Why Does Bush Fear Venezuela? It Has a Democratic President, a Moderate Social Reform Programme ... and Rather a Lot of Oil

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Venezuela has become a haven for Islamic terrorist groups, if you believe General James Hill, head of US Southern Command--the US military's command centre responsible for keeping Latin America in line. His claim that Margarita Island, off the Venezuelan coast, is a hotbed of Arab "money laundering, drug trafficking, or arms deals" appeared in US News & World Report in October.

Earlier in the year, the neoconservative Weekly Standard magazine called for the US Congress and the Organisation of American States to impose sanctions on Venezuela. It reported that a Venezuelan pilot who had "defected" to the US was claiming that President Hugo Chavez had links with al-Qaeda. In one transaction, Chavez was alleged to have paid Osama Bin Laden $1m (although why the near-bankrupt Venezuela would subsidise the billionaire Bin Laden was not clear).

[??]Que pasa? Such stories, with their unnamed government officials, inventions, supposed defectors and links to international terror groups, pop up more and more frequently in the US press. They are so reminiscent of an earlier era of government-sanctioned propaganda--disclosed by the Iran-Contra investigation--that they raise the question: "Who's now advising George Bush on Latin America?"

The answer is Otto Reich, special envoy to the western hemisphere. It was Reich who, in the 1980s, as head of the US State Department's Office of Public Diplomacy, planted disinformation in the US press about Nicaragua's left-wing Sandinista government. One of his fabrications--reported in some credulous newspapers--was that tiny Nicaragua had bought MiG fighter jets to attack the US. As the Iran-Contra scandal unravelled, the US comptroller-general concluded that Reich's office had "engaged in prohibited, covert propaganda activity". Now, despite protests from the Senate, he's in from the political wilderness, concentrating on Venezuela and Chavez.

Elected in 1999, Chavez has introduced a series of moderate social reforms (free education, healthcare for the poor, land reform--but no grand nationalisations or seriously redistributive taxes). Though these may have irritated local and US elites, what has put Chavez on a collision course with America's manifest destiny is its oil--what a Venezuelan minister in the 1970s called "the devil's excrement".

Venezuela is one of the top three suppliers of foreign oil to the US (Canada and Saudi Arabia are the other two). Under its presidency of Opec, the price of a barrel of oil rose from $10 to $20--a great gain for the funding of social programmes in Venezuela but not to America's liking.

In November, Chavez announced an initiative, PetroSur, at the Congress of Andean Parliaments, which would combine Venezuela's oil assets with those of Ecuador, Brazil and Trinidad, integrating the continent's oil resources.

Chavez is a survivor. …