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Oil Markets Fear Iraqi Escalation

Oil Markets Fear Iraqi Escalation

The military operation by Iraqi…

Officials In Caracas Accuse The U.S. Of Industrial Espionage

Officials In Caracas Accuse The U.S. Of Industrial Espionage

The government of Venezuelan President Nicolas Maduro is investigating a report that the U.S. government has been spying on executives of the state-owned Petroleos de Venezuela, or PDVSA, over the past decade. “The oil industry is the backbone of the Venezuelan economy,” Maduro said on state television. “The U.S. empire for a long time … has intended to sabotage [Venezuela’s] oil industry and defeat the [Caracas] government in order to steal the oil.”

He spoke Wednesday shortly after the news website The Intercept said it had documents from Edward Snowden, the former contractor for the U.S. National Security Agency (NSA), saying the agency had been spying on PDVSA’s senior executives. Snowden, who faces espionage charges himself for releasing secret NSA files in 2013, is now living in self-imposed exile in Russia.

Among the allegations by The Intercept was that the NSA intercepted the calls and emails of Rafael Ramirez, who served as PDVSA’s president from 2004 to 2014 and was the country’s energy minister from 2002 to 2014. The Intercept report was based on an article dated March 2011 in an internal NSA newsletter that it said was obtained by Snowden.

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The article in the newsletter, SIDToday, said, “[T]he NSA had obtained access to vast amounts of Petróleos de Venezuela’s internal communications.” The Intercept report added, “This produced few emails from PDVSA’s leaders, but the 10,000 employee contact profiles included those of PDVSA’s then-president, Rafael Dario Ramírez, and former company vice president Luis Felipe Vierma Pérez.”

The report came about three weeks after The Wall Street Journal published an article saying Washington had begun “a series of wide-ranging investigations into whether Venezuela’s leaders used PDVSA to loot billions of dollars from the country through kickbacks and other schemes.”

“We cannot accept this,” Maduro said. “It is offensive, a violation of international law.” He added that he would deliver a letter protesting the reported spying to the U.S. chargé d’affaires in Caracas, Lee McClenny, and ordered his government to investigate the report by Intercept. There was no immediate comment from the State Department or McClenny’s office. The United States and Venezuela have not had full diplomatic relations since 2010.

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The United States and Venezuela have been at odds since Maduro’s predecessor, Hugo Chavez, became president in 1999. Until his death from cancer in March 2013, Chavez repeatedly accused Washington of doing its utmost to undermine his practice of “socialism in the 21st century.”

Despite the two countries’ differences, Venezuela, a member of OPEC, is the fourth-largest exporter of oil to the United States, after Canada, Saudi Arabia and Mexico. Despite Maduro’s angry language, the report may amount to no more than a less-than-significant tit-for-tat exchange of accusations and investigations between two rival countries.

For example, last week two nephews of Maduro’s wife, Cilia Flores, were indicted in New York on charges of importing cocaine. Shortly before that, Caracas said a U.S. Coast Guard aircraft violated Venezuelan air space. Last March, Washington issued sanctions on seven Venezuelan government officials, accusing them of human rights offenses, part of what it called the country’s culture of political intimidation.

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Supporters of Maduro and Chavez say the Venezuelan government is right to speak truth to the United States, which they say has a centuries-old history of political and economic exploitation throughout Latin America.

Maduro’s critics counter that his public indignation is meant to divert attention from Venezuela’s domestic problems, such as rising crime rates, shortages of food staples and runaway inflation. They say this is especially true as the country prepares for legislative elections on Dec. 6.

Much of Venezuela’s economic problems arise from its oil industry, which is responsible for 96 percent of the country’s foreign income. It has been hit hard by the steep drop in oil prices since mid-2014.

By Andy Tully of Oilprice.com

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