Venezuela United States
United States -Trade- Venezuela
Recently Venezuela has been in the news more and more. Since the election of Hugo Chavez relations between the US and Venezuela have become more strained. Chavez's hard-line stance against the Bush administration is reminiscent of President Kennedy and Fidel Castro. Unlike Cuba however the United States will have a much harder time isolating Venezuela because it's a member of OPEC. Because of America's addiction to oil our country as whole is increasing unable to project diplomatic power in oil producing countries. This inability to diversify away from petroleum has given our enemies increased leverage.
There is another country with a seat in OPEC that has more confrontational leadership and that is Iran. Last week at an international OPEC meeting Hugo Chavez and Iranian president Mahmoud Ahmadinejad launched a verbal assault on the Bush administration and the United States. Chavez is quoted as saying the dollar is a worthless peace of paper. Both countries argued that they have seen lost profits because OPEC trades oil in dollars instead of other currencies like the Euro. The price of the dollar and the price of oil are inversely related the high the price of oil the lower the price for the dollar (6).Chavez points to the fact the dollar has depreciated against the Euro which means that Opec makes less money selling a barrel of oil in dollars than it would if it sold the same barrel in Euros. States like Saudi Arabia have maintained a warm relationship with the bush administration and because they are one of the largest oil distributors in the world, and they trade in dollars, there is slim chance that oil will be trade in anything other than dollars in the near future.
Venezuela and Iran also have been evolved in driving up the price of oil. No greater example of this was the gas spikes that took place after the Iranian revolution in the 1979. This should serve as a warning of what a rogue nation with oil can do. America had diplomatic relations with Iran even after the hostage crisis. Wile economic relations have been good with Venezuela the bush administration agenda of isolation and regime change could have blowback and push Venezuela closer to radicalization much like it did with Iran.
In 2002 there was a coup that tried to overthrow Hugo Chavez and tried to install Pedro Carmona. The United States recognized the government of Carmona but denies that it had any part in the coup attempt. The government of Venezuela says that it has radar images that indicate American aircraft and war ships were in the area around Venezuela. Since the attempt the government of President Chavez has taken a more confrontational stance against the United States.
About a week ago, President of Venezuela, Hugo Chavez announced that Venezuela would no longer need the help of anyone especially the IMF and the WB anymore. He criticized the other elected officials from the past when it concerned them even agreeing to the IMF or WB which he believed they perpetuated poverty and high inflation. Venezuela did a great job of paying off the debt to the WB five years before expected and then as soon as Chavez took office they paid off the IMF debt. Although they saved more than $8 million Chavez still asks them to “return what they owe to us”. Hugo Chavez is a very opinionated and is known for controversy in politics and well as several slashing comments and name-calling towards President Bush and the United States.
The Organization of the Petroleum Exporting Countries (OPEC) was created in 1960 to unify and protect the interests of oil-producing countries. OPEC's original members are Iran, Iraq, Kuwait, and Venezuela. Seven more members were added after and now there is a total of 12. OPEC members are responsible for half of the world's oil exports. According to wisegeek.com, OPEC prevents its members from being taken advantage of by industrialized countries, by ensuring that oil-exporting countries are paid a fair price for crude oil. Venezuela is one of the most dependable oil suppliers to the Hugo Chavez does a lot of criticizing against the United States but at the same time Venezuela benefits so much from America.
The United States-Venezuela relations have traditionally been close, characterized by an important trade and investment relationship. The US trade balance with Venezuela has been going for more than 22 years. The trade balance is some where from $-19,627.6 or more. Since 1985 Venezuela has traded with the US for different things. The import and export numbers are not consistent. They fluctuated through out the years of trade. A large portion of Venezuela's imports and exports has traditionally been provided by the United States.
In 1998, Venezuela exported US $9.157 billion of goods (52 percent of its exports) to the United States, with oil accounting for 57.6 percent of the total. Other exported goods included chemicals, iron and steel, and aluminum. In 1998, Venezuela imported US $6.520 billion (44 percent of its imports) from the United States. Machinery and transport equipment accounted for 53 percent of Venezuela's imports from the United States in 1998. In 1997, for example, when world oil prices fell by 33 percent, the value of Venezuela's exports declined from US $23.707 billion in 1997 to $17.564 billion in 1998, a fall of 25.9 percent. With oil prices rebounding in 2000, the value of exports rebounded to US $32.8 billion in 2000. (http://www.nationsencyclopedia.com/economies/Americas/Venezuela-INTERNATIONAL-TRADE.html)
Venezuela has also been running a negative balance of trade in services, as when Venezuelans take money out of the country by traveling abroad, or when they purchase foreign products, like automobiles, thereby subsidizing both the foreign manufacturer and the shipping companies that deliver the vehicle to them. In 1998, Venezuelans imported US $5.054 billion in services while exporting only US $1.457 billion. However, Venezuela's overall trade balance is positive. In 2000, that trade surplus reached US $18.1 billion, on imports of US $14.7 billion. It has been estimated that Venezuelans have invested US $50 billion abroad. In 1990, the country's foreign debt was estimated at US $38 billion, which the government has tried to reduce. The economy remained in depression in 2003, declining by 9.2% after an 8.9% fall in 2002. “Within the last year alone the level of imports and exports between the US and Venezuela has risen by 15%,” said Venamcham chief Edmond Saade (1). Political differences are not curtailing trade between the United States and Venezuela. It surged 36 percent in 2005 to end the year at $40.4 billion.
Venezuela a country of three that made it through the collapse of Gran Colombia 1830 where as the United States of America is the third largest country by size and population in the world. Venezuela was ruled by the military who “pumped” the oil industry and moved for social changes in the beginning of the 20th century. During the 19th and 20th century centuries, thirty-seven states were added to the original thirteen of the USA. The population of America, calculated from July 2007, was 301,139,947 to that of Venezuela's 26,023,528. The population growth rate of Venezuela almost doubles that of America with 1.486%. The percentage of ethnic groups in the United States consists of whites 81.7%, blacks 12.9%, Asians 4.2%, Amerindian and Alaska native 1%, native Hawaiian and Pacific Islander 0.2%. Venezuela's ethnic groups are Spanish, Italian, Portuguese, Arab, German, African, and Indigenous people.
The diversity of religions are greater in the US then Venezuela. The Protestant 52% in the US to Venezuela's 2%, but Venezuela is nominally Roman Catholic with 96% to 24% of the US, Mormon 2%, Jewish 1%, Muslim 1%, other 10%, and no religion at all was 10% in the US. The percentage of languages spoken in the United States are English 82.1%, Spanish 10%, Indo-European 3.8%, Asian and Pacific island 2.7%, and other languages is 0.7%. Venezuela's official language is Spanish but they have numerous indigenous dialects. Both countries have capitals; the United States is Washington, D.C., and Venezuela is Caracas. The administrative divisions of the United States consist of fifty states and one district called the District of Columbia were Venezuela has 23 states, 1 capital district (Distrito Federal), and 1 federal dependency (Dependencias Federales).
The chief of state since February 3, 1999 in Venezuela is President Hugo Chavez Frias and since January 20, 2001 is President George W. Bush for the US. The unemployment rate in the United States is 4.8% but is higher in Venezuela with 8.9%. The current balance in the United States because of the war in Iraq and trade is -$811.5 billion but Venezuela's current balance is an average high at $27.15 billion. The currency code in the United States is the US dollar to that of Venezuela's bolivar (VEB). The military branches in the United States and Venezuela consist of the same branches with Army, Naval (includes marines), Air Force, and Coast Guard. The US still remains the world's most powerful nation state.
Venezuela and the United States are very similar as far as functions in the economy but are very different as far as culture and way of living. When it comes to a trade relationship between these two developed and booming countries their goals are the same. The case can be made that regardless of what the governments of our two nation's think of each other they both need each other. When Venezuela economic situation becomes better America will want to continue to trade with this nation so we need to be thinking of ways of developing long term relations. Venezuela is not going away and its economic impact on the world will only increase over time. Our current policy of isolation has already failed and our blind commitment to our position is only making the situation worse. The coup attempt failed and now we have to deal with whatever government the people of Venezuela choose. We should respect their decision and try to help them, and ourselves, achieve peace and friendly relations on our continent.
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