By Eryn-Ashlei Bailey
Hugo Chavez announced that China will be lending $20 billion dollars to Venezuela. The purpose of this strategic move is to secure oil resources for the burgeoning need of energy in China. Currently, the U.S. is the top importer of Venezuelan oil. Financial analysts, including Morgan Stanley, predict that Venezuela may be on the brink of economic decline. Hence, this $20 billion dollar loan from China will lessen some of Hugo Chavez’s oil concerns. Does this loan, or investment, from China influence the United States’ recent decision to establish free trade with Colombia? Will China respond to the Ecuadorian governments demand for higher oil revenue to be returned to the Ecuadorian government? How will investment in the Venezuelan oil market effect global energy crisis concerns?
Last week, Defense Secretary Robert Gates expressed interest in ratifying free trade with Colombia. This decision was made without considering ethical implications of human rights violations in Colombia. The U.S. would potentially enter into a free trade agreement with Colombia at the risk of exacerbating foreign relations with countries such as Bolivia, Venezuela, and Cuba. China lending Hugo Chavez $20 billion dollars adds a new facet to the debate on U.S. presence in the region. On April 15, 2010, the BBC published an article that detailed the recent dealings of China and Brazil. China signed various agreements with Brazil with hopes “of boosting trade and energy co-operation between the two states and including a pact to build a Chinese steel plant in Brazil” It is evident that China is advancing an agenda of trade and economic influence in South America. The U.S. should be concerned with China allying itself with Venezuela whose President Hugo Chavez holds intense anti-American views. China is also a member of BRIC, which includes the country of Brazil, Russia, India, and China. These four countries are interested in reorganizing the global financial affairs, specifically the workings of the World Bank.
An article in the Wall Street Journal discussed frustrations held by the Ecuadorian government regarding oil revenues not received by the government. Major oil companies that receive large amounts of money from oil revenue include China and Brazil. To assuage concerns of the Ecuadorian President, will Chinese President Hu Jintao extend loans or enter into agreements with Ecuador? U.S. foreign policy needs to ally itself with major oil exporters in South America. Ecuador is a member state of ALBA, the Bolivarian Alliance for the Americas. It is arguable that Ecuador will be swayed to conform to the leanings of Hugo Chavez, Evo Morales, and Raul Castro. China’s economic investment will strengthen ties between ALBA and Bric. The alliance of these groups will threaten U.S. interests in the global market.
The global energy crisis has countries scrambling for methods of attaining sustainable energy world-wide. Chinese investment in Venezuelan oil sources should expedite the research and process of acquiring sustainable energy for the U.S. and world-wide. If the U.S. headlines the race in renewable energy sources, the country stands a chance of re-establishing economic clout and influence across the globe. Oil will remain a source of energy for years to come. However, efforts to find renewable energy sources world-wide is critical environmentally, politically, and economically.
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