Another blog post I wrote for International Political Economy.

In C Chapman’s March 1st post, the opinion is offered that by increasing oil exports to China, Venezuela’s threat to cut off exports of oil to the United States could become a reality.

While increased exporting to China may help Venezuela with its economic goals as far as oil exportation goes, I don’t believe that we’ll be seeing the South American state actually moving to cut off supply to the United States any time soon. The Venezuelan economy is in the pits; recently the state’s central bank raised interest rates on credit in an effort to combat the rapid inflation that is ailing its economy. Venezuelan consumer prices raised 22.5 percent in 2007, which is far more than the government’s goal of 10-12 percent.

The President of Venezuela, Hugo Chavez, has also continued his regular tirades against the United States and non-socialist countries and ordered the army on high alert with an eye towards Colombia. This move came after the armed forces of Colombia killed the leader of the rebel organization FARC (Revolutionary Armed Forces of Colombia) inside Ecuador, a move that Ecuador and Venezuela have protested. Chavez also ordered the Colombian embassy in his country closed.

If Chavez wants to continue his saber-rattling and possibly start a war in South America, he is going to need a turnaround in the state’s economy to go along with his rhetoric. He will not be seen as a serious person in South American politics if his economy continues to tank, and cutting off oil exportation to the United States or anywhere else would be a step in the wrong direction. Chavez knows that while he may rant against the capitalism of the United States and the United States’ role in the world, his country needs all the customers it can get. Increasing exportation to China would serve this goal, but simultaneously doing so and cutting off the massive amount of business the country gets from the United States would not serve to boost economic growth in Venezuela. Thus, President Chavez’s threat to cut off oil supply to the United States should be taken as an empty threat reflecting more on his political aims and desires than the economic reality that his country faces.