As Hugo Chávez battles cancer and prepares to run in the upcoming Venezuelan presidential election, a group of experts gathered at AEI on Thursday to discuss the implications of this tenuous situation on Venezuela’s oil deals with China.
Roger Noriega of AEI initiated the discussion by outlining the deepening economic relationship between the two countries, which coincides with a weakening economic bond between Venezuela and the United States. Evan Ellis of the Strategic Studies Institute then presented a history of the “delicate dance of mutual interest” between China and Venezuela — how China has come to lock in oil prices at the lowest possible rates — and how Venezuela has used its financial support to maintain its current political system.
Ellis also elaborated on the complicated situation China faces as Venezuela approaches a possible change in administration. If Chávez’s rival candidate Henrique Capriles Radonski can prove a more stable trading partner, it may be in China’s best interests to rally for his election.
Vanessa Neumann of the Foreign Policy Research Institute gave a broader overview of the China-Venezuela agreements and offered a Venezuelan’s perspective on the relationship. She claimed that, for the Venezuelan people, it is “galling and ironic” that Chavez is “privatizing” the Venezuelan state-owned oil company, Petróleos de Venezuela. Nonetheless, she believes China’s investments in Venezuela have improved the country’s infrastructure, which is imperative to its continued economic growth.
In the last six years, under the cloak of Washington's indifference, the People's Republic of China has dramatically increased its participation in Venezuela's oil sector, stepping in as President Hugo Chávez displaces U.S., European and even local investors. Chinese imports of Venezuelan oil have increased tenfold in five years, while U.S. imports of Venezuela’s traditional source of petroleum is one-third what it was 10 years ago. China has contributed $24 billion to Chávez’s secretive slush fund over the past year and half, satisfying Caracas’s desperate need for cash in exchange for oil at artificially low prices. What does China stand to lose when Chávez dies, and what will Beijing do to preserve its sweetheart deals with Venezuela? Join a panel discussion on this timely and significant topic.