within India, the attack would be undoubtedly blamed on Pakistan, with potentially catastrophic results. 44

And, new proliferation causes nuclear war Cirincione 00, Director of the Non-Proliferation Project at the Carnegie Endowment for International
Peace, (Joseph, The Asian Nuclear Reaction Chain,3-22, Foreign Policy)
Kennedy's arms control vision, negotiated by President Lyndon Johnson and implemented by President Richard Nixon, has proved to be a global success story. Since the signing of the NPT in 1968, the treaty regime has greatly restricted the spread of weapons of mass destruction. But Kennedy's legacy is now under siege, and the nonproliferation clock may be set back to the 1960s. If the United States disassembles diplomatic restraints, shatters carefully crafted threat reduction arrangements, and moves from builder to destroyer of the nonproliferation regime, then there will be little to prevent new nations from concluding that their national security requires nuclear arms. Taking elements we don't like out of the regime structure starts a dangerous round of Jenga, the tabletop game where blocks are sequentially removed from a wooden tower until the whole structure collapses. The blocks would fall quickest and hardest in Asia, where proliferation pressures are already building more quickly than anywhere else in the world. If a nuclear breakout takes place in Asia, then the international arms control agreements that have been painstakingly negotiated over the past 40 years will crumble. Moreover, the United States could find itself embroiled in its fourth war on the Asian continent in six decades--a costly rebuke to those who seek the safety of Fortress America by hiding behind national missile defenses. Consider what is already happening: North Korea continues to play guessing games with its nuclear and missile programs; South Korea wants its own missiles to match Pyongyang's; India and Pakistan shoot across borders while running a slow-motion nuclear arms race; China modernizes its nuclear arsenal amid tensions with Taiwan and the United States; Japan's vice defense minister is forced to resign after extolling the benefits of nuclear weapons; and Russia--whose Far East nuclear deployments alone make it the largest Asian nuclear power--struggles to maintain territorial coherence. Five of these states

have nuclear weapons; the others are capable of constructing them. Like neutrons firing from a split atom, one nation's actions can trigger reactions throughout the region, which in turn, stimulate additional actions. These nations form an interlocking Asian nuclear reaction chain that vibrates dangerously with each new development. If the frequency and intensity of this reaction cycle increase, critical decisions taken by any one of these governments could cascade into the second great wave of nuclear-weapon proliferation, bringing regional and global economic and political instability and, perhaps, the first combat use of a nuclear weapon since 1945.

The plan solves- the changing political dynamics in Latin America could allow for greater cooperation over key issues like Iran By Gloria Borger, CNN Chief Political Analyst, Wed March 6, 2013, http://www.cnn.com/2013/03/05/politics/venezuela-chavez-u-sBut senior

American officials don't expect the relationship to change dramatically in the short term primarily because Chavez's system still exists. The United States, these officials say, will want to see a

break with that and movement toward a democratic process.The officials believe that Chavez adherents led by Maduro will want to maintain the same approach, but could be more pragmatic and less confrontational.However, there are strong anti-Venezuelan views on Capitol Hill and it would be difficult to confirm an ambassador. That could change if there is cooperation
on issues like counter-narcotics or counter-terrorism, the officials said.The Obama

administration is

expected to try and get Venezuela to impose sanctions on Iran, which the country has repeatedly violated, they added.Latin American experts believe Chavez's death could change the dynamic in the region, not only between the United States and Venezuela, but also among Latin American countries.Robert
Menendez, chairman of the Senate Foreign Relations Committee, said that Chavez ruled "with an iron hand" and his death has left a "political void that we hope will be filled peacefully.""With free and fair elections, Venezuela can begin to restore its once robust democracy and ensure respect for the human, political and civil rights of its people," the New Jersey Democrat said.Mike Rogers, chairman of the House Intelligence Committee, called Chavez

a "destabilizing force in Latin America" and an obstacle to progress."I hope his death provides an opportunity for a new chapter in U.S.-Venezuelan relations," the Michigan Republican said.

Plan
Plan: The United States federal government should offer energy sector reform engagement to Venezuela if they cut ties with Iran and end support of terrorist groups.

Solvency
Only conditioning future engagement solves Venezuelan support of Iran and terrorist groups.
Christy 3/15, Patrick Christy is a senior policy analyst at the Foreign Policy Initiative, http://www.usnews.com/opinion/blogs/worldreport/2013/03/15/after-chavez-us-must-encourage-democratic-venezuela

What's perverse is how the Obama administration's move to "reset" relations with Maduro is doing more to legitimize him as the rightful heir to Venezuela's presidency than to resuscitate relations between the two governments. The
move showed itself to be even more naive after Maduro accused the United States of plotting to poison Chavez shortly after the strongman's death. Washington

must realize that a strategy of engagement alone will not ensure a renewed and
with Caracas.

improved partnership

Failure to realize this will not only undermine whatever influence

America has in the months ahead, but also send a troubling signal to Venezuela's increasingly united political opposition. The Obama administration should instead pursue a more principled policy towards a post-Chavez Venezuela . In particular, it should:Pressure Caracas to implement key election reforms. Venezuela's opposition faces formidable obstacles.
Interim President Maduro will use the government's near-monopoly control of public airwaves, its established networks of political patronage and last-minute public spending programs to bolster his populist agenda.Washington should stress publicly and privately that any attempts to suppress or intimidate the opposition runs contrary to Venezuela's constitution and the principles defined in the Inter-American Democratic Charter, which was adopted by Venezuela in 2001. To this point, Jos Crdenas, a former USAID acting assistant administrator for Latin America, writes,The Venezuelan opposition continues to insist that the constitution (which is of Chavez's own writing) be followed and have drawn up a list of simple electoral reforms that would level the playing field and better allow the Venezuelan people to chart their own future free of chavista and foreign interference.Demand free, fair and verifiable elections. Although Venezuela announced that a special election to replace Chavez will be held next month, it is important to remember that elections alone do not make a democracy. Indeed, Chavez long embraced the rhetoric of democracy as he, in reality, consolidated executive power, undermined Venezuela's previously democratic political system and altered the outcomes of election through corruption, fraud and intimidation.The Obama administration should make clear that free and fair elections,properly monitored by respected international election observers, are essential to Venezuela's future standing in the hemisphere and the world. Likewise, Secretary of State John Kerry should work with regional partnersincluding (but not limited to) Brazil, Canada, Colombia and Mexicoto firmly encourage Maduro's interim government. A unified regional voice would send a powerful signal to Chavez's cronies in Caracas and longtime enablers in China, Iran and Russia. Condition

future diplomatic and economic

relations . Corruption and criminality were widespread under the Chavez regime, as high-level government and military officials benefited from close ties to corrupt businesses and international drug traffickers. Yet to date, the Obama administration has done little to hold Venezuela's leaders accountable. Washington should make clear that full diplomatic relations with the United States will be contingent upon Venezuela ending ties to international terrorist groups and rogue regimes like Iran. If Venezuela takes meaningful steps to end these ties
and ensure future elections, the

United States should work with Caracas


and identify key development projects and reforms to

and the private sector to reform Venezuela's energy industry

improve the country's economic future.The United States can play an important role in shaping Venezuela's post-Chavez future. But to do so,

the Obama administration will need to stand with the people of Venezuela by publicly defending democratic principles and the impartial rule of law in Latin America.

Maduro will say yeshe really wants closer cooperation with the US.
By Eduardo J. Gmez, a Senior Lecturer in International Development and Emerging Economies in King's International Development Institute, Special to CNN, Wed March

13, 2013, http://www.cnn.com/2013/03/13/opinion/gmez-chavez-ahmadinejad-america While it may seem that Maduro may have a difficult time working with the United States, considering his accusations that the United States has historically plotted against Venezuela and the recent removal of U.S. diplomats from Caracas, it appears that this was mainly done to gain the trust of Chvez political supporters in order to secure

Maduro's position as the next president.U.S. diplomatic officials view Maduro as a pragmatist and the fact that he was supportive of initiating closer ties with the United States last year suggests that this could continue, especially in light of Venezuela's economic troubles and the need to increase revenues through trade .Chvez's passing should motivate the United States to seek a new partnership with Venezuela. First, Secretary of State John Kerry should reopen the U.S. embassy in Caracas, which has been closed
since 2010, while assigning diplomats who are committed to engaging in peaceful dialogue and political and economic cooperation.Second,

Kerry should take this opportunity to strengthen cooperation over issues that can provide mutual benefits in the areas of national security and the economy, such as counternarcotics, counterterrorism, as well as sustaining oil trade : the United States currently imports just under 1 million barrels a day from
Venezuela.But the United States should also see this situation as an opportunity to strengthen its ties with other nations, such as Cuba. With the likely decline in economic assistance to Cuba from Venezuela, Cuban President Raul Castro may consider stepping up negotiations with the Obama administration over the U.S. embargo, human rights and the release of American prisoners, such as Alan Gross.Chvez

is gone, but the United States' commitment to peaceful democratic relations persists. Going forward, the United States should explore ways of strengthening its ties with Venezuela and other Latin American nations.But this is not a one-way street: Maduro in Venezuela will also need to find ways to strengthen his government's ties with the United States , which may be a balancing act if he wants to sustain his government's good relations with Iran , particularly after Ahmadinejad leaves office.

Venezuela really wants more oil engagement with the US- they need new technology and investment to increase production.
Timothy Gardner1 and Tom Doggett2, 4-15-2010, author of "Diminishing

Resources: Oil, Energy & Environment Correspondent @ Reuters1, Energy Correspondent @ Reuters2, UPDATE 3-Venezuela oil minister
seeks U.S. investment, http://www.reuters.com/article/2010/04/15/venezuela-oil-opec-idUSN1523721520100415 UPDATE 3-Venezuela oil minister seeks U.S. investment * In overture to US, Ramirez has 1st talks in DC in 6 yrs * More OPEC output would end up in inventories-oilmin * Oil market speculation causing current oil price-oilmin (adds comments from Latin America analyst) By Timothy Gardner and Tom Doggett WASHINGTON, April 15 (Reuters) - Venezuelan

Oil Minister Rafael Ramirez on Thursday welcomed investment by U.S. oil companies to help develop his country's vast crude reserves,
as he held energy talks in Washington for the first time in six years. Ramirez said Venezuela is signing agreements with companies in Russia, China, Europe and Japan to develop its reserves and U.S.

companies should be there as well. "This U nited S tates cannot

miss this opportunity," he told reporters on the sidelines of a two-day conference of Western Hemisphere countries meeting to address energy and climate change issues. Relations between the U nited S tates and Venezuela have long been strained, hitting a particularly low point in 2006 when visiting Venezuelan President Hugo Chavez took on then-President George W. Bush at the United Nations, calling him a "devil." Ramirez said foreign oil companies wanting to do business in Venezuela would have to "respect" the country's energy laws and policies. Venezuela has an estimated 99.4 billion barrels of proven oil reserves, with last year's oil production averaging 2.2 million barrels per day, down 190,000 bpd from the year before. It is the world's eighth largest oil exporter and the fourth biggest foreign oil supplier to the U.S. market. MONEY NEEDED TO TAP "HEAVY OIL" To boost its sagging output from traditional wells, Venezuela needs foreign investment and technology to tap the heavy oil of the Orinoco belt that requires much upgrading to turn into lighter crude. Venezuela was criticized several years ago when it forced foreign companies to renegotiate their oil
development contracts, reducing their profits. Several companies, including those U.S.-based, sold their stakes instead of following the Venezuelan government's new terms. Leading U.S. oil companies Exxon Mobil (XOM.N) and ConocoPhillips (COP.N), left Venezuela in 2007 after being pushed out of multibillion-dollar Orinoco projects. Before Thursday, Ramirez

had not held energy talks in Washington since 2004. He said Venezuelan-U.S. relations had been hurt by the Bush administration, which he said had been "hostile" to his country.

"There's

no reason whatsoever for this relationship to have been halted," he said. Ramirez said he expected to has not

have a private meeting with his U.S. counterpart, Energy Secretary Steven Chu, during the conference. Patrick Esteruelas, Latin America analyst at Eurasia Group in New York, said he did not think Ramirez's comments about U.S. firms was significant because Venezuela

discriminated against companies from specific countries.

The US is key- only the US is well-equipped to refine Venezuelan oil, the plans cooperation solves.
Carl Meacham, 4-11-2013, the director of the

Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C., Ana Rodrguez, an intern scholar with the Americas Program at CSIS, provided research assistance, Venezuelas Presidential Election: How Significant is the Outcome for the
United States? http://csis.org/publication/venezuelas-presidential-election-how-significant-outcome-united-states How is the

energy relationship between the U nited S tates and Venezuela evolving? A1: Much has been said about the interdependence of the two countries, but recent figures show this is becoming less and less so. Venezuela, through the state-owned oil company PDVSA, is the fourth largest oil provider to the U nited S tates, trailing only Canada,
Saudi Arabia, and Mexico. At the end of 2011, Venezuela represented 11 percent of imports for the United Statesthe worlds largest oil consumer. To be sure, 11 percent remains a significant share of the U.S. market, but Venezuelas share continues to decline. As recently as 2007, U.S. imports of Venezuelan oil stood at 1.4 million barrels per day (bpd); by 2012, this number stood at 879,000 bpd, according to preliminary figures released by the U.S. Department of Energys Energy Information Administration. Meanwhile, the United States continues to advance on its path of increasing energy independence as production of shale gas and tight oil grows. Final approval of the 2,000 mile Keystone pipeline, which would bring 700,000 bpd of oil from Canada to refineries in Houston and the Gulf of Mexico, would increasingly delink the United States from Venezuelan exports. Not to mention the possibility of increasing deep-water exploration in Mexico as it begins to enact reforms of its energy sector. For

Venezuela, the U.S. market will remain the number one destination of oil exports, with roughly 40 percent of its oil going to the United States, followed by the Caribbean and China. The oil sector accounts for 25 percent of Venezuelan GDP and 80 percent of exports. Less demand from the U.S. market would hit the
Venezuelan economy with considerable force. The United States might see adverse effects from rapidly decreasing Venezuelan supplies, such as higher fuel prices, and growth would slow, but these effects would likely be transitory. What

is more likely in the midterm is a rebalancing of the U.S. energy basket. This is likely to include less dependence on Venezuelan oil because of the changing energy scenario described above. If current trends continue, the Venezuelan economy is likely to experience difficulty. Despite tight global supplies of oil, Venezuela may struggle to find new buyers and to reorient infrastructure used to refine its oil to reach other markets, including Asia, since today only the U nited S tates is well-equipped to refine Venezuelas heavy, low-quality oil. Q2: Where does anti-drug trafficking cooperation stand? A2: In the 1980s, officials in
Caracas and Washington, D.C. developed multiple joint antidrug trafficking initiatives as a result of a memorandum of understanding (MoU) signed in 1978. By the beginning of the twenty-first century, this bilateral relationship had blossomed, with both sides in close consultation on logistical and technical support, sharing information, and confiscating illegal narcotics shipments. However, since 2005 the Venezuelan government has dramatically reversed course and has accused the U.S. Drug Enforcement Agency (DEA) of conducting espionage within Venezuelan borders. Amid this turmoil, Caracas demanded the renegotiation of the MoU but when it came time to sign an appendix prepared by a U.S.-Venezuela Commission, the Venezuelan president backed down. The Chvez governments links with FARC guerrillas and the porousness of the Venezuela-Colombian border has turned Venezuela into one of the main gateways for cocaine headed for the United States. The DEA, after the fallout with the Venezuelan government, proceeded to appoint its former exemplary partner as failing to meet international standards in anti-trafficking measures, and consequently imposed an arms embargo on the Chvez government. This measure prevents Venezuela from purchasing arms or defense services, not only directly from the United States but also from purchasing arms from a third country that originated in the United States. As revealed by Eladio Aponte Aponte, former president of the Criminal Chamber of the Supreme Court and military prosecutor until ousted by Chvez, possible links by members of the Chvez government with drug dealers only serves to further the distance between the United States and Venezuela, especially since the United States has found willing and effective partners in Colombia and Mexico especially. Q3: How does the Venezuela-Cuba relationship impact the United States? A3: Some

have suggested that Venezuela could serve as a valuable interlocutor in a U.S.-Cuba rapprochement. However, this is likely wishful thinking.
The link between Maduro and the Castro brothers brings no added value to talks between the United States and Cuba and may further complicate the issue. In this regard, if

Washington were to initiate efforts to find areas of cooperation with the Venezuelan government it may consider dealing directly with the Cuban government, as Cuba, not Venezuela, seems to be the senior

partner in the CubaVenezuela relationship. Much has changed in

the U.S.-Venezuela relationship. A new environment highlights why the United States can allow itself to operate from a different posture when dealing with Venezuela. A U nited S tates with increasing energy things done
production, close

cooperation

with Mexico, Colombia, and other actors in the region on antidrug trafficking

initiatives, and the subordinate nature of Caracass relationship with Havana signifies that for many needs, the United States can without going through Caracas.

get

Ev Describing the Engagement


The plan would likely be DOE technical and energy policy cooperation
John R. Brodman, 10-21-2003, Analyst

@ Abraham Energy Report, previously the Deputy Assistant Secretary of Energy for International Energy Policy, Office of Policy and International Affairs, U.S. Department of Energy, U.S. Energy Security: West Africa and Latin America, http://www.gpo.gov/fdsys/pkg/CHRG-108shrg91959/html/CHRG108shrg91959.htm

Venezuela is a key oil producing country with the Western Hemisphere's largest conventional proven reserves. Venezuela has experienced a great deal of turmoil in its energy sector recently, with increasing government intervention and labor unrest. In the past few years under President Chavez, cuts in the state oil company, Petroleos de Venezuela, S.A, (PDVSA), a lack of f oreign d irect i nvestment and a policy of strict adherence to OPEC quotas have hindered the country's long-term expansion and production. The Outlook for Venezuela The loss of Venezuelan oil supply during December, January and February was a serious blow to U.S. oil supplies. The Administration monitored the
situation closely. We also encouraged other oil producers to activate their spare production capacity in response to the market signals that were generated by the Venezuelan loss. OPEC's decision to increase its production was a positive development. We are continuing our close monitoring of the Venezuelan situation and are prepared to act quickly should a need arise. Venezuela

is a significant source of oil for the U.S. and we have kept a close eye on events in that country. Over the past few months, the Department of Energy has met on
several occasions with officials from Venezuela's Ministry of Mines and Energy and PDVSA. In February and again in July, Deputy Secretary McSlarrow met with Minister Ramirez and PDVSA President Ali Rodriguez. There

have also been ongoing DOE staff level meetings and exchanges of data with PDVSA representatives to discuss current production and export levels in an attempt to improve the transparency of information coming out of the country. The worst effects of the strike in Venezuela appear to be over. Venezuelan oil production and exports have been significantly restored. The increase in oil supplies from Venezuela, as well as from other producers, has helped relieve pressure on crude and product markets over the past several months. However, crude and product inventories remain at historically low levels, due in part to the Venezuelan disruption. Production--There are a wide range of estimates about Venezuela's
ability to restore full production and export of oil. Venezuelan government sources claim that production is at 3.1 million bpd. On the other hand, most industry experts place production around 2.5 million bpd. EIA is using 2.35 million bpd for its calculations since that is what can be confirmed based on available data. Industry analysts cite field damage and lack of maintenance resources as preventing the restoration of the remaining 500,000 bpd. Before the strike, Venezuela produced about 3 million bpd and exported 2.5 million bpd. Many analysts also question whether current production can be sustained. Venezuela's

oil fields have natural depletion rates up to 25 percent per year, which has, in the past, required PDVSA to invest heavily to maintain production capacity. Experts have not seen evidence of the investment--such as drilling activity--necessary to sustain production. Exports--Unofficial EIA data from the last few weeks show that U.S. crude imports from Venezuela continue to be
above one million barrels per day--higher than levels seen in January and February but still below pre-strike levels of 1.5-1.6 million barrels per day. Refining--Reports indicate that several

refineries are operational and running, but the amount and quality of refined products being produced, by Venezuela, particularly gasoline, are unknown. Venezuelan domestic demand for gasoline has dropped due to economic constraints, which may allow for more exports. There have been reports
of gasoline shipments to the U.S. but it is possible that the gasoline came from storage or was imported to Venezuela during the strike. Venezuelan gasoline exports to the U.S. have not yet consistently returned to pre-strike levels of around 60,000 bpd (100,000 bpd with imports from PDVSA's Caribbean refineries). Technical Consultations--The

D epartment o f E nergy has had long- standing technical and

policy cooperation with Venezuela. We believe it is important to maintain that relationship. We have made initial efforts to resume technical level cooperation. We have not yet set dates for policy level consultations. current u.s. energy policy with regard to africa The President has recognized the importance of the United States' relationship with Africa, and the N ational E nergy P olicy outlined some specific recommend ation s for continued engagement , that include actions to:

Economy Advantage

Oil Shocks Add On

2AC Oil Shocks Add On


Venezuela instability dramatically effects global oil supplies and the global economyhuge oil exporter
Johnson, 03/05/2013 (Keith Johnson, Staff reporter with the Wall Street Journal and lead author of its Environmental Capital blog,
After Chvez, a Question of His Country's Oil, The Wall Street Journal, http://online.wsj.com/article/SB10001424127887324178904578343053650258188.html)

Venezuela is one of the world's biggest oil exporters and one of the top five suppliers to the U.S. As a result, any sign of instability following Mr. Chvez's death could roil oil markets, boost crude prices and dent the global economy.
"Instability Even a Chavista successor to Mr. Chvezsuch as current Vice President Nicols Madurocould have a tough time maintaining the heterogeneous coalition of socialists, businessmen, and the military that has coalesced around Mr. Chvez.

in Venezuela is the real risk, because that could have a dramatic impact on global oil

supplies ," said Mark Jones, a Venezuela expert at Rice University. Venezuela produces about 2.5 million barrels of oil a day and supplies about 1 million barrels a day to the U.S. Oil wealth, especially in the middle of the
last decade, underwrote Mr. Chvez's "Bolivarian revolution" and allowed lavish spending on social programs. But chronic underinvestment in the state oil company, Petrleos de Venezuela, and hostility to foreign firms has steadily eroded the country's oil-production capacity, leaving the future murky. Mr. Chvez's death also could have knock-on effects throughout the region. Venezuela

provides about 100,000 barrels of oil a day to Cuba, essentially freea $3 billion to $4 billion annual subsidy that could disappear if Mr. Chvez is replaced by an opposition candidate. That would be devastating to Cuba, comparable to the economic hardship the island suffered after the implosion of its main sponsor, the Soviet Union, in the early 1990s. Venezuela also provides subsidized oil to Nicaragua and sells oil to other Caribbean nations on preferential terms meaning any political upheaval in Caracas could harm economic growth throughout the region. Whoever succeeds Mr. Chvez likely will seek to maintain oil trade with the U.S. and, if possible, to boost investment in the oil sector .

Energy shocks cause great power nuke war Islam Yasin Qasem 7, a doctoral candidate in the Department of Politics and Social Sciences at the
University of Pompeu Fabra (UPF) in Barcelona, MA in International Affairs from Columbia, July 9, 2007, The Coming Warfare of Oil Shortage, online: http://www.opednews.com/articles/opedne_islam_ya_070709_the_coming_warfare_o.htm Recognizing the strategic value of oil for their national interests, superpowers will not hesitate to unleash their economic and military power to ensure secure access to oil resources, triggering worldwide tension, if not armed conflict. And while superpowers like the United States maintain superior conventional military power, in addition to their nuclear power, some weaker states are already nuclearly armed, others are seeking nuclear weapons. In an anarchic world with many nuclear-weapon states feeling insecure, and a global economy in downward spiral, the chances of using nuclear weapons in pursues of national interests are high.

XT Oil Shocks IL
Venezuela production key to global oil prices
Sullivan, 2008 (Mark P. Sullivan, Specialist in Latin American Affairs Foreign Affairs, Defense, and Trade Division, Venezuela: Political
Conditions and U.S. Policy, CRS Report for Congress, 08/01/2008, http://www.au.af.mil/au/awc/awcgate/crs/rl32488.pdf) Because of these comments, however, some observers have raised questions about the security of Venezuela as a major supplier of foreign oil. There are also concerns that

Venezuela is looking to develop China as a replacement market, although Venezuelan officials maintain that they are only attempting to diversify Venezuelas oil markets . In June
2006, the Government Accountability Office (GAO) issued a report, requested by Senate Foreign Relations Committee Chairman Richard Lugar, on the issue of potential Venezuelan oil supply disruption. The

GAO report concluded that a sudden loss of all or most Venezuelan oil from the world market could raise world prices up to $11 per barrel and decrease U.S. gross domestic product by about $23 billion. It also concluded that if Venezuela does not maintain or expand its current level of oil production, then the world oil market may become even tighter than it is now , putting pressures on both the level and volatility of energy prices.127

Uniqueness

UQ-Oil Sector Collapse


Venezuelan oil is on the brink of collapse- too early to tell how Maduro will handle it decline. RT 13 (RT, Chavezs death opens oil industry questions for Venezuela, March 06, 2013, http://rt.com/business/chavezvenezuelan-death-oil-887/) Economy, Natural resources, Oil The

news of the Venezuelan leader's death has had a moderate impact on crude prices, but has opened a Pandora's box about the future of the nation's oil reserves, the world's largest. Hugo Chavez the orchestrator of Venezuelas oil industry- which sits on an estimated 297 billion barrels of oil died at 4:25pm on Tuesday at a military hospital in Caracas. Crude oil prices rose moderately in reaction to the news, and will likely continue their upward trajectory. Brent crude gained 33 cents to $111.94 a barrel on the ICE
Futures exchange in London. In New York crude oil closed at $91.04 a barrel, rising 0.24%. Brent closed at $112.95 on Tuesday. Chavezs death wasnt the sole catalyst for the price bump. The closure of a North Sea Brent pipeline which transports 90,000 barrels a day is also a factor that sent prices upwards. Investors

are betting on higher oil prices, and experts are closely watching the political situation, as Venezuela is an export driven economy and a top 5 US supplier. The future of crude oil prices will be dependent on Venezuelas future geopolitical situation, and there may be a brief drop in oil production output. Problems in Venezuela will undoubtedly impact the market, but may not be too much of a problem for the market to cope with, said Ric Spooner, chief market analyst at CMC Markets in Sydney. A potential oil super power, Venezuela hasnt tapped into its full oil potential. Venezuela is currently the worlds fourth largest OPEC producer, after Saudi Arabia, Iraq, and Kuwait. Venezuelas oil deposits of an estimated 297 billion barrels are comparable or even slightly above those of Saudi Arabia, the worlds biggest oil producer. But actual production is far behind due to decades of
underinvestment. In 2012 Saudi Arabia exported 12% of the worlds oil, and Venezuela only 3%. Since 1998 oil output has fallen 25%, currently Venezuela is the fifth largest oil exporter. When Chavez took office in 1999, Venezuelan crude oil was about $9 a barrel, and fourteen years later, it is $103.89, almost an 11-fold increase. A Petroles de Venezuela (PDVSA) worker smiles next to a banner against ExxonMobil during a meeting to celebrate the court decision against US giant ExxonMobil, at the Simon Bolivar hall in PDVSA's La Campina headquarters in Caracas on March 24, 2008. (AFP Photo / Pedro Rey) A

new era for Venezuelas oil riches The death of Hugo Chavez has unraveled a Pandoras box for the future of Venezuelan oil,
which has been state controlled since Chavez took power in 1999. The man who once declared that capitalism killed Mars also used petro-dollars to nationalize Venezuelas oil wealth, and then used profits to subsidize a socialist welfare state."Chavez has been in the forefront of achieving sovereignty over the oil resources of the country. Oil is fundamental to Venezuela, for its geostrategic global economy, because our nation has enormous resources," said Rafael Ramirez, Venezuela's energy minister. Energy

sales account for 95% of the country's export earnings . So far oil has been safe guarded and wealth redistributed by Chavez himself, but his exit from the political scene could open a new economic market. Many neighboring oil executives are meeting the political transition with optimism, and investors are eyeing more friendly market policies. Things will change, said Ronald Pantin, chief executive of
Bogota-based oil producer Pacific Rubiales Energy Corp in an interview before Chavezs death. It took years for the opposition to realize that a lot of what Chavez did, Venezuelans liked, said Ramirez. The emphasis of the states role in the economy is something that will be long- lasting. "It's

too early to tell how the new leader will handle it, but ConocoPhillips could benefit oil companies helped Venezuela develop wells in the first half of the 20th century. In the 1970s, the countrys oil and gas sector was nationalized, essentially ousting foreign companies. Since Chavez became president, state control over
the most," Fadel Gheit, senior oil analyst at Oppenheimer & Co, told Christian Science Monitor. US this sector and the rest of the economy has intensified. Chavez kicked out oil giants Exxon-Mobil and Conoco-Phillips and nationalized over 1000 companies. ConocoPhillips is looking for over $20 billion in compensation of lost assets. In fact, at the time Chavez ousted the company, it was the biggest foreign stakeholder in Venezuela, so it will likely try and regain its former assets. Exxon Mobil was seeking $12 billion in compensation for assets that were taken from its Cerro Negro, but in January 2013 an arbitration panel has awarded the US oil giant less than 10% - $908 million. Chevron Corporation continues to have some projects in the country, but the company faces constant pressure from state owned agencies. Venezuelan President Hugo Chavez while he chats with Russian Deputy Prime minister Igor Sechin at the Miraflores presidencial palace in Caracas on July 27, 2009. (AFP Photo / Presedencia)

Venezuela oil production deteriorating- investment uniquely key Ladislaw & Verrastro, 03/07/2013 (Sarah O. Ladislaw is co-Director and senior fellow, Energy and National Security
Program, and Frank A. Verrastro, senior vice president and James R. Schlesinger Chair for Energy & Geopolitics, CSIS, A Post-Chavez Outlook for Venezuela Oil, Real Clear World, http://www.realclearworld.com/articles/2013/03/07/a_postchavez_outlook_for_venezuela_oil_100601.html)

Despite its enormous oil resources, Venezuela's oil production (regardless of whose figures you use) has long been in steady decline. In 2011 liquids production was 2.47 million barrels per day (mmbd) , down a million barrels per day 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 and managerial capabilities of state run oil and gas company PDVSA have deteriorated since the 2002 strike and aftermath. Increasingly, PDVSA relies on contractors, as well as other private company partners, to keep the fields in production but reports state that contractors 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 withheld incremental new money. China has not announced a new line of credit or extensions on its development-linked financing since last April.

Production declines now Carter 13 (John Carter, journalist for Energy and Capital Political Investment Analysis in the New Energy Economy, Venezuela
Oil Crisis-The Future of Oil Policy, March 14th 2013, http://www.energyandcapital.com/articles/venezuela-oil-crisis/3175) Vice President Nicholas Maduro is expected to become the next leader of Venezuela after the death of Hugo Chavez. And it is highly probable that Maduro

will continue the status quo in managing the nations oil reserves. Include the fact that Rafael Ramirez, head of the Energy Ministry, will continue to oversee the oil sector, as reported by Reuters.
The International Energy Agencys monthly analysis maintains that Ramirez stay will only solidify current energy policy. Though Maduro was a Chavez acolyte, no one truly knows what he plans to do with the national oil market. There

is every indication that he may preserve the current system, or he could steer to the left of Chavez. However, there is a slim
chance of Maduro recognizing the realities of his countrys impending energy problemsomething that could make him more conciliatory in seeking new business aboard. But regardless of the direction he chooses, the

current trajectory of Venezuelan oil policy is unsustainable. Chavez used oil funds from state-run oil company Petroleum of Venezuela (PDVSA) to maintain the countrys robust social programs, according to Reuters. These programs are not cheap, and now there is an added problem of a decline oil production from the time Chavez took office in 1998. During Chavez tenure, oil output dropped from 3.5 million barrels per day to 2.34 bpd in the last month. According to projections, Venezuelan oil output will only move up to 2.8 million bpd in the next few years.

The state of the Venezuelan oil industry is declining now- reform is needed
Marianne Lavelle, writer for National Geographic News, Published March 6, 2013, http://news.nationalgeographic.com/news/energy/2013/03/130306-hugo-chavez-venezuela-oil/

In the economic isolation that Chavez imposed, development of the nation's vast oil reserves languished, most outside observers agree. Venezuela's oil production has declined 25 percent since 2001 . Crude exports to Venezuela's long-time chief customer, the United States, have fallen roughly to the level seen before Chavez took office. Indeed, after a deadly explosion last year in its main refinery, Venezuela was forced to rely
on gasoline imports from the United States to keep its economy moving. (See related: "Venezuelan Refinery Under Scrutiny After Deadly Blaze.")Now, in addition to electing a new leader,

Venezuela must choose a path for managing its immense

resourceseither staying the course that Chavez plotted in support of his "Bolivarian revolution," or attempting to forge a future that better realizes the value of its natural treasure .Large, Sticky Oil StoresBecause oil accounts for 95 percent of Venezuela's export earnings and nearly half of its federal budget revenue, Venezuela is

deeply dependent upon a factor largely outside its controlthe global price of oil. Chavez took office in 1999
amid economic turmoil in Venezuela caused by a precipitous fall in the price per barrel during the Asian economic crisis. As oil prices climbed steadily over the next decade, the

new flow of revenue bolstered Chavez's regime."Oil prices are what made Hugo Chavez possible," said Daniel Yergin, a leading energy industry consultant, in an email from Houston, where he is hosting one of
the industry's biggest conferences, IHS Ceraweek, which was abuzz with the news out of Caracas. "The collapse of oil prices [from 1997 to 1998] and the resulting discontent in Venezuela gave him the opening to become president, just seven years after he was sent to jail for leading a coup," said Yergin, author of two histories of the oil industry. "And it was rising oil prices since 2000 that gave him the financial resources to consolidate power, court public opinion and try to turn his Bolivarian revolution into a global campaign for 'twenty-first century socialism.'"Meanwhile, advances in technology had made it possible to extract heavy oil mixed in sandstone, like the vast reserves in Venezuela's Orinoco belt, in the basin of one of the longest rivers in South America. In 2010, in a review of Venezuela's stores based on the current state of technology, the U.S. Geological Survey concluded that, based on the state of technology at the time, Orinoco held the largest accumulation of oil it had ever assessed. One widely followed global review of resources, BP's, put Venezuela ahead of Saudi Arabia as the nation with the largest stores of oil. Others said Venezuela was in a close second place.But much like the tar sands of Alberta, Canada, the heavy oil of the Orinoco belt requires specialized production and refining processes. Canada's tar sands oil production has skyrocketed over the past decade thanks to application of the new technologies, but Venezuela's heavy oil development has stagnated. The

state-run oil company, Petroleos de Venezuela (PdVSA), had made an effort to attract foreign investment and the technical expertise of the large multinational oil companies before Chavez took office, but those efforts were halted. In 2002, nearly half of PdVSA's employees walked off the job in protest against Chavez's management of the
company's operations; Chavez responded by firing 18,000 and consolidating control.In 2006 and 2007, Chavez fully nationalized oil exploration and production, forcibly seizing assets of Exxon Mobil, France's Total and Italy's Eni. Last year, Venezuela said it paid Exxon $250 million to settle Exxon's legal claims over the seizure; the company originally had sought to freeze $12 billion in PdVSA assets as compensation.Isolation and Declining Oil ProductionExpelling

the foreign oil companies served Chavez's leftist aims, but deprived Venezuela of the expertise to tap its unique geology and the ability to earn far more oil revenue. "In a
way it showed just how ideological Chavez was," says David Jhirad, professor and director of the energy resources and environment program at Johns Hopkins University's School of International Studies, who served during President Bill Clinton's administration as the U.S. Department of Energy's deputy assistant secretary for international energy policy. "The state still could have gotten a lot of those revenues through taxing the companies and through partnerships. Venezuela

could have achieved far more for the goals of social justice with an approach that was much more pragmatic and smart."While oil production declined, Venezuela's take on each barrel also declined due to Chavez's policies at home and abroad. Venezuelans paid the lowest
prices in the world for gasolinefrom 6 cents to 12 cents per gallon in recent yearsand even Chavez threatened in recent years that the high subsidies for fuel would have to be rolled back, blaming citizens for energy waste. (See related gallery and map: "Eleven Nations With Large Fossil Fuel Subsidies" and "Fossil-Fuel Burden on State Coffers.")Under Chavez's "Petrocaribe" initiative, Venezuela provided a sizable amount of its crude oil and gasoline to regional allies at below-market prices and with favorable financing terms. About 400,000 barrels per day, nearly a quarter of the nation's exports, went to Cuba, where Chavez spent much of his final months in ultimately futile treatment for cancer. (See related story: "Cuba's Oil Quest to Continue, Despite Deepwater Disappointment.") The favorable exports rankled many in Venezuela and were taken up by opposition leader Henrique Capriles in last year's election.Capriles, a centrist and governor of Miranda state, is expected to make another bid at the presidency in the elections that should be held within the next 30 days under Venezuela's constitution. But Chavez's handpicked successor, former bus driver turned loyal lieutenant Nicolas Maduro, has signaled his devotion to continue Chavez's path. "Our people will never again see the bourgeoisie plundering this country," he has said. "Better to be dead than traitors to the people and to Chavez!" Jhirad

says it remains to be seen whether Venezuela "can take all this ideological baggage of

Chavez and kind of bury it" in an effort to rebuild its economy. Yergin notes that post-Chavez Venezuela now stands greatly weakened by spending, capital flight, and shortages . "Without his charisma
and force of character, it is not all clear how his successors will maintain the system he created," he said.

Investment in Venezuela key to energy sector Vanderklippe, 03/06/2013 (Nathan Vanderklippe, reporter at The Globe and Mail, Chavez's death opens door to Venezuela's oil
riches, The Globe and Mail, http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/chavezsdeath-opens-door-to-venezuelas-oil-riches/article9324112/?service=mobile) Many observers, however, believe Chavezs ruling United Socialist Party of Venezuela will hold on to power in coming elections, and political status quo means status quo for the oil industry, Katherine Spector, commodity strategist at the Canadian Imperial Bank of Commerce in New York, wrote in a January research note. The greater uncertainty lies in the impact of a political transition either to opposition rule or to fractured governance among Chavistas. In that case, implications for

oil price would be shortterm bullish, and possibly long-term bearish if the outcome is a more liberal government, she wrote. Observers caution, however, that profound change is needed for Venezuela to attract the billions in outside

investment it needs to revitalize energy output . That includes abiding by international dispute resolution systems, offering competitive terms and respecting contract law. Even then, those who have been
burned in the past may face obstacles in returning to a country that has under-invested in numerous areas.

Boosting outside energy investment will grow oil production Zhdannikov, 03/08/2013 (Dmitry Zhdannikov, writer for reuters, Venezuela could boost oil output in 5-7 years: Lukoil, Reuters,
http://business.financialpost.com/2013/03/08/venezuela-could-boost-oil-output-in-5-7-years-lukoil/?__lsa=a77a-19ab)

Venezuela could boost its long stagnant oil output considerably in just five to seven years if it offers investors greater certainty over contracts, an executive of Russias LUKOIL said. Under president Hugo Chavez, who died on Tuesday after 14 years in power, foreign oil companies in Venezuela, the worlds 11th largest crude exporter, have faced price controls and currency devaluations along with threats of nationalisation. Output has dropped from some 3.5 million barrels per day when he was elected and Venezuela pumped just 2.34 million bpd last month, according to analysts. In my opinion in the next 5-7 years it is possible to really grow oil production in Venezuela, said Andrei Kuzyayev, vice president and head of foreign projects at LUKOIL, Russias second largest crude producer, which is active in the Latin American country. But you need a quiet situation, stability in contracts and a good situation for investment, Kuzyayev told Reuters on Friday. The socialist leaders death is unlikely to have a big impact on Venezuelas oil sector in the short term, with key projects expected to stay on track if his preferred successor wins elections due to be called in the next 30 days. An opposition victory could eventually lead to an increase in foreign investment, but analysts said this could take years.

Investment key to oil production and economy


Nam, 01/08/2013 (Moiss Nam, a scholar at the Carnegie Endowment for International Peace, is a syndicated columnist and author,
An Economic Crisis of Historic Proportions, The New York Times, http://www.nytimes.com/roomfordebate/2013/01/03/venezuela-postchavez/chavez-will-leave-behind-an-economic-crisis)

The crisis includes a fiscal deficit approaching 20 percent of the economy (in the cliff-panicking United States it is 7
percent), a black market where a U.S. dollar costs four times more than the government-determined exchange rate, one of the world's highest inflation rates, a swollen number of public sector jobs, debt 10 times larger than it was in 2003,

a fragile banking system and the free fall of the state-controlled oil industry, the country's main source of revenue. Oil-exporting countries rarely face hard currency shortages, but the Chvez regime may be the exception. Mismanagement and lack of investment have decreased oil production. Meanwhile oil revenue is compromised partly because of Chvezs decision to supply Venezuelans with the country's most valuable resource at heavily subsidized prices. Thus a large and growing share of locally produced oil is sold domestically at the lowest prices in the world (in
Venezuela it costs 25 cents to fill the tank of a mid-sized car). Another share of the oil output is shipped abroad to Cuba and other Chvez allies, and to China, which bought oil in advance at deeply discounted prices (apparently the revenue from China has already been spent). Most

of

the crude left to be exported at market prices is sold to Venezuela's best client, and, ironically, Chvez's main foe: the United States. Yet, as a result of America's own oil boom, U.S. imports of Venezuelan oil have recently hit a 30-year low.

Venezuela oil production deteriorating- now uniquely key


Ladislaw & Verrastro, 03/07/2013 (Sarah O. Ladislaw is co-Director and senior fellow, Energy and National Security Program, and
Frank A. Verrastro, senior vice president and James R. Schlesinger Chair for Energy & Geopolitics, CSIS, A Post-Chavez Outlook for Venezuela Oil, Real Clear World, http://www.realclearworld.com/articles/2013/03/07/a_post-chavez_outlook_for_venezuela_oil_100601.html)

Despite its enormous oil resources, Venezuela's oil production (regardless of whose figures you use) has long been in steady decline. In 2011 liquids production was 2.47 million barrels per day (mmbd) , down a million barrels per day 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 and managerial capabilities of state run oil and gas company PDVSA have deteriorated since the 2002 strike and aftermath. Increasingly, PDVSA relies on contractors, as well as other private company partners, to keep the fields in production but reports state that contractors 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 withheld incremental new money. China has not announced a new line of credit or extensions on its development-linked financing since last April.

No action risks strikes and Venezuela instability


Ladislaw & Verrastro, 03/07/2013 (Sarah O. Ladislaw is co-Director and senior fellow, Energy and National Security Program, and
Frank A. Verrastro, senior vice president and James R. Schlesinger Chair for Energy & Geopolitics, CSIS, A Post-Chavez Outlook for Venezuela Oil, Real Clear World, http://www.realclearworld.com/articles/2013/03/07/a_post-chavez_outlook_for_venezuela_oil_100601.html) At the same time that production

is dropping, highly subsidized domestic consumption of oil is increasing while revenue from exports is also declining. 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

this culminates in an outlook for continued decline in oil 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 production is such a large part of Venezuela's government balance sheet that no leadership could survive for long without a sustained cash flow that 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 potential for strikes or instability among groups involved in the sector (some of whom have not been paid) could have additional negative impacts on production.
market rates due to extremely preferential financing relationships, including additional heavy subsidies for Cuban exports. All of

Venezuelan oil collapsing now- mismanagement and lack of investment Parraga & Wallis 11 (Marianna Parraga, senior correspondent and Daniel Wallis, senior correspondent for Reuters,
Venezuelan oil giant sitting atop a well of trouble, August 17, 2011, http://business.financialpost.com/2011/08/17/venezuel an-oilgiant-sitting-atop-a-well-of trouble/?__lsa=a77a-19ab) Venezuela received an enviable honor last month: OPEC said it is sitting on the biggest reserves of crude oil in the world even more than Saudi Arabia. But the Venezuelan

oil industry is also sitting atop a well of trouble. The South American nation has struggled to take advantage of its bonanza of expanding reserves. And a scandal over embezzled pension funds at state oil company PDVSA has renewed concerns about corruption and mismanagement. Retired workers from the oil behemoth have taken to the streets in protest. Their beef: nearly half a billion dollars of pension fund money was lost after it was invested in what turned out to be a Madoff-style Ponzi scheme run by a U.S. financial advisor who was closely linked to President Hugo Chavezs governme nt.
The fraud case centers on Francisco Illarramendi, a Connecticut hedge fund manager with joint U.S.-Venezuelan citizenship who used to work as a U.S.-based advisor to PDVSA and the Finance Ministry. Several top executives at PDVSA have been axed since the scandal, which one former director of the company said proved Venezuela under Chavez had become a moral cesspool. Pensioners are not the only ones still wondering how such a large chunk of the firms $2.5 billion pension fund was invested with Illarramendi in the first place. The question cuts to the heart of the challenges facing PDVSA, one of Latin Americas big three oil companies alongside Pemex of Mexico and Brazils Petrobras. The Organization of the Petroleum Exporting Countries issued a report last month showing Venezuela surpassed Saudi Arabia as the largest holder of crude oil reserves in 2010. PDVSA is ranked by Petroleum Intelligence Weekly as the worlds fourth largest oil company thanks to its reserves, production, refining and sales capacity, and it has been transformed in recent years into the piggy-bank of Chavezs 21st Century Socialism. The timing of the scandal is not good for Chavez: the charismatic, 57-year-old former coup leader underwent cancer surgery in Cuba in June and is fighting to recover his health to run for re-election next year. He needs every cent possible from PDVSA for the social projects that fuel his popularity. MULTI-TASKING The company does a lot more than pump Venezuelas vast oil reserves. Tapped constantly to replenish government coffers, PDVSA funds projects ranging from health and education to arts and Formula One motor racing. From painting homes to funding medical clinics staffed by Cuban doctors, the restoration of a Caracas shopping boulevard and even a victorious team at the Rio carnival, theres little that PDVSA doesnt do. Jeffrey Davidow, a

former U.S. ambassador to Venezuela who now heads the Institute of the Americas at the University of California, San Diego, points to the occasion when PDVSA senior executives turned down invitations to a regional energy conference at the last minute back in May, saying they were too busy because of PDVSAs leading role in the

governments Gran Mission Vivienda project. It aims to build two million homes over the next seven years. In poorly-managed societies, national oil companies tend to be the most efficient organizations, so the government gives
them more work to do, instead of letting them focus on being better oil companies, Davidow told industry executives in the ballroom at a luxurious La Jolla hotel. Thats the kind of criticism that Chavez, who has nationalized most of his countrys oil sector since he was elected in 1999, says is rooted in a bankrupt imperial Yankee mind-set. He purged perceived opponents from PDVSAs ranks in response to a crippling strike in 2002-2003 that slashed output, firing thousands of staff and replacing them with loyalists. Since then, the company has endured one controversy after another. There was the maleta-gate affair in 2007, so-called after the Spanish word for suitcase, when a Venezuelan-American businessman was stopped at Buenos Aires airport carrying luggage stuffed with $800,000 in cash that U.S. prosecutors said came from PDVSA and was intended for Cristina Fernandezs presidential campaign in Argentina. Both Fernandez and Chavez denied the charge. There

have also been persistent allegations by industry experts and international energy organizations that Venezuela inflates its production statistics which PDVSA denies and a string of accidents, including the sinking of a gas exploration rig in the Caribbean last year and a huge fire at a giant oil storage terminal on an island not far away. In a big blow to its domestic popularity, tens of thousands of tons of meat and milk bought by PDVSAs importer
subsidiary, PDVAL, were left festering in shipping containers at the nations main port last year, exacerbating shortages of staples on shop shelves. Opposition media quickly nicknamed the subsidiary pudreval in a play on the Spanish verb to rot pudrir. In an apparent damage-limitation exercise after the pension scandal, five members of the PDVSA board were relieved of their duties in May, including the official who ran the pension fund. They were replaced by Chavez loyalists in cluding the countrys finance minister and foreign minister. Gustavo Coronel, a former PDVSA director in the 1970s and later Venezuelas representative to anti -graft watchdog Transparency International, said the fraud had been going on right under the noses of the PDVSA board. What this scandal shows is that Venezuela has become a moral cesspool, not only restricted to the public sector but to the private sector as well, he wrote on his blog. Money

is dancing like a devil in Venezuela, without control, without accountability. Those who are well connected with the regime have thrown the moral compass by the side Venezuelan justice will not move a finger. Fortunately, U.S. justice will. SHOW ME THE MONEY U.S. investigators say Illarramendi, the majority owner of the Michael Kenwood Group LLC hedge fund, ran the Ponzi scheme from 2006 until February of this year, using deposits from new investors to repay old ones. He
pleaded guilty in March to multiple counts of wire fraud, securities and investment advisor fraud, as well as conspiracy to obstruct justice and defraud the U.S. Securities and Exchange Commission. He could face up to 70 years in prison. By those outside the circles of power in Venezuela, Illarramendi was seen as one of the Boli-Bourgeoisie someone who was already wealthy but grew much richer thanks to the Bolivarian Revolution, named by Chavez after the dashing 19th century South American independence hero Simon Bolivar. In one widely-circulated image, Illarramendi is seen overweight and balding, wearing a dark blue overcoat and clutching a blue briefcase as he left federal court in Bridgeport, Connecticut after pleading guilty. An ex-Credit Suisse employee and Opus Dei member in his early 40s who lived in the United States for at least the last 10 years but traveled frequently to Venezuela, Illarramendi is on bail with a bond secured on four U.S. properties he owns. He was close to PDVSA board members and Ministry of Finance officials, but is not thought to have known Chavez personally. The son of a minister in a previous Venezuelan government, Illarramendi did enjoy some perks including using a terminal at the capitals Maiquetia International Airport normally reserved for the president and his ministers, according to one source close to his business associates. His sentencing date has not been set yet, but a receivers report by the attorney designated to track down the cash is due in September. In June, SEC regulators said they found almost $230 million of the looted money in an offshore fund. That was just part of the approximately $500 million Illarramendi received, about 90 percent of which was from the PDVSA pension fund, according to the SEC. PDVSA has assured its former workers they have nothing to worry about, and that the money will be replaced. But what concerns some retirees are allegations the company may have broken its own rules for managing its pension fund, which should have provided for more oversight by pensioners. A representative of the retirees should attend meetings where the use of the fund is discussed, but no pensioners have been called to attend such a meeting since 2002. PDVSAs

investment in capitalist U.S. markets may seem to be incongruous given the presidents anti-West rhetoric, but the scale of such transfers is not known, and the investment options for such funds at home in Venezuela are sharply limited, not least by restrictive currency controls. Energy Minister Rafael Ramirez told Reuters that Illarramendi only had an advisory role
with PDVSA, and that it ended six years ago. So quite how he came to be managing such a big chunk of the pension fund is a hotly debated topic. Ramirez said the pension fund had been administered properly, and that the losses were of great concern to the company. In July, PDVSA boosted pension payments to ex-employees by 800 bolivars a month, or about $188. The government also allocated nearly half the income from a new 2031 bond issue of $4.2 billion to the companys pension fund probably to replenish deposits lost in the scandal.

UQ- No Oil Coop Now


Chavezs death opens up space for US oil companies to return to Venezuela, but future engagement levels are up in the air Daly 13 (John Daly, chief analyst for Oilprice.com, received his Ph.D. from the School of Slavonic and East European Studies,
Director of Programs at the Middle East Institute in Washington DC, The True Legacy of Venezuelas Hugo Chavez, March 6, 2013, http://oilprice.com/Geopolitics/South-America/The-True-Legacy-of-Venezuelas-Hugo-Chavez.html) Colonel Lawrence Wilkerson, Collin Powell's former Chief of Staff and now at the College of William & Mary says that the

Obama administration should have the courage to normalize relations with Venezuela
Cuba. While

and

few things are certain in politics, what is certain is that the death of Chvez will refocus sharply the interest of foreign countries and oil companies on the Western hemispheres largest energy reserves. While it is unclear at this stage whether there will be an election to replace Chvez, in the interim Vice President Nicholas Maduro acting as head of state can expect a long line of oil company executives and foreign diplomats to flood his office, seeking to determine whether the countrys energy policies will change, as ExxonMobil and ConocoPhillips lawsuits for compensation slowly wend their way through the U.S. and Venezuelan courts But whether Washington does or does not normalize relations with Venezuela, Chvez has provided his nation with tangible proof that the countrys economy need not always be gamed to the rich, and that social and economic justice need not remain ideas confined to the pages of political science journals, that those previously marginalized by their countrys political system can still have a role to play.

Internal Links/Solvency

Instability ILs
Venezuela oil revenues key to stability and economic growth
Tulchin, 05/28/2013 (Dr. Jospeh S. Tulchin, Latin American scholar with published research on hemispheric security and international
affairs, citizen security and police reform, reducing inequality and the governance of cities. His areas of expertise are US foreign policy, interAmerican relations, contemporary Latin America, strategic planning, and social science research methodology, Commodity prices hit Latin American economies, The World Review, http://www.worldreview.info/content/commodity-prices-hit-latin-american-economies)

A SIX fold increase in oil prices in the last decade gave Venezuela an unprecedented bonanza almost US$1 trillion in revenues. Under the leadership of President Hugo Chavez (1999-2013), it propelled Venezuela on to the world stage. Now Mr Chavez is dead, Venezuelan oil output is declining and energy prices are no longer rising. Venezuela's new leader, Nicolas Maduro, is untested. Many observers believe the fate of the country is now totally linked to the price of oil and the vagaries of an extremely volatile market. The case of Venezuela is an extreme example of
what has become known as 'Dutch disease', named after the experience of the Netherlands in the 1960s when new discoveries of natural gas in the North Sea brought sudden and massive increases in export revenues for the Dutch government. The windfall, called rents by economists because they are over and above the normal profit on a market exchange, caused the real exchange rate to appreciate and produced powerful disincentives to invest in non-tradeable goods, such as domestic manufacturing and services. The Dutch economy fell out of balance and was plunged into a severe recession. Venezuela

is almost totally reliant on just one commodity oil. Revenues from the sale of oil by its national petroleum company, PDVSA, account for 80 per cent of the nations gross domestic product (GDP).
In the last decade, the average annual windfall has been 30 per cent of GDP. The wealth accumulated over a decade amounted to 320 per cent of GDP.

The price of oil is arguably the critical variable which determines the stability of the Venezuelan

state, its economy and social cohesion.

Venezuela low oil prices specifically key to stability


Sun, 2009 (Emmeline Sun, contributer to the Berkeley Political ReviewThe Perils of Falling Oil Prices, BERKELEY POLITICAL REVIEW,
04/23/2009, http://bpr.berkeley.edu/2009/04/the-perils-of-falling-oil-prices/) In the midst of all this, Venezuela

appears to be an anomaly. Their current political development seems unaffected by oil prices. Efforts to improve education and resource development have continued. The state recently elected to potentially extend Hugo Chavez rule through the removal of term limits. This political stability seems to contradict the normal trend, in which heavy dependence on oil fosters instability. However, one of Chavez main policies has been to keep oil prices low for his country. At $.12 a gallon, he has effectively established domestic gas prices as the cheapest in the world. Though Chavez is buying the happiness of his people, it comes at a costly price- roughly $8.8 billion
per year. In a country where 93 percent of revenue comes from exporting crude oil, falling oil prices significantly impact its wealth, even if this

most obvious solution to negating this effect is to raise oil prices by decreasing the subsidies that have been in place for a few decades. However , such an act will undoubtedly fuel inflation in a country that cant afford it. Although outwardly stable, all Venezuelan leaders have recognized the internal
is outwardly unapparent. The volatility of the country, an indication made clear by the fact that subsidies have only been slashed once in the past 20 years. Its unlikely that Chavez will break this trend if he wishes to stay in power. The toll of low oil prices is recognized in other ways. Chavez recently cut spending, increased domestic borrowing and raised sales taxes in an effort to offset the drop in revenue. A different scenario holds true for Russia. Though it is the worlds second largest exporter of oil, falling oil prices are not as detrimental to its internal structure. A loss in revenue, even if significant, is unlikely to oust President Dmitry Medvedev from office. At the very least, Russia has $450 billion in foreign-currency reserves to fall back on, which though significant, is a steep loss from what was very recently $600 billion in reserves. Falling oil prices are also a blow to Russias political diplomacy. This is further exacerbated by the global recession, which has almost decimated Russia s foreign investments. The implications explain Russias precarious relationship with countries like Iran and China. Because investing with Russia is risky for key oil demanders when oil prices are down, Russia seems quite willing to take a "quantity over quality" approach in choosing its allies, perhaps in hopes of boosting its diplomatic position. When we view these actions in their historical context, we recognize that they are not unprecedented. Russia vocally opposed the US invasion of Iraq, even vetoing the UN resolution to authorize war. There were two major reasons for this: the first was that Iraq had an outstanding debt of $8 billion remaining from USSR rule that Russia feared would not be repaid in the event of a regime change; the second, and perhaps more relevant reason, was that Lukoil, Russias largest oil company, had a $3.5 billion

contract with Saddam Husseins government for further oil development in Iraq. Even more intricately, Russia realized that if Iraq, with its large oil reserves, were to fall into US hands, Russian oil would hold significantly less negotiation power and monetary value. An even further look back in history reveals just how dependent the Russian political economy has always been on oil prices. The steep drop in 1986 oil prices (a plunge from $30 per barrel to $10 per barrel) precipitated the fracture of the USSR and led to its collapse a mere five years later. Today, the same problems (fluctuating oil prices) plague Russia, despite its developed internal stability. On the other hand, oil

demanders like the US and China are quick to capitalize on dropping oil prices. At a local level, drivers are more willing to fill up their gas
tanks with prices down from $4 a gallon. Though the drop aids demanders at the moment, a key concern lies in what could happen to smaller countries in Eastern Europe. The political problems that stem from a loss in oil income could easily be picked up by Russia in an effort to exert more influence over those areas. Because

oil is unrenewable, it wreaks domestic and international instability on all countries, creating a tumultuous global arena. This competition for resources will only escalate as countries continue to exhaust finite supplies. Until we develop feasible alternative sources of energy, the international community will remain in flux.

Venezuela needs technological expertise- failure to invest causes instability


Demkiv, 2012 (Anita Demkiv, professor in political science studying global affairs,
Political instability in petrostates, Rutgers, 05/2012, http://mss3.libraries.rutgers.edu/dlr/showfed.php?pid=rutgers-lib:37303) Since Hugo Chavez came to power in 1999, there has been an occasionally tense relationship between the oil industry and President Chavez. Although NOC management usually complies with the needs of the government, PDVSA is somewhat of an anomaly. Steve LeVine writes: The trouble has been that, since Chavez took power 13 years ago, Venezuela's

oil production has fallen to 3 million barrels a day, 16 percent less than the 3.5 million barrels a day it produced in the 1990s. This has resulted from Chavez forcing out key members of the skilled labor force and management of the state oil company, known as PDVSA, and his marginalizing of the other source of oil patch expertise -- foreign oil companies such as Chevron and Shell.98 Chavezs mismanagement of the oil sector is all the more troubling since Venezuela has many mature oil fields and the need for technical expertise, which means the need to allow private oil companies to help with extraction technologies . The management of the oil sector is one area of concern for Venezuela, but political instability
also looms

large. Already the main contender to President Chavez,

Henrique Capriles, has been gaining in popularity. The 2012 Venezuelan presidential elections may showcase more disenchantment with the current political system.

Latin America and Caribbean especially dependent on Venezuela oil industry


Garcia et al., 03/06/2013 (Associated Press writers Anne-Marie Garcia in Havana; Luis Andres Henao in Santiago, Chile; David
McFadden in Kingston, Jamaica; Luis Manuel Galeano in Managua, Nicaragua; Ezequiel Abiu Lopez in Santo Domingo, the Dominican Republic; and Trenton Daniel in Port-au-Prince, Haiti contributed to this report, Nations that rely on Chavez's generous oil terms have much to lose if it slows to a trickle, Fox News, http://www.foxnews.com/world/2013/03/06/nations-that-rely-on-chavez-generous-oil-terms-have-much-tolose-if-it-slows-to/) More than a dozen other countries

in Latin America and the Caribbean, many of them economic minnows, have benefited to the tune of billions of dollars from the Petrocaribe pact that was created in 2005 with the goal of unifying the regional oil industry under Venezuelan leadership and countering U.S. influence. Cuba alone receives about 92,000 barrels of Venezuelan oil a day to meet half its consumption needs, worth around $3.2 billion a year, according to
an estimate by University of Texas energy analyst Jorge Pinon. Havana pays about half the bill through a barter exchange in which tens of thousands of doctors, teachers and other advisers provide services in Venezuela. The rest goes into 25-year credits with 1 percent interest. "There's no cash exchange. They don't have to write a check. That's the importance of this agreement," Pinon said. "It represents $3.2 billion of free cash flow to the Cuban economy." "If

a new Venezuelan government turns that into a true commercial agreement where in 30 days you pay 100 percent in cash for what you owe, it would be a substantial economic impact to both Cuba and to Petrocaribe countries, no question about that," Pinon said. Nicaragua, perhaps the second-most dependent on Venezuelan oil after Cuba, gets nearly all its 12 million barrels a year from Caracas, worth
about $1.2 billion, said Nestor Avendano, an economist and president of the consulting firm Consultores Para el Desarrollo. President Daniel Ortega, a staunch Chavez ally, pays about half up-front and finances the rest over 23 years at 2 percent annual interest. La Prensa, Nicaragua's leading newspaper, noted in an editorial that Ortega has been trying to shore up economic reserves in recent months and raised taxes in January, apparently in anticipation of a reduction in Venezuelan aid. The

Dominican Republic gets just over 40 percent of its oil through Petrocaribe, and saves roughly $400 million a year from the arrangement. Struggling Jamaica, where debt is a whopping 140 percent of gross domestic product, gets roughly two-thirds of its crude through

Petrocaribe. Across the Caribbean, it's the same story one island nation after another. "Petrocaribe saved several Caribbean economies from certain collapse," said Anthony Bryan, a senior associate at the Center for
Strategic and International Studies in Washington and an expert on U.S.-Caribbean relations.

Venezuela low oil prices shows increased risk of civil war- statistics prove
Demkiv, 2012 (Anita Demkiv, professor in political science studying global affairs,
http://mss3.libraries.rutgers.edu/dlr/showfed.php?pid=rutgers-lib:37303) In Test 4. Coup detat and Attempted Coup detat . Russia, Venezuela, Iran and Algeria, Political instability in petrostates, Rutgers, 05/2012,

demonstrated an increase in publication frequency during the low oil price periods, while Nigeria demonstrated a decrease in publication frequency related to Civil War and Guerilla Warfare.3 Overall, the world exhibited 28.01% increase and the Type I Petrostates, as a group, increased by 274.13%.

Venezuela oil prices effect stability- global ramifications


Demkiv, 2012 (Anita Demkiv, professor in political science studying global affairs,
or where civil war rages, the Political instability in petrostates, Rutgers, 05/2012, http://mss3.libraries.rutgers.edu/dlr/showfed.php?pid=rutgers-lib:37303) Why should anyone, outside of petrostates, worry about the future of these oil rich countries? More than countries where terrorism emanates,

domestic status of petrostates profoundly affects developed nations due to oil supplies. This answer seems too facile, but because of growing oil demand, these states have been elevated to major global players. In addition, the high price of oil has precipitously risen from 2005 and has enriched petrostates immensely. Whether it is a case of a suspected pipeline explosion in Saudi Arabia, imminent sanctions against Iran, continuing civil unrest in Nigeria, terrorism in Algeria, or the 2012 elections in Russia and Venezuela, the immediate concern is the maintenance of domestic stability to ensure stable oil supplies and low gas prices for consumers. Petrostate instability has global ramification s. Any signs of turbulence in these countries cause oil markets to react dramatically, and that is why gauging how high and low oil prices affect petrostates domestic stability is a worthwhile endeavor.

Solves the Economy


Status quo Venezuelan economic conditions make US engagement uniquely effective working to protect Venezuelan energy security creates jobs and builds competitiveness.
Eric Farnsworth, 4-11-2013, Vice President, Council of the Americas, Energy Security Opportunities in Latin America and the Caribbean, http://docs.house.gov/meetings/FA/FA07/20130411/100622/HHRG-113-FA07-Wstate-FarnsworthE-20130411.pdf Finally, we

should begin to view energyspecifically natural gasas a potent new tool of regional foreign policy, particularly in the Caribbean Basin including Central America, but only if we first allow ourselves to export it rather than keeping it bottled up in the United States. The Caribbean Basin faces economic challenges unlike the rest of the hemisphere due to small and less competitive economies. As security gains are made in Mexico and increasingly Central America, drug traffickers will change their routes back into the Caribbean. Those realities, coupled with Venezuelas growing economic challenges and political transition which may cause Caracas to reduce its provision of subsidized energy under the Petrocaribe program, suggest that now would be an opportune time for the U nited S tates to help build Caribbean competitiveness and job creation in the formal economy. The
export of natural gas and a focus on regional connectivity should underlie such an initiative. More broadly, the

U nited S tates has a strategic interest in working with willing nations in the hemisphere to develop their own energy resources effectively, while promoting models that reduce the negative if unintended consequences of regional energy development, including a lack of transparency and official corruption, the distorting impact of consumption subsidies, an over-reliance on a single commodity or sector, environmental concerns, and a concentration of wealth and political power around the sector. In order to develop their respective industries, nations need U.S. technology, management expertise, and investment dollars. They need our
education system to develop their engineers and seismologists, they need help to understand regulatory, tax, and policy models that work,

they need to be exposed to best practices in environmental mitigation, and they need our technical assistance to improve the investment climate and the rule of law.

Yusef Rashid, 3-23-2005, Political

Science at Simon Fraser University, paper written for Anil Hira, professor at SFU, research interests in Latin America and author of An East Asian Model for Latin American Success,
THE PROPOSED FREE TRADE AREA OF THE AMERICAS: AN OPPORTUNITY FOR ECONOMIC DEVELOPMENT, http://www.sfu.ca/~ahira/Free%20Trade%20&%20Other%20Student%20Papers/Y%20Rashid%20Venez%20Petrol%2005.pdf

VENEZUELA SHOULD PURSUE THE IMPLEMENTATION OF THE FTAA, WHILE AMENDING DOMESTIC LEGISLATION AND REFORMING ITS PETROLEUM INDUSTRY Although the current Venezuelan government has dismissed the proposed FTAA, it would be prudent to reassess the potential advantages associated with a hemispheric trading bloc. Recent political and economic instability in Venezuela has emphasized the need for increased foreign investment and technology to stimulate growth in the vital petroleum sector. Presently, it may be difficult to convince the Chavez regime that the petroleum sector is at risk of stagnation, given record-high oil prices that have produced an economic boom in Venezuela. However, oil prices fluctuate, undermining the long-term sustainability of economic growth. Recent decades have demonstrated that gradual liberalization of the Venezuelan petroleum sector can deliver increased petroleum production, while protectionist policies result in uneven growth and undermine long-term

development. This study has established that much of Chavezs concern regarding the FTAA is unsubstantiated. The FTAA would not
inevitably lead to the complete privatization of the Venezuelan petroleum sector. Rather, the government could gradually liberalize the economy, while utilizing regulatory control mechanisms to preserve national interests and protect Venezuelan stakeholders. In order to achieve these objectives, the Venezuelan government should adopt the following recommendations: 1. Amend the Bolivarian Constitution of 1999 and repeal the Hydrocarbons Law of 2001 in order to attract much needed foreign investment. 2. Divert some petroleum revenue from redistributive social programs to the development and maintenance of the petroleum sector to promote longterm productivity. 3. Pursue the implementation of the proposed FTAA agreement as a means

to liberalize the petroleum sector and attract foreign investment and technology. 4. Implement effective regulatory control mechanisms to protect national
interests and ensure the distribution of oil revenue throughout society. Amending the Bolivarian Constitution would reduce current restrictions that prevent foreign petroleum companies from operating in Venezuela. Repealing the Hydrocarbons Law would decrease the royalties and income taxes paid by such foreign investors. Both measures would facilitate the vital flow of foreign capital into the Venezuelan petroleum sector. Diverting petroleum revenue towards the development and maintenance of equipment and technology would de-politicize the expenditure of Venezuelan oil money, while promoting sectoral long-term sustainability. Successful FTAA negotiations are crucial, as they would reinforce the legislative

reform discussed above. Furthermore, the FTAA would allow Venezuela to build closer, more productive relations with its key trading partners, particularly the U nited S tates. Finally, the implementation of regulatory
control mechanisms would allow the Venzuelan government to maintain a measure of control over the petroleum industry and the revenues that it generates. By

pursuing such a strategy, the Venezuelan government could promote sustainable economic growth, while continuing to redistribute oil revenue within Venezuelan society. This would allow Venezuela to become more economically competitive and to develop a wealthier more egalitarian society.

Increased oil production solves poverty


James, 2012 (Ian James, contributer to the Huffington Post, Venezuela Oil Production Growth: Chavez Presidency May Have Squandered
Oil Riches, Huffington Post, 09/23/2012, http://www.huffingtonpost.com/2012/09/23/venezuela-oil-production_n_1907170.html) Yet some experts say Chavez

could have done much more to improve the country's infrastructure, boost its economy and invest in the very oil industry that keeps Venezuela afloat. "It's overwhelmingly clear that Venezuela has wasted the windfall," said Francisco Monaldi, an economist and director of the International Center of Energy and the Environment at Caracas' IESA business school. "You should have had much greater economic growth, much greater reduction of poverty."
Among Latin American countries, the economies of Brazil, Chile, Peru and Argentina all have expanded more rapidly than Venezuela's since Chavez took office in 1999, recording average growth between 3 and 5 percent a year. Venezuela, by contrast, averaged a 2.8 percent annual increase of gross domestic product between 1999 and 2011, according to International Monetary Fund figures. By that measure, the country was outperformed by every other member of the Organization of Petroleum Exporting Countries except Libya. Even wartorn Iraq posted higher growth. Some Venezuelans, such as tennis instructor Naybeth Figueroa, say Chavez has simply channeled money toward his "Chavista" supporters while neglecting deeply ingrained problems such as soaring murder rates, inflation, crumbling infrastructure and poor government services. Venezuela

now ranks among the most violent and corrupt places on earth. "The country is falling to pieces," Figueroa said. "Where is the oil money going?" Where the money went On a rutted unpaved road in the
countryside outside Caracas, unemployed housewife Moreli Gonzalez lives in a shack with a dirt floor and walls made of rusting sheets of zinc. She is thankful to Chavez that she now receives a $280-a-month cash benefit through a program called "Mothers of the Neighborhood Mission." "Now we have everything," said Gonzalez, who credits a government education program with helping her learn to read and a staterun grocery down the road that has made food more affordable. "We eat better," she said, showing off cupboards filled with bags of rice and pasta. "My children didn't used to eat snacks. Now they eat well." The government programs for the poor are why Oil Minister Rafael Ramirez recently boasted: "This was one country before President Chavez's government, and a different one afterward." He was referring to the more than $300 billion that the government has spent during Chavez's tenure on "social

development," including health care and education. It's been made possible by oil prices that have shot up, sending more than $981 billion in revenues to the state oil company, Petroleos de Venezuela SA, between 1999 and 2011. Some economists say that given the boom, it's little wonder Venezuelans living below the poverty line declined from 50 percent in the first half of 1999 to about 32 percent in the second half of last year. "There are people here who are eating meat who didn't used to eat meat. But is that due to Chavez? That's not due to Chavez. That's the result of the changes in the price of oil ," said economist Angel Garcia Banchs, director of the consulting firm Econometrica. The state oil company's
contributions to the government have more than tripled, from $16.5 billion in 2004 to $58.6 billion last year. And it's not all going to social programs. Chavez has spent billions on the military, buying up Russian-made fighter jets, helicopters and rifles. University enrollment has also more than doubled. Low-income students now attend the tuition-free Bolivarian University, which was established on the leafy campus of a former state oil company office building. One of the biggest expenses, though, has simply been supporting a growing bureaucracy. The number of public employees has ballooned during Chavez's presidency, from about 1.3 million to 2.4 million. And Chavez has made clear that if he's re-

elected, "that's going to keep going up." Black gold but not for everyone When a powerful explosion rocked the Amuay oil refinery last month, killing at least 42 people, several experts swiftly blamed the country's worst-ever refinery disaster on a lack of maintenance. Last month, a deadly prison riot killed more than two dozen in an overcrowded penitentiary, the latest in a rising tide of bloodshed that left 560 people dead in the country's prisons last year. That disconnect, between falling poverty and worsening infrastructure, points to what critics say has been a failure to address the underlying causes of many of the country's ills. Yes, government food giveaways mean millions of poor people have more to eat, but critics argue that Chavez's largesse has ignored basic remedies needed to modernize the nation. While campaigning ahead of the presidential vote, opposition candidate Henrique Capriles has argued that more should have been spent to improve police forces, build water systems and invest in the oil industry instead of, among other things, "giving away" oil wealth through fuel deals with allies such as Cuba and Nicaragua. Official figures support some of the criticism. The murder rate more than doubled during Chavez's presidency. Dangerous slums have proliferated, with the number of homes deemed "inadequate" growing from 295,000 in 1999 to more than 404,000 last year. Chavez defends his record, noting that Venezuela has invested billions in refinery maintenance, is building a new national police force and is starting to make revolutionary changes to "humanize" an overcrowded prison system. Even in areas where Chavez has targeted spending, results have often been elusive. For example, the president says he has revolutionized health care by setting up free clinics staffed by Cuban doctors in poor slums across the country. But hospitals have lagged behind, with officials figures showing the number of available hospital beds down from 28,000 beds in 2000 to 22,000 in 2010. By some accounts, inadequate maternity wards have bumped women in labor from one public hospital to another. Opposition politician Carlos Vecchio posted photos on Twitter showing patients lying on the floor at a hospital emergency room in Maturin. Despite more health care spending, the government's programs have worsened due to "inefficiency, ineffectiveness and incompetence," said Dr. Carlos Walter, a former health minister and director of the Center of Development Studies of Central University of Venezuela. In his handling of the economy, Chavez has emphasized a bigger state role, and while he has expropriated businesses from cement plants to retail stores, economists say private investment has suffered. Even as it

battles an 18 percent inflation rate, Venezuela remains perilously reliant on oil, which accounts for 95 percent of its export earnings. "I think that in the long term, we're headed for a situation of poverty. If oil income starts to run out, if the prices fall too much, there's no productive engine here that can feed us," said Margarita Lopez Maya, a historian at Central
University. "But while the price of oil is so high, fantasies can be paid for."

Oil Key
Oil key to the economy- lack of investment means economic collapse and instability Fournier & Fini, 01/29/2013 (Pierre Fournier, Michael Fini, GEOPOLITICAL HOTLINE:SCENARIOS FOR A POST-CHAVEZ
VENEZUELA, National Bank Financial, http://c3352932.r32.cf0.rackcdn.com/pdfa273955c03d7b131435d8e89c8ca1f4b.pdf)

Venezuela produces 2.47 million barrels of oil per day (mbd) and accounts for 3.85% of world supplies, the majority of which is destined for the United States and the Caribbean. Oil revenues are crucial for the economy and account for 94% of export earnings, 50% of budget revenues and 30% of GDP. Annual
production has, however, steadily fallen since the election of populist Hugo Chavez, with total exports declining 50% since peaking in the late 1990s (see Fig. 1). As we wrote in June 2012 (see our Geopolitical risks to oil production outside the Middle East),

declining oil

production is primarily due to a lack of investment in Venezuelas aging wells , but this is in turn a direct result of political mismanagement. Both the 2002 transformation of the national oil company Petrleos de Venezuela
S.A. (PDVSA) into a political tool of the Chavez government, as well as a wave of private-sector nationalizations, have limited local and foreign investments in the energy sector. Going forward, PDVSA must spend roughly $3 billion annually to maintain production levels at existing fields, while simultaneously trying to reduce its mounting financial debt of $35 billion (a ten-fold increase from 2008 levels, with $20 billion due within five years). In

the absence of a significant shift in government policy and the regulatory climate, Venezuela will likely continue to fall short of its significant potential. Since consolidating his power following a failed coup
attempt in 2002, Chavez has treated PDVSA as a cash cow, using oil revenues to fund social programs that ensure loyalty from his base of urban and rural poor.1 In 2011, he reportedly spent $29 billion of PDVSAs $88 billion in revenues on social programs (versus $17.9 billion invested in maintaining/expanding core oil and gas businesses), while a full 97% of net income was transferred to the government in 2010, up from 93% in 2009. Chavez increased government spending by 67% in 2012 including the construction of 200,000 houses, up from 95,000 in 2011 and announced a 30% hike in the minimum wage in early April. These new expenses will more than likely be subsidized with PDVSA revenues, despite the urgent

need to enhance extraction technologies, boost production in aging fields and stabilize the countrys deteriorating socioeconomic conditions.

Venezuela oil revenues key to stability and growth Tulchin, 05/28/2013 (Dr. Jospeh S. Tulchin, Latin American scholar with published research on hemispheric security and
international affairs, citizen security and police reform, reducing inequality and the governance of cities. His areas of expertise are US foreign policy, inter-American relations, contemporary Latin America, strategic planning, and social science research methodology, Commodity prices hit Latin American economies, The World Review, http://www.worldreview.info/content/commodity-prices-hit-latin-american-economies)

A SIX fold increase in oil prices in the last decade gave Venezuela an unprecedented bonanza almost US$1 trillion in revenues. Under the leadership of President Hugo Chavez (1999-2013), it propelled Venezuela on to the world stage. Now Mr Chavez is dead, Venezuelan oil output is declining and energy prices are no longer rising. Venezuela's new leader, Nicolas Maduro, is untested. Many observers believe the fate of the country is now totally linked to the price of oil and the vagaries of an extremely volatile market. The case of Venezuela is an extreme example of
what has become known as 'Dutch disease', named after the experience of the Netherlands in the 1960s when new discoveries of natural gas in the North Sea brought sudden and massive increases in export revenues for the Dutch government. The windfall, called rents by economists because they are over and above the normal profit on a market exchange, caused the real exchange rate to appreciate and produced powerful disincentives to invest in non-tradeable goods, such as domestic manufacturing and services. The Dutch economy fell out of balance and was plunged into a severe recession. Venezuela

is almost totally reliant on just one commodity oil. Revenues from the sale of oil by its national petroleum company, PDVSA, account for 80 per cent of the nations gross domestic product (GDP).
In the last decade, the average annual windfall has been 30 per cent of GDP. The wealth accumulated over a decade amounted to 320 per cent of GDP.

The price of oil is arguably the critical variable which determines the stability of the Venezuelan

state, its economy and social cohesion.

Oil key to the economy- investment means economic growth and stability
Fournier & Fini, 01/29/2013 (Pierre Fournier, Michael Fini, GEOPOLITICAL HOTLINE:SCENARIOS FOR A POST-CHAVEZ VENEZUELA,
National Bank Financial, http://c3352932.r32.cf0.rackcdn.com/pdfa273955c03d7b131435d8e89c8ca1f4b.pdf)

Venezuela produces 2.47 million barrels of oil per day (mbd) and accounts for 3.85% of world supplies, the majority of which is destined for the United States and the Caribbean. Oil revenues are crucial for the economy and account for 94% of export earnings, 50% of budget revenues and 30% of GDP. Annual
production has, however, steadily fallen since the election of populist Hugo Chavez, with total exports declining 50% since peaking in the late 1990s (see Fig. 1). As we wrote in June 2012 (see our Geopolitical risks to oil production outside the Middle East),

declining oil

production is primarily due to a lack of investment in Venezuelas aging wells , but this is in turn a direct result of political mismanagement. Both the 2002 transformation of the national oil company Petrleos de Venezuela
S.A. (PDVSA) into a political tool of the Chavez government, as well as a wave of private-sector nationalizations, have limited local and foreign investments in the energy sector. Going forward, PDVSA must spend roughly $3 billion annually to maintain production levels at existing fields, while simultaneously trying to reduce its mounting financial debt of $35 billion (a ten-fold increase from 2008 levels, with $20 billion due within five years). In

the absence of a significant shift in government policy and the regulatory climate, Venezuela will likely continue to fall short of its significant potential. Since consolidating his power following a failed coup
attempt in 2002, Chavez has treated PDVSA as a cash cow, using oil revenues to fund social programs that ensure loyalty from his base of urban and rural poor.1 In 2011, he reportedly spent $29 billion of PDVSAs $88 billion in revenues on social programs (versus $17.9 billion invested in maintaining/expanding core oil and gas businesses), while a full 97% of net income was transferred to the government in 2010, up from 93% in 2009. Chavez increased government spending by 67% in 2012 including the construction of 200,000 houses, up from 95,000 in 2011 and announced a 30% hike in the minimum wage in early April. These new expenses will more than likely be subsidized with PDVSA revenues, despite the urgent

need to enhance extraction technologies, boost production in aging fields and stabilize the countrys deteriorating socioeconomic conditions.

Oil boost= econ boost and oil prices fall


White & Rowley, 03/11/2013 (Garry White studies commodities and the effect population growth & Emma Rowley is a journalist at
the telegraph, Death of Hugo Chavez propels Venezuelan oil production into the spotlight, The Telegraph, http://www.telegraph.co.uk/finance/commodities/9920725/Death-of-Hugo-Chavez-propels-Venezuelan-oil-production-into-the-spotlight.html)

Venezuela has the largest known oil reserves in the world, but oil output has slumped by almost a third because of Mr Chavezs nationalisation of the industry. At the end of 2011, the country held 17.9pc of the worlds known oil reserves, compared
with 16.1pc in Saudi Arabia and 11pc in Canada, according to BPs statistical review of world energy. However, it only represented 3.5pc of global production compared with 13.2pc in Saudi Arabia. It

is likely that oil output could rise , should there be an easing of the countrys antagonism to foreign investors. Some believe this could lead to a fall in the oil price and a consequent boost to the global economy. The death of Hugo Chavez may see oil prices fall as they did during the 2002 coup, Gerard Lane, an oil analyst at Shore Capital, said. With greater foreign investment it is foreseeable that the 30pc fall in Venezuelan oil production could be reversed. Indeed the scale of potential oil output is enough combined with on-going shale oil production growth in the USA, suggesting that oil prices could fall. However, such a scenario is unlikely just yet. Venezuelas massive oil reserves will not be unleashed on global oil markets
anytime soon, while the near-term impact on prices will be limited, Ole Hansen, head of commodity strategy at Saxo Bank, noted. The state oil company PDVSA has increasingly been handing over its income to fund various government programmes, leaving it with negative cash flows for the past five years, Mr Hansen added. The

result of this has been a lack of investments as old fields matured and new ones were not explored, hence the drop in output. Mr Hansen believes reforms and the re-introduction of foreign investment will not happen overnight, possibly not for a few years. But once it does another source of increased supply will further help to alleviate some of the worries about future supply not keeping up with an increase in demand, especially from emerging economies, Mr Hansen said. Should production eventually rise, which seems likely, the main loser is likely to be Canada. Venezuela positioned its oil industry away from the US to the more
friendly nationals of China and Russia.

Without strong oil growth- as in 2012- Venezuelan economy will crash


Stabroek, 04/15/2013 (Stabroek editor, Venezuelas Maduro inherits tough economic problems, Stabroek News,
http://www.stabroeknews.com/2013/news/regional/04/15/venezuelas-maduro-inherits-tough-economic-problems/)

The late presidents lavish social spending financed by an unprecedented oil boom created a following of millions, and Chavezs endorsement of Maduro before his death appeared to put his protg on track for an easy victory. Instead, the winning margin was just 1.6 percentage points and opposition candidate Henrique Capriles refused to accept the official result. He is demanding a full recount. A perception that Maduro has a weak mandate could prompt challenges from within the disparate ruling coalition that formed around Chavez, just as overstretched state finances force him to slow the very oil-funded largesse he staked his reputation on maintaining. The

OPEC nations strong growth is seen by most private economists as dropping this year as the government pares back following hefty spending in 2012 that was a key driver of the economy and helped Chavez win re-election in October. At the same time,
annual inflation may head toward 30 percent thanks to a currency devaluation and expanding money supply, while periodic shortages of products such as medicine and corn flour look likely to remain an annoyance. Were

going to see a reduction in government spending, most notably in the home construction program, and the devaluation is also going to limit growth, said Angel Garcia of consulting firm Econometrica, which is critical of the government. Its going to be a year of inflation with stagnant growth. There are few signs, however, that the situation could descend into a fullblown crisis or force Venezuela to default on its debt. Wall Street investors who have for years sneered at Venezuelan
socialism are likely to continue buying up its lucrative and high-yielding paper. Government supporters have long chuckled at doomsday predictions by the opposition of economic mayhem that in retrospect were exaggerated or simply wrong. But with the opposition

questioning his legitimacy, Maduro may have little room for pragmatic measures
Byzantine system of price and currency controls that have created economic distortions.

such as unwinding the

Oil price is key to success for Venezuela


Tulchin, 04/24/2013 (Dr. Joseph S. Tulchin, Latin American scholar with published research on hemispheric security and international
affairs, citizen security and police reform, reducing inequality and the governance of cities. His areas of expertise are US foreign policy, interAmerican relations, contemporary Latin America, strategic planning, and social science research methodology, Oil price is key to success for Venezuelas President Maduro, The World Review, http://www.worldreview.info/content/oil-price-key-success-venezuelas-president-maduro) Mr Maduro has

to deal with three problems from the moment he assumes power. First is the petroleum industry. The social model built by Mr Chavez will collapse very quickly without increased production. No Venezuelan government can survive long with the price of oil below US$90 per barrel or if production continues to decline even at higher prices. Second is inflation. The economy is seriously dysfunctional, largely because of Mr Chavezs wild spending spree in the year prior to last Octobers elections and his dependence on oil revenue. Third is the crime rate which makes Venezuela one of the most violent countries in the world. This is itself symbolic of a
more general problem of social cohesion.Today, Venezuelan society is deeply divided. Civil discourse has disappeared, personal freedoms have been severely curtailed, the rule of law is uncertain. It will be a challenge for the new government to avoid civic discord and violence and deal

it is petroleum which has dominated Venezuelas economy for nearly a century. Petroleum revenue equals 82 per cent of Venezuelas GDP. PDVSA was turned into Venezuelas largest social benefits ministry using virtually all its petroleum sales revenue to pay for the ambitious government social programmes carried out by Mr Chavez when he was president. The variables that will determine the future capacity of the Venezuelan government to pay its debts, control inflation, and pay for its social welfare programmes are the international price of oil; the level of oil production; and
with widespread crime. A rising proportion of this is connected to international traffic in drugs. But

the level of investment in Venezuelas petroleum industry. The interplay between these determines the scenarios for Venezuelas future.

Oil production key to Venezuela economy- they dont need tech, they need investment
AP, 03/26/2013 (Associated Press, Politics rule everyday govt in Venezuela, from state oil company to subways, Fox News,
http://www.foxnews.com/world/2013/03/26/politics-rule-everyday-govt-in-venezuela-from-state-oil-company-to-subways/)

Oil industry analysts blame the production drop on a PDVSA brain drain during the Chavez years and the company's failure to invest in new exploration while it funded popular social programs. The economic effects are already being felt nationwide, with dropping exports bringing in fewer dollars, which in turn

has spurred shortages

of everything from cars to machine parts to basic foods. Venezuelan officials have pledged to boost oil production, and the country's economy depends on that happening. Yet production numbers have stayed flat for the past three years, U.S. Energy Department figures show. The company "isn't looking for people who have know-how," said Diego Gonzalez, a former PDVSA oil exploration engineer who left in 2001. "It doesn't seem to be producing new deposits now. There are no new refineries, petrochemical plants.
There's nothing new." On top of that, Venezuela continues to sell the cheapest gas in the world, at 6 cents per gallon, thanks to government subsidies designed to keep consumers happy. That program costs Venezuela about $16 billion a year, according to the International Energy Agency, further eroding potential export earnings. Andres Izarra, a former Chavez information minister, called reports of declining oil production "lies" and said PDVSA's current workers had in fact saved the company after a general strike in 2002 and 2003 that paralyzed the economy. "The PDVSA worker has been through a war," Izarra said. "They were the ones who recovered the oil industry. It's thanks to them we can produce oil again and have gasoline again. These are guys who are very much militants of the revolution." By all accounts, the

move to purge government ranks began in earnest with the strike, which shrank the economy by nearly 8 percent in 2003. Chavez responded by demanding loyalty throughout his government, from the armed forces to doctors, and replaced striking PDVSA workers with party members, Gonzalez said. Once known as some of the best in the industry, many PDVSA engineers and managers have since moved to the Middle East and other oil-producing regions.

Oil investment needed to maintain economy


Gjelten, 04/11/2013 (Tom Gjelten, covers a wide variety of global security and economic issues for NPR News and has experience as
NPR's Latin America correspondent, Venezuela's Next Leader Faces Tough Choice On Oil Program, NPR, http://www.npr.org/2013/04/11/176843567/venezuela-s-next-leader-faces-tough-choice-on-oil-program) "In reality, PDVSA

makes money from only a small proportion of the oil it produces," says independent energy who specializes in the Latin American energy market. "Now, can that continue? I don't think so." Venezuela's problem is that its oil production is declining, in part because of the lack of reinvestment and the politicization of PDVSA operations under the Chavez government. Unless oil prices move sharply higher, the country will face a significant loss of oil revenue. "In 1997, PDVSA was producing 3.5 million barrels a day," notes Pion, now an energy analyst at the University of Texas at Austin. "Today they are about 2.8 million barrels a day. It shows you what a bad job the Venezuelan government has done in managing their national oil company." Chavez died before he had to confront the economic and political problems certain to plague his successor. Venezuela's next president won't be able to maintain the oil industry, subsidize gasoline at home, spend oil revenue on social programs and share Venezuela's oil wealth with his Caribbean and Latin neighbors. Something has to give. If it's a choice between serving domestic needs and maintaining the sweetheart oil deals with other countries , the
economist Roger Tissot, PetroCaribe nations may be in for a disappointment.

Increase in oil exports uniquely key to prevent stagnant Venezuelan economy


Rapoza, 6/03/2013 (Kenneth Rapoza, Post-Chavez Venezuela Economy Gets Messier, Forbes,
http://www.forbes.com/sites/kenrapoza/2013/06/03/post-chavez-venezuela-economy-gets-messier/)

Venezuelan growth began slipping in the first quarter. GDP registered just a marginal expansion of 0.7% year over year in the first,
below market consensus estimates of 1.1%. Last quarter was the lowest quarterly growth in more than two years. Seasonally adjusted, this means that the economy shrank 2.5% from the fourth quarter, which in annualized terms represents a 9.7% contraction, Barclays Capital analysts led by Alejandro Arreaza said in a note to clients on Monday. The

devaluation of the currency in the case of Venezuela represents a reallocation of resources from the private to the public sector, which is practically the only exporter thanks to oil giant PDVSA. Private consumption moderated from 7.0% growth in 2012 to just 3.2% yearly growth in the first. Growth is projected to decelerate sharply and so is private consumption as the rich watch their
currency lose value. In Chavezs last year at the helm, the economy grew at 5.5%, more than any country in the Americas except for Peru, which grew over 6%. What a difference a year makes. Barclays estimated today that GDP will contract by 2.0% in the second quarter and by 1.4% overall this year. Further also worth highlighting the fact that exports

delays in the solving the currency supply problem could deepen the recession. It is fell by 7.5% driven mainly by a 5.6% decline in oil shipments. This,

coupled with a 7.4% decline in oil prices, caused a 13% yearly decline in the countrys oil exports . If the decline in oil exports is not reversed, there could be a greater deterioration in the international position of the government, increasing its vulnerability , Barclays analysts said.

Increased oil revenues boost Venezuelan economy


Rodrguez et al., 2012 (Pedro L. Rodrguez is a member of the digital media team at Cohn & Wolfe, a global
public relations within the WPP Group, and studies emerging social and digital trends, Jos R. Morales & Francisco J. Monaldi are contributors to the center for global development, Direct Distribution of Oil Revenues in Venezuela: A Viable Alternative?, Center for Global Development, 09/2012, http://www.cgdev.org/files/1426486_file_Rodriguez_et_al_Venezuela_OTC_FINAL.pdf)

Between 2004 and 2008 Venezuela benefited from a prolonged oil boom, showing strong economic growth and a substantial decrease in poverty rates, yet the governments chosen economic and social policies increased the countrys dependence on oil revenues making them extremely vulnerable to a fall in prices. While in 1998 oil exports represented 31% of fiscal revenues and 64% of export revenues, by 2008 these figures reached 64% and 92% respectively.4 After peaking at US$ 126 in July 2008, oil prices collapsed as a result of the financial
crisis, reaching a trough of US$ 31 by December 2008. The economy briskly followed, growing by less than 1% in the first quarter of 2009, thereafter displaying negative growth for six consecutive quarters. In 2010 Venezuela, despite a renewed increase in oil prices, was the only country in the region, together with earthquake stricken Haiti, with negative growth. In effect, Venezuelas

economic

performance has been and remains highly contingent on oil revenues (see Figure 1).

Increase production solves econ


Devereux et al., 03/07/2013 (Charlie Devereux is reporter for Bloomberg News in Caracas. Pons is a reporter for Bloomberg News in
Caracas. Lakshmanan is a reporter for Bloomberg News in Washington. Philips is an associate editor for Bloomberg Businessweek in New York, For Chvez's Successor, Venezuela's Economy Looms Large, Bloomberg, http://www.businessweek.com/articles/2013-03-07/for-ch-vezssuccessor-venezuelas-economy-looms-large) If, as is likely, Maduro is elected president sometime this year, even that ardent Chvez supporter will

have to face the need to restore PDVSA. The quickest way to upgrade the state oil company would be to cut its dividend to the government and recruit outside partners to help repair its fields. This could be an opportunity for big oil companies to invest in Venezuela, though they may not be U.S.-based. ConocoPhillips (COP) and ExxonMobil (XOM) still have
arbitration cases pending against Venezuela for seizing their oil fields and offering what they say was inadequate compensation, so they are unlikely to jump back in soon. The

big advantage of investing in Venezuelan oil is that extracting it doesnt present high-tech engineering problems. Its the sort of thing where you could increase production largely by throwing money at it , says Citigroup (C) oil analyst Tim Evans. Chvezs successor will have to deal with the consequences of the late presidents heavy expenditures on new social programs to guarantee his reelection in October. The spending spree resulted in a budget deficit estimated by Moodys Investors Service (MCO) to be about 11 percent of gross domestic product. The government devalued the currency by 32 percent in February in the hope of closing the budget gap by bringing in more bolivars per dollar of oil exports. The devaluation could also drive inflation as high as 35 percent this year, as imports become more expensive, according to
Nomura Securities. At the same time, the economy may lose momentum after the binge spending of the campaign: Growth will slow to 1.7 percent this year, according to the median average in a Bloomberg survey of 10 analysts.

Increased oil production strengthens Venezuelan economy


AVN, 2012 (AVN, Agencia Venezolana de Noticias , Venezuelas Oil Production Aimed at Promoting Industrial Transformation, Venezuelan
Embassy to the U.S. , 02/23/2012, http://venezuela-us.org/2012/02/23/venezuela%E2%80%99s-oil-production-aimed-at-promoting-industrialtransformation/) Venezuelan President Hugo Chvez said Tuesday that the

goal of the Venezuelan government is to increase oil production to 3.5 million barrels per day, at a fair price so the Venezuelan economy continues to strengthen. The Venezuelan president said that revenues will not go into a bottomless pit, but will instead be used for the

countrys economic transformation and at the same time to continue increasing the standard of living of the population in social and economic terms. Thats the essence of the socialist project of the Bolivarian Revolution, he said. On Tuesday, Brent crude oil prices reached $120.46 per barrel, while Venezuelan oil closed at $110.82 per barrel last week. The state oil company Petrleos de Venezuela, S.A. (PDVSA), estimates that Venezuelan oil production will reach 4 million barrels per day by 2014 to help meet market demand in excess of 100 million barrels per day, according to comments earlier this month by PDVSA President Rafael Ramrez. Based on those estimations, the Sowing
Oil Plan is expected to increase current oil production from 3 million to 4 million barrels of oil per day in 2014 and again to 6 million by 2019, said Ramrez.

Foreign Investment Key


Lack of foreign investment dooms the Venezuelan economy Blackman 13 (Sarah Blackman is an online reporter working across NRI Digital's websites, covering renewable energy and
growth within power markets, offshore oil drilling and the market for new and sustainable hydrocarbons, as well as reporting on the transport, health and hospitality sectors, Venezuela's oil policy post-Chavez: what's next as Maduro takes the reins? April 17, 2013, http://www.offshore-technology.com/features/featurevenezuela-oil-policy-chavez-maduro-takes-the-reins) Hugo Chvez's last request was granted when his chosen successor Nicols Maduro was elected as president. The late socialist leader was known for nationalizing the oil sector and curbing foreign investment, but will Maduro steer the country in another direction, or follow the work of his mentor? They say a change is as good as a rest, but

with the late socialist leader Hugo Chvez's chosen successor Nicols Maduro now in charge and investors shunning Venezuelan debt on Monday, the country's weakening oil sector could be set to crash and burn. Last month, Maduro - then an acting
president - said Chvez had "left ready the industrial and petroleum development of the nation," which will be boosted through the continuation of a 21st century Bolivarian Revolution, a movement that has seen the implementation of a new constitution and the nationalisation of the key sectors. It seems, like his predecessor, Maduro is

intent on promoting socialist reforms in the country, where poverty is stamped out through higher wages, free healthcare and cut-price housing, but foreign investment in oil, which Venezuela relies on for 95% of its exports and 45% of its federal budget revenues, is curbed. Venezuela's oil future in doubt "It seems, like his predecessor, Maduro is intent on
promoting socialist reforms in the country." Just two days in office and Maduro, who won a narrow victory in Venezuela's presidential election on Sunday, has faced fierce criticism from his opponents. The official count indicates that the 50-year old socialist won 50.7% of the votes against business rival Henrique Capriles' 49.1%. But Capriles has refused to accept the result and called for a recount and peaceful demonstrations. During his campaign, Maduro gained sympathy from his followers by playing a video of Chvez, filmed shortly before his death, giving him his blessing in an emotional speech to the OPEC, and later claimed his "father's" spirit had visited him in the form of a "little bird." He also threatened his political enemies with a curse if they failed to vote for him. Few could deny Maduro's ability to manipulate, but this skill will only take him so far. Now

he must aid the recovery of a financial crisis in Venezuela, triggered by a lack of foreign investment and an obsession with
oppressing North American influence on the region. "Few could deny Maduro's ability to manipulate, but this skill will only take him so far." Venezuela is often described as an oil-rich country due to its proven reserves, which amount to around 100 billion barrels. But the term seems ironic in this case, as oil production in the country has declined by roughly a quarter since Chvez took office in 1999. The late president nationalized the oil industry to claim a 60% stake in all oil projects around Venezuela, a decision which led major investors, including ConocoPhillips and ExxonMobil, to leave on bad terms. Chvez could also be accused of hurting Venezuela's relations with the US - for which it relies on for 40% of its exports - by forging alliances such as the Community of Latin American and Caribbean States and the Union of South American Nations, and reaching out to far-out countries such as China and Russia, not to mention calling former US president George Bush "the devil" in a speech at the United Nations in 2006. Speaking one day after Bush addressed the same session of the General Assembly, Chvez announced: "The devil came here yesterday, and it smells of sulfur still today, this table that I am now standing in front of. Yesterday, ladies and gentlemen, from this rostrum, the President of the United States, the gentleman to whom I refer as the devil, came here, talking as if he owned the world." History repeating itself "Venezuela is often described as an oil-rich country due to its proven reserves, which amount to around 100 billion barrels." It seems

Maduro is following in Chvez's footsteps in terms of pushing certain policies, and behaving erratically. In the months leading up to the election, the acting president expelled two attachs from
the US embassy for searching for active military personnel in Venezuela to propose destabilizing projects from with the Bolivarian National Armed Forces, and accused foreign enemies of "causing" Chavez's cancer. He also labeled the domestic opposition "fascists" who want to divide the country. In April, Maduro claimed former United States Ambassador to Venezuela Otto Reich and US diplomat Roger Noriega were plotting to kill him, in order to prevent his victory in the election. Speaking in a television interview, Maduro said the plot also involved "right-wing forces" from El Salvador, which had already sent paid assassins to Venezuela. El Salvador president Mauricio Funes had refused in 2009 to incorporate his country into the Bolivarian Alliance or 21st century socialism that was promoted by Chavez. "Their goal is to kill me," said Maduro. "They want to kill me because they know they cannot win free and fair elections." Maduro sees Chvez as his "mentor," and that doesn't

bode well for the oil industry and Venezuela's economy as a whole. No one knows what Maduro plans to do with the oil market, but all signs suggest that he will preserve the current system, ignoring Venezuela's impending energy problem and deepening financial crisis.

Venezuelan oil industry is lacking foreign investment US engagement solves. Squo presents a unique opportunity for US-Venezuelan cooperation.
Zachary Fillingham, 3-10-2013, Director of

Publications @ Geopolitical Monitor, BA in International Relations @ NYU, MA in Chinese Studies @ University of London (SOAS), the recipient of a Taiwan Ministry of Education Huayu Scholarship, writer, editor and translator, and has consulted for some of the worlds largest finance firms, Post-Chavez US-Venezuelan Relations: Headed for a Thaw? http://www.geopoliticalmonitor.com/post-chavezus-venezuelan-relations-headed-for-a-thaw-4790 And by all indications, Venezuelas

finances arent going to hold out for very long. The country is currently running a deficit of over 20 percent, and its national inflation rate fluctuates between 20 and 30 percent. Though it presides over one of the worlds largest oil reserves and is a card-carrying member of OPEC, Venezuelas oil yields have been dropping
throughout the Chavez era due

to a lack of foreign investment.

The same is true of Venezuelas food industry. A

lack of foreign investment, inefficiency, and costly subsidies have stunted overall output, resulting in food shortages that are now showing themselves in the huge lineups spilling out of government food depots nationwide. A reoccurring

theme of Chavezs economic policy was a willful ignorance regarding the creation of infrastructure and social capital that could drive economic growth beyond the era of direct government handouts. Given the structural challenges that the Venezuelan economy now faces, challenges that will preclude the governments ability to continue Chavez-era patronage ad infinitum, a Maduro government will inevitably be faced with an economic reckoning of sorts. In the aftermath of this economic reckoning, there will be an opportunity for both domestic opposition forces within Venezuela, and American foreign policy to make inroads. Just to recap: what we are likely to see is a Maduro win, followed by a politico-economic crisis that ushers in either a return to credible multi-party democracy or a descent into conspicuous authoritarianism. But how will this impact US-Venezuelan relations? Given its precarious economic situation, Venezuela will need outside assistance in the near future. And while some would say that China is best suited to step up and bail out Caracas, there are a few reasons to question whether this will actually come to pass. First of all, The Chinese Development Bank has already provided a huge amount of money to the Chavez government, about $40 billion between 2008 and 2012 alone. Thus, if Venezuela were to be faced with a default, it would be Chinese investors with their money on the line. Any debt renegotiations would surely include provisions that didnt sit well with the Venezuelan public. After all, there have already been agreements reached between Venezuela and the
Chinese state-owned company Citic Group that have raised populist alarm bells regarding the signing of mineral rights over to foreign companies. In this context, a limited rapprochement makes sense from a Venezuelan point of view, as it would balance against a preponderance of Chinese economic influence. Now that the Bolivarian Revolution is all but discredited, and countries like

Brazil have proven that its possible to alleviate poverty through trade and keep US influence at arms length, a USVenezuelan thaw is theoretically possible. However, authorities in Washington will likely have to endure another round of vitriol
and wait until the dust settles in Venezuelan domestic politics before their window of opportunity presents itself.

The new Venezuelan government will gradually open up the markets, creating a great climate for investment over the long-term
By Adam Currie, writer for OilInvestingNews, March 12, 2013, 4:30am PDT , http://oilinvestingnews.com/9231-hugo-chavez-death-venezuela-oil-market.html Hugo Chavez, president of Venezuela, passed

away last week in Caracas. For 14 years he reigned over the South American nation with an iron fist; now, investors are eager to see if his successor will be able to reverse the dramatic decline in oil exports that has taken place over the past decade. While most analysts agree that Chavezs death could result in near-term political uncertainty, which could bring further turmoil to Venezuelas oil sector, others believe that in the long term, any new government will be motivated to focus on promoting and rebuilding the

sector . The potential value of the Venezuelan oil sector is phenomenal, with the countrys Orinoco Belt holding
the worlds second-largest reserve of tar sands and also the worlds largest conventional oil reserve, according to BPs (NYSE:BP,LS E:BP) Statistical Review of World Energy 2012. Questionable energy policies Chavezs

time in charge proved punishing for the countrys once-thriving oil industry. Despite boasting 18 percent of the worlds proven oil reserves, the largest share for any one country, Venezuelas annual output has fallen by more than 20 percent since 1998, to 2.5 million barrels per
day, according to The Wall Street Journal. Many put the decline down to Chavez being elected president, at which time he immediately increased state control of the oil sector. His questionable energy policies led to a scenario whereby heavy domestic oil subsidies drove domestic oil consumption up from 36 percent to 47 percent of the total energy mix in the last decade, reducing the amount of crude available for the country to sell into the global market. With the former president relying heavily on oil revenues to fund government spending, state-owned Petroleos de Venezuela (PDVSA)

became a prime example of underinvestment, mismanagement and inefficiency, effectively kept afloat by loans from the Chinese government. Since 2006, the companys debt has
climbed 10-fold, to $34 billion, and despite relying on the sectors income to fund his famous social programs, Chavez reinvested relatively little back into the sector. Future uncertain The

delays currently afflicting the planned $233-billion development of oil fields, pipelines and refineries in the countrys Orinoco Belt, which according to a US Geological Survey study may hold more crude reserves than Saudi Arabia, are a prime example of this mismanagement. Until now, PDVSA has given no indication as to whether it will invite more foreign investment or increase its own investment in new production; however, the late president held such sway over the companys direction that his death could dramatically alter not only the future of the company, but also of the entire sector. Questionable investment environment Despite the countrys obvious potential, investors have been cautious to back companies operating in the region. This reticence is largely
due to Chavezs past moves to make PDVSA the majority stakeholder in all Venezuelan projects by nationalizing oil and gas assets owned by international oil companies. Moves like that prompted ExxonMobil (NYSE:XOM) and a number of other companies to abandon work in the country; in turn, that reduced Venezuelas access to oil and gas technology and expertise. In what many analysts feel was the fatal blow, in 2007 Chavez essentially renationalized the industry, kicking out a number of foreign oil companies that refused to renegotiate their contracts, namely ExxonMobil and ConocoPhilips (NYSE:COP), which until that point had invested billions of dollars into Venezuelas oil sector, according to CNNMoney. The new rulings require foreign investors to essentially sign over 60 percent of their operations to PDVSA. However, under these terms, the foreign entity, which holds the remaining 40 percent, is still required to fund 100 percent of the investment hardly an enticing prospect. Additionally, whatever profit is made by the foreign entity is subject to a 50-percent tax rate and a 33-percent royalty, and any disputes concerning ownership are only allowed to be heard in Venezuelan courts. What lies ahead? The question now is what lies ahead for the countrys oil sector.

For western investors, the hope is that Chavezs successor will shift focus to

allow Venezuela to regain its peak oil production, while also allowing policies that encourage outside investment . However, some believe Chavezs death will likely not have an effect on the market. Oswald Clint, an oil and gas analyst at
Sanford C. Bernstein & Company, recently stated that any profound change in the countrys oil sector is unlikely, according to a report by Bloomberg. The death of President Chavez increases uncertainty over the political direction of Venezuela in the short term, he wrote in a note. However, we believe the most likely scenario is one where the current environment for international oil companies continues. Tim Evans, an energy futures specialist at Citi Futures, is of the same opinion. In the near-term, we certainly had some uncertainty, he told CNBC, adding that he does not expect a dramatic shift in Venezuelan production any time soon.What I expect to see is a period of mourning in Venezuela, during which oil production will continue at current levels and then theyll gather themselves for the required elections. That said, a number of majors will be watching the proceedings with great interest. In an interview with CNBC, BPs CEO, Bob Dudley, confirmed that the company may look at investing in Venezuela again if the right conditions exist. Enrique Sira, senior director at energy consulting company IHS CERA, weighed in with his thoughts. What

you would hope for is a very different investment environment, Bloomberg reported Sira as saying. Under the right conditions, Sira foresees a significant inflow of experienced, knowledgeable people, technical resources and capital flowing into Venezuela.
Despite the countrys abundant potential, investors would also do well to remember that Venezuelas role in the global oil market has diminished over the years. Venezuela is a weak OPEC hawk, as it has no sufficient production to influence prices, Gustavo Coronel, a founding member of the board of PDVSA, told CNBC last week. Venezuela is no longer a factor that can really upset the markets as it was the case 20 years ago. Can foreign investors be lured back? While political analysts admit it is difficult to predict what if anything will change in Venezuelas oil industry in the short term, the

fact remains that the country is nearing an investment breaking point in relation to oil production. Regardless of what successor is chosen, the president will know that the national government cannot continue to rely on PDVSA to bankroll its plans and that there is a serious need to embrace foreign partners with real experience. For junior companies, there will be little change in
the short term. While many are eager to obtain even a small portion of the countrys oil reserves, the majority will wait for well-funded majors to test the new political and investment climate if indeed that materializes. However, in order to lure the global talent needed to get the sector back on track, Chavezs successor will need to make some very real changes to the countrys ownership and tax laws. The government will also need to include terms that abide by international dispute resolution systems, offer competitive terms and respect contract law. Investors and companies will not rush back to Venezuela until a more hospitable and stable investment climate is created. Further, even if that

environment is built, it will likely be some time before investors see any notable production shifts. Chavez has effectively obliterated the nations credibility, and it will take time for Venezuela to earn back that trust.

Investment in Venezuela key to energy sector


Vanderklippe, 03/06/2013 (Nathan Vanderklippe, reporter at The Globe and Mail, Chavez's death opens door to Venezuela's oil
riches, The Globe and Mail, http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/chavezsdeath-opens-door-to-venezuelas-oil-riches/article9324112/?service=mobile) Many observers, however, believe Chavezs ruling United Socialist Party of Venezuela will hold on to power in coming elections, and political status quo means status quo for the oil industry, Katherine Spector, commodity strategist at the Canadian Imperial Bank of Commerce in New York, wrote in a January research note. The greater uncertainty lies in the impact of a political transition either to opposition rule or to fractured governance among Chavistas. In that case, implications for

oil price would be shortterm bullish, and possibly long-term bearish if the outcome is a more liberal government, she wrote. Observers caution, however, that profound change is needed for Venezuela to attract the billions in outside investment it needs to revitalize energy output . That includes abiding by international dispute resolution systems, offering competitive terms and respecting contract law. Even then, those who have been
burned in the past may face obstacles in returning to a country that has under-invested in numerous areas.

Boosting outside energy investment will grow oil production


Zhdannikov, 03/08/2013 (Dmitry Zhdannikov, writer for reuters, Venezuela could boost oil output in 5-7 years: Lukoil, Reuters,
http://business.financialpost.com/2013/03/08/venezuela-could-boost-oil-output-in-5-7-years-lukoil/?__lsa=a77a-19ab)

Venezuela could boost its long stagnant oil output considerably in just five to seven years if it offers investors greater certainty over contracts, an executive of Russias LUKOIL said. Under president Hugo Chavez, who died on Tuesday after 14 years in power, foreign oil companies in Venezuela, the worlds 11th largest crude exporter, have faced price controls and currency devaluations along with threats of nationalisation. Output has dropped from some 3.5 million barrels per day when he was elected and Venezuela pumped just 2.34 million bpd last month, according to analysts. In my opinion in the next 5-7 years it is possible to really grow oil production in Venezuela, said Andrei Kuzyayev, vice president and head of foreign projects at LUKOIL, Russias second largest crude producer, which is active in the Latin American country. But you need a quiet situation, stability in contracts and a good situation for investment, Kuzyayev told Reuters on Friday. The socialist leaders death is unlikely to have a big impact on Venezuelas oil sector in the short term, with key projects expected to stay on track if his preferred successor wins elections due to be called in the next 30 days. An opposition victory could eventually lead to an increase in foreign investment, but analysts said this could take years.

Investment key to oil production and economy


Nam, 01/08/2013 (Moiss Nam, a scholar at the Carnegie Endowment for International Peace, is a syndicated columnist and author,
An Economic Crisis of Historic Proportions, The New York Times, http://www.nytimes.com/roomfordebate/2013/01/03/venezuela-postchavez/chavez-will-leave-behind-an-economic-crisis)

The crisis includes a fiscal deficit approaching 20 percent of the economy (in the cliff-panicking United States it is 7
percent), a black market where a U.S. dollar costs four times more than the government-determined exchange rate, one of the world's highest inflation rates, a swollen number of public sector jobs, debt 10 times larger than it was in 2003,

a fragile banking system and the free fall of the state-controlled oil industry, the country's main source of revenue. Oil-exporting countries rarely face hard currency shortages, but the Chvez regime may be the exception. Mismanagement and lack of investment have decreased oil production. Meanwhile oil revenue is compromised partly because of Chvezs decision to supply Venezuelans with the country's most valuable resource at heavily subsidized prices. Thus a large and growing share of locally produced oil is sold domestically at the lowest prices in the world (in
Venezuela it costs 25 cents to fill the tank of a mid-sized car). Another share of the oil output is shipped abroad to Cuba and other Chvez allies, and to China, which bought oil in advance at deeply discounted prices (apparently the revenue from China has already been spent). Most

of

the crude left to be exported at market prices is sold to Venezuela's best client, and, ironically, Chvez's main foe: the United States. Yet, as a result of America's own oil boom, U.S. imports of Venezuelan oil have recently hit a 30-year low.

Solves New Production


Boosting outside energy investment grows oil production Zhdannikov, 03/08/2013 (Dmitry Zhdannikov, writer for reuters, Venezuela could boost oil output in 5-7 years: Lukoil,
Reuters, http://business.financialpost.com/2013/03/08/venezuela-could-boost-oil-output-in-5-7-years-lukoil/?__lsa=a77a-19ab)

Venezuela could boost its long stagnant oil output considerably in just five to seven years if it offers investors greater certainty over contracts, an executive of Russias LUKOIL said. Under president Hugo Chavez, who died on Tuesday after 14 years in power, foreign oil companies in Venezuela, the worlds 11th largest crude exporter, have faced price controls and currency devaluations along with threats of nationalisation. Output has dropped from some 3.5 million barrels per day when he was elected and Venezuela pumped just 2.34 million bpd last month, according to analysts. In my opinion in the next 5-7 years it is possible to really grow oil production in Venezuela, said Andrei Kuzyayev, vice president and head of foreign projects at LUKOIL, Russias second largest crude producer, which is active in the Latin American country. But you need a quiet situation, stability in contracts and a good situation for investment, Kuzyayev told Reuters on Friday. The socialist leaders death is unlikely to have a big impact on Venezuelas oil sector in the short term, with key projects expected to stay on track if his preferred successor wins elections due to be called in the next 30 days. An opposition victory could eventually lead to an increase in foreign investment, but analysts said this could take years.

Solvency new tech would allow developing the Orinoco oil belt. Manik Talwani, 9-xx-2002, Schlumberger Professor of Earth Science, Rice University, THE ORINOCO HEAVY OIL
BELT IN VENEZUELA (OR HEAVY OIL TO THE RESCUE?), http://bakerinstitute.org/publications/the-orinoco-heavy-oil-belt-in-venezuela-orheavy-oil-to-the-rescue

North of the Orinoco River in Venezuela, in an area of the size of Massachusetts lie the largest oil deposits in the world , estimated at 1.3 trillion barrels of oil in place (some estimates are considerably higher). The Heavy Oil Belt in Venezuela, Faja Petrolifera del Orinoco (Figure 1) contains an estimated 270 billion barrels of recoverable oil, which matches the oil reserves of Saudi Arabia. Improved tech nology and/or higher oil prices could increase the size of the reserves even further. On the other hand, current projects instituted in the Heavy Oil Belt within the last five years with an investment of more than $12 billion, will, at their peak to be reached at the end of this decade, produce only 660,000 barrels/day. Over the 35 year life time of the current projects, only about 8 billion barrels of oil will have been produced, which is less than 3% of the total oil reserves. The reason
for these low production figures is, of course, that heavy oil is very expensive to produce and to refine (because of high sulfur and metal content). The unanswered question is whether it

would be in the U.S. national interest to make further

investments in new technology and changes in tax policy that would increase the total reserves and the production rates. These practical moves would decrease U.S. dependence on Middle East oil.

Solves Liberalization
US should jumpstart energy engagement with Venezuela current policies fail but endorsing liberalization solves.
Paul Isbell, 1-14-2009, Senior Analyst and Director of the Energy Programme at the Elcano Royal Energy for the Western Hemisphere: Revisiting Latin Americas Energy Scene before the 5th Summit of the Americas, http://www.ariae.org/download/varios/ARI10-2009_IEWHA.pdf

Institute,

Growing energy demand in Latin America and the persistence of numerous barriers to expanded supplies of both traditional and alternative energies, together with the imperative to reduce carbon emissions and prepare for the effects of climate change, pose significant challenges to the countries of the region. For years, strong demand, rising oil prices and energy nationalism threatened sustainable growth, particularly in netimporting economies, but now the credit crisis, economic recession and falling oil prices threaten to destabilise some producer states and undermine the thrust towards unconventional hydrocarbons, renewable energy deployment and effective policies to ward off climate change. A collaborative, regional energy strategy, while difficult to conceive and design, would likely be a positive contribution to the policy quest for greater energy security and more rational energy stances in the face of climate change. Regional energy collaboration in the Americas is also an area in which the US and Spain might develop an effective partnership for the promotion of renewable
energies. The Energy Scenario in the Americas: Supply, Demand and Infrastructure The Western Hemisphere is roughly self-sufficient in energy. This does not mean, however, that energy security does not pose a significant policy challenge for the Americas. Energy integration, in both infrastructural and institutional terms, remains relatively underdeveloped (certainly in light of projected future energy demand), while the regions supplies of traditional energy sources are very unevenly distributed. The US and the Southern Cone are the two principal centres of heavy and increasing consumption and external dependence, while Canada, the Gulf of Mexico and the Andean zone are the principal foci of hydrocarbons production and net exportation. Meanwhile, less than 1% of the Americas primary energy demand is met with classic renewable energy sources (ie, wind, solar and the various forms of ocean power as opposed to nuclear, hydroelectric and biomass, the other conventional low-carbon energy sources). Traditional fossil fuels continue to dominate (over 80%) the Hemispheres primary energy mix and will continue to do so well into the future if the regions energy scenario is not radically transformed. There

exists much potential for increased energy supply, particularly in the realm of socalled unconventional and difficult hydrocarbons like Canadas tar sands and Venezuelas ultra-heavy oil, which together (some 500 billion barrels) might be the equivalent of two Saudi Arabias and the Hemispheres many potential sources of offshore and ultra-deep water oil and
gas (particularly in Brazil and Mexico, but also potentially in the US, Caribbean and Andean zones). The obstacles to increasing supply including energy nationalism and the rising costs of technical and material inputs, both of which exercise a negative impact upon investment are immense, while primary energy demand is set to continuing growing less so in North America (0.6% annually to 2030) but significantly in Latin America (2%). Nevertheless, despite the

regions apparent energy potential, the Hemisphere will become ever more dependent on hydrocarbon imports from the Persian Gulf and ever more vulnerable to the destabilizing impacts of fossil fuel-induced climate change unless status quo dynamics are drastically altered. On the other hand, both the quantity and quality of energy infrastructure (including power plants, transmission grids and electricity distribution networks, oil and gas pipelines, refineries and LNG export and import terminals) is insufficient across most of the region, while
nearly a quarter of Latin Americas population lacks access to electricity. The International Energy Agency (IEA) reference (or business as usual) scenario foresees a trebling of electricity generation and a doubling of capacity requiring an enormous amount of investment (over US$1 trillion in the electricity sector alone) if demand is to be met in Latin America during the 25 years leading up to 2030. Even in North America,

rising demand is already placing strains upon an increasingly antiquated energy infrastructure system. By itself, the infrastructure challenge is significant enough to constrict demand in many parts of the region, to say
nothing of placing severe constraints on renewable energy deployment, particularly centralised forms of wind and solar power (ie, wind and solar farms), across the Hemisphere. The IEA estimates that Latin

America will need to invest at least the equivalent of 1.5%

of its total GDP to 2030 some 50% more than average energy investment requirements world-wide in expanded energy supply and infrastructure if its business as usual energy demand is to be satisfied. Energy Nationalism and Market Pragmatism Another salient characteristic of the regions current energy scene has been the return of energy nationalism , now influencing the
energy policies of many of the Hemispheres oil and gas producers. While many emerging markets in Asia successfully took advantage of the

economic globalisation of the last 20 years and, as a result of their consequent economic growth, contributed much of the new energy demand that has been partially responsible for the recent spike in prices, a number of less-than-developed

oil and gas producers in Latin America (particularly Venezuela , Bolivia, Ecuador and Argentina) have become sceptical even resentful of globalisation dynamics. Such economies have remained for whatever reason, for better or for worse on the margins of the globalising economy. Partially as a result, they have also become highly dependent on oil and gas exports, while their energy sectors have become increasingly dominated by the state. Although prices have recently collapsed from their peaks, and
now stand at only 30% of their historic levels some six months ago, the massive revenues that such historically high prices potentially represent have combined with brewing resentment towards liberallytinged globalisation to produce the potent political cocktail of energy nationalism.

The ultimate result has been more prohibitive restrictions on foreign and private sector exploration and production (in the form of tighter fiscal and access conditions for international oil and gas companies) in Latin American hydrocarbons
provinces and a stagnation of upstream investment and oil and gas output levels. Now that oil prices have fallen just as dramatically as they rose, national oil companies are faced with even more severe financial pressure to skimp on investment even further. Even

with high prices, energy nationalism prejudices the level of upstream investment; with low prices, the effect of energy nationalism on upstream investment is potentially mortal. The impact can be seen in the evolution of production levels. Both Venezuela and Argentina are producing approximately 25% less petroleum than when at their respective production peaks some 10 years ago. At the same time, a number of other countries in the region, including Brazil, Chile, Peru and Colombia, have continued to pursue more pragmatic energy policies which, without abandoning or denying a legitimate role for the state, remain more open, transparent, rules-based and market-oriented. Such policies not only acknowledge the reality of global economic integration even in the realm of energy but actually embrace it as a positive, constructive force. These pragmatic, rules-based, market-oriented energy policies express a broader political and economic stance of openness, transparency and flexibility
that

reveal such countries to be rising above the regions traditional ideological deadlock between good revolutionaries and free marketers to forge what Javier Santiso has called a new political economy of the possible in Latin America.

US should work to liberalize Venezuelan oil creates a central pivot in Latin America to spread liberal democracy.
Trey Mays, 3-07-2013, Grassroots

Commentator, The Patriot Post, previously a Land Assistant, The Panola Corporation Founder, Independent Writer, The Mays Blog, Independent PC, One Twenty Four, LLC, B.S., Business Administration, LeTourneau University, What the Death of Hugo Chavez Mean,
http://patriotpost.us/commentary/17101 According to the Wall Street Journal, since 1998 when

Chavez was elected President, Venezuela "endured nearly two decades of political and economic turmoil." Chavez's Cuban-inspired 21st century socialism, authoritarianism, and antiAmericanism have only made conditions worse for the Venezuelan people. Even when other countries in Latin America seemed to be embracing free market and democratic reforms, Chavez

pushed his socialism and anti-Americanism on Venezuelans at a time when global oil prices were on the rise in 2006, which allowed him to buy his influence. He had his detractors in Venezuela who opposed his socialist policies and government takeover of media and oil companies, but because of his populism and government handouts, he was still liked by the Venezuelan people. The US government should initially tread lightly on how they oppose the Chevaz-built government. They should demand and encourage that they hold free and fair elections without coming on too strong in the beginning so as not to alienate the Venezuelan people and push them further towards anti-American Marxism. However, over the course of a few months, America should take the necessary indirect steps to support liberal democracy and liberal democracy activists in Venezuela. America's Latin American foreign policy should have two driving factors: American interests and the promotion of Liberty. Moreover, the best vehicle for promoting liberty in a

Latin American country

like Venezuela is the promotion of liberal democracy. We should encourage the Venezuelans to liberalize their economy and political institutions. The challenge to liberty and liberal democracy in Venezuela lies
primarily with the Interim President Nicolas Maduro, the leader that Hugo Chavez recently appointed as his successor before he died. He has made some recent comments claiming that Chavez's enemies, namely the United States, poisoned the Venezuelan President with his cancer, and other incendiary anti-American rants. The question is whether he will hold elections within the required 30 days, and if so, will the elections be free and fair. I'm not holding my breath. Since Hugo Chavez took to the helm of the presidency in Venezuela, although there were a number of Latin American countries embracing free-market and democratic reforms, his incendiary rhetoric, socialist policies, and fascist alliances actually succeeded in seeing other Marxist imitators rise to power in Ecuador and Bolivia. The

death of Hugo Chavez can either have far-reaching opportunities for liberty, or far-reaching consequences. If the Venezuelan people can say no to the Chavez-style Marxism and anti-Americanism, then the forces of liberty and liberal democracy could have an ally centrally located in Latin America. This would allow us to spread the hope and opportunity
that freedom provides with free nations eventually out numbering dictatorial nations. However, the consequences could cause the current dictators to entrench themselves in their power and make stronger alliances with other evil empires. This would make them be an even bigger thorn in our side not only in Latin America, but also worldwide because of their evil alliances.

XT- Energy Key Issue


Maduros prepared for Post-Chavez relations thaw US energy engagement is a key first step to normalize relations.
El Universal, 1-01-2013, major Mexican newspaper, ranked the second most visited news site in Mexico, US, Venezuela are reportedly seeking post-Chvez thaw, http://www.eluniversal.com/nacional-y-politica/130101/us-venezuela-are-reportedlyseeking-post-chavez-thaw

US, Venezuela are reportedly seeking post-Chvez thaw Roberta S. Jacobson, the top US State Department official in charge of Latin American affairs, held a long telephone conversation with Venezuela's VicePresident and Chvez-designated heir Nicols Maduro Washington expects greater cooperation in counter-narcotics (Photo:
EFE) EL UNIVERSAL Tuesday January 01, 2013 06:29 PM While Venezuela's announcement that President Hugo Chvez's bout with cancer has taken a turn for the worse is making big headlines, there is another development

in the Venezuelan drama that has gone almost unnoticed: high-level US-Venezuelan talks preparing for a post-Chvez future may have already started,
according to US officials. Roberta S. Jacobson, the top US State Department official in charge of Latin American affairs, held a long telephone conversation with Venezuela's Vice-President and Chvez-designated heir Nicols Maduro on November 21, where the two discussed, among other things, the possibility of restoring ambassadors, the sources said. The talks, which were encouraged by Secretary of State Hillary Clinton, started with a US diplomatic approach to Maduro's office asking whether the vice-president would take a call from Jacobson, the sources added. The answer was positive, and the telephone conversation took place shortly thereafter. Asked whether she had talked with Maduro,

Jacobson replied, "Yes. We are always interested in having a more productive relationship with Venezuela, starting with counternarcotics, and in order to have a more productive relationship you have to talk to people."
Details of the talks come as reports from Havana, where Chvez recently underwent a fourth surgery for cancer, indicate that he is experiencing a slow recovery. Maduro said Sunday that Chvez suffered "new complications" from a respiratory infection and his condition was delicate. The behind-the-scenes talks were originally reported in a December 12 column by Venezuela's daily El Universal columnist Nelson Bocaranda, and in a December 14 article by former US ambassador Roger Noriega, a conservative Republican, in the online magazine of the American Enterprise Institute. Noriega referred to the Jacobson-Maduro telephone conversation toward the end of his article, and lambasted US "career diplomats" for allegedly "legitimizing a narco-authoritarian regime" in Venezuela. In addition, Noriega reported that Jacobson's deputy Kevin Whitaker had subsequently had a conversation in Washington with senior Venezuelan diplomat Roy Chaderton. US officials confirm that this conversation took place. In his article, Noriega urged the US Congress to intervene to stop the talks, claiming that "an unconditional rapprochement may undercut efforts to indict senior (Venezuelan) officials for their drug crimes." Suggesting that Washington should not recognize Chvez's successor "until he promises to adopt democratic reforms," Noriega added that "career diplomats

may get their wish of

normalizing relations with Caracas, even if it confers legitimacy on a dangerous, undemocratic regime in Venezuela." According to US officials, during the Jacobson-Maduro talks in which both sides expressed hopes for a speedy recovery of Chvez the Venezuelan vice-president offered to exchange ambassadors on occasion of the beginning of President Barack Obama's second term. Jacobson, in turn, is said to have proposed a step-by-step approach to improve bilateral relations, starting with greater cooperation in counter-narcotics, counter-terrorism and energy issues. Under the three-step US
proposal, the first test to restore bilateral relations would be Venezuela's acceptance of a visit by the top DEA regional psupervisor based in Colombia, to map a plan of greater cooperation on anti-narcotic issues. While there are anti-narcotics officials at the US Embassy in Caracas, such a visit would give bilateral talks greater diplomatic weight, officials say. According to the sources, both sides may have powerful reasons to seek a thaw as they prepare for the possibility of a post-Chvez era. US officials would

on drugs, terrorism and

like Venezuela to allow greater cooperation energy , regardless of who is in power, to stop the country from becoming "a drug-

traffickers' paradise. "

Now is a critical time to seek new relations with Madurorestarting energy cooperation is key. REYES THEIS, writer for EL UNIVERSAL, Friday 6-7-13, 2013 10:22 AM

Although the Venezuelan opposition expected Washington to take a hard-line stance vis--vis the Venezuelan Government, US Secretary of State John Kerry met with Venezuelan Foreign Minister Elas Jaua on Wednesday and agreed

on making all possible efforts to keep good diplomatic relations. Kenneth Ramrez, the president of the Venezuelan Council on Foreign Affairs (Covri), believes that this is "a new attempt of Barack Obama's Administration to implement an engagement policy towards Venezuela . They seek to use dialogue and negotiation to attain political depolarization and discourage somehow Venezuela's pugnacious foreign policy, which represents an obstacle for the US policy on the region ." He explained that the US aims "to restore ambassadorlevel relations; reactivate counter-narcotics cooperation, which has been frozen since 2005; and likely to

get cooperation on

energy back on track, as it has been on hold since 2003." Ramrez reminded that in 2010, Washington was bolstering an engagement policy towards Venezuela. Such efforts were derailed when designated US Ambassador to
Venezuela, Larry Palmer made some statements about Venezuela before the US Congress. Upon Palmer's remarks, Caracas denied his placet, and Washington responded by revoking Venezuelan Ambassador Bernardo lvarez's visa. According to the analyst, President Obama understood that the confrontation policy has failed. "He

is giving (dialogue) a second chance, as he believes that Venezuela and Nicols Maduro, considering President (Hugo) Chvez demise, the economic crisis and the narrow presidential vote, have no other choice but to change their policy and start an opening."
Regarding Venezuela's interests, Ramrez claimed that the meeting held between Kerry and Jaua defuses the opposition's plans to seek enforcement of the Inter-American Democratic Charter and make the Venezuelan Government conduct a comprehensive election audit under specific terms. Further, the

meeting gave Nicols Maduro the recognition as Venezuelan president he sought

from Washington.

S- Both Sides Want it


Both sides are open to improving relations Borger 13 (Gloria Borger, CNN Chief Political Analyst The relationship between Chavez and U.S.- U.S. open to 'more
constructive relationship' with Venezuela, March 6, 2013, http://www.cnn.com/2013/03/05/politics/venezuela-chavez-u-s-)

White House interested in policies that promote democratic principles Source says expulsion of two U.S. military aides "not a sign of strength" Obama administration wants elections to be "free and fair and credible," source says Venezuelan President Hugo Chavez died after a long fight with cancer Washington (CNN) -- The United States is open to a "more constructive relationship with the Venezuelan government" following the death of Hugo Chavez
on Tuesday and the expulsion of two military attaches. However, the action against the United States is "not a sign of strength," according to a senior Obama administration official, describing the move as an internal political ploy to stir nationalistic fervor. The official said Venezuela's vice president, Nicolas Maduro, "is not charismatic" and is trying to sustain the Chavez legacy and win an election by advancing "conspiracy theories." Chavez died of cancer, Maduro said. President Barack Obama

said in a statement that the United States "reaffirms its support for the Venezuelan people and its interest in developing a constructive relationship" with Venezuela's government. Photos: Celebrities and Hugo Chavez Photos: Hugo Chavez, Venezuela's vocal leader Hugo Chavez's 2009 interview with CNN "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," the statement said. Maduro assumes the interim presidency and elections will be
held in 30 days, Venezuela's foreign minister, Elias Jaua, said during an interview aired on state-run broadcaster VTV. The Obama administration wants the election to be "free and fair and credible," according to the administration official. Hugo Chavez's death draws sympathy, anger Maduro made no mention of running for election in his public comments on Tuesday. But he is widely expected to be the United Socialist Party of Venezuela's candidate and is considered the frontrunner by Latin American experts. The United States will stay out of the election. And the administration official said it remains open to restoring diplomatic relations with an ambassador regardless of the winner. However, given what occurred on Tuesday regarding charges by Venezuela against two U.S. Embassy attaches, the official said "we need to see more than we saw today." The Americans were accused of plotting to destabilize the country, which the State Department dismissed. The

administration official believes, however, it is "counterproductive to be at odds" with the Venezuelan government. Another administration official said
expulsion of the U.S. military aides was a sign the Venezuelan leadership is feeling "uncertain, unsure and weak," and that a more constructive relationship with the United States was "really up to the Venezuelans if they want that." But senior American officials don't expect the relationship to change dramatically in the short term primarily because Chavez's system still exists. Chavez: From failed coup to presidency 2006: Chavez calls Bush 'the devil' Venezuela's future after Chavez The relationship between Chavez and U.S. Opinion: Chavez used force of personality to win votes, influence leaders The United States, these officials say, will want to see a break with that and movement toward a democratic process. The officials believe that Chavez adherents led by Maduro will want to maintain the same approach, but could be more pragmatic and less confrontational. However, there are strong anti-Venezuelan views on Capitol Hill and it would be difficult to confirm an ambassador. That could change if there is cooperation on issues like counter-narcotics or counter-terrorism, the officials said. The Obama

administration is expected to try and get Venezuela to impose sanctions on Iran, which the country has repeatedly violated, they added. Latin American
experts believe Chavez's death could change the dynamic in the region, not only between the United States and Venezuela, but also among Latin American countries. Robert Menendez, chairman of the Senate Foreign Relations Committee, said that Chavez ruled "with an iron hand" and his death has left a "political void that we hope will be filled peacefully." "With free and fair elections, Venezuela can begin to restore its once robust democracy and ensure respect for the human, political and civil rights of its people," the New Jersey Democrat said. Mike Rogers, chairman of the House Intelligence Committee, called Chavez a "destabilizing force in Latin America" and an obstacle to progress. "I

hope his death provides an opportunity for a new chapter in U.S.Venezuelan relations," the Michigan Republican said.

Rapprochement is possible BBC 13 (BBC News, Us and Canadian coverage, Viewpoint: New era for US-Venezuela relations? March 6, 2013,
http://www.bbc.co.uk/news/world-us-canada-21680885) Shifting ties The US is too useful and tempting a foil for papering over internal disagreements in Chavez's party and for rallying loyal supporters for the upcoming presidential election to expect any abrupt change. Continue reading the main story Start Quote Colombia, Brazil, Peru, and other Latin American nations, have opened up to the United States and in the process benefited tremendously. Heir apparent and now interim President Nicolas Maduro's

speech right before Chavez's death

shows this. In it he expelled two US diplomats and even accused the US of causing Chavez's cancer. But in the longer term, trade, commercial relations and personal ties could shift US-Venezuelan relations for the better. First and foremost are the economic ties between the two nations. Despite the rhetorical animosity of the last decade, trade continued. The US remains the largest recipient of Venezuelan oil - some 40% percent of Venezuelan oil exports (and oil makes up over 90% of the country's total exports). In turn, the US has continued to send machinery and cars, and even increased exports of natural gas and petroleum products to the South American nation. The hard currency and goods are vital to the functioning of Venezuela's
economy, government and society, and may become even more so through the anticipated tough economic times ahead. Venezuelans protested American officals on the ninth anniversary of the failed coup against Chavez Despite the increased government management of the economy through price controls and the nationalization of hundreds of private companies over the last decade, many well- and lesser-known US companies still

work in Venezuela, providing not just goods but

ongoing links with the United States. In addition to these commercial links, the more than 200,000 Venezuelans living in
the US and the hundreds of thousands more that have ties through family, friends and colleagues, could also bring the two countries together. Finally, as subsequent Venezuelan governments look to adjust their economic policies in the coming months and years, the experience of their neighbors provide incentives to forge a more amicable bilateral relationship.

Eric Farnsworth, 4-11-2013, Vice President, Council of the Americas, Energy Security Opportunities in Latin America and the Caribbean, http://docs.house.gov/meetings/FA/FA07/20130411/100622/HHRG-113-FA07-Wstate-FarnsworthE-20130411.pdf As well, for the past several years the Council has organized our Energy Action Group, a public-private dialogue that seeks to focus on the strategic, policy, and commercial issues at the heart of hemispheric energy matters with a view to providing recommendations to policymakers on the Western Hemisphere energy agenda. We genuinely appreciate the opportunity to appear before you to provide testimony regarding

energy security opportunities in Latin America and the Caribbean. Mr. Chairman, if I may give you the bottom line first: energy security for the U nited S tates is of fundamental strategic importance. It underlies our ability to function as a modern society, and ensuring energy security has long been a critical component of U.S. foreign policy globally on a bipartisan basis. It is within this context that we firmly believe the nations of Latin America, the Caribbean, and Canada must be considered, leading to a new and abiding appreciation at the most senior levels of government of the strategic importance of the Western Hemisphere to the U nited S tates. The region cannot be an afterthought or taken for granted. Already, just over half of U.S. energy imports come from the Western Hemisphere, meeting approximately one quarter of our daily energy needs. Canada, Mexico, and Venezuela are three of our top suppliers worldwide. We receive more than twice as much energy from Canada, our top supplier, as from Saudi Arabia, our second largest supplier. Colombia, Ecuador, and Brazil also contribute significant amounts. 2 Even when political relations are troubled with certain countries, for example Venezuela and Ecuador, the U nited S tates continues to engage in energy trade on a commercial basis. At the same time, a dramatic expansion of new energy resources across the hemisphere made possible by new technologies including ultra-deep water drilling offshore and biofuel production and fracking onshore has created the possibility of a new, highly favorable paradigm for hemispheric energy. Herein lies the primary opportunity for regional partnership, if we are nimble enough, collectively, to grasp it: working together as a hemisphere to increase energy security for all parties in a manner that lowers costs through increased production and greater efficiencies, encourages sustainable economic growth, development, and job creation, and supports a clean energy matrix with appropriate environmental protections. In fact, energy partnership was one of the key initiatives at the 1994 Summit of the Americas in Miami, at the insistence of Venezuela , and was one of the deliverables coming out of the 2009 Summit of the Americas in Trinidad and Tobago. Changing sector dynamics make the vision truly compelling, to the extent that regional political challenges can be minimized or overcome

Renewed ties with Venezuela energy coops a key new initiative.


Bradley Kapper, 1-09-2013,US seeking renewed Venezuela ties after Chavez, http://nbclatino.com/2013/01/09/us-seeking-renewedvenezuela-ties-after-chavez/ WASHINGTON With President Hugo Chavez possibly in his last days, the

U nited S tates sees the possibility of a long-sought

reset in relations with Venezuela. Chavez recently underwent his fourth cancer-related surgery in Cuba and there is wide speculation that the 58-year-old at the very least will never again be able to govern. His allies, now backed by Supreme
Court approval, have postponed his inauguration for a new presidential term, originally scheduled for Thursday, prompting a fierce battle with the Venezuelan opposition, which argues such a delay is unconstitutional. The Obama administration is steering clear of the legal debate. But it is nevertheless looking to the likely end of Chavezs 14-year rule, during which he championed a Latin America free of American influence and built alliances with U.S. foes across the globe such as Iran and Libyas Moammar Gadhafi, destroying anti-drug and counterterrorism ties with Washington along the way. Regardless

of what happens politically in Venezuela, if the Venezuelan government and if the Venezuelan people want to move forward with us, we think there is a path thats possible, State Department spokeswoman Victoria Nuland said Wednesday. It is just going to take two to tango, Nuland told reporters. Its
going to take action on the Venezuelan side as well as our willingness in order to improve relations. Chavez hasnt spoken publicly in a month and while American officials dont know his exact condition, they believe he may be near death or a state of incapacity. Venezuelas government has kept Chavezs health a closely guarded secret. If either scenario plays out, there is little to suggest Chavezs followers would seek to roll back his idiosyncratic and often anti-American vision of a Bolivarian socialist revolution. Still, the Obama administration is

stepping up its outreach to the countrys next likely leaders, convinced it can find some areas of future cooperation with the firebrand populist out-of-the-way. Roberta Jacobson, the top American diplomat for Latin America, spoke by telephone with Vice President Nicolas Maduro in November and discussed ways of improving ties on such issues as fighting drug cartels to terrorism. Chavez hand-picked Maduro to run for president if he is unable any longer to govern. U.S. diplomat Kevin Whitaker also has been in regular contact with Roy Chaderton, Venezuelas
ambassador to the Organization of American States in Washington. Washingtons goal is a pragmatic relationship with Chavezs successors, even as the two countries will likely have much to continue disagreeing over. The approach is somewhat akin to the one President Barack Obama adopted with Russia after taking office four years ago, hoping to eliminate the distrust that built up during George W. Bushs presidency by re-establishing cooperation on issues such as Afghanistan and nuclear non-proliferation, while acknowledging that Moscow and Washington wont necessarily agree on democracy and the rule of law. The reset in ties with the Kremlin has stalled amid sharp U.S.-Russian disputes over missile defense plans and Syrias civil war, but the administration still fiercely defends its merits. With Venezuela, the U.S. is hoping to start with stronger counter-narcotics coordination, a challenge given that the Venezuelan government includes officials subject to U.S. drug kingpin sanctions. Other American

priorities include energy cooperation

and stronger enforcement of sanctions against

Iran. The U.S. also fears Iranian efforts to use Venezuela as a base for terrorist or other activity in the Western Hemisphere against American interests. RELATED: Venezuelans in South Florida closely following Hugo Chavezs health Maduro and other insiders in Chavezs government also seek rapprochement, but want to start with the first exchange of ambassadors between the two countries since 2010. The U.S. Embassy in Caracas has been without a top envoy since Chavez rejected Obamas nominee and accused him of making disrespectful remarks about Venezuelas government. That led Washington to revoke the visa of Venezuelas ambassador. Speaking last week, Maduro

stressed that the U.S. and Venezuela have great ideological and political differences. But he held out the possibility of normalized relations based on mutual respect. Despite Chavezs tirades against the U.S. and what he sees as its attempts to bring down his government, and U.S. criticism of Venezuelas lax efforts against drug traffickers, the two countries have maintained economic relations. The U.S. gets about 10 percent of its oil from Venezuela and remains the Latin American countrys
top purchaser.

KT LA Economies
Griffin 13 (John Griffin, Crimson editorial writer, Engage with Venezuela, The Harvard Crimson, April 3, 2013,
http://www.thecrimson.com/article/2013/4/3/Harvard-Venezuela-Chavez-death/)

Beyond leading to more amicable, cooperative relationships with Latin American nations, engagement with Venezuela would also be economically advisable. With the worlds largest oil reserves, countless other valuable
resources, 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 such cooperation: 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 the entirety of Latin America . It was mostly through Venezuelas efforts that the United States was unable to create a Free Trade Area of the Americas, an endeavor that would have eliminated most trade barriers among participant nations, thereby leading to more lucrative trade. In a world where the United States and Venezuela were to enjoy normalized relations, all nations involved would benefit from such agreements.

Venez Collapse impacts

Laundry List
Destroys democracy, cooperation, counternarcotic efforts, and the economy- spills over to global markets
Duddy, 2012 (Patrick D. Duddy, senior lecturer in international studies at Duke University and former U.S. ambassador to Venezuela,
Political Unrest in Venezuela, Council on Foreign Relations, 09/2012, https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&cad=rja&ved=0CDcQFjABOAo&url=http%3A%2F%2Fi.cfr.org%2Fcon tent%2Fpublications%2Fattachments%2FCPA_contingencymemo_16.pdf&ei=CXHYUZDnB8iWyAHntYDICw&usg=AFQjCNH2sYIvkSmFtTk5qKdo8 1GPmWCyEg&sig2=yd0X4dBJJtFx0j1PhSKqRQ&bvm=bv.48705608,d.aWc)

Political instability and violence in Venezuela would damage U.S. efforts to promote democracy, increase regional cooperation, combat narcotics, and protect its economic interests in the region. Democracy promotion : The United States has worked for decades to promote democracy in the Western Hemisphere. In recent years, Chavez has become increasingly authoritarian, undermining important political institutions, giving more powers to the presidency, and weakening both civil society and the independent media. The United States should view a suspension or further deterioration in the quality of Venezuelas democracy as a setback for U.S. policy and for the hemisphere. The emergence of a military junta or a compromised Chavez regime would also likely increase Iranian and Cuban influence in Venezuela. It already has a close relationship with Iran from which it reportedly receives advanced weapon systems and other assistance. Cuba sends thousands of teachers and technical, medical, and security advisers in exchange for an estimated ninety to one hundred thousand barrels of oil per day. Regional cooperation : The United States has an interest in nurturing regional cooperation particularly under the auspices of the Organization of American States (OAS), of which it is a
core member. While often disappointing to both the United States and Latin America, the OAS provides the only regional forum in which all of the countries with democratically elected 5 governments participate. A

failure by the OAS to play an effective role in Venezuela if it appears democracy is at risk would further undermine support for the organization both in the region and in the United States. How the United States manages its relations with Venezuela if violence does break out would likely affect U.S. relations with others in the hemisphere, especially Brazil, which has cordial relations with Chavez and reacts badly to perceived U.S. efforts to dictate to Latin America. A repetition of the acrimony that characterized the hemispheres efforts to resolve the Honduras crisis of 2009 would be corrosive to U.S. relations with the region. Counternarcotics : Venezuela does not cooperate with the United States on counternarcotics, except at the most minimal level. Drug trafficking has, consequently, surged. A
number of Venezuelan military officers, including the current minister of defense, have been plausibly accused by the U.S. Treasury of cooperating with the Colombian insurgent group Fuerzas Armadas Revolucionarias de Colombia (FARC) and facilitating drug shipments through Venezuela, especially from Apure State. Venezuelan

recalcitrance in counternarcotics clearly undermines other regional efforts to combat the drug trade. Even low levels of violence would create new opportunities for the FARC and other drug traffickers to retrench and extend their reach. Economic interests : A significant number of U.S. companies have operations in Venezuela; it remains an important market for U.S. goods and some services, especially oil services. Many of these companies could be at risk if violent internal conflict broke out. Venezuela is consistently among the five largest foreign suppliers of oil to the United States.
The United States is Venezuelas largest market, buying up to nine hundred thousand barrels of oil daily, up to 45 percent of Venezuelas total oil exports. Around six hundred thousand barrels of Venezuelan crude per day are refined at CITGO facilities in the United States. Although a cut off of Venezuelan oil to the United States is theoretically possible, it is unlikely given Venezuelas dependence on the U.S. market. The United States is now less vulnerable to a cut off of supply from Venezuela as U.S. domestic production has risen and imports from elsewhere could relatively quickly replace Venezuelan oil. Venezuelas

economy, on the other hand, has become more dependent on petroleum. Although production has stagnated since 2003, oil accounts for over 95 percent of Venezuelas export earnings, and export revenue pays for nearly 50 percent of the governments budget. Thus, although Venezuela is vulnerable to pressure via its dependence on its oil exports generally and the U.S. market and refineries

specifically,

global markets would

likely

react negatively to

either

an interruption of Venezuelan

production or a crisis in U.S.-Venezuelan relations that threatens the bilateral trade in oil.

Venezuela instability destroys democracy, cooperation, counternarcotic efforts, and the economy- spills over to global markets
Duddy, 2012 (Patrick D. Duddy, senior lecturer in international studies at Duke University and former U.S. ambassador to Venezuela,
Political Unrest in Venezuela, Council on Foreign Relations, 09/2012, https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&cad=rja&ved=0CDcQFjABOAo&url=http%3A%2F%2Fi.cfr.org%2Fcon tent%2Fpublications%2Fattachments%2FCPA_contingencymemo_16.pdf&ei=CXHYUZDnB8iWyAHntYDICw&usg=AFQjCNH2sYIvkSmFtTk5qKdo8 1GPmWCyEg&sig2=yd0X4dBJJtFx0j1PhSKqRQ&bvm=bv.48705608,d.aWc)

Political instability and violence in Venezuela would damage U.S. efforts to promote democracy, increase regional cooperation, combat narcotics, and protect its economic interests in the region. Democracy promotion : The United States has worked for decades to promote democracy in the Western Hemisphere. In recent years, Chavez has become increasingly authoritarian, undermining important political institutions, giving more powers to the presidency, and weakening both civil society and the independent media. The United States should view a suspension or further deterioration in the quality of Venezuelas democracy as a setback for U.S. policy and for the hemisphere. The emergence of a military junta or a compromised Chavez regime would also likely increase Iranian and Cuban influence in Venezuela. It already has a close relationship with Iran from which it reportedly receives advanced weapon systems and other assistance. Cuba sends thousands of teachers and technical, medical, and security advisers in exchange for an estimated ninety to one hundred thousand barrels of oil per day. Regional cooperation : The United States has an interest in nurturing regional cooperation particularly under the auspices of the Organization of American States (OAS), of which it is a
core member. While often disappointing to both the United States and Latin America, the OAS provides the only regional forum in which all of the countries with democratically elected 5 governments participate. A

failure by the OAS to play an effective role in Venezuela if it appears democracy is at risk would further undermine support for the organization both in the region and in the United States. How the United States manages its relations with Venezuela if violence does break out would likely affect U.S. relations with others in the hemisphere, especially Brazil, which has cordial relations with Chavez and reacts badly to perceived U.S. efforts to dictate to Latin America. A repetition of the acrimony that characterized the hemispheres efforts to resolve the Honduras crisis of 2009 would be corrosive to U.S. relations with the region. Counternarcotics : Venezuela does not cooperate with the United States on counternarcotics, except at the most minimal level. Drug trafficking has, consequently, surged. A
number of Venezuelan military officers, including the current minister of defense, have been plausibly accused by the U.S. Treasury of cooperating with the Colombian insurgent group Fuerzas Armadas Revolucionarias de Colombia (FARC) and facilitating drug shipments through Venezuela, especially from Apure State. Venezuelan

recalcitrance in counternarcotics clearly undermines other regional efforts to combat the drug trade. Even low levels of violence would create new opportunities for the FARC and other drug traffickers to retrench and extend their reach. Economic interests : A significant number of U.S. companies have operations in Venezuela; it remains an important market for U.S. goods and some services, especially oil services. Many of these companies could be at risk if violent internal conflict broke out. Venezuela is consistently among the five largest foreign suppliers of oil to the United States.
The United States is Venezuelas largest market, buying up to nine hundred thousand barrels of oil daily, up to 45 percent of Venezuelas total oil exports. Around six hundred thousand barrels of Venezuelan crude per day are refined at CITGO facilities in the United States. Although a cut off of Venezuelan oil to the United States is theoretically possible, it is unlikely given Venezuelas dependence on the U.S. market. The United States is now less vulnerable to a cut off of supply from Venezuela as U.S. domestic production has risen and imports from elsewhere could relatively quickly replace Venezuelan oil. Venezuelas

economy, on the other hand, has become more dependent on petroleum. Although production has stagnated since 2003, oil accounts for over 95 percent of Venezuelas export earnings, and export revenue pays for nearly 50 percent of the governments budget. Thus, although Venezuela is vulnerable to pressure via its dependence on its oil exports generally and the U.S. market and refineries

specifically,

global markets would

likely

react negatively to

either

an interruption of Venezuelan

production or a crisis in U.S.-Venezuelan relations that threatens the bilateral trade in oil.

*Venezuela instability dramatically effects global oil supplies and the global economyhuge oil exporter
Johnson, 03/05/2013 (Keith Johnson, Staff reporter with the Wall Street Journal and lead author of its Environmental Capital blog,
After Chvez, a Question of His Country's Oil, The Wall Street Journal, http://online.wsj.com/article/SB10001424127887324178904578343053650258188.html)

Venezuela is one of the world's biggest oil exporters and one of the top five suppliers to the U.S. As a result, any sign of instability following Mr. Chvez's death could roil oil markets, boost crude prices and dent the global economy.
"Instability Even a Chavista successor to Mr. Chvezsuch as current Vice President Nicols Madurocould have a tough time maintaining the heterogeneous coalition of socialists, businessmen, and the military that has coalesced around Mr. Chvez.

in Venezuela is the real risk, because that could have a dramatic impact on global oil

supplies ," said Mark Jones, a Venezuela expert at Rice University. Venezuela produces about 2.5 million barrels of oil a day and supplies about 1 million barrels a day to the U.S. Oil wealth, especially in the middle of the
last decade, underwrote Mr. Chvez's "Bolivarian revolution" and allowed lavish spending on social programs. But chronic underinvestment in the state oil company, Petrleos de Venezuela, and hostility to foreign firms has steadily eroded the country's oil-production capacity, leaving the future murky. Mr. Chvez's death also could have knock-on effects throughout the region. Venezuela

provides about 100,000 barrels of oil a day to Cuba, essentially freea $3 billion to $4 billion annual subsidy that could disappear if Mr. Chvez is replaced by an opposition candidate. That would be devastating to Cuba, comparable to the economic hardship the island suffered after the implosion of its main sponsor, the Soviet Union, in the early 1990s. Venezuela also provides subsidized oil to Nicaragua and sells oil to other Caribbean nations on preferential terms meaning any political upheaval in Caracas could harm economic growth throughout the region. Whoever succeeds Mr. Chvez likely will seek to maintain oil trade with the U.S. and, if possible, to boost investment in the oil sector .

Venezuela instability spills over to Latin America- they rely on Venezuela


The Economist, 06/08/2013 (The Economist, authoritative insight and opinion on international news, politics, business, finance,
science and technology, Ostrich diplomacy, The Economist, http://www.economist.com/news/americas/21579067-venezuelas-neighboursstudiously-ignore-crisis-unfolding-next-door-ostrich-diplomacy) Most Latin

American and Caribbean governments are either ideologically close to the chavista regime, dependent on its oil-fuelled largesse, or simply disinclined to incur its wrath. The Organisation of American
States (OAS), whose annual assembly began on June 4th in Guatemala, is bound by treaty to monitor its members democratic credentials. But

the OASs Democratic Charter, launched in 2001, has so far been used only to protect presidents (including Chvez) and to bludgeon puny countries such as Honduras and Paraguay. Brazil, which has the muscle to take on a country the size of
Venezuela, seems more concerned with protecting its businesses, which are making billions from trade with its northern neighbour. Ahead of the OAS meeting its secretary-general, Jos Miguel

Insulza, said the atmosphere was not conducive to a discussion of the Venezuelan crisisa diplomatic way of saying no one was prepared to pick up the hot potato. Mr Insulza himself has in the past admitted that Venezuela is in breach of the Democratic Charter. Among other things, it requires an
independent judiciary and guarantees recourse to the inter-American human-rights system. Venezuela has announced that it will abandon the system later this year. The ostrich approach

may not work for ever. For one thing, the Venezuelan oppositions campaign across

the region is putting presidents under pressure from their parliaments and civic groups to support democracy. Second, Venezuelas

political fragility and Mr Maduros weakness threaten instability which the region may be unable to ignore. Shutting the door in Mr Capriles face could prove a short-sighted policy, as well as a shameful one.

Democracy
Unrest in Venezuela threatens to rollback democratic gains across Latin America. Duddy 12 (Patrick D. Duddy, Visiting Senior Lecturer, Duke University, Political Unrest in Venezuela-Contingency Planning
Memorandum No. 16, Sept, http://www.cfr.org/venezuela/political-unrest-venezuela/p28936)
In the coming months, Venezuela

could experience significant political unrest and violence that lead to the further curtailment of democracy in the country. Presidential elections are scheduled to take place on October 7, 2012. President
Hugo Chavez is in the midst of a tough reelection campaign against Henrique Capriles Radonski the young and energetic governor of the state of Mirandawho enjoys multiparty support and appears to have a better chance of defeating the incumbent than earlier challengers. Over

the course of the past year, Chavez and several of his most senior associates have asserted that there will be instability and violence if he is not reelected. At the same time, Chavez is battling cancer, but he has shared little information
with the public about the state of his health beyond the fact that he has twice been treated for the disease since spring 2011. Speculation about Chavez's health problems has generated considerable uncertainty among his supporters, especially since he has not anointed a successor. Should Chavez appear to be losing the election, die suddenly, or withdraw from public life for health reasons, tensions are likely to rise in Venezuela, especially if the public suspects that Chavez has used extra-constitutional means to preclude or invalidate an opposition victory in order to sustain his regime's hold on power.

Protests over such actions, which could turn violent, may in turn lead to the imposition of martial law and the further curtailment of democratic rights in Venezuela. This would almost certainly trigger a major political crisis
in the Western Hemisphere that pits countries seeking to restore democracy and the rule of law in Venezuela including the United Statesagainst those who support Chavez and the principle of noninterference in the internal affairs of other states.

Longstanding U.S. efforts to

promote good governance in Latin America as well as cooperation on a range of political, economic, and security challenges in the region would be threatened as a consequence.
If Chavez is reelected in a process judged acceptably free and fair, Accordingly, the United States should seek free and fair elections in Venezuela. If Chavez or a replacement candidate is defeated, it should offer to help promote an orderly, peaceful transition.

the United States should seek to reset the bilateral relationship with an eye toward the eventual renewal of high-level communication on areas of mutual interest. If the election results appear fraudulent or apparently legitimate results are nullified, the United States should encourage international
pressure to restore democracy and suspend bilateral business as usual until a legitimate government is restored.

Venezuelan political instability spills over to hurt Latin American democracy generally. Duddy 12 (Patrick D. Duddy, Visiting Senior Lecturer, Duke University, Political Unrest in Venezuela-Contingency Planning
Memorandum No. 16, Sept, http://www.cfr.org/venezuela/political-unrest-venezuela/p28936)

Political instability and violence in Venezuela would damage U.S. efforts to promote democracy, increase regional cooperation, combat narcotics, and protect its economic interests in the region. Democracy Promotion: The United States has worked for decades to promote democracy in the Western Hemisphere. In recent years, Chavez has become increasingly authoritarian, undermining important political
institutions, giving more powers to the presidency, and weakening both civil society and the independent media. The United States should view a suspension or further deterioration in the

quality of Venezuela's democracy as a setback for U.S.

policy and for the hemisphere. The emergence of a military junta or a compromised Chavez regime would also likely
increase Iranian and Cuban influence in Venezuela. It already has a close relationship with Iran from which it reportedly receives advanced weapon systems and other assistance. Cuba sends thousands of teachers and technical, medical, and security advisers in exchange for an estimated ninety to one hundred thousand barrels of oil per day. Regional

Cooperation: The United States has an interest in nurturing regional cooperation particularly under the auspices of the Organization of American States (OAS), of which it is a core member. While often disappointing to both the United States and Latin America, the OAS provides the only regional forum in which all of the countries with democratically elected governments participate. A failure by the OAS to play an effective role in
Venezuela if it appears democracy is at risk would further undermine support for the organization both in the region and in the United States. How

the United States manages its relations with Venezuela if violence does break out would likely affect U.S. relations with others in the hemisphere, especially Brazil, which has cordial relations with
Chavez and reacts badly to perceived U.S. efforts to dictate to Latin America. A repetition of the acrimony that characterized the

hemisphere's efforts to resolve the Honduras crisis of 2009 would be corrosive to U.S. relations with the region. Counternarcotics:

Venezuela does not cooperate with the United States on counternarcotics, except at the most minimal level. Drug trafficking has, consequently, surged. A number of Venezuelan military officers, including the
current minister of defense, have been plausibly accused by the U.S. Treasury of cooperating with the Colombian insurgent group Fuerzas Armadas Revolucionarias de Colombia (FARC) and facilitating drug shipments through Venezuela, especially from Apure State. Venezuelan

recalcitrance in counternarcotics clearly undermines other regional efforts to combat the drug trade. Even low levels of violence would create new opportunities for the FARC and other drug traffickers to retrench and extend their reach. Economic Interests: A significant number of U.S. companies have operations in Venezuela; it remains an important market for U.S. goods and some services, especially oil services. Many of these companies could be at risk if violent internal conflict broke out. Venezuela is consistently among the five largest foreign suppliers of oil to the United States. The U nited States is Venezuela's largest market, buying up to nine hundred thousand barrels of oil daily, up to 45 percent of Venezuela's total oil exports. Around six hundred thousand barrels of Venezuelan crude per day are refined at CITGO facilities in the United States. Although a cut off of Venezuelan oil to the United States is theoretically possible, it is unlikely given Venezuela's dependence on the U.S. market.

LA Democracy Impacts
Latin American democracy solves the environment Callejas 10 (Danny, Professor of Economics at the Universidad de Antioquia, Colombia, Democracy
and Environmental Quality in Latin America: A Panel System of Equations Approach, 1995-2008, November) Democracy has a positive effect on environmental quality. The theory suggests that democracy sustains and encourages freedom of speech, freedom of press, political participation and social awareness. These elements provide a conduit for social demands. As urban population and income grow, citizens increase their demand for higher environmental standards and quality. The enactment of new policies and regulations that incentive individuals and firms may lead to a reduction in pollution, environmental degradation and deforestation; therefore, leading to a higher level of environmental quality. This study analyzed 19 Latin America countries for the period 1995-2008. A panel data system of equations estimates suggest that a 10% increase in democracy may reduce CO2 emissions per capita in 0.48% or 0.60% in Latin America. Similarly, a 10% increase in education may reduce emissions in 0.71% or 0.73%. These results suggest that democracy and education have a positive effect on environmental quality.

Extinction Takacs 96 (David, Philosophies of Paradise, The Johns Hopkins Univ. Pr., Baltimore)
"Habitat

destruction and conversion are eliminating species at such a frightening pace that extinction of many contemporary lead to ecological disaster and severe alteration of the evolutionary process," Terry Erwin writes." And E. 0. Wilson notes: "The question I am asked most frequently about the diversity of life:
species and the systems they live in and support ... may if enough species are extinguished, will the ecosystem collapse, and will the extinction of most other species follow soon afterward? The only answer anyone can give is: possibly. By the time we find out, however, it might be too late. One planet, one experiment."" So biodiversity

keeps the world running. It has value in and for itself, as well as for us. Raven, Erwin, and Wilson oblige us to think about the value of biodiversity for our own lives. The Ehrlichs' rivet-popper trope makes this same point; by eliminating rivets, we play Russian roulette with global ecology and human futures: "It is likely that destruction of the rich complex of species in the Amazon basin could trigger rapid changes in global climate patterns. Agriculture remains heavily dependent on stable climate, and human beings remain heavily dependent on food. By the end of the century the extinction of perhaps a million species in the Amazon basin could have entrained famines in which a billion human beings perished . And if our species is very unlucky, the famines could lead to a thermonuclear war , which could extinguish civilization.""

Democratic backsliding in Latin America causes regional proliferation and nuclear conflict Schulz 2k (Donald Schulz, Chairman of the Political Science Department at Cleveland State University,
March 2000, The United States and Latin America: Shaping an Elusive Future, http://www.strategicstudiesinstitute.army.mil/pdffiles/pub31.pdf) A second major interest is the promotion of democracy. At first glance, this might appear to be a peripheral concern. For
much of its history, the United States was perfectly comfortable with authoritarian regimes in Latin America, so long as they did not threaten higher priority interests like regional security or U.S. economic holdings. But that is no longer the case. U.S. values have changed; democracy has been elevated to the status of an "important" interest. In part, this has been because American

leaders have gained a greater appreciation of the role of legitimacy as a source of political stability. Governments that are popularly elected and respect human rights and the rule of law are less dangerous to both their citizens and their neighbors. Nations which are substantively democratic tend not to go to war with one another. They are also less vulnerable to the threat of internal war provoked, in part, by

government violence and illegality.(5) In short, democracy and economic integration are not simply value preferences, but are increasingly bound up with hemispheric security. To take just one example: The restoration of democracy in Brazil and Argentina and their increasingly strong and profitable relationship in Mercosur have contributed in no small degree to their decisions to foresake the development of nuclear weapons. Perceptions of threat have declined, and perceptions of the benefits of cooperation have grown, and this has permitted progress on a range of security issues from
border disputes, to peacekeeping, environmental protection, counternarcotics, and the combat of organized crime. CONTINUES Until recently, the primary U.S. concern about Brazil has been that it might acquire nuclear weapons and delivery systems. In the 1970s, the Brazilian military embarked on a secret program to develop an atom bomb. By the late 1980s, both Brazil and Argentina were aggressively pursuing nuclear development programs that had clear military spin-offs.54 There were powerful military and civilian advocates of developing nuclear weapons and ballistic missiles within both countries. Today, however, the situation has changed. As

a result of political leadership transitions in both countries, Brazil and Argentina now appear firmly committed to restricting their nuclear programs to peaceful purposes. They have entered into various nuclear-related agreements with each othermost
notably the quadripartite comprehensive safeguards agreement (1991), which permits the inspection of all their nuclear installations by the International Atomic Energy Agencyand have joined the Missile Technology Control Regime. Even

so, no one can be certain about the future. As Scott Tollefson has observed: . . the military application of Brazils nuclear and space programs depends less on technological considerations than on political will. While technological constraints
present a formidable barrier to achieving nuclear bombs and ballistic missiles, that barrier is not insurmountable. The critical element, therefore, in determining the applications of Brazils nuclear and space technologies will be primarily political.55 Put simply, if changes

in political leadership were instrumental in redirecting Brazils nuclear program towards peaceful purposes, future political upheavals could still produce a reversion to previous orientations. Civilian supremacy is not so strong that it could not be swept away by a coup, especially if the legitimacy of the current democratic experiment were to be undermined by economic crisis and growing poverty/inequality. Nor are
civilian leaders necessarily less militaristic or more committed to democracy than the military. The example of Perus Fujimori comes immediately to mind. How serious a threat might Brazil potentially be? It has been estimated that if the nuclear plant at Angra dos Reis (Angra I) were only producing at 30 percent capacity, it could produce five 20-kiloton weapons a year. If production from other plants were included,

Brazil would have a capability three times greater than India or Pakistan. Furthermore, its defense industry
already has a substantial missile producing capability. On the other hand, the country has a very limited capacity to project its military power via air and sealift or to sustain its forces over long distances. And though a 1983 law authorizes significant military manpower increases (which could place Brazil at a numerical level slightly higher than France, Iran and Pakistan), such growth will be restricted by a lack of economic resources. Indeed, the development of all these military potentials has been, and will continue to be, severely constrained by a lack of money. (Which is one reason Brazil decided to engage in arms control with Argentina in the first p1ace.) In short, a restoration of Brazilian militarism, imbued with nationalistic ambitions for great power status, is not unthinkable, and such a regime could present some fairly serious problems.

That government would probably need foreign as well as domestic enemies to help justify its existence. One obvious candidate would be the United States, which would presumably be critical of any return to dictatorial rule. Beyond this,
moreover, the spectre of a predatory international community, covetous of the riches of the Amazon, could help rally political support to the regime. For years, some Brazilian military officers have been warning of foreign intervention. Indeed, as far back as 1991 General Antenor de Santa Cruz Abreu, then chief of the Military Command of the Amazon, threatened

to transform the region into a new Vietnam if developed countries tried to internationalize the Amazon. Subsequently, in 1993, U.S.-Guyanese
combined military exercises near the Brazilian border provoked an angry response from many high-ranking Brazilian officers.57 Since then, of course, U.S.-Brazilian relations have improved considerably. Nevertheless, the basic U.S./ international concerns over the Amaazonthe threat to the regions ecology through burning and deforestation, the presence of narcotrafficking activities, the Indian question, etc.have not disappeared, and some may very well intensify in the years ahead. At the same time, if the growing trend towards subregional economic groupingsin particular, MERCOSURcontinues, it is likely to increase competition between Southern Cone and NAFTA countries.

Economic conflicts, in turn, may be expected to intensify political differences, and could lead to heightened politicomilitary rivalry between different blocs or coalitions in the hemisphere.

Key to stop global prolif Beamont and Rubinsky 12 (Paul D. Beamont and Thomas Rubinsky, International Law and Policy
Institute, An Introduction to the Issue of Nuclear Weapons in Latin America and the Caribbean, December, http://nwp.ilpi.org/?p=1851) As the world continues to grapple with the issues of non-proliferation and disarmament, the experience of Latin America and the Caribbean in creating the Tlatelolco regime remains important.
One should be careful not to generalise to much from the experience of one disarmament regime in a region almost unique in its absence of

serious armed conflict[128] Nonetheless, the Tlatelolco experience does provide some lessons that that advocates of nuclear disarmament would be wise to heed. The Latin American NWFZ demonstrates quite clearly the wisdom in creating a treaty with the long game in mind. The flexible entry-into force-requirements allowed the Treaty to gain vital impetus at its inception while it also kept the more reluctant countries tied to the treatys principles. Together with its flexible amendment procedure, this allowed it to pick up momentum when favourable changes in geopolitics and domestic conditions permitted it. Using this formula the

Treaty of Tlatelolco created the first nuclearweapon-free zone in the inhabited world, and has successfully expanded to include every state in the region. With the successful product of ingenuity, dedication and above all patience, Latin Americas NWFZ has consolidated the regions reputation for peaceful co-operation. The Treatys permanent secretariat, OPANAL, is active in both building regional consensus and in enhancing the regions presence in international organizations. While it remains to be seen how future disarmament efforts will unfold, Latin American states are well positioned to play a significant role in the continuing efforts aimed at reaching the goal of a world free of nuclear weapons.

New prolif ensures widespread nuclear conflict --- asymmetries Lyon 9 Program Director, Strategy and International, with Australian Strategic Policy Institute,
previously a Senior Lecturer in International Relations at the University of Queensland, A delicate issue, Asias nuclear future, December, online Deterrence relationships in Asia wont look like EastWest deterrence. They wont be relationships of mutual assured destruction (MAD), and there will be many asymmetries among them. Regional nuclearweapon states will articulate a spectrum of strategies ranging from existential deterrence to minimum deterrence to assured retaliation; and sometimes doctrinal statements will outrun capabilities. The smaller arsenals of Asia and the
absence of severe confrontations will help to keep doctrines at the level of generalised deterrence. Extended nuclear deterrence will continue to be important to US allies in East Asia, although it is hard to imagine other Asian nuclear weapon states extending deterrence to their clients or allies. Alagappas propositions contain a picture of what a more proliferated Asia might look li ke. It could well remain a region where deterrence dominates, and where arsenals are typically constrained: an Asia, in fact, that falls some way short of a nuclear chaos mod el of unrestrained proliferation and mushrooming nuclear dangers. An order in flux? Notwithstanding Alagappas more reassuring view, we

shouldnt understate the extent of the looming change from a nuclear relationship based on bipolar symmetry to a set of relationships based on multiplayer asymmetries. As one observer has noted, when you add to that change the relatively
constrained size of nuclear arsenals in Asia, the likelihood of further nuclear reductions by the US and Russia, and ballistic missile defences of uncertain effectiveness, the world is about to enter uncharted territory (Ford 2009:125). Some

factors certainly act as stabilising influences on the current nuclear order, not least that nuclear weapons (here as elsewhere) typically induce caution, that the
regional great powers tend to get along reasonably well with each other and that the region enters its era of nuclear pre-eminence inheriting a strong set of robust norms and regimes from the earlier nuclear era. But

other factors imply a period of looming change: geopolitical dynamism is rearranging strategic relationships; the number of risktolerant adversaries seems to be increasing ; most nuclear weapons states are modernising their arsenals; the American
arsenal is ageing; and the USs position of primacy is increasingly contested in Asia. Indeed, it may be that dynamism which could most seriously undermine the Solingen model of East Asian nonproliferation. Solingen, after all, has not attempted to produce a general theory about proliferation; she has attempted to explain only proliferation in the post-NPT age (see Solingen 2007:3), when the P-5 of the UN Security Council already had nuclear weapons. In essence, though, its exactly that broader geopolitical order that might be shifting. It isn t yet clear how the Asian nuclear order will evolve. Its one of those uncertainties that define Australias shifting strategic environment. Its not too hard to imagine an order thats more competitive than the one we see now. The managed system of deterrence The second approach to thinking about the Asian nuclear order is to attempt to superimpose upon it William Walkers two key mechanisms of the first nuclear age: the managed system of deterrence and the managed system of abstinence. What might those systems look like in Asia? In Walkers model, the managed system of deterrence included: the deployment of military hardware under increasingly sophisticated command and control; the development of strategic doctrines to ensure mutual vulnerability and restraint; and the establishment of arms control processes through which policy elites engaged in dialogue and negotiated binding agreements. (Walker 2007:436) It

isnt obvious that those core aspects of the managed system are all central features of Asian nuclear relationships. Perhaps most importantly, it isnt obvious that the
world even has a good model for how deterrence works in asymmetric relationships. Within the US, theres been something of a revival of interest in matters nuclear as strategic analysts attempt to reconceptualise how nuclear relationships might work in the future. Recent work on the problems of exercising deterrence across asymmetrical strategic contests, for example, suggests a number of problems: In

conflict situations, foment it

asymmetric deterrence may not only be unable to prevent violence but may also help arise precisely because weaker players seem

(Adler 2009:103). Some of the problems

increasingly likely to test stronger players threatsas part of a pattern of conflict that has emerged over recent centuries, in which weaker players have often prevailed against stronger opponents.3 If we were to look at the case study of the IndiaPakistan nuclear relationshipwhich is grounded in an enduring strategic
rivalry, and therefore not typical of the broader nuclear relationships in Asiaits a moot point whether Pakistani behaviour has been much altered by the deterrence policies of India. Indeed, the case seems to show that Pakistan doesnt even accept a long -term condition of strategic asymmetry with India, and that it intends to use its nuclear weapons as an equaliser against Indias larger conventional forces by building a

nuclear arsenal larger than the Indian arsenal arrayed against it. That would imply, more broadly, that increasing

strategic rivalries across Asia could be accompanied by efforts to minimise asymmetrical disadvantages between a much wider range of players. In short, in a more competitive Asian strategic environment, nuclear asymmetries that are tolerable now might well become less tolerable. Furthermore, we need to think about how we might codify deterrence in Asia. In the Cold War days, the MAD doctrine tended to be reflected in arms control accords that limited wasteful spending and corralled the competition. As Walker acknowledges, the agreements were important stabilisers of the broader nuclear relationship, but to what extent
can they be replicated in conditions of asymmetry? It might be possible to codify crisis management procedures, but designing (and verifying)

limitations on weapons numbers would seem to be much more difficult when the arsenals are of uneven size, and when the weaker party (perhaps both parties) would probably be relying on secrecy about the numbers and locations of weapons to minimise the vulnerability of their arsenals.

Nuclear war Cimbala 10 - Prof. of Political Science @ Penn State, (Stephen, Nuclear Weapons and Cooperative Security in the 21st Century, p. 117-8)
A five-sided nuclear competition in the Pacific would be linked, in geopolitical deterrence and proliferation space, to the existing nuclear deterrents in India and Pakistan, and to the emerging nuclear weapons status of Iran. An arc of nuclear instability from Tehran to Tokyo could place U.S. proliferation strategies into the ash heap of history and call for more drastic military options, not excluding preemptive war, defenses, and counter-deterrent special operations. In addition, an eight-sided nuclear arms race in Asia would increase the likelihood of accidental or inadvertent nuclear war . It would do so because: (1) some of these states already have histories of protracted conflict; (2) states may have politically unreliable or immature command and control systems, especially during a crisis involving a decision for nuclear first strike or retaliation; unreliable or immature systems might permit a technical malfunction that caused an unintended launch, or a deliberate but unauthorized launch by rogue commanders; (3) faulty intelligence and warning systems might cause one side to misinterpret the others defensive moves to forestall attack as offensive preparations for attack, thus triggering a mistaken preemption.

LA Cooperation IL
US ENGAGEMENT specifically best in Venezuela- spills over to other Latin American countries
Griffin, 04/03/2013 (John Griffin, Crimson editorial writer, Engage with Venezuela, The Harvard Crimson,
http://www.thecrimson.com/article/2013/4/3/Harvard-Venezuela-Chavez-death/) Unfortunately for the United States, its general strategy regarding Venezuela has often strengthened Chvezs position. Every

time Washington chastises Venezuela for opposing American interests or attempts to bring sanctions against the Latin American country, the leader in Caracas (whether it be Chvez 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 Venezuelas. If Washington wants Latin America to stop its current trend of electing leftist, Chavista governments, its first step should be to adopt a less astringent tone in dealing with Venezuela. Caracas will be unable to paint Washington as an aggressor, and Washington will in turn gain a better image in Latin America. Beyond leading to more amicable, cooperative relationships with Latin American nations, engagement with Venezuela would also be economically advisable. With the worlds largest oil reserves, countless other valuable resources, 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 such cooperation: 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 the entirety of Latin America . It was mostly through Venezuelas efforts that the United States was unable to create a Free Trade Area of the
Americas, an endeavor that would have eliminated most trade barriers among participant nations, thereby leading to more lucrative 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 best course 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 and making economic cooperation nearly impossible. While there is much for which the Venezuelan government can rightly be criticizedauthoritarian rule, abuse of human rights, lack of market-friendly policiesnothing that the United States is doing to counter those drawbacks is having any effect. The United States should stop playing tough guy with Venezuela, bite the bullet, and work toward stability and prosperity for the entire hemisphere. We arent catching any flies with our vinegarits high time we started
trying to catch them with honey.

Iran Adv

UQ-Venez-Iran Alliance
Military cooperation between the nations is increasing- presents a huge risk to US security
Beckhusen 12, Robert, NatSec writer at Medium, http://www.wired.com/dangerroom/2012/03/iran-venezuela-drones/
The ScanEagle is a small, unarmed, catapult-launched U.S. spy drone used by special operations forces. If Irans design for the drones speed and range are comparable, its highly, highly unlikely the flimsy robot could reach Miami from Venezuela to snap some pictures or take some video. Even allowing for the theoretical possibility that an aircraft built to loiter could max out its engine, top speeds and fuel supply for the 1,200-mile trip, it couldnt go north of Florida, and it definitely couldnt make it home. In other words, dont expect the skies above Sheboygan to fill up with Iranian killing machines under the order of Hugo Chavez. Assuming Venezuela could get them off the ground: Fraser said a fire recently broke out at the drones manufacturing plant, delaying its production. But think of it this way: an

actual Iranian-Venezuelan drone factory exists, representing an upgrade in industrial cooperation from earlier joint projects like dairy plants and a tractor factory. More seriously, U.S. officials also dont know if technology acquired from a CIA-operated drone
that crashed in Iran last year has made it into the design. Routine drone design characteristics, like engines, are easy to duplicate, but the advanced sensors and other secret gear on the RQ-170 Beast of Kandahar are a different matter. The Iranians may not know how to even use the software or get past potential (classified) anti-tamper measures. Its also not likely to change the balance of Latin American drone power. Brazil has spent more than $350 million on advanced Israeli-made drones for surveillance operations above the Amazon rainforest and along Brazils long, porous borders. Israel has also prohibited Brazil, which depends on its relationship with Israeli firms for their drone designs, from selling the drones to Chavez. Whatever their specifications, the

new drones are tailor made to sew panic in Congress and the blogosphere about the Venezuela-Iran Legion of Doom. In February, a hearing by the House Foreign Affairs Committee raised concerns about the threat to U.S. national security posed by Iranian and Iraniansponsored activities in our own Western Hemisphere, said committee chair Rep. Ileana Ros-Lehtinen, a Florida
Republican. The committee pointed to media reports suggesting increased activity in Latin America by Hezbollah and the Iranian Qods Force.

The Obama administration is rolling its eyes. People talk about Hezbollah. They talk about Iranian support for weapons and
the rest. I guarantee you, Iran will not be able to pose a hemispheric threat to the United States, Vice President Joe Biden, who is spending the week in Mexico and Honduras, said on Wednesday. Last May, the administration also denied (now discredited) reports Iran was building a longrange missile base in Venezuela.

But it is a sign that the Venezuelan military is increasing its ties to Iran. Before, the extent of Iranian-Venezuelan cooperation was primarily limited to rhetorical attacks on the U.S. and poorly-managed joint economic projects. They are working to build diplomatic relations [and] international support to counter the sanctions, Fraser said. Joint military projects are an important feature of such relationships . But surveillance drones are still a military project. Its a bit riskier than just another tractor factory.

Iran-Venezuela will strengthen regardless of leadership changes


PressTV 6/10, 2013, http://www.presstv.com/detail/2013/06/10/308225/iran-venezuela-relations-tolast-forever/ Iranian President Mahmoud Ahmadinejad has hailed Iran-Venezuela ties, saying the two nations will stand by each other as they have common enemies, ideals and goals . In a Monday meeting with the new Venezuelan Ambassador to Tehran Amenhotep Zambrano, President Ahmadinejad said that relations between the two countries are at a very high level and are growing stronger by the day. Iran and Venezuela are on the same front and have common enemies, ideals and goals and will stand firmly by each other, the Iranian president added. He said nothing
can prevent the deepening of friendship and brotherhood between the two countries as they are beyond bilateral diplomatic ties and will last forever. President Ahmadinejad said Latin

American nations have awakened and are treading the path of independence, dignity and resistance, which will lead to victory. He also praised the late Venezuelan President Hugo
Chavez as a great figure and the symbol of resistance. In the meeting, the Venezuelan ambassador submitted his credentials to the Iranian president and praised bilateral ties between the two countries, saying imperialism is rattled by Iran-Venezuela unity.

Terrorism ILs
Iran- Venezuelan relations give Iran a launching point for terrorism against the US Stanek 09 (Steven Stanek, journalist for TheNational, US 'threatened' by Iran's relationship with Latin America, October 29,
2009, http://www.thenational.ae/news/world/middle-east/us-threatened-by-irans-relationship-with-latinamerica#ixzz2Xqw083CX /mrg) WASHINGTON // Iran

has moved to substantially increase its diplomatic, trade and military ties to countries in South America, posing a new challenge to US authority in the Western Hemisphere, a group of experts told a joint congressional subcommittee on Tuesday. The westward expansion has helped Iran blunt the effect of US and UN sanctions, several witnesses told members of the House foreign affairs committee. Some said the developments pose a direct security threat to the United States. Topic "By developing close regional ties, Iran has the ability to leapfrog its international isolation, while making common cause with others who have
self-identified as opposing the United States and other western nations," said Eric Farnsworth, vice president of the Council of the Americas, who testified at the hearings. "At the very least, these

are issues that should be watched with a careful, wary eye." The Islamic republic has 11 embassies in Latin America; six - in Nicaragua, Colombia, Bolivia, Chile, Ecuador and
Uruguay - have opened since Mahmoud Ahmadinejad was first elected president in 2005. Next month, Mr Ahmadinejad is scheduled to meet the outgoing Brazilian president, Luiz Inacio Lula da Silva. A previously scheduled meeting between the two leaders was cancelled last year amid protest from the Brazilian Jewish community. Some analysts here worry that the meeting, scheduled for the end of November, will confer a new degree of legitimacy on the Iranian regime at a crucial point in the West's efforts to isolate Iran over its secretive nuclear programme. An

even greater threat to the United States, the experts said, is Iran's close partnership with Venezuela and the emerging bond between Mr Ahmadinejad and Hugo Chavez, the Venezuelan president. The two leaders, united in their hostility towards the United States, have cooperated on an array of diplomatic and financial initiatives, from the establishment of binational banks to the trade of raw materials, which may include uranium, the experts said. In a speech at the Brookings Institution last
month, Robert Morgenthau, the New York district attorney, who said his office had gathered information on various forms of illegal activity involving Iran, described the

relationship between Iran and Venezuela as a "cozy financial, political

and military partnership". "Now is the time for policies and actions in order to ensure that the partnership produces no
poisonous fruit," he said. Iran's ties with other regional players that have been critical of the United States, including Nicaragua, Bolivia and Ecuador, have also raised concerns here, according to Douglas Farah, an expert on financial investigations and transparency at the Virginia-based International Assessment and Strategy Center. In his testimony he described Iran's dealings with those countries as "generally opaque" and built on the "personal dynamic" between Mr Ahmadinejad and Latin American leaders. "These personalised relationships have largely supplanted institutionalised, formal policies guided by input from the respective congresses or ministries of foreign affairs and economic issues," he said. Experts have different estimations of the threat Iran's presence in the West poses to the United States. Norman Bailey,

an expert on economic statecraft at the Institute of World Politics in Washington, said he believes Iran's westward expansion is "designed to facilitate the funding of terrorist organisations " and jeapordises US security. In prepared testimony, he cited "extensive"
Iranian involvement in drug trafficking, including transshipment of cocaine through West Africa to Europe in bags marked "cement".

Iran-Venezuela axis results in nuclear terrorism attempts within the US. Mallett-Outtrim 13 (Ryan Mallett-Outtrim, senior analyst and reporter for the VenezuelanAnalysis, Venezuela-Iran
Relations: No Longer Imperilled by Imperialism? June 30, 2013, http://venezuelanalysis.com/analysis/9789 /mrg) It was just in March that Roger Noriega delivered his red blooded testimony before the House Committee on Foreign Affairs that alleged that Latin

American drug traffickers, Hezbollah, Venezuela and Iran have all united in some kind of convoluted plot that involves waging asymmetrical warfare against U.S. security, interests and allies close to the homeland. Along with stating that Hezbollah operatives and their radical anti-Semitic allies hold
important senior positions in the Venezuelan government, Noriega also argued that Margarita Island is basically one big Hezb ollah training camp (could put a slight dent in the government's ambitions to develop the tourism sector) and that senior chavista

officials engage routinely in lucrative schemes involving Hezbollah front companies, Colombian terrorist groups, narcotraffickers, Venezuelan financial institutions and even powerful state-run entities. In short a unified front of Arabs, Iranians, terrorism, drugs and state run enterprises united against Washington. Noriega is far from a lone voice warning against this rainbow of conservative fears. Vice president of the American Foreign Policy Council Ilan Berman has also warned that a myriad of recent events ranging from toilet paper shortages in Venezuela
to the Colombian peace process are all possibly playing into the hands of a shadowy network enabling Iran to carry out attacks in the region. Last year, an opinion piece in the Miami Herald penetrated to the core of this

existential threat to the U.S.: the most remarkable and dangerous foreign policy initiative of the *former+ Chvez regime, its positive relationship with Iran. The article continues by arguing that the threat of Iran and Venezuela cooperating to smuggle a nuclear weapon into the U.S...should not be dismissed lightly. The
relationship between Caracas and Iran was a key consideration when lawmakers passed the Countering Iran in the Western Hemisphere Act of 2012 (CIWHA), which aims to address Iran's growing hostile presence and activity in the region. Since CIWHA was passed, Venezuela's state arms manufacturer has been targeted by U.S. sanctions under the Iran, North Korea, and Syria Nonproliferation Act (INKSNA).

War with Iran is likely absent a US demand for Venezuela to sever their ties with rogue states
Nancy Menges and Luis Fleischman, 4/17, 2013, Dr. Luis Fleischman is a Senior adviser to the Menges Hemispheric Security

Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University, http://www.centerforsecuritypolicy.org/2013/04/17/challenges-continue-aftermaduros-election-in-venezuela/ Without suggesting that the United States should reject Maduros overtures, it is important not to fall under any illusion. The structure set by the 14 year Chavez rule created a structure that will need to be dismantled.The Venezuelan government placed the countrys airports, ports, planes, and ships at the disposal of drug cartels. Venezuela

became a major transit route for cocaine out of Colombia and has increased manifold the amount of cocaine flow. Venezuela also developed relations with the FARC harboring and cutting an ideological and militant partnership. It provided FARC with military support, supplies of Russianand Chinese-made automatic weapons, sniper rifles, grenade launchers, and man-portable air defense systems. Chavez also nurtured relations with Iran and its proxy, Hezbollah. Its relationship with Iran cannot be reduced to a commercial dimension as some analysts have done . Iran has developed a complex relation with Venezuela as well as with
some of its allies in the region that includes helping Iran avoiding financial sanctions and providing political support for its nuclear program. Venezuelan diplomats have been involved in helping Hezbollah fund-raising efforts and facilitated the travel of its operatives to and from Venezuela. Today the

power of Iran is encroaching on the backyard of the United States, making our own border more vulnerable. Further, Irans cooperation with the Mexican drug gang called Zetas in the October 2011 plot to assassinate the Saudi Ambassador in Washington, DC, only confirms our potential vulnerability and terrorist activity in the region.And if Iran develops nuclear weapons, will Venezuela or other Iranian allies in the region allow them to be posted on their soil? In that case, the United States and the entire region could face a serious threat comparable to the Cuban missile crisis in 1962 .Maduro has also reportedly maintained close relations with Cuba, Iran and
with the FARC.The United States should not take the message to Governor Richardson at face value.

It must demand the reversal

of these ominous relationships before prematurely celebrating the beginning of a new era as well as continuing to support a recount of this last election .

Hezbollah IL
Sullivan & Beittel 13 (Mark P. Sullivan Specialist in Latin American Affairs, and June S. Beittel Analyst in Latin American
Affairs, Latin America: Terrorism Issues-Terrorism in Latin America: U.S. Concerns April 5, 2013, http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=2063&context=key_workplace /mrg) Over the years, the

United States has been concerned about threats to Latin American and Caribbean nations from various terrorist or insurgent groups that have attempted to influence or overthrow elected governments. Although Latin America has not been the focal point in the war on terrorism, countries in the region have
struggled with domestic terrorism for decades and international terrorist groups have at times used the region as a battleground to advance their causes. The State Departments annual Country Reports on Terrorism highlights U.S.

concerns about terrorist threats around the world, including in Latin America. The 2011 report (issued in July 2012) maintained that terrorist attacks
in the Western Hemisphere rose by 40% from 2010 to 2011, with 343 attacks in 2010 and 480 attacks in 2011.1 The majority of terrorist attacks in the region were reported to be perpetrated by terrorist organizations in Colombia (the Revolutionary Armed Forces of Colombia and the National Liberation Army) and by other radical leftist Andean groups, such as the Shining Path in Peru. Overall, the report maintained that the threat of a transnational terrorist attack remained low for most countries in the hemisphere.

U.S. policymakers have expressed concerns over the past several years about I rans deepening relations with several Latin American countries, especially Venezuela, and its activities in the region. These concerns were reflected once again in the 2011 terrorism report, which cited a foiled plot in 2011 to assassinate the Saudi Ambassador to the United States in Washington, D.C. by an Iranian operative who thought he was working with a member of a Mexican drug trafficking organization (but was actually a U.S. Drug Enforcement Administration informant). The terrorism report also cited U.S. sanctions against several Venezuelan companies for violating U.S. sanctions against Iran. One of the main concerns about Irans increasing
relations with the region is its ties to Hezbollah, the radical Lebanon-based Islamic group that the Department of State designated a Foreign Terrorist Organization in 1997. While the State Department asserted in its 2011 terrorism report that there were no known operational cells of either Hezbollah or Al Qaeda or in the hemisphere, it noted that ideological sympathizers in South America and the Caribbean continued to provide financial and moral support to these and other terrorist groups in the Middle East and South Asia. The

report also stated that there were credible reports that Hezbollah sympathizers and supporters engaged in fundraising and support activity in Venezuela. There has been significant U.S. concern in recent years
about the increasing and brutal violence of Mexicos drug trafficking organizations, with as many as 65,000 drug trafficking -related deaths in Mexico from 2007 through 2012. In response to some concerns that these criminal organizations may be adopting terrorist tactics, the State Department asserted in its 2010 and 2011 terrorism reports that there is no evidence of ties between the Mexican Drug Trafficking Organizations (DTOs) and terrorist groups. The State Department maintains that there is no evidence that these criminal organizations have aims of political or territorial control, aside from seeking to protect and expand the impunity with which they conduct their criminal activity.

The drug trade funds Hezbollah and Iranthese funds lead to Middle East instability, nuclear terrorism, and Iranian prolif McCaul 12 (Michael, Rep. A LINE IN THE SAND: COUNTERING CRIME, VIOLENCE AND TERROR AT THE
SOUTHWEST BORDER: MAJORITY REPORT BY THE UNITED STATES HOUSE COMMITTEE ON HOMELAND SECURITY SUBCOMMITTEE ON OVERSIGHT, INVESTIGATIONS, AND MANAGEMENT, http://homeland.house.gov/sites/homeland.house.gov/files/11-15-12-Line-in-the-Sand.pdf) Hezbollah remains especially active in the TBA. 25 With an estimated $12 billion a year in illegal commerce, the TBA is the center of the largest underground economy in the Western Hemisphere.26 Financial crimes are a specialty of the area and include
intellectual property fraud, counterfeiting, money laundering and smuggling. Moreover, lax customs enforcement in the area allows these crimes to continue largely unabated from one country to the other.27 The

TBA has been described as one of the most lucrative sources of revenue for Hezbollah outside of state sponsorship.28 The evidence to suggest Hezbollah is actively involved in the trafficking of South American cocaine to fund its operations is mounting as well. In 2008, U.S. and Colombian authorities dismantled a cocainesmuggling and money-laundering organization that
allegedly helped fund Hezbollah operations. Dubbed Operation Titan, the enforcement effort uncovered a money laundering operation that is suspected of laundering hundreds of millions of dollars of cocaine proceeds a year and paying 12 percent of those profits to Hezbollah.29 Operation Titan has led to more than 130 arrests and the seizure of $23 million.30 One of those arrests wa s of Chekri Mahmoud Harb (also known as Taliban or Tali) who is a Lebanese national suspected of being a kingpin of the operation. In 2010, Harb pled guilty to conspiracy to manufacture and distribute five kilograms or more of cocaine knowing the drugs would ultimately be smuggled into the United States.31 In another example, the Treasury Departments Office of Foreign Assets Control (OFAC) has listed

Ayman Junior Joumaa, a Lebanese national and Hezbollah supporter, as a Specially Designated Narcotic s Trafficker based upon his involvement in the transportation, distribution and sale of multi-ton shipments of cocaine from South America along with the laundering of hundreds of millions of dollars of cocaine proceeds from Europe and the Middle East.32 Federal prosecutors in Virginia also charged Joumaa for conspiracy to distribute cocaine and money laundering charges. The indictment alleges Joumaa shipped thousands of kilograms of Colombian cocaine to the United States via Guatemala, Honduras and Mexico. Specifically mentioned in the indictment was 85,000 kilograms of cocaine that was sold to the Los Zetas drug cartel from 2005 to 2007.33 The indictment further substantiates the established relationship between Hezbollah, a proxy for Iran, and Mexican drug cartels, which control secured smuggling routes into the United States. This nexus potentially provides Iranian operatives with undetected access into the United States. Joumaa allegedly laundered in excess of $250 million of cocaine proceeds from sales in the United States, Mexico, Central America, West Africa and Europe. Joumaa would typically receive these proceeds in Mexico as bulk cash deliveries. Once the proceeds were laundered, they would be paid out in Venezuelan or Colombian currency to the cocaine suppliers in Colombia. Joumaas fee for laundering the currency would vary from eight to 14 percent.34 A recent civil complaint filed by the U.S. De partment of Justice states that Joumaa relied heavily upon the Lebanese Canadian Bank (LCB) and the Lebanese exchange houses Hassan Ayash Exchange Company (Hassan) and Ellissa Holding (Ellissa) to conduct the money laundering operation described above.35 The complaint also alleges these businesses partnered with Hezbollah in various other money laundering schemes. One such scheme involved LCB allowing Hezbollah-related entities to conduct transactions as large as $260,000 per day without disclosing any information about the transaction.36 According to the 2011 State Department Country Reports on Terrorism, the

Barakat Network in the TBA is another example of drug money being funneled to Hezbollah. Although the total amount of money being sent to Hezbollah is difficult to determine, the Barakat Network provided, and perhaps still provides, a sizeable amount of the money sent annually from the TBA to finance Hezbollah and its operations around the world. Another scheme that took place from 2007 to early 2011
involved LCB, Hassan and Ellissa transferring at least $329 million of illicit proceeds to the United States for the purchase of used cars through 30 car dealerships that typically had no assets other than the bank accounts which received the overseas wire transfers. Once in receipt of the wired funds, these dealerships would purchase used vehicles and ship them to West Africa to be sold. The cash proceeds would then make their way to Lebanon under the security of Hezbollah and its illegitimate money transfer systems.37 Hezbollah

has also involved itself in the trafficking of weapons, which fuels the violence so intrinsic to drug trafficking and terrorism in Latin America. On July 6, 2009, Jamal Yousef, also known as
Talal Hassan Ghantou, was indicted in New York City on federal narco-terrorism conspiracy charges. According to the unsealed indictment, Yousef is a former member of the Syrian military and an international arms trafficker who was attempting to make a weapons-forcocaine deal with the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia or FARC).38 What Yousef did not know was that he was actually negotiating with an undercover operative of the Drug Enforcement Administration who was posing as a representative of the FARC. Yousef had agreed to provide the FARC militarygrade weapons that included 100 AR-15 and 100 M-16 assault rifles, 10 M-60 machine guns, C-4 explosives, 2,500 hand grenades and rocket-propelled grenades. In exchange for the weapons, the FARC was to deliver 938 kilograms of cocaine to Yousef.39 While negotiations progressed, Yousef stated that the weapons had been stolen from Iraq and were being stored in Mexico by Yousefs cousin who is an active member of Hezbollah. To establish t heir bona fides for the trade, Yousefs cousin videotaped the weapons cache on location in Mexico. Towards the completion of the transaction, it was learned that the weapons cache was actually larger than had been first reported. The deal was amended to include the additional weapons in exchange for 7,000 to 8,000 more kilograms of cocaine that would be delivered to the coast of Honduras.40 The transaction was never completed because Yousef was arrested and imprisoned in Honduras on separate charges beforehand. In August 2009, Yousef was extradited to New York where he awaits trial. The

explanation for Iranian presence in Latin America begins with its symbiotic relationship with Hezbollah.41 United in their dedication to the destruction of Israel, Iran has helped Hezbollah grow from a small group of untrained guerrillas into what is arguably the most highly trained, organized and equipped terrorist organization in the world.42 In return, Hezbollah has served as an ideal proxy for Iranian military force
particularly against Israel which affords Iran plausible deniability diplomatically.43 Hence wherever Hezbollah is entrenched, Iran will be as well and vice-versa.

The primary reason for Irans increasing presence and influence in Latin America is based on its growing ideological and economic relationship with Venezuela. Ideologically speaking, both regimes share a mutual enmity of what they perceive as the imperialist agenda of the United States.44 Economically speaking, the two countries have partnered together in an attempt to survive and thrive despite being ostracized in varying degrees from the official economy and its financial and trade systems.45 On the latter score one would be hard pressed to find a country that has been more successful at overcoming sanctions and embargoes levied by the United States and international community than Iran. In spite of ever-increasing economic constraints dating back to the Carter Administration, Iran has managed to fight an eight year war with Iraq, become the worlds biggest sponsor of terrorism, vigorously pursued its own nuclear program and become the prime destabilizing factor in the Middle East.46 This impressive adaptability relies in no small part on Irans creativity in exploiting unscrupulous businesses, criminal networks and other corrupt regimes for economic survival. For rogue leaders like Venezuela President Hugo Chavez, who see embargoes and sanctions as just
another manifestation of American oppression and imperialism, Iran has become their champion and welcomed ally.47 This sentiment has developed into a cooperative understanding that, to the extent they can be successful at overcoming economic sanctions and creating their own economy, Iran and Venezuela can continue to pursue their ideological agendas beyond the reproach of their Western first-world oppressors. In their efforts to achieve this independence,

neither Iran nor Venezuela has ignored the pecuniary and political benefits of participating in the illicit drug trade. For example, Iranian Revolutionary Guard Corps (IRGC) General Gholamreza Baghbani has been working in conjunction with the Taliban to oversee the trafficking of opium and heroin from Afghanistan through Iran in order to generate revenue to support Hezbollah.48 General Baghbani is a commander in the IRGC Qods Force which is the Iranian Special Forces
unit that works closely with Hezbollah in cond ucting terror operations throughout the world. In a similar fashion to Irans ideological relationship with Hezbollah, Venezuela and the FARC often work together in the trafficking of cocaine for mutual benefit. Numerous Venezuela government officials have been designated by the OFAC as providing assistance to the FARC in the trafficking of cocaine and the purchasing of weapons.49 In addition to participating in cocaine trafficking, Venezuela affords the FARC respite from United States and Colombian pursuit via safe havens within the country.50 Venezuela extends this assistance in part because the socialist regime of Hugo Chavez aligns well ideologically with the FARCs Marxist underpinnings. Pragmatically sp eaking, Venezuela provides support to the FARC insurgency because it believes it helps mitigate the perceived threat of United States intervention in the region.51 The FARC in turn has provided

reciprocal support of the Chavez regime by such actions as training pro-Chavez militants and assassinating anti-Chavez politicians within Venezuela.52 Given their own individual propensities in the trafficking of illicit drugs to further ideological interests, it should come as no surprise that the

activity is so intrinsic to the ongoing VenezuelanIranian enterprise in Latin America.53 Each country brings valuable infrastructure to drug trafficking that can be used to help expand and supply a worldwide cocaine market. Assets such as state-owned airlines,
shipping companies, airports and sea ports can operate beyond the watchful eyes of the legitimate world. This can be seen in the regularly scheduled flights between Caracas and Tehran that continue despite Venezuelan-owned Conviasa Airlines claims they ended in September 2010.54 Even though it was describe d as a regular commercial flight, there was no means by which to purchase a ticket to travel onboard. Moreover, the flight would depart Caracas from a secluded nonpublic terminal without the normal manifests associated with legitimate air commerce.55 Another example that also illustrates the ingenuity of Iran in circumventing international sanctions involves the Islamic Republic of Iran Shipping Lines (IRISL), which is responsible for moving almost one-third of Irans imports and exports. The IRISL has bee n under OFAC economic sanction since September 2008 for providing logistical services to Irans Ministry of Defense and Armed Forces Logistics.56 In order to stay one step ahead of OFAC and United Nations regulatory efforts, the IRISL regularly reflags and changes the owners of its ships. Between September 2008 and February 2012, there were 878 changes to the IRISL fleet including 157 name changes, 94 changes of flag, 122 changes of operator and 127 changes of registered ownership. This simple tactic has allowed Iran to continue shipping goods to and from Venezuela and all over the world despite the best efforts of the international community to prevent it.57 Being able to control major modes of transportation that operate from one safe port to another beyond the watchful eyes of legitimate immigration and customs authorities is a fundamental advantage that is very difficult to counter. While Iran and Venezuela may be much more interested in using this advantage for commercial, military and nuclear purposes, there is no reason to doubt they would use it in the trafficking of drugs to finance covert terrorist activities for themselves and their allies. IMPLICATIONS FOR UNITED STATES NATIONAL SECURITY Iran and Hezbollah have been involved in the underworld of Latin America long enough to become intimately familiar with all of its inhabitants and capitalize on their capabilities. Former DEA executive Michael Braun has an interesting way of describing this dynamic: If you want to visualize ungoverned space or a permissive environment, I tell people to simply think of the bar scene in the first Star Wars movie. Operatives from FTOs (foreign terrorist organizations ) and DTOs (drug trafficking organizations) are frequenting the same shady bars, the same seedy hotels and the same sweaty brothels in a growing number of areas around the world. And what else are they doing? Based upon over 37 years in the law enforcement and security sectors, you can mark my word that they are most assuredly talking business and sharing lessons learned.58 Braun says as Europe's demand for cocaine continues to grow and TCO's operate in West and North Africa to establish infrastructure to move the drugs: "These bad guys (cartels) are now routinely coming in very close contact with the likes of Hezbollah, Hamas, Al Qaeda, who are vying for the same money, the same turf and same dollars. It's really a nightmare scenario. And my point being is if

anyone thinks for a moment that Hezbollah and Qods Force, the masters at leveraging and exploiting existing elicit infrastructures globally, are not going to focus on our southwest border and use that as perhaps a spring board in attacking our country then they just don't understand how the real underworld works."59 Iran attempted to leverage this capability in October 2011 with the foiled plot
to assassinate the Saudi Ambassador to the United States. According to a federal arrest complaint filed in New York City, the Qods Force attempted to hire a drug cartel (identified by other sources as the Los Zetas) to assassinate Saudi Ambassador Adel al-Jubeir for a fee of $1.5 million. The terror attack was to take place at a popular restaurant in Washington, D.C. without regard to collateral deaths or damage.60 The Qods Force made this solicitation because it knows drug traffickers are willing to undertake such criminal activity in exchange for money. Moreover, if this terror attack had been successful, the Qods Force intended to use the Los Zetas for other attacks in the future.61 Had it not been for a DEA informant posing as the Los Zetas operative, this attack could have very well taken place. It has been suggested that this assassination was directed by the Iranian government in retaliation for a Saudi-led military intervention in Bahrain against an Iranianbacked Shiite Muslim majority that was protesting a Saudi-backed Sunni Muslim minority government.62 There are also indications that Iranian Supreme Leader Ayatollah Khamenei has ordered the Qods Force to intensify terror attacks against the United States and other Western countries for supporting the ousting of Syrian President and Iranian ally Bashar al-Assad.63 How

all of this plays into the Iranian nuclear threat leaves troubling possibilities for the U.S. and our ally Israel. We know that Hezbollah has a significant presence in the United States that could be utilized in terror attacks intended to deter our efforts to curtail Irans nuclear program.64 For this same reason, Israelis in the United States and around the world have gone on high alert to prevent a repeat of deadly Hezbollah terror attacks against Israeli facilities that occurred in Argentina in 1992 and 1994. These increasingly hostile actions taken by the Iranian government would be alarming enough without Iran and Hezbollah having well-established bases of operations in Latin America. While Latin American bases serve as a finance mechanism for Hezbollah, it is believed the ability exists to turn operational if the need arises. There is no doubt that the enemy is at our doorstep and we must do something about it now. While a very aggressive foreign
policy to counteract these threats is in order, we must not forget that a secure Southwest border is always our first and last line of defense.

Nuclear terrorism likelystate sponsorship key Graham Allison, Director, Belfer Center for Science and International Affairs; Douglas Dillon Professor of Government; Faculty Chair, Dubai Initiative, Harvard Kennedy School, 9/7/12, "Living in the Era of
Megaterror", belfercenter.ksg.harvard.edu/publication/22302/living_in_the_era_of_megaterror.html
Today, how many people can a small group of terrorists kill in a single blow? Had Bruce Ivins, the U.S. government microbiologist responsible for the 2001 anthrax attacks, distributed his deadly agent with sprayers he could have purchased off the shelf, tens of thousands of Americans would have died. Had Soviet arsenal) in

the 2001 Dragonfire report that Al Qaeda had a small nuclear weapon (from the former New York City proved correct, and not a false alarm, detonation of that bomb in Times Square could have incinerated a half million Americans. In this electoral season, President Obama is claiming credit, rightly, for actions he
and U.S. Special Forces took in killing Osama bin Laden. Similarly, at last weeks Republican convention in Tampa, Jeb Bush praised his brother for making the United States safer after 9/11. There can be no doubt that the thousands of actions taken at federal, state and local levels have made people safer from terrorist attacks. Many

are therefore attracted to the chorus of officials and experts claiming that

the strategic defeat of Al Qaeda means the end of this chapter of history. But we should remember a deeper and more profound truth. While applauding actions that have made us safer from future terrorist attacks, we must recognize that they have not reversed an inescapable reality: The relentless advance of science and technology is making it possible for smaller and smaller groups to kill larger and larger numbers of people. If a Qaeda affiliate, or some terrorist group in Pakistan whose name readers have never heard, acquires highly enriched uranium or plutonium made by a state, they can construct an elementary nuclear bomb capable of killing hundreds of thousands of people. At biotech labs across the United States and around the world, research scientists making medicines that advance human well-being are also capable of making pathogens, like anthrax, that can produce massive casualties. What to do? Sherlock Holmes examined crime scenes using a method he called M.M.O.: motive, means and opportunity. In a society where
citizens gather in unprotected movie theaters, churches, shopping centers and stadiums, opportunities for attack abound. Free societies are inherently target rich. Motive to commit such atrocities poses a more difficult challenge. In all societies, a percentage of the population will be homicidal. No one can examine the mounting number of cases of mass murder in schools, movie theaters and elsewhere without worrying about a societys mental health. Additionally, actions we take abroad unquestionably impact others motivation to attack us. As Faisal Shahzad, the 2010 would-be Times Square bomber, testified at his trial: Until the hour the U.S. ... stops the occupation of Muslim lands, and stops killing the Muslims ... we will be attacking U.S., and I plead guilty to that. Fortunately,

it is more difficult for a terrorist to acquire the means to cause mass casualties. Producing highly enriched uranium or plutonium requires expensive industrial-scale investments that only states will make . If all fissile material can be secured to a gold standard beyond the reach of thieves or terrorists, aspirations to become the worlds first nuclear terrorist can be thwarted.

XT- Prolif
Irans ties with Venezuela makes Venezuelan prolif likely
By Ariel Farrar-Wellman, Ariel Farrar-Wellman is a contributing author to the AEI Critical Threats Project. She manages the Iran Soft Power Project and has contributed to the Iran Tracker Working Paper Series. Previously a Research Assistant in Foreign and Defense Policy at AEI, Farrar-Wellman earned a Bachelors Degree from Bucknell University where she graduated with honors in 2008, May 12, 2010, http://www.irantracker.org/foreign-relations/venezuela-iran-foreign-relations In June 2009, Venezuelan President Hugo Chavez congratulated Iranian President Mahmoud Ahmadinejad on his reelection, stating that "Ahmadinejad's triumph was a triumph all the way. They are trying to stain Ahmadinejad's triumph and through that weaken the government and the Islamic revolution. I know they will not succeed."*1+ NUCLEAR: Venezuelas President Hugo Chavez

has officially stated that Iran has a legitimate right to its nuclear program and that Venezuela supports Irans right to peaceful nuclear technology.[2] Venezuela is a member of the Non-Aligned Movement, which released a statement in
July 2008, saying that the member states welcomed the continuing cooperation being extended by the Islamic Republic of Iran to the IAEA and reaffirmed that states choices and decisions, including those of the Islamic Republic of Iran, in the field of peaceful uses of nuclear technology and its fuel cycle policies must be respected.*3+ In September 2008, Chavez

announced that he was interested in developing nuclear energy, for peaceful ends of course, claiming that Russia had offered to help with this program, just as it had with Irans current program.*4+ The United States has already sanctioned one Iranian-owned bank in Caracas, Venezuela for providing financial services that supported Irans nuclear weapons program .[5] In late May
2009, Israeli news website Ynet obtained a detailed dossier drafted by the Israeli Foreign Ministry on Irans activities in South America.*6+ The report, which is based on information gathered by Israeli and foreign military and diplomatic sources around the world, claimed that Iran had begun building friendships in Latin America as early as 1982.*7+ The Foreign Ministry report claimed that particularly since Ahmadinejads rise to power, Tehran

has been promoting an aggressive policy aimed at bolstering its ties with Latin American countries with the declared goal of bringing America to its knees.*8+ The Ynet article said that Israel
and the rest of the Western world is particularly concerned with the reports claiming that Venezuela has been supplying Iran with uranium designated for its nuclear program and that Tehran has been setting up Hezbollah terror cells in north Venezuela and in Margarita Island, which is under Venezuela control.[9] In October 2009, Chavez said that Iran with Russia to develop nuclear energy for civilian purposes.

is helping his country mine for uranium, while working Chavez explicitly described the development of a uranium
In late November 2009, the IAEA passed a rebuke against Iran for

mining industry as a strategic need for Venezuela .[10]

building a second enrichment plant in secret.[11] Venezuela, along with Cuba and Malaysia, opposed the resolution.[12] The resolution by the 35-member IAEA Board of Governors calls on Iran to halt uranium enrichment and immediately freeze the construction of its Fordo nuclear facility, located near Qom.[13]

Venez Prolif Impacts


Venezuela nuclear proliferation destroys global non-prolif efforts- spreads throughout Latin America
Garner, 2010 (Calvin Garner, Staff Editor at the International Affairs Review, Venezuelas nuclear program the alarmists are right, The
International Affairs Review, 12/13/2010, http://www.iar-gwu.org/node/240)

It might seem alarmist to equate a civilian nuclear program with the weakening of the nonproliferation regime, the threat of a nuclear arms race, or the further deterioration of U.S.-Russia relations. Unfortunately, history and the facts support such a conclusion. A Venezuelan nuclear program is bad for global non-proliferation efforts. The civilian program is a necessary precondition for a weapons program and makes such a program possible. Venezuelas close ties with Syria and Iran should cause observers to doubt just how seriously it will take its non-proliferation requirements under
the Nuclear Non-Proliferation Treaty and the Treaty of Tlatelolco, the 1967 treaty making all of Latin America a nuclear weapons-free zone. Assuming that Chvez has the best of intentions now, there is the possibility that in the future he will

choose to pursue nuclear weapons as a way to blunt U.S. power, shore up domestic support by rallying his people behind a nuclear crusade, or assert Venezuelas role in the Americas. It is worth noting that leaders rarely announce that they plan to use peaceful nuclear technology as a stepping stone to a weapons program. Given Venezuelas rich oil, gas, and hydroelectric resources, the need for a nuclear power program seems questionable. Considering Chvezs willingness to stand with those who snub the global nonproliferation regime and his hostility towards the United States and western institutions, he must be considered a candidate to say one thing and do another on the nuclear issue. Playing cat-and-mouse with the International Atomic
Energy Agency (IAEA) has proven to be a good way to win international attention, exact concessions from the West, or raise fears in neighbors minds about the possibility that a country has nuclear weapons capabilities. Unfortunately, the IAEA has not come up with a good way to keep

Even if Chvez neither has nor develops the intention to pursue nuclear weapons, he will find it increasingly attractive to evade or complicate the IAEA inspection regime for other reasons. In so doing, he will provide yet another example of ways to exploit weaknesses in the global non-proliferation regime. Mixed signals from a nuclear Venezuela would have troubling implications for keeping Latin America free of nuclear weapons. Brazil and Argentina would most likely seriously reconsider their earlier decisions to forgo nuclear weapons in the face of a Venezuela with ambiguous nuclear priorities. If either country concluded it could not trust Venezuelas statements on its nuclear program, a South American nuclear arms race could quite likely happen. Proliferation on the continent may start in Caracas but it would almost certainly spread , ending the international success story of Latin America as a nuclear-weapons free zone.
leaders from stonewalling or punish those who do so.

Venezuela nuclear proliferation decimates US-Russian relations


Garner, 2010 (Calvin Garner, Staff Editor at the International Affairs Review, Venezuelas nuclear program the alarmists are right, The
International Affairs Review, 12/13/2010, http://www.iar-gwu.org/node/240) Lastly, a

nuclear deal between Russia and Venezuela will lock Russia into behavior and rhetoric that are inherently anti-American, jeopardizing the progress that has been made in U.S.-Russia relations since 2009. The history of this deal explains why this is the case. Russia offered Venezuela nuclear power in 2008, the absolute low-point in U.S.-Russia relations, when Russia was fighting a shooting war with Georgia, a U.S. partner that was supporting the NATO coalition in Afghanistan. The realization of the nuclear partnership will place Russia back into a position of confronting the West as it did two years ago when tensions were running high. Additionally,
it will move Russia away from those nations that seek to prevent the spread of nuclear capabilities. In light of Russias large nuclear weapons stockpile, knowledge, and technology, this would be a costly development for global non-proliferation efforts. As a signatory to the Nuclear Non-Proliferation Treaty, Venezuela

is within its rights to receive and operate civilian nuclear facilities. But

observers who buy Chvezs line that the program is intended for peaceful power generation may be nave. Regardless, they miss an important point: the implications of the program are damaging, even if the intentions are sound.

Close Iran-Venezuela ties means Venezuelas proliferation- agreements already in place


Noriega, 2010 (ROGER F. NORIEGA , a former assistant secretary of state for Western Hemisphere affairs (Canada, Latin America, and the
Caribbean) and a former U.S. ambassador to the Organization of American States. He coordinates AEI's program on Latin America and writes for the Institute's Latin American Outlook series, Chvez's Secret Nuclear Program, Foreign Policy, 10/05/2010, http://www.foreignpolicy.com/articles/2010/10/05/chavez_s_secret_nuclear_program?page=0,1) Venezuelan President Hugo Chvez admitted last week that his

government is "carrying out the first studies" of a nuclear program. He attempted to portray it as an innocuous program designed solely for peaceful purposes. On Sept. 21, I held a briefing for journalists and regional experts where I revealed for the first time information about Chavez's nuclear program and his troubling and substantial collaboration with Iran. This research -- conducted
during the past 12 months by a team of experts who analyzed sensitive material obtained from sources within the Venezuelan regime --

paints a far darker picture of Chavez's intentions. Chvez has been developing the program for two years with the collaboration of Iran, a nuclear rogue state. In addition to showing the two states' cooperation on nuclear research, these documents suggest that Venezuela is helping Iran obtain uranium and evade international sanctions, all steps that are apparent violations of the U.N. Security Council resolutions meant to forestall Iran's illegal nuclear weapons program. Chvez's suggestion that he is merely studying the idea of a nuclear energy program is misleading. In fact, in November 2008, Iranian and Venezuelan officials signed a secret "science and technology" agreement formalizing cooperation "in the field of nuclear technology." (The text of the agreement, available in Farsi and Spanish, is available here.) The week after the agreement was signed, Venezuela's Ministry of Energy and Petroleum prepared a presentation for the International Atomic Energy Agency documenting the establishment of a "nuclear power programme" in Venezuela. That presentation, obtained from sources
within the Venezuelan government, reveals that an "Atomic Energy Committee" has been managing the nuclear program since 2007. All countries have the right to a peaceful nuclear energy program under the Nuclear Non-Proliferation Treaty, of which Venezuela is a signatory. However, Chvez's decision

to rely on one of the world's worst proliferators to help develop his country's capabilities in this sensitive technology sets alarm bells ringing . And his recent public declarations understating the nature of his nuclear program raise more questions than they answer. It's not only Venezuela's cooperation with Iran on its own nuclear program that raises questions -- other documents provided by sources within the Venezuelan government reveal a suspicious network of Iranian-run facilities in that South American country that could contravene Security Council sanctions. For example, a November 2008 contract between a Venezuelan state-run firm, CVG Minerven, and the Iranian government firm Impasco grants the Iranians a "gold mine" concession in the heart of the Roraima basin in the southeastern state of Bolivar, which sits along the Venezuela-Guyana border. Although gold mining in Venezuela goes back decades, the basin is also home to one of the world's largest deposits of uranium, according to a survey by the U308 Corp., a Canadian uranium exploration company. There is nothing illegal about the commercial mining of uranium -- unless it is conducted by Iran. Security Council Resolution 1929, passed this June after an aggressive diplomatic effort by the United States, ordered all governments to prohibit any Iranian involvement in "uranium mining, production or use of nuclear materials and technology." If Iran's Impasco has struck gold in Venezuela, that is nobody's business. If it is mining uranium, that is quite a different matter. In addition to acquiring a mine strategically located above substantial uranium deposits, Iranian firms have taken over nearby industrial facilities and seem to be using them for purposes other than those publicly stated. For example, a "cement plant" produces little if any cement, a "tractor factory" produces few tractors, and both facilities are well situated for supporting Iran's shadowy activities in an area that is far from everything but uranium.

Lack of US action means Venezuelan and Iranian proliferation accelerates- already mining for uranium
Noriega, 2010 (ROGER F. NORIEGA , a former assistant secretary of state for Western Hemisphere affairs (Canada, Latin America, and the
Caribbean) and a former U.S. ambassador to the Organization of American States. He coordinates AEI's program on Latin America and writes for the Institute's Latin American Outlook series, Chvez's Secret Nuclear Program, Foreign Policy, 10/05/2010, http://www.foreignpolicy.com/articles/2010/10/05/chavez_s_secret_nuclear_program?page=0,1)

In addition to providing physical cover for Iranian operations, banks and other purportedly commercial ventures established in Venezuela afford Iran access to the international financial sector in violation of several Security Council resolutions intended to deny funds to the country's illicit nuclear weapons program. Resolution 1803 (2008) warns governments to "exercise vigilance" against Iranian banks, specifically Bank Saderat, "to avoid such activities contributing to the proliferation of sensitive nuclear activities." Documents retrieved from Venezuelan government archives (available in Spanish here) show that by 2007, Iran's Bank Saderat
had already incorporated the Banco Internacional de Desarrollo (BID) in Venezuela. All of BID's founding directors are Iranian, and it appears to operate today as a Venezuelan bank that is actually a wholly-owned front for Saderat. Records of Iranian firms operating in Venezuela reflect dollar-denominated transactions carried out by BID in contravention of U.S. law and U.N. resolutions. The United Nations had good reason to single out Saderat as a possible conduit for funds used to finance terrorism and nuclear proliferation. In 2006, the U.S. Treasury sanctioned Saderat for serving as a conduit for funds to the Lebanese Shiite terrorist group Hezbollah. Only two months ago, the European Union froze BID's assets for its role in supporting Iran's "nuclear or ballistic missile activities." Yet Chvez's to move money through Iranian front companies and Venezuelan partners in order to evade

government continues to allow BID international sanctions. Ignoring what Chvez and his friends are up to right under our noses is no longer an option. If the United States and the United Nations are serious about nonproliferation, they must challenge Venezuela and Iran to come clean and, if necessary, take steps to hold both regimes accountable. Unfortunately, U.S. policymakers continue to shy away from issues that might lead to a confrontation with the irascible Chvez . But Venezuela's willingness to flout international law and abet Iran's activities close to U.S. shores is becoming too flagrant -- and ultimately, too dangerous -- to ignore.

Irans nuclear program and close Venezuela ties means its only a matter of time until Venezuela proliferation
Padgett, 2009 (Tim Padgett, Miami & Latin America bureau chief for TIME, Chvez to Iran: How About Some Uranium?, TIME,
10/08/2009, http://www.time.com/time/world/article/0,8599,1929256,00.html) But how big a concern should Venezuela be? Chvez delights in getting a rise out of the U.S., and his alliance with Iran and President Mahmoud Ahmadinejad is largely a calculated affront to Washington his version of Cuba's Cold War partnership with the Soviet Union. It's little coincidence that Sanz made his announcement the same day the U.S. and its allies called Iran on the existence of a secret nuclear-fuel plant near the Iranian city of Qum. The U.S. and the U.N.'s International Atomic Energy Agency (IAEA) fear that Iran

is on the verge of bolting the global Nuclear Non-Proliferation Treaty and developing not just nuclear energy but a nuclear weapon, a charge Tehran denies. Venezuela's ties to the Islamic Republic, as a result, have taken on dimensions beyond just tweaking Uncle Sam's nose. That suits Chvez's fondness for the international spotlight. Still, security experts say he's flirting with something more serious than anti-yanqui bravado. Chvez, who recently agreed to sell Iran 20,000 barrels of gasoline a day, backs the country's claim that it's enriching uranium only for peaceful purposes. But if the international community decides Iran is making an atomic bomb something IAEA inspections may determine later this month it would complicate any Venezuelan plans to export uranium to the country, since it would be widely viewed as aiding and abetting a rogue nuclearweapons program. "In that event, the world is watching whether Venezuela seems poised to cross any international legal boundaries," says Johanna Mendelson Forman, a senior associate for the Americas at the Center for Strategic
and International Studies in Washington, D.C. "But it's still too early to tell what Venezuela is really doing." A recent intelligence report put out by the government of Israel, which considers Iran's nuclear program a direct threat to its security, said Venezuela

was already supplying Iran with uranium. But experts say it's hardly certain Venezuela even has much, if any, uranium to provide Iran or anyone
else. Officials there have long estimated the country is sitting on 50,000 tons of the radioactive ore, concentrated mostly in western Venezuela and in the Roraima Basin along the country's southeastern border with Brazil and Guyana. (The U.S. has uranium reserves of about 340,000

tons.) It may be high grade, says James Otton, a uranium-resources specialist at the federal U.S. Geological Survey, a reference not to its quality but to the "tremendous quantities of uranium in a given volume of rock" found in places similar to Roraima, a virtual Lost World of Precambrian geology. But those jungle conditions make extracting the ore, if it's there, difficult. "And there is still no publicly available information that uranium has ever occurred in Venezuela," says Otton. "Right now it's just potential." Robert Rich, a Denver-based uranium expert, agrees: "Chvez can claim the geology indicates they might discover it there, but as a scientist I'd say there's not much to it yet." Sanz, however, insists that Iranian experts have concluded

Venezuela "has a lot of uranium." If so, the other big question is whether Venezuela itself will really pursue a nuclear-energy program. Like oil-rich Iran, it's hardly in urgent need of nuclear power: Venezuela has the western hemisphere's largest crude reserves, and 75% of its electricity is hydro-generated. It abandoned its one test nuclear reactor 15 years ago. Still, Chvez says the country needs alternatives, and has struck a deal to receive nuclear-fuel-technology aid from Russia, Venezuela's top arms
supplier. "We're not going to make an atomic bomb," Chvez said after announcing the Russia agreement, "so don't bother us the way you're bothering Iran." Experts say it could take Venezuela's less-than-stellar science infrastructure more than a decade to develop a nuclear-power industry, let alone a nuclear bomb. (Only Brazil, Argentina and Mexico produce nuclear power in the region.) What's more, Venezuela is a signatory to the 1967 Tlatelolco Treaty, which prohibits the development of nuclear weapons in Latin America. Even so, says Mendelson, "the

U.S. is worried that Venezuela has become a platform for the entrance of Iranian mischief in the hemisphere." If Iran is building a bomb, she adds, the U.S. may well assume that Tehran is interested in slipping that technology to Venezuela as well.

Relations Advantage

1ac
Energy cooperation with Venezuelan oil sector is a starting point for tying diplomatic relations solves Venezuelan economic sustainability, and spills over to other areas of cooperation.
Krenare Thaci, 8-xx-2011, paper submitted

as a Capstone Project Report in partial fulfillment of a Master of Science Degree in Professional Studies at the Rochester Institute of Technology, Energy Policies and Diplomatic
Relations with the United States, https://ritdml.rit.edu/bitstream/handle/1850/14110/Krenare_Thaci_CapstoneProject_Report_82011.pdf?sequence=1 On the other hand, in September 2006 at the United Nations, Chavez spoke judgmentally of President Bush; however, the U.S. refrained from reacting to Chavezs personal attack critiques. Also on March 2006, while President Bush visited Brazil and Uruguay; President Chavez led an anti-American public meeting in Argentina, but even then the U.S. refrained from reacting and ignored the critique. This reaction pointed out a focus on a positive agenda of U.S. engagement with Venezuela. In 2008, U.S. policy toward Venezuela appeared to be to refrain from getting into and unneeded conflicts or spats with President Chavez, and instead to focus on a positive U.S. agenda for the hemisphere. Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon stated in July 17th, 2008 congratulations testimony that 6 We

remain committed to a positive relationship with the people of Venezuela and have the patience and the persistence necessary to manage our challenging relationship (statement by Larry Palmer, july 27th , 2010 - page 13). Shannon pointed out in his testimony that Venezuela for the first time in many years, expressed a willingness to explore improved relations with the U nited S tates, including counter-drug cooperation, and that we have told Venezuela that we would like to explore this diplomatic opening. Nevertheless, when Venezuelan officials expelled the U.S. ambassador Patrick
Duddy, relations between the U.S. and Venezuela worsened, and even then the U.S. officials responded kindly with Venezuelan Ambassador Bernardo Alvarez. On the other hand, President Bush criticized again Venezuelas efforts against drug trafficking and determined that Venezuela had failed to hold on to its duties under international narcotics control agreement. On June 25th, 2009 under Obama Administration, both countries publicized an agreement that was signed by the U.S. and Venezuelas officials for the return of ambassadors. At the same time some observers are confident that the return of the ambassadors will mark a development in relations between the U.S. and Venezuela. 2.4 Discussion - The Impact of Diplomatic Relations on Venezuelas Oil Exports Current diplomatic relations

between the U.S. and

Venezuela are very complex. While searching for the background problem of this report, different articles written by popular scholars proved the fact that Venezuela has gone through many different strikes and disruptions regarding Venezuelan state oil Company PdVSA. These disruptions have had a negative impact in the U.S. because it has proved difficulties to keep up secure policy courses that could protect the nation from periods of volatility. In addition, these disruptions have had a huge effect indicating future improvement in energy policies and diplomatic relations between these two countries. However, my analysis shows that the conflict regarding oil will remain a destabilizing factor between the U.S. and Venezuela if not properly managed by effective diplomacy. The most efficient way to build good diplomatic relations between the U.S. and Venezuela is by creating bilateral cooperation with Venezuela on a variety of issues such as: Counterterrorism, Counter-narcotics, Energy , Commercial etc. Venezuela has an extensive border of 1.370 miles
with Colombia, which is a major transit route of Cocaine and heroine, destined for the United States. According to the International Narcotics Control Strategy Report (INCSR), Venezuela is one of the main routes for trafficking illegal narcotics out of Colombia due to a nonjudgmental and corrupt environment in Venezuela. The greater parts of narcotics passing through Venezuela are intended for the United States. Also, a growing percentage has started to go toward Western Africa as well as Europe. The corruption problem in Venezuela has been mixed by the transit of drugs, as has the increased level of crime and violence all over the country. Therefore, the bilateral U.S. and Venezuela for signing an antidrug cooperation agreement would

teamwork between the allow both countries to build better diplomatic

relations and will open the doors for future cooperation on different segments. Additionally, U.S. - Venezuela commercial bond is strong. U.S. goods account for 25% of imports from Venezuela and about 60% of Venezuelan export go to the United States; making these two countries important trading partners. Furthermore, Venezuelans purchase U.S. machinery, transportation equipment, agricultural commodities, and auto parts. However, one of the

most important segments between these two countries is oil . Venezuela is the United States one of the largest oil exporters. Thus, no matter how bad is the battle between the two nations; the important factor is petroleum and the importance of the petroleum trade relationship,

which plays an important role to both countries economic stability. Since the main interest to both countries is their economic stability and that relies on the petroleum trade; both countries should look for a potential significant step toward mending their tattered relationship. They should seek for a positive engagement , concentrating on areas where the benefit is in both nations interest and this could mark a new beginning between
the two countries. Additionally, analysis showsthat the continuation of full diplomatic relations between the U.S. and Venezuela reflects the important commercial ties between the two countries. First of all, the U.S. government should have the desire to create better relations with Latin America as well as the need for Chavez to change his image. A more diplomatic

approach is likely to prove more effective in bringing the desired results in both countries and it could start by developing strong cooperation for mutual benefits and will result in developing better future energy policies and at the same time tying their diplomatic relations. By being able to deal with these major problems, analysis show that a new period of constructive relations on respect between the U.S. and Venezuela might be possible and this will lead the two countries toward building stronger
and more efficient diplomatic relations.

Positive engagement with Venezuela now is critical to American credibility and overall Latin American relations
Griffin 4/3, 2013, John, foreign policy editorial writer for the Harvard Crimson, http://www.thecrimson.com/article/2013/4/3/HarvardVenezuela-Chavez-death/

While it might seem likely that relations between the United States and Venezuela would naturally improve after the death of the combative Chvez, the opposite now seems more likely . Before passing away, Chvez had
handpicked a successor in Nicholas Maduro, who has assumed power in the interim before the presidential election in April. As Chvezs handpicked successor, Maduro

has already continued with his mentors trend of using anti-American rhetoric to bring popularity to his government, even declaring that American agents may have infected Chvez with the cancer that killed
him. While Washington has officially declared that it is committed to a more functional relationship with Venezuela, its actions have not been consistent with this idea: The United States offered no official condolences for Chvezs death, and both nations have starte d 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 Chvez-style governance in Venezuela. Calling
himself a 21st-century socialist, Chvez nationalized the lucrative oil industry, developed strong trade 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 at large, especially in Latin America . Chvez (along with his friends the Castros in Cuba) was able 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 Chvez 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. Chvez galvanized these nationsmany of whom have experienced American interventionist tacticsby vilifying America as a common, imperial enemy.Unfortunately for the United States, its general strategy regarding Venezuela has often strengthened Chvezs position. Every time Washington chastises Venezuela for opposing American interests or attempts to bring sanctions against the Latin American country, the leader in Caracas (whether it be Chvez or Maduro) simply gains more evidence toward his claim that Washington is a neocolonialist meddler. This weakens the United States diplomatic position, while simultaneously strengthening Venezuelas. If Washington wants Latin America to stop its current trend of electing leftist, Chavista governments, its first step should be to adopt a less astringent tone in dealing with Venezuela. Caracas will be unable to paint Washington as an aggressor, and Washington will in turn gain a better image in Latin America.Beyond leading to more amicable,

cooperative relationships with Latin American nations, engagement

with Venezuela would also be economically advisable . With the worlds largest oilreserves, countless

other valuable resources, 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 such cooperation: 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 the entirety of Latin America . It was
mostly through Venezuelas efforts that the United States was unable to create a Free Trade Area of the Americas, an endeavor that would have eliminated most trade barriers among participant nations, thereby leading to more lucrative 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 best course 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 and making 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 policiesnothing that the United States is doing to counter those drawbacks is having any effect. The United States should stop playing tough guy with Venezuela, bite the bullet, and work toward stability and prosperity for the entire hemisphere. We arent catching any flies with our vinegarits high time we started trying to catch them with honey. Eric Farnsworth, 4-11-2013, Vice President, Council of the Americas, Energy Security Opportunities in Latin America and the Caribbean, http://docs.house.gov/meetings/FA/FA07/20130411/100622/HHRG-113-FA07-Wstate-FarnsworthE-20130411.pdf As well, for the past several years the Council has organized our Energy Action Group, a public-private dialogue that seeks to focus on the strategic, policy, and commercial issues at the heart of hemispheric energy matters with a view to providing recommendations to policymakers on the Western Hemisphere energy agenda. We genuinely appreciate the opportunity to appear before you to provide testimony regarding

energy security opportunities in Latin America and the Caribbean. Mr. Chairman, if I may give you the bottom line first: energy security for the U nited S tates is of fundamental strategic importance. It underlies our ability to function as a modern society, and ensuring energy security has long been a critical component of U.S. foreign policy globally on a bipartisan basis. It is within this context that we firmly believe the nations of Latin America, the Caribbean, and Canada must be considered, leading to a new and abiding appreciation at the most senior levels of government of the strategic importance of the Western Hemisphere to the U nited S tates. The region cannot be an afterthought or taken for granted. Already, just over half of U.S. energy imports come from the Western Hemisphere, meeting approximately one quarter of our daily energy needs. Canada, Mexico, and Venezuela are three of our top suppliers worldwide. We receive more than twice as much energy from Canada, our top supplier, as from Saudi Arabia, our second largest supplier. Colombia, Ecuador, and Brazil also contribute significant amounts. 2 Even when political relations are troubled with certain countries, for example Venezuela and Ecuador, the U nited S tates continues to engage in energy trade on a commercial basis. At the same time, a dramatic expansion of new energy resources across the hemisphere made possible by new technologies including ultra-deep water drilling offshore and biofuel production and fracking onshore has created the possibility of a new, highly favorable paradigm for hemispheric energy. Herein lies the primary opportunity for regional partnership, if we are nimble enough, collectively, to grasp it: working together as a hemisphere to increase energy security for all parties in a manner that lowers costs through increased production and greater efficiencies, encourages sustainable economic growth, development, and job creation, and supports a clean energy matrix with appropriate environmental protections. In fact, energy partnership was one of the key initiatives at the 1994 Summit of the Americas in Miami, at the insistence of Venezuela , and was one of the deliverables coming out of the 2009 Summit of the Americas in Trinidad and Tobago. Changing sector dynamics make the vision truly compelling, to the extent that regional political challenges can be minimized or overcome.

New engagement between the US-Venezuela solves relations


Shannon O'Neil is Senior Fellow of Latin America Studies at the Council on Foreign Relations, and author of Two Nations Indivisible: Mexico, the United States and the Road Ahead, 6 March 2013, http://www.bbc.co.uk/news/world-us-canada-21680885 The death of Hugo Chavez leaves much uncertainty in Venezuela. But Shannon O'Neil says stronger ties with the United States may be on the horizon. After 14 years in power, Venezuelan president Hugo Chavez lost his long and secretive battle with cancer. Many now wonder about his domestic and international legacy. For the US, one of the important questions is whether his bilateral foreign policy approach will continue without him. The USVenezuela relationship has been characterised over the past decade by public spats and outlandish statements, but it was not always so hostile. When Chavez was elected in 1998, interactions between the two countries were
cordial; Chavez even travelled to Washington to meet then-President Bill Clinton. But the relations soon headed downhill. 'Smell of sulphur' In 2002 Chavez accused the US of supporting the coup that briefly ousted him from power, as US officials were quick to welcome the transition. In 2005 bilateral counter-narcotics operations ended. Since then American spokespersons have criticised Venezuelan officials for their involvement in the drug trade, skewering the country in annual drug reports and freezing the assets of at least seven current or former Venezuelan officials. The bad blood was immortalised in Chavez's 2006 United Nations speech when he theatrically referred to then-President George Bush as the devil, commenting on the distinct smell of sulphur that remained at the podium. In 2010, Chavez declared thenAmbassador Patrick Duddy persona non grata, marking the last time that the US had an ambassadorial presence in Venezuela (but not the last time the two countries have expelled diplomatic personnel). With Chavez's death, some have hoped for a change in the US-Venezuela relationship. But just because Chavez is gone it doesn't mean the tensions in bilateral relations will ease. Shifting ties The US is too useful and tempting a foil for papering over internal disagreements in Chavez's party and for rallying loyal supporters for the upcoming presidential election to expect any abrupt change. Heir apparent and now interim President Nicolas Maduro's speech right before Chavez's death shows this. In it he expelled two US diplomats and even accused the US of causing Chavez's cancer. But

in the longer term, trade,

commercial relations and personal ties could shift US-Venezuelan relations for the better . First and foremost are the economic ties between the two nations. Despite the rhetorical animosity of the last decade, trade continued. The US remains the largest recipient of Venezuelan oil - some 40% percent of Venezuelan oil exports (and oil makes up
over 90% of the country's total exports). In turn, the US has continued to send machinery and cars, and even increased exports of natural gas and petroleum products to the South American nation. The

hard currency and goods are vital to the functioning of Venezuela's economy, government and society, and may become even more so through the anticipated tough economic times ahead. Venezuelans protested American officals on the ninth anniversary of the failed coup
against Chavez Despite the increased government management of the economy through price controls and the nationalisation of hundreds of private companies over the last decade, many well- and lesser-known US companies still work in Venezuela, providing not just goods but ongoing links with the United States. In addition to these commercial links, the more than 200,000 Venezuelans living in the US and the hundreds of thousands more that have ties through family, friends and colleagues, could also bring the two countries together. Finally, as subsequent Venezuelan governments look to adjust their economic policies in the coming months and years, the

experience of their

neighbours provide incentives to forge a more amicable bilateral relationship.

An emerging 'third way' Colombia, Brazil, Peru, along with other Latin American nations, have opened up to the US and the world more broadly in recent years and in the process have benefited tremendously. In the last set of hemispheric elections, a "third way" combining open markets, balanced fiscal accounts, and socially inclusive policies - most closely identified with former Brazilian President Luiz Inacio Lula da Silva - became an almost mantra for incumbent and opposition party candidates alike (including Chavez's 2012 rival, Henrique Capriles Radonski). These nations and

Today Venezuela faces significant political uncertainty, as Mr Maduro works to unite the many factions within Chavez's party. He does so
leaders illustrate a real and positive path forward, not just economically but also diplomatically. without Chavez's charisma nor the deep-seated loyalty he inspired. The next administration also will confront growing economic and fiscal problems, making governing all the harder in the months to come. Still, in

most of Latin America anti-US rhetoric is fading,

which suggests it can in Venezuela too.

Solves Relations
US-Venezuela willing to cooperate
Sullivan, 2008 (Mark P. Sullivan, Specialist in Latin American Affairs Foreign Affairs, Defense, and Trade Division, Venezuela: Political
Conditions and U.S. Policy, CRS Report for Congress, 08/01/2008, http://www.au.af.mil/au/awc/awcgate/crs/rl32488.pdf) Today, U.S.

policy toward Venezuela appears to be to refrain from getting into any unneeded conflicts or spats with President Chvez, and instead to focus on a positive U.S. agenda for the hemisphere while at the same time being open to constructive cooperation with Venezuela on issues of mutual concern. Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon stated in July 17, 2008 congressional testimony that we remain committed to a positive relationship with the people of Venezuela and have the patience and the persistence necessary to manage our challenging relationship. Shannon pointed out in his testimony that Venezuela for the first time in many years, expressed a willingness to explore improved relations with the United States, including counter-drug cooperation, and that we have told Venezuela that we would like to explore this diplomatic opening.79

China Adv

UQ

China Influence Now


Chinese presence in Latin America is crowding out the US now GIGA 13 (German Institute of Global and Area Studies, The Dragon in the Backyard: US
Visions of Chinas Relations toward Latin America, 2013, http://www.gigahamburg.de/dl/download.php?d=/content/publikationen/pdf/gf_international_1305.pdf)

The second cycle of US concern regarding the dragon in the backyard started at the beginning of this decade. The US economy had been debilitated by the nancial crisis of 20072008, while Chinese trade with Latin America was still growing at high rates. Between 2000 and 2011, US participation in Latin American exports and imports went down from 59.7 percent to 39.6 percent and from 50.4 percent to 30.1 percent, respectively. During the same period, Chinese participation in Latin American exports and imports grew from 1.1 percent to 8.9 percent and 1.8 percent to 13.8 percent, respectively. In Brazil (a key country), China overtook the United States as the most important trade partner. In 2011, China was the rst or second most important destination
for exports in 7 out of 18 Latin American countries (CEPAL 2012). Moreover, trade with China was increasingly supplemented by Chinese investment and Chinese credits. As Gallagher et al (2012: 27) found, China

has committed approximately 75 billion USD in loans to Latin American countries since 2005. Chinas loan commitments of 37 billion USD in 2010
were more than those of the World Bank, Inter-American Development Bank, and the US Ex-Im Bank combined for that year. In 2009, China also joined the Inter-American Development Bank. China lends money to countries such as Ecuador, Venezuela and Argentina, which have problems borrowing money in the global nancial market. Chinese banks do not attach political conditionality to their loans. However, they do generally tie their loans to the purchase of Chinese goods. Around

two-thirds of Chinese loans dragon in the backyard started at the beginning of this decade. The US economy had been debilitated by the nancial crisis of 20072008, while Chinese trade with Latin America was still growing at high rates. Between 2000 and 2011, US participation in Latin American exports and imports went down from 59.7
percent to 39.6 percent and from 50.4 percent to 30.1 percent, respectively. During the same period, Chinese participation in Latin American exports and imports grew from 1.1 percent to 8.9 percent and 1.8 percent to 13.8 percent, respectively. In Brazil (a key country), China

overtook the United States as the most important trade partner. In 2011, China was the rst or with China was increasingly supplemented by Chinese investment and Chinese credits. As Gallagher et al (2012:
second most important destination for exports in 7 out of 18 Latin American countries (CEPAL 2012). Moreover, trade 27) found, China has committed approximately 75 billion USD in loans to Latin American countries since 2005. Chinas loan commitments of 37 billion USD in 2010 were more than those of the World Bank, Inter-American Development Bank, and the US Ex-Im Bank combined for that year. In 2009, China

also joined the Inter-American Development Bank. China lends money to countries such as Ecuador, Venezuela and Argentina, which have problems borrowing money in the global nancial market. Chinese banks do not attach political conditionality to their loans. However, they do generally tie their loans to the purchase of Chinese goods. Around two-thirds of
Chinese loans combined a loan agreement with an oil sale agreement (oil for loans). Chinese loans are also used for infrastructure projects.

Impact
China Venezuelan relations lead to economic, military, and geopolitical instability GIGA 13 (German Institute of Global and Area Studies, The Dragon in the Backyard: US
Visions of Chinas Relations toward Latin America, 2013, http://www.gigahamburg.de/dl/download.php?d=/content/publikationen/pdf/gf_international_1305.pdf) Dierent Types of Challenges for the United States Taking a broader look at the current perceptions of the challenges that Chinas

activities in Latin America present to US interests, one can dierentiate between economic, military, and geopolitical challenges, on the one hand, and direct and indirect challenges as well as normal challenges and challenges in extraordinary situations, on the other hand. However, in recent documents and
declarations, the US governments reaction to Chinas growing presence has generally been quite muted. In their Key Strategic Issue List for 2012/2013, the Institute 2012); one

US Army War College lists ve issues for the Western Hemisphere (Strategic Studies of which is the need to assess the strategic implications of increased Chinese engagement in Latin America. In contrast, the 2012 and 2013 brie ngs of the Congressional Research Service on Key Issues for Congress in Latin America and the Caribbean do not mention China. Moreover, in an October 2011 hearing before the
Committee on Foreign A airs of the House of Representatives on Emerging Threats and Security in the Western Hemisphere, China was not a very prominent topic being mentioned only twice. Responding to one representatives questions as to whether Chinas

activities in the Western Hemisphere were considered a serious emerging threat, Philip Goldberg, head of the Bureau of Intelligence and Research, answered that there were some economic challenges and some minor diplomatic challenges related to the fact that both China and Brazil are involved in the BRICS group. However, Chinas
weapon sales to the region are not seen as a major security problem. From a broader perspective, however, the delivery of Chinese military equipment to Latin America and Chinese-Latin American military cooperation are seen with mixed emotions. China

has

increased personnel exchanges and institutional contacts with Latin American militaries and has
participated with the military police in the UN peacekeeping mission in Haiti (MINUSTAH) since 2004. Much more important from the US point of view are military sales to Latin America starting with unsophisticated items such as personal equipment and military clothing, and moving up to more sophisticated military equipment such as aircraft ( ghters and transport) and radar and telecommunication systems (also for civilian use). Chinas main clients have been Venezuela, Ecuador and Bolivia (Ellis 2011a). On the one hand, Chinas

donations or sales of military equipment at relatively low prices were perceived as a contribution to the ability of poor governments in the region to assert control over national territory and to confront drug tra cking. On the other hand, the willingness of China to sell low-cost arms to countries in con ict with the US, such as Venezuela, undercuts the ability of the United States to impose sanctions or controls on the arms purchases of such countries (Ellis 2011a, 2012).

Chinese-Venezuelan relations lead to instability Ferchen 13 (Matt Ferchen is a resident scholar at the Carnegie-Tsinghua Center for Global Policy, where he runs the China and
the Developing World program. He is also an associate professor in the Department of International Relations at Tsinghua University, where he teaches courses on international and Chinese political economy as well as on China-Latin America relations, 2China and Venezuela: Equity Oil and Political Risk, February 1, 2013, http://www.jamestown.org/programs/chinabrief/sing le/?tx_ttnews%5Btt_news%5D=40404&tx_ttnews%5BbackPid%5D=688&no_cache=1#.UdNChPmRBsl) China and Post-Chavez Venezuela: Managing theHangover Neither Chavez nor PDVSA have necessarily been easy partners for China and many former PDVSA officials and opposition figures have been critical of the loans-for-oil deals with China (Perspectiva, November 2, 2012; La Nacion, October 7, 2012). China has had to work to parry Chavezs efforts to involve it more closely in his own ideological and anti-U.S. agenda. Whether inside or outside of Venezuela, Chavez has been the kind of polarizing leader who you are either for or against. So in the case of the CDB-led build-up of financing and investment in Chavezs Venezuela, Chinas actions have spoken louder than words. For better or for worse, Chavez has

been Beijings man and in return China has continued to supply Chavez with scarce foreign financing and investment. With Chavez ill in Cuba, possibly never to return, Venezuela has entered into a constitutional and political crisis that may drag China in as well. For well over a year concerns have been raised that if, in a post-Chavez scenario, the opposition were to come to power that it would seek to alter the loans-for-oil deals with China (Chinas Cautious Economic and

Strategic Gamble in Venezuela, China Brief, September 30, 2011). Ultimately, no one knows the answer to those concerns.
The CDB may have secured long-term access to Venezuelan oil for Chinas NOCs, or alternately the CDB and other Chinese firms may face loss-making revisions to current agreements [10]. What is clear is that the CDBs decade plus of binging on state-to-state deals with the Chavez government has now exposed Beijing to a painful diplomatic hangover tied to Venezuelas slow-motion crisis. Whether at home or abroad, Chinese

leaders hate nothing more than instability, but instability is what they face in their relations with Venezuela. As in Sudan and Iran before, an unwanted crisis may yet serve to focus Chinese
leaders minds to help build a healthier and more stable Venezuela, but doing so will probably require a willingness to rethink the governance of Chinas SOEs abroad. Since the vast majority of Chinas imported oil continues to be supplied by basic lo ng-term trade contracts and not through its equity oil acquisitions,

the crisis in Venezuela may prove the perfect opportunity to move away from a pattern of Chinese equity oil ties to controversial governments. If a major portion of
Chinas equity oil is not going to China anyway, the new Chinese leadership should ask itself whether the diplomatic and image costs to China are worth the risks.

Solvency

Say Yes

Iran QPQ
Venezuelas current alliance with Iran is pragmatic- they needed the investment in their oil industry. Their military alliance doesnt trump economic needs. Mallett-Outtrim 6-30-13 (Ryan, regular contributor to Correo del Orinoco International and Green Left
Weekly. Ryan also has a fortnightly column in the University of South Australia's Unilife Magazine, Venezuela-Iran Relations: No Longer Imperilled by Imperialism?, http://venezuelanalysis.com/analysis/9789)
And a dash of reality While

military cooperation between Iran and Venezuela still hit the headlines every so often, energy resources are the real lynchpin of the relationship . In 2010 both countries agreed to invest US$760 million in each other's energy sectors. On top of this, under another agreement, US$800 million worth of
Venezuelan gasoline was shipped to Iran. In the following year over 14,000 homes that were built in Venezuela under the housing mission were constructed with Iranian assistance. In 2012, a slew of new agreements were signed between the two countries; mostly in the fields of technology, agriculture, food processing and civil construction. The

relationship between Iran and Venezuela is clearly multifaceted it has a defensive aspect, but is largely focused on civilian projects . A reasonable...nay,
inevitable deterrence policy Focusing on the Iran-Venezuela relationship as a defensive initiative does not give an accurate impression of the whole story, but is, nonetheless, the most controversial aspect of the relationship. Yet this relationship as an aspect of defence policy is not only reasonable, but almost inevitable given Washington's handling of the two countries in recent years. As Michael Corcoran rightly pointed out in February, despite

being lumped in the same basket by much of the Western media, internally the governments of Iran and Venezuela couldn't be more different. As Corcoran argues: Venezuela has internationally
recognized elections and works to empower the working class and the poor. Chvezs opponents in Venezuela are free to broadcast their discontent and do. Venezuela may in fact be the only nation where the media could publicly call for a coup of an elected leader, as some Venezuelan media outlets did in 2002, and remain on the air. Certainly, such activities would not be permitted in the United States. In contrast, Iran, an Islamist state, jails dissidents, executes gays, and is ruled with absolute power by Supreme Leader Ayatollah Ali Khamenei. Yet for the U.S. media, Iran and the left-leaning Latin American governments are all of a piece. This assumption undergirds the demonization of the pink tide leaders as dangerous pawns in Irans supposed efforts to build nuclear weaponsefforts that are unconfirmed by U.S. intelligence agencies or the International Atomic Energy Agency. I couldn't put it better myself. Nonetheless, the

disdain with which Washington has treated both countries over the last decade has led them to take a number of similar actions in the international theatre. If a global hegemon treats two countries similarly, then it shouldn't be a mystery when they both respond in similar ways. It really shouldn't have come as a surprise to anyone to see both Iran and Venezuela pursuing policies of deterrence throughout the last decade. Since the U.S. backed the 2002 coup
against Chvez, Venezuela has developed a multifaceted deterrence strategy primarily reliant on developing regional alliances (the drive to modernise the Venezuelan military is supplementary at best). As was blatantly obvious to most observers of this year's Organization of American States (OAS) summit, this strategy has been nothing short of a spectacular success. From issues ranging from counter-narcotics to free trade, the U.S. and Canada were looking pretty lonely. However, Iran's attempts to integrate into the international community have failed, largely due to U.S.-Israeli efforts. Hence, while Venezuelan president Nicolas Maduro enjoys strong support from most of Latin America (for proof, look no further than his tour of the Southern Cone, which VA covered here and here), Iran is encircled by U.S.-aligned regimes in Iraq, Pakistan, Afghanistan, Saudi Arabia and the other gulf states of Bahrain, Qatar, Kuwait, Oman and the United Arab Emirates. Moreover, contrary to Noriega's fear mongering, as Bloomberg recently reported, even the State Department has conceded that Iranian influence in Latin America and the Caribbean is waning. In such a context, if Iran is developing nuclear weapons (which there is scant evidence of) then it's largely the result of U.S. policy. If the country's atomic energy program really is peaceful, then the Iranian leadership is in desperate need of some kind of effective deterrence model; especially when Benjamin Netanyahu appears to be under the impression that Iran's leaders are plotting a second holocaust. The supreme leader Ali Hosseini Khamenei only needs to look next door to Iraq to see what happens when U.S/Israeli hawks come knocking and you don't have any WMD's. Indeed, if Saddam Hussein actually had WMD's, the likelihood that even the hawks would have risked their deployment with an invasion is remote. So, while there

are still plenty in Washington who are eager to beat the drums of war, in reality both Venezuela and Iran are pursuing defensive policies in the face of very real U.S. aggression. For Iran, Washington's aggression manifests mostly in its policy of encirclement, and the
ever tightening economic sanctions, which have put millions of lives at risk. These are supplemented by Israeli aggression, most notably in the form of Mossad support of groups like the Peoples Mujahedin of Iran, which has carried out anumber of terrorist attacks on Iranian soil. U.S. dependence on Venezuelan oil makes extensive sanctions undesirable for Washington, and attempts to encircle Venezuela have utterly failed, leaving the exploitation of Venezuela's opposition as the only viable option in recent years. However, as I have previously argued, U.S.

attempts to isolate and destabilise Venezuela have failed to the extent that as a last resort, Washington may try to actually foster cooperation with Caracas. Does this mean the U.S. wont try to extinguish Venezuela-Iran relations in the future? Not at all, though the focus will change. Unlike a decade ago, the Iran-Venezuela bond is no longer mutually

beneficial as a deterrence strategy. While Venezuela still has plenty to gain from cooperation with Iran in areas like agriculture and technology (Cavim's new Harpy is a great example of the latter), Venezuela probably wont see deterrence dividends so much in the future. Between ALBA, PetroCaribe and Mercosur, Venezuela's geopolitical significance has skyrocketed over the last decade, while the U.S.'s iron grip on the western hemisphere is quickly becoming a
bad memory. Iran, on the other hand, needs all the help it can get. If the Western media is to be believed, sanctions are working exactly as intended; punishing the poor. Meanwhile, the Israeli noose is tightening, and the U.S. propaganda machine keeps rolling on. As Hugo Chavez once said, they accuse us of being a threat to the United States. They are the threat, and not a hypothetical one but a real, proven one.

Maduro is not that close to Iran- it was Chavezs personal relationship with Ahmadinejad. Jackson 13 (Mark, Specialist in Latin American Affairs for the Congressional Research Service, Hugo
Chvezs Death: Implications for Venezuela and U.S. Relations, April 9, http://www.fas.org/sgp/crs/row/R42989.pdf)
In terms of Venezuelas foreign policy, observers who believe that Maduro will win the election maintain that there would be continuity with the policy under President Chvez, especially since Maduro served as his Foreign Minister for more than six years. Many see Venezuelas strong support for Cuba continuing under a Maduro presidency, although some analysts contend that a difficult economic situation in Venezuela could result in a diminishment of that support. Some observers also contend

that without Chvez at the helm, Venezuelas role as a regional power could begin to wane as well as its relations with Iran.18 Venezuelas strengthening of relations with Iran in recent years is viewed by many analysts as being driven by the personal relationship between Chvez and Iranian President Mahmoud Ahmadinejad.

Oil needs are the key driver in the relationship Bailey 12 (Norman, President of the Institute for Global Economic Growth and Adjunct Professor of Economic
Statecraft at the Institute of World Politics in Washington, Irans Venezuelan Gateway, Feb, www.afpc.org/files/getContentPostAttachment/213)

Cooperation in energy lies at the heart of the economic ties between Caracas and Tehran. The Venezuelan state oil company PDVSA and Iranian state oil company PetroPars, for example, have formed a joint venture for the exploration of a block in Anzoategui state.16 Likewise, the Venezuelan petrochemical company PEQUIVEN and the National Petrochemical Company of Iran have formed a joint venture to manufacture plastics in Zulia state and construct a new petrochemical plant in Iran, supposedly with Venezuelan technical advice.17 Most significantly, Venezuela has announced that it will ignore international sanctions and supply Iran with gasolinea move that weakens U.S. efforts to pressure Iran by leveraging its deep dependence on foreign refined petroleum.18

Say Yes Oil


Maduro will say yes Metzker, 06/18/2013 (Jared Metzker, Analysts Say Oil Could Help Mend U.S.-Venezuela Relations, The International News
Magazine, http://www.international.to/index.php?option=com_content&view=article&id=8681:analysts-say-oil-could-help-mend-usvenezuela-relations&catid=268:inter-press-service&Itemid=377)

Despite a troubled political relationship, its principal customer is the United States, which imports nearly a million barrels a day from Venezuela. Venezuela's oil industry has been officially nationalised since the 1970s, and,
as president, Chavez further tightened government control over its production. His government took a greater chunk of revenues and imposed quotas that ensured a certain percentage would always go directly towards aiding Venezuelans via social spending and fuel subsidies. While these measures may be popular with Venezuelans, who pay the lowest price for gasoline in the world, critics argue such policies hampered growth and led to mismanagement of Petroleos de Venezuela, S.A. (PdVSA), the main state-run oil company. The same critics also point to increasing debt levels, slowdowns in productions and accidents stemming from faulty infrastructure. In order to boost production, PdVSA agreed in May to accept a number of major loans. This includes one from Chevron, one of the largest U.S. oil companies, which will work with Venezuelans to develop new extraction sites.[related_articles] "The

oil sector is in deep trouble in Venezuela production is down and the economic situation is deteriorating," explained Shifter. "They know they need foreign investment to increase production, and this is in part what has motivated Maduro to reach out." If its economy continues to falter, Venezuela may be further tempted to embrace the United States, which has the largest, most sophisticated fossil fuel industry in the world. Kerry's recent words suggest that the administration of President Barack Obama would be waiting with open arms. "Venezuela cannot confront its economic crisis and the United States at the same time," Diana Villiers Negroponte, a senior fellow at the Brookings Institute, a
Washington think tank, told IPS, "and we are a pragmatic country which will deal with Maduro if it is in our interests." Indeed, Negroponte said she was

"optimistic" about the possibility of rapprochement between the two countries within the next six months. She notes a "troika" of issues on which the United States is looking for Venezuelan cooperation: counter-terrorism, counter-narcotics and assistance in ridding Colombia of its FARC rebels.

Venezuela weakening economic forces Maduro to cooperate on oil


Farzad, 03/14/2013 (Roben Farzad, Bloomberg Businessweek contributor. He has written for The New York Times, Boston Globe, and
The Wall Street Journal and appears on NPR, CNBC, PBS, CNN, and BBC News, After Chvez, What Happens to Venezuela's Oil?, Bloomberg Businessweek, http://www.businessweek.com/articles/2013-03-14/after-ch-vez-what-happens-to-venezuelas-oil) Venezuelas 2011 crude production was comparable to what it was churning out in the 1980s, according to the U.S. Energy Information Administration. Its investment in exploration and production may continue that decline if social spending underwritten by PDVSA continues apace, says the International Energy Agencya likely outcome if Chvezs preferred successor, Nicols Maduro, gets elected. But, says Kathryn Rooney Vera of Bulltick Capital Markets, any change in leadership, whoever stays in power, will

have to be more pragmatic about oil in order to stay in power. Hell have to increase revenue, which means opening up PDVSA to more private investment and joint ventures . That, or cutting social spending. Its the lesser of two evils. According to Fitch, the budget deficit in Venezuela has already yawned to an unstable width. With oil prices high last year, Fitch writes, Chvez piled on debt and social promises to secure his reelection, ratcheting his countrys fiscal deficit to more than 7 percent of its gross domestic product. Vera calculates that the economys cryuncle pointwhere the government immediately cannot make ends meet, both domestically and to foreign creditorsis at $50-a-barrel crude.

Venezuela wants US investment for oil production- wants to privatize PDVSA


Weissenstein, 05/04/2013 (Michael Weissenstein, Correspondent from Associated PressAddicted to oil, Venezuela faces a grim
future with prices and production dropping, Fox News, http://www.foxnews.com/world/2013/05/04/addicted-to-oil-venezuela-faces-grimfuture-with-prices-and-production-dropping/) The oil flowing from the El Palito refinery sells for more than five times what it cost when President Hugo Chavez took office in 1999. Yet when Chavez died in March he left Venezuela's cash cow, its state-run oil company, in such dire straits that analysts say $100-a-barrel oil may no

longer be enough to keep the country afloat barring a complete overhaul of a deteriorating petroleum industry. The situation is more urgent than ever, analysts say. The

price of crude has slumped in recent weeks and Chavez's heir, Nicolas Maduro, appears to have done little to address declining production, billions in debt and infrastructure deficiencies that
have caused major accidents including a blaze that killed at least 42 people at Venezuela's largest refinery last year. Maduro has retained Chavez's oil minister and the head of state oil company Petroleos de Venezuela S.A., Rafael Ramirez. And he appears intent on continuing to send cut-rate oil to members of the 18-nation Petrocaribe alliance, for which Venezuela is hosting a summit on Saturday. Ramirez said Friday that Maduro would use the meeting to propose creating a special economic zone for group members. PDVSA,

which accounts for 96 percent of the country's export earnings, no longer "generates enough income to cover all its costs and finance its commitments," said Pedro Luis Rodriguez Sosa, an energy expert at the Institute for Advanced Studies in Administration in Caracas. He said that "you can see PDVSA is in trouble" at the $100-a-barrel level because of the many millions lost to
gasoline subsidies and spending on domestic social spending and PDVSA's use as a "geopolitical tool" to maintain regional alliances. Venezuela has the world's largest oil reserves but PDVSA's

production, earnings and income all appear to be on a downward slide and its debts to suppliers rose 35 percent. Its debt to the Central Bank of Venezuela reached $26.19 billion last year, a nearly eight-fold increase in two years. The government makes no apologies. It says it is employing the country's most important natural resource for the good of the people and promises increased production and revenues in the immediate future. Ramirez said that PDVSA's efforts remained focused on developing the remote Orinoco belt, site of the world's biggest oil reserves, with the aid of oil firms from China, Russia, the U.S., Italy, Vietnam, Malaysia, Japan and Spain. Venezuela hopes to lift overall production to some 3.32 million barrels a day, 200,000 more than last year. "We're in a process of trying to attract investment in dollars other than ours," Ramirez said, assuring reporters that PDVSA would work with private investors to not take on more debt to make new investment.

Venezuela needs and wants to boost oil industry


Reuters, 03/05/2013 (Reuters, world's largest international multimedia news agency, providing investing news, world news, business
news, technology news, and headline news, Instant View: Oil analysts' reaction to death of Venezuela's Chavez, Reuters, http://www.reuters.com/article/2013/03/06/us-venezuela-chavez-oilmarket-idUSBRE92500820130306) "Chavez's death may result in a period of political thing for oil exports." "Venezuela's

instability and uncertainty in Venezuela. That is never a good oil industry has had major setbacks during the Chavez era. Venezuela has mortgaged its future and, like Mexico, it depends so heavily on oil (revenue) that it will have little choice but to do whatever it can to boost exports ." "Venezuela needs money. Whatever comes next, it won't have the kind of charismatic leader that Chavez was. It will have to get serious about rebuilding its oil industry." DANIEL YERGIN, VICE
CHAIRMAN OF IHS, INC., ENERGY AUTHOR: "It's too soon to say what Hugo Chavez's death means for oil prices, but it is certainly true that oil prices are what made Hugo Chavez possible." "The collapse of oil prices in 1997-8 and the resulting discontent in Venezuela gave him the opening to become president, just seven years after he was sent to jail for leading a coup. And it was rising oil prices since 2000 that gave him the financial resources to consolidate power, court public opinion and try to turn his Bolivarian revolution into a global campaign for "twentyfirst century socialism." "He

leaves behind an economy greatly weakened by spending, intervention, inflation capital flight, and shortages. And, beyond Cuba, his effort to create an alliance against what he called "the U.S. empire" managed
only to enlist a few countries. "Without his charisma and force of character, it is not all clear how his successors will maintain the system he created." TIM EVANS, ENERGY FUTURES SPECIALIST, CITI FUTURES PERSPECTIVE, NEW YORK CITY "I don't think anybody gets a windfall out of this. If it opens the country up to more investment, that may be an opportunity for profit, but it's also a risk. Chavez was not the first one to nationalize oil operations in Venezuela. "There was a prior cycle of nationalization in the 1970s so the country has this history of some periods where international investment is welcome and encouraged and other periods in which the government of the day decides they don't like the terms of the investment and they take it back.

Venezuelas economic crisis has opened them up to US help with their oil industry
Diana Villiers Negroponte | March 5, 2013 7:13pmHugo Chavez's Death an Opportunity for More Pragmatic Relationship with U.S., Formerly a trade lawyer and professor of history, Diana Negroponte is a nonresident senior fellow with the Latin America Initiative under Foreign Policy at Brookings. She focuses on Latin America and researches and writes about the New Left, populism and the relationship between criminal gangs and state institutions, http://www.brookings.edu/blogs/up-front/posts/2013/03/05-chavez-venezuela-negroponte

The death of Hugo Chavez presents an opportunity for the new Venezuelan leadership to tone down the rhetoric of anti-Americanism and put our bilateral relations on a pragmatic basis. The U.S. remains the principal purchaser of Venezuelan oil which is refined in Gulf Coast refineries for later export to China and other markets.
Food and pharmaceutical products, cosmetics, spare parts and electrical equipment are bought from the U.S. although payment for these goods is delayed and consumers must wait 4 to 5 months for the new inventory to arrive at Venezuelan ports.Venezuela

is in the midst of an economic crisis with shortages of U.S. dollars, a devaluation of 32 percent and the prospect of searing inflation. Furthermore, Venezuela needs foreign direct investment, technical expertise and spare parts from the U.S. Rather than demonizing Washington, an opportunity exists for Caracas to reframe the relationship to a realistic mode.

Oil is a unique part of the relationship- Maduro will say yes even if he is generally anti American Gonzalez 13 (Angel Gonzalez, reporter and columnist at the Wall Street Journal, Revival of Venezuela's Oil Sector on StandBy, March 6, 2013, http://online.wsj.com/article/SB10001424127887324128504578344612480601482.html)

Venezuela's battered oil industry bore the burden of Hugo Chvez's socialist dream. Now the charismatic
leader's death gives his successors the opportunity to unlock its potential, but few in the oil industry expect an immediate renaissance. Under Mr. Chvez's rule, a

huge oil-sector strike, the firing of thousands of top engineers, poor maintenance, frequent refinery accidents and the diversion of oil revenue into social programs and subsidies to foreign allies crippled Petrleos de Venezuela SA, the national oil company. Despite arguably having the world's largest oil reserves, Venezuela's oil output fell by nearly a third to about 2.5 million barrelsabout a quarter of Saudi Arabia's outputa day since Mr. Chvez took over 14 years ago,
according to the U.S. Energy Information Administration. PDVSA, as the oil company is known, maintains it produces closer to three million barrels a day. A toughening stance on foreign companies through Chvez's presidency also pushed Exxon Mobil Corp. XOM +0.06% and ConocoPhillips COP +0.08% out of the country in 2007 and prompted other oil firms that remained to invest little. But

the country's oil policy is unlikely to change in the short term, Venezuelan officials and analysts say, as the ruling United Socialist Party of Venezuela are expected to build their political power base on the so-called Bolivarian Revolution that widened government intervention across most economic
Mr. Chvez's likely successors from sectors. "The oil is for the people, this is a principle that is fixed into our national consciousness," Rafael Ramrez, the country's oil minister, said Tuesday night on state TV after the government announced Mr. Chvezs death. Mr. Ramrez added that PDVSA would keep sailing the course set by Mr. Chvez, maintaining its focus on social programs and a firm grip on the nation's vast oil reserves. But

declining oil output and rising shale-oil production in the U.S., Venezuela's main market, may force a redirection. Barring any new political or military shocks in the Middle East, global oil prices look like "a balloon with a slow leak," said Amy Myers Jaffe, executive director for energy and sustainability at the University of California-Davis. The Venezuelan government can't count on high oil prices to match rising public spending, she added.
Anticapitalist rhetoric heated up in the days leading to Mr. Chvez's death. Last week, Venezuelan Acting President Nicols Maduro accused Chevron Corp., CVX -0.06% the No. 2 U.S. oil company by market value behind Exxon, of aggression against Ecuador in a multibillion-dollar environmental lawsuit pitting the company against Ecuadorean plaintiffs. Analysts

said they were surprised by the comments, as Chevron, the only major U.S. oil company to remain in Venezuela, was considered by Mr. Chvez as a key investor, and is lending Venezuela $2 billion to increase output at a joint-venture oil development. A spokesman for Chevron declined to comment on Mr. Maduro's assertion. Despite the posturing, Still, Mr. Chvez's death presents an opportunity for a new administration to lift some of the burdens heaped on PDVSA, which has supplied billions of dollars in cheap oil to Cuba and other friendly foreign
governments, said Carlos Jord, a Houston-based oil consultant who was once a senior manager at the oil company. To reach its full potential, Venezuelas entire oil industry sector needs to be reinvented, something that is unlikely, said Luis Pacheco, a former PDVSA executive fired during the oil strike of 2003 along with 20,000 other employees who opposed Mr. Chvez. Venezuela

Debt Weakens After Death of Chvez In 2000, Mr. Chvez signed its first oil deal with Cuba, providing the communist
island with 53,000 barrels a day of cut-rate oil, a sum that has risen to 110,000 barrels now. In return, the Cuban government has sent some 40,000 doctors and experts to support the popular social programs developed by Mr. Chvez. Mr. Jord, who called those oil deals unsustainable, said that domestic fuel prices, the world's lowest at around 6 cents a gallon, will also have to rise at some point. The

cost to the country of the domestic fuel subsidies has also increased because refinery accidents forced the government to import growing quantities of gasoline, according to the EIA. The

Venezuelan government denies it imports fuel. Worsening fiscal conditions will also prompt Mr. Chvez's successors
to improve relations with foreign investorsand eliminate bottlenecks created by the deceased leader's highly-personal, hands-on management style, said Jim Loftis, a partner with Vinson & Elkins LLC's international arbitration practice. The country also needs to increase oil production to pay for tens of billions of dollars in Chinese loans it undertook to finance large social projects and a big boost in election spending last year. "Venezuelans to rain."

see their relationship with oil as if the nation's virility is at

stake," Mr. Pacheco said. Until that perception changes, the oil industry will "keep dancing in a circle around the fire, waiting for it

Maduro embraces engagement over oil. Auken 13 (Bill Van Auken, a politician and activist for the Socialist Equality Party and was a presidential candidate in the U.S.
election, a reporter for the World Socialist Web Site, Venezuelas Maduro reaches out to big business and Washington, June 7, 2013, https://www.wsws.org/en/articles/2013/06/07/vene-j07.html) 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 Venezuelas biggest capitalists as well as with the Obama administration in Washington. Maduro has repeatedly charged in recent months that US imperialism was conspiring to bring down his government and was the guiding hand behind a wave of political violence that followed his narrow
election victory against right-wing candidate Henrique Capriles in April. Yet Venezuelas Foreign Minister Elias Jaua was all smiles Wednesday, following a 40-minute meeting in Guatemala with US Secretary of State John Kerry. The two, who met privately on the sidelines of the Organization of American States General Assembly meeting in Antigua, Guatemala, declared

their commitment to, in Kerrys words, establish a more constructive and positive relationship. This is to include
resuming the exchange of ambassadors, which has been suspended since late 2010. It was Venezuela that requested the meeting. We agreed today there will be an ongoing, continuing dialogue between the State Department and the Foreign Ministry, and we will try to set out an agenda by which we agree on things we can work together, said Kerry. For his part, Jaua declared that A

good relationship between the government of President Nicolas Maduro and the government of President Barack Obama is what suits both peoples, its the guarantee of peace and stability for our peoples.
Just last month, Maduro referred to Obama in a public speech as the big boss of the devils and accused him of backing the fascist right in attacking the Venezuelan people. In Guatemala, Jaua said that he had presented Kerry with a report on the violence that followed the April 14 election to choose Chavezs successor in which 11 people were killed and 80 injured, most of them Maduro supporters. He gave the US secretary of state an extract of the report prepared on the incidents by Venezuelas Public Advocates office. He said that the discussion had alerted Kerry to the actions of anti-democratic groups in Venezuela, which threaten Venezuelan democracy, stability and which often are being supported by political and economic sectors of other countries. In point of fact, the most significant sectors seeking to destabilize the Venezuelan regime have long been the CIA and the US State

Maduros turn toward accommodation with US imperialism has been accompanied by a similar approach to both foreign and domestic capital. Among the most significant deals in terms of foreign capital was reached late last month with Chevron Corp. Chevron is providing $2 billion in financing for Petroboscan, a joint venture between the US oil giant and Venezuelas state-owned oil company,
Department. PDVSA, to boost heavy crude production in the northwestern state of Zulia. Shortly beforehand, PDVSA secured a $1 billion credit line with Houston-based Schlumberger Ltd., the worlds largest oilfield services company. While

oil exports to the US have declined to about 900,000 barrels a day, it remains Venezuelas chief customer for oil, responsible for 95 percent of the countrys export earnings and roughly half of its federal budget revenue. From the standpoint of the US-based energy conglomerates, securing dominance over Venezuelas oil reserves, the largest in the world, remains a strategic objective. The investments by Chevron and Schlumberger make clear
that they see the potential for major profits, the Venezuelan governments rhetoric about Bolivarian socialism notwithstanding. Domestically, after charging for months that major Venezuelan capitalists, backed by the US, were waging an economic war against his government, Maduro invited the countrys second-richest individual, Lorenzo Mendoza, the head of the countrys largest food company, Polar, to meet with him last month at the Miraflores presidential palace in Caracas.

The death of Chavez presents a key opportunity for energy cooperation with Venezuela US investment is necessary to remedy declining production and investment in PDVSA Maduro says yes.

Michael Shifter, 3-11-2013, President

of the Inter-American Dialogue, Adjunct Professor of Latin American Studies at Georgetown University's School of Foreign Service, member of the Council on Foreign Relations, writer for Foreign Affairs, member of the Latin American Studies Association, contributing editor to Current History, The Empire Makes Nice Is it time for a Venezuela reset?
http://www.foreignpolicy.com/articles/2013/03/11/the_empire_makes_nice_venezuela_hugo_chavez?page=0,0 Four years ago, when the first Obama administration was still hopeful about the prospects of resetting relationships with U.S. adversaries in the world, Venezuela was high on the list. "Eight you and I

years of isolation has resulted in the kinds of outreach that, I think, both find troubling," then Secretary of State Hillary Clinton told the Senate in 2009. "Our belief is, if it hasn't worked, why keep it going? Let's see what else might be possible." Things haven't turned out quite as planned, but following the death of Hugo Chvez, the U nited S tates may get a new opportunity to improve one of its most frustrating relationships, and find out if a new way of operating might indeed be possible. Some progress has been
made, of course. The Obama administration learned some important lessons from the George W. Bush years. It wisely avoided becoming embroiled in rhetorical tit-for-tats -- a game Chvez played with relish and of which he was the undisputed master. In 2006, for instance, thenDefense Secretary Donald Rumsfeld likened Chvez to Adolf Hitler. The Venezuelan president responded in kind at a rally in Caracas, "The imperialist, genocidal, fascist attitude of the U.S. president has no limits. I think Hitler would be like a suckling baby next to George W Bush." The Obama White House also seemed to accept the fact that, for all his faults and the problems he posed for the United States, Chvez was Venezuela's legitimately elected president. Had there been another attempt to oust him, Obama officials would, one hopes, not have expressed undisguised glee, as the Bush White House did during the brief putsch of 2002. Seven years after that failed coup attempt, and three months into his presidency, Obama shook hands and bantered a bit with Chvez at a hemispheric summit in Trinidad and Tobago. (Chvez, ever the showman, gave Obama a copy of a book by leftist historian Eduardo Galeano, a gift presumably aimed at enlightening the incoming president about the evils of U.S. imperialism.) True, Obama has eschewed Bush's military adventurism, which touched a deep nerve in Latin America. But a more restrained U.S. foreign policy and a commitment to "engage" with the region as "partners" did little to persuade Chvez that Washington had changed its tutelary ways. "Obama, to me, until now, has been a great disappointment." Chavez told CNN in 2010, comparing the U.S. president to a highly rated baseball pitching prospect who "end up being wild." Today, three months into Obama's second term,

Washington will have to deal with a Venezuela -- a country with the world's largest oil reserves that accounts for roughly 10 percent of U.S. imports today -- without Chvez. No one can match the riveting theater Chvez reliably
provided -- his trademark, strident rhetoric and audacious, provocative moves on the regional and global stages, so often targeted at Washington. Still, after

14 years of distancing and mutual suspicions, the U.S.-Venezuela relationship is sure to be very difficult. Though uncertainty abounds in the country that Chvez so thoroughly dominated for so long, the most likely scenario is that
acting President Nicols Maduro, Chvez's designated successor, will win the election scheduled for April 14. He will benefit from an emotional boost from Chavez's death and a demoralized opposition that that was thrown off balance by major defeats in presidential and gubernatorial elections in late 2012. Maduro will preside over a government made up of diverse factions that, absent Chvez's charisma and political shrewdness, will have a hard time staying together -- particularly as the country's already serious economic conditions worsen. The Obama administration should take two critical facts about Venezuela's post-Chvez political reality into account. First, since Maduro is not Chvez, he will

have little choice but to govern in a different fashion than his predecessor. Lacking comparable magnetism and resources, Maduro will likely be somewhat more accommodating to those Chvez treated with utter intransigence, such as the private sector, foreign investors, and the opposition. Maduro, acting out of self-interest, will need, and look for, political oxygen. The second is simply the risk of turbulence in Venezuela, especially after the upcoming
electoral cycle. To be sure, analysts' occasional predictions about political violence during the Chvez years were (happily) not borne out. And given the extent of rancor and polarization in the society, it is striking how little political violence there has been (common crime, on the other hand, has skyrocketed). Still, the security situation is far from settled -- a militia force of 125,000 answered directly to Chvez -- and it would be a mistake to rule out chaotic and perilous scenarios that should be of great concern to the entire hemisphere. What does this mean for Washington? Assuming that Maduro succeeds Chvez, the Obama administration should

be amenable to taking steps toward establishing a better relationship with Caracas. Since the relationship today is practically nonexistent, that would not require a
big leap. It might simply entail opening up channels of communication and seeking to establish an ambassadorial presence in both capitals which -- absurdly, given the strong commercial relationship between the two countries -- have not existed since 2010. Beyond that, depending on how Venezuela's economic situation unfolds, it

might be worth exploring some degree of cooperation and support in energy. Under Chvez, Venezuela's state oil company PDVSA has suffered from declining production and investment and heavy politicization. Maduro may not want to change that right away -- he will need to show that he is a loyal Chvista. But if the country's fiscal pressures prove untenable, he may have few options, and the U nited S tates should be open to helping out.
Collaboration on counternarcotics and law enforcement would also be desirable but for the time being are probably non-starters politically, given the depth of mutual mistrust (not to mention that seven Venezuelan officials are on a Treasury Department blacklist for their alleged involvement in drugs and arms dealing). To its credit, the State Department reached out to

Maduro several months ago, and following Chvez's death the Obama administration has expressed an interest in improving the tense bilateral relationship. Its entreaty was surely not helped by Maduro's broadside against the United States, just hours before he announced that Chvez had died -- a move right out of Hugo's playbook. Maduro not only expelled two military attaches from the U.S. Embassy but also intimated that Washington might have been responsible in some way for Chvez's death. Absent a shred of evidence, Maduro's words were outrageous, but aimed at proving to the base that he was a worthy heir to Chvez before the election. But it's

far too early for the U nited S tates

to give up hope on Maduro. Despite his reckless words in recent days, his ideologically hard-line views, and close relationship with Cuban leaders, Maduro's style contrasts sharply with Chvez's. Chvez was a military man, a former paratrooper who attempted a coup in 1992. Maduro was not only foreign minister and head of the National Assembly, but earlier in his career was a union official who negotiated deals. He will be tough rhetorically, but some give-and-take behind the scenes seems feasible -- a balancing act Washington will have to understand and deal with. Maduro will likely also confront more dire economic circumstances than Chvez ever did. Politically, he will not be able to afford to reject communication and some accommodation with the private sector. In fact, Maduro has been instrumental in the Venezuelan government's constructive role in current peace talks in Havana between the Colombian government and the Revolutionary Armed Forces of Colombia (FARC). His support to what is arguably Washington's closest South
American ally in an effort to bring to an end the only remaining armed conflict in the hemisphere can be construed as an example of his pragmatism. A peace accord between the Colombian government and the FARC (which uses Venezuelan territory as a sanctuary and was supported by Chvez) would reduce a key source of instability in the wider region. To anticipate potential turmoil in Venezuela in the coming period, Washington should be consulting regularly and at the highest levels with South American allies, especially Colombia and Brazil, who have the most at stake should the security situation deteriorate. Although many commentators have

drawn attention to Cuba's role in the Venezuelan transition, and have particularly highlighted Cuba's huge dependence on Venezuelan oil and money, Brazil will
probably end up being just as influential as the situation unfolds. South America's undisputed superpower -- whose leverage on Venezuela stems from key exports, especially food, and political backing -- is chiefly interested in maintaining social peace within its own neighborhood. In keeping with Brazil's own governance and political evolution in recent years, Brasilia will aim to keep the situation in Venezuela under control and to encourage moderation, gradualism, and communication on both sides. It does not want trouble on its borders. Venezuela's recent entry into the Brazil-led MERCOSUR trade group will makes this issue of even greater concern for President Dilma Rousseff's government. In this respect, there is ample coincidence of interests between Washington and Braslia. Absent Chvez, Venezuela will continue to be tricky in the second Obama administration. The

administration will need to arrive at a more accurate on-the-ground reading of what is happening in

the country. It will need to engage in quiet, steady, high-level diplomacy with key allies in the region not only to closely monitor the security situation and guard against dire scenarios but to press for free and fair elections and adherence to the rule of law. None of this will be easy, and recent history is not encouraging. But

Chvez is gone, and although for now some measure of continuity in Venezuela is most likely, conditions of scarcity -- in charisma, money, and political astuteness -- will soon be acutely felt. It is important not to forget that Chvez was able to do what he did for 14 years for a
simple reason -- because he could.

Maduro has extended an olive branch and wants to reverse previous bad relations
John Daly, May 27th, 2013, Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School
of Slavonic and East European Studies, University of London. While at the Central Asia-Caucasus Institute at Johns Hopkins University's Paul H. Nitze School of Advanced International Studies, where he is currently a non-resident scholar, in 199 he founded The Cyber-Caravan, which continues today under the title, The Central Asia-Caucasus Analyst. He subsequently served as Director of Programs at the Middle East Institute in Washington DC before joining UPI as International Correspondent, http://www.economonitor.com/blog/2013/05/venezuelan-presidentmaduro-offers-olive-branch-to-washington/

To say that U.S. relations with Venezuelas former President Hugo Rafael Chvez grew increasingly strained would be an understatement. But Chvez succumbed to cancer on 5 March, and the winds of change are blowing
through Caracas.Why was Chvez in Washingtons bad books? His choice of allies, which included the Russian Federation, Iran and Cuba, but worse still were the social programs that Chvez implemented to benefit his people, which were socialist in nature, anathema to Washingtons proscriptions. But,

tying the U.S. and Venezuela together like Siamese twins is oil.

According to the U.S. Energy

Administration, Venezuela is the fourth largest provider of crude oil imports to the U.S., averaging 930 thousand barrels per day. In itscountry report on Venezuela the EIA succinctly noted, Venezuela

contains some of the largest oil and natural gas reserves in the world. It consistently ranks as one of the top suppliers of oil to the U.S. Venezuela is one of the world's largest exporters of crude oil and the largest in the Western Hemisphere. The oil sector is of central
importance to the Venezuelan economy. As a founding member of the Organization of the Petroleum Exporting Countries (OPEC), Venezuela is an important player in the global oil market.Venezuela has the largest conventional oil reserves and the second-largest natural gas reserves in the Western Hemisphere and two years ago OPEC reported that of the organizations 81.33 percent of the globes known oil reserves

Venezuela had 24.8 percent, exceeding Saudi Arabia with 22.2 percent. According to state oil company Petrleos de Venezuela, S.A. (PDVSA) figures, Venezuela currently has 77.5 billion barrels of oil reserves, the largest in the Western Hemisphere. PDVSA has a production capacity, including its strategic associations and operating agreements, of 4 million barrels per day, the highest production capacity in the Western Hemisphere.To fund his social programs, Chvez was determined to bring the countrys oil sector under government control, put ting him into direct conflict with Washingtons belief in free marketsVenezuelas

oil industry had been under private control until 1974, when Venezuela nationalized it, setting up PDVSA. Venezuelas oil production is centered in the Orinoco Oil Belt, which analysts believe contains the worlds largest reserves of extra-heavy oil, with an estimated 300 billion recoverable barrels. In the 1990s PDVSA began a so-called oil opening, where it allowed more and more foreign private companies to extract oil, via majority shares in joint ventures and the operating agreements.But difficulties began with Washington in February 2007, when Chvez announced a new law to nationalize the last remaining oil production sites that are under foreign company control, to take effect on 1 May. Under the law, which allowed foreign companies to
negotiate the nationalization terms, earlier joint ventures, involving ExxonMobil, ChevronTexaco, Statoil, ConocoPhillips, and BP, were transformed to give PDVSA a minimum 60 percent stake. The process completed a government initiative begun in 2005, when the Chavez administration transformed earlier operating agreements in Venezuelas older oil fields into joint ventures with a wide variety of foreign companies. Thirty out of 32 such operating agreements were transformed, with most foreign companies accepting the new arrangements, but ExxonMobil and ConocoPhillips refused, instituting lawsuits for compensation that continue to this day.The policies had repercussions in the diplomatic sphere. On 28 June 2010 President Obama nominated Palmer as U.S. Ambassador to Venezuela but three months later Chvez announced on his weekly TV program that he would not allow Larry Palmer to take up his post after Palmer told a US senator that morale in the Venezuelan army was low and that members of Chvez's government had ties to leftist FARC Colombian rebels. On 28 December Chvez flatly refused to accept Palmer because of his derogatory remarks and the following day the U.S. revoked the accreditation of Venezuelan ambassador, Bernardo lvarez Herrera.And there relations have remained until now, even as oil

sales have continued unabated. But Venezuela's new President, Nicols Maduro, is now seeking to break the diplomatic logjam . On 19 May, during an interview with Venezuelas Televen television channel, Foreign Minister Elias Jaua said, "We are going to remain open to normalizing relations with the United States. The first thing would be to resume diplomatic representation at the highest level," adding that Venezuela is "interested in further deepening and cultivating a friendship with the U.S. people." To be sure, there are still many roadblocks in the way quite aside from the rhetorical sniping, the U.S. has yet to recognize Maduros election, and there remains that pesky issue of compensation. But an olive branch has been extended, and Washington can lose little by at least listening to the country with the Western Hemispheres largest energy reserves . If they do not, then Caracas always has China, which is interested in trade more than ideological rhetoric.

Oil ties are critical to rapprochement- Venezuela knows it needs more foreign investment from US oil companies Metzker 13 (Jared Metzker, political analyst for IPS, Oil Could Help Mend U.S.-Venezuela Relations, June 17, 2013,
http://www.ipsnews.net/2013/06/analysts-say-oil-could-help-mend-u-s-venezuela-relations/)

A shift in U.S. foreign policy towards Venezuela may be pending as a bilateral rapprochement suddenly appears more possible than it has in years. On the sidelines of talks held earlier this month in Guatemala by
the Organisation of American States (OAS), U.S. Secretary of State John Kerry met with Venezuelan Foreign Minister Elias Jaua, with Kerrys subsequent statements indicating that relations today both of us, Venezuela and

could be heading in a friendlier direction. We agreed the United States that we would like to see our countries find a new way forward, establish a more constructive and positive relationship and find the ways to do that, Kerry said following the meeting with Jaua, which was reportedly requested by the Venezuelans. The meeting
happened on the heels of the release of Timothy Tracy, a U.S. filmmaker whom Venezuela had been holding on accusations of espionage. His release was interpreted by many as an olive branch being offered by the new Venezuelan government of Nicholas Maduro, whose presidency Washington still has not formally recognized. Only months ago, before the death of Venezuelas longtime socialist leader Hugo Chavez, any normalization of relations between Venezuela and the United States seemed highly unlikely. In 2002, Chavez was briefly removed from power by a military coup dtat that the U.S. Central Intelligence Agency (CIA) had known was imminent. Chavez immediately accused the United States of having played a part in the event. After his suspicions were confirmed partly valid, his rhetoric grew more scathing. In 2006, he famously told the United Nations General Assembly that thenU.S. President George W. Bush was the devil himself. Following Chavezs death from cancer in March, however, his hand-picked successor, Maduro, the former vice-president, has not been as vitriolic in his posturing vis--vis the United States. According to Michael Shifter, president of the Inter-American Dialogue, a Washington-based think tank, Maduro has offered conflicting signals.

Maduro has so far shifted in his position toward the U.S. between a moderate approach and a more hard-line one, Shifter told IPS. "Venezuela cannot confront its economic crisis and the United States at the same time." -Diana Villiers Negroponte The new presidents waffling may be a reflection of his tenuous grip on power. By many accounts, Ma duro lacks the political prowess and rabble-rousing charm of Chavez, who enjoyed military backing as well as fervent support from the lower classes. In addition to a strong anti-Chavista opposition that openly challenges the legitimacy of his narrowly won election, Maduro has had to deal with a split within Chavezs own former political base. Shifter pointed out that among the military, which was once a source of significant strength for Chavez, more support is given to Diosdado Cabello, currently head of Venezuelas parliament and whose supporters believe he was the rightful heir to the presidency. Maduros legitimacy stems largely from his perceived ideological fidelity, the reason for his selection by Chavez to lead in the first place. Shifter said this leads hi m to emulate his predecessor and makes rapprochement with the United States less probable. Still, ideological concerns may not ultimately decide the issue. Venezuela has inherited from Chavez an economy in difficult straits, which continues to suffer from notorious shortages and high inflation. Oil

economy Over half of Venezuelas federal budget revenues come from its oil industry, which also accounts for 95 percent of the countrys exports. Estimated at 77 billion barrels, its proven reserves of black gold are the largest of any nation in the world. Despite a troubled political relationship, its principal customer is the United States, which imports nearly a million barrels a day from Venezuela. Venezuelas oil industry has been officially nationalised since the 1970s, and, as president, Chavez further tightened government control over its production. His government took a greater chunk of revenues and imposed quotas that ensured a certain percentage would always go directly towards aiding Venezuelans via social spending and fuel subsidies. While these measures may be popular with Venezuelans, who pay
the lowest price for gasoline in the world, critics argue such policies hampered growth and led to mismanagement of Petroleos de Venezuela, S.A. (PdVSA), the main state-run oil company. The same

critics also point to increasing debt levels, slowdowns in productions and accidents stemming from faulty infrastructure. In order to boost production,
PdVSA agreed in May to accept a number of major loans. This includes one from Chevron, one of the largest U.S. oil companies, which will work with Venezuelans to develop new extraction sites. Related IPS Articles UNASUR Backs Venezuelan President-elect and Calls for Peace Tension Surrounds Start of Venezuelas Post-Chvez Era OP-ED: Stability Will Mark Post-Chvez Venezuela The oil sector is in deep trouble in Venezuela production is down and the economic situation is deteriorating, explained Shifter. They

know they need foreign investment to increase production, and this is in part what has motivated Maduro to reach out. If its economy continues to falter, Venezuela may be further tempted to embrace the United States, which has the largest, most sophisticated fossil fuel industry in the world. Kerrys recent words suggest that the administration of President Barack Obama would be waiting with open arms.
Venezuela cannot confront its economic crisis and the United States at the same time, Diana Villiers Negroponte, a senior f ellow at the Brookings Institute, a Washington think tank, told IPS, and we are

a pragmatic country which will deal with Maduro if it is in our interests. Indeed, Negroponte said she was optimistic about the possibility of rapprochement between the two countries within the next six months. She notes a troika of issues on which
the United States is looking for Venezuelan cooperation: counter-terrorism, counter-narcotics and assistance in ridding Colombia of its FARC rebels. Nonetheless, major actions remain to be taken if normalization is to even begin, such as the exchange of ambassadors and official U.S. recognition of the Maduro government. Shifter (who regards the Kerry-Jaua meeting as a small step) was not optimistic that these larger requirements will be completed in the short term. I dont think Washington is going to push hard to send an ambassador to Caracas, he said. It will probably take more time to observe the new government and see where it is going.

Maduro wants rapprochement AFP 13 (Agence France-Presse, AFP is a French news agency, the oldest one in the world, and one of the three largest with
Associated Press and Reuters, Venezuelas new government open to resuming U.S. diplomatic relations, May 19, 2013, http://www.rawstory.com/rs/2013/05/19/venezuelas-new-government-open-to-resuming-u-s-diplomatic-relations/)

Venezuela on Sunday made a rare diplomatic overture to the United States, suggesting it could be time for better ties. We are going to remain open to normalizing relations with the United States, Foreign Minister Elias Jaua said on Televen television Sunday. The first thing would be to resume diplomatic representation at the highest level, he said. The countrys late socialist president Hugo Chavez was a staunch critic of the United States, and his successor Nicolas Maduro is still feeling out its footing with Washington. Chavez for more than
14 years unleashed verbal broadsides on US leaders before his death in March. The United States and Venezuela since 2010 have not even had ambassadors in their embassies in their respective capitals. Maduro, who earlier said his government would like to increase dialogue with the United States, has selected lawmaker Calixto Ortega as its potential US envoy. US President Barack Obama however has not congratulated Maduro for his controversial, razor-thin April 14 election, as Maduros opposition rival Henrique Capriles presses claims that the Venezuelan presidential election was marred by irregularities. Maduro meanwhile slammed Obama

the top leader of devils after he commented on post-election unrest in Venezuela. Despite

the bad blood, Venezuela

sells about 900,000 barrels of oil every day to the United States.

Say yes- proven by Maduros statements that he values economic ties with the US Hootsen 13 (Jan-Albert Hootsen, journalist specializing in national affairs and cultural and socio-economic issues for various
Dutch media, including Trouw, De Pers, Radio Netherlands Worldwide and De Groene Amsterdammer, After Chavez, U.S. Ties Less Present in Venezuela Election, April 12, 2013, http://www.worldpoliticsreview.com/articles/12865/after-chavez-u-s-ties-lesspresent-in-venezuela-election) Venezuelas stance toward the U.S. was complicated throughout the 14 years Chavez ruled the country. His fiery anti -American rhetoric, culminating in a 2006 speech at the U.N. General Assembly in which he famously called then-U.S. President George W. Bush the devil, caused its share of bilateral tensions. Even more infuriating to Washington were Venezuelas warm relations with countries hostile to the U.S., such as Cuba, Iran and Syria, as well as suspected aid to the Revolutionary Armed Forces of Colombia (FARC), a guerrilla group deemed a terrorist organization by both the U.S. and the European Union. At the same time, however,

economic ties between the U.S. and Venezuela have remained close. Venezuela, which has the worlds largest
proven oil reserves, still sends half of its crude exports to the U.S., providing revenues that finance nearly a quarter of the governments yearly budget. Still, as the campaign progressed, only Maduro

made a point of including the U.S. in his talking points, mainly to entertain the crowds with outlandish conspiracy theories. Hours before the March 5 announcement of
Chavezs death, Maduro accused a U.S. diplomat of spying on the Venezuelan military and insisted the Venezuelan government had evidence that Chavezs cancer was caused by the U.S. and Israeli governments. Several weeks later, he publicly asked U.S. President Barack Obama to call off an alleged plot to kill Capriles, a plan, Maduro said, masterminded by Pentagon officials to create chaos in Venezuela. Why the sudden wave of absurd allegations, when only months ago Maduro

seemed to be looking to

explore the possibility of improved relations with the U.S.? To many analysts, the aggressive anti-American stance
serves an electoral purpose: to divert attention from formidable domestic troubles, such as high inflation, an exploding crime rate and scarcity of products caused by dollar clamps and restrictions on imports -- problems which many believe Maduro is incapable of solving. As

a former exterior minister, Maduro knows more than anyone just how dependent his government is on the U.S. economy, says Remi Lehmann, a Dutch political scientist and author of Chavez, the
Venezuelan Petro State and Foreign Policy. Lehmann adds, He depicts the U.S. as an evil empire and an enemy of the Bolivarian revolution, making it the perfect common adversary to unite his slightly fractured following. For James Bosworth, an analyst of Latin American politics, Maduros poor political skills raise serious questions about his ability to address the countrys many challenges. He will need antagonists to blame for his poor governing skills, says Bosworth, and the U.S. presents an easy target for him to point fingers at. Be that as it may, Chavista voters largely cheered Maduros anti-American statements. The lions share of his constituency consists of members of the working class who benefited greatly from Chavezs social welfare programs, including free housing, health care and education. Fearing that a Maduro loss could mean a sudden end to the petrodollar-funded largesse, most Chavistas are happy to blame the U.S. for any problem Venezuela faces. And seemingly they will continue to do so if Maduro, who has vowed to follow Chavezs policies to the letter, is elected. If anything, the anti-American attitude might even become more radical. The sensitivity of Venezuela-U.S. relations is such that Capriles has preferred to refrain from mentioning the United States at all in his campaign. From an electoral point of view, this was the sensible way to go, as any perceived warm feelings toward the United Sates would rally Chavista voters even more firmly behind Maduro and decrease Capriles already slim chance of winning the elections. Conversely, any attempt to even slightly copy Maduros anti-American slogans would immediately alienate Capriles natural constituency: middle- and high-income voters with no hostile feelings toward the U.S., including many with strong ties to large Venezuelan expatriate communities in cities like Miami. For Capriles, silence on the matter seemed to be the safest approach. The opposition candidate did, however, vow to end oil shipments to countries antagonistic to the U.S. and appears to have no interest in continuing support to Syria and Iran, which by itself is enough to make a good impression in Washington. The Obama administration, meanwhile, has kept a low profile in recent weeks, limiting itself to calling the post-Chavez era a new chapter for Venezuela and denying the most outlandish of Maduros accusations. The

Obama administration wants a productive

relationship with the Venezuelan government, Bosworth says. They're willing to overlook the crazy accusations if
they can get some concrete progress on issues of importance. Whether -- and by whom -- those issues will be addressed remains to be seen; the latest polls indicate that Maduros early advantage is rapidly fading.

The election of Maduro presents an opportunity for the US to normalize relations through cooperation in the oil industry- theyll say yes because they need investment
By Daniel J. Graeber, a senior journalist at the energy news site Oilprice.com. He is a writer and political analyst based in Michigan., Mon,

April 15th,

2013, http://oilprice.com/Geopolitics/South-America/The-apparent-victory-for-Nicolos-Maduro-in-the-Venezuelanpresidential-election.html

The apparent victory for Nicolos Maduro in the Venezuelan presidential election may give the United States a sense of hope for improved ties with the Latin American oil giant. His service as a diplomat could make him at least tepid toward Washington, a sentiment backed by outreach efforts before the election. U.S. supermajor Chevron, meanwhile, is among the major players expressing interest in the vast oil deposits that lie off Venezuela's coast. Caracas, for its part, is eager to bring more foreign investors into the country . With U.S. oil production in a boom cycle, however, it's unclear if U.S. eyes will focus on Venezuelan developments given the evolving tilt toward other hemispheres.Before his death in March, Hugo
Chavez left power in the hands of Maduro, his vice president and foreign minister. As foreign minister, Maduro moved Caracas closer to Western opponents like Belarus, the fading Syrian regime of Bashar Assad and Vladimir Putin's Russia. In February, Caracas said it was expecting a $1.1 billion upfront payment from Russian oil company Rosneft for work in the offshore Orinoco belt. Rosneft said it would come in later with $1.5 billion in financing for a project that could produce as much as 400,000 barrels of oil per day.Select the reports you are interested in:Venezuela passed Saudi Arabia in terms of crude oil deposits with an estimated 296.5 billion barrels at the end of 2011. Venezuelan

Oil Minister Rafael Ramirez said that means the country may be a panacea for a world economy on the road to recovery.Related article: VENEZUELA-US: Tell-Tale Signs of Hostile Environment for Investors"We have always said that in the
future the natural resources will become scarce and when the economy recovers and demand will come back then we will be one of the few countries able to respond to that," he said.Two market reports last week OPEC's and the U.S. Energy Department's both forecast a decline in global oil demand in 2013, however. OPEC, in its April report, cut its forecast by 40,000 barrels per day to 800,000 bpd in part because of declining consumption in Europe and Japan. The U.S. Energy Information Administration, meanwhile, cut its 2013 forecast by 50,000 bpd to 960,000 bpd for the year.The

United States has been a key purchaser of Venezuelan crude in the past . U.S.

representatives met with Maduro last weekend, saying there was an opportunity with the former foreign minister to "regularize the relationship." That could kick start diplomatic outreach efforts suspended during the Chavez era . U.S. consumption of Venezuelan crude, however, is in decline. The EIA said that, as of January, the United States imported 871,000 bpd of Venezuelan crude, down more than 17 percent from their December figures. Maduro, meanwhile, may draw on the long-standing relationship with Russian giants, and the Chinese economy. Venezuela already sends 430,000 bpd to China, a substantial increase from a decade ago. Despite a challenge to the polls from
rival Henrique Capriles, Maduro may nudge open some of the doors closed by his mentor, Hugo Chavez. The outcome of that effort, however, depends on who's knocking.

The new government will be forced to bring in investment to boost production capabilities
Venezuela and the oil market after Chvez, Nick Butler, 3/5, 2013, Visiting Professor and Chair of the Kings Policy Institute at Kings College London. He spent 29 years with BP, including five years as Group Vice President for Policy and Strategy Development at BP from 2002 to 2006. He has also served as Senior Policy Adviser at No 10, Chairman of the Centre for European Reform and Treasurer of the Fabian Society, http://blogs.ft.com/nick-butler/2013/03/05/venezuela-and-the-oil-market-after-chavez/

The death of Hugo Chvez and the prospect of a regime change in Venezuela will cause no more than a momentary blip in the oil market. This is a remarkable change from the situation a few years ago, when developments in Carcacas would have destabilised prices across the world. In reality, Chvez diminished Venezuelas potential role in the international oil business by undermining the status of the state
company Petrleos de Venezuela SA and excluding major international investment. Production and exports from Venezuela are now well below their potential levels. To restore PDVSA to its former glory will take time. Many

of the people best able to build the company and the country now live comfortably in London or New York and will take some persuading to go back home. Oil industry investors will be circling the airport in their private jets, but there is no new consensus as yet as to the terms on which they might be allowed to return. That too will take time. In the
meantime, any new government will be desperate to sustain revenue and to see oil prices remain as high as possible. The power to achieve that, however, lies elsewhere and in economic terms, Venezuela is a price taker. They must deal at whatever price the market sets and in the end that means relying on the Saudis to maintain Opec discipline. Looking ahead, events in Venezuela put further downward pressure on the oil price. Almost

any new government is likely to want to increase oil production and to encourage

foreign involvement . The countrys resources are enormous and as Venezuelans move beyond the rhetoric of the

Chvez years

they may want to see greater investment, a return to a professional oil company and a new

opening to the international market . Although it could take time to deliver, any material growth in output and exports would
increase the pressures being felt within Opec from the rise in Iraqi production, which is already occurring. Global demand growth is not sufficient to absorb all the production available. As ever, the game will come back to the Saudis. In recent months, probably as a result of their increasing revenue needs, they appear to reset their desired price at something above $110. As production elsewhere grows,

that

level will become harder and harder to maintain. For the past decade the policies of Chvez have kept Venezuelan production and exports down and oil prices up. With his death, there is no guarantee that such policies or such an outcome will be maintained for long .

Maduro = Pragmatic
While its true that Maduro is still full of anti-American rhetoric, the difference is that hes a pragmatist and will negotiate with the United States
Jonathan Watts, Latin America correspondent at the Guardian, Mar maduro-post-chavez-bluster

6th, http://www.guardian.co.uk/world/2013/mar/06/nicolas-

The interim president of Venezuela, Nicols Maduro, may have a reputation as an approachable pragmatist but he has begun the post-Chvez era in the pugnacious style of his former boss expelling US diplomats, accusing "historical enemies" of poisoning the president and labelling the domestic opposition as fascists who want to
divide the country.The question now is whether that rhetoric sets the tone of the next administration or is simply the opening salvo in an election campaign to decide the long-term successor to the leader who dominated the nation's politics for 14 years.As the candidate for the ruling United Socialist party, Maduro, a former foreign minister, bus driver and trade union activist, will be the clear favourite but faces tough competition from an opposition that united last year around Henrique Capriles. But Maduro has the ultimate endorsement.In his last public address before emergency cancer treatment, in December, Hugo Chvez spelled out clearly that the 50-year-old Maduro was his chosen successor."My firm opinion, as clear as the full moon irrevocable, absolute, total is that you elect Nicols Maduro as president," Chvez said in a dramatic televised statement. "I ask this of you from my heart. He is one of the young leaders with the greatest ability to continue, if I cannot."With an upsurge of sympathy likely to be generated by the huge state funeral that is planned for Friday and endorsements from the many Latin American leaders who will come to pay their respects, Maduro has a good chance of securing a full six-year term. Although a longterm Chvez loyalist,

Maduro was until recently known for having a very different persona; he was admired

for his quiet demeanour and sensible pragmatism ."He is a quiet and serious man. A very good orator and clear thinker," said Agustin D'Attellis, an Argentinian government adviser who has attended several meetings with Maduro. "But he is no Chvez."Perhaps hoping for a change, the US reached out to Maduro soon after he became vice-president and effectively began running the country in Chvez's absence and received a relatively concilliatory response.However, Maduro's tone was very different on Tuesday. As well as expelling a US airforce attache
accused of trying to foment a military plot, he accused imperial enemies a term usually associated with the US of poisoning Chvez. "We have no doubt that commander Chvez was attacked with this illness," Maduro said, echoing a charge first made by the former president himself. "The old enemies of our fatherland looked for a way to harm his health."He said he would launch an investigation, but the US has denied the poisoning and plotting accusations.Maduro's background suggests he will be a tough adversary. Born in 1952 and raised in Buenos Aires, he was a rock music enthusiast in his teens with Led Zeppelin among his favourites and reportedly considered a career in a band. Instead, he worked for the Caracas metropolitan transport system and became a union activist, who later went for training in Cuba. He retains close links with Cuba and is a friend of the Castros, which suggests he would not cut the subsidised oil supplies that Venezuela now provides to the island, as well as to several other left-leaning nations.His

second wife, Cilia Flores, a lawyer, is a former speaker of the national assembly. She led the legal team that helped free Chvez after the failed 1992 coup against the Prez government. The background of this couple suggests they are negotiators rather than confrontationalists, despite the bluff and bluster of Tuesday's press conference, which analysts said was aimed at a domestic audience .Michael Shifter, head of the Inter-American Dialogue thinktank in Washington DC, said: " Maduro's ideas are not different, but his style is. He is union leader not a lieutenant colonel in the military ."We can expect him to be rhetorically hardline, but he does have a pragmatic streak that we will see behind the scenes. He's someone that the US, and maybe even the opposition, can deal with."There will have to have two tracks: While he is hardline in public, he will have to make deals too to make up for the fact that he is not Chvez."

Maduros history as a negotiator makes him open to greater cooperation with the United States
Jim Lobe, 3/7/13, He joined IPS in 1979 and opened its Washington, D.C. bureau in 1980, serving as bureau chief for most of the years since. He founded his popular blog dedicated to United Stated foreign policy in 2007. Jim is best known for his coverage of U.S. foreign policy for IPS, particularly the neoconservative influence in the former George W. Bush administration, http://www.ipsnews.net/2013/03/u-s-hopes-forsome-rapprochement-after-chavez/

Still,

most observers believe that Maduro will be more willing to engage Washington on a number of

issues than Chvez , who had initially welcomed Obamas election in 2008 but quickly grew disillusioned with the new president and declared Washingtons ambassador in Caracas persona non grata in 2010.For instance, in late November, Maduro reportedly conducted a cordial telephone conversation about possible ways to improve bilateral ties with Assistant Secretary of State for Western Hemispheric Affairs Roberta Jacobson. If Maduro were to be elected and lead a government with a broad consensus, it is likely that relations with the U.S. would improve , noted Smilde.On the one hand, Maduro is a negotiator and was significant in a breakthrough in diplomatic relations with Colombia. One can imagine a similar improvement with the U.S., he noted. On
the other hand, the conceptual anchor of Maduros ideology is an anti-imperialism in which the U.S. is the more important symbolic foil.Maduro

will obviously have to govern in a very different way from Chvez. He doesnt have the same charisma or appetite for control and power, Shifter told IPS.Hes a union leader with a lot of experience in
negotiations, so well see a different style that could offer some opportunity for the United States not to have a warm and close relationship with Venezuela but at least to open up channels of communication and have ambassadors in both capitals. That would be a step forward from what we have now.At the same time, however,

Shifter warned that the White House itself will likely move very

slowly, so as not to provoke right-wingers in Congress who greeted Chvezs long-awaited demise with undiluted enthusiasm .They called, among other things, for the administration to retaliate for the two expulsions, a step which
State Department officials said they were reviewing Wednesday.Hugo Chvez was a tyrant who forced the people of Venezuela to live in fear, said Rep. Ed Royce, who has just succeeded the fiercely anti-Chvez and anti-Castro Rep. Ileana Ros-Lehtinen as chair of the House Foreign Affairs Committee. His death dents the alliance of anti-U.S. leftist leaders in South America. Good riddance to this dictator.The problem on the U.S. side of the bilateral relationship is going to be some members of Congress who will be very critical of any sign of rapprochement between the administration and Maduro, Shifter said. And theyre not going to want to fight with members of Congress over V enezuela. So theyre going to try to explore these openings but will be quite cautious and careful about doing so.Indeed, despite

Chvezs

hostility toward the U.S., which reached its zenith after the George W. Bush administration endorsed a failed coup attempt against him in 2002, strong trade relations never suffered during his 14-year tenure.As noted by Shannon ONeil, a senior fellow for Latin American studies at the influential Council on Foreign Relations, in an op-ed for BBC Wednesday, the U.S. buys more oil from Venezuela than any other country, while Caracas has been a major consumer of U.S. manufactured exports, particularly automobiles.(A)s subsequent Venezuelan governments look to adjust their economic
policies in the coming months and years, the experience of their (South American) neighbours provide incentives to forge a more amicable bilateral relationship, wrote ONeil.Since Novembers exchange between Maduro and Jacobson, lower-level

Venezuelan and U.S. officials have reportedly held occasional meetings in Washington to further explore opportunities for renewing cooperation in what the State Department official called a little bit of a rocky road.We didnt
really begin the substantive portion of those conversations, so we really hadnt gotten very far and were not sure whether the government of Venezuela wanted to continue that road when yesterday occurred, the official added in reference to Chvezs death. The

official

suggested that possible cooperation on counter-narcotics, counter-terrorism, citizen security, and economic and commercial issues would serve the two countries mutual interests . The official said
Washington will likely send a delegation to Chvezs funeral Friday and will push Caracas to permit international election monitors, as well as domestic groups, to observe the preparations for and the conduct of the upcoming elections. ]CARACAS, Venezuela In the weeks before his mentor's death, Vice President Nicolas Maduro's imitations of President Hugo Chavez became ever more apparent the same vocal patterns and speech rhythms, the same themes. He has also adopted Chavez's clothes, walking beside his coffin in an enormous procession Wednesday in a windbreaker patterned after the national colors. Now the big question is whether Maduro will still mirror Chavez or veer off.

"He can't just stand there and say 'I am the Mini-Me of Chavez and now you have to follow me,' " said Maxwell A. Cameron of the University of British Columbia in Vancouver.

Maduros pragmatist attitude bodes well for attempts to improve the US-Venezuela relationship
By Ginger Thompson and William Neuman, 03/07/2013, foreign policy writers for The New York Times, http://www.denverpost.com/nationworld/ci_22734521/hugo-chavez-successor-nicolas-maduro-shows-himself-pragmatist

Vice President Nicolas Maduro is a pragmatist , diplomats say. Washington has been feeling out Maduro for months, years even, to determine whether he might provide an opening for closer ties between the two nations.U.S. officials say that Chavez, despite his very public denunciations of Washington, worked behind the scenes to keep trade relations between the two countries, especially in the oil sector, strong. They recalled Wednesday
how Chavez once picked up the phone and dialed an American diplomat to talk policy, an odd move for a leader who more than once barred U.S. ambassadors from Caracas and regularly denounced Washington and its leaders, sometimes using barnyard epithets."The United States needs to fix this," Chavez said during the call, which concerned the ouster of the Honduran president in 2009. "You are the only ones who can."Beneath

the bluster, American diplomats and analysts said, Chavez could be a pragmatist, albeit a sometimes bombastic one, and they hope Maduro will prove to be even more of one."I know Nicolas Maduro well," said William D. Delahunt, a former Massachusetts member of Congress. " I know he's a pragmatist."The United States reached out to Maduro in November to gauge interest in improving the relationship . He responded positively, and the two nations held three informal meetings in Washington, the last one taking place
after it was clear that Chavez's condition was severe, U.S. officials said.Most diplomats and political analysts agree that the start of the postChavez landscape looked bleak, with Maduro accusing the United States of plotting against the country and expelling two American military attaches. However,

some observers saw the moves as an overtly calculated one analyst called it

"inelegant" attempt by Maduro to appeal to Chavez' supporters and propel his own chances of winning an election to succeed him .

Political challenges and an economic downturn make Maduro willing to compromise and give in to US demands
By ALEXANDRA OLSON and CHRISTOPHER TOOTHAKER, venezuela_n_3091649.html

4/16, http://www.huffingtonpost.com/2013/04/16/nicolas-maduro-

Among Venezuela's problems are crumbling infrastructure, persistent shortages of food and medicine, and double-digit inflation. The nonprofit Venezuelan Violence Observatory estimates Venezuela's homicide rate last year was 73 per 100,000 people, among the world's worst.With such a narrow victory, Maduro has little political capital to make some of the difficult choices some of those problems require, said Risa GraisTargow, Latin America analyst for the Eurasia Group.Price controls and strict currency controls imposed under Chavez have failed to stem inflation or the flight of dollars and are strangling private firms. But lifting them abruptly could bring economic turmoil and hurt the poor.GraisTargow said Maduro will likely focus instead on expanding the myriad of social programs that cemented Chavez's popularity. But that has become increasingly difficult to balance with the need to spend on redressing Venezuela's other problems.The

state-oil company that gave billions of dollars to fund social programs is saddled with mounting debt and declining profits. Critics say the company has failed to invest in boosting oil production, which has fallen for years even though Venezuela has the world's biggest oil reserves.Throughout the campaign, Maduro blamed
Venezuela's frequent power blackouts on sabotage by government enemies and said food shortages are caused by hoarding by the private sector. So did Chavez before he died, but Sunday's election results showed that a growing numbers of Venezuelans are no longer buying it.Maduro, a former bus driver who rose to become foreign minister and vice president under Chavez, offered no ideas of his own for resolving the country's problems. He did suggest at the news conference Monday night that a Cabinet shake-up was in the works.The president-elect said he would have to "conform a new government," though he quickly added that he would ratify Vice President Jorge Arreaza, Chavez's son-inlaw, in his post.In his own Twitter message, Arreaza also hinted that the election results were sobering, though he used softer language than Cabello. "Review and rectify where we have to," he wrote.Chavez swiftly sidelined those who openly questioned him during his 14 years in

power. Maduro's narrow victory has given him a weaker mandate for keeping the disparate factions of the movement in line.The factions include former soldiers like Cabello who joined Chavez in a failed 1992 coup. Maduro comes from the ranks of leftist political and labor groups that united to help elect Chavez president in 1998. Chavez's relatives, led by his brother Adan, form another bloc."His

legitimacy comes from the fact that Chavez named him as his successor and other factions were forced to accept it," said Grais-Targow. "But he faces this landscape where the other main figure, Diosdado Cabello, could elevate his role and have more power. There are also governors who have bases of support and could pose challenges."Anger over past Chavista fissures surfaced amid Monday's tensions. Adan Chavez blamed two former Chavista politicians for
disturbances in Barinas. "They are traitors of the revolution," Chavez told state television.The powerful state political apparatus built by Chavez is standing with Maduro.The National Electoral Council, where four of the five directors are accused by the opposition of having ties to the government, has so far brushed off the demand for a recount. Lucena, the council president, suggested Capriles take his complaints to other channels - presumably the Supreme Court, which is stacked with Chavista sympathizers.Another thing Maduro may have going for him: Other Chavista leaders don't have considerable big bases of their own after years in Chavez's shadow. That may motivate them to stay united as long as possible."His leadership will not be publicly questioned for at least the first year of his government," said Moya-Ocampos. "After that, if he fails to resolve domestic problems, members of the PSUV and the military will step forward and begin to publicly question his leadership."Some politicians and diplomats who have met Maduro, who was Chavez's foreign minister for six years, describe him as a smooth negotiator.Former longtime U.S. Rep. Bill Delahunt, a Democrat from Massachusetts who attended Chavez's funeral in representation of the United States and met with Maduro, said he thinks that given

the pressures "enveloping" Maduro, the pragmatist in him will show."He has an excellent sense of humor. He connects with people. He's bright. He's very easy to underestimate and that's a mistake for people," Delahunt said in an interview with The Associated Press."His background I think would lead some to believe that he is not prepared. He is prepared. He has excellent political skills,"

AT: Companies wont go there


Oil companies are speculating on Venezuela already.
Energy Investing, Oil Companies Hope for New Opportunity in Energy-Rich Venezuela, Money Morning Staff reports - March 19,
2013, http://moneymorning.com/2013/03/19/oil-companies-hope-for-new-opportunity-in-energy-rich-venezuela/

One of the biggest headlines recently related to oil companies was news of the passing of Venezuelan President Hugo Chavez. "El Commandante" as he was affectionately referred to by his countrymen, at least by those who approved of his leftist policies, was 58 and succumbed to a lengthy battle with cancer. Predictably, news of Chavez's passing has sparked ample speculation about what the future holds for Venezuela's oil industry and those oil companies looking to profit from a possible renaissance there . Venezuela is South America's largest oil producer and an OPEC
member. In what may come as a surprise to some investors, Venezuela could be called the Saudi Arabia of OPEC. In other words, the South American nation is home to about 300 billion barrels of proven oil reserves, compared to about 270 billion barrels in Saudi Arabia. That is according to OPEC's own estimate. Not only that, but Venezuela

is home to the largest natural gas reserves in the Western Hemisphere. Given those superlatives, it is easy to understand why some Western oil companies are cautiously optimistic
about what the future may hold for them in Venezuela. A Rosy Scenario for Oil Companies Despite its embarrassment of oil riches,

Venezuela has failed to unlock the profit potential in these reserves. Due to years of not properly investing in its oil industry resources, production steadily declined by about 25% in the 14 years Chavez was in power, and oil exports fell by nearly 50%. In fact, there were various points during the Chavez years that
Venezuela was actually a net importer of crude."Venezuela's clout on OPEC and on world oil prices has been greatly diminished because of its inability to exploit its enormous resources," Michael Lynch, president of Strategic Energy and Economic Research, a consultancy, told The New York Times. "In the

1990s, their production was booming and they could thumb their nose at Saudi Arabia and get away with it, but now they have become OPEC's poor cousin." That is to say even with a regime change, which does not appear imminent, it will take years for output there to jump to the point where Venezuela makes a significant contribution to reserves and profits for major oil companies.

US new tech means they want to invest in Venezuela [& Mexico]


Aguilar, 03/06/2013 (Julin Aguilar, Reporter at the Texas Tribune, Mexico's Energy Reform Drawing Interest in Texas, The Texas
Tribune, http://www.texastribune.org/2013/03/06/mexicos-energy-reform-drawing-interest-texas/)

A reform of Mexicos energy sector has the potential to have a significant impact on the entire United States, particularly in the oil and gas region in South Texas that already enjoys strong ties with Mexico and has experienced unprecedented industry growth, enhanced modernization and technological advancements, said STEER president Omar Garcia. Those technological advancements will be a key factor for many U.S. interests, said Scott Miller, a senior adviser at the Center for Strategic and International Studies. Despite having proven oil reserves, PEMEX has under-produced, he said. The capability is there, but what they need is better technology and better access to some of the more modern techniques, and this is where U.S. energy services companies many of them located in and around Houston would, I think, find a major business opportunity, he said. Its something that oil and energy development around the world benefit handsomely from U.S. know-how and U.S. technology. Miller added that state control of a resource is not something to necessarily be wary of. The largest private owner of energy reserves, Exxon Mobil, owns only 2 percent of the worlds share. Most oil resources or energy resources are in government hands , either state-owned enterprises or state-controlled enterprises, he said. All of Russia, all of Venezuela and Petrobras [in Brazil] and most of the Middle East. So its not unusual to have that. Its really how they structure it and what access is providing for oil services. But any opening of any sort will be looked at as an important opportunity.
tends to

US Key

US key
US technical assistance is keymanagement expertise, technology, and investment capital.
Eric Farnsworth, 4-11-2013, Vice President, Council of the Americas, Energy Security Opportunities in Latin America and the Caribbean, http://docs.house.gov/meetings/FA/FA07/20130411/100622/HHRG-113-FA07-Wstate-FarnsworthE-20130411.pdf Finally, we

should begin to view energyspecifically natural gasas a potent new tool of regional foreign policy, particularly in the Caribbean Basin including Central America, but only if we first allow ourselves to export it rather than keeping it bottled up in the United States. The Caribbean Basin faces economic challenges unlike the rest of the hemisphere due to small and less competitive economies. As security gains are made in Mexico and increasingly Central America, drug traffickers will change their routes back into the Caribbean. Those realities, coupled with Venezuelas growing economic challenges and political transition which may cause Caracas to reduce its provision of subsidized energy under the Petrocaribe program, suggest that now would be an opportune time for the U nited S tates to help build Caribbean competitiveness and job creation in the formal economy. The
export of natural gas and a focus on regional connectivity should underlie such an initiative. More broadly, the

U nited S tates has a strategic interest in working with willing nations in the hemisphere to develop their own energy resources effectively, while promoting models that reduce the negative if unintended consequences of regional energy development, including a lack of transparency and official corruption, the distorting impact of consumption subsidies, an over-reliance on a single commodity or sector, environmental concerns, and a concentration of wealth and political power around the sector. In order to develop their respective industries, nations need U.S. technology, management expertise, and investment dollars. They need our
education system to develop their engineers and seismologists, they need help to understand regulatory, tax, and policy models that work,

they need to be exposed to best practices in environmental mitigation, and they need our technical assistance to improve the investment climate and the rule of law.

US new tech means they want to invest in Venezuela Aguilar, 03/06/2013 (Julin Aguilar, Reporter at the Texas Tribune, Mexico's Energy Reform Drawing Interest in Texas, The Texas
Tribune, http://www.texastribune.org/2013/03/06/mexicos-energy-reform-drawing-interest-texas/)

A reform of Mexicos energy sector has the potential to have a significant impact on the entire United States, particularly in the oil and gas region in South Texas that already enjoys strong ties with Mexico and has experienced unprecedented industry growth, enhanced modernization and technological advancements, said STEER president Omar Garcia. Those technological advancements will be a key factor for many U.S. interests, said Scott Miller, a senior adviser at the Center for Strategic and International Studies. Despite having proven oil reserves, PEMEX has under-produced, he said. The capability is there, but what they need is better technology and better access to some of the more modern techniques, and this is where U.S. energy services companies many of them located in and around Houston would, I think, find a major business opportunity, he said. Its something that oil and energy development around the world benefit handsomely from U.S. know-how and U.S. technology. Miller added that state control of a resource is not something to necessarily be wary of. The largest private owner of energy reserves, Exxon Mobil, owns only 2 percent of the worlds share. Most oil resources or energy resources are in government hands , either state-owned enterprises or state-controlled enterprises, he said. All of Russia, all of Venezuela and Petrobras [in Brazil] and most of the Middle
tends to

East. So its

not unusual to have that. Its really how they structure it and what access is providing for oil services. But any opening of any sort will be looked at as an important opportunity.

Conditions Key Cards


Conditioning further assistance on the ending of Venezuelan association with rogue states is the most effective strategy to pursue
James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics and Sergio

Daga is Visiting Senior Policy Analyst for Economic Freedom in Latin America at The Heritage Foundation., 2013,
http://www.heritage.org/research/reports/2013/04/venezuela-us-should-push-president-maduro-toward-economic-freedom

Hugo Chavezs hand-picked successor, former trade union boss Nicols Maduro, appears to have defeated Governor Henrique Capriles by a narrow margin in a contentious and hard-fought special election on April 14. Venezuela

is in such shambles after 14 years of seat-of-the-pants mismanagement that Maduroassuming his victory is confirmed may ultimately be forced to pursue more moderate policies and seek help from the U.S. to restore stability .The Obama Administration and Congress should exploit this opening by using U.S. leverage to push Venezuela to turn from Chavezs failed experiment in oil-cursed[1] 21st-century socialism toward economic freedom.An Economy in RuinsThe foundations of economic freedom in Venezuela have crumbled. When Chavez
took office in 1999, Venezuela scored 54 out of 100 possible points in The Heritage Foundation/Wall Street Journals annualIndex of Economic Freedom. Today, however, after 14 years of Chavezs soft authoritarian populism, Venezuela merits a score of just 36 points. This nearly 20point plunge is among the most severe ever recorded by a country in the history of the Index. Its 2013 rank174th out of 179 countries places Venezuela among the most repressed nations in the world.[2]Venezuelas dismal economic freedom score is reflected in statistics that translate into real-time hardship for Venezuelans, who must spend more of their incomes on higher prices for necessitiesif they can find them on empty store shelves. There

are scarcities of nearly all staple food and fuel products. In fact, according to the

Banco Central of Venezuelas (BCV) shortages index, Venezuela faces the most severe food shortages in four years.[3] And what food is available comes at a price: Mary OGrady reports in The Wall Street Journal that over the past 10 years inflation in food and nonalcoholic beverages is 1,284%.[4]Financial disequilibrium in Venezuela is the result of a sharply widening fiscal deficit that reached almost 15 percent of gross domestic product (GDP) last year.[5] Government control of the formerly independent BCV also contributed to a massive expansion of the money supply. There are anecdotal reports in Caracas of people paying as much as 23 bolvars for one U.S. dollar in the black market as of early April. The official rate is just 6.3 bolvars per dollarand that is after a significant 32 percent devaluation in February.[6]These problems were aggravated by Chavezs foreign adventurismwhich drained billions of petrodollars from the economy to keep afloat the failed economy in Fidel Castros Cubaas well as generous subsidies to his Chavista cronies in the region through such schemes as ALBA and PetroCaribe.Corruption and Weak Rule of LawAs reported in the Index, political

interference in Venezuelas judicial system has become routine, and corruption is rampant. The landscape in Caracas and elsewhere in the country is littered
with half-finished, publicly funded infrastructure and housing projects. The government funds needed to complete them often disappear.As government expanded under Chavez, corruption became institutionalized. Chavez doubled the size of the public sector, many of whose 2.4 million[7] employees have no real job other than to work to keep the regime in power. A World Economic Forum (WEF) survey found little trust among businesses, politicians, the judicial system, and the police in Venezuela.[8] The

tragic result is that Venezuela is now one of the most dangerous countries of the world. According to the Venezuelan Violence Observatory, in 2012 nearly
22,000 people were murdered.[9]An inefficient and non-transparent regulatory environment that is hostile to private foreign direct investment obstructs long-term development and hampers entrepreneurial growth. The

investment regime is tightly controlled by the state and favors investors from China, Russia, Iran, and other democracy-challenged countries.[10]
Investor protection in Venezuela is ranked at 140 out of 144 countries, according to the WEF report.[11] In 1998, before Chavez took power, there were more than 14,000 private industrial companies in Venezuela; in 2011, after 13 years of extensive nationalizations and expropriations, only about 9,000 remained.[12]The Chavez government did make one product very inexpensive for Venezuelans: Generous energy subsidies mean a car can be filled up with 15 gallons of gasoline for less than one U.S. dollar.[13]Although that might buy short-term

political advantage for the Chavista government, in the long term these energy subsidies are very destructive to future economic growth, since Venezuelan companies have a distorted cost base and thus cannot compete globally. Operations of the state oil company, PDVSA, have also deteriorated significantly under Chavez. When he took office, PDVSA was producing 3.5 million barrels per day (bbl/d); today, it is down to 2.5 bbl/d.[14]Social Programs and InequalityIronically, Chavezs years in power did not result in much reduction of poverty and inequality. Although some measures of income inequality (such as the Gini coefficient) did improve under Chavez,[15]according to a recently published research paper by Darryl McLeod and Nora Lustig[16] that used data for 18 Latin American countries, market democracies such as Chile and Brazil were far more successful at reducing inequality and poverty than the populist Chavista regimes.Despite its vast oil wealth, Venezuelas economic growth performance has also been poor. Between 1999 and 2012, average annual per capita growth was just 1.1 percent, while in the top four Latin American countries (Panama, Peru, the Dominican Republic, and Chile) the rate was 3.6 percent.[17]Not surprisingly, the rate of private investment in Venezuelaunder 5 percentis also one of the lowest in the region. In Peru and Chile, it is almost 20 percent.[18]U.S. Policy Toward the New Maduro Government Washington U.S. ambassador to Caracas or

should insist on strict conditionality before

sending a new

assenting to any new lending to Venezuela by international financial institutions until the new government:Produces a comprehensive plan for reform that reduces the size of the public sector , reverses
nationalizations and expropriations of land and enterprises with just compensation to owners, restores the independence of the central bank and judicial institutions, reforms the electoral system, and submits to an internationally supervised audit of the governments books during the Chavez years; Takes

steps to privatize PDVSA to bring in international equity partners with the expertise and

financial capacity to restore PDVSA to the high level of professional operational and managerial expertise for which it was widely respected prior to 1999;Immediately stops all subsidies to Cuba and terminates wasteful and economically destabilizing subsidy programs such as PetroCaribe and ALBA ;

Ceases cooperation with international state sponsors of terrorism (such as Iran) and

joins the international communitys cooperative efforts in the fight against transnational crime, narco-trafficking, and terrorism ; andRestores freedom of the press and access to information for all Venezuelans.Use U.S. LeverageThe foundations of economic freedom in Venezuela were severely weakened during the 14-year misrule by Chavez. Although Chavezs death may aggravate instability and further polarize Venezuela, it need not be that way.
Venezuela is in need of immediate and sweeping reforms, but these changes will take time, effort, determination, and, above all, dedicated reformers in Venezuela.The

Obama Administration should step into the breach with active and forward-looking policies to bring Venezuela back into the globalized economic system.

Engagement with Maduro should be conditioned


Post Editorial Board, 6/11, 2013, Washington Post, http://www.washingtonpost.com/opinions/venezuela-gets-a-lifeline-from-theunited-states/2013/06/11/ab20c178-d2b1-11e2-8cbe-1bcbee06f8f8_story.html?hpid=z3

Perhaps most alarming for Mr. Maduro, an energized opposition has refused to accept the election outcome; its capable leader, Henrique Capriles, has been gaining sympathy around the region. The
president of neighboring Colombia, Juan Manuel Santos, met with Mr. Capriles on May 29, prompting paroxysms of rage from Mr. Maduro and his aides. Other

Latin American governments, while avoiding a confrontation with Caracas, have made it clear they regard the new leaders legitimacy as questionable; the regional group Unasur called for an audit of the election results.The success of New Yorks program shouldnt absolve its racial disparity.One government, however, has chosen to toss Mr. Maduro a lifeline: the United States. Last week Secretary of State John F. Kerry took time to meet Venezuelan Foreign Minister Elias Jaua on the sidelines of an Organization of American States meeting, then announced that the Obama administration would like to find a new way forward with the Maduro administration and quickly move to the appointment of ambassadors. Mr. Kerry even thanked Mr. Maduro for taking steps toward this encounter words that the state-run media trumpeted.What did Mr. Maduro do to earn this assistance from Mr. Kerry? Since Mr.
Chvezs death in March, the Venezuelan leader has repeatedly used the United States as a foil. He expelled two U.S. military attaches posted at the embassy in Caracas, claiming that they were trying to destabilize the country; he claimed the CIA was provoking violence in order to justify an invasion; and he called President Obama the big boss of the devils. A U.S. filmmaker, Timothy Tracy, was arrested and charged with

plotting against the government a ludicrous allegation that was backed with no evidence. Though Mr. Tracy was put on a plane to Miami on the day of the Kerry-Jaua encounter, Mr. Kerry agreed to the meeting before that gesture.Theres

nothing wrong, in principle, with diplomatic meetings or even in dispatching an ambassador to a country such as Venezuela. The State Department has also been meeting with senior opposition leaders and has yet to say it recognizes the presidential election results. But Mr. Kerrys words amounted to a precious endorsement for Mr. Maduro and the Obama administration appears bent on cultivating him regardless of his actions. Perhaps the increasingly desperate new leader has secretly promised concessions to Washington on matters such as drug trafficking. But with senior government and military officials involved in the transhipment of cocaine to the United States and Europe, he is unlikely to deliver.In short, this looks like a reset for the sake of reset, launched without regard for good timing or the cause of Venezuelan democracy.

Previous sanctions have not been effective in controlling Venezuela- their dependence on US oil demand means that a condition would be effective in controlling the IranVenezuela alliance
Luis Fleischman,

JUNE 13, 2013, Dr. Luis Fleischman is a Senior adviser to the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University, http://www.americas-forum.com/u-s-venezuelan-relations-revisited-by-luis-fleischman/ There is nothing wrong when two parties whose relations are tense seek to make things better. However, good relations between the U.S. and Venezuela must require that the government of Venezuela radically change a very dangerous behavior .Arbitrary arrests, abuse of state resources, intimidation of the opposition, subjugation of the judiciary, and demand of loyalty to the revolutionary government and other violations of rights are common practice in todays Venezuela. Neither the
international community, the OAS, nor other countries of the region including the United States have ever held the Venezuelan government accountable for these gross breaches of human rights. But this is not all.According to a report by the U.S. Government Accountability Office in 2009, Venezuela extended a lifeline to Colombian illegal and armed groups by providing them with significant support and safe haven along the border. As a result, these groups remain viable threats to Colombian security and U.S.-Colombian counternarcotic efforts. The report provided evidence of the activities and cooperation between the Venezuelan government with drug cartels and the Revolutionary Armed Forces of Colombia (FARC) . The report revealed that the flow of cocaine shipped from Venezuelan ports and airports to the United States, West Africa, and Europe increased more than four times from 2004 to 2007 and continues to increase. Likewise, cocaine destined for the United States from Venezuela transits through Central America, Mexico, the Dominican Republic, Haiti, and other Caribbean islands. Between January and July, 2008, numerous vessels with Venezuelan flags that were carrying large amounts of cocaine were seized.Furthermore, a Colombian army raid in Ecuador in March, 2008 seized FARC computers and discovered documents belonging to FARC leader Ral Reyes (known as the Reyes files). The

files indicated that the Venezuelan government may have provided the Colombian guerillas with about $300 million in Russian weapons supplies. The files also seem
to indicate that Chavez sought political and military cooperation with the FARC at the same time as the Colombian government was denouncing the presence of FARC training camps inside Venezuela. The FARC is a dangerous subversive force that threatens Colombias security and is also involved in drug trafficking.While the United States is putting efforts into fighting drug traffickers in Mexico and other parts of Latin America, Venezuela is providing them with a lifeline. The danger of this development is not only that drug trafficking poisons our population and in particular our youth but that the drug business corrupts governments, security forces and the legal system. In Central American countries are now facing a state of anarchy that is gradually creating another Afghanistan in our own hemisphere with all the dangers that this implies.Venezuelan relations with the Islamic Republic of Iran are no less worrisome.

The government of Venezuela has strengthened relations with Iran and has helped Iran and its proxies increase their presence throughout the continent. As more countries joined Chavezs sphere of influence they also developed relations with Iran and Iran increased its presence in those countries. This includes a growing presence of the
Iranian proxy and terrorist group, Hezbollah, and the Iranian Republican Guards. A Lebanese-born Venezuelan diplomat posted in the Venezuelan embassy in Syria and Lebanon, Ghazi Nasr al-Din, helped Hezbollah raise money and facilitated the travel of its operatives from and to Venezuela. Irans penetration into Latin America is likely to grow under the influence of the Venezuelan Bolivarian revolution. Venezuela,

along with Syria and Cuba, have been the main supporters of Irans right to

develop a nuclear weapon . Venezuela helped Iran launder money through its banking system as well as selling the Iranians gasoline so they could avoid international sanctions. Venezuelas actions have been in clear
violation of international sanctions. Only a few days ago President Barack Obama increased sanctions on companies doing business with Iran. As part of the sanctions protocol the

United States will not do business with companies or governments that help Iran avoid sanctions . If the sanctions law were fully operationalized, the U.S. would no longer be buying Venezuelan oi l. This would be a severe blow to Venezuela but would make little difference to the U.S. Instead, Venezuela and Venezuelan companies such as the oil giant Petroleos de Venezuela (PDVSA) have never paid a serious price for their dealings with Iran.Some reports, including one by former
Manhattan district attorney Robert Morgenthau, even indicated that Iran is trying to extract uranium from countries such as Venezuela and Bolivia.

A scenario that should not be ruled out is that if Iran develops nuclear capabilities it could use

Venezuelan soil to make the United States more vulnerable to an attack . Trying to diminish tensions and develop peaceful relations with countries is a good goal to pursue.However, in the case of Venezuela, before peaceful and productive relations can be established the United States government must set conditions demanding that Venezuela completely cease its human rights violations and fully dismantle all its ties to terrorist groups and drug cartels as well as ceasing to assist Iran in their effort to avoid sanction.

Venezuela wants to improve relations now- conditioning this improvement is critical to solvency
Ray Walser is a Senior Policy Analyst at the Douglas and Sarah Allison Center for Foreign Policy Studies, June http://www.thecommentator.com/article/3752/don_t_be_naive_when_it_comes_to_venezuela_mr_kerry

7th, 2013,

Maduro and Jaua clearly hope that Secretary Kerry and the Obama Administration will finally recognise the outcome of the April 14th elections and legitimise Maduros presidency while openly throwing the democratic opposition under the bus. In this light, Kerrys statement equating Maduros mouthpiece Jaua with Venezuela is disconcerting.The offensive of Maduro and Jaua is aimed at undercutting the diplomatic offensive of the opposition. They also hope to keep the systemic failures of their Cuban-inspired socialism and economic mismanagement out of the discussion and obscure their ties with Iran, Syria, and Hezbollah.Therefore, the bar for genuine improvements in U.S.Venezuela relations should remain hig h. It should include a serious commitment by the Maduro regime to not only respect the rights of the democratic opposition but to enter into an actual dialogue aimed at reducing tensions and preserving fundamental political and economic rights.Critically, it will also require a major reversal in persistent anti-Americanism coupled with genuine cooperation to combat illicit drug trafficking and terrorism and adherence to all Iran and Syria sanction s.Without progress on these keys themes, Kerry and company will falter when it comes to changing the dynamic with post-Chavez Venezuela.

War with Iran is likely absent a US demand for Venezuela to sever their ties with rogue states
Nancy Menges and Luis Fleischman, 4/17, 2013, Dr. Luis Fleischman is a Senior adviser to the Menges Hemispheric Security

Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University, http://www.centerforsecuritypolicy.org/2013/04/17/challenges-continue-aftermaduros-election-in-venezuela/

Without suggesting that the United States should reject Maduros overtures, it is important not to fall under any illusion. The structure set by the 14 year Chavez rule created a structure that will need to be dismantled.The Venezuelan government placed the countrys airports, ports, planes, and ships at the disposal of drug cartels. Venezuela

became a major transit route for cocaine out of Colombia and has increased manifold the amount of cocaine flow. Venezuela also developed relations with the FARC harboring and cutting an ideological and militant partnership. It provided FARC with military support, supplies of Russianand Chinese-made automatic weapons, sniper rifles, grenade launchers, and man-portable air defense systems. Chavez also nurtured relations with Iran and its proxy, Hezbollah. Its relationship with Iran cannot be reduced to a commercial dimension as some analysts have done . Iran has developed a complex relation with Venezuela as well as with
some of its allies in the region that includes helping Iran avoiding financial sanctions and providing political support for its nuclear program. Venezuelan diplomats have been involved in helping Hezbollah fund-raising efforts and facilitated the travel of its operatives to and from Venezuela. Today the

power of Iran is encroaching on the backyard of the United States, making our own border more vulnerable. Further, Irans cooperation with the Mexican drug gang called Zetas in the October 2011 plot to assassinate the Saudi Ambassador in Washington, DC, only confirms our potential vulnerability and terrorist activity in the region.And if Iran develops nuclear weapons, will Venezuela or other Iranian allies in the region allow them to be posted on their soil? In that case, the United States and the entire region could face a serious threat comparable to the Cuban missile crisis in 1962 .Maduro has also reportedly maintained close relations with Cuba, Iran and
with the FARC.The United States should not take the message to Governor Richardson at face value.

It must demand the reversal

of these ominous relationships before prematurely celebrating the beginning of a new era as well as continuing to support a recount of this last election .

Plan is an important stage in changing Venezuelas foreign policy and improving relations
REYES THEIS, writer for EL UNIVERSAL, Friday June

07, 2013

10:22 AM

Although the Venezuelan opposition expected Washington to take a hard-line stance vis--vis the Venezuelan Government, US Secretary of State John Kerry met with Venezuelan Foreign Minister Elas Jaua on Wednesday and agreed

on making all possible efforts to keep good diplomatic relations. Kenneth Ramrez, the president of the Venezuelan Council on Foreign Affairs (Covri), believes that this is "a new attempt of Barack Obama's Administration to implement an engagement policy towards Venezuela . They seek to use dialogue and negotiation to attain political depolarization and discourage somehow Venezuela's pugnacious foreign policy, which represents an obstacle for the US policy on the region ." He explained that the US aims "to restore ambassadorlevel relations; reactivate counter-narcotics cooperation, which has been frozen since 2005; and likely

to get cooperation on

energy back on track, as it has been on hold since 2003 ." Ramrez reminded that in 2010, Washington was bolstering an engagement policy towards Venezuela. Such efforts were derailed when designated US Ambassador to
Venezuela, Larry Palmer made some statements about Venezuela before the US Congress. Upon Palmer's remarks, Caracas denied his placet, and Washington responded by revoking Venezuelan Ambassador Bernardo lvarez's visa. According to the analyst, President Obama understood that the confrontation policy has failed. "He

is giving (dialogue) a second chance, as he believes that Venezuela and Nicols Maduro, considering President (Hugo) Chvez demise, the economic crisis and the narrow presidential vote, have no other choice but to change their policy and start an opening."
Regarding Venezuela's interests, Ramrez claimed that the meeting held between Kerry and Jaua defuses the opposition's plans to seek enforcement of the Inter-American Democratic Charter and make the Venezuelan Government conduct a comprehensive election audit under specific terms. Further, the

meeting gave Nicols Maduro the recognition as Venezuelan president he sought

from Washington.

US should condition engagement with Venezuela on supporting the fight against crime and terrorism Venezuelas oil industry needs help and squo makes a recession likely.
Ray Walser1 and Jessica Zuckerman2, 3-06-2013, PhD,

Senior Policy Analyst for Latin America @ the Heritage Foundation1, Research Associate in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation2, Venezuela After Chavez: U.S. Should Rally to Democracy, http://www.heritage.org/research/reports/2013/03/venezuelaafter-death-of-chavez-us-should-rally-to-democracy On Tuesday, cancer

claimed the life of Venezuelas President Hugo Chavez, silencing one of Latin Americas most controversial death opens the way to an uncertain succession process, continued polarization, and potential instability in oil-rich Venezuela. Dealing with a post-Chavez Venezuela will require an ongoing U.S. commitment to free and fair presidential elections, to the defense of individual rights and liberties, and to leveraging future improvements in bilateral relations to genuine cooperation in the fight against transnational crime and terrorism. Working with Venezuela for a more stable and secure hemispheric energy market is also a desired, if still distant, objective. From Coup-Maker to Kingmaker During his 14-year presidency (19992013), Chavez developed a unique
leaders in the 21st century. Chavezs combination of populism, authoritarianism, socialism, and combativeness that won him the adulation of the masses and a large international following. Born in 1954, the career military officer and failed military coup-maker of 1992 emerged as the self-proclaimed revolutionary kingmaker of Venezuelas politics. As president, Chavez survived an inept 2002 coup, a massive oil strike, a recall referendum, and a battle to institute term limits. He won re-elections in 2006 and 2012 by comfortable margins. His goal was to govern until 2032. By tapping

Venezuelas enormous oil wealth, Chavez advanced a hybrid economic program of nationalizations, socialist economics, free spending social programs, price and exchange controls, and crony capitalism
dubbed Socialism of the 21st Century. Under the banner of participatory democracy, Chavez offered a grassroots strategy that gave limited authority to local communities, forged loyal political cadres, and created a network of citizen-clients. Subsidies, social missions, and patronage power were the ties holding the system together. Via constitutional suicide, Chavez concentrated unprecedented powers in the executives hands. He ushered in a new model for elected authoritarianism that ended separation of powers and institutional autonomy in Venezuela while toppling rule of law and constricting basic rights and liberties. Admirers hailed him as the greatest Latin American since Fidel Castro. Chavezs legacy, they claim, is a genuine revolution of social justice that has improved the lives of millions. The October 2012 presidential re-election demonstrated that his style and plan for governance could still deliver electoral victories. Nonetheless, Chavezs

successor will face many challenges, including over-dependence on oil revenues and a comparatively stagnant oil industry starved of much-needed re-investment. High inflation, a recent currency devaluation, capital flight, food shortages, and extremely high levels of homicide and criminal violence will be handed down. National investment has been haphazard, and infrastructure has crumbled. Venezuelan society remains polarized, overly militarized, and ripe with corruption. A fall in oil prices or a debt crisis could send it into recession. From economic freedom to perceptions of corruption, Venezuela raced relentlessly toward the bottom in global rankings. Drum Major of Anti-Americanism Keen to emulate his hero Simon
Bolivar, Chavez anointed himself the chief protagonist for South American integration. He helped forge a South American bloc of nations, cemented relations with the Peronists in Argentina, and gained support from Brazils dominant, left-leaning Workers Party. Establishment of the Union of South American States and Venezuelas 2012 entry into South Americas common market were Chavez victories. A consistent objective for Chavez-led foreign policy was undercutting U.S. presence and influence in South America and in multilateral bodies. Another foundational stone of Chavezs foreign policy was an alliance with Cuba, which was formalized in 2002. An

estimated 60,000 Cubans serve in various sectors of the Venezuelan government in exchange for approximately 100,000 barrels of oil each day, leading many to see Havana as intimately involved in shaping the Bolivarian Revolution. Chavezs oil wealth and Cuban
organization skills helped build the leftist Bolivarian Alliance for the Americas, which now has seven members. Chavezs obsessive antiAmericanism compelled him to associate with U.S. competitors such as China (loans and technology for oil) and Russia (oil and arms) and with anti-democratic rogue leaders and insurgent and terrorist organizations (such as Hezbollah). He opposed NATO intervention in Libya and rendered support for the despotic Bashar al-Assad regime in Syria. The full range of Venezuelas ties with IranChavezs axis of unityis hidden from public scrutiny, but include undetermined degrees of military and security cooperation. In the age of globalized criminal and terrorist networks, the absence of accountability and transparency in the regime, coupled with anti-American belligerency, still poses a threat to U.S. security. Chavismo Without Chavez Chavezs death opens the way for presidential elections within 30 days. On December 7, before his final surgery in Cuba, Chavez anointed Vice President and Foreign Minister Nicholas Maduro as his successor, urging supporters to vote for Maduro and preserve unity within the United Socialist Party of Venezuela (PSUV). Once a bus driver, the 51-year-old Cuban-trained activist became foreign minister in 2006 and vice president in October 2012. He reportedly enjoys the backing of the Castro regime. For now, Maduro has outdistanced potential rivals such as National Assembly President Diosdado Cabello. Fierce infighting in PSUV ranks representing the

competing interests of the military, business, and unions is possible. Whoever emerges on top will preside over a weaker but still dominant PSUV. None can replicate Chavezs emotional connection with millions of Venezuelans. Opportunity for the Opposition? With the help of the Mesa de la Unidad Democrtica (MUD, or Democratic Unity Roundtable), Venezuelas opposition has demonstrated impressive unity. The MUD conducted a presidential primary that selected presidential candidate Henrique Capriles, ran a vigorous campaign, and collected 5 million votes (45 percent of the electorate) in the October presidential elections. Some polls indicate that Capriles enjoys more popular support than Maduro does. But with elections within 30 days, Capriles or any other opposition candidate will face the same obstacles encountered last October 7, with the electoral playing field tilted strongly in favor of Chavezs successor. The sympathy vote for and patronage power of Chavismo may be hard to overcome. U.S. Policy Toward a Post-Chavez Venezuela A principled

U.S. policy toward Venezuela should be guided by continued commitments to broad-basednot just electoraldemocracy enshrined in the 2001 Inter-American
Democratic Charter. Preservation of the constitutional order in Venezuela requires new elections that are not only free but fair. The interests of the U.S. will be best served with the return of fully functioning democracy (separation of powers, rule of law, protection of individual rights and liberties) in Venezuela. To achieve these objectives, the Obama Administration should: Deliver by public diplomacy channels a comprehensive report on the costs and consequences of the Chavez regime; Insist on maintaining the 30-day electoral timetable and press for real international electoral observation; Signal clearly that anything other than free and fair elections will open the door to possible diplomatic and economic sanctions; Continue to investigate narco-corruption and collect intelligence on criminal, terrorist, and Iranian activity in Venezuela; and Refrain

from restoring relations at the ambassadorial level without a firm Venezuelan commitment to cooperate in fighting drug trafficking and international terrorism.

Unconditional Solvency Cards


Pressure failsMaduro prefers engagement. Garibian 13 (Pablo Garibian, journalist, Venezuela's Maduro sends conciliatory message to U.S--- Venezuela's President
Nicolas Maduro (2nd R) speaks during a meeting with Ministers and Governors at . April 23, 2013, http://news.yahoo.com/venezuelas-maduro-sends-conciliatory-message-u-235954058.html) CARACAS (Reuters) - Venezuelan President Nicolas Maduro

named a new acting head of its U.S. diplomatic mission in Washington on Tuesday and sent an offer of dialogue after attacking the United States for "interference" in a row over his election. Disputes between Venezuela and the United States were common during Hugo Chavez's 14-year socialist rule of Venezuela, leaving both nations without ambassadors in each other's capitals. Maduro, who won an election this month to replace Chavez after his death from cancer, has wavered between reaching out to the U.S. government and condemning its policies in the same uncompromising terms as his predecessor. In an address on live on TV, Maduro called for "respect" and "dialogue" while naming Calixto Ortega, an ally and member of Venezuela's delegation to the Latin American parliament, to the post of charge d'affaires in Washington. "We want to have the best ties with all the world's governments, and the U.S. government , but on the basis of respect. There can be no threats ," said Maduro.
Last week, Maduro blasted the United States for "brutal" and "vulgar" meddling in supporting opposition calls for a vote recount after the April 14 election. Maduro won the vote by less than 2 percent, leaving opposition leader Henrique Capriles fuming at what he said were thousands of irregularities that skewed the result. "As we don't have ambassadors, we have for a while been considering naming a new charge d'affaires to our embassy in Washington," Maduro said. "I have

decided to name Calixto Ortega so that dialogue with U.S. society may increase, with the universities, the academic world, the social and union world, the Afro-American community, the Latino community, Congress, senators, representatives, the economic, trade and energy sectors." Despite the years of diplomatic spats, oil has continued to flow north unabated. Venezuela, an OPEC member with the world's largest oil reserves, sends between 900,000 and one million barrels per day to the United States, its biggest export market. "We hope one day to have respectful relations with the United States, a dialogue between equals, state-to-state," Maduro said. "Sooner rather than later, the elites
running the United States will have to realize there is a new, independent, sovereign and dignified Latin America." While filling in for the cancer-ridden Chavez last year, Maduro had opened a back-channel with a U.S. State Department official, but ended that after perceived criticism by Washington of Venezuela's democratic credentials. Chavez came to replace Cuba's Fidel Castro as Latin America's main U.S. critic in the region - a mantle up for grabs since his death.

AT Democracy Turn
Venezuelan political instability destroys US efforts at democracy. Duddy 12 (Patrick D. Duddy, senior lecturer in international studies at Duke University and former U.S.
ambassador to Venezuela, Political Unrest in Venezuela, Council on Foreign Relations, 09/2012, https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&cad=rja&ved=0CDcQFjABOAo&url=htt p%3A%2F%2Fi.cfr.org%2Fcontent%2Fpublications%2Fattachments%2FCPA_contingencymemo_16.pdf&ei=CXHYUZ DnB8iWyAHntYDICw&usg=AFQjCNH2sYIvkSmFtTk5qKdo81GPmWCyEg&sig2=yd0X4dBJJtFx0j1PhSKqRQ&bvm=bv.4 8705608,d.aWc) **From Venezuela aff file

Political instability and violence in Venezuela would damage U.S. efforts to promote democracy, increase regional cooperation, combat narcotics, and protect its economic interests in the region. Democracy promotion : The United States has worked for decades to promote democracy in the Western Hemisphere. In recent years, Chavez has become increasingly authoritarian, undermining important political institutions, giving more powers to the presidency, and weakening both civil society and the independent media. The United States should view a suspension or further deterioration in the quality of Venezuelas democracy as a setback for U.S. policy and for the hemisphere. The emergence of a military junta or a compromised Chavez regime would also likely increase Iranian and Cuban influence in Venezuela. It already has a close relationship with Iran from which it reportedly receives advanced weapon systems and other assistance. Cuba sends thousands of teachers and technical, medical, and security advisers in exchange for an estimated
ninety to one hundred thousand barrels of oil per day.

Oil promotes Venezuelan democracy --- promotes competition. Hidalgo 7 (Manuel, A Petro-State: Oil, Politics and Democracy in Venezuela, Real Insituto Elcano, 6-11-2007,
http://www.realinstitutoelcano.org/documentos/WP2007/WP49-2007_Hidalgo_Petro-State_Venezuela.pdf)

Oil was the most important structural factor in promoting democracy. But one must not ignore others such as the role of political leaders, who, with projects aimed at modernisation, gave a central role to the State in economic and social life and in the political realm. It was a centralised State. Once the democratic regime was established, political parties were the main players, not just because of the programmes they pushed, organisational development and establishment of links with the main social organisations, but also because having access to a State with abundant external revenue put them in a privileged position. From that position they controlled a weak civil society that would grow under the protection of the State. The State also relied for many years not only on peoples widespread acceptance of elections as a democratic ritual (Maingn & Sonntag, 1991), but also on neo-corporative practices that gave priority to certain interest groups and sectors, facilitating money-seeking behaviour. At the same time, government policy was to hire lots of civil servants,
grant heavy subsidies and apply extensive controls and strong protectionist measures.

Oil historically promotes democracy in Venezuela. Wilpert 3 (Gregory, The Economics, Culture, and Politics of Oil in Venezuela, VenezuelAnalysis, 8 -30-2003,
http://venezuelanalysis.com/analysis/74)

Another consequence that Venezuelas oil

wealth has had for its political system is

that it turned it into what

political scientist Terry Lynn Karl calls a pacted democracy . The term pacted democracy describes a democracy which is held together via an agreement among different elite groups. It is a kind of truce among opposing powerful
interest groups in the society, so as to maintain their privileges. In Venezuela this truce took the form of the pact of Punto Fijo, where all major parties were guaranteed access to power in proportion to the voting results. In other words, even if one party won the presidential and legislative elections, it would still be obliged to share the spoils of Venezuelas oil economy among the other parties, more or less according to

the vote results. This

way each of the main parties (primarily Accin Democratica and Copei) was guaranteed access to jobs, contracts, ministries, etc. To further minimize conflict, the main union federation, CTV, was similarly divided among the parties, although Accin Democratica, as its founder, always was in control of it. Radical socialist and communist parties were completely excluded from this pact. The pact of Punto Fijo, however, began
falling apart once oil rents began to decline in the mid 80s. It then received its deathblow when Hugo Chvez was elected president in 1998.

Topicality

Energy is Economic Engagement

2AC We Meet
Economic engagement includes cooperation over energy- prefer government definition
Robert D. Hormats, Under Secretary for Economic Growth, Energy, and the Environment Asia Society Global Forum, Washington, DC, June http://www.state.gov/e/rls/rmk/210563.htm

12, 2013,

But U.S. economic engagement with the Asia-Pacific region is not limited to traditional trade and investment issues . It includes energy as well . As part of the U.S.-Asia Pacific Comprehensive Energy Partnership, announced by President Obama at last years East Asia Summit, the U.S. Government has earmarked up to $6 billion in a line of credit over four years through the Export-Import Bank and the Overseas Private Investment Corporation. This will drive trade and investment in private sector and public-private energy-related projects
across the region. In addition to these resources, the United States will support capacity building programs through APEC and ASEAN, as well as with our bilateral partners, in the priority areas of interconnectivity, natural gas, renewables, and sustainable development.

Ext Energy is T
Energy interdependence is a form of economic engagement
Roger Noriega, foreign policy writer, The Washington Times, October 22, 2012, 2:24 pm, http://www.aei-ideas.org/2012/10/latin-americais-crucial-to-us-competitiveness/

The United States must recover its own credibility by making bold decisions to restore fiscal responsibility, aggressive trade promotion, energy interdependence , and economic growth. The security challenges in the Americas are very real
and growing more complicated every day. Illegal narcotics trafficking, transnational organized crime, and radical populism fueled by Venezuelas petrodollars and allied with dangerous extra-regional forces pose a daunting set of challenges. Alongside

a positive economic engagement , assessing and addressing threats is an indispensable obligation to US security and regional leadership.
DR. RICHARD A. MELANSON 2004, http://www.dtic.mil/dtic/tr/fulltext/u2/a441643.pdf, Iran: Threat or Opportunity? A Selective Economic Engagement Strategy Proposal If Iran permits US

economic engagement proposals to move forward, measurements of success are both objective and

subjective. A major objective success would be a verifiable Iranian commitment not to pursue a nuclear weapons program, either by agreeing to substantial international inspections or canceling their current nuclear power programs. This strategy provides alternative

options for Iran to meet its energy needs, utilizing US or other foreign investment resources . Sunk costs
in existing nuclear power facilities may lead Iran to ignore those alternatives, which would leave their nuclear weapon intentions under suspicion. A means to ensure the nuclear issue is dealt with at the outset is to make all US investment ventures and lifting of third country penalties contingent upon an agreement to allow unimpeded international inspections of nuclear facilities. Removal of third country repercussions on investment in the energy sector would bring additional pressure from other countries for Iran to acquiesce and resolve the nuclear weapon issue. Since diplomatic relations do not exist, a third party country would need to be drafted to act as a US intermediary and negotiate an agreement by Iran to submit to inspections by the International Atomic Energy Agency. The best candidate for the job would one of the major European states that wants to invest in Irans energy sector. The Dooley 9 intermediary could also provide utility in negotiating the necessary details required to launch economic ventures.

Xiong Zhengyan 11, 4/27, writer for Xinhua, http://news.xinhuanet.com/english2010/china/2011-04/27/c_13848997.htm

Resources and energy, including iron ore, coal, liquefied natural gas and oil, are at the heart of the China-Australia economic relationship. In 2010, bilateral trade volume reached 88 billion U.S. dollars. Natural resource and energy trades accounted for about 40 billion U.S. dollars, nearly half of the total. But natural resource and energy cooperation are far from sufficient.
Although Australia is currently China's biggest supplier of iron ore, coal, aluminum and liquefied natural gas, buying and selling remain the primary

methods of engagement . Given this fact, Chinese Vice Premier Li Keqiang has appealed for both sides to go beyond "a

simple buyer-seller relationship." By playing a bigger part in investment, research and development, Chinese companies can build stronger ties with Australian suppliers in this regard.

State Department 13, http://2001-2009.state.gov/e/eeb/92986.htm


Total Economic Engagement seeks to integrate and coordinate all U.S. economic instruments and programs into our regional and country strategies. The Bureau of Economic, Energy and Business Affairs (EEB) broad cross-section of economic disciplines, interagency contacts, and expertise in

such areas as trade, finance, energy, development, transportation, and telecommunications help ensure this coordination. EEB is actively involved in the entire range of international economic issues affecting Americas security and well-being. Our priorities extend from securing reliable, sustainable energy supplies to
increasing market access for U.S. goods and services. Protection of American interests, such as intellectual property rights, fair play in international business, and shutting down terrorist access to financial networks, is not only part of our work, it is the foundation on which our efforts rest.

Energy infrastructure development is included in economic engagement


Todd M. Walters, 2005, Research Associate, Institute for Foreign Policy Analysis, http://www.ifpa.org/pdf/shanghai/Econ-Briefing.pdf How should we go about framing this discussion? First, it

is necessary to look at some precedents for economic

engagement in more detail. Fortunately, the recent history of the DPRK itself provides a good deal of information in this respect. The
implementation of the 1994 Agreed Framework is particularly pertinent to the present discussion, as is the history of the World Food Programs (WFP) activities in North Korea. In addition to the history of DPRK economic aid, efforts to engage Eastern European countries after the fall of the Soviet Union might be instructive, such as the work of the European Bank for Reconstruction and Development. There are also various think tank and government proposals from around the region that can be helpful as we try to identify the most promising approach going forward. How can the six-party process facilitate North Korean economic development and contribute to an easing of tensions on the peninsula? Should the group establish a proprietary bank account, make decisions on collective aid and energy assistance packages, and then see them through? Or, should its role be more passive, providing guidance and oversight for existing international organizations and individual countries? Might the six- party group serve a different function in different areas of economic engagement? How can the group develop a consensus on priorities and an appropriate division oflabor? The following sections of this brief will discussthe context for economic aid,

including the current state of the North Korean economy and the lessons-learned from past economic engagement efforts with the DPRK. This background discussion will highlight the various potential components of an economic package, such as fuel oil delivery, energy infrastructure development, private enterprise investment, the future role of international financial institutions (IFIs), the lifting of economic sanctions, and the coordination of bilateral initiatives. The final section of the brief lays out some guiding discussion topics for the break-out group. These topics stem
from the question of what role the six-party process should play during the implementation of an agreement with regard to (1) setting goals, priorities, standards and procedures, (2) conducting studies of the DPRK economy, (3) evaluating short-term implementation, (4) assessing long-term success, (5) acquiring funding for the various components of an agreement, and (6) coordinating activities of the various actorsinvolved.

Disad Answers

Politics

Plan Popular
AFF Engaging Venezuela is popular both sides of Congress see Chavezs death as a chance to reset relations.
Matt , 3-05-20 , White House correspondent for Reuters, Despite new hopes, U.S. treads cautiously after death of Venezuela's Chavez, http://articles.chicagotribune.com/2013-03-05/news/sns-rt-us-venezuela-chavez-usabre92504a20130305_1_venezuela-s-chavez-vice-president-nicolas-maduro-venezuelan-leaders President Barack Obama quickly reached

Spetalnick

13

out to Venezuelans, expressing an interest in a "constructive

relationship" in the post-Chavez era. But analysts said it would be hard to make tangible progress when deep political uncertainty risks destabilizing the South American oil-producing nation. Washington's challenge will be to figure out how far to go in seizing the opening to engage with Venezuelan leaders as well as its political opposition without giving the impression of U.S. meddling following the socialist president's death after a two-year battle with cancer. "We're not interested in having a confrontational relationship with Venezuela," a senior U.S. official told Reuters. "We're going to have to see how things evolve. It's a dynamic period." For Washington, a major test will be whether Venezuela follows its own constitution which has been widely interpreted to require a special election to pick Chavez's successor - and if such a vote is conducted in a free and fair way in "accordance with hemispheric norms," the official said. Washington had accused Chavez and his allies of electoral abuses, such as intimidating foes and misusing state media during his 14-year rule. Chavez had created headaches for successive U.S. administrations with his strong anti-American rhetoric and his alliances with some of Washington's main foes, including Cuba and Iran. The question now is whether his leftist "revolution" and incendiary foreign policy can live on without his dominant personality at the helm. In

a normally divided Washington, Chavez's death brought a rare moment of bipartisan agreement , with Republicans and Democrats alike seeing it as a chance to turn a page after a long period of strained U.S.-Venezuelan ties. "Hugo Chavez was a destabilizing force in Latin America, and an obstacle to progress in the region," said Mike Rogers, a Republican from Michigan and chairman of the U.S. House of Representatives intelligence committee. "I hope his death provides an opportunity for a new chapter in U.S.-Venezuelan relations." "Hopefully there will be a peaceful transition of power in Venezuela with real, meaningful democratic reforms," U.S. Senator Bill
Nelson, a Democrat from Florida, said in a message on Twitter.

AFF Lobbyists push the plan controls Congressional action. Chris Peterson, 3-13-2013, 03/13/2013 10:10 AM, http://www.telegraph.co.uk/finance/commodities/9920725/Death-of-HugoChavez-propels-Venezuelan-oil-production-into-the-spotlight.html#comment-827948723 And, of course, lobbyists

have already began twisting the arms of Congress to spend tax payer money in their effort to move into Venezuela under the guise of "humanitarian" relief. What a crock.

AFF Tea Party supports attempts to increase relations Chavezs death is seen as a chance to reset. Rapoza, 3-06-2013, writer for Forbes, Dow Jones, Wall Street Journal and Barrons, reporter covering Brazil, Russia, India and China, Tea Party Republican Cheers Chavezs Death,
Kenneth http://www.forbes.com/sites/kenrapoza/2013/03/06/tea-party-republican-cheers-chavezs-death/

Tea Party Republican Cheers Chavez's Death The controversial and charismatic Hugo Chavez is dead. The man Washington feared would single-handedly turn all of Latin America against it, the Che Guevera bogey man, is gone. And one member of the Tea Party in California, and a United States congressman, couldnt be more relieved. This is
what Ed Royce (R-Calif), a U.S. Congressman and chairman of the House Committee on Foreign Affairs, was quoted as saying in CNN on Wednesday, less than 24 hours after Chavezs passing from pelvic cancer: Hugo Chavez was a tyrant who forced the people of Venezuela to live in fear. His death

dents the alliance of anti-U.S. leftist leaders in South America. Good riddance to this dictator, Royce told CNN today. Venezuela once had a strong democratic tradition and was close to the U nited S tates.
Chavezs death sets the stage for fresh elections. While not guaranteed,

closer U.S. relations with (this) key country in our

Hemisphere are now possible.

Mark P. Sullivan1 and Clare M. Ribando2, 10-17-2006, Specialist

in Latin American Affairs Foreign Affairs, Defense, and Trade Division of the Congressional Research Service1, Analyst in Latin American Affairs Foreign Affairs, Defense, and Trade Division2, Latin America: Energy Supply, Political Developments, and U.S. Policy
Approaches, http://assets.opencrs.com/rpts/RL33693_20061017.pdf

Concerns about the effect of Latin Americas political environment on energy production in the region also prompted the U.S. Southern Command to issue a study in June 2006 focusing on long-term oil production in several Latin American countries. The report warns against the dangers of reemerging state control in the energy sectors of several Latin American
countries especially Venezuela and Ecuador that will likely thwart investment, increase inefficiencies, and hamper efforts to increase supplies and production. In Mexico, the report notes that the current regulatory environment and laws prohibiting foreign investment in the energy sector have dampened prospects for increasing oil reserves. The report asserts that pending any favorable changes to the investment climate, prospects for long-term energy production in Venezuela, Ecuador, and Mexico are at risk, while countries that have opened their energy sectors to foreign investment, like Trinidad and Tobago, will see increased reserves and production.40 Congressional Interest Over the past year, there

has been ongoing congressional interest in energy security issues. Some of that interest has focused on how to ensure that countries in the Western Hemisphere, which currently supply about half of U.S. imports of crude oil and petroleum products, remain reliable sources of energy for the U nited S tates. Another area of interest has been to promote cooperation among Latin American countries, which are divided between net energy exporting and importing nations, to ensure that enough clean, affordable, and reliable energy sources are exploited to support regional growth and development. Members have expressed support for developing a cohesive regional energy security framework, and also have expressed concerns about the effects of political instability, resource nationalism, and the increasing interest in the hemispheres energy resources by such countries as China and India. Committees in both houses held several hearings in 2006 focusing
on Western Hemisphere energy security issues, while in March 2006, Senator Richard Lugar introduced S. 2435, the Energy Diplomacy and Security Act of 2006, which includes 40 U.S. Southern Command, Long-Term Oil Production:

Venezuela , Ecuador, Mexico, and Trinidad

and Tobago, June 2006; Andy Webb-Vidal, Resource Nationalism Creates Supply Threat, Warns U.S. Military, Financial Times, June 26, 2006.

provisions to increase hemispheric cooperation on energy (see legislative section below for details). Several themes emerged from the congressional hearings. Several Members expressed concerns that recent events in Latin America particularly in Bolivia and Venezuela have demonstrated how political events can undermine the reliability of energy producing countries. At a May 16, 2006 hearing, Representative Darrell Issa, Chairman of the House Energy and Resources Subcommittee, said that
the United States was at risk of being boxed in by Iran, Venezuela, Russia, Nigeria, and Bolivia...[such that] we cannot effectively counter the use of energy as a weapon. Representative Stephen F. Lynch expressed concerns about the possibility that President Chvez might take retaliatory oil-related actions...[against the United States+ stemming from his opposition to U.S. policy. While Bush Administration officials tried to allay these congressional concerns, other witnesses, including David Goldwyn, a private energy analyst, pointed out several key threats to U.S. interests that have emerged in Latin America. He described how companies and their shareholders are seeing their asset values cut in half as a result of resource nationalism, oil and gas production is leveling off or declining, and U.S. influence in the region is declining (as

Venezuelas power has increased).41 Another theme that emerged is the need for improved investment climates in the region in order to increase investment in energy sectors. At a March 2, 2006 hearing of the House Western Hemisphere Subcommittee, Eric Farnsworth of the Council of the Americas, asserted that countries in the region need to

improve their investment climates in order to attract foreign investment and boost their competitiveness, echoing the recommendations of the Councils October 2005 report described above. D epartment o f E nergy Assistant Secretary for Policy and International Affairs Karen Harbert warned about the negative effects of unpredictable and non-transparent legal and regulatory frameworks, resource nationalism, and a lack of investment in exploration and maintenance on regional energy markets.42 At a June 22, 2006
hearing by the Senate Foreign Relations Committee, Luis Giusti, former chairman of PdVSA and currently an adviser with the Center for Strategic and International Studies, asserted that unless

investment climates across Latin America improve dramatically, foreign investment will continue to move to other regional energy markets.43

Maduro Cred Good DA

Uniqueness
Maduro will stay in power until December overthrow inevitable Renuncio 13 [June 19, 2013. Irenea Renuncio is a Senior Associate at Intelligence & Analysis, London.
Venezuela: strategic risk outlook for 2013 http://news.riskadvisory.net/index.php/2013/06/venezuelastrategic-risk-outlook-for-2013/]
This intelligence suggests that the

long-term political future of Maduro remains uncertain at this stage. But while Cabellos stand could ultimately pose a threat to the president in the long term, Maduro seems to have the ability to govern for the remainder of 2013. A former Chavista official tells us that the rivals appear to need each other to govern. According to this source, Maduro needs someone to keep the armed forces in check, while Cabello needs to appear to respect Chvezs wish for Maduro to follow as his successor , at least in the short
term. Maduros executive power seems to be limited by Cabellos control of key state powers. However, as president he still retains control of the countrys key oil resources through the management of state oil company, PDVSA , whose head Rafael Ramrez remains a clos e ally. According to our sources, the Cuban government provides Maduro with intelligence in exchange for economic support, and has been instrumental in providing the president with parallel military and police intelligence to that controlled by Cabello. Maduro constantly refers to plots to oust him, and relies on Cuban security, as he seems to mistrust Cabello. These indicators suggest that

Maduro has resources at his disposal to secure his immediate political survival. In addition, several countries tacitly support Maduros
continuation in power. As former foreign affairs minister, Maduro knows most international leaders personally and has the tacit support of powers such as China, Brazil and Russia, which were the first countries to congratulate him after the election. All of these countries seem to support the status quo and the continuation of key contracts in the energy, construction and food industries. While we

believe that Maduro and Cabello are likely to continue governing in an informal power sharing agreement for the remainder of the year, it is unclear at this point if this arrangement is sustainable in the longer term , particularly as hardship protests appear likely to continue and put pressure on the relationship. Protests could weaken Maduros authority and upset the balance of power between the two men. Currently there is no firm evidence to suggest that Maduro could be ousted from power before the December elections and we think such a scenario is unlikely on current indications. Rather, Cabello and Maduro seem likely to cooperate to maintain their positions and privileges under the current system,
with both leaders forced to support each other despite their differences.

Maduro will be overthrown in 2 years anyway Guillermoprieto 13 [June 3, 2013. Alma Guillermoprieto is a Mexican journalist who has written extensively
about Latin America for the British and American press. Chavismo: The Crack Up? The New York Review of Books. http://www.nybooks.com/blogs/nyrblog/2013/jun/03/venezuela-chavismo-silvas-secrets/]

in the three months since Hugo Chvez was pronounced dead, his favorite television mouthpiece, a Silva, delivered himself of his sorrow regarding Venezuela in the course of a highly private conversation. It was a riveting aria: fifty-three minutes in which Silva told of coup plots, death threats, power struggles
Sometime broadcaster called Mario

within the heart of chavismo . Astonishingly, Mario Silvas complaint was sung not to a friend or colleague, not to a
Venezuelan official or source but to Aramis Palacios, a lieutenant colonel of Cubas G2 intelligence directorat e, and we know what was said because someonea spy for the opposition? secret agent Palacios himself?has made an audio recording of this conversation available to the Venezuelan opposition. The Cuban government depends for its very survival on the oil Hugo Chvez mainlined to Havana until his death in March, and so its not surprising that its leaders would have felt the need to develop their own intelligence sources men like Palaciosin Chvezs Venezuela. What is surprising is that the canary should turn out to be Mario Silvaalways so unctuous in his dealings with the powerful, poisonous when in striking range of the weak. Silvas program, La Hojilla (The Razor Blade), on which Chvez liked to appear, was where the regimes enemy of the moment was always dipped in the acid of Silvas scorn. On his program, opposition presidential candidate Henrique Capriles was always a fascist, and, lately, after Capriles lost the presidential election to Nicols Maduro, Hugo Chvezs designated successor, by less than 2 percent of the vote, an assassin. After

the opposition showed a cell-phone video last month of chavista members of the congressional body attacking opposition members,

breaking the nose of one and beating another black and blue, it was Silva who devoted an hour or so to explaining how the video should actually be seen as an oppositionist assault on chavistas. Silva would seem by any light a cynical man. But in the audio he is earnest, troubled, even depressed, as he confesses to Palacios. I have a visceral, emotional,
fucked up

fearthat were sending all this

shit [ chavista

power and the chavista

state] to hell , he tells the Cuban agent. Silva could easily be depressed about the parlous state of the Venezuelan economy, besieged as
it is by inflation, crucial shortages, and disorganization, or by the oppositions growing appeal. But

what troubles him instead is

the roiling fight for power inside the chavista leadership, the tenuous popular appeal of the new president, Nicols Maduro, the possible plots against Maduro from within chavismo , and certain of his
perceived eccentricities. Listen to this, he says to Palacios. *Maduro+ sent me a photo *during his ele ctoral campaign, and told me] that his Madurosface had appeared in the portrait of the comandante *Hugo Chvez+ thats in *Chvezs mausoleum+. Perplexed, Silva called a party hierarch to ask what he should do about this and was warned to stay away from the story. Watch what you say, Mario, because in two days they could bring down the entire campaign by saying that Maduro is crazy, the hierarch, Jorge Rodriguez, said. But in my wicked and very maquiavlico head, Silva tells Palacios, I

think that this whole thing was fomented by Diosdado Cabello , because he knows that if this got airplay it would be un boom *a scandal.+ With this, Diosdado Cabello, aged fifty, current president of Venezuelas national legislative body, the Asamblea Nacional, slopes on the stage. He is a former army lieutenant, former conspirator with Chvez in their failed coup attempt of 1992, former governor of the state of Miranda (which
he lost to opposition candidate Henrique Capriles in 2008), defeated rival for the post of Chvezs dauphin, and the man Silva refers to as that very great son of a whore. In the conversation with the Cuban agent,

Silva is accusing Diosdado Cabello of immense,

hardly conceivable corruption, conspiring constantly against Maduro from within the chavista state, and possibly plotting a coup . Remember that in a previous report I said that Diosdados sources of financing had to be cut off?
Silva asks, before listing the numerous sources of Cabellos allegedly vast fortune and dangerous power. These include, Silva says, the currency exchange supervisory body and the port authoritythe latter in the hands of Diosdados brother, Jose David Cabellothe military and civilian intelligence services and the national police, as well as civilian high government officials. It has apparently become common for businessmen favored by the government to bring in gigantic authorized dollar loans from abroad and then sell the currency on the black market at two or three times the official exchange rate. Silva explains how one of Chvezs most trusted and reputable advisors has intervened to stop an investigation into this sort of money-trafficking by other government officials, apparently Cabello allies. We

are immersed in a sea

of shit, compadre, and we havent realized it yet, Silva laments . But his ultimate concern is Diosdado Cabellos hold on a significant proportion of the officer corps, and the possibility that Cabello has understood that he doesnt need the presidency to control the state in Venezuela. Theyre going to create shortages. Theyre going to create various messes simultaneously, Palacios. Theyre going to create conditions so thatthe whole administration becomes ungovernable so that two years down the line they can call for (Maduros) repeal.
what in Latin America is called caudillismo the In the regime created by Hugo Chvezs highly personalistic approach to government

problem isnt so much Maduros lack of popularity but his lack of

institutional backing.

The new president came up in the world as a militant in a small radical left-wing party and later as a union

activist. Before he was elevated to the vice-presidency by Chvez he spent six years as foreign minister. He

his own. In contrast, Diosdado

has no political base of Cabello has been a leader of the chavista umbrella party and its

organizaciones populares , in addition to his ascendancy over all the intelligence agencies and much of the officer corps. And he is an army man: he held the rank of lieutenant before he was evicted from the army after the coup attempt that brought Chvez to public attention in 1992. It is not surprising that he would have seen himself as Hugo
Chvezs natural successor, but the comandante took to his grave the reasons why he didnt agree with that choice. How credible is Mario Silva, a man who has made a career of on-screen libel? How much of the access he claims to have is he inventing? How much of a patriot can someone be who is caught in the act of delivering an intelligence report to a foreign power, evenor perhaps especiallyif that foreign power is his governments strategic ally? How big is the mess President Nicols Maduro now finds himself in, and how strained are relations between the Cubans and Maduro now that the Maduro knows that his Cuban friends are running agents on him behind

his back? What can relations between Maduro and Asamblea president Diosdado Cabello possibly be like after Silvas allegations? Who leaked his conversation anyway, and is it an authentic recording?

Maduro credibility alone doesnt stabilize Venezuela 1AC economy advantage turns the DA. Kevin Lees, 4-15-2013, attorney in Washington, D.C., and editor of the comparative-politics blog
Suffragio.org, writer for The Atlantic, If He Holds on to Victory, Maduro Will Have an Extremely Hard Job,
http://www.theatlantic.com/international/archive/2013/04/if-he-holds-on-to-victory-maduro-will-have-an-extremely-hard-job/274984/

Venezuela's president faces not only a credibility challenge but massive economic problems

that got their

start in 1918. CARACAS, Venezuela -- During the 10-day presidential campaign to determine who will fill out the rest of late president Hugo Chvez's six-year term, his anointed successor Nicols Maduro threatened that the "curse of Maracapana" would fall on those Venezuelan voters who failed to support Maduro. (The name of the curse comes from a battle in which Spanish conquistadors defeated indigenous Caribbean tribes in the late 1560s.) But the curse is now on Maduro. Despite a flowery and defiant victory speech late Sunday night after Venezuela's National Election Commission declared him the winner with just 50.66 percent of the vote to 49.17 percent for his aggressive challenger Henrique Capriles, Maduro's tenure in office, whether it lasts six days or six years, will be haunted with the doubt of half the nation's voters. Maduro is a bland apparatchik whose legitimacy, so long as he remains president, will

forever be challenged by his narrow victory. In the short term, he faces an immediate crisis over the audit of election
results that could further delegitimize his victory. Capriles defiantly refused to accept Sunday's election results in an early morning address to the nation. Wielding a thick stack of alleged election day violations, Capriles demanded a recount of 100 percent of the votes. While he stopped short of declaring victory himself, he ominously noted that his campaign had a different count of the results. Venezuela's army made clear last night that it was siding with Maduro for now, but that could change if the audit doesn't line up with the election commission's declarations.

Maduro was always going to face an economic crisis in the long run. But now, just five weeks after Chvez's death, Maduro faces a governability crisis as well. If his election is upheld and he serves until the end of his term in 2019, Venezuela will have marched through 20 years of chavismo. Maduro takes office with an economy under siege -- the country has become increasingly reliant on imports ; PDVSA, its state-run oil company actually produces less oil today than it did when Chvez took office; both international finance markets and Chinese lenders seem unwilling to fund a growing public debt ; and the country is plagued with growing inflation
that was already in double digits before the government officially devalued its currency in February and a informally devalued it even more in March. It's

far from certain that Maduro is up to the task of salvaging it all from a major economic crisis or recession. That half the nation believes Capriles won certainly won't help matters. It will make Maduro's
position even weaker within the inner guard of the chavistas who run Venezuela's government, and Maduro's weak victory essentially makes chavismo a lame-duck movement more than ever. But though Venezuela

seems in dire need of at least some basic changes in economic policy, Venezuela's problems run far deeper in its society than even the most surgical reforms could fix. When the smoke clears, the deeper curse Maduro faces will come from neither Maracapana nor Capriles, but the curse that began in 1918 with Venezuela's oil exporting prowess -- the resources curse.

Link Uniqueness
The olive branch has already been extended only a question of whether the US accepts it or not impact shouldve been triggered John C. K. Daly, 5-27-2013, CEO @ U.S.-Central Asia Biofuels Ltd, chief analyst for Oilprice.com, nonresident scholar @ Johns Hopkins University's Paul H. Nitze School of Advanced International Studies,
Venezuelan President Maduro Offers Olive Branch to Washington, http://oilprice.com/Geopolitics/South-America/Venezuelan-PresidentMaduro-Offers-Olive-Branch-to-Washington.html But Venezuela's

new President, Nicols Maduro, is now seeking to break the diplomatic logjam. On 19 May, Minister Elias Jaua said, "We are going to remain open to normalizing relations with the U nited S tates. The first thing would be to resume diplomatic representation at the highest level," adding that Venezuela is "interested in further deepening and cultivating a friendship with the U.S. people." To be sure, there are still many roadblocks in the way quite aside from the
during an interview with Venezuelas Televen television channel, Foreign rhetorical sniping, the U.S. has yet to recognize Maduros election, and there remains that pesky issue of compensation. But

an olive

branch has been extended , and Washington can lose little by at least listening to the country with the Western Hemispheres largest energy reserves. If they do not, then Caracas always has China, which is interested in
trade more than ideological rhetoric.

Plan Helps Maduro


If Maduro delivers on economic policy, he can maintain power past December aff solves Renuncio 13 [June 19, 2013. Irenea Renuncio is a Senior Associate at Intelligence & Analysis, London.
Venezuela: strategic risk outlook for 2013 http://news.riskadvisory.net/index.php/2013/06/venezuelastrategic-risk-outlook-for-2013/]
However, Maduros

prospects after the elections seem much less certain, making the next six months a critical window for him to start delivering on economic policy and bringing improved security to the country. Constrained by a power sharing agreement and having inherited a highly dysfunctional economy and political system,
Maduros ability to deliver is very limited. It seems unlikely that even with a dramatic reform program he will be able to de liver results quickly. In the meantime, opposition protests seem almost certain to continue over the following months. These are most likely to intensify in October and November ahead of the December municipal elections, which are likely to be a test of Maduros leadership. With the opposition calling for a mass turnout at the polls, the

next local election is most likely to result in renewed unrest in the countrys main cities, especially if socio-economic hardship continues. Regardless of outcome, the municipal elections will not unseat Maduro, but potentially sweeping gains by the opposition could seriously erode his standing in Chavismo and open the door to an internal challenge by Cabello. Although the longer-term direction of Chavismo is difficult to forecast with any reliability, on current indications the current government appears to lack the cohesion or
popular support to navigate a range of different economic and political challenges during Maduros six-year mandate, so we expect a restive end to the year.

Maduro anti-Americanism hurts his legitimacy shows hes desperate and lacks an agenda. Erika Johnsen, 5-06-2013, [Qualifications needed] , writer for the website Hot Air, Venezuelas Maduro really hitting this
American imperialist meddling thing hard, huh? http://hotair.com/archives/2013/05/06/venezuelas-maduro-really-hitting-this-americanimperialist-meddling-thing-hard-huh/ Obamas comments about Tracy, and others questioning socialist Maduros democratic credentials after last months disputed presidential vote, have infuriated the government and revived

accusations of imperialist meddling . Unfortunately for him, the

flailing is all too transparent , at least to several interested outsiders, and Im sure that the opposition party is sensing some possible vulnerability: Peruvian Foreign Minister Rafael Roncagliolo called on the Union of South American Nations, of which his country is acting president, to issue a statement urging Maduro to exercise tolerance. Former Colombian president Alvaro Uribe says he is taking Maduro to the Inter-American Commission for Human Rights over immature accusations that Uribe plotted to assassinate Maduro. The Tim Tracy case is a sad diversion in the midst of uncertainty, economic chaos and social upheaval , Roett said. Roett says Maduros Chvez-like language in which he railed this weekend against U.S. imperialism, the bourgeoisie and the far right shows he lacks an agenda for the country. Maduro does not seem to have many ideas of his own, Roett said. It is safer to parrot Chvez. Maduros entire campaign pretty much revolved around being Chavezs political reincarnation more than being a leader in his own right, which was likely one of the reasons the opposition party made such a huge and game-changing showing, and his leadership skills so far still seem to be sorely wanting . Maduro is definitely nervous right now.

Oil is the lifeline of Chavismo reforming the oil sector is popular and helps the economy Fleischhaker 13 [March 7, 2013. Cornelius Fleischhaker is currently a Research Analyst at the
International Monetary Fund. Three (not so simple) Steps for Curing the Venezuelan Economy http://semancha.com/2013/03/07/three-not-so-simple-steps/] Everyone knows that oil is the lifeblood of the Venezuelan economy and the lifeline of Chavismo . Yet the policies currently in place are slowly strangling the goose that is laying the golden eggs . Venezuelas oil production has been stagnant at best in recent years even though the abundance of reserves and the high oil price make a strong case for expansion. When it comes to petroleum products, the country has become increasingly reliant on imports, as poorly maintained refineries are crumbing and accident-prone. The major problem is that PDVSA has been abused as a cash cow by the government. Not only are its profits siphoned off to the Venezuelan public budged, funding Chvezs missions, the hard currency has also been used as piggy bank for off-budget projects. PDVSA has not been able to retain enough profits to invest in maintenance, let alone expansion.

Increased Oil production boosts Venezuela leadership


Quiggin, 2010 (Tom Quiggin, Senior Researcher at the Canadian Centre of Intelligence and Security Studies at Carleton University. A court
qualified expert on terrorism and a veteran of 20 years in the intelligence community, Axis of Oil? Canada, Venezuela and America, The Global Brief, 01/29/2010, http://globalbrief.ca/tomquiggin/2010/01/29/axis-of-oil-canada-venezuela-and-america/) How does this affect the future of international policies concerning oil production and energy needs ? While the Middle East today consumes large about of policy effort and energy, it is possible to envisage a future some 10 years or more away where North American energy requirements from the Middle East are drastically reduced. American concerns over Middle Eastern politics and security concerns will drop coincident with the amount of reduced oil purchases in the region. On the other hand, the new consumers, such as China and India, are constantly on the outlook for future oil supplies. China and India are less likely to be concerned with ideological concerns and historical baggage. In the Americas, the future for further competition and conflict appear mixed. Most Canadian oil being produced now flows directly to American markets. Canadian export figures have grown from a 2005 figure of 700,000 barrels a day to current figure of more than one million barrels per day. Future production figures envisage a capability of exports of more than 2 million barrels per day. This will provide the USA with a stable source of imports and Canada with a reliable revenue stream. However, the outlook for Venezuela remains murky. President Hugo Chavezs relationship

with the USA may be strained, but both countries may remain mutually dependent. The USA needs the oil and Venezuela needs the revenues from a stable customer that pays world market prices in US dollars. While ideology and personalities may collide, energy needs and big money should do the
loudest talking. Where does this leave security matters? The future is murky. For Canada, it can be said that big trouble may follow big money. Terrorism concerns are valid, given the fragility of the oil infrastructure which is spread out over vast areas, often with temperatures regularly hitting more 20 degrees below zero. Transnational organized crime is another concern. Regional economic inequalities will produce fiscal infighting at the provincial and national levels. Oil money can be a curse as well as a bonus if mishandled. For

Venezuela, it means a greater voice and leadership in South America and the Caribbean, especially while the attention of the USA is focussed on Afghanistan, Iraq and the economy. Leadership and visibility comes with a cost,
however, and Venezuela will find itself with further complications, especially with the Caribbean states and Columbia. While much of the future security picture is unclear, several observations can be safely made. The first of these is that the Middle East will progressively see a shift in the next ten years as American interests in this region decline along with its dependency on local oil production. The security picture in the Middle East will be more complicated, as China and India move into the region driven by their own oil needs. At the same time,

the security picture in the Caribbean will become increasingly complicated as Central and South American states try to adjust to the reality of having their own version of Saudi Arabia in the neighbourhood. For states
such as Columbia and Brazil, how do they chose between one of their own South American neighbours and the USA? Whatever the future,

energy driven security affairs in the next ten years are about to become much more interesting, to use
the Chinese sense of the term. Will Canada, Venezuela and the USA form the axis of oil?

High oil prices ruins Maduro image and causes inflation


Cawthorne & Naranjo, 02/09/2013 (Andrew Cawthorne, journalist studying Latin America, Africa, Europe and the Middle East,
Mario Naranjo, reporter for Reuters, Opposition slams Venezuela devaluation, shoppers fret, Reuters, http://www.foxbusiness.com/news/2013/02/09/opposition-slams-venezuela-devaluation-shoppers-fret/)

The devaluation, which takes effect on Wednesday, was announced before a four-day weekend for Venezuela's Carnival holiday to minimize political or market repercussions. It had been widely forecast by economists as a way of redressing distortions including a black market rate for dollars at four times the old official level of 4.3 bolivars. Raising the rate to 6.3 bolivars will boost state finances by providing more local

it also hikes prices for imports crucial to the oil-dependent economy, potentially fueling inflation, although the state will seek to brake that through price controls. Many people ran to shops on Saturday in fear of quick price rises, although the rush was lighter than past devaluations, perhaps because so many Venezuelans were heading out on holidays. Inflation has already spiked in the past two months to an annual rate of 22.2 percent. Further price hikes risk hurting Maduro and other senior officials' popularity at a sensitive time given Chavez's condition and a possible new vote. WALL STREET PRAISE Maduro, who is
currency for each dollar of oil export revenue. But Chavez's preferred successor should his cancer force him out of office, said the devaluation was needed to optimize revenues, including the funding of flagship social programs that are popular among Venezuela's poor. He said the devaluation was also a response to attacks on the bolivar by capitalist "speculators," adding that more

economic measures would be announced in the days ahead, in line with to guarantee economic growth and diversification this year," Maduro said. "We will push ahead with the perfect plan for the people's victory." Critics flooded Twitter with mocking references to a "red package," or socialist version, of an old-style
Chavez's instructions to ministers who visited Havana. "Our commander-president has decided them with full consciousness and clarity ... International Monetary Fund economic package hated by leftists.

Lack of investment means Venezuela influence waning


Romero, 2009 (Simon Romero, Brazil bureau chief for The New York Times
In recent years, Mr. Chvez Venezuelas Hope of More Sway Dims as Riches Dip, New York Times, 05/19/2009, http://www.nytimes.com/2009/05/20/world/americas/20venez.html)

has used his nations oil wealth to drive his socialist-inspired agenda at home and draw other countries in the region into his sphere of influence, helping to consolidate a leftward political shift in parts of Latin America. But more than a dozen big projects intended to broaden his nations reach are in limbo
including a gas pipeline across the continent and at least eight refineries, from Jamaica to Uruguay as Venezuela grapples with falling revenues and other troubles in its national oil company. Venezuela

is also cutting back sharply on other types of financial support for its neighbors, a cornerstone of its regional influence. One recent study by the Center of
Economic Investigations, a financial consulting firm here, found that Venezuela had announced plans to spend only about $6 billion abroad this year, down from $79 billion in 2008. That

includes proposed spending on everything from military purchases to aid, and points to a major weakening of Mr. Chvezs oil diplomacy. Gone, for instance, are multibillion-dollar outlays to buy Argentine bonds, replaced by modest loans like $9 million for growing rice in Haiti. Now countries that have been dependent on Venezuelan aid are turning elsewhere. Argentina locked in a $10 billion deal with China to help it buy Chinese imports, while Ecuador, a close ally of Venezuela, is rekindling ties to the International Monetary Fund, the kind of Western-dominated institution that Mr. Chvez scorns. Some Venezuelan allies even appear to be warming to the Obama administration, sometimes in areas like military training. This month, President Rafael Correa of Ecuador sent a personal pilot to study at the Air War College in Montgomery, Ala. Cuba, too, is cautiously opening the door to improving ties with Washington, while trying to attract investment from Brazil, potentially reducing its reliance on Venezuela.

A2 Cabello/Chavista Overthrow
Capriles and the opposition would overthrow the government in the event of instability, not Cabello Cheney 5/8/13 [Catherine Cheney is World Politics Review's Trend Lines Reporter. Venezuela's Opposition in
a Favorable Position Amid Political Instability World Politics Review.

http://www.thedialogue.org/page.cfm?pageID=32&pubID=3304] Since Nicolas Maduros narrow victory over opposition candidate Henrique Capriles Radonski in Venezuelas presidential election last month, tensions have escalated in the country, most recently with rival marches in the streets. Last week, lawmakers
engaged in a fistfight in the Legislative Assembly, in an altercation underscoring Venezuelas political uncertainty following the death of former President Hugo Chavez. Michael Shifter, president of the Inter-American Dialogue, called Maduros inability to keep order striking. A lot of his rhetoric and a lot of his actions reflect a kind of flailing about, Shifter said of Maduro, explaining that while he is trying to just keep this government on course and have it settle down, its not settling down. Chavez had a unique ability to preserve political stability, Shifter said, explaining that Maduro Meanwhile, Capriles is

does not have the skills nor command the loyalty Chavez did. trying to sustain the unity of the opposition in the face of what seems to be almost an implosion of the government, Shifter said. Capriles must strike a balance between being prepared for the possibility that the Maduro government might fall , while also demonstrating restraint given the risk of violence. You just have this sense of tremendous disorder within the government, and that helps Capriles , Shifter said. His challenge, of course, is how to figure out in a smart way how to keep the opposition together and have them show restraint and patience until the right moment. Demanding the recount and pressing the government at every turn makes a lot of sense, Shifter said. At the same time, *Capriles+ clearly doesn't want to be part of
what could be a violent scenario. While Capriles may have some legitimacy, Shifter said the dispute between Maduro and Capriles is a might versus right situation. The forces are aligned against Capriles in the sense that the government controls all the institutions and the military is on their side and the media is on their side and the oil company on their side, Shifter said, referring to PDVSA, the national energy company. Shifter once thought the Maduro victory meant Capriles would fade from the headlines, but he told Trend Lines he has revised this view. The

forces are moving in a direction that is more favorable to the opposition than the government, Shifter
said, noting that the

unraveling of the government is a mobilizing factor for the opposition. Shifter said Capriles, who also lost a previous presidential vote in October 2012, has worked to build bridges with more moderate figures in the Chavista camp. But it remains to be seen whether he can keep hard-liners within his own opposition camp in check, Shifter said

Capriles led government breaks ties with Iran solves Watts and Lopez 12 *September 30, 2012. Jonathan Watts is the Guardians Latin America correspondent.
Virginia Lopez is a correspondent for the Guardian. Hugo Chvez rival pledges seismic shift in foreign policy The Guardian. http://www.guardian.co.uk/world/2012/sep/30/venezuela-chavez-challenger-electionpledges]

The challenger to Hugo Chvez in the Venezuelan presidential election has vowed a dramatic change in foreign policy if he is elected next Sunday, shifting his country away from China and Russia and reviewing crucial oil deals. Henrique Capriles, who has gained ground in recent polls, said he would halt arms purchases from Russia, rethink relations with Iran and revise deals to exploit one of the world's biggest recoverable oil resources in the Orinoco belt. In an interview during a campaign stop, Capriles said he would end the Chvez policy of promoting worldwide revolution and focus on Venezuela's needs. "The foreign policy of this government is driven by politics to extend a revolution worldwide. My objective with regards to foreign relations is to benefit all Venezuelans," he said. This would mark a dramatic change. Under Chvez, Venezuela has consistently thumbed its nose at the US and moved closer to Russia, China, Nicaragua, Cuba and Iran. An example of the close friendship with Moscow came this week when Vladimir Putin presented Chvez

with a Russian terrier puppy. Capriles did not mention Russian dogs, but said Russian guns would no longer be required. "We have spent more than $14bn (8.66bn) on arms purchases from Russia," Capriles said. "I am not going to buy more weapons. I think the policy has been mistaken." The big question is what would happen to the oil industry in Venezuela, which vies with Saudi Arabia in claiming the biggest proven oil reserves in the world. Until

now Russian and Chinese companies have struck the biggest deals for future exploitation. "We have to revise every deal. I think they are agreements that are not functioning," Capriles said. Capriles has said he will continue to work with Beijing because "everyone deals with China" but he appeared ready to distance Venezuela from Iran . "How have relations with Iran and Belarus benefited Venezuela? We are interested in countries that have democracies, that respect human rights, that we have an affinity with. What affinity do we have with Iran?"

Maduro Cred Bad DA

Saudi Oil DA

AT: UQ
Experts agree that oil prices will drop substantially --- high supply and low demand. Patterson 7-3-13 (Jim, Associate Editor @ The Kiplinger Letter, Lower Oil Prices on the Horizon, Yahoo!
Finance, http://finance.yahoo.com/news/lower-oil-prices-horizon-040001205.html)

oil prices are poised for a drop . New sources of supply and slowing demand both at home and abroad will combine to push prices down by 20% to 30% by 2016. See Also:
After nearly a decade of unrelenting gains, Our Full Energy Forecast The plunge will also lower gasoline prices, to around $3 a gallon, on average -- a welcome break for motorists, who will be able to spend the money they save at the pumps on other purchases, helping to boost the economy. To

appreciate just how

significant the coming downshift will be, consider the recent history of oil prices: In 2002, crude oil in the U.S. averaged $26
per barrel, fairly close to the low prices that prevailed for much of the 1980s and 1990s. But by 2008, crude had nearly quadrupled, to $100 per barrel, because of surging demand from China and other fast-growing countries, along with waning domestic oil output. The recession that hit the U.S. economy that year brought a sharp drop, but only briefly. Prices have averaged about $95 per barrel since 2011. But now, the

factors behind the bull oil market are reversing. Expensive gasoline has convinced many consumers to trade in SUVs for fuel-sipping alternatives, and automakers are scrambling to boost the fuel economy of every model they sell.
At the same time, high prices have unleashed a surge of new exploration and drilling by energy firms eager to cash in on expensive oil. As a result, U.S.

oil consumption is off 11% from its peak, while output has rebounded by 30% in just four years. Similar shifts are happening abroad. Oil demand in emerging markets is easing, after a decade of torrid growth . Fuel subsidies
meant to spur newly middle-class consumers to buy their first automobiles are being pared back as China and other fast-growing nations look to cut costs and air pollution. Wealthy Middle Eastern countries are building power plants that run on natural gas, to lessen the need to burn oil for electricity during the region's scorching summers. In Europe and Japan, weak economies and stringent environmental policies figure to keep oil demand stagnant at best. Meanwhile, output is surging from Canada to Iraq to deepwater fields off the coasts of Africa. That

combination of mounting supply and cooling demand spells "a new era of lower energy prices," according to veteran energy analyst Phil Flynn of commodities brokerage PRICE Futures Group.
Although a decade of rising prices convinced many traders and energy analysts that oil will trade ever higher, he sees a major correction in the works. "This is very typical" of the boom-and-bust cycles that commodities go through, Flynn says, adding that "peak oil" -- the theory that dwindling oil supplies inevitably mean higher prices -- dates back to the 19th century, when whale oil was a key commodity. Michael

Lynch, of Massachusetts-based Strategic Energy and Economic Research, sees much the same scenario unfolding. He compares today's oil markets to those of the late 1970s, when a similar era of high prices caused by OPEC oil embargoes led to the pessimistic assumption that oil would remain painfully expensive forever. But then as now, high prices prompted conservation and new drilling, and by the early 1980s the price of oil had collapsed. And unlike in the 1980s, new technologies are enabling a wide range of alternatives to oil as a transportation fuel. In particular, freight
shippers are looking to natural gas as a cheaper way to move cargo by truck, rail or water. The surge of gas production enabled by hydraulic fracturing and other drilling techniques has made natural gas in the U.S. cheap and abundant, and shippers are eager to cash in. Glen Kedzie, vice president and environmental affairs counsel at the American Trucking Associations, says trucking firms in particular are making big investments in rigs that run on liquefied or compressed natural gas instead of diesel fuel, and truck manufacturers are rushing to offer new models. Expect to see similar trends in freight rail and ocean shipping take significant bites out of future oil demand, too.

Recent spike in oil prices was only a media blip --- structural trends suggest an inevitable downward pressure. Loftus 7-8-13 (Robert, graduate of the i-School at Syracuse University, Oil Prices Will Fall On Egypt Non-Event
And Change In Indian Policy, Seeking Alpha OIL, http://seekingalpha.com/article/1538472-oil-prices-will-fall-onegypt-non-event-and-change-in-indian-policy?source=feed)
Lately we've

seen an increase in oil prices due to concern by traders over political turmoil in Egypt. These concerns are largely misplaced , and appear to be the result of investors who are lacking in oil market information, and prone to hysteria over difficulties in the Middle East. In an earlier article I discussed the Convergence and Decline of WTI and Brent Oil Futures, and that long-term trend is still under way. The current rise in oil futures prices is a media-manufactured blip that is not supported by market fundamentals .

Concerns over disruption of oil markets due to Egyptian unrest are unfounded as Egypt is a net importer of oil. Also, the Muslim Brotherhood has not demonstrated any interest in attempting to Pirate oil vessels, or trying to limit access to the Suez Canal. Worldwide oil demand should decline as a result of multiple factors, including the Indian government's decision to reduce gasoline price subsidies for Indian consumers. This combination of factors means the recent spike in oil prices is nothing more than a media manufactured pump and dump, and not a long-term price trend. Egypt is a net importer of oil (click on the
Petroleum tab to expand the chart). Also, there have been no reports of any attempts to disrupt oil production in the country. Even if there were, Egypt is a relatively small economy, and any decline in Egyptian production that would have to be made up by increased imports to the country would be relatively small. According to the EIA chart cited above, Egyptian oil production is roughly 725.68 thousand barrels per day. For the sake of comparison, the June 28, issue of the EIA Weekly Petroleum Status Report [pdf] indicated that U.S. imports of petroleum have declined by 1.1 Million barrels per day over the course of the last year - a result of increased U.S. oil production. Total

Egyptian oil production is smaller than the increase in U.S. Production from the past year. The Muslim
Brotherhood has voiced no interest in attempting to block passage of the Suez canal. Even if the Brotherhood were interested in attempting such an action, any ramshackle attempt at canal piracy would be met with overwhelming military force. The Suez canal has a deep enough draft to support U.S. Navy warships. Last year, Iranian saber rattling resulted in a bit of gun-boat diplomacy when the USS John Stennis carrier group passed through the Suez Canal. Any Muslim Brotherhood small craft that attempted to create issues in the canal would be quickly dispatched. Along with the multiple factors pointing to declining U.S. demand that I discussed in my earlier article, international

oil demand should also face downward pressure from shrinking factory activity in China, and the decision by the governments of India and Indonesia to cut fuel subsidies. The decision by these countries to reduce gasoline subsidies
should not be written off. India is the world's fourth-largest consumer of energy. Widespread declines in Indian consumption of gasoline could put significant downward pressure on worldwide petroleum demand. Recent concern that's led to a spike in petroleum prices is not based in reality. Egypt is a net importer of oil, and even if the country had to replace all of its domestic production through imports, that level of imports would be less than the increase in U.S. production seen over the course of the last year. The Muslim Brotherhood is not a credible threat to the Suez Canal, and any misguided attempts at canal piracy would be met with overwhelming military force. Multiple

economic factors including structural changes in the U.S. economy, a slowdown in Chinese manufacturing, and changes in government policy in India and Indonesia should put downward pressure on worldwide petroleum demand. No credible arguments have been presented to justify the recent run-up in futures prices, and the recent increase seems to be a product of hysteria and misinformation. A return to the convergence and decline pattern for Brent and WTI oil futures is inevitable.

Oil prices have fallen after Egyptian unrest. AFP 7-5-13 (American Free Press, Oil prices fall after recent spikes, Daily Times,
http://www.dailytimes.com.pk/default.asp?page=2013\07\05\story_5-7-2013_pg5_21)

Oil prices fell on Thursday after spiking in recent days on concern about Middle East supplies after Egypts army overthrew and detained president Mohamed Morsi. Investors are closely watching whether the latest unrest would escalate and affect stability in the oil-rich and politically volatile Middle East region which neighbour north African nation Egypt. Brent North Sea crude for delivery in August dropped 69 cents to stand at
LONDON: $105.07 a barrel approaching midday in London. New Yorks main contract, West Texas Intermediate (WTI) light sweet crude for August, fell 48 cents to $100.76 a barrel. On Wednesday, the contract had hit a 14-month high point at $102.18. The gains from

previous days have scaled down as the crude market seems to have priced in the transfer of power from the civil to transitional government in Egypt, David Lennox, resource analyst at Fat Prophets told AFP. What the market will be closely
watching out for now is the reaction from those previously in government, and whether that would escalate the situation, said the Sydneybased analyst. The Egyptian army on Wednesday toppled Islamist president Morsi after a week of unrest that killed nearly 50 people as millions took to the streets to demand an end to his turbulent year of rule. In a televised address, army chief Abdel Fattah al-Sisi who was the defence minister in Morsis government said the countrys Islamist-drafted constitution had been suspended. afp

Link N/U
US oil production jump combined with a decline in imports disproves link. Loder 7-10-13 (Asjylyn, Fracking Pushes U.S. Oil Output to Highest Since 1992, Bloomberg,
http://www.bloomberg.com/news/2013-07-10/fracking-pushes-u-s-oil-output-to-highest-since-january1992.html)

U.S. oil production jumped last week to the highest level since January 1992, cutting consumption of foreign fuel and putting the U.S. closer to energy independence. Drilling techniques including hydraulic fracturing, or fracking, pushed crude output up by 134,000 barrels, or 1.8 percent, to 7.401 million barrels a day in the seven days ended July 5, the
Energy Information Administration said today. Rising crude supplies from oilfields including North Dakotas Bakken shale and the Eagle Ford in Texas have helped the U.S. become the worlds largest exporter of refined fuels including gasoline and diesel. The shale boom has also helped cut world reliance on OPEC oil even as global demand gains. It adds to supply in a world where demand continues to grow, and it certainly reduces our reliance on OPEC, said Andy Lipow, president of Lipow Oil Associates LLC, a Houston-based consulting firm, who expects output to reach 7.75 million barrels a day by the end of this year. The

U.S. met 89 percent of its own energy needs in March, the highest monthly rate since April 1986, EIA data show. Net imports of crude oil and petroleum products will fall to 5.7 million barrels a day by 2014, down from 12.5 million in 2005, the EIA said yesterday in its ShortTerm Energy Outlook. Domestic crude output will average 7.31 million barrels a day in 2013 and 8.09 million in 2014, the EIA, a unit of the Energy Department, said in the report.

Russia also set a 25-year record for oil production. Kezik 7-11-13 (Irina, Russias daily oil production hits 25-year high, Russia Beyond the Headlines,
http://rbth.ru/business/2013/07/11/russias_daily_oil_production_hits_25-year_high_27975.html)

Russia has set a new, 25-year record for daily oil production. In June, an average of 10.53 million barrels was produced per day. The only time that oil production levels were higher was in 1988 . Oil
companies are looking for further increases in production, but that may present a serious challenge. In June, Russias daily oil production reached 10.53 million barrels, according to Central Dispatching Department of Fuel Energy Complex (CDU TEK) data. The only time Russia has produced more oil was in 1988, when the average daily production in the Russian Soviet Federative Socialist Republic reached 11.07 million barrels. Oil production has been falling since, hitting an all-time low of 6.06 million barrels per day in 1996. Last year, daily oil production averaged 10.37 million barrels. There

are two reasons for the new record, says Andrei Gromadin, oil and gas analyst at JPMorgan. The first is the increase in oil production at the Vankor Oil and Gas Field developed by Rosneft, where last years
output totaled 18.3 million tons. In 2013, Rosneft expects the Vankor Field to reach its peak capacity of 25 million tons. At the start of the year, Rosneft managers were saying that Vankor would produce between 420,000 and 440,000 barrels per day. Currently, its daily capacity stands at 430,000 barrels, Gromadin says, adding that the field will not be able to further increase production. The

second factor is Gazproms boosting of its gas condensate output to 350,000 barrels a day, up from 270,000 barrels in 2010 and
300,000 barrels in 2011. The growth in production has been helped by rising oil prices, as well. In February, prices reached their peak at $119 per barrel, while prices averaged $108 per barrel in the first half of the year, says Solid Investment and Financial Company analyst Artur Akhmetov. Russia has long been ahead of Saudi Arabia in terms of daily oil production. According to Bloomberg, Saudi Arabia produced an average 9.47 million barrels of oil per day in June 2013. The country can easily increase its production to 12.5 million barrels per day, but, preferring to keep prices high, it will not do this, says Raiffeisenbank analyst Andrei Polishchuk. There is a good reason why Rosneft has boosted its oil production, Polishchuk says. The oil giant has concluded some big, long-term contracts for crude deliveries. Starting this July, for example, Rosneft will be supplying 8.6 million tons of crude annually to PKN Orlen, until 2016.

Largest oil production increase in US history didnt trigger impacts. Johnson and Gold 6-12-13 (Keith and Russell, U.S. Oil Notches Record Growth, WSJ,
http://online.wsj.com/article/SB10001424127887324049504578541601909939628.html)

U.S. crude-oil production grew by more than one million barrels a day last year , the largest increase in the world and the largest in U.S. history . In the latest sign of the shale revolution remaking world energy markets, crude production in the U.S. jumped 14% last year to 8.9 million barrels a day, according to the newly released
Statistical Review of World Energy, an annual compilation of industry trends published by BP BP.LN -0.16% PLC for more than six decades.

The wave of new crude, flowing in oil fields from North Dakota to south Texas, helped keep the global market adequately supplied and helped markets weather declining oil production elsewhere in the world. "The growth in U.S. output was a major factor in keeping oil prices from rising sharply, despite a second
consecutive year of large oil supply disruptions," said BP Chief Executive Bob Dudley. In volume terms, last year's U.S. production gain of 1.04 million barrels a day surpassed the earlier biggest annual increase of 640,000 barrels per day, recorded in 1967. Most of this new production is coming from dense shale-rock formations, such as the Bakken Shale in North Dakota and the Eagle Ford Shale in Texas. In recent years, the oil industry has developed techniques to hydraulically fracture, or frack, these shales, freeing up previously trapped oils. Beyond the U.S., oil

production increased almost 7% in Canada, raising North America's profile as a global oil producer. The
boom in the North American oil patch contrasts sharply with developments in many big oil-producing countries such as Nigeria and Venezuela, where aging oil fields and political strife led to steep declines.

No Saudi Collapse
The Saudi Arabian economy is resilient enough to sustain low oil prices. Propel 12 (Propel Consult, Saudi Arabias economy healthy enough to sustain low oil prices: Samba, 7 -10-12,
http://www.propelconsult.com/saudi-arabias-economy-healthy-enough-to-sustain-low-oil-prices-samba/)

Saudi Arabias oil revenues are expected to drop this year. Brent price is likely to reach $100/barrel in 2012 and $98/barrel in 2013 from $118/b in April this year. However, for Saudi Arabia, the consequences of lower oil prices are likely to be slight , according to a report by Samba. Samba projected the Kingdoms oil earnings at $324 billion, a 16 percent decline. Earnings are comfortably above the five-year average of $225 billion. Moreover, despite this years reduced earnings, a current account surplus of $148 billion, or 25 percent of GDP is in prospect. For 2013, Samba expects a surplus of some 18 percent of GDP. By the end of 2013 total net foreign assets are expected to total $827 billion , equivalent to 135 percent of GDP. The report said, governments fiscal position also remains robust.
Whereas previously Samba expected a surplus of 20 percent of GDP, but now this will come in at 13 percent of GDP. Saudi Arabia is aiming to use this period of high oil prices to lessen dependence on oil itself. The report said value of nonoil exports have grown by an annual average of 17 percent over the past decade, increasing their share of total exports from 14 percent to 17 percent. Most of these are derived from hydrocarbons (petrochemicals, refined products, steel), but they are sufficiently far up the value chain to soften the direct dependence on oil prices. Nevertheless, the health of the domestic economy is still intimately linked to oil earnings. Hydrocarbons accounts directly for 28 percent of real GDP, and its indirect impact through government spending is considerably greater. The need to intensify diversification efforts is becoming more pressing as domestic demand for oil continues to rise at a breakneck pace. Part of the reason for the increase in Saudi crude output is to meet domestic demand during the summer months, when increased demand for air-conditioning requires that additional crude be diverted to feed domestic power stations. It is hoped that additional gas from the offshore Karan field will help to meet this demand, while alternative energy such as power and nuclear have moved up the authorities agenda, the report said. Meanwhile, PMI

data continue to point to an economy that is bucking the global slowdown. The overall HSBC/Markit PMI
recorded 59.7 in June, a slight decline on the previous month, but still comfortably in expansion mode. The new orders sub-index drove much of this improvement with a reading above 69. Fears that weakening demand for oil and petrochemicals in Asia might have a pronounced impact on Saudi firms appear not to have been realized, with the new export orders category rising from its March 2012 low. Yet readings from this index are still well below the highs achieved in the summer of last year and it seems that much of the demand for new orders is coming from domestic clients, the Samba report added.

Saudi Arabia can continue economic growth after oil price crash --- immense foreign reserves. Torchia 7-11-13 (Andrew, Economics Editor, Europe, Middle East and Africa @ Reuters, Analysis: Sliding oil
price rebalances Middle East economy, Reuters, http://en.terra.com/news/news/analysis_sliding_oil_price_rebalances_middle_east_economy/act483035)
In the Gulf, the oil price slide threatens to cool an 18-month economic boom that helped the region recover from the global financial crisis of 2008-2009. In addition to receiving lower oil prices, Gulf oil producers - particularly Saudi Arabia - may have to cut the volumes they sell to prevent a deeper drop of prices. So far, however, most Gulf

economies look likely to continue expanding at

comfortable rates with cheaper oil . In the wake of the recent slide in the price, the UAE's economy minister Sultan bin Saeed alMansouri last week cut his forecast for this year's GDP growth to around 3 percent, from the almost 4 percent which he predicted in March. Any further drop in the oil price, if sustained, could slow growth further. But Gulf

economies would probably remain far from recession. Last year, as Saudi Arabia produced 9.3 million barrels of oil per day with the Brent crude price hovering around $110, its GDP grew 6.8 percent; in 2010, with production at just 8.4 million bpd and Brent around $80, it still managed growth of 4.6 percent. The key for the Gulf economies is preventing the oil price from dropping below their "break-even" prices, the levels at which they can balance their budgets. While they remain in the black, governments can boost spending on infrastructure and social welfare if needed to keep their economies humming. With the exception of Bahrain, which can count on financial support from Saudi Arabia, all of the six wealthy
Gulf exporters are still far from going into the red. The UAE's break-even price is about $86 per barrel, and the key level is $76 for Saudi Arabia, according to the average estimates in a Reuters poll of analysts in March. "As long as Brent crude prices remain above $70 per barrel, most Gulf countries will have no trouble funding their fiscal expansion," said Said

Hirsh, Middle East economist at Capital

Economics in London. Martins said HSBC economists originally projected Saudi Arabia could break even on its budget at an average oil
price of $90 and production of 9.4 million bpd over this year. So far this year, however, it has been producing about 10 million bpd. This suggests that even

if Riyadh now cuts output by 2 million bpd as part of efforts to support the oil price near $100, the impact on its finances for the rest of 2012 will be relatively small, she said. Furthermore, the Saudi central bank's huge foreign reserves of over $500 billion mean it could continue spending heavily for some time even if the government did fall into deficit. "They could theoretically carry on spending at current levels for another 2-1/2 years without pumping another barrel of oil," Martins said. Other Gulf
countries also have substantial financial reserves, although Bahrain and Oman would be at risk from a prolonged fall of oil prices, Hirsh at Capital Economics said.

Saudi can withstand oil price crashes --- strength of the non-oil economy. Best News 6-21-13 (S & P raised the sovereign rating of Saudi economy continues to improve,
http://www.best-news.us/news-4702708-S-amp-P-raised-the-sovereign-rating-of-Saudi-economy-continues-toimprove.html)

S & P said this raised the Saudi sovereign credit rating, is mainly based on a sound financial condition and Saudi external environment in recent years, the Saudi government through the prudent management of high oil revenues, significantly reducing the government debt, prompting economic fundamentals continue to improve. Currently,
the Saudi government debt to gross domestic product (GDP) is the world's third-lowest state, while overseas assets of more than 90% of GDP or more as of April this year, the Saudi central bank's net foreign assets reached a record $ 668.2 billion, while money supply growth rate reached 14.1 percent, since October 2011 is the fastest growing of the month(http://www.best-news.us/). relatively low debt levels and adequate money supply for the Saudi government to implement counter-cyclical fiscal policy to create space. At the same time, sustained

economic growth will help improve the productivity and competitiveness of Saudi Arabia, and to alleviate social pressures such as high unemployment has a positive effect in recent years, the Saudi government has been through massive public spending to stimulate the development of non-oil economy , but also private sector led economic activity .2005 to 2012, Saudi non-oil sector, the average growth rate of 8.0%, so that a continuous, longterm high growth also makes an average real GDP growth reached 6.5% in non-oil economy continues to improve the prospect of being able to help the Saudi economy to withstand oil prices and other adverse external factors , but also reflects the Government's fiscal policy flexibility.

Saudi diversification means its less dependent on oil. Murphy 10 (Caryle, Saudi reaches out to diversify its economy, The National,
http://www.thenational.ae/business/economy/saudi-reaches-out-to-diversify-its-economy)
As such,

the forum underscored Saudi Arabia's continuing determination to diversify its oil-dependent economy, not only by bringing in foreign expertise and capital, but also by creating Saudi companies that can be successful players in the competitive global market. "Everyone knows that oil is not going to be here forever and now is
the time to plan for the future," says the forum participant William Barilka, the executive vice president for initiatives at DevCorp International's Riyadh office. Diversification

of the world's largest oil-producing economy has been a mantra of Saudi officials for years now. And strides towards this goal have been made, particularly in expanding the private sector. Last year, for example, the non-oil private sector contributed about 47 per cent to the country's economic output, almost twice what it was in 1974 (25.3 per cent), according to John Sfakianakis, the chief economist at Banque Saudi Fransi in Riyadh. The country "has diversified but more is required", says Mr
Sfakianakis. "The private sector's participation has improved, but oil - still plays a very important role - as the principal revenue earner for the country." Since joining the World Trade Organisation (WTO) in 2005, the kingdom has improved its regulatory regime, opened up key sectors such as telecommunications and banking to foreign investors, begun developing new sectors - tourism stands out - and directed oil revenue into major infrastructure projects to attract foreign investment.

The strength of the non-oil sector provides resilience to oil price crashes. Oxford 6-21-13 (Oxford Business Group, Saudi Arabia: Strong fundamentals support positive outlook, The
Middle East, http://www.oxfordbusinessgroup.com/economic_updates/saudi-arabia-strong-fundamentalssupport-positive-outlook)

Sound fiscal management and healthy reserves have set Saudi Arabia on track for an upgrade of its key ratings, improving the Kingdoms investment and growth prospects. On May 29, ratings agency Standard & Poors (S&P) issued an upward revision for its outlook on Saudi Arabias long-term sovereign credit ratings from stable to positive. The agency confirmed the Kingdoms long-term and short-term foreign and local currency sovereign credit ratings at AA-/A-1+,
while leaving the transfer and convertibility assessment unchanged at AA+. S&Ps move marks its first revision to Saudi Arabias outlook since 2007, prior to the global financial crisis. Growth fundamentals have strengthened in Saudi Arabia, the agency said. A

long track

record of high and steady non-oil growth , averaging 8.0% during 2005-2012, has contributed to overall average
real GDP growth of 6.5%. In our opinion, the

improved growth prospects for the non-oil economy will bolster the
Monica Malik, economist with

economy's resilience to exogenous shocks such as a decline in oil prices.

investment bank EFG-Hermes, thinks it unlikely the revision will have a significant impact since borrowing costs are already down due to the Kingdoms strong macroeconomic position and liquidity. Nevertheless, the upgrade is a positive confirmation of the improved fundamentals, Malik told the Bloomberg news agency on May 29.

AT: Middle East War


Middle East war is unlikely --- no one gets drawn in. Farrar 12 (R. Christopher, Researching issues of regional security, including Irans nuclear program, the rise of
the South Atlantic as a geo-political power, and the impact of climate change on national security @ Center for the National Interest; cites Aaron David Miller, Vice President for New Initiatives and a Distinguished Scholar at the Woodrow Wilson International Center for Scholars, Ph.D. in American Diplomatic and Middle East History from the University of Michigan, War in Syria: What If It Spreads?, Center for the National Interest, 11-16-12, http://www.cftni.org/WarinSyriaSummary.pdf)
Melham argued that unless the United States intervenes, the situation will continue to fester, as the current rebels lack the ability to produce a unified front. While some may argue that it is too late for the U.S. to intervene, Mehlam disagrees, arguing that as President of the United States, Obama wields power to do things that no other state can and unless he steps in, he will look with regret on his inaction in years to come. Aaron David Miller

offered several observations on the situation in Syria and its possible implications. Due to the idiosyncratic rise of the al-Assads, Syria became the only Arab state to never seek close relations with the United States. As a result, Miller contends, Assads downfall will be idiosyncratic as well; Syria is a unique ex a mple of a states political transition causing so much regional tension, something that Miller attributes to both its geography in the Middle East and its heterogeneous demography. While other Arab Spring states such as Tunisia and Egypt have relatively homogeneous societies, Syria has a complex mixture of different ethnic and religious groups, resulting in a disjointed, complicated uprising with an increased likelihood of the military firing on its own citizens. Miller disagreed with Melhem, however, on the issue of the war becoming regional in scope. Regional war is unlikely , Miller contended, as Turkey and Israel are unlikely to intervene.

Middle East war wont escalate --- empirics prove. Drum 7 (Kevin, THE CHAOS HAWKS, Washington Monthly, 9-9-07,
http://www.washingtonmonthly.com/archives/individual/2007_09/012029.php)
Having admitted, however, that the odds of a military success in Iraq are almost impossibly long, Chaos

Hawks nonetheless insist that the U.S. military needs to stay in Iraq for the foreseeable future. Why? Because if we leave the entire Middle East will become a bloodbath. Sunni and Shiite will engage in mutual genocide, oil fields will go up in flames, fundamentalist parties will take over, and al-Qaeda will have a safe haven bigger than the entire continent of Europe. Needless to say, this is nonsense. Israel has fought war after war in the Middle East. Result: no regional conflagration. Iran and Iraq fought one of the bloodiest wars of the second half the 20th century. Result: no regional conflagration. The Soviets fought in Afghanistan and then withdrew. No regional conflagration. The U.S. fought the Gulf War and then left. No regional conflagration. Algeria fought an internal civil war for a decade. No regional conflagration. So where does this bogeyman come
from? Hard to say. Probably a deep-seated unwillingness to confront the fact that the United States can't really influence a course of events we originally set in motion. But Iraq is already fighting a civil war, and that civil war will continue whether we stay or go. If we go it will likely become more intense, but also shorter lived. The eventual result, however, will almost certainly be the same: a de facto independent Kurdistan in the north and a Shiite theocracy in the south. The

rest of the Middle East will, as usual, watch events unfold without doing much of anything about them, and will accept the inevitable results. The U.S., for its part, will remain in the north to
protect Kurdistan, in the east in Afghanistan, in the west in the Mediterranean, and in the south in its bases in the Gulf. We'll hardly be absent from the region.

AT: Middle East Prolif

No Middle East prolif --- US nuclear deterrence and structural factors empirically check --- experts agree. Theodoulou 12 (Michael, Foreign Correspondent for The National, A nuclear Iran unlikely to trigger Middle
East arms race: study, The National, http://www.thenational.ae/news/world/middle-east/a-nuclear-iran-unlikelyto-trigger-middle-east-arms-race-study#full)

In a study published last week, two experts from the Department of War Studies at King's College in London argue that key regional players - Saudi Arabia, Egypt and Turkey - are unlikely to follow suit and develop their own nuclear arsenals. Indeed, Christopher Hobbs and Matthew Moran argue that the Middle East itself offers evidence that "nuclear proliferation is not inevitable". Israel remains the region's sole nuclear-armed power - albeit an undeclared one - more than four decades after it acquired nuclear weapons capability. The flaw in the logic that "proliferation begets proliferation" is also demonstrated in North East Asia where North Korea's nuclear weapons have not provoked Japan or South Korea, countries with advanced civil nuclear programmes, to follow suit despite a long history of regional conflict. The authors of Looking Beyond a Nuclear Iran make clear there are reasons to be to be wary of Iran's nuclear
ambitions. While Tehran insists its atomic programme is solely peaceful, they point out that Iran's growing stockpile of medium-enriched uranium is already far in excess of its civilian needs. Even so, Mr Hobbs and Mr Moran argue that this will not necessarily ignite a regional rush for the bomb. This is not to say there is no history of regional powers harbouring nuclear ambitions. Iraq's Saddam Hussein was thought to have embarked on a plan to refine weapons-grade nuclear fuel in the late 1970s, as did Syria's Bashar Al Assad in the early 2000's. In both cases, Israel responded with devastating air strikes. Still, this year, Turkey,

Egypt and Saudi Arabia recognise that nuclear restraint is in their best interests - not least because, according to Mr Hobbs and Mr Moran, "strong security alliances with the United States incorporating extended nuclear deterrence have played an important role in dissuading these countries from going nuclear". All three, moreover, are members of the Nuclear NonProliferation Treaty (NPT) and have long pressed for a nuclear-free Middle East. Peter Jenkins, a former UK
ambassador to the UN's atomic watchdog, the International Atomic Energy Agency, is also sceptical that a nuclear-armed Iran would trigger a regional nuclear arms race. Saudi Arabia, he argues, while deeply suspicious of Iran, would be loath to alienate the US, its long-standing top supplier of conventional arms, and tacit guarantor of the kingdom's security, by seeking a nuclear deterrent. "It is hard to imagine that the US would stand by while its Saudi ally set about proliferating, or that Saudi rulers would risk that friendship by defying America's wishes," Mr Jenkins said.

Russian Oil DA

Russian Econ low


Alternative causes to Russian economy decline --- Russian company profits, official statistics, energy exports, industry production, chemical industry. Weiss 6-13-13 (Clara, Russian economy threatened by recession, World Socialist Web Site,
http://www.wsws.org/en/articles/2013/06/13/russ-j13.html)

There are increasing signs that the Russian economy is headed towards recession . The Kremlin has revised downwards its forecasts for economic growth this year on several occasions and now claims the economy will grow by just 2.4 percent. This represents the lowest level of growth since the crisis year of 2009. In February,
Finance Minister Andrei Belousov warned that Russia could slide into a recession this fall. The countrys trade surplus slumped earlier this year by 17 percent, compared to the beginning of 2012. Overall

profits at Russian companies and banks declined by 21.2

percent from January to February of this year, the most pronounced decline since the financial crisis of 2009. Official statistics indicate economic growth of just 1 percent for the first quarter of 2013, a rate that has
declined for five consecutive quarters. According to a report by the Moscow Higher School of Economics in April, total production in key economic sectors, including energy, industry and agriculture, has declined by 4.5 percent since October 2012. The

leading sectors of the economy, responsible for two thirds of gross domestic product, were all in the red in the first three
months of the year. The outflow of capital from the Russian economy, which totaled around US$57 billion last year, is continuing. This year investors are expected to withdraw an estimated US$30 to US$35 billion. The main reason for the economic crisis is the high dependence of the Russian economy on commodity exports. Revenues from the export of oil and gas account for about 50 percent of the state budget. Given the world economic downturn, Russias customers are importing less, and the prices of oil and gas have declined significantly. The price of oil fell from an average of US$115 per barrel in July 2012 to US$100 in early June 2013. Above all, the

recession in the European

Union (EU), which imports about 50 percent of Russias raw materials , and the slowdown in economic growth in China, Russias largest trading partner, have led to a sharp decline in energy exports. Oil exports fell by 5.2 percent in the first quarter of 2013 compared to the same period last year. In addition to the international economic crisis, structural changes in the international energy market have led to the decline in exports. The development of shale gas and oil in the United States is expected to undermine the importance of Russias own raw material reserves in the long term.
Since 2009, the US has been the largest gas producer in the world. Analysts expect that America could begin exporting gas and oil in the next few years. Gas production in Russia, on the other hand, has declined slightly. In the first five months of the year, it fell by half a percent, while oil production increased by just by half a percent. A significant decline in Russian energy production is expected in the next few years. The global growth of gas supplies had also led to a sharp fall in prices for this commodity. The Russian energy concern, Gazprom, which accounts for about 8 percent of Russias gross domestic product and about 20 percent of government revenues, is under increasing pressure. The companys gas exports to Europe declined by over 7 percent in 2012 and reached their lowest level in a decade. Gazprom posted a 9.5 percent decline in profits for 2012, making it no longer the worlds most profitable company. There have been prolonged discussions in the Russian elite about a restructuring of its energy sector and in particular the gas industry. Gazprom, which is closely linked to President Vladimir Putin, may lose its monopoly position as a result. There has also been a dramatic decline in industrial production in several regions of the country. Last year, 15 regions reported a double-digit decrease in output. In the southern Russian province of Ingushetia, industrial production fell by 27.5 percent. The situation has also deteriorated in the more highly industrialised regions in Siberia and northwest Russia. In Kaluga and Kaliningrad oblasts, both centres of the auto industry, production fell by 20.5 and 16.4 percent, respectively. In the Siberian Nenets Autonomous Okrug, home to important oil production sites, as well as chemical and metal working factories, production has declined by 10 percent. One of the factors contributing to the decline in industrial production was Russias accession to the World Trade Organisation (WTO) last summer. Russian companies remain technically backward due to the de-industrialisation and economic collapse that took place following the reintroduction of capitalism in the 1990s. This severely hampers their ability to compete on the international market. Hardest hit by the decline in production are the countrys so-called mono-towns, which are centered on just a handful of factories, or even one. Up to 35 million workers and their families live in these cities, which are in an advanced state of decay. The economic situation in these cities is so hopeless that in many cases the government has discussed measures for a mass resettlement of the population. In 2010 alone, 6 percent of the workingage population left these cities. This year, a government subsidy programme to support these regions, which was first introduced in 2009 following widespread social unrest, is due to expire. Several cities are now facing financial ruin, with plant closures and layoffs once again on the agenda. With the onset of the economic crisis in 2009, industrial production in Russia fell by 19 percent, the worst performance since the economic disaster of the 1990s. In some regions,

production in 2009 fell by 50 percent, and in some cases

approached 80 to 90 percent . Only a handful of factories have been able to return to their pre-crisis production levels. Formerly,

the auto market in Russia was one of the fastest growing in the world. Now it has stalled, with predictions of either stagnation or decline this year. In April, auto sales dropped by 8 percent. The growth of the auto industry prior to 20082009 was based primarily on government subsidies, cheap credit and a growing middle class. Since then, government subsidies to the auto sector have been substantially reduced, business loans are more expensive and the financial position of large sections of the middle class has deteriorated. Western politicians and the liberal opposition in Russia are using the economic crisis to argue for market reforms and to agitate against the bureaucratic clique led by Putin, which controls large parts of the economy. In fact, the extent of the current crisis is a result of capitalist restoration and the systematic destruction of the Soviet economy in the 1990s. According to recent estimates by the liberal economist Andrei Illarionov, total production in Russia in early 2013 was 23.1 percent lower than in 1990.

Production in the chemical industry has halved since 1990, while light industry is producing just a fifth of its former total. Oil production has declined by 6 percent. The only expansion has been in the gas industry, where production has increased by 17.8 percent. Now, however, the countrys energy exports, which were the basis for Russias economic boom between 2000 and 2008, are shrinking.

Russian economy is low now --- high inflation, lack of economic diversity, and lack of investment. The Economist 6-22-13 (The Russian economy Sputtering, MOSCOW,
http://www.economist.com/news/europe/21579877-slowing-growth-reflects-structural-failings-kremlin-nottackling-sputtering)
AT ONE time, Vladimir Putin gloated about Russias not have been booming by 7% a year, as in the mid-2000s, but GDP grew by 3.6% in 2012. Yet in

economic resilience. With most of Europe in recession, Russian growth was the envy of many. It may the first quarter it rose at an annual rate

of just 1.6%, the slowest since 2009. Economists have long warned about falling oil prices and European recession. Oil and gas prices look likelier to fall than
to rise; the euro zone remains in trouble. Even so, unlike the drop in 2009 after the financial crisis, the latest slowdown is driven by internal factors. The

Kremlin cannot just wait for a global upturn and no obvious fixes are to hand at home. In the 2000s the lingering
effects of the 1998 devaluation made Russian goods attractive at home, and unused capacity from the Soviet era let firms produce more with little new investment. Oil wealth was redistributed via consumption. This worked, says Natalia Orlova of Alfa Bank, only until Russia had no more spare capacity: no o ne in power prepared for the end of this model in advance. Investment

has stayed low because high inflation has pushed up costs

and a strong trouble has eroded competitiveness. That leads Russian firms to take their savings elsewhere. As much as fears for property rights or political instability, this explains soaring capital outflows ($9 billion in May alone). Poorly developed banks
do not help. As Roland Nash of Verno Capital explains, bad financial infrastructure means there are few links between those with money to spare, like hydrocarbon producers, and those in need of capital, like households and small businesses. The plumbing is missing, says Mr Nash. Another

problem is the state. In 2008-12, the private sector lost 300,000 jobs, but the state added 1.1m, pushing its numbers to 18m (around 25% of the workforce, more even than in France). That is strange in a country with unemployment of only 5%. Private firms not only lose business to state-owned ones, but also compete with them for labour, office space and transport, further driving up costs.
The Kremlin appears to want a weaker rouble to spur growth. Yet without

structural reforms to diversify the

economy and improve the business climate that will not lay the ground for the longer term. With the economy at full capacity, a cheaper rouble may also push up inflation, now running at 7.4%. Even so, there will be
pressure on the central banks new boss, Elvira Nabiullina, to lower interest rates. Ms Nabiullina is a respected economist, but she comes fr om the Kremlin and will be less independent than her predecessor. Mr Putin has made regular sport of criticising ministers for poor work on the economy. The position of Dmitry Medvedev, the prime minister, already shaky, is weakening. When Mr Putin insulted ministers recently, Mr Medvedev was not present. Offstage is Alexei Kudrin, a former finance minister and possible future prime minister who acts as unofficial ombudsman for the protest movement. He has written in Kommersant of half reforms and half-measures in economic policy. The decision to hold a snap mayoral election in Moscow this September, rather than wait until 2015, suggests the Kremlin does not expect an early economic upturn. Yet Vladislav Inozemtsev of the Centre for Post-Industrial Studies notes that, for Mr Putins overall rule, growth in income is more important than growth in economy itself. Low

debt and high reserves mean the Kremlin could easily finance wage growth. That could stave off political troublebut do little for the economy.

AT: Dutch Disease


Oil revenues key to economic resilience- no Dutch Disease Weisbrot & Johnston, 2012 (Mark Weisbrot is an economist and Co-Director, and Jake Johnston is a research associate at the Center
for Economic and Policy Research, in Washington D.C., Venezuelas Economic Recovery: Is it Sustainable?, Center for Economic and Political Research, 09/2012, http://www.cepr.net/documents/publications/venezuela-2012-09.pdf)

With a sizeable trade surplus, Venezuela is unlikely to see any balance of payments crisis in the foreseeable future, and its currency does not have to be devalued. While in the long run the government may want to consider other currency regimes, there is no obvious reason that the current system could not be maintained. For all of these reasons, the current economic recovery is sustainable. An unsustainable economic expansion is one in which there are imbalances that cannot be maintained. Examples would include the U.S. economy in 2006, or a number of other economies (e.g. Spain, U.K., Ireland) that had large real estate bubbles that would inevitably have to burst. Economies with unaffordable debt service, or large current account deficits can also face inevitable adjustment although even in these cases there are usually feasible alternatives to recessions, or at least to severe or prolonged recession. But Venezuela does not face any such inevitable, sharp adjustment that would push the economy into recession. As can be seen in Figure 12, from 1980-1998, Venezuelas per capita GDP actually declined by 14 percent. It was one of the worst economic performances in a region that, as a whole, experienced its worst long-term growth failure in a century. Since 1998, the economy has had modest per capita GDP growth, and much higher growth since political stability was restored and the government got control over the oil industry. Measuring from 2004, when the economy reached it pre-recession peak, GDP per person has grown by an average of 2.5 percent annually. As noted above, this growth led to a large reduction in poverty and extreme poverty, as well as numerous other gains in health care and education due to increases in social spending. And as Figure 13 also shows, as high as Venezuelas 22 percent annual rate of inflation has been (since 1998), it was much worse (34 percent) in the pre-Chvez years. Venezuela has about 500 billion barrels of oil, according to the U.S. geological survey estimates, the largest in the world. Its proven reserves are about 300 billion barrels. The country is currently using about 1 billion barrels of those reserves per year. So long as political stability is maintained and it has been since the government got control of the national oil industry in 2003 Venezuela will have the ability, with reasonable macroeconomic policies, to maintain solid rates of economic growth. Reliance on commodities saves Latin America from economic downturn- the recession proves The Economist, 2010 (The Economist, Authoritative weekly newspaper focusing on international politics and business news, Its Only
Natural, The Economist, 09/09/2010, http://www.economist.com/node/16964094)

Latin America is uncomfortably dependent on commodities. In the past decade they accounted for 52% of the region's exports, according to the World Bank. That is down from 86% in the 1970s, but over the same period
the figure in East Asia and the Pacific fell from 94% to 30%. Chile, Peru and Venezuela still rely on raw materials for more than three-quarters of their total exports. In all, as the World Bank notes in a report published this month, more than 90% of Latin Americans live in countries that are net exporters of commodities, the exceptions being in Central America and the Caribbean. Governments have also become more reliant on raw materials for their tax revenues (see chart 1). There

is nothing wrong with producing raw materials. The rise in world prices for Latin America's commodities, and the related increase in their output, may have accounted for between one-third and half of the region's growth over the past decade. And thanks to Asia's economic vigour, commodity prices fell only briefly during the recession and remain at historically high levels. Over the past decade a region that has habitually suffered from balance-of-payments troubles has benefited from the foreign exchange that commodities bring in. This bonanza seems to refute the thesis

put forward by Ral Prebisch, the founding director of ECLAC,

that the price of commodities is bound to decline in

relation to the price of manufactured goods.

Oil reserves cushion economy from the effects of Dutch Disease


Kosich, 2008 (Dorothy Kosich, Hoping to restore confidence, Venezuela rolls out the 'strong bolivar', Mine Web, 01/02/2008,
http://www.mineweb.com/mineweb/content/en/mineweb-usa?oid=43583&sn=Detail) Some economists claim that, with its rich oil reserves, Venezuela may suffer from the "Dutch Disease" often attributed to resource-exporting nations. The theory asserts that increases in natural resource revenues de-industrialize a nation's economy by raising the exchange rate. One

common approach to "Dutch Disease" has been to slow the appreciation of the real exchange rate. An oil strike from December 2002 to February 2003 did send the Venezuelan economy into a severe recession during which the country lost 24% of GDP. Currently, however, the government is believed to have a large cushion of oil reserves, which could absorb a decline of 20% or more in oil prices . Venezuela borrowing capacity solves impact of Dutch Disease Weisbrot & Johnston, 2012 (Mark Weisbrot is an economist and Co-Director, and Jake Johnston is a research associate at the Center
for Economic and Policy Research, in Washington D.C., Venezuelas Economic Recovery: Is it Sustainable?, Center for Economic and Political Research, 09/2012, http://www.cepr.net/documents/publications/venezuela-2012-09.pdf) A recurring pessimistic scenario has been based on a collapse of oil prices, which provide about 95 percent of Venezuelas fo reign exchange earnings. This is what happened in the fourth quarter of 2008; although much of the price drop recovered within six months. As noted above,

Venezuela had the capacity to borrow in order to finance counter-cyclical spending when oil prices collapsed. Since its debt burden remains quite low, it would be able to do this if there were another temporary drop in oil prices; and it is likely that it would, in order to avoid another recession. A long-term drop in oil prices would of course present a bigger problem, although Venezuelas borrowing capacity would enable the government to adjust over a long time to any such change. However, such a long-term price decline is very unlikely. Table 3 shows various forecasts for future real oil prices from the U.S. Energy Information Administrations Annual Energy Outlook.
Almost all of them show higher real oil prices in the years and decades ahead.

Venezuela not vulnerable to market sways despite oil dependency


Weisbrot, 2010 (Mark Weisbrot, co-director of the Center for Economic and Policy Research, in Washington, D.C. He is also president of
Just Foreign Policy, Venezuelas Recovery Depends on Economic Policy, CEPR: Center for Economic and Policy Research, 04/2010, http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/venezuelas-recovery-depends-on-economic-policy/)

Venezuela ran a huge current account surplus in 2008 meaning that it was accumulating dollars. When oil prices plunged, this surplus quickly collapsed into a deficit but only for six months. The government dipped into its international reserves in order pay for imports. But it did not need to let the economy shrink. It could have dipped further into reserves, since these have remained sizeable, reduced capital flight, or even borrowed internationally as much as necessary. Venezuela foreign public debt is quite low, just 11 percent of GDP, and its total pubic debt is only 20 percent of GDP (as compared to about 100 percent of GDP in the U.S. ). Remember, the government does not need foreign currency for the stimulus itself; it only needs enough to cover its imports in a
growing economy (as opposed to a shrinking economy, in which imports also fall), and to maintain adequate reserves. All this is important because it

shows that the growth of Venezuelas economy is not so directly tied to oil prices as most people think it is. The government has the capability to maintain steady growth as oil prices fluctuate, especially when it has such a low level of public debt and a relatively high level of international reserves.

US aid in failing Venezuela oil sector maximizes reserves making it less vulnerable to market swings/oil shocks
Coggin, 2011 (John Coggin, Senior Editor for International Policy Digest, Venezuelas Oil Sword, International Policy Digest, 05/26/2011,
http://www.internationalpolicydigest.org/2011/05/26/venezuelas-oil-sword/)

Because of its proximity to Venezuela, the majority of these U.S. heavy-oil refineries are concentrated along the Gulf of Mexico. Were another hurricane like Katrina to inundate the Gulf coast, the U.S. would have no capacity to process most Venezuelan oil. The latest news out of Caracas casts doubt on the ability of Chavezs government to manage its energy sector. Earlier this month, Venezuela began rationing electricity after blackouts afflicted
nearly half the country. The sudden power outage halted operations at its largest oil refinery complex. Venezuelas oil sector actually shrank during first quarter 2011, even as crude price averaged $91/barrel and its economy posted GDP growth of 4.5 percent. The

International Monetary Fund projects the country to grow slower than any other major economy in Latin America. The bottom line: Venezuelas petroleum exports have dropped almost 50 percent since peaking in 1997. There are sources of hope. Soon, when Mexico becomes a net oil importer, the U.S. will surely pressure Venezuela to accept foreign oil inspectors and advisers who can help PDVSA maximize its recoverable reserves. Hugo Chavez could lose re-election next year, if democratic fever spreads from the Arab world to Latin America. If they ultimately help us discover the true measure of Venezuelas oil affluence, then perhaps we can declare the U.S. sanctions against PDVSA a success.

Oil prices enables more spending for other sectors


AP, 2012 (Associated Press, Venezuela Reports 5.2% Economic Growth, The Gleaner, 11/23/2012, http://jamaicagleaner.com/gleaner/20121123/business/business93.html) boost for non-oil sector Venezuela

remains a major oil producer, and relatively high oil prices have helped bring more money into government coffers, which, in turn, has enabled more spending. Yet, in the latest quarter, the country's non-oil sector grew 5.4 per cent, outpacing 1.1 per cent growth in the oil sector. The economic expansion has been driven largely by government spending that has grown more than 20 per cent so far this year, said Angel Garcia Banchs, an economist and director of the Venezuelan consulting firm Econometrica. Garcia Banchs said he thinks such
rapid growth isn't sustainable, citing government deficit problems as well as construction and banking industries that he said aren't capable of continuing with such performance. Venezuela

also has some unresolved currency issues that could complicate

the economy in the coming months. The government maintains strict currency exchange controls that fix the official exchange
rate at 4.3 bolivars to the dollar and require both Venezuelans and businesses to apply to a government agency to obtain dollars at that rate. However,

a scarcity of dollars has recently prompted a nosedive in the value of the bolivar on the black market, where the US dollar has recently been fetching three times the official rate. Venezuelan economists say the sliding value of the bolivar increases pressure on the government to devalue. Some business leaders have also warned that importers and other companies are having difficulties obtaining dollars, and that those troubles could contribute to an eventual cooling of the economy.
Central Bank President Nelson Merentes, however, dismissed such suggestions and said: "We're going to keep growing."

Oil Prices

High Prices Bad- Economy

High oil prices bad [general]


High oil prices bad- OPEC proves
Rubin, 2012 (Jeff Rubin, chief economist and chief strategist at CIBC World Markets Inc.How High Oil Prices Will Permanently Cap
Economic Growth, Bloomberg News, 09/23/2012, http://www.bloomberg.com/news/2012-09-23/how-high-oil-prices-will-permanently-capeconomic-growth.html) Oil provides more than a third of the energy we use on the planet every day, more than any other energy source. And you can draw a straight line between oil consumption and gross-domestic- product growth. The

more oil we burn, the faster the global economy grows. On average over the last four decades, a 1 percent bump in world oil consumption has led to a 2 percent increase in global GDP. That means if GDP increased 4 percent a year -- as it often did before the 2008 recession -- oil consumption was increasing by 2 percent a year. At $20 a barrel, increasing annual oil consumption by 2 percent seems reasonable enough. At $100 a barrel, it becomes easier to see how a 2 percent increase in fuel consumption is enough to make an economy collapse. Fortunately, the reverse is also true. When our economies stop
growing, less oil is needed. For example, after the big decline in 2008, global oil demand actually fell for the first time since 1983. Thats why the best cure for high oil prices is high oil prices. When

prices rise to a level that causes an economic crash, lower prices inevitably follow. Over the last four decades , each time oil prices have spiked, the global economy has entered a recession. Consider the first oil shock, after the Yom Kippur War in 1973, when the Organization of Petroleum Exporting Countries Arab members turned off the taps on roughly 8 percent of the worlds oil supply by cutting shipments to the U.S. and other Israeli allies. Crude prices spiked, and by 1974, real GDP in the U.S. had shrunk by 2.5 percent. The second OPEC oil shock happened during Irans revolution and the subsequent war with Iraq. Disruptions to Iranian production during the revolution sent crude prices higher, pushing the North American economy into a recession for the first half of 1980. A few months later, Irans war with Iraq shut off 6 percent of world oil production, sending North America into a double-dip recession that began
in the spring of 1981.

High oil prices bad- hurts the economy


Tverberg, 01/17/2013 (Gail Tverberg, Director of Energy Economics at Space Solar Power Institute Researcher at Our Finite World
Contributor--Editor at TheOilDrum.com, Ten Reasons Why High Oil Prices are a Problem, Our Infinite World, http://ourfiniteworld.com/2013/01/17/ten-reasons-why-high-oil-prices-are-a-problem/) Why are high

oil prices a problem? 1. It is not just oil prices that rise . The cost of food rises as well, partly because oil is used in many ways in growing and transporting food and partly because of the competition from biofuels for land, sending land prices up. The cost of shipping goods of all types rises, since oil is used in nearly all methods of transports. The cost of materials that are made from oil, such as asphalt and chemical products, also rises. If the cost of oil rises, it tends to raise the cost of other fossil fuels. The cost of natural gas extraction tends to rises, since oil is used in natural gas drilling and in transporting water for fracking.
Because of an over-supply of natural gas in the US, its sales price is temporarily less than the cost of production. This is not a sustainable situation.

Higher oil costs also tend to raise the cost of transporting coal to the destination where it is

used. Figure 2. US Energy Prices as % of Wages and as of GDP. Ratio to GDP provided by EIA Short Term Economic Outlook Figure 27,
converted to Wage Base by author, using same wages as described for Figure 3. Figure 2 shows total energy costs as a percentage of two different bases: GDP and Wages.1 These costs are still near their high point in 2008, relative to these bases. Because oil is the largest source of energy, and the highest priced, it represents the majority of energy costs. GDP is the usual base of comparison, but I have chosen to show a comparison to wages as well. I do this because even if an increase in costs takes place in the government or business sector of the economy, most of the higher costs will eventually have to be paid for by individuals, through higher taxes or higher prices on goods or services.

2.

High oil prices dont go away, except in recession.

We extracted the easiest (and cheapest) to extract oil first. Even oil

company executives say, The easy oil is gone. The oil that is available now tends to be expensive to extract because it is deep under the sea, or near the North Pole, or needs to be fracked, or is thick like paste, and needs to be melted. We havent discovered cheaper substitutes, either, even though we have been looking for years. In fact, there is good reason to believe that the cost of oil extraction will continue to rise faster than the rate of inflation, because we are hitting a situation of diminishing returns. There is evidence that world oil production costs

are increasing at about 9% per year (7% after backing out the effect of inflation). Oil prices paid by consumers will need to keep pace, if we expect increased extraction to take place. There is even evidence that sweet sports are extracted first in Bakken tight oil, causing the cost of this extraction to rise as well.

3. Salaries dont increase to offset rising oil prices.

Most of us know from personal experience

that salaries dont rise with rising oil prices. In fact, as oil prices have risen since 2000, wage growth has increasingly lagged GDP growth. Figure 3 shows the ratio of wages (using the same definition as in Figure 2) to GDP. Figure 3. Wage Base (defined as sum of Wage and Salary Disbursements plus Employer Contributions for Social Insurance plus Proprietors Income from Table 2.1. Personal Income and its Distribution) as Percentage of GDP, based on US Bureau of Economic Analysis data. *2012 amounts estimated based on part-year data. If salaries dont rise, and prices of many types of goods and services do, something has to give. This disparity seems to be the reason for the continuing economic discomfort experienced in the past several years. For many consumers, the only solution is a long-term cut back in

4. Spikes in oil prices tend to be associated with recessions. Economist James Hamilton has shown that 10 out of the last 11 US recessions were associated with oil price spikes. When oil prices rise, consumers tend to cut back on discretionary spending, so as to have enough money for basics, such as food and gasoline for commuting. These cut-backs in spending lead to lay-offs in discretionary sectors of the economy, such as vacation travel and visits to restaurants. The lay-offs in these sectors lead to more cutbacks in spending, and to more debt defaults. 5. High oil prices dont recycle well
discretionary spending.

through the economy.

Theoretically, high oil prices might lead to more employment in the oil sector, and more purchases by these

employees. In practice, this provides only a very partial offset to higher price. The oil sector is not a big employer, although with rising oil extraction costs and more US drilling, it is getting to be a larger employer. Oil importing countries find that much of their expenditures must go abroad. Even if these expenditures are recycled back as more US debt, this is not the same as more US salaries. Also, the United States government is reaching debt limits. Even within oil exporting countries, high oil prices dont necessarily recycle to other citizens well. A recent study shows that 2011 food price spikes helped trigger the Arab Spring. Since higher food prices are closely related to higher oil prices (and occurred at the same time), this is an example of poor recycling. As populations rise, the need to keep big populations properly fed and otherwise cared for gets to be more of an issue. Countries with high populations relative to exports, such as Iran, Nigeria, Russia, Sudan, and Venezuela would seem to have the most difficulty in providing needed goods to citizens.

6. Housing prices are adversely

affected by high oil prices. If a person is required to pay more for oil, food, and delivered goods of all sorts, less will be left over for discretionary spending. Buying a new home is one such type of discretionary expenditure. US
housing prices started to drop in mid 2006, according to data of the S&P Case Shiller home price index. This timing fits in well with when oil

7. Business profitability is adversely affected by high oil prices. Some businesses in discretionary sectors may close their doors completely. Others may lay off workers to get supply and demand back into balance. 8. The impact of high oil prices doesnt go away. Citizens discretionary income is permanently lower. Businesses that close when oil prices rise generally dont re-open. In some cases, businesses that close may be replaced by companies in China or India, with lower operating
prices began to rise, based on Figure 1. costs. These lower operating costs indirectly reflect the fact that the companies use less oil, and the fact that their workers can be paid less, because the workers use less oil. This is a part of the reason why US employment levels remain low, and why we dont see a big bounce-back in growth after the Great Recession. Figure 4 below shows the big shifts in oil consumption that have taken place. Figure 4. Percentage growth in oil consumption between 2006 and 2011, based on BPs 2012 Statistical Review of World Energy. A major part of the fix for high oil prices that does takes place is provided by the government. This takes the place in the form of unemployment benefits, stimulus programs, and artificially low interest rates. Efficiency changes may provide some mitigation, as older less fuel-efficient cars are replaced with more fuelefficient cars. Of course, if the more fuel-efficient cars are more expensive, part of the savings to consumers will be lost because of higher

9. Government finances are especially affected by high oil prices. With higher unemployment rates, governments are faced with paying more unemployment benefits and making more stimulus payments. If there have been many debt defaults (because of more unemployment or because of falling home prices), the government may also need to bail out banks. At the same time, taxes collected from
monthly payments for the replacement vehicles. citizens are lower, because of lower employment. A major reason (but not the only reason) for todays debt problems of the governments of large oil importers, such as US, Japan, and much of Europe, is high oil prices. Governments

are also affected by the high cost of replacing infrastructure that was built when oil prices were much lower. For example, the cost of replacing
asphalt roads is much higher. So is the cost of replacing bridges and buried underground pipelines. The only way these costs can be reduced is by doing lessgoing back to gravel roads, for example.

10. Higher oil prices reflect a need to focus a disproportionate

share of investment and resource use inside the oil sector . This makes it increasingly difficult maintain growth within the oil sector, and acts to reduce growth rates outside the oil sector. There is a close tie between energy consumption and economic activity because nearly all economic activity

requires the use of some type of energy besides human labor. Oil is the single largest source of energy, and the most
expensive. When we look at GDP growth for the world, it is closely aligned with growth in oil consumption and growth in energy consumption in general. In fact, changes in oil and energy growth seem to precede GDP growth, as might be expected if oil and energy use are a cause of world economic growth.

CP Answers

Pressure CP
Pressure fails-- Previous sanctions have not been effective in controlling Venezuelabut their dependence on US oil demand means that the plans condition would be effective in controlling the Iran-Venezuela alliance
Luis Fleischman,

JUNE 13, 2013, Dr. Luis Fleischman is a Senior adviser to the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University, http://www.americas-forum.com/u-s-venezuelan-relations-revisited-by-luis-fleischman/ There is nothing wrong when two parties whose relations are tense seek to make things better. However, good relations between the U.S. and Venezuela must require that the government of Venezuela radically change a very dangerous behavior .Arbitrary arrests, abuse of state resources, intimidation of the opposition, subjugation of the judiciary, and demand of loyalty to the revolutionary government and other violations of rights are common practice in todays Venezuela. Neither the
international community, the OAS, nor other countries of the region including the United States have ever held the Venezuelan government accountable for these gross breaches of human rights. But this is not all.According to a report by the U.S. Government Accountability Office in 2009, Venezuela extended a lifeline to Colombian illegal and armed groups by providing them with significant support and safe haven along the border. As a result, these groups remain viable threats to Colombian security and U.S.-Colombian counternarcotic efforts. The report provided evidence of the activities and cooperation between the Venezuelan government with drug cartels and the Revolutionary Armed Forces of Colombia (FARC) . The report revealed that the flow of cocaine shipped from Venezuelan ports and airports to the United States, West Africa, and Europe increased more than four times from 2004 to 2007 and continues to increase. Likewise, cocaine destined for the United States from Venezuela transits through Central America, Mexico, the Dominican Republic, Haiti, and other Caribbean islands. Between January and July, 2008, numerous vessels with Venezuelan flags that were carrying large amounts of cocaine were seized.Furthermore, a Colombian army raid in Ecuador in March, 2008 seized FARC computers and discovered documents belonging to FARC leader Ral Reyes (known as the Reyes files). The

files indicated that the Venezuelan government may have provided the Colombian guerillas with about $300 million in Russian weapons supplies. The files also seem
to indicate that Chavez sought political and military cooperation with the FARC at the same time as the Colombian government was denouncing the presence of FARC training camps inside Venezuela. The FARC is a dangerous subversive force that threatens Colombias security and is also involved in drug trafficking.While the United States is putting efforts into fighting drug traffickers in Mexico and other parts of Latin America, Venezuela is providing them with a lifeline. The danger of this development is not only that drug trafficking poisons our population and in particular our youth but that the drug business corrupts governments, security forces and the legal system. In Central American countries are now facing a state of anarchy that is gradually creating another Afghanistan in our own hemisphere with all the dangers that this implies.Venezuelan relations with the Islamic Republic of Iran are no less worrisome.

The government of Venezuela has strengthened relations with Iran and has helped Iran and its proxies increase their presence throughout the continent. As more countries joined Chavezs sphere of influence they also developed relations with Iran and Iran increased its presence in those countries. This includes a growing presence of the
Iranian proxy and terrorist group, Hezbollah, and the Iranian Republican Guards. A Lebanese-born Venezuelan diplomat posted in the Venezuelan embassy in Syria and Lebanon, Ghazi Nasr al-Din, helped Hezbollah raise money and facilitated the travel of its operatives from and to Venezuela. Irans penetration into Latin America is likely to grow under the influence of the Venezuelan Bolivarian revolution. Venezuela,

along with Syria and Cuba, have been the main supporters of Irans right to

develop a nuclear weapon . Venezuela helped Iran launder money through its banking system as well as selling the Iranians gasoline so they could avoid international sanctions . Venezuelas actions have been in clear
violation of international sanctions. Only a few days ago President Barack Obama increased sanctions on companies doing business with Iran. As part of the sanctions protocol the United States will not do business with companies or governments that help Iran avoid

sanctions. If the sanctions law were fully operationalized, the U.S. would no longer be buying Venezuelan oil. This would be a severe blow to Venezuela but would make little difference to the U.S. Instead, Venezuela and Venezuelan companies such as the oil giant Petroleos de Venezuela (PDVSA) have never paid a serious price for their dealings with Iran.Some reports, including
one by former Manhattan district attorney Robert Morgenthau, even indicated that Iran is trying to extract uranium from countries such as Venezuela and Bolivia. A

scenario that should not be ruled out is that if Iran develops nuclear capabilities it

could use Venezuelan soil to make the United States more vulnerable to an attack . Trying to diminish tensions and develop peaceful relations with countries is a good goal to pursue.However, in the case of Venezuela, before peaceful and productive relations can be established the United States government must set conditions demanding that Venezuela completely cease its human rights violations and fully dismantle all its ties to terrorist groups and drug cartels as well as ceasing to assist Iran in their effort to avoid sanction.

Unconditional CP
Need to keep the pressure on Maduro, we shouldnt just give them benefits without seeing behavior change.
Ray Walser is a Senior Policy Analyst at the Douglas and Sarah Allison Center for Foreign Policy Studies, June http://www.thecommentator.com/article/3752/don_t_be_naive_when_it_comes_to_venezuela_mr_kerry

7th, 2013,

Maduro and Jaua clearly hope that Secretary Kerry and the Obama Administration will finally recognise the outcome of the April 14th elections and legitimise Maduros presidency while openly throwing the democratic opposition under the bus. In this light, Kerrys statement equating Maduros mouthpiece Jaua with Venezuela is disconcerting.The offensive of Maduro and Jaua is aimed at undercutting the diplomatic offensive of the opposition. They also hope to keep the systemic failures of their Cuban-inspired socialism and economic mismanagement out of the discussion and obscure their ties with Iran, Syria, and Hezbollah.Therefore, the bar for genuine improvements in U.S.Venezuela relations should remain hig h. It should include a serious commitment by the Maduro regime to not only respect the rights of the democratic opposition but to enter into an actual dialogue aimed at reducing tensions and preserving fundamental political and economic rights.Critically, it will also require a major reversal in persistent anti-Americanism coupled with genuine cooperation to combat illicit drug trafficking and terrorism and adherence to all Iran and Syria sanction s.Without progress on these keys themes, Kerry and company will falter when it comes to changing the dynamic with post-Chavez Venezuela.

China CP

Defense/Solvency Deficits
China wont want to stay engaged- think Venezuelan instability is too risky Ferchen 13 (Matt Ferchen is a resident scholar at the Carnegie-Tsinghua Center for Global Policy, where he runs the China and
the Developing World program. He is also an associate professor in the Department of International Relations at Tsinghua University, where he teaches courses on international and Chinese political economy as well as on China-Latin America relations, 2China and Venezuela: Equity Oil and Political Risk, February 1, 2013, http://www.jamestown.org/programs/chinabrief/sing le/?tx_ttnews%5Btt_news%5D=40404&tx_ttnews%5BbackPid%5D=688&no_cache=1#.UdNChPmRBsl) China and Post-Chavez Venezuela: Managing theHangover Neither Chavez nor PDVSA have necessarily been easy partners for China and many former PDVSA officials and opposition figures have been critical of the loans-for-oil deals with China (Perspectiva, November 2, 2012; La Nacion, October 7, 2012). China has had to work to parry Chavezs efforts to involve it more closely in his own ideological and anti-U.S. agenda. Whether inside or outside of Venezuela, Chavez has been the kind of polarizing leader who you are either for or against. So in the case of the CDB-led build-up of financing and investment in Chavezs Venezuela, Chinas actions have spoken louder than words. For better or for worse, Chavez has

been Beijings man and in return China has continued to supply Chavez with scarce foreign financing and investment. With Chavez ill in Cuba, possibly never to return, Venezuela has entered into a constitutional and political crisis that may drag China in as well. For well over a year concerns have been raised that if, in a post-Chavez scenario, the opposition were to come to power that it would seek to alter the loans-for-oil deals with China (Chinas Cautious Economic and Strategic Gamble in Venezuela, China Brief, September 30, 2011). Ultimately, no one knows the answer to those concerns.
The CDB may have secured long-term access to Venezuelan oil for Chinas NOCs, or alternately the CDB and other Chinese firms may face loss-making revisions to current agreements [10]. What is clear is that the CDBs decade plus of binging on state-to-state deals with the Chavez government has now exposed Beijing to a painful diplomatic hangover tied to Venezuelas slow-motion crisis. Whether at home or abroad, Chinese

leaders hate nothing more than instability, but instability is what they face in their relations with Venezuela. As in Sudan and Iran before, an unwanted crisis may yet serve to focus Chinese
leaders minds to help build a healthier and more stable Venezuela, but doing so will probably require a willingness to rethink the governance of Chinas SOEs abroad. Since the vast majority of Chinas imported oil continues to be supplied by basic lo ng-term trade contracts and not through its equity oil acquisitions,

the crisis in Venezuela may prove the perfect opportunity to move away from a pattern of Chinese equity oil ties to controversial governments. If a major portion of
Chinas equity oil is not going to China anyway, the new Chinese leadership should ask itself whether the diplomatic and image costs to China are worth the risks.

The China CP does not solve no energy tech, colonial business development model.
Nick Snow, 4-29-2013, Washington

Editor, Oil and Gas Journal, was founding editor of Petroleum Finance Week, worked in several capacities for The Oil Daily, US can play constructive Western Hemisphere role, House panel told,
http://www.ogj.com/articles/print/volume-111/issue-4d/general-interest/us-can-play-constructive-western-hemisphere.html

The US should carefully consider how it can best help L atin A merican and C aribbean countries address their energy problems, witnesses told a US House subcommittee on Apr. 11. One constructive US move would be to show it's serious about
negotiating and honoring mutually beneficial agreements, several of them suggested during the Foreign Affairs Committee's Western Hemisphere Subcommittee hearing. Approving construction of the proposed Keystone XL crude oil pipeline's northern segment, finalizing and implementing the transboundary agreement with Mexico, and authorizing LNG exports, the witnesses indicated would send a very positive signal to countries across the hemisphere, they indicated. "In coming years, our

energy interdependence with the region

will only increase, as oil producers such as Canada, Brazil, and Colombia ramp up output, and Mexicoalready a major energy
producerconsiders important reforms to increase its production," said Matthew M. Rooney, deputy assistant secretary in the US Department of State's Bureau of Western Hemisphere Affairs. "The

U nited S tates has extensive experience and has developed significant expertise in permitting, regulatory oversight, and incident response planning for conventional and unconventional resource exploration and extraction," Rooney said, adding, "The Obama administration is sharing these
environmental, regulatory, legal, and commercial best practices with other countries in the region." Rooney did not mention TransCanada Corp.'s revised crossborder permit application for the Keystone XL project, which the State Department is reviewing. He noted in his written testimony that transparent,

effective market structures are essential in the Americas, but major challenges

must be overcome. "Countries that have pursued statist, nontransparent energy policies have seen their production decline despite high energy prices over the past couple of years," he said. "These countries have found it difficult to attract the necessary investments, both foreign and domestic, to help their energy production and economies grow. 'Avenue of engagement' Rooney continued, "But our balanced approach of focused technical cooperation and broad policy discussions has provided an avenue of engagement with most countries in the regioneven some with which we have significant differences. We continue to advocate open and transparent energy markets, free from corruption and reinforced by strong protections for investments, to help countries enhance output and promote long-term economic growth." He said the US has made clear to Argentina's government that
expropriating assets is a bad idea, while Chile and a few others are "fairly clean." Still others "are somewhere in the middle on transparency and anticorruption efforts," Rooney said, adding, "It's clear that in some countries, foreign companies have to have a strong stomach. That said, many US companies do business there." Other witnesses emphasized that the US will need to not make other countries feel it is not interfering in their internal affairs as it offers encouragement and assistance. That may prove difficult as China and other countries from outside the region negotiate resource agreements with teams of state energy companies and national banks, they conceded. "The

US still leads

the world in energy technology," said David L. Goldwyn, the Special Envoy and Coordinator for International Energy Affairs at the State Department during 2009-11 who now heads Goldwyn Strategies LLC. "It also has a business development model that is more favorable than China's , which is increasingly seen as colonial with employees who keep to themselves and don't work to help develop local economies." Jorge R. Pinon, associate director of the Latin American
and Caribbean Program at the University of Texas at Austin's Center for International Energy and Environmental Policy, said, "One thing US oil companies have done so well is that they're well separated from the federal government. We have to be careful how the US government becomes involved in US companies' overseas operations." China could realize 600,000 b/d of production from the Western Hemisphere sooner than some people think, he added. "Its companies are partners in several ventures with Statoil and Petrobras, which already have deepwater expertise," Pinon said. 'Deeply complex' Carlos Pascual, who succeeded Goldwyn as Special Envoy and Coordinator for International Energy Affairs at the State Department, said in his written statement that the

Western Hemisphere's energy picture "is deeply complex and interconnected, with spectacular opportunities for US jobs, commercial interests, economic development, and energy supply linked to the political perspectives in Canada, Mexico, Venezuela , the Caribbean, and beyond." He noted that as world energy markets transform as a reflection of the US's own energy revolution, it has much to share and to gain from being a formative part of the picture, especially in the Americas. "From building North
American energy security and shaping natural gas markets to paving the road for tomorrow's commercial and innovative transformation, the US must continue to lead, to share our best practices and lessons learned, to support transparency and an even playing field, and to give our companies and innovators access to tomorrow's energy markets," Pascual, who formerly was US Ambassador to Mexico, told the subcommittee. He said that Mexico's president, Enrique Pena Nieto, backs comprehensive energy policy reform and is working across three political parties to achieve it. "The goal is to protect Mexico's natural resources while creating conditions that attract foreign investment and participation," Pascual said, adding the country appreciates growing US congressional interest in approving and implementing the 2012 TransBoundary Hydrocarbons Agreement. Eric Farnsworth, vice-president of the Council of the Americas in Washington, said, "Approval of legislation to implement the agreement will be seen as a sort of 'proof of concept' to find creative ways to introduce outside investment into Mexico's energy sector. It also creates mechanisms to increase collaboration on environmental protection and disaster response, and will open new avenues for US commercial activity which has been desired for many years." Other witnesses said it's vital that any energy policy changes in Mexico be seen as internally driven, and part of bigger economic reforms. Pinon said this could be difficult since the national oil company, Petroleos Mexicanos (Pemex), is only active within Mexico, unlike Brazil's Petrobras and Colombia's Ecopetrol have international operations.

Venezuelan President Hugo Chavez's strategy of giving several countries deep discounts on their purchases of Venezuelan crude oil was having an impact before he died earlier this year. Pascual said it perpetuated some smaller nations' dependence on diesel fuel to generate electricity, making prices in them 4-5 times higher than in the US. "We are working with them to create alternative power generation," he
Chavez's legacy Witnesses acknowledged that said. "Projects

can't run for long on subsidies. They need to compete economically ." Rooney conceded that the in
petroleum prices," Pascual said. "I don't think many, if any, did it for ideological reasons." Speaking days before

State Department has concerns about Chavez's discounts and subsidies program: Petro-Caribe. "Several countries bought into it 2-3 years ago because there was a spike

Venezuela ns voted to elect Chavez's successor, Rooney said the US plans to watch what happens there in the next 2 years from a distance. "We have had a testy relationship with Venezuela," he told the subcommittee. "We see possibilities to work with them on energy , narcotics, and counterterrorism. Unfortunately, they've been cool to that idea, but we hope it will

change." Goldwyn added, "The conversation is going to be difficult for a while, but we

again. There still may be some senior people at [national oil company
Pascual said, "It

need to start talking to Venezuela P etroleos d e V enezuela SA ] who could be helpful."

bothers me that a country with so much of the Western Hemisphere's oil is broke. "

CP cant solve energy security- only the US avoids oil shocks


Federico F. Pea1 and Federico C. Baradello2, 4-14-2012, Senior Advisor at Vestar Capital Partners, a leading global private

equity firm, served in the Colorado State House of Representatives, Mayor of the City and County of Denver, founded an investment advisory firm, served in two cabinet positions in the Clinton Administration as Secretary of the Department of Energy and Secretary of the Department of Transportation, JD from the University of Texas, serves on the board of Sonic Corp., Toyotas North American Diversity Advisory Board, National Co-Chair of COMPETE, Chair of A+ Denver, National Co-Chair of Obama for America1, cross-border private equity and venture capital experience and a background in business, law, and public policy in the U.S., EU, and Latin America, worked at the U.S. Departments of State and Homeland Security, the National Democratic Institute for International Affairs, Ph.D. from the London School of Economics, M.P.P. from Harvard Universitys Kennedy School, a bachelors degree from Princeton Universitys Woodrow Wilson School2, It's Time to Tango: The Case for a Reinvigorated
Western Hemisphere Energy Strategy, http://www.law.berkeley.edu/13223.htm

Prompted by high gasoline prices, energy policy has become a major battleground issue in the 2012 elections. As President Obama meets with other Western Hemisphere leaders at the Summit of the Americas in Cartagena, Colombia this weekend, there is an opportunity to highlight the enormous potential of a reinvigorated Western Hemisphere energy strategy. A fulsome approach to developing the Western Hemisphere's energy potential would have a profoundly positive impact on America's energy security. As the second largest energy producer after the Middle East, the Western Hemisphere has become an increasingly important source of U.S. energy supply. In fact, three of the top four oil suppliers to the U.S. are from the Western Hemisphere (Canada, Mexico and Venezuela). The Western Hemisphere also has massive potential for expanded energy production. Thanks in large part to new technologies, the Western Hemisphere has an ample available supply of unconventional oil and natural gas. This energy supply extends beyond traditional carbon-based fuels. Latin America in particular has vast renewable energy potential in biofuels, wind, solar, and hydro. The Obama Administration understands the importance of the Western Hemisphere's energy potential to U.S. energy security. At the last Summit of
the Americas in 2009, the President called for a "new partnership on energy" and launched the Energy and Climate Partnership of the Americas (ECPA). The ECPA aims to foster partnerships across the hemisphere to achieve low carbon economic growth and development. In addition, the ECPA has launched at least 25 new initiatives ranging from a renewable energy research and development center in Chile to a global shale-gas initiative to explore the potential of South America's unconventional gas resources. The administration has also deepened links with Brazil, Latin America's most promising energy producer, through a Strategic Energy Dialogue (SED) that aims to increase energy sector cooperation between the two countries. The SED has focused on exploring bilateral partnerships across diversified energy sources including biofuels, oil and gas, renewable energy, efficiency, and nuclear energy. While

the U.S. has engaged in these multilateral and bilateral initiatives, countries including China and Russia have aggressively invested billions of dollars in Latin America's energy industries. For example, in early 2011, Sinopec, China's largest oil refiner, formalized a $7 billion contract to buy a 40 percent stake in the
Brazilian operations of Repsol, Spain's largest energy company. Sinopec's main rival, the China National Offshore Oil Corporation, is now preparing a major offer to take over Repsol's stake in YPT, Argentina's main oil and gas company. Earlier this year, Russia

and Venezuela announced a joint venture between Venezuela's state-owned oil company Petroleos de Venezuela and Russia's Gazprombank, a subsidiary of Russian energy giant Gazprom. As part of the deal, Gazprombank took 40 percent ownership of a joint venture that seeks to "strengthen energy operations" in oil-rich eastern Venezuela. These investments, among many others, demonstrate that these countries view Latin America as an important region for their energy security. For the U.S. to protect its energy security in the Western Hemisphere, it will need to devise a bold public-private strategy to leverage its massive energy consumption market, and its proximate location, into a long term competitive advantage. In
addition to deepening existing multilateral and bilateral initiatives, the U.S. can strengthen and expand bilateral energy arrangements across Latin America. According to a 2007 United Nations study, Latin America will require $1.3 trillion in energy sector investment by 2030. In a time of record profits for U.S. energy companies, this

presents an opportunity for the U.S. to leverage its ample supply of risk capital, its technological expertise, research institutions, and national laboratories to develop strategic partnerships that invest in Latin America's energy potential. This new energy investment can

provide perhaps the most significant engine of growth and development in a region that has continued to defy skeptics by prospering while much of the Western world has faltered in recent years. Ultimately, any initiative for increased economic ties with Latin America will need to come from the U nited States.
While other issues, including poverty and inequality, public security, and migration will continue to be important themes in U.S.-Latin America relations, America's immediate energy security imperatives motivate serious engagement Western Hemisphere's vast energy potential is on the dance floor. Does the U.S. care to tango?

today. The

China CP does not solve- US key


Nick Snow, 4-29-2013, Washington

Editor, Oil and Gas Journal, was founding editor of Petroleum Finance Week, worked in several capacities for The Oil Daily, US can play constructive Western Hemisphere role, House panel told,
http://www.ogj.com/articles/print/volume-111/issue-4d/general-interest/us-can-play-constructive-western-hemisphere.html

The US should carefully consider how it can best help L atin A merican and C aribbean countries address their energy problems, witnesses told a US House subcommittee on Apr. 11. One constructive US move would be to show it's serious about
negotiating and honoring mutually beneficial agreements, several of them suggested during the Foreign Affairs Committee's Western Hemisphere Subcommittee hearing. Approving construction of the proposed Keystone XL crude oil pipeline's northern segment, finalizing and implementing the transboundary agreement with Mexico, and authorizing LNG exports, the witnesses indicated would send a very positive signal to countries across the hemisphere, they indicated. "In coming years, our

energy interdependence with the region will only increase, as oil producers such as Canada, Brazil, and Colombia ramp up output, and Mexicoalready a major energy
producerconsiders important reforms to increase its production," said Matthew M. Rooney, deputy assistant secretary in the US Department of State's Bureau of Western Hemisphere Affairs. "The

U nited S tates has extensive experience and has developed significant expertise in permitting, regulatory oversight, and incident response planning for conventional and unconventional resource exploration and extraction," Rooney said, adding, "The Obama administration is sharing these
environmental, regulatory, legal, and commercial best practices with other countries in the region." Rooney did not mention TransCanada Corp.'s revised crossborder permit application for the Keystone XL project, which the State Department is reviewing. He noted in his written testimony that transparent,

effective market structures are essential in the Americas, but major challenges must be overcome. "Countries that have pursued statist, nontransparent energy policies have seen their production decline despite high energy prices over the past couple of years," he said. "These countries have found it difficult to attract the necessary investments, both foreign and domestic, to help their energy production and economies grow. 'Avenue of engagement' Rooney continued, "But our balanced approach of focused technical cooperation and broad policy discussions has provided an avenue of engagement with most countries in the regioneven some with which we have significant differences. We continue to advocate open and transparent energy markets, free from corruption and reinforced by strong protections for investments, to help countries enhance output and promote long-term economic growth." He said the US has made clear to Argentina's government that
expropriating assets is a bad idea, while Chile and a few others are "fairly clean." Still others "are somewhere in the middle on transparency and anticorruption efforts," Rooney said, adding, "It's clear that in some countries, foreign companies have to have a strong stomach. That said, many US companies do business there." Other witnesses emphasized that the US will need to not make other countries feel it is not interfering in their internal affairs as it offers encouragement and assistance. That may prove difficult as China and other countries from outside the region negotiate resource agreements with teams of state energy companies and national banks, they conceded. "The

US still leads

the world in energy technology," said David L. Goldwyn, the Special Envoy and Coordinator for International Energy Affairs at the State Department during 2009-11 who now heads Goldwyn Strategies LLC. "It also has a business development model that is more favorable than China's , which is increasingly seen as colonial with employees who keep to themselves and don't work to help develop local economies." Jorge R. Pinon, associate director of the Latin American
and Caribbean Program at the University of Texas at Austin's Center for International Energy and Environmental Policy, said, "One thing US oil companies have done so well is that they're well separated from the federal government. We have to be careful how the US government becomes involved in US companies' overseas operations." China could realize 600,000 b/d of production from the Western Hemisphere sooner than some people think, he added. "Its companies are partners in several ventures with Statoil and Petrobras, which already have deepwater

expertise," Pinon said. 'Deeply complex' Carlos Pascual, who succeeded Goldwyn as Special Envoy and Coordinator for International Energy Affairs at the State Department, said in his written statement that the

Western Hemisphere's energy picture "is deeply complex and interconnected, with spectacular opportunities for US jobs, commercial interests, economic development, and energy supply linked to the political perspectives in Canada, Mexico, Venezuela , the Caribbean, and beyond." He noted that as world energy markets transform as a reflection of the US's own energy revolution, it has much to share and to gain from being a formative part of the picture, especially in the Americas. "From building North
American energy security and shaping natural gas markets to paving the road for tomorrow's commercial and innovative transformation, the US must continue to lead, to share our best practices and lessons learned, to support transparency and an even playing field, and to give our companies and innovators access to tomorrow's energy markets," Pascual, who formerly was US Ambassador to Mexico, told the subcommittee. He said that Mexico's president, Enrique Pena Nieto, backs comprehensive energy policy reform and is working across three political parties to achieve it. "The goal is to protect Mexico's natural resources while creating conditions that attract foreign investment and participation," Pascual said, adding the country appreciates growing US congressional interest in approving and implementing the 2012 TransBoundary Hydrocarbons Agreement. Eric Farnsworth, vice-president of the Council of the Americas in Washington, said, "Approval of legislation to implement the agreement will be seen as a sort of 'proof of concept' to find creative ways to introduce outside investment into Mexico's energy sector. It also creates mechanisms to increase collaboration on environmental protection and disaster response, and will open new avenues for US commercial activity which has been desired for many years." Other witnesses said it's vital that any energy policy changes in Mexico be seen as internally driven, and part of bigger economic reforms. Pinon said this could be difficult since the national oil company, Petroleos Mexicanos (Pemex), is only active within Mexico, unlike Brazil's Petrobras and Colombia's Ecopetrol have international operations.

Venezuelan President Hugo Chavez's strategy of giving several countries deep discounts on their purchases of Venezuelan crude oil was having an impact before he died earlier this year. Pascual said it perpetuated some smaller nations' dependence on diesel fuel to generate electricity, making prices in them 4-5 times higher than in the US. "We are working with them to create alternative power generation," he
Chavez's legacy Witnesses acknowledged that said. "Projects

can't run for long on subsidies. They need to compete economically ." Rooney conceded that the in
petroleum prices," Pascual said. "I don't think many, if any, did it for ideological reasons." Speaking days before

State Department has concerns about Chavez's discounts and subsidies program: Petro-Caribe. "Several countries bought into it 2-3 years ago because there was a spike

Venezuela ns voted to elect Chavez's successor, Rooney said the US plans to watch what happens there in the next 2 years from a distance. "We have had a testy relationship with Venezuela," he told the subcommittee. "We see possibilities to work with them on energy , narcotics, and counterterrorism. Unfortunately, they've been cool to that idea, but we hope it will change." Goldwyn added, "The conversation is going to be difficult for a while, but we need to start talking to Venezuela again. There still may be some senior people at [national oil company P etroleos d e V enezuela SA ] who could be helpful."
Pascual said, "It

bothers me that a country with so much of the Western Hemisphere's oil is broke. "

2AC Debt trap da


Debt trap DA Chinese loans to Venezuela are repaid in oil instead of cash, creates an unsustainable debt cycle and ensures long term economic unsustainability.
Chris Arsenault, 3-12-2013, Al

Jazeera web producer, BA in history and economics from Dalhousie University and an MA in history from the University of British Columbia, Venezuela looks to China for economic boost,
http://www.aljazeera.com/indepth/features/2013/03/201331271053389351.html While Chinas

business deals with South America are welcomed by many, including politicians and young businessmen like worry the manufacturing powerhouse is repeating old problems faced by Latin America, allowing countries to boost their economies purely through primary commodity exports. Loans to Venezuela backed by the Chinese state and its development banks are being repaid in oil ,
Sanchez, some experts directly from the spigot, rather

than cash or government bonds. Current oil deals are creating a

fundamentally unsustainable cycle of indebtedness and dependency, according to the University of Miami study. Since 2008, state-backed China Development Bank has agreed to lend Venezuela $46.5bn, according to a report from Tufts University. More than 90 percent of this debt is backed by sales contracts for crude. And the government is running up debt despite high oil prices. With international lenders demanding high interest rates on
Venezuelan government debt, and the Chavez government criticising the International Monetary Fund (IMF) and World Bank for their demands of privitisation and austerity, turning to China makes sense, according to some observers. Venezuela has a policy goal of tr ying to limit its exposure to the international debt market, Mark Jones, Latin America expert at the Baker Institute for Public Policy, a think-tank specialising in the energy industry, told Al Jazeera. For

China, ideology has very little to do with it; they are investing for strategic reasons - to acquire natural resources. Ideology, for Venezuela, is crucial. Carlos Andres Perez, a former

Venezuelan president, once slammed the IMF for practicing economic totalitarianism which kills not with bullets but with famines. But its

unclear whether deals from totalitarian China, especially if they are backed with black gold, will be any better for Venezuelas long-term prospects. My children and grandchildren will have to pay that debt, Sanchez said, wondering if the billions in loans-for-oil deals could be a double-edged sword.

2AC Access da
Access DA Counterplan crowds out American influence and threatens US influence heavily damages energy sceurity.
Daniel P. Erikson, [6-7]-xx-2006, senior

associate for U .S. policy at the Inter-American Dialogue think tank in Washington, D.C., has published more than fifty scholarly articles and essays and in publications including the Washington Post, the Los Angeles Times, and the Miami Herald, A Dragon in the Andes? China,
Venezuela, and U.S. Energy Security, http://www.questia.com/library/1G1-150356901/a-dragon-in-the-andes-china-venezuela-and-us#articleDetails IN AUGUST 2005, the Venezuelan daily El Universal published an interview with Ambassador Ju Yijie, the Chinese envoy to Caracas. When

asked if China's demand for Venezuelan oil could push the U nited S tates out of Venezuela's market, the ambassador asserted that "China has the potential to do it." He then quickly added, "Though I don't see the necessity for any of the countries involved." (1) The exchange highlighted the growing tension between China, the U nited S tates, and Venezuela over the fate of Venezuela's oil reserves as China's influence in the Western Hemisphere continues to expand. Does China's increasing role in South America's energy sector represent a threat to U.S. interests? In recent years, this question has provoked unease among U.S. policymakers who see a dangerous convergence of three worrisome trends. The first is the rise of China as a global economic power that may seek to challenge U.S. dominance over the next quarter-century. Second, U.S. influence in Latin America appears to be in flux as a number of the region's leaders, led by Venezuela's left-leaning President Hugo Chavez, have embraced populist politics and adopted anti-American stances. Third, ensuring access to energy sources has become a central U.S. security concern because a tight global oil market has caused crude oil prices to soar to more than $70 per barrel. Against this backdrop, China's increased efforts to tap into energy reserves in the Western Hemisphere have reverberated throughout the region, with potentially profound consequences for U.S. energy security.

2AC Encroachment da
Encroachment DA CP spurs Chinese expansionism in Latin America theyre starting with Venezuela.
Patricia Rey Malln, 6-28-2013, reporter for IB Times, Latin America Increases Relations with China: What Does That Mean for the US? http://www.ibtimes.com/latin-america-increases-relations-china-what-does-mean-us-1317981

U nited S tates as the ruling global superpower, China is gaining influence in its hemispheric "backyard," Secretary of State John Kerry's unintentionally insulting designation for Latin America. China has had its sights on Latin America for the past decade and is now positioning itself as a competitive trade partner in the region. The populous, rapidly developing Asian nation covets oil, soybeans and gold, of which Latin America has plenty,
As if to confirm the declining hegemony of the and has been slowly but steadily increasing its presence and its trade with several countries there. The U.S., whose history of blocking outside political influence in Latin America going back to the Monroe Doctrine, has been directing its attention elsewhere, as Michael Cerna of the China Research Center observed. *The

U.S.'+ attention of late has been focused on Iraq and Afghanistan, and Latin America fell lower and lower on Americas list of priorities. China has been all too willing to fill any void, Cerna said. That dominance is in decline. After decades of uncontested U.S. influence in the region, some Latin American leaders have started making decidedly anti-American policies. The most notable was the late Venezuela n Comandante Hugo Chvez, who
was very vocal about his disdain for the U.S., but he is far from the only one. Bolivia's President Evo Morales, for instance, kicked out USAID after Kerry's verbal slip, and has gone so far as to ban Coca-Cola from the country.

AT: EU
EU soft power cant solve global problems --- Iran and Afghanistan prove. Dempsey 11 (Judy, senior associate at Carnegie Europe and editor in chief of Strategic Europe, columnist for
the International Herald Tribune, The Failure of Soft Power, Atlantic Community, 10-5-11, http://archive.atlanticcommunity.org/index/articles/view/The_Failure_of_Soft_Power_)

Europes efforts to exert influence on the world through soft power has proven ineffective . To restore
Europes credibility in the world, Europe must open itself up to trade and immigration, provide more aid to civil society groups in the greater European neighborhood and be more vocal against dictatorial regimes. Europeans

have long believed soft power to be

the best instrument to promote their values and their security. They have a strong sense of moral superiority about it, particularly when looking at hard, or military, power. Military action is something that the Europeans leave to the United States, Britain, and France. Even if it wanted to, the European Union cannot do it. It lacks the basic capabilities, such as heavy airlift and logistics. It lacks an integrated defense policy for armament procurement. It also lacks a security strategy that includes the use of hard power as an option. The soft
power instruments Europeans have used over the years consist of development aid and civilian assistance, such as training the police and judiciary in some countries. The Europeans also sometimes couple soft power with trade incentives or with sanctions. Above all, they pride themselves on basing their actions on the defense of human rights which are, at least officially, at the core of Europe's value system. But Europe's record in making soft power the cornerstone of its security strategy has been patchy. It has been worked incredibly well in Eastern Europe. Enlargement with its plethora of promises and incentives is soft power at its most powerful. But Europe

cannot enlarge to the rest of the world. That is where Europe's soft power policies have had so little, if any success. Take Iran. Years of negotiations with Iran to get it to abandon its nuclear ambitions have gotten the Europeans nowhere. Promises of technical assistance and closer economic cooperation have had no impact on the regime in Teheran, even though some of the sanctions are biting. The reason why the Europeans have failed is because Iranian President
Mahmoud Ahmadinejad is just too stubborn. He seems determined to develop a nuclear military capability for Iran's own geo-strategic interests no matter what the cost to his people. Soft power can find no grip there. Bosnia-Herzegovina is another case where the instrument has failed. Fifteen years after the Dayton accords that ended the civil war in the former Yugoslavia, Bosnia is mired in corruption and misrule. This is despite the presence of a large EU police force, not to mention the billions of euros the European taxpayer has poured into this tiny country. The state that the EU is trying to build has never really been accepted by the ethnic communities living there. And the EU is not

Afghanistan is another stain on the EU's soft power record. There, the Europeans have done too little and too late, wasting the initial good will of the Afghan people after the Taliban regime was overthrown in 2001. While the U.S. and its coalition forces were
prepared to stop the bullying and separatist tactics of the Bosnian Serbs in particular. distracted by the war in Iraq, the Europeans did little to fill the gap left in Afghanistan. Europe's most abject failure is its police-training mission there. It is still under-financed and under-staffed. What a shame for what should have been a stellar example of the EU's use of soft power. And there is North Africa and the Middle East. Europe's record in colluding with dictators in the region before the Arab Spring is well known. Now would be the chance to repair its credibility by putting its soft power to work. It would not require much. First of all, Europe would have to become much more outspoken and committed in it defense of human rights. How? It would need to do more to support the opposition to dictatorial regimes. For instance, it could support political prisoners in Iran by discreetly providing aid or and even legal assistance to their families. Europe should also open its doors to asylum seekers from these countries. That's not idealism. This is about Europe defending its human rights values. Then there is trade.

The EU must open up for trade from North Africa and the Middle East. This is crucial for economic reform, prosperity, and the development of a vibrant middle class which would strengthen stability and security across the Mediterranean. Borders, too, should gradually be opened despite
the growing anti-immigration movements across Europe. Young people from North Africa and the Middle East must be allowed to travel to Europe and they must have access to education there. Indeed, the Arab Spring presents an ideal opportunity for the EU's Erasmus higher education programs to take the initiative. Trade and education in the Middle East are very much in Europe's long term strategic interests.

*******

Canada For Wave 2

Canada 1AC 1
Lack of investment in Venezuelan oil means increased Canadian oil
Vanderklippe, 03/06/2013 (Nathan Vanderklippe, reporter at The Globe and Mail, Chavez's death opens door to Venezuela's oil
riches, The Globe and Mail, http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/chavezsdeath-opens-door-to-venezuelas-oil-riches/article9324112/?service=mobile) That could portend important

shifts for Canada, given the sheer size of Venezuelas reserves and their similarity to the Alberta oil sands. The question for Canada, especially, is is this the beginning of the end of Venezuela as an inefficient producer? And it probably is, said Robert Johnston, the director of energy and natural resources at the Eurasia
Group political risk firm. I dont think well see a big change in the next four or five years. If you look at the four or five years beyond that,

things could get very interesting. A revival in Venezuelas oil industry could draw investment dollars away from Canada, given the relatively low cost of producing heavy crude in the South American nation. A revival in production there could also pose new competitive threats to Canada as it seeks markets for its oil sands product.

Canadian oil sands trade off with Venezuela oil


Tissot, 2012 (Roger Tissot, an Alberta industry veteran who has become a roving independent business consultant, specializing in his native
South America, Why the health of Hugo Chavez matters to Albertas oil sands, Alberta Oil, 06/01/2012, http://www.albertaoilmagazine.com/2012/06/hugo-chavez-is-losing-his-hold-on-power-in-venezuela-should-albertas-oil-and-gas-sector-beworried/)

Albertas oil sands have been one of the benefactors of the fall from grace of PDVSA and the Venezuelan oil and gas industry during the Chavez presidency. His anti-U.S. rhetoric, plus the threat of nationalization and expropriation, caused some of Big Oils players to shift their capital elsewhere, notably to bitumen deposits located in landlocked northern Alberta, which has accelerated development of the resource. But a Chavez defeat in this falls presidential elections, and a return to the Venezuela and PDVSA of the early 1990s, could have the oil and gas industry flocking to Venezuela once again and focusing less on investing in a high-cost resource like the oil sands. While there might not be any threat of expropriation in Alberta, the fact is crude oil from the Orinoco is far cheaper to produce and transport than oil sands crude. Whats more, it only takes five days to move a supertanker from Venezuela to the U.S. Gulf Coast.

Venezuelan oil uniquely different from Canadian oil sands


Aletho, 2010 (Aletho News, The Orinoco Belt has a strong and, indeed, enviable competitive position, Aletho News, 08/01/2010,
http://alethonews.wordpress.com/2010/08/04/the-orinoco-belt-has-a-strong-and-indeed-enviable-competitive-position/) Mr Wallis refers to 513 billion barrels of recoverable oil if costs were not an issue.

But they are not since costs are certainly much lower than those for deepwater, offshore drilling or those in the Athabasca Tar Sands. It is unfortunate the Orinoco Belt crudes and Athabasca crudes are often mentioned together as being tar sands. This is wrong since the oil in Orinoco Belt is accumulated in reservoirs in the subsurface, whereas the bitumen in the Athabasca Tar Sands is found near the surface mixed with sand, clay and minerals. Neither is there anything unconventional about the production process in the Orinoco Belt . Wells are drilled in a cluster of up to 24 from one location using what is known as horizontal drilling drilling is diagonal till the oil sands are reached when it switches to horizontal. With a temperature of 50C, oil flows easily and large electric pumps pump it to the surface without difficulty. On reaching the surface, the oil cools and becomes viscous like a thick tar. It is then blended with a light crude of 32API to produce a 16API crude of commercial quality. Alternatively, it is mixed with a diluent and pumped to the upgrader on the coast to be upgraded to either 16API or 32API depending on the
plant. The diluent is recovered and pumped back to the production area.

Canada oil sands destroy the environment and exacerbate climate change
Villarreal, 03/22/2013 (Ryan Villarreal, reports on foreign affairs with a focus on Latin America. He also covers human rights and
environmental issues worldwide, Canada Eyes Tar Sands Oil Boom In A Project That Could Damage The Environment And Destroy Ecosystems,

International Business Times, http://www.ibtimes.com/canada-eyes-tar-sands-oil-boom-project-could-damage-environment-destroyecosystems-1130699#) The so-called tar

sands located in the Canadian province of Alberta are estimated to contain the third-largest proven oil reserves in the world, but their expanding development has raised concerns about indigenous rights and the environmental impact. Beneath a vast expanse of boreal forest about 54,000 square miles in area (roughly the size of the state of New York) sit three main oil deposits, containing an estimated 171 billion barrels of crude bitumen - a viscous tar-like form of petroleum -- in proven reserves. Saudi Arabia has the largest proven oil reserves, 260 billion barrels, followed by Venezuela with 211 billion barrels. But the key distinction is that those reserves are in the form of crude oil. Bitumen, on the other hand, requires a more energy-intensive process to extract, transport and refine. About one-fifth of the
bitumen is recoverable through open-pit mining, while the remainder requires more complex (and expensive) in situ methods such as steamassisted gravity drainage, or SAGD, which essentially involves drilling two horizontal wells into a deposit, pumping steam into the upper one and reducing the viscosity of the surrounding bitumen, allowing it to flow into the lower well for extraction. At present, Canada

produces

about 1.6 million barrels of oil per day from the Albertan tar sands, with most activity focused on the region around the Athabasca River system, where the largest deposit sits. It plans to expand production to 3.5 million barrels per day by 2025. Canadas total current oil production amounts to 3.59 million barrels of oil per day, the sixth-highest amount in the world.
Saudi Arabia produces the most with 11.15 million barrels per day, followed by Russia (10.21 million), the U.S. (9.02 million), Iran (4.23 million) and China (4.07 million). The

Canadian governments intention to continue expanding development of the tar sands is clear, while environmental groups and local indigenous tribes -- referred to as First Nations -- are demanding a halt to oil extraction. *B+itumen is turned into oil through complex and energyintensive processes that cause widespread environmental damage, Greenpeace Canada says on its website. These processes pollute the Athabasca River, lace the air with toxins and convert farmland into wasteland. Large areas of the boreal forest are clearcut to make way for development in the tar sands, the fastest- growing source of greenhouse gas emissions in Canada, it adds. In January an independent environmental study commissioned by the Canadian government examined six lakes near tar sands surface mining sites and found increasing levels of petroleum-linked carcinogens over time in step with oil development. In this study,
with the exception of one lake very close to the oil sands, the levels of these contaminants did not exceed Canadian guidelines and were low compared to urban areas, said Adam Sweet, press secretary for the government ministry Environment Canada. The head researcher on the study, John P. Smol, a professor of biology at the University of Kingston, said that while current levels were not necessarily harmful, the health risks would increase over time. Its going

to get worse, said Smol, Reuters reports. Its not too late, but the trend is not looking good. This host of environmental issues has also affected the First Nations in the Athabasca region. Expansion of the tar sands in my peoples homelands means a death sentence for our way for life, destruction of eco-systems vital to the continuation of our inherent treaty rights and massive contributions to catastrophic global climate change, a fate
we all share, said Chief Allan Adam of the Athabasca Chipewyan First Nation, in a recent statement. While current tar sands development is not taking place directly on First Nations land, it has affected the water systems and wildlife that they depend on and consider part of their cultural heritage. Crystal Lameman, a member of the Beaver Lake Cree First Nations, talked about how her people have witnessed declining numbers of caribou in areas near tar sands development sites, which they hunt both for food and as part of their traditions. There used to be thousands, Lameman said. Now there are only around 175 to 225. We have an obligation to care for these beings, she added. The Beaver Lake Cree are currently filing a lawsuit against the government, citing a violation of treaty rights which granted them to hunt freely on their land, though a trial date has not been set. Its a long process. They (the government) knows its a long process, Lameman said. But at least we can say were going about this in a legal way. Meanwhile, the Canadian government continues to issue permits and approve new projects. Keith Stewart, climate and energy campaign coordinator at Greenpeace Canada, said Ottawa has already approved projects that will increase oil production to 5 million barrels a day, with an additional increase of 4 million barrels in pending projects. If

theyre serious about assessing the environmental impact of these contaminants, then they need to stop approving new projects, Stewart said. But the gears of industry are already in motion and seem to be accelerating as Canada makes
long-term plans for transporting tar sands oil to global markets. In particular, Ottawa is waiting with bated breath for President Obama's decision about whether his administration will approve the controversial northern section of the Keystone XL oil pipeline that would allow Canada to transport tar sands oil down through the U.S. Midwest to the Texas Gulf Coast for export. Michael Levi, director of the program on energy security and climate change at the Council on Foreign Relations, said that the Keystone XL project is the most economically lucrative option for Canada, but its approval or rejection by the U.S. government is not likely to deter tar sands development. I dont imagine the Albertan government is just going to sit on top of that oil, Levi said. Canadas Plan B would be to route the oil through a twin pipeline system, known as the Enbridge Northern Gateway Project, through the province of British Columbia to the Pacific Coast, where it could be exported to Asia. The Enbridge project is currently undergoing environmental assessments but is not expected to move forward until a decision has been made on Keystone XL. As long as the Keystone option is open, all other pipelines are economically unattractive, Levi said. While the pipelines will determine how much oil can be transported and thus affect how much can be produced profitably, global

oil prices will

determine the overall profitability of developing Canadas tar sands.

Warming causes extinction


Deibel 7 (Terry L, Professor of IR @ National War College, Foreign Affairs Strategy: Logic for American Statecraft, Conclusion: American Foreign Affairs Strategy Today) there is one major existential threat to American security (as well as prosperity) of a nonviolent nature, which, though far in the future, demands urgent global warming to the stability of the climate upon which all earthly life depends. Scientists worldwide have been observing the gathering of this threat for three decades now, and what was once a mere possibility has passed through probability to near certainty. Indeed not one of more than 900 articles on climate change published in refereed scientific journals from 1993 to 2003 doubted that anthropogenic warming is occurring. In legitimate scientific circles, writes Elizabeth Kolbert, it is virtually impossible to find evidence of disagreement over the fundamentals of global warming. Evidence from a vast international scientific monitoring effort accumulates almost weekly, as this sample of newspaper reports shows: an international panel predicts brutal droughts, floods and violent storms across the planet over the next century; climate change could literally alter ocean currents, wipe away huge portions of Alpine Snowcaps and aid the spread of cholera and malaria; glaciers in the Antarctic and in Greenland are melting much faster than expected, andworldwide, plants are blooming several days earlier than a decade ago; rising sea temperatures have been accompanied by a significant global increase in the most destructive hurricanes; NASA scientists have concluded from direct temperature measurements that 2005 was the hottest year on record, with 1998 a close
Finally, action. It is the threat of second; Earths warming climate is estimated to contribute to more than 150,000 deaths and 5 million illnesses each year as disease spreads; widespread bleaching from Texas to Trinidadkilled broad swaths of corals due to a 2-degree rise in sea temperatures. , concluded Inuit hunter Noah Metuq, who lives 30 miles from the Arctic Circle. They call it climate changebut we just call it breaking up. From the founding of the first cities some 6,000 years ago until the beginning of the industrial revolution, carbon dioxide levels in the atmosphere remained relatively constant at about 280 parts per million (ppm). At present they are accelerating toward 400 ppm, and by 2050 they will

The world is slowly disintegrating

there is no way immediately to reduce levels, only to slow their increase, we are thus in for significant global warming; the only debate is how much and how serious the effects will be. As the newspaper stories quoted above show, we are already experiencing the effects of 1-2 degree warming in more violent storms, spread of
reach 500 ppm, about double pre-industrial levels. Unfortunately, atmospheric CO2 lasts about a century, so disease, mass die offs of plants and animals, species extinction, and threatened inundation of low-lying countries like the Pacific nation of Kiribati and the Netherlands at a warming of 5 degrees or less the Greenland and West Antarctic ice sheets could disintegrate, leading to a sea level of rise of 20 feet that would cover North Carolinas outer banks, swamp the southern third of Florida, and inundate Manhattan up to the middle of Greenwich Village. Another catastrophic effect would be the collapse of the Atlantic thermohaline circulation that keeps the winter weather in Europe far warmer than its latitude would otherwise allow. Economist William Cline once estimated the damage to the United States alone from moderate levels of warming at 1-6

the most frightening scenario is runaway greenhouse warming, based on positive feedback from the buildup of water vapor in the atmosphere that is both caused by and causes hotter surface temperatures. Past ice age transitions, associated with only 5-10 degree changes in average global
percent of GDP annually; severe warming could cost 13-26 percent of GDP. But temperatures, took place in just decades, even though no one was then pouring ever-increasing amounts of carbon into the atmosphere. Faced with this specter, the best one can conclude is

the natural greenhouse effect is akin to playing Russian roulette with the earths climate and humanitys life support system. At worst, says physics professor Marty Hoffert of New York University, were just going to burn everything up ; were going to heat the atmosphere to the temperature it was in the Cretaceous when there were crocodiles at the poles, and then everything will collapse. During the Cold War, astronomer Carl Sagan popularized a theory of nuclear winter to describe how a thermonuclear war between the Untied States and the Soviet Union would not only destroy both countries but possibly end life on this planet. Global warming is the post-Cold War eras equivalent of nuclear winter at least as serious and considerably better supported scientifically. Over the long run it puts dangers from terrorism and traditional military challenges to shame . It is a threat not only to the security and prosperity to the United States, but potentially to the continued existence of life on this planet.
that humankinds continuing enhancement of

Canada 1AC 2
Canada moving towards renewables now
Caron, 2011 (Zo Caron is the Climate & Energy Specialist for WWF-Canada interviewed by Peter McMahon at WGSI, 100% renewable
energy is achievable by 2050, WWF, http://www.wwf.ca/conservation/global_warming/energy_report.cfm)

The ecological footprint of the average Canadian is more than twice the global average, mainly because of carbon emissions related to transportation, heating and electricity use. What would a nationallevel switch to renewable energy mean for Canada? Zo: Canada already depends largely on hydroelectricity, in addition to power that comes from coal-fired and nuclear plants. The potential is great to increase our energy efficiency and conservation efforts. We also have the ability to increase the production of energy from wind, solar, hydro and tidal energy sources, both for export and our own use. A switch to renewable energy would involve using electric vehicles, as well as putting a stop to providing subsidies to the coal, oil and gas industries and subsidizing cleaner forms of energy instead. Is Canada ready for such a change? Are we capable of achieving such a goal without compromising our economic future? Zo: Canada is incredibly well placed to be on the forefront of energy efficiency, conservation and renewable energy. On an economic scale, the global outlook for making this shift would save up to $5.5 trillion a year. While initial investments will be needed, the payback will be significant. Economists also note that the longer we wait, the more expensive this transition becomes and, if we do nothing, the impacts of climate change will cost us more than would an investment in renewable energy

Venezuela oil forces Canada to invest in alternative energy- thats good


Gindin, 2006 (Jonah Gindin, an independent journalist and researcher living between Toronto and Caracas.
He has written for Venezuelanalysis.com, ZNet, and NACLA Report on the Americas, among other publications, Venezuela's and Canada's Very Different Approaches to Oil, 12/14/2006, Venzuela Analysis, http://venezuelanalysis.com/analysis/2138)

Why isnt Alberta investing a portion of current oil profits in developing an alternative energy industry that could establish itself as a leader once fossil fuels are exhausted, or once we decide that the cost is just too high? By taking the lead in alternative energy, protection of the environment and equitable partnership with indigenous communities, Canada could establish itself as model for constructive, socially just development. The Alberta model depends on the assumption that private profits will be reinvested back in the industry, with resulting job creation. But oil companies are having difficulty finding projects in which to invest; their record profits are currently being passed on to shareholders. The distinction seems relatively straight-forward; but, at root, separating the Albertan and Venezuelan models are questions of power,
and ultimately of ideology.

Environmentally harmful keystone trades off with Venezuelan oil


Landers, 03/07/2013 (Jim Landers, writer for the Dallas News, Crumbling Venezuelan oil sector expected to remain hostile to U.S.
investment, Dallas News, http://www.dallasnews.com/business/energy/20130306-crumbling-venezuelan-oil-sector-expected-to-remainhostile-to-u.s.-investment.ece)

Canada wants to increase oil sands exports to the Gulf Coast via the Keystone XL pipeline, where the Canadian supplies are expected to displace U.S. imports of Venezuelan oil . The Obama administration has been reviewing TransCanadas application to build the pipeline, which m any environmental groups oppose because of climate change concerns. Venezuelas continued hostility is a reason why the United States should go ahead on the Keystone pipeline, Farnsworth said. It would mean positive benefits by delinking
American capital flowing to a regime that clearly doesnt like us. Chvez opponents were led in Octobers elections by Henrique Capriles, a former governor who ran on a platform sympathetic to free markets and the private sector, including in the oil business. Under

Chvez,

much of the countrys oil revenue was directed to popular anti-poverty programs including discounted
heating oil through Citgo for 100,000 lower-income Americans. Dan Yergin, vice chairman of IHS and an energy historian, said managing the

economy will be a challenge for Chvez successor. He leaves

behind an economy greatly weakened by spending, intervention, inflation, capital flight, and shortages. And, beyond Cuba, his effort to create an alliance against what he
called the U.S. empire managed only to enlist a few countries, Yergin said.

**Keystone uniquely destroys the environment and accelerates global warmingprevents switch to renewables
Smith & Brecher, no date (Brendan Smith is a co-founder of Voices for a Sustainability, director for the National Alliance for Fair
Employment, co-director of UCLA Law Schools Globalization and Labor Standards Project, and co-founder of Global Labor Strategies, a resource center focused on the impact of China, the global economic crisis and climate change, and Jeremy Brecher is a writer, historian, and activist who is the author of more than a dozen books on labor and social movements, Pipeline Climate Disaster: The Keystone XL Pipeline and Labor, Labor Network for Sustainability, http://www.labor4sustainability.org/articles/pipeline-climate-disaster-the-keystone-xl-pipeline-and-labor/)

The Keystone XL pipeline is a key link in an energy path that will lead to devastation for the American working families we are told it will provide better days. Heres why. Weve all heard about global warming caused by the emission of carbon and other greenhouse gasses into the atmosphere. Despite the claims of a political faction that it is a myth, there is a near-total consensus among climate scientists that it is real and that and that it will cause devastating climate change. That means rising sea levels, an ever-increasing number of extreme weather events like droughts, floods, and heat waves, and consequences like forest fires and species extinction . We can see these effects emerging right now. 2010 was tied with 2005 as the hottest year on record. Rising sea levels,
heat waves, forest fires, tornadoes, floods - their rising frequency and destructiveness are not in some distant future, but right now. As Scientific American recently noted, In this year alone massive blizzards have struck the U.S. Northeast, tornadoes have ripped through the nation, mighty rivers like the Mississippi and Missouri have flowed over their banks, and floodwaters have covered huge swaths of Australia as well as displaced more than five million people in China and devastated Colombia. And

this years natural disasters follow on the heels of a staggering litany of extreme weather in 2010, from record floods in Nashville, Tenn., and Pakistan, to Russias crippling heat wave. Scientists calculate that the safe level for carbon in the atmosphere is 350 parts per millions. But we are already significantly over that level which is why we are already facing devastating climate change. Only by drastically limiting our carbon emissions can we limit still greater devastation. Why is a single pipeline the Keystone XL so important to this story? Because it is the key link in an energy strategy that will radically escalate carbon emissions still further. The energy strategy is to introduce large quantities of oil from Canadian tar sands. According to the US Department of Environmental Protection, the greenhouse gas emissions from Canadian oil sands crude oil will be more than 80% greater than oil refined in the US. Independent estimates run up to three times more global warming pollution than conventional oil. Once the Keystone XL is in place, a wide area of the US will become dependent on oil from Canadian tar sands. With no available alternative, pressure will grow to import more and more of it. Even more dangerous, the pipeline will lock in dependence on fossil fuels for decades to come and remove the pressure to convert to renewable alternatives. The Alberta tar sands are estimated to contain enough carbon to raise carbon emissions in the atmosphere by 200 parts per million. That would increase the current level of greenhouse gasses in the atmosphere by more than half. It would be more than enough to create more climate change than in the entire history of humanity on earth . It would also render pointless all other efforts to reduce greenhouse gas emissions . As leading climate scientist James Hanson put it, If the tar sands are thrown into the mix, it is essentially game over. There is no practical way to capture the co2 while burning oil. We cannot get back to a safe CO2 level if unconventional fossil fuels, like tar sands are exploited. There are also a multitude of other problems with the project. Tar sands extraction is already devastating native lands in Alberta. Other recently built pipelines are already leaking and spilling large quantities of oil into the US environment. The pipeline threatens the aquifer that is critical for Midwestern agriculture and drinking water. The tar sand oil carry some of the deadliest chemicals,
including nickel, vanadium, lead, chromium, mercury, arsenic, selenium, and benzene But isnt the Keystone XL pipeline part of a balanced

energy policy? The trade union leaders letter to Secretary Clinton acknowledges the criticism that further

development of

Canadas oil sands puts in jeopardy U.S. efforts aimed at capping carbon emissions and greenhouse gasses. It presents as an answer a position that has often been stated by spokespeople for US labor: Comprehensive energy and
environmental policy should strive to address climate concerns while simultaneously ensuring adequate supplies of reliable energy and promoting energy independence and national security. Such a balanced policy sounds reasonable. But the problem is that in practice it

means putting off the necessary sharp reductions in greenhouse gas emissions for further decades, guaranteeing that the climate catastrophe will grow worse and worse. Indeed, the letter goes on to say,
Alternative energy sources are generally still in developmental stages; therefore it is likely the U.S. Consumer will remain substantially dependent on carbon fuels for the next several decades. Any

policy based on the assumption that the US will remain substantially dependent on carbon fuels for the next several decades is condemning American working people, all Americans, and indeed the entire world to a fate worse than humanity has ever known.

Canada moving towards renewables now


Canada moving towards renewables now
Caron, 2011 (Zo Caron is the Climate & Energy Specialist for WWF-Canada interviewed by Peter McMahon at WGSI, 100% renewable
energy is achievable by 2050, WWF, http://www.wwf.ca/conservation/global_warming/energy_report.cfm)

The ecological footprint of the average Canadian is more than twice the global average, mainly because of carbon emissions related to transportation, heating and electricity use. What would a nationallevel switch to renewable energy mean for Canada? Zo: Canada already depends largely on hydroelectricity, in addition to power that comes from coal-fired and nuclear plants. The potential is great to increase our energy efficiency and conservation efforts. We also have the ability to increase the production of energy from wind, solar, hydro and tidal energy sources, both for export and our own use. A switch to renewable energy would involve using electric vehicles, as well as putting a stop to providing subsidies to the coal, oil and gas industries and subsidizing cleaner forms of energy instead. Is Canada ready for such a change? Are we capable of achieving such a goal without compromising our economic future? Zo: Canada is incredibly well placed to be on the forefront of energy efficiency, conservation and renewable energy. On an economic scale, the global outlook for making this shift would save up to $5.5 trillion a year. While initial investments will be needed, the payback will be significant. Economists also note that the longer we wait, the more expensive this transition becomes and, if we do nothing, the impacts of climate change will cost us more than would an investment in renewable energy

Green Projects Taking Off In Canada


Trinh, 2012 (Brian Trinh, writer for the Huffington Post specializing in Canadian affairs, Renewable Energy Sources: Green Projects Take
Off In Canada, The Huffington Post, 11/18/2012, http://www.huffingtonpost.ca/2012/11/18/renewable-energy-sourcescanada_n_2156416.html)

Wind Power Many Torontonians drive by the 30-stories tall wind turbine at Exhibition Place these days without noticing itits become a fixture on the Toronto skyline, but this powerful turbine puts out about 1 million kilowatt hours of clean wind energy annually, which is enough electricity to power about 100 homes for a year. You may also not realize that this is North Americas first urban turbinemost cant be built in cities given zoning regulations and the fact that residential areas often tend to interfere with the flow of wind needed to generate power. Solar Energy When one thinks of Canadas cold climate, solar power, ie. converting sunlight into energy, may not be the first resource that comes to mind. But we have a wealth of solar energy resources, focused more in Ontario, Quebec and the Prairie provinces. While the solar-power
industry is in a bit of a tenuous position (the abundance of supply and subsidies being slashed being at the root of the downturn), installing solar panels can be a simple way to cut your energy bill, and kits are readily available at your local building supply store such as Home Depot. As for solar-powered businesses, in Red Deer, Alta., the Comfort Inn & Suites is one of Canadas most energy-efficient hotels. Thanks to rooftop solar panels, 520 tons of carbon dioxide emissions will be saved. Green

Roofs In 2009, Toronto was the first North American city to implement a green-roof bylaw, which requires all new construction to feature a green roof of no less area than 2,000 square metres. How does a green roof help benefit condos such as Tridels The
Republic condo and North Toronto Collegiate Institute? By providing insulation, absorbing heat and collecting rainwater, not to mention helping to clean the air. Rainwater Harvesting You may never say Rain, rain go away, come again some other day, when you hear this: A University of Guelph study found that rainwater harvesting (that is, capturing rainwater runoff and storing it for use later) could decrease household potable water demands by as much as 47 percent. One

company thats implemented rainwater harvesting is IKEA Canada. At its new location in Richmond Hill, Ont., impermeable pavement absorbs rainwater and helps to improve drainage. (And this is just one of the sustainable features included herethe new store also boasts reflective rooftop to minimize solar gain, occupancy sensors and fans to reduce heating requirements, and much more). Electric Cars Now non-car owners in Montreal who opt to take public transit and to walk or ride their bikes as a way to reduce their carbon footprint have an eco-friendly option when it comes to renting a car for those occasional times they need a vehicle. Communauto added a fleet of electric Nissan Leaf cars to their car-sharing service this year so you can get around
the city without feeling ridden with guilt about your greenhouse gas emissions.

Trade off with Canada [generic]

Lack of investment in Venezuelan oil means increased Canadian oil


Vanderklippe, 03/06/2013 (Nathan Vanderklippe, reporter at The Globe and Mail, Chavez's death opens door to Venezuela's oil
riches, The Globe and Mail, http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/chavezsdeath-opens-door-to-venezuelas-oil-riches/article9324112/?service=mobile) That could portend important

shifts for Canada, given the sheer size of Venezuelas reserves and their similarity to this the beginning of the end of Venezuela as an inefficient producer? And it probably is, said Robert Johnston, the director of energy and natural resources at the Eurasia
the Alberta oil sands. The question for Canada, especially, is is Group political risk firm. I dont think well see a big change in the next four or five years. If you look at the four or five years beyond that,

things could get very interesting. A revival in Venezuelas oil industry could draw investment dollars away from Canada, given the relatively low cost of producing heavy crude in the South American nation. A revival in production there could also pose new competitive threats to Canada as it seeks markets for its oil sands product.

Canadian oil sands trade off with Venezuela oil


Tissot, 2012 (Roger Tissot, an Alberta industry veteran who has become a roving independent business consultant, specializing in his native
South America, Why the health of Hugo Chavez matters to Albertas oil sands, Alberta Oil, 06/01/2012, http://www.albertaoilmagazine.com/2012/06/hugo-chavez-is-losing-his-hold-on-power-in-venezuela-should-albertas-oil-and-gas-sector-beworried/)

Albertas oil sands have been one of the benefactors of the fall from grace of PDVSA and the Venezuelan oil and gas industry during the Chavez presidency. His anti-U.S. rhetoric, plus the threat of nationalization and expropriation, caused some of Big Oils players to shift their capital elsewhere, notably to bitumen deposits located in landlocked northern Alberta, which has accelerated development of the resource. But a Chavez defeat in this falls presidential elections, and a return to the Venezuela and PDVSA of the early 1990s, could have the oil and gas industry flocking to Venezuela once again and focusing less on investing in a high-cost resource like the oil sands. While there might not be any threat of expropriation in Alberta, the fact is crude oil from the Orinoco is far cheaper to produce and transport than oil sands crude. Whats more, it only takes five days to move a supertanker from Venezuela to the U.S. Gulf Coast.

Trade off with Canada [Keystone]


Environmentally harmful keystone planned to replace Venezuela oil imports
Landers, 03/07/2013 (Jim Landers, writer for the Dallas News, Crumbling Venezuelan oil sector expected to remain hostile to U.S.
investment, Dallas News, http://www.dallasnews.com/business/energy/20130306-crumbling-venezuelan-oil-sector-expected-to-remainhostile-to-u.s.-investment.ece)

Canada wants to increase oil sands exports to the Gulf Coast via the Keystone XL pipeline, where the Canadian supplies are expected to displace U.S. imports of Venezuelan oil . The Obama administration has been reviewing TransCanadas application to build the pipeline, which m any environmental groups oppose because of climate change concerns. Venezuelas continued hostility is a reason why the United States should go ahead on the Keystone pipeline, Farnsworth said. It would mean positive benefits by delinking
American capital flowing to a regime that clearly doesnt like us. Chvez opponents were led in Octobers elections by Henrique Capriles, a former governor who ran on a platform sympathetic to free markets and the private sector, including in the oil business. Under

Chvez, much of the countrys oil revenue was directed to popular anti-poverty programs including discounted
heating oil through Citgo for 100,000 lower-income Americans. Dan Yergin, vice chairman of IHS and an energy historian, said managing the economy will be a challenge for Chvez successor. He leaves

behind an economy greatly weakened by spending, intervention, inflation, capital flight, and shortages. And, beyond Cuba, his effort to create an alliance against what he
called the U.S. empire managed only to enlist a few countries, Yergin said.

Venezuela oil production trades off with Keystone pipeline


Catteneo, 03/06/2013 (Claudia Catteneo, Western Business Columnist at the National Post and specializes in energy, business, and
policy issues shaping enterprise across the West, Will Chavezs death spoil oil sands party?, Financial Post, http://business.financialpost.com/2013/03/06/will-chavezs-death-spoil-oil-sands-party/) Barely five years ago, when Canadian pipelines could do no wrong and Canada was the darling of the United States oil industry, a joke making the rounds at Enbridge Inc.s expanding Houston base was that Hugo Chavez had been named Employee Of The Year. Hes done a lot to help

thanks to Venezuelas nationalization policies under Chavez that companies such as Enbridge were expanding aggressively to bring more Canadian oil to refineries in the U.S. Gulf, while oil majors that were pushed out of the South American country were redeploying their money and heavy oil expertise to Canadas oil sands. For Exxon Mobil Corp., Royal Dutch Shell PLC, Statoil ASA, Total SA, BP PLC, Canada was a good backup: it offered similarly large deposits, access to the U.S. market, as well as stable fiscal and political regimes. But much like Venezuelas loss was Canadas gain when Hugo Chavez was alive, his death on Tuesday could take some lustre away from oil sands if it leads to a
us, Stephen Letwin, who was in charge of Calgary-based Enbridges U.S. operation, said at the time. Indeed, it was

more pragmatic approach to oil development in Venezuela , as some expect. In addition, if oil production in Venezuela stabilizes, and U.S. production from tight oil continues to increase, the U.S. could feel less pressured to get in bed with Canada over the long term for its energy security as it prepares to decide whether to permit the Keystone XL pipeline from Alberta to Texas. But first, Venezuela must overcome big
challenges, and it will take a radical change in leadership mindset and many years to pull them off. They include: rebuilding its credibility as a secure place to invest, reverse policies that drove out international oil companies, make up for a lost decade of heavy oil development, steal the momentum away from the oil sands and fight for market share against other growing sources.

Keystone pipeline trades off with Venezuelan oil- crashes the economy
Sobczak, 03/11/2013 (Blake Sobczak, Reporter for EnergyWire and E&E Publishing, Pipeline could pose challenge to Venezuela's new
leadership, E&E Publishing, http://www.eenews.net/stories/1059977612) "There isn't

enough capacity to refine both the Canadian oil and the Venezuelan oil," said professor Erick Langer, director of the Center for Latin American Studies at Georgetown University and an expert on Venezuelan politics. "So if the pipeline is built, then Venezuela might be up a creek without a paddle, because they won't have anywhere else to refine the oil." Venezuela, one of the founding members of the Organization of the Petroleum Exporting

Countries, has been buffered from the impact of the domestic shale oil boom in the United States because of its proximity and its huge supplies of heavy crude. Many U.S. Gulf Coast refineries are tailored for processing "heavy" oil, which has a higher density and sulfur content than most domestically produced varieties and is often brought in from Mexico or Venezuela. Canada's vast oil sands also contain heavy oil. The

proposed Keystone XL pipeline would pump 830,000 barrels per day of the gooey bitumen from Alberta to the U.S. Gulf Coast, giving refiners such as Valero Energy Corp. an attractive alternative to Venezuelan crude. "Valero is already reducing the amount of heavy crude brought in from South America and Mexico," said spokesman Bill Day. "It's already been declining, and that will continue and accelerate once Keystone is operational." Valero's overall refining capacity is about 3 million barrels per day, although Day declined to offer specific figures regarding the various sources of the company's oil. Day cited price concerns and declining production in parts of Latin America, "whether it's because of dysfunction in Venezuela's oil production or because of the maturity of the fields," he explained. "That's why Valero's looking for additional sources of heavy crude, and there are vast supplies of relatively low-cost crude oil in Canada," he said. If too many U.S. refiners move to Canadian crude, it could jeopardize a key pillar of Venezuela's economy . Such a switch could also affect the political clout of Chvez's likely successor,
interim President and former Vice President Nicols Maduro. Chvez died of complications from cancer last week after more than 14 years in power. "Maduro does

not have the charisma Chvez had," Langer said. "He cannot afford to stop the social programs that came under Chvez, so he will probably have to undergird his own political ambitions with more money." If the United States were to back away from Venezuelan crude, Langer said, the South American nation would find itself in a difficult position. Unable to afford upgrading its own refining capacity, Venezuela would have to ship its crude halfway across the world -- a prospect that "makes no sense at all," Langer said. Missed
potential Venezuela relies on oil revenues for roughly 45 percent of its federal budget, according to the CIA World Factbook. The South American nation has long exported its heaviest crude to facilities in Texas or Louisiana, just a quick jaunt away by barge across the Gulf of Mexico. Chvez

was often criticized for failing to recognize the significance of U.S.-bound crude exports to his country's economy. Average daily U.S. imports of Venezuelan crude peaked at 1.394 million barrels per day in 1997, the year
before the elections that catapulted Chvez into the presidency. Since then, U.S. imports have dropped 35 percent to 906,000 barrels per day in 2012, according to figures from the U.S. Energy Information Administration.

Venezuela oil investment trades off with Canadian oil and Keystone Pipeline
McKenna, 05/2/2013 (Barrie McKenna, National Business Correspondent at The Globe and Mail, The secret threat to Canadas oil
sands, The Globe and Mail, http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/the-secret-threat-tocanadas-oil-sands/article11597201/) In recent years, Canada

has been winning the competitive battle to feed those refineries. Alberta oil has steadily displaced Mexican and Venezuelan crude in the U.S. market. But there is no certainty that shift will continue. Indeed, Venezuela and Mexico are showing tentative signs of getting their energy act together. Canada has benefited from the ineptitude of its energy producing rivals in the hemisphere. The state-run oil industries in Venezuela and Mexico are hobbled by inefficiencies, poor technology and under-investment in exploration. In spite of vast reserves, the two countries are producing less oil now than they did five years ago. U.S. imports of Venezuelan crude, for example, have dropped to less than a million barrels a day from 1.7 million barrels a day in 1997. Oil imports from Mexico have shrunk nearly 30 cent since 2006. New drilling technology and foreign investment cash could change all that. An often overlooked risk for Canadas oil patch is the possibility that both these underperforming competitors could start ramping up production and exports again. That would
exacerbate the already-significant price discount on Canadian crude in the U.S. market. It would also ratchet up pressure on Canadian producers to access alternative markets in China and India via pipelines to the West Coast. Politics and economics have held back Venezuela and Mexico. But the landscape in both countries is shifting. Hugo Chavez was an unexpected gift to the oil sands. Now that hes gone,

Venezuela has a much greater chance of shedding its image as an unstable and inefficient supplier of oil to the U.S. Venezuela has proven oil reserves of 211 billion barrels, eclipsing Canadas 175 billion barrels, according to the U.S. Energy
Information Administration. And in Mexico, newly installed President Enrique Pena Nieto is vowing to reform the countrys troubled oil industry and attract private investment, particularly to help develop deep offshore and shale reserves in the Gulf of Mexico. Mexico has nearly 11 billion barrels of proven oil reserves, but roughly twice that including potential unconventional and deepwater sources. Mexico is unlikely to privatize Petroleos Mexicanos the state-owned oil company known as Pemex. But Finance Minister Luis Videgaray acknowledged recently that Mexico cant do everything itself and there might be opportunities for private investors in unconventional oil and gas projects where Pemex clearly doesnt have either the capital or the expertise. Venezuela and Mexico have a long way to go to right their energy industries, and some tough political decisions to make. But if, and when, they do, Canada could be the biggest loser. More

Venezuelan and Mexican oil

coming into the U.S. would likely lead to an even larger discount on oil sands crude, which is already hampered by high extraction costs and limited pipeline capacity. The threat of new and more productive rivals underscores why projects such as the Keystone XL and Northern Gateway pipelines are so vital to Canada. The industry needs access
to markets before there is a gusher of rival capacity in the neighbourhood oil thats free of the extraction, transportation and environmental challenges of the oil sands.

Keystone pipeline trades off with Venezuelan oil


Jones, 04/18/2013 (Jeffrey Jones, Senior Reporter for Reuters, Canada swipes at Venezuela in push for U.S. approval of Keystone,
Reuters, http://www.reuters.com/article/2013/04/18/canada-energy-venezuela-idUSL2N0D51WU20130418) Despite frequent threats, Venezuela

has not shut off exports to the United States, but Oliver's remarks underline how high the stakes have become for Canada as a U.S. decision on Keystone XL looms. Prime
Minister Stephen Harper's Conservative government and Alberta Premier Alison Redford have aggressively lobbied U.S. politicians ahead of the Obama administration's decision, likely this summer, whether to approve the $5.3 billion TransCanada Corp proposal. Oliver is scheduled to travel to Washington and New York next week to meet with Republican and Democratic lawmakers as well as the media. Canada

and its oil industry say the project will bring energy security, jobs and growth to both countries as oil sands-derived crude flows to the largest refining market in the United States. The project faces strong opposition from environmentalists, who say it would vastly increase greenhouse gas emissions and risks of oil spills.
According to U.S. Energy Information Administration data, the United States imported 2.5 million barrels of oil a day from Canada last week, versus 709,000 from Venezuela. However, the

lion's share of the Venezuelan crude was used by Gulf Coast refineries, and only a fraction of the Canadian crude flowed to that region due to limited infrastructure to get it there. Tight export pipeline capacity in the United States has helped create a glut in Canada, and is cited as a key reason that Canadian heavy oil is deeply discounted in the fight for space to transport it. Oliver said he was not specifically seeking to cast aspersions on the competing oil supplier. "I'm not taking a shot. The reason I mention Venezuela is that Venezuelan oil is a large part of the oil that comes into the United States," he told reporters following his speech. " If our oil comes down, it will be displacing Venezuela oil. I'm just
simply commenting on that economic reality."

Venez oil preferable


Venezuelan oil preferable to Canadian oil
Catteneo, 03/06/2013 (Claudia Catteneo, Western Business Columnist at the National Post and specializes in energy, business, and
policy issues shaping enterprise across the West, Will Chavezs death spoil oil sands party?, Financial Post, http://business.financialpost.com/2013/03/06/will-chavezs-death-spoil-oil-sands-party/)

Venezuelas deposits were favoured over Albertas by the global oil industry because they are easier to produce, are geographically better-placed there are no costly open-pit mines and crude flows more easily to the surface and are easier to transport by tanker to the U.S. Gulf. Much of the heavy-oil refining capacity in the U.S. Gulf Coast that Canadian oil producers are trying to lock up was specifically designed to handle Venezuelas heavy oil. If Venezuela plays its cards right, Canada also faces a loss of expertise and labour. An estimated
3,000 Venezuelans migrated to oil jobs in Calgary, Fort McMurray and Edmonton after the dictator purged 18,000 from the national oil company nearly half its workforce for going on strike in the fall of 2002. Enrique, Sira senior director for IHS CERA, the energy consulting company, said he anticipates a significant

inflow of experienced, knowledgeable people, technical resources and capital flowing into Venezuela.

Keystone kills the environment

*Keystone uniquely destroys the environment and accelerates global warmingprevents switch to renewables
Smith & Brecher, no date (Brendan Smith is a co-founder of Voices for a Sustainability, director for the National Alliance for Fair
Employment, co-director of UCLA Law Schools Globalization and Labor Standards Project, and co-founder of Global Labor Strategies, a resource center focused on the impact of China, the global economic crisis and climate change, and Jeremy Brecher is a writer, historian, and activist who is the author of more than a dozen books on labor and social movements, Pipeline Climate Disaster: The Keystone XL Pipeline and Labor, Labor Network for Sustainability, http://www.labor4sustainability.org/articles/pipeline-climate-disaster-the-keystone-xl-pipeline-and-labor/)

The Keystone XL pipeline is a key link in an energy path that will lead to devastation for the American working families we are told it will provide better days. Heres why. Weve all heard about global warming caused by the emission of carbon and other greenhouse gasses into the atmosphere. Despite the claims of a political faction that it is a myth, there is a near-total consensus among climate scientists that it is real and that and that it will cause devastating climate change. That means rising sea levels, an ever-increasing number of extreme weather events like droughts, floods, and heat waves, and consequences like forest fires and species extinction . We can see these effects emerging right now. 2010 was tied with 2005 as the hottest year on record. Rising sea levels,
heat waves, forest fires, tornadoes, floods - their rising frequency and destructiveness are not in some distant future, but right now. As Scientific American recently noted, In this year alone massive blizzards have struck the U.S. Northeast, tornadoes have ripped through the nation, mighty rivers like the Mississippi and Missouri have flowed over their banks, and floodwaters have covered huge swaths of Australia as well as displaced more than five million people in China and devastated Colombia. And

this years natural disasters follow on

the heels of a staggering litany of extreme weather in 2010, from record floods in Nashville, Tenn., and Pakistan, to Russias crippling heat wave. Scientists calculate that the safe level for carbon in the atmosphere is 350 parts per millions. But we are already significantly over that level which is why we are already facing devastating climate change. Only by drastically limiting our carbon emissions can we limit still greater devastation. Why is a single pipeline the Keystone XL so important to this story? Because it is the key link in an energy strategy that will radically escalate carbon emissions still further. The energy strategy is to introduce large quantities of oil from Canadian tar sands. According to the US Department of Environmental Protection, the greenhouse gas emissions from Canadian oil sands crude oil will be more than 80% greater than oil refined in the US. Independent estimates run up to three times more global warming pollution than conventional oil. Once the Keystone XL is in place, a wide area of the US will become dependent on oil from Canadian tar sands. With no available alternative, pressure will grow to import more and more of it. Even more dangerous, the pipeline will lock in dependence on fossil fuels for decades to come and remove the pressure to convert to renewable alternatives. The Alberta tar sands are estimated to contain enough carbon to raise carbon emissions in the atmosphere by 200 parts per million. That would increase the current level of greenhouse gasses in the atmosphere by more than half. It would be more than enough to create more climate change than in the entire history of humanity on earth . It would also render pointless all other efforts to reduce greenhouse gas emissions . As leading climate scientist James Hanson put it, If the tar sands are thrown into the mix, it is essentially game over. There is no practical way to capture the co2 while burning oil. We cannot get back to a safe CO2 level if unconventional fossil fuels, like tar sands are exploited. There are also a multitude of other problems with the project. Tar sands extraction is already devastating native lands in Alberta. Other recently built pipelines are already leaking and spilling large quantities of oil into the US environment. The pipeline threatens the aquifer that is critical for Midwestern agriculture and drinking water. The tar sand oil carry some of the deadliest chemicals,
including nickel, vanadium, lead, chromium, mercury, arsenic, selenium, and benzene But isnt the Keystone XL pipeline part of a balanced energy policy? The trade union leaders letter to Secretary Clinton acknowledges the criticism that further

development of

Canadas oil sands puts in jeopardy U.S. efforts aimed at capping carbon emissions and greenhouse

gasses. It presents as an answer a position that has often been stated by spokespeople for US labor: Comprehensive energy and
environmental policy should strive to address climate concerns while simultaneously ensuring adequate supplies of reliable energy and promoting energy independence and national security. Such a balanced policy sounds reasonable. But the problem is that in practice it

means putting off the necessary sharp reductions in greenhouse gas emissions for further decades, guaranteeing that the climate catastrophe will grow worse and worse. Indeed, the letter goes on to say,
Alternative energy sources are generally still in developmental stages; therefore it is likely the U.S. Consumer will remain substantially dependent on carbon fuels for the next several decades. Any

policy based on the assumption that the US will remain substantially dependent on carbon fuels for the next several decades is condemning American working people, all Americans, and indeed the entire world to a fate worse than humanity has ever known.

Alt Energy

Renewables available and cheaper now- Keystone causes continued oil dependence
Smith & Brecher, no date (Brendan Smith is a co-founder of Voices for a Sustainability, director for the National Alliance for Fair
Employment, co-director of UCLA Law Schools Globalization and Labor Standards Project, and co-founder of Global Labor Strategies, a resource center focused on the impact of China, the global economic crisis and climate change, and Jeremy Brecher is a writer, historian, and activist who is the author of more than a dozen books on labor and social movements, Pipeline Climate Disaster: The Keystone XL Pipeline and Labor, Labor Network for Sustainability, http://www.labor4sustainability.org/articles/pipeline-climate-disaster-the-keystone-xl-pipeline-and-labor/)

Clean renewable energy and energy conservation are cheaper than new, unconventional fossil fuels. They are available right now. Many studies have shown that dollar for dollar they produce far more jobs including jobs for the very workers who might find jobs on the Keystone XL pipeline. Labor should reconsider the pipeline the same way the Teamsters reconsidered oil drilling in the Arctic. If labor is to use its political clout to secure more jobs, the best way to do so is to fight for a new energy economy that rapidly phases out carbon-emitting fossil fuels and even more rapidly replaces them with renewable energy and conservation. That is the only real way to provide better days for American workers.

Canada oil no good Canada oil sands destroy the environment and exacerbate climate change
Villarreal, 03/22/2013 (Ryan Villarreal, reports on foreign affairs with a focus on Latin America. He also covers human rights and
environmental issues worldwide, Canada Eyes Tar Sands Oil Boom In A Project That Could Damage The Environment And Destroy Ecosystems, International Business Times, http://www.ibtimes.com/canada-eyes-tar-sands-oil-boom-project-could-damage-environment-destroyecosystems-1130699#) The so-called tar

sands located in the Canadian province of Alberta are estimated to contain the third-largest proven oil reserves in the world, but their expanding development has raised concerns about indigenous rights and the environmental impact. Beneath a vast expanse of boreal forest about 54,000 square miles in area (roughly the size of the state of New York) sit three main oil deposits, containing an estimated 171 billion barrels of crude bitumen - a viscous tar-like form of petroleum -- in proven reserves. Saudi Arabia has the largest proven oil reserves, 260 billion barrels, followed by Venezuela with 211 billion barrels. But the key distinction is that those reserves are in the form of crude oil. Bitumen, on the other hand, requires a more energy-intensive process to extract, transport and refine. About one-fifth of the
bitumen is recoverable through open-pit mining, while the remainder requires more complex (and expensive) in situ methods such as steamassisted gravity drainage, or SAGD, which essentially involves drilling two horizontal wells into a deposit, pumping steam into the upper one and reducing the viscosity of the surrounding bitumen, allowing it to flow into the lower well for extraction. At present, Canada

produces about 1.6 million barrels of oil per day from the Albertan tar sands, with most activity focused on the region around the Athabasca River system, where the largest deposit sits. It plans to expand production to 3.5 million barrels per day by 2025. Canadas total current oil production amounts to 3.59 million barrels of oil per day, the sixth-highest amount in the world.
Saudi Arabia produces the most with 11.15 million barrels per day, followed by Russia (10.21 million), the U.S. (9.02 million), Iran (4.23 million) and China (4.07 million). The

Canadian governments intention to continue expanding development of the tar sands is clear, while environmental groups and local indigenous tribes -- referred to as First Nations -- are demanding a halt to oil extraction. *B+itumen is turned into oil through complex and energyintensive processes that cause widespread environmental damage, Greenpeace Canada says on its website. These processes pollute the Athabasca River, lace the air with toxins and convert farmland into wasteland. Large areas of the boreal forest are clearcut to make way for development in the tar sands, the fastest- growing source of greenhouse gas emissions in Canada, it adds. In January an independent environmental study commissioned by the Canadian government examined six lakes near tar sands surface mining sites and found increasing levels of petroleum-linked carcinogens over time in step with oil development. In this study,
with the exception of one lake very close to the oil sands, the levels of these contaminants did not exceed Canadian guidelines and were low compared to urban areas, said Adam Sweet, press secretary for the government ministry Environment Canada. The head researcher on the study, John P. Smol, a professor of biology at the University of Kingston, said that while current levels were not necessarily harmful, the health risks would increase over time. Its going

to get worse, said Smol, Reuters reports. Its not too late, but the trend is not looking good. This host of environmental issues has also affected the First Nations in the Athabasca region. Expansion of the tar

sands in my peoples homelands means a death sentence for our way for life, destruction of eco-systems vital to the continuation of our inherent treaty rights and massive contributions to catastrophic global climate change, a fate
we all share, said Chief Allan Adam of the Athabasca Chipewyan First Nation, in a recent statement. While current tar sands development is not taking place directly on First Nations land, it has affected the water systems and wildlife that they depend on and consider part of their cultural heritage. Crystal Lameman, a member of the Beaver Lake Cree First Nations, talked about how her people have witnessed declining numbers of caribou in areas near tar sands development sites, which they hunt both for food and as part of their traditions. There used to be thousands, Lameman said. Now there are only around 175 to 225. We have an obligation to care for these beings, she added. The Beaver Lake Cree are currently filing a lawsuit against the government, citing a violation of treaty rights which granted them to hunt freely on their land, though a trial date has not been set. Its a long process. They (the government) knows its a long process, Lameman said. But at least we can say were going about this in a legal way. Meanwhile, the Canadian government continues to issue permits and approve new projects. Keith Stewart, climate and energy campaign coordinator at Greenpeace Canada, said Ottawa has already approved projects that will increase oil production to 5 million barrels a day, with an additional increase of 4 million barrels in pending projects. If

theyre serious about assessing the environmental impact of these contaminants, then they need to stop approving new projects, Stewart said. But the gears of industry are already in motion and seem to be accelerating as Canada makes
long-term plans for transporting tar sands oil to global markets. In particular, Ottawa is waiting with bated breath for President Obama's decision about whether his administration will approve the controversial northern section of the Keystone XL oil pipeline that would allow Canada to transport tar sands oil down through the U.S. Midwest to the Texas Gulf Coast for export. Michael Levi, director of the program on energy security and climate change at the Council on Foreign Relations, said that the Keystone XL project is the most economically lucrative option for Canada, but its approval or rejection by the U.S. government is not likely to deter tar sands development. I dont imagine the Albertan government is just going to sit on top of that oil, Levi said. Canadas Plan B would be to route the oil through a twin pipeline system, known as the Enbridge Northern Gateway Project, through the province of British Columbia to the Pacific Coast, where it could be exported to Asia. The Enbridge project is currently undergoing environmental assessments but is not expected to move forward until a decision has been made on Keystone XL. As long as the Keystone option is open, all other pipelines are economically unattractive, Levi said. While the pipelines will determine how much oil can be transported and thus affect how much can be produced profitably, global

oil prices will

determine the overall profitability of developing Canadas tar sands.