Venezuela deepens trade, military ties with China

Venezuela took control this weekend of a Chinese-built communications satellite, part of a deepening trade relationship that some say illustrates waning U.S. influence in Latin America. Accompanied by Chinese technicians at a communications facility in western Guarico state, President Hugo Chavez presided at a ceremony in which Venezuela formally assumed operation of the Simon Bolivar, a $400-million satellite that China launched in October. "This will put an end to media terrorism and help us spread our own truth, to wage the battle of ideas with efficiency and transparency," Chavez said on national television Saturday.

Chavez said the satellite, which China built for Venezuela on contract, would strengthen his nation's sovereignty by overcoming U.S. "media bombardment." The orb will also bring the Internet to schools and homes across Venezuela and facilitate "tele-medicine": sending medical tests of patients in remote locations via the Internet to urban medical centers for speedier diagnoses.

Evan Ellis, a consultant with Arlington, Va.-based Booz Allen Hamilton, said the satellite is an example of "strategic relationships" China has been able to build because the United States no longer "closely defends its exclusive presence" in Latin America. "Traditionally Chinese diplomacy has been cautious there for fear of provoking us and endangering its U.S. trade relationship," Ellis said. "But it's become bolder in its affairs, not just with relatively neutral countries, but even with a country like Venezuela, which is openly hostile to the United States."

Also this month, China is delivering 18 military jet training aircraft that can be refitted for combat as well as a missile defense radar system. Venezuela also has begun to receive 27 oil drilling platforms and a fleet of oil tankers it ordered from China, Ellis said. China now buys an average of 338,000 barrels of Venezuelan oil daily, a figure that could rise to 1 million a day by 2012, Chavez has said. Venezuela subsidizes those sales by paying the freight costs.

Chavez critic and former foreign minister Simon Alberto Consalvi said that the burgeoning trade relationship has mostly benefited China, and that the recent decline in oil prices may force Chavez to curtail his spending. "China is doing great business here while Venezuela is running up a very negative trade balance," Consalvi said. "With the drop in oil prices, I don't think Chavez can continue these sorts of arrangements."

China has also committed to investing billions of dollars in a heavy oil development project in eastern Venezuela's Orinoco Belt, where several U.S. and European oil firms were given the boot after refusing to cede control of projects to the state oil company Petroleos de Venezuela, known as PDVSA. Looking to secure long-term access to oil and other minerals, China has signed 21 such energy deals around the world.

Beijing has also committed $4 billion to fund social development projects in Venezuela, including railroads, housing, highways and schools. Chavez said China has also committed to adding billions more to a second social projects fund.