Nikolas Kozloff

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As the presidential election nears, Republicans are relying on their usual fear-mongering tactics by playing on supposed external threats such as Iran.  Already it seems such a strategy seems to have moved Obama to the right with the president going out of his way to issue stern warnings toward the Islamic Republic during his State of the Union address.  What is more, in a worrying development the Republicans are doing their utmost to link Iran with the Latin American populist left and Hugo Chávez of Venezuela, which could have undesirable and unforeseen consequences on U.S. foreign policy.

 

According to secret U.S. State Department cables recently released by whistle-blowing outfit WikiLeaks, American diplomats from Hillary Clinton on down have little evidence of a significant military alliance between Iran and Venezuela, yet that didn't stop surging Republican presidential candidate Rick Santorum from exaggerating the threat from this quarter in a recent debate.  Ileana Ros-Lehtinen, the Chair of the House Foreign Relations Committee, has meanwhile been holding hearings on the supposed Iranian-Latin American threat to the U.S.

 

Hopefully the Democrats will not seek to echo the Chávez-Ahmadinejad military angle which will only serve to further inflame the tattered state of U.S.-Venezuelan relations, yet it's no secret that the Obama administration, like its predecessor, would like to rid itself of the populist left current in Latin America.  Such combative posturing is not only regrettable but counter-productive.  Indeed, further cables released by WikiLeaks suggest that, with a little bit of effort, Washington might be able to mend fences with Chávez.  Whatever the Venezuelan leader may say in public about the U.S. and its wider objectives throughout the region, in private Chávez has been more than happy to search for common ground and extend an olive branch. 

 

Chávez's Charm Offensive

 

Judging from the cables Chávez was particularly amenable to friendly diplomacy prior to the April, 2002 coup which briefly toppled him from power.  Indeed, U.S. diplomats had numerous opportunities to build a constructive relationship with Chávez but squandered their chances.  In 1998, for example, political neophyte Chávez approached the U.S. Embassy in advance of Venezuela's upcoming election. 

 

Then a presidential candidate, Chávez had criticized U.S. free trade and neo-liberalism, yet in private discussions with the American ambassador in Caracas the firebrand politician was on his "best behavior" and stressed that his own political success depended "in good measure on his relationship with the U.S."  Buttering up the Americans, Chávez said he admired the U.S., "which he traced to his early love of baseball and his contact with U.S. military officers during his service in the armed forces." 

 

Six years earlier, while still a military officer, Chávez had launched an aborted coup against the pro-U.S. government of Carlos Andrés Pérez, and during his discussion with the ambassador Chávez regretted that his relationship with the U.S. had suffered as a result.  In hindsight, Chávez said, the 1992 coup attempt was "incorrect," and the aspiring candidate was careful to stress his commitment to democratic principles. 

 

U.S. Ambassador to Chávez: Don't Push Us

 

Unconvinced by Chávez's charm offensive, U.S. ambassador John Maisto bluntly informed the presidential aspirant that there was "palpable concern" in Washington about Venezuela's political and economic situation.  Foreign investment required clear and reliable rules, the ambassador added, and uncertainty about Chávez's fiery rhetoric had given severe pause to investors. 

 

The Americans were particularly concerned about Chávez's plans to convene a constitutional assembly if elected, which "would stop foreign investment cold" and leave Venezuela "without the foreign capital it needs for economic growth."  To be sure, the U.S. ambassador conceded, Venezuela's institutions were "tattered" but nevertheless ought to be preserved.  Chávez's rhetoric, on the other hand, was "provocative and confusing."  At times, the ambassador remarked, Chávez sounded as if he was "promoting not a constitutional assembly but a revolutionary junta."

 

Speaking with the Americans, Chávez voiced his support for a reform of the state, which in his view needed to be "re-legitimized" in the eyes of the people.  On the other hand, Chávez was quick to add, the new assembly would not be a revolutionary junta but rather an elected body with sharply defined responsibilities.  Hardly a strident economic nationalist in private, Chávez also told the ambassador that he was in favor of privatizing all state assets save Venezuelan oil company PdVSA.

 

In an effort to further mollify the U.S. the aspiring candidate added that he would respect all business commitments and international agreements while working to improve counternarcotics cooperation.  "My God," Chávez reportedly declared, "my government's success will depend on attracting investment."  In a further over the top remark, Chávez said "I hope God grants me the opportunity" to prove a commitment to democracy, economic reform and privatization. 

 

Going even further, the presidential candidate added that he was keenly aware that whoever he selected for his future cabinet would "send a strong signal to investors" about the tenor of his future government.  Hinting to the Americans that they had nothing to fear, Chávez said "you will be surprised.  I will pick a very good group."

 

Skeptical Clinton White House

 

The evidence suggests that, on balance, Chávez continued to seek good relations with the U.S.  Shortly after he was elected president in early 1999, Chávez wrote U.S. president Bill Clinton personally, expressing Venezuela's interest in "renewing and reforging" relations with Washington.  "We certainly share the desire for a solid and vibrant democracy," Chávez wrote, "the kind envisioned and practiced by men such as Abraham Lincoln and Simón Bolívar." 

 

Still eager to please, Chávez defended his constitutional assembly and was careful to point out that former U.S. president Jimmy Carter no less had praised Venezuela's "democratic revolution."  In the economic sphere meanwhile, Venezuela was "open to all types of U.S. private and public sector initiatives to advance our countries' mutual development."  On counter-narcotics, Chávez likewise reiterated his intention to fight drug trafficking and "all crimes related to that disease."

 

In Caracas, Maisto was apparently still unconvinced by Chávez's charm offensive.  Speaking to top Venezuelan officials, the U.S. ambassador declared tersely that Chávez must develop a "concrete agenda of agreements in areas of mutual interest," such as a bilateral investment treaty and expanded narcotics cooperation.  Moreover, Washington sought a "clear understanding" permitting U.S. aircraft to overfly Venezuela as part of a forward operating location agreement in Curacao and Aruba.  Ultimately, remarked the ever skeptical Maisto, "nice words are fine, but…the substance of the bilateral relationship will be determined by concrete cooperation."

 

Relations Take a Nosedive

 

If U.S.-Venezuelan relations were frosty during the Clinton era, they became downright combative in the Bush years.  WikiLeaks cables show that, far from seeking to repair tattered diplomatic ties, the Bush White House ratcheted up tensions.  In an effort to turn up the pressure on Chávez, Washington sent financial aid to the rightist opposition in Venezuela even as Chávez derided the U.S. drug war in Latin America and sought to exert greater control over his country's oil industry.  In April, 2002 a coup launched by rightists who had received U.S. financial assistance briefly unseated Chávez from power.

 

In the wake of the coup, U.S. diplomats were hardly apologetic for their meddling in Venezuelan affairs.  In Caracas, the American Chargé d'Affaires asked Venezuelan Vice President José Vicente Rangel how it would be possible for relations to improve in light of Chávez's anti-imperialist declarations.  Sarcastically turning the tables, the Chargé asked "how the government of Venezuela could characterize any of us as imperialist, when it was Venezuela, not the U.S. government, that owned refineries and gas stations in the U.S., when it was Venezuela that could say whether we could or couldn't use their air space for the…Forward Operation Location flights?" 

 

From there, the conversation degenerated with Rangel accusing the U.S. of plotting the 2002 coup.  When the Vice President added that Venezuela had hard proof of Bush administration complicity, the Chargé shot back that if Chávez had such proof it should publish it.  Furthermore, the American diplomat added, the U.S. government had itself already investigated Venezuela's allegations and come up with nothing.  Preposterously, the diplomat declared that "our recent investigations…into the WMD issue showed we could do an honest investigation."

 

Failure to "Reset"

 

With the election of Obama, Chávez seems to have hoped that relations might be set right.  In March, 2009 Chávez told U.S. legislators that he was hoping for a "reset" with Washington and reportedly even expressed interest in renewing counternarcotics cooperation.  The following month, Chávez met Obama during a Summit of the Americas summit in Port of Spain, Trinidad. 

 

Reportedly, Obama told the Venezuelan president that "we will have our differences but I will never get involved in things internal to Venezuela." Chávez claims to have responded, "Believe me that we want to talk but it has not been possible."  Chávez then added, in Spanish and English, "Look, I am going to repeat the same thing I said eight years ago to your predecessor, 'I want to be your friend.  We want to talk.'"

 

It seemed like a propitious start, yet Obama, like his predecessors, would squander opportunity by pursuing an aggressive foreign policy in the region.  Chávez was particularly irked by U.S. handling of the coup in Honduras and Washington's installation of seven military bases in Colombia.  During a TV interview, the Venezuelan remarked "Obama may end up being . . . a great frustration . . . he may end up being only a token used by the empire that continues acting against and attacking the world in a manner even more ferocious and aggressive than in the times of Bush, which is a lot to say."

 

From Clinton to Bush to Obama, the U.S. had numerous attempts to smooth over relations with Chávez but failed to do so.  The WikiLeaks cache ends in early 2010, but it's no secret that Chávez continues to feel frustrated by the course of U.S. foreign policy.  Will the Obama White House further ratchet up pressure in response to calls from the major Republican presidential candidates?  Adopting such a policy would be importunate at any time but particularly self defeating now as Chávez faces a tough reelection battle in October.  If he feels that Obama is determined to stamp out Venezuela's so-called "Bolivarian Revolution," Chávez will surely lash out and relations might be tarnished to an irreparable degree.

As the Venezuelan presidential election approaches in October, Washington is undoubtedly hoping that Hugo Chávez will go down to stinging electoral defeat and that the populist leader's geopolitical alliance will crumble and come to an ignominious end. Of particular concern to both the Bush and Obama administrations has been Nicaragua, a country which moved into Chávez's orbit when Daniel Ortega, a leader of the Sandinista Revolution, captured the presidency in 2006. According to secret cables recently released by whistle-blowing outfit WikiLeaks, the State Department has been furious with Ortega for conducting an independent foreign policy, and U.S. diplomats have resorted to threats and intimidation in order to head off the Venezuelan-Nicaraguan alliance.

 

American diplomats in Managua would have surely preferred to see a continuation of the Enrique Bolaños administration, which predated the Ortega regime and proved much more amenable to Washington's conservative agenda. In early 2006, prior to Ortega's election, the Nicaraguans told the U.S. ambassador that they would not back Venezuela for a non-permanent seat on the United Nations Security Council and would support Guatemala for the spot instead. In fact, Nicaragua went so far as to act as a kind of ringleader against Venezuela, rounding up Central American support for Guatemala in an effort to "forestall" Chávez's rising influence.

 

As the election neared, the Bush administration became increasingly concerned about what an Ortega win might mean at the regional level. In Managua, the American ambassador complained to the Nicaraguans about "the pattern of harassment directed by the Venezuelan government" against U.S. diplomats. The Nicaraguan Foreign Minister sympathized, adding that he was worried about "Chávez's interest in Sandinista (FSLN) leader Daniel Ortega's winning the November election." In a follow up meeting, the Americans told the Bolaños government that Washington was closely monitoring Chávez, who had proposed an oil deal with the Sandinistas.

 

Washington Loses a Key Ally

 

With the re-election of Ortega in late 2006, who had previously served as president of Nicaragua at the height of the U.S.-funded Contra War of the 1980s, the Bush administration's foremost fear had come to pass. Flying down to Managua, Assistant Secretary of State Thomas Shannon met with President elect Ortega in the conference room of the FSLN Secretariat. After Ortega announced that he would seek a trade agreement with Venezuela, Shannon remarked sternly that "President Chávez knows what he has to do to improve relations. He is the author of the present confrontation."

 

If that was not clear enough, U.S. diplomats later warned the incoming Ortega administration that Washington would respect Nicaraguan sovereignty, but "if the FSLN government were, for example, to recruit hundreds of Venezuelans to man its ministries, we would be concerned." The main purpose of such advisers, noted the U.S. ambassador to his superiors, would be "to indoctrinate Nicaraguans against the United States and democracy." It would be absolutely "essential," the ambassador noted, to convey a sense of U.S "red lines" toward the Ortega regime such as the need to follow the directives of large, international financial institutions.

 

If the Americans hoped that Nicaragua would distance itself from Chávez, however, they got a shot in the arm during the Ortega inaugural in early 2007. Singing the praises of his Bolivarian "twin" Hugo Chávez, the new Nicaraguan president proclaimed the failure of so-called "neo-liberal" economics. During the ceremony, Ortega pledged to bring Nicaragua into Venezuela's ALBA alliance and end privatizations of public companies. In another jab at the Bush administration, Ortega said he would like to "revisit" certain elements of the Central American Free Trade Agreement or CAFTA. Both Chávez and Bolivian leader Evo Morales were at the inaugural to proclaim the "death of imperialism."

 

Divide and Conquer in Latin America

 

With the alarm bells going off, U.S. ambassador to Nicaragua Paul Trivelli invited fellow Central American ambassadors over for breakfast and a discussion. During the get together, the conservative dignitaries said they were "startled by the populist rhetoric and procession of infamous guests surrounding the inauguration of President Daniel Ortega," and were "dismayed" by Ortega's accession to agreements with Venezuela. Perhaps, they opined, Nicaragua's neighbors could help to "offset the negative influence" of Chávez.

 

Not content to stop there, Trivelli then organized yet another breakfast, this time inviting the Spanish, Mexican, Chilean, Brazilian and Colombian ambassadors to Nicaragua, respectively. All the diplomats echoed the previous chorus of concern, declaring preoccupation over Chávez's "destabilizing" influence. The over the top pro-U.S. Colombian ambassador was particularly worried, declaring hyperbolically that Chávez could cause mischief in Central America and thus "open the door to drug trafficking and the movement of terrorists."

 

Ratcheting up International Pressure

 

The atmosphere became increasingly poisonous by March, 2007 with Trivelli going into overdrive in an effort to recruit international allies against the incipient Ortega-Chávez alliance. The campaign bore fruit as both Spain and Germany joined the fray and warned Ortega not to issue "contradictory statements and actions regarding foreign affairs, press freedom, and investment." Hosting yet another breakfast, Trivelli invited the Nicaraguan Foreign Minister, Economics Minister and Presidential Advisor as well as the Spanish and German ambassadors.

 

Trivelli quickly let the Nicaraguans know who was boss, opening the breakfast "by remarking that the administration's moves to centralize government, criticize the press, scapegoat international investors, and engage pariah regimes...raise questions about the new government's commitment to maintain an open democracy and friendly relations with all."

The breakfast, Trivelli wrote, served to put the Nicaraguans on notice. The U.S. ambassador intended to issue a warning to the government's more moderate faction that "we and other embassies are monitoring investor relations closely, a message they can use to push back against party radicals urging Ortega to strengthen alliances with Venezuela." Nervously, the Nicaraguans blamed the "sensationalist press" for distorting Ortega's record, adding that all new governments go through a "period of adjustment."

 

Push and Shove over Economic Policy

 

In an effort no doubt to mark a line in the sand or "red lines," Trivelli also met with the new Minister of Finance. In light of Ortega's recent actions, including the signing of important economic deals with the likes of Chávez, what kind of economic model was Nicaragua planning to pursue, Trivelli asked? The Finance Minister responded that his country's foremost concern was maintaining macroeconomic stability and holding talks with the likes of the IMF. Trivelli seemed skeptical of such claims, noting that "U.S. investors had begun questioning what sort of economic model the new government plans to pursue."

 

From there, the discussion got somewhat frosty with the ambassador pressing the Finance Minister about the need to resolve property claims stemming from expropriations that took place in the 1980s during the height of the Sandinista Revolution. Trivelli personally handed over a list of "high profile" expropriation cases. The Minister responded defensively that Ortega had no plans to expropriate property as in the 1980s, "nor do anything that will damage the favorable investment climate that currently exists."

 

Despite such assurances, Trivelli pressed on. Would Ortega limit foreign investment in sensitive sectors such as energy and coastal property, Trivelli asked? Seeking to placate the ambassador, the Finance Minister replied that "Nicaragua is not going to shut the door on anyone (nor) obstruct investment in any sector."  Unconvinced, Trivelli prodded Nicaragua's Central Bank President about Nicaraguan economic policy in a follow up meeting. Testily, Trivelli asked the Nicaraguan how a closer relationship with Venezuela would facilitate a sensible business climate. In a game of cat and mouse, the official responded that recent economic agreements with Chávez did not represent "a reflection of a political vision for Nicaragua, but rather an acknowledgment that Nicaragua depends upon [Venezuela's] largesse...for oil."  Still skeptical, Trivelli brought up Ortega's recent statements attacking "neo-liberalism" and calls to end "dependency" on the International Monetary Fund. Ortega's desire to review privatization of the telephone and power sectors was likewise a concern, and the ambassador prodded the Central Bank President as to the particulars of ALBA economic aid for Nicaragua.

 

Game of Cat and Mouse

 

U.S. Embassy staff continued to press the Nicaraguans, hoping to identify moderate factions within the government which could help to reel in Ortega's pro-Chávez leanings. By speaking with Magda Enríquez, a high level official at the Ministry of Foreign Affairs, the Americans hoped to make their case. Within the Sandinista hierarchy, Enríquez appeared to be "aligned with the FSLN moderates, recognizes the value of positive engagement with the United States, and probably lends a voice of reason to balance the more extreme views of the Sandinista hardliners."

 

When the Americans complained that Ortega's discourse regarding the U.S. had become "increasingly belligerent and unconstructive," Enríquez nodded in agreement and promised to urge the president to dial back his rhetoric. Hoping to calm tempers at the U.S. Embassy, Enríquez added that while Ortega saw Chávez as his "friend and ally," Nicaragua did not see eye to eye with Venezuela on all issues.

 

Nicaragua's Business Community vs. Ortega and Chávez

 

Having made overtures towards other foreign powers as well as moderates within the Sandinista government, the Americans proceeded to court the Nicaraguan business sector. At an economic roundtable, Trivelli hosted heavy hitters linked to international investment such as Alberto Chamorro of the Bank of Central America, which was almost 50% owned by GE Financial and Joaquim de Magalhaes of Esso Nicaragua. Speaking with the Americans, the businessmen complained about Ortega, who in their view was intent on regaining his standing as a Latin American revolutionary by praising Chávez.

 

Venezuelan oil diplomacy surely did not go over well amongst the ambassador's guests. According to them, Venezuelan petroleum shipments to the Ortega government were arriving faster than Nicaraguan state oil company Petronic could handle them, and this in turn was creating difficulties for local fuel distributors. Even worse, Ortega had undertaken a nationalistic energy policy by seizing fuel storage tanks owned by Exxon. Overall, the guests believed that the Ortega regime saw Petronic and Venezuelan oil as a "giant ATM" from which it could withdraw cash at any time.

 

Investors grew even more jittery when the board of the Millennium Challenge Corporation cancelled more than $60 million in U.S. economic assistance to Nicaragua as a result of alleged election fraud marring the November, 2008 municipal contests. As Ortega railed against the U.S., arguing that Washington was unduly interfering with Nicaragua's own sovereignty, local businessmen lamented the cutoff in aid.

 

Obama Era: Tensions Continue

 

If the Americans, however, hoped that such punitive measures would dissuade Ortega from cozying up to Venezuela, they would be sorely mistaken. Indeed, if anything the cutoff encouraged Nicaragua to look for alternative funding, and by 2008 Ortega had already received more than $1 billion from Venezuela in the form of loans, grants, and foreign direct investment. According to the U.S. Embassy, the FSLN used part of the assistance to invest in party building and propaganda. To add insult to injury, Ortega also lambasted the Bush administration, claiming that the Americans had conspired to assassinate Chávez.

WikiLeaks cables hint at the further deterioration of U.S.-Nicaraguan relations during the Obama era, and underscore Ortega's growing ties with Venezuela and ALBA members such as Cuba. Joining with his left allies in Latin America, Ortega called for the development of a new regional organization which would exclude the U.S. and resist the political influence of "the Empire." Speaking on Cuban television, Ortega criticized Obama for maintaining Bush era policies such as freezing of the Millennium Challenge Account for Nicaragua.

 

In private meanwhile, Sandinista officials told the Americans they were becoming frustrated with the Obama administration and would deepen joint projects within the ALBA alliance, thus leading the U.S. Embassy to further lose patience with Ortega and his clique, which displayed a "skewed" world view "claiming a moral right to demand more resources, without conditions, while at the same time denouncing the very countries that provide such aid."

 

The WikiLeaks cache ends in early 2010, so we don't know the inside story of U.S. diplomacy in the region during the recent past. Yet, it's no secret that the Obama administration, like the Bush White House before it, views the Latin populist left as an irritant and would like to be rid of Chávez and his allies. If the cables are any indication, American diplomats in Managua most likely continued to pursue their earlier approach of cultivating support within the Nicaraguan business elite, peeling off Sandinista moderates and drumming up conservative support in the wider region against Ortega.

 

Unfortunately for the State Department, such tactics have not yielded concrete results. Indeed, it would appear that Ortega has now consolidated his political grip on Nicaragua following the Sandinista's recent reelection to a third presidential term. Yet, 2012 will be a momentous year in the region, as Chávez too risks everything on his own reelection bid. If Chávez should go down in defeat, Nicaragua would be deprived of a key political and economic benefactor and suggest further problems for the populist left in Latin America.