Affairs

Diplomacy

Chávez’s €1bn spending spree— Lisbon

Preface

Last week, as Lisbon’s nerves were fraying over its ultimately suspended budget talks, Hugo Chávez was driving an eight-person minivan around the sleepy Portuguese region of Viana.

Chávez

29 October 2010

Last week, as Lisbon’s nerves were fraying over its ultimately suspended budget talks, Hugo Chávez was driving an eight-person minivan around the sleepy Portuguese region of Viana. It was a surprising end to the Venezuelan president’s world tour – a typically provocative route that saw him sign trade agreements with Russia, Belarus, Ukraine, Iran, Syria and Libya.

The latter three countries raised the most eyebrows. Joint funds were agreed in Damascus for oil refineries, Tehran for gas exploration, and Tripoli for grand-sounding but as-yet unspecified projects. In his characteristic bluster, Chávez declared his itinerary as “the new geopolitical map”. The position of Portugal on that map – where Chávez spent 10 hours and €1bn – is for now, hard to place.

For Portugal the visit signals a time of unusual desperation. Prime Minister Jose Socrates, who invited Chávez to Viana’s shipbuilding hub, is for now not too concerned about cuddling up to such a polarising figure. On the contrary, he signed off two asphalt carriers for Caracas; one ferry (which could lead to “four or five”); 12,500 prefab social housing units, and 1.5m low-cost computers. Still yet unspecified deals were made to develop renewable energy in Venezuela, using Portuguese expertise, with a promise of increased oil shipments to the Lusophone country in return.

Dr Mark Manger, a lecturer in international political economy at LSE, believes that Chávez’s enthusiasm will have no real effect on Portugal’s ailing fortunes. “It’s an odd situation, as trade between the two countries is so small. It seems like the aim of backing individual construction projects and investments is to provide a photo opportunity. It makes it look like the Portuguese government is doing something for its industry and economic development.”

New Venezuelan trade will not directly affect Portugal’s standing with EU partners or the US – the latter being the biggest importer of Venezuelan oil. But a too-close political relationship could cause problems later on. Joel Hirst, a Latin American expert at the Council of Foreign Relations, points to the impasse between Spain and Venezuela over Jose Arturo Cubillas, who holds a position in Chávez’s administration and is accused by Madrid of training ETA terrorists. Venezuela’s government has responded by calling Portugal’s neighbour “interfering” and “colonial”. “There are uncomfortable conflicts that Lisbon should be wary of if it continues to deal with Chávez,” Hirst says.

Political concerns aside, Portugal has perhaps not chosen the most reliable business partner. “Of the 13-plus refineries Chávez has committed to building or repairing around the world, the only one which has significant (if any) progress is in Cuba,” Hirst says. “As demonstrated by Chávez’s recent nationalisation of US firm Owens Illinois, foreign investments are often not respected.

“Portugal should use this relationship as much as it can – but it should be aware that promises from the Venezuelan president often stay just that.”

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