It's not about the oil

www.globeandmail.com By PAUL KNOX Wednesday, February 12, 2003 – Page A19

Concern for the health of Venezuela's democracy should guide the thinking of Canadians

CARACAS -- Latin America's anguish once again demands attention, even as conflict looms on the other side of the world. Keeping the 20 republics straight can be difficult, but, fortunately, each boasts at least one distinctive characteristic with a major influence on history and current events.

Mexico has its tortured relationship with the United States. Had Cuba not been an island, its story since 1959 could not have been the same. A slave revolt gave birth to Haiti, canal-building intrigue to Panama. Indian-mestizo tension permeates life in Guatemala, high population density in El Salvador. Honduras was the original banana republic, Nicaragua had the Sandinista revolution, Costa Rica abolished its army. The Dominican Republic is a virtual factory for baseball infielders.

In South America, Colombia's rugged geography nurtures political and social strife. Ecuador is split between coastal and mountain cliques. Peru was the centre of the continent's largest pre-Columbian empire. Chile is -- visibly, at any rate -- the least corrupt of all the republics. Argentina is the most European. Brazil has immense size and a moving frontier. Bolivia is landlocked, and don't you forget it. Uruguay was the region's first welfare state. Paraguay, half Hispanic and half Guarani Indian, is the most strongly bilingual country in the Americas.

As for Venezuela, oil quickly became the defining feature after large reserves were discovered nearly a hundred years ago.

For more than 40 years, until 1970, Venezuela was the world's biggest petroleum exporter. Even after its eclipse by Middle Eastern suppliers, it was still considered a strategic source by the United States. Recently, it has accounted for about 13 per cent of U.S. imports. It is relatively close to U.S. ports and, for a long time, there was no threat of political turmoil interrupting the supply.

Since December, of course, the second statement is no longer true. A walkout by oil workers, part of a carefully planned challenge by political opponents of President Hugo Chavez, virtually halted production and cut off exports. Oil has begun to flow again, but a massive purge of senior staff and a radical change of strategy at state-owned Petroleos de Venezuela have left its future cloudy. Venezuela is an increasing source of worry to the United States.

Even before the stoppage, new attention was being paid to oil exploration and development in Latin America because of growing uncertainty about the security of the Middle East. As long as the tap was turned on, the social reforms and eccentric imagery of Mr. Chavez's "Bolivarian revolution" inspired curiosity in Washington, but not much more. Now, an overriding question hangs over U.S.-Venezuelan relations: Can Mr. Chavez guarantee stable petroleum supplies?

The answer will determine the extent to which the United States favours an early vote on whether he should continue in office. Only the Bush administration's obsession with overthrowing Saddam Hussein has stopped it from paying more attention at high levels to the Venezuelan crisis.

As far as I can make out, the effect of the turmoil here on gasoline and heating-oil prices in Canada is indirect. Three decades ago, Venezuela supplied more than half of Canada's petroleum imports. But our sources are now far more diverse, mainly because of the availability of North Sea oil. Brad Wark, an energy specialist at the Department of Natural Resources in Ottawa, tells me that Venezuelan oil is "a drop in the bucket, and it's relatively easy to replace." High prices in Canada are due to global market conditions; the contribution of Venezuela's troubles to those is smaller than that of colder weather or the outlook for the Middle East.

Venezuela's constitution includes mechanisms that could lead to some type of popular referendum on Mr. Chavez's rule before the end of this year. If his opponents have, as they claim, obtained the number of signatures needed to trigger such a vote, it should proceed without undue delay. Concern for the health of democracy in the Americas -- not fear of an oil shock -- should guide the thinking of Canadians and their government.

My mistake: In my description last week of Canada's recent official presence in South America, I mistakenly said that House of Commons Speaker Peter Milliken met several Brazilian cabinet ministers while attending inauguration ceremonies for President Luiz Inacio Lula da Silva. Mr. Milliken held a 45-minute meeting with Mr. da Silva. Foreign Affairs Minister Bill Graham visited Brazil later in the month and also met several ministers. pknox@globeandmail.ca