Glenn Greenwald: President Obama sanctions Venezuela, embraces Saudi Arabia.

[bigtree]

14. on point

U.S. opposition to Venezuela has always been about the oil and protecting the Saudi monopoly on the market.

Here's a 2006 headline about an appearance by National Intelligence Director John Negroponte before the Senate Intelligence committee Feb.2 that disappeared from the article it was linked to:

"National Intelligence Director John Negroponte told Congress on Thursday that Iran probably does not yet have nuclear weapons, nor has it obtained the material central to producing them. Still, Negroponte called Iran's program a matter of "highest concern."

What Negroponte said in the hearing was that Iran has a stockpile of ballistic missiles, to, as he admitted, repel foreign assaults on their country. A further 'threat' from Iran that he expressed was the government's hostility to the United States and its interests.

So, what the Bush administration presented to the nation as justification for their proposed subversion of the elected government in Iran, and the raising of the possibility of retaliatory action against what they asserted was Iran's 'ambition' to develop nuclear weapons, was a weak, imperialistic argument based on Bush's imagined right to dictate our agenda to countries in that region at the point of our nation's military force.

The most revealing argument that the Bush administration made against Iran was their reference to Iran's oil and the influence Iran gains by trading with regional actors like Russia and Pakistan. Negroponte said in the Feb.2, 2006 hearing that a combination of rising demand for energy and instability in oil-producing regions “is increasing the geopolitical leverage of key producing states”.

"Record oil revenues and diversification of its trading partners are further strengthening the Tehran government." Negroponte warned the senate committee.

Oil was also on Negroponte's mind as he blasted Venezuelan President Hugo Chavez for his increasing relationship with Iran. Chavez ``is seeking closer economic, military and diplomatic ties with Iran and North Korea,'' he said. Negroponte worried aloud in his statement that Chavez is looking to dump the U.S. as an oil trading partner in favor of customers like Russia and China. Although the U.S. was then getting about 60% of Venezuela's oil exports, Venezuela had reportedly planned to double their exports to China by the end of the year.

Am I the only one who thinks it was out of line for the Director of National Intelligence to be musing about oil exports and alternative fuels? Not so unusual if you already consider that all of the Bush's military adventures into the Middle East were driven by their obsession for oil as well as for power.

Secretary of Torture, Don Rumsfeld, likened Hugo Chavez to Hitler. "I mean, we've got Chavez in Venezuela with a lot of oil money," Rumsfeld told the National Press Club. "He's a person who was elected legally _ just as Adolf Hitler was elected legally _ and then consolidated power and now . . .

Fast forward 14 or so years later, and the US government is still working to demonize Venezuela and they, in turn, are still moving closer to China...

from Bloomberg:

Finance Minister Rodolfo Marco Torres to Beijing. Torres spent the first week of December in China, during which he tweeted photos of his meetings with Chinese officials and bankers.

Continuamos trabajo en Beijing. Reunidos con el Sr Zhou Xiaochuan, Gobernador del Banco Popular de China y directores http://t.co/V8yolUrjsApic.twitter.com/V8yolUrjsA
]
— Rodolfo Marco Torres (@RMarcoTorres) December 4, 2014

The late Hugo Chávez cozied up to China as part of his drive to curb U.S. influence in the Americas. Maduro, like his predecessor, has relied on Beijing to underwrite Venezuela’s flagging socialist revolution and finance the country’s gaping fiscal deficits (this year’s shortfall could amount to 15 percent of gross domestic product). Without loans from the Chinese, Maduro’s government might not have been able to weather a deep economic crisis. Under his watch, Venezuelans have had to put up with massive shortages of basic goods, the world’s highest inflation rate, and a steep currency devaluation.

Beijing has so far been happy to oblige Maduro. Since 2007, China has advanced Venezuela about $46 billion in loans repayable in oil, of which about $20 billion has been repaid. The latest loan agreement was in July, when Chinese President Xi Jinping visited the country and pledged $5.69 billion in credits...

Beijing’s largesse has come at a price. Chinese goods are flooding the Venezuelan market, as many Chinese credits are tied to the import of products and services. The low-priced imports are squeezing local companies.

Problem for Venezuela is that most of the money from oil trade with China is going to pay off their debt to the Communist giant, keeping Venezuela well within the US orbit.

from Quartz:

Every day, about 500,000 barrels of Venezuelan oil are exported to China, half of which go to pay off the country’s loans from Beijing. As of last month, outstanding debt totaled $17 billion, according to Venezuela’s vice president for the economy. The Maduro administration plans to pay off the additional loans by producing and exporting more oil—an additional 100,000 barrels (paywall) a day. Venezuela sits on the world’s largest proven oil reserves.

So far, Sino-Venezuelan ties seem as stable as when Hugo Chávez, an ally of Beijing’s, was still leading the country. Aside from an embarrassing rendition of Venezuela’s national anthem, Xi’s state visit to Caracas went on without a hitch. The two state leaders signed about 38 economic agreements, deals to explore mining reserves, expand public transport, and launch another Venezuelan satellite. But with an increasing amount of Venezuelan oil going to repay its debts to China, the relationship may not stay unstrained for long.

It serves the US govt's interests to have Venezuela's economy collapse completely in the wake and midst of falling oil prices and China's unwillingness to loan them any more money; while the Saudis remain financially comfortable enough to ride out the price drop with their reserve of revenue. What does concern the US, though, is the inevitable move by Venezuelan leaders toward autocracy and more privatization of industry, including the oil interests in the country. That's what I believe the Obama administration is hedging against.

one more view from the NYT:

A HISTORIC change of roles is at the heart of the clamor and turmoil over the collapse of oil prices, which have plummeted by 50 percent since September. For decades, Saudi Arabia, backed by the Persian Gulf emirates, was described as the “swing producer.” With its immense production capacity, it could raise or lower its output to help the global market adjust to shortages or surpluses.

But on Nov. 27, at the OPEC meeting in Vienna, Saudi Arabia effectively resigned from that role and OPEC handed over all responsibility for oil prices to the market, which the Saudi oil minister, Ali Al-Naimi, predicted would “stabilize itself eventually.” OPEC’s decision was hardly unanimous. Venezuela and Iran, their economies in deep trouble, lobbied hard for production cutbacks, to no avail. Afterward, Iran accused Saudi Arabia of waging an “oil war” and being part of a “plot” against it.

By leaving oil prices to the market, Saudi Arabia and the emirates also passed the responsibility as de facto swing producer to a country that hardly expected it — the United States. This approach is expected to continue with the accession of the new Saudi king, Salman, following the death on Friday of King Abdullah. And it means that changes in American production will now, along with that of Persian Gulf producers, also have a major influence on global oil prices...

...several things postponed a price collapse. One was the growing consumption in the developing world, led by China. Another was turmoil in Libya, South Sudan and other countries that reduced supply. Over a million barrels per day were also taken off the market by sanctions imposed on Iran. Without that big surge of shale oil from the United States, it is highly likely that those sanctions would have failed. Prices would have spiked, countries seeking cheaper oil would have broken ranks — and Iran might not be at the nuclear negotiating table today...

... most immediately, they were looking at two neighbors. They did not want to give up markets to Iraq, a country they see as an Iranian satellite, and whose output is increasing. And they certainly did not want to make way for Iran, which they thought might come to a nuclear deal with the United States and its allies, bringing that missing Iranian oil back into the market.

... Venezuela is highly vulnerable to turmoil and even financial collapse. Russia is coping not only with lower prices for oil, which provides over 40 percent of government revenues, but with Ukraine-related sanctions, and seems headed into a deep recession.