Saturday, February 18, 2006

Chavez warns US on oil after Rice remarks

Chavez warns US on oil after Rice remarks
By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez on Friday warned the United States would get no more Venezuelan oil if Washington "crosses the line" as relations between the two governments deteriorated in an escalating battle of words.

The latest exchange between the United States and top oil supplier Venezuela came two weeks after left-winger Chavez expelled a U.S. naval attaché accused of spying and Washington sent home a Venezuelan diplomat in tit-for-tat dispute.

Chavez's comments came a day after U.S. Secretary of State Condoleezza Rice said Washington wanted to curb his influence in South America by lobbying allies to criticize the former soldier allied with U.S. foe Cuba.

"The U.S. government should know that if they cross the line they will not have any Venezuelan oil," Chavez said at a public event. "I have started taking measures in that respect, I'm not going to say what," he said.

Venezuela, the world's No. 5 oil exporter, supplies 15 percent of U.S. energy imports. Chavez has warned the United States over its oil supplies before and he did not say what might trigger measures against U.S. shipments.

Analysts say it would be difficult for Caracas to cut oil sales to the United States, which takes half of its petroleum and has the refineries to process the heavy crude. Chavez is also benefiting from oil revenues to finance social programs for the poor as he prepares for an election in December.

Despite worsening ties, the Venezuelan ambassador to Washington said recently Venezuela would remain a secure oil supplier to the United States.

Fortified by soaring petroleum revenues, Chavez has reached out to his South American neighbors and captured anti-U.S. sentiment with his message of socialist revolution as an alternative to U.S.-backed free-market policies.

Chavez brands U.S. President George W. Bush "Mr. Danger" and often blasts U.S. "imperialist" policies. U.S. officials say the populist president is eroding democracy at home and working to destabilize the region.

"You form your front Mr. Danger and we'll form ours, front against front," Chavez said.

Rice said on Thursday Washington would try to curb Chavez's anti-American influence by reaching out to allies to expose any anti-democratic policies in what she termed an "inoculation" strategy to counter Chavez, who is allied to U.S. foe Cuba.

"I think it's fair to say that one of the biggest problems that we face in that regard are the policies of Venezuela, which as you say, are attempting to influence neighbors away from democratic processes," Rice told a congressional hearing.

She said she had contacted governments to publicly criticize a treason trial against leaders of a movement, Sumate, which had received U.S. funding and helped organize a 2004 referendum that failed to oust Chavez.

Since Chavez's 1998 election, relations between Washington and Caracas have steadily deteriorated even though Venezuela still supplies the U.S. markets. Chavez has sparred with Washington over arms sales to Venezuela and drug cooperation.

(Additional reporting by Magdalena Morales and Brian Ellsworth)