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Venezuela's Troubling Nuclear Ties

Authors: Joel D. Hirst, International Affairs Fellow in Residence, 2010-2011, and Jonathan Pearl, Stanton Nuclear Security Fellow, 2010-2011
October 28, 2010

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Venezuela's President Hugo Chavez returned to Caracas last Sunday after completing a whirlwind tour of Russia, Belarus, Ukraine, Iran, Syria, Libya, and Portugal.  Chavez's goal was to advance agreements "to accelerate the fall of imperialist (read American) hegemony and the birth of the new world of equilibrium and peace," as he stated in Damascus. While the rhetoric is familiar, the initiatives pursued on this trip could pose major challenges to the Obama administration. Washington must develop sensible policy options, particularly when it comes to Venezuela's cooperation with Iran and Chavez' own nuclear ambitions.

Starting his tour in Moscow, Chavez finalized negotiations for Russia's state nuclear power company, Rosatom, to supply Venezuela with two 1,200 megawatt (BBC) nuclear power reactors and a smaller research reactor. This deal is the successor to a general agreement on nuclear cooperation signed in November 2008. Though completion of these reactors may take more than a decade, the possibility of an increasingly autocratic Chavez gaining access to nuclear technology should raise concern for Washington and its allies. The reactors may be of limited direct proliferation threat, but Venezuela's close ties with Iran and its significant untapped deposits of uranium--which might total as much as fifty thousand tons--raise questions about whether Caracas could pose a proliferation risk in the future.

U.S. policymakers seem unsure of how to respond to the deal. As Chavez will be the first to remind Washington, Venezuela is well within its rights under the 1968 Nuclear Nonproliferation Treaty to access nuclear technology for civilian purposes. Administration officials likely fear that vocal opposition to the deal could provide Chavez with a propaganda windfall at a time when President Barack Obama is seeking to reduce bilateral tensions (BBC). There may also be a concern that attempts to derail this deal could impede future progress with Moscow on arms control, missile defense, and other important issues.

The Obama administration's response to the reactor deal has so far been limited to affirming Venezuela's right to peaceful nuclear power while urging (AFP) on October 19 that Caracas "act responsibly." Chavez retorted two days later (AFP) that "President Obama has started a war by spreading doubt with his words" about Venezuelan nuclear intentions.

Appointment in Iran

Following his visit to Russia, Chavez made his ninth visit to Iran. While in Tehran, Chavez and Iranian President Mahmoud Ahmadinejad continued to deepen their relationship, calling for the creation of a "new world order" and signing eleven different agreements. Iran and Venezuela have already signed over two hundred different memoranda of cooperation (ElUniversal). When it comes to uranium, cooperation might be a two-way street, with Iran helping Venezuela (NYT) locate deposits and Venezuela helping Iran (FP) acquire some portion of them.

Venezuela's close ties with Iran and its significant untapped deposits of uranium--which might total as much as fifty thousand tons--raise questions about whether Caracas could pose a proliferation risk in the future.

According to an Iranian energy sector official, one of the bilateral agreements between Caracas and Tehran would see Venezuela's state oil company Petroleos de Venezuela SA (PDVSA) invest $780 million (SydneyMorningHerald) in Iran's South Pars gas field. Should this agreement be implemented, it would raise questions as to whether PDVSA or its wholly owned subsidiary, CITGO Corporation, would be punished under the current sanctions regimes against Iran.

Washington should also take note of Chavez's language with respect to Iran (Reuters). "We will always stand together," said Chavez before departing Tehran for Damascus. "We will not only resist, we will also stand victorious beside one another." This is not the first time Chavez has declared his allegiance with Iran. In the past, Chavez's representatives have said that Venezuela will violate U.S. and EU sanctions and sell gas to Iran "should they request it."

Syria and the Bolivarian Alliance

From Tehran, Chavez flew to Damascus, where he continued his push for closer Venezuelan-Syrian relations. The highlight of the trip for Chavez was likely Syria's formal acceptance of his invitation to sit as an observer state in the Venezuela-sponsored Bolivarian Alliance of the Americas (ALBA). The ALBA is an anti-United States pact of eight member countries including Ecuador, Cuba, Nicaragua, and Bolivia, whose stated goal is to reduce U.S. influence in the world. Coming at a time when Syria is stonewalling International Atomic Energy Agency (IAEA) efforts to determine whether it was clandestinely building a plutonium-producing reactor at Dair al Zour with North Korean help (the facility was destroyed by an Israeli bombing raid in September 2007), and when Obama is attempting to woo the Syrian leadership away from Iran and Hezbollah, this largely unnoticed development indicates that, at the least, U.S.-Syrian relations have a long way to go.

Chavez's recent trip has raised a number of important questions that U.S. policymakers will need to address. Inaction could usher in a much more complicated scenario for Washington and its allies. But finding solutions to these issues will require a nuanced and pragmatic approach. The Obama administration should consider the following actions:

- Appeal to Moscow to make its nuclear contract with Venezuela contingent upon Caracas signing a model Additional Protocol agreement (AP) with the IAEA. This supplementary safeguards measure was developed in response to discoveries after the first Gulf War that Saddam Hussein had been attempting to reconstitute his WMD program. A Venezuelan AP would provide broad access to IAEA inspectors, which could increase the world's confidence in the completeness and correctness of Venezuela's nuclear declarations and help to ensure that its civilian nuclear program remains civilian in nature.

- Continue to carefully examine (ElUniversal) the proposed PDVSA involvement in the South Pars gas field development project--as well as other areas of Iran-Venezuela cooperation--to ascertain whether they run afoul of U.S., Security Council, or EU sanctions against Iran. To the extent that such information is made public, the potential for sanctions might serve as a positive incentive for Chavez to modify behavior that the Obama administration has labeled as unhelpful.

- Finally, Washington should put in place contingency plans for a temporary disruption in oil supplies of the more than one million barrels per day imported from Venezuela, the United State's fifth-most important supplier.  Disruptions could stem from any of several factors--from sanctions violations to Venezuela's diversification of its oil clients (particularly as Chinese facilities capable of refining Venezuela's high-sulfur crude come online). Such an outcome should not be allowed to harm the U.S. economy or national security interests.

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