Washington and Wall Street Look Southward . . . for Barrels of Oil

On January 1,  2006, thirty-two private oil companies in Venezuela lost their contracts to operate independently.  The replaced contracts were given to the oil companies by the pre-Chavez government in Caracas during the 1990s, the latest in a series of oil agreements that were much more beneficial to the oil companies than they were to the Venezuelans.  The end of these agreements will ensure that the Venezuelans — and not the multinational energy industry — will reap the most benefits from their resources.  In addition, as long as the populist policies being instituted by Hugo Chavez and his government continue, it also means that the vast majority of the Venezuelan people will benefit via better education, health care, transportation, and housing.

The foreign energy companies did not give up their exclusive rights willingly.  A recent news article from BBC revealed that the Venezuelan government had given ExxonMobil an ultimatum: enter a joint oil agreement with the state oil consortium or leave the country and its oil field concessions behind.  According to a Reuters report dated December 30, 2005, ExxonMobil refused the offer and sold off its rights.  A Spanish oil company is currently working out an agreement for the fields ExxonMobil let go.  As noted above, it isn’t like ExxonMobil was singled out.  Indeed, every single foreign energy company that operates in Venezuela was given a similar deal.  The primary objections that ExxonMobil had centered on the fact that Venezuela wanted a controlling interest in these agreements.  Despite objections by many of the major corporations involved, all of them except for ExxonMobil eventually agreed to the government’s demands, concluding that a third of a loaf is better than none.  ExxonMobil, meanwhile, is attempting to get its complaints against the Venezuelan government taken to arbitration, claiming in essence that it should have the ultimate control over the Venezuelan oilfields it essentially expropriated years ago.

It’s not like ExxonMobil is suffering.  Not by any stretch of the imagination.  As pretty much everybody knows, this corporation has shamelessly reaped untold billions in profits just in the past year.  It then had the gall to tell the world that it would not apologize for its profits and continue reaping them as long as the market allowed.  With a conscience guided only by profit, it is no surprise that ExxonMobil would consider Venezuela’s request for control of its resources to be an encroachment on what it perceives to be its right to plunder and profit at will.

These developments would not be of much concern if things were like they used to be in Venezuela.  That is, if the state oil ministry was still just a puppet of foreign oil companies and complicit in expropriating oil profits from the Venezuelan people.  However, ever since the election of Chavez, things in Venezuela have not been like they used to be.  The working class and poor are being educated and given health care.  The peasants are being given land to farm so they can take care of their families.  Popular media is spreading, taking the monopoly on information away from the corporate press.  And the rich and comprador classes are freaking out because they are no longer able to control the government for their benefit.  Why?  Because true democracy finally exists.

Venezuela is not alone.  In the continent Washington has considered its backyard ever since US President James Monroe issued that doctrine, there has been a wave of truly democratic elections.  As one would expect from people who have seen their lands and labor exploited for more than a century, these elections have put left wing populists in power.  In turn, the elections have raised concerns in Washington to a level unseen since the Cuban revolution over forty years ago.  Washington’s response to that long ago change was the Alliance for Progress — a humanistic name for a program that propped up military dictatorships, ripped populations from their homes, supported the torture of activists and community workers, and made the continent safe for US corporations.  Through associations between the CIA and AFL-CIO, the US set up fake labor associations that not only siphoned support away from grassroots unions but also helped the local regimes ferret out more radical activists and disappear them.  This was but one part of the ongoing US project to create a so-called “third way” between military dictators and left wing governments.  Under the cover of promoting democracy, this “third way” was really just another name for neocolonialism and a cover for many anti-democratic practices, ranging from rigged elections to torture and murder.

Although that program was ended in 1973, the US agenda in Latin America remained the same.  In short, this meant making Central and South America safe for US capitalism.  One need look no further than the CIA overthrow of the Allende government in Chile that same year for proof that this is Washington’s agenda for the region.  Although the facts of that bloody episode were never very well hidden, the release of CIA documents in 2003 make it quite clear that the CIA was working not only with fascist and other rightist elements in Chilean political and military circles, the coup and unrest leading up to it were financed by US companies, specifically Anaconda Copper and International Telephone and Telegraph (ITT).  As most readers know, the coup was followed by years of repression that included the torture and murder of hundreds of Chileans and a few foreign nationals who supported the Allende program.  Subsequent revolutions and popular uprisings in other Latin American states were met with similar assaults from the United States.  Foremost among these were the Sandinista victory in Nicaragua, and the popular revolution in El Salvador that ended with the installation of a US-created and -funded puppet regime.  Given that Chile was the victim of such brutality at the hands of the US and its Chilean overseers, it is rather ironic that Chile is now one of the several countries in Latin America to potentially elect a leftist government — if the Socialist candidate wins the January 15, 2006 runoff like most observers predict she will.  Even after decades of repression and then the election of President Frei — a neoliberal friend of Washington — the desire for economic and social justice has not died.  The same can be said of Uruguay, Brazil, Argentina, Venezuela, and most recently Bolivia, where an indigenous social justice organizer was recently elected president of that impoverished nation.  Peru and Mexico may not be far behind.

Of course, there are still several governments in Latin America that are on board with the US push to further open up Latin America to US investment via the Free Trade Agreement of the Americas (FTAA).  Of these governments, Colombia‘s is among the first.  This is especially true since the election of President Uribe, who is one of Washington’s most frequent foreign visitors.  Usually when the man visits the US, it is to ask for money and to lie about his military’s practices.  The funds were traditionally requested under the aegis of the so-called “war on drugs” — an endeavor that is nothing more than a boondoggle for governments and large-scale growers and dealers of illegal substances — although since George W. Bush was inaugurated, there have been more requests for guns and money made using the rationale that Colombia must fight terrorism.  Of course, the primary targets of this fight against terrorism are the leftist FARC guerrilla forces, not the right wing paramilitaries that have historically done the dirtiest work for the Colombian government.  Both forces are involved in the coca trade in Colombia, although FARC’s role has to do with extracting monies from growers in the form of a “tax,” while the paras are more involved in  protection of large scale growers and distributors and actually do a fair amount of distribution themselves.1

In recent years, Washington has also quietly reorganized its military capabilities in the region.  This includes forward bases in at least four countries and intelligence operations in many more.  In addition, there are naval operations ongoing.  Besides the more obvious forward bases mentioned, there are also installations that the Pentagon calls Cooperative Security Locations, or CSLs.  These bases are usually small and serve a number of functions, including acting as permanent bases for special forces covert actions; and, should an invasion of Colombia, Venezuela, or another nation be launched, these bases would play a role similar to that played by US bases in Bahrain and Kuwait.  In other words, they would channel invading forces into the region, serve as refueling stops, and provide other logistical support.  To test the functionality of these bases (and, presumably, to threaten the growing numbers of governments in Latin America that consider Washington to be their greatest threat), the Pentagon will be conducting more joint military exercises with Paraguay in 2006.  Washington hopes to find more nations to join in these maneuvers, but has not been able to do so yet.

Does this mean that there will be a US-led war in Latin America in the near future?  No, but the elements exist.  Governments refusing to cooperate with Wall Street’s designs for the region combined with US corporations unwilling to compromise by entering contracts where both sides get most of what they want can make for unstable relations between Washington and those it considers its subordinates.  Furthermore, Washington has made it clear — both in historical terms and in its statements over the past decade — that what it can’t get with contracts and IMF loans, it will take by force.  As the Iraq war reminds us, force is very much an option for Washington when energy resources are involved.  For people in the countries of Venezuela, Bolivia, Colombia, Ecuador, and Peru, where oil and natural gas are important factors in their current and/or future economic well-being, Iraq is a dire warning of what they could face in the not so distant future.


1  The illegal drug element that has become essential to the FARC’s existence has tainted its politics and withered its support among its traditional base in Colombia. This has also minimized the group’s potential international support.



Markey, Patrick, “Exxon Out; Venezuela’s PDVSA, Repsol Set Oil Deal.” Reuters. 30 December 2005.

Morsbach, Greg. “Venezuela Gives Exxon Ultimatum.” BBC News 20 December 2005.

Quinn, Steve. “Exxon Mobil Posts New Record for Profit.” Associated Press. 27 October 2005.

Ron Jacobs is author of The Way the Wind Blew: A History of the Weather Underground, just republished by Verso. Jacobs’ essay on Big Bill Broonzy is featured in CounterPunch‘s new collection on music, art and sex: Serpents in the Garden. He can be reached at <rjacobs3625@charter.net>.