Chavez Shuns Neighbors for Dealing With US

By Howard Williams | July 7, 2008 | 8:17 PM EDT

( - Venezuelan President Hugo Chavez says he is withdrawing from a regional bloc because fellow members Colombia and Peru have signed free trade agreements with the United States. Doing so "fatally wounded" hopes of an independent regional trade alliance, he said.

The U.S. arch-critic frequently has lashed out at bilateral free trade agreements Washington has been negotiating with Latin American nations, charging that they favor multinational - largely U.S. - corporations at the expense of poor communities.

Chavez already has announced plans to set up what he says will be a strategic political and economic alliance of South American countries, independent of U.S. pressure.

The Bolivarian Alternative for the Americas (ALBA), to be financed largely with Venezuela's oil riches, aims to export Chavez's socialist "Bolivarian Revolution," named after 19th century Latin American independence champion Simon Bolivar.

Chavez announced Venezuela's withdrawal from the five-member Andean Community of Nations during a summit in Paraguay that also involved the leaders of Bolivia and Uruguay.

The meeting approved in principle a plan to develop an oil and gas pipeline project to feed Venezuelan oil and Bolivian natural gas to each other and to the other two nations.

Colombia reacted to Chavez's announcement with cautious concern. President Alvaro Uribe said the decision warranted broad, detailed and quiet analysis.

Uribe is concerned because of his country's close physical and economic ties with Venezuela. The two countries are currently building a gas pipeline and a multi-purpose pipeline conducting Venezuelan oil exports to Asia through Colombia.

Local analysts say the Chavez move is designed to "punish" Colombia for co-operating with the U.S. on political and economic matters and helping Washington to push Venezuela and Bolivia into economic isolation.

Nonetheless, Chavez so far has not announced any plan to pull out of the pipeline deal with Colombia.

Peru is the other Andean Community member to annoy Chavez by signing an FTA with the U.S. It is in the midst of a presidential election, with Chavez ally Ollanta Humala the current front-runner.

Venezuela's decision to quit the Andean Community followed an announcement earlier this month that it had signed a new oil pact with Cuba, boosting oil deliveries to the communist nation by 70,000 barrels a day and pumping in up to $1 billion to "rehabilitate" an aging, Soviet-era oil refinery on the island.

According to several published reports, Venezuela currently exports about 90,000 barrels of crude oil a day to Cuba. There are also well-documented reports that Fidel Castro's regime is hundreds of millions of dollars in arrears to Venezuela. Chavez is Castro's closest ally in the region.

The Cuban deal and the planned new regional oil and gas supply network are just the latest steps by Chavez to thumb his nose at Washington and its allies.

Already this month, Venezuela has taken control of two oil fields operated by Total of France and ENI of Italy after the two European oil giants chose not to re-negotiate their lease deals. Chavez had demanded a majority stake in the European countries' Venezuelan operations.

Chavez is also demanding that foreign oil companies pay higher taxes and royalties, retroactively. British-owned BP has been ordered to pay back taxes of $61.4 million for the period 2002-2004.

Venezuela is the world's fifth-largest oil exporter and a key supplier to the U.S. market.

Subscribe to the free daily E-Brief.

Send a Letter to the Editor about this article.