This commentary is not directly about oil – but it concerns the location of the largest oil deposits in the world, in our own neighborhood, which we have acquiesced in allowing them to be dominated by adversaries.
In the 1990s I was doing considerable business in SE Asia and was in and out of Hong Kong frequently. In July, 1996, I was asked to give an after dinner talk to a mixed audience in a rather rustic setting in Northern California on what I expected would “Happen to Hong Kong when China Takes it Over”. The transfer of Hong Kong from British to Chinese rule was scheduled for the following March.
Although scheduled to arrive onsite a few days early, due to flight delays, meetings, and so on, I arrived just before dinner in a suit which I was contemplating burning if I ever got it off. I told the audience that I thought the subject needed to be changed to: “What will Happen to Us When Hong Kong takes over China”. My thesis was that combining the 24-hour, 7-day-week, full-bore capitalistic, entrepreneurial energy of Hong Kong and its capital, management experience, and aggressiveness with the largest, cheapest labor force in the world would be a problem for us, not them – and they would bury us. Many acquaintances were already moving plants and offices to Shanghai.
When asked what we should do about it, I said we should embrace Latin America; a continent with a shared history of European colonialism, Christian faith and values, and a Western Civilization heritage; a continent with a large population and rich in resources. We should establish treaties, economic ties, and other strong relationships with the countries there. I saw no other way we could counter China’s size in any contest for world dominance.
What have we done about Latin America? Almost nothing; mostly we ignored it. Although in November, 2013, Secretary of State John Kerry announced to the Organization of American States that the Monroe Doctrine of the US was no longer in effect; another foreign policy action which cannot be justified by rational analysis. This decision was consistent with long-term policy neglect of other countries in our own hemisphere. Many of them do not even have ambassadors. We have increasingly antagonized, alienated, estranged, and withdrawn from, Latin America.
This neglect has been exploited by China and Iran who have been penetrating the area for many years. Iran has expanded its diplomatic, intelligence, fund-raising, and Hezbollah presence throughout Latin America. After Kerry’s announcement, Russia announced their intent to build naval bases in Venezuela and Nicaragua, the same countries where Iran has reportedly built missile bases. Failure to do this yet probably has more to do with the drop of oil price than lack of intent. Of course, Kerry’s announcement was well received by both Venezuela and Nicaragua and their Marxist dependents and allies: Bolivia, Ecuador, and Cuba.
The attitude toward Latin America among US foreign policy commentators is obvious. After the election several journals had special sections of commentary regarding their analysis of what foreign policy will be with the new Trump Administration. I reviewed and issue of Foreign Affairs which had a section titled Trump Time. This was a special section with multiple authors with their opinions regarding various subjects which they considered challenges facing the new Trump Administration and discussions of various aspects of foreign policy. Similar reviews and analyses appeared in other journals as well. I presume the discussions pertain to the issues considered of primary importance by the editors and the authors. Latin America is not mentioned; it is the Missing Continent.
We ignore Latin America at our peril. We maintain armies in the Middle East and Central Asia and have an uncertain supply and volatile price of oil when the largest oil deposits in the world are in Venezuela, a country falling apart, and Colombia, a long-term friend, and we offer no help. We need to strengthen our bonds with these countries in particular and Latin America in general.
Venezuelan Agonistes
Venezuela is in terrible shape. The social/economic situation there is so bad the New York Times and other mainstream media, never eager to point out the failures of Socialism, have taken notice. The country with the largest oil deposits in the world cannot feed its own people. Even the Organization of American States, one of the most lethargic of international organizations, is criticizing Venezuelan government policies. The oil industry is so mis-managed it is importing oil from the US for its refineries. The government is supplying oil and propping up its Communist brethren in Cuba and Nicaragua while a generation of its own children will be stunted by malnourishment. Russian, Iranian, and Chinese influence and presence in the country are growing less than a five-hour flight (or a medium missile range) from the US.
What are we doing about it? We are still buying between nearly 800,000 barrels of oil per day from Venezuela and following a common US foreign policy practice: Trade with our adversaries and make them rich. We send troops and aid missions around the far corners of the earth on so-called humanitarian missions but ignore a true humanitarian problem of a long-standing friend in our own neighborhood. Is the problem that we do not want to publicize the latest blatant case of the failure of Socialism? Venezuela is a great candidate for a Case Study of how Socialism can wreck a rich and prosperous economy in less than 20 years.
What can we do about it? Headlines today say the Trump Administration is considering sanctions. These seem to include cutting off purchases of Venezuelan oil by American companies. Cutting off income to the Venezuelans is not a policy which will accomplish much for the starving population. It probably will not be successful because the Chinese will then buy the oil anyway.
We need to find a policy that will get some direct help to Venezuelans. I think we should try Wal-Mart. CITGO is an American oil company owned by Venezuela which is in debt to the Russians (Rosneft) and the Russians are considering foreclosure and then would control the company. The US should impound its assets and payments by American companies for Venezuelan oil and put them in an account in trust for the Venezuelan people. These funds can then be accessed on-line by individual Venezuelans who can go to a computer terminal, enter their ID number and make a withdrawal every two weeks. For those without access to the internet, terminals can be set up at Wal Mart facilities. The withdrawals can be in the form of a currency or pre-paid credit cards redeemable at Wal-Mart for food and daily hygiene items. The currency and cards would expire in six weeks to reduce value to criminals. Redemptions of the currency or cards would be covered from the Trust Account.
A lot of details will need worked out: The computer systems, the logistics, and security. I have every confidence that this country has the ability to put the right people together in a room – and I know some of such people – and the details can be worked out in less than 48 hours. We could then start moving food and soap and toothpaste to our suffering neighbors – if not with Wal-Mart, then by another means; we need to help them.