The recent dramatic pronouncement that Venezuelan President Hugo Chavez underwent cancer treatment in Cuba reverberated far beyond Venezuela, depressing his allies and elating his enemies.
While the leader of his self-proclaimed "Bolivarian revolution" is second only to his good buddy Fidel Castro in Washington's black book, the fact remains that Chavez has discreetly deployed Venezuela's vast oil and cash reserves to assist the struggling economies of a number of his Central American neighbors, which has earned him deep gratitude.
Ever the showman on alert for any opportunity to tweak Uncle Sam's snout, in March 2006 in the aftermath of Hurricane Katrina, which damaged the U.S. Gulf oil infrastructure sending domestic prices soaring, he offered shivering New England residents discounted heating oil, infuriating the Bush administration.
Venezuela has the largest conventional oil reserves and the second-largest natural gas reserves in the Western Hemisphere.
But the reality is that Venezuela remains the United States' fourth largest oil importer, accounting for roughly 1.5 million barrels a day. Should Chavez ever in a fit of pique turn off the taps, the only option that the U.S. would have to replace lost imports would be to turn to Saudi Arabia, the sole OPEC member, and ask them to ramp up production, as Saudi Arabia is the only OPEC member with the reserve capacity to do so.
This in turn would create political problems for Riyadh with other OPEC members, most notably Iran, as under the OPEC system each member state has a pumping quota, and Tehran has already accused Riyadh of breaching its quotas by stealth.
Chavez certainly has reason to be mightily annoyed with U.S. policy, which has been turning up the pressure on Chavez for years while carefully calculating how to avoid a total rupture.
In 2005 Washington classified Venezuela as a country that does not "cooperate in the fight against drug trafficking," with government officials stating that the lack of assistance should incur financial penalties. The following year the U.S. upped the ante, labeling Venezuela as a country that "does not cooperate sufficiently with the fight against terrorism" and imposed sanctions prohibiting U.S. arms sales to Venezuela or those from any company in the world using U.S. technology.
Upping the ante, in 2007 Chavez announced the nationalization of the country's oil industry. The foreign oil companies were forced to sign…