Since Chávez came to power in 1999, and particularly since a failed coup in 2002 which attempted to overthrow him—an event which some sources attribute to the United States—China has found itself almost unintentionally becoming Venezuela’s number one ally. The failed coup radicalized Chávez, who went from aiming to diversify Venezuela’s trade and diplomatic policies to openly championing the creation of a strategic alliance against Washington and—to a lesser degree—Europe. Since then, he has seen China as a counterweight to the United States and as providing the perfect pretext for breaking away from the “imperialist” North Americans. The fact that Beijing is not in the least bit interested in this anti-Western crusade, since it would never compromise its relationship with Washington for a cause of this kind, has not stopped Chávez from showering his “Chinese comrade” with tributes, in the broadest sense of the word. In return, Beijing is shrewdly keeping quiet and graciously receiving everything that Venezuela has to offer.
While Beijing attempts to keep a certain distance to avoid becoming part of Chávez’s circus, the Chinese are also rubbing their hands together with glee at the thought of all the opportunities that he is handing to them on a silver platter. The figures speak for themselves in demonstrating the power that the Asian giant has gained in the Venezuelan economy. China has sold two satellites and a considerable number of weapons to the regime and, once again, has dug deep into its bottomless pockets to grant the country torrents of loans in exchange for natural resources: in 2010 the China Development Bank granted Venezuela $20 billion in credit, along with another $4 billion agreed with the Industrial and Commercial Bank of China,62 as well as a combined investment fund worth $12 billion. All of this is down to the power of the most precious of Venezuelan resources: the gigantic reserves of “black gold” in the Orinoco Belt.63
At a rate of 640,000 barrels per day, China has not yet overtaken the United States as the biggest buyer of Venezuelan crude oil.64 However, this figure is expected to reach a million barrels per day by 2014, according to the agreement signed between the two countries. In terms of Chinese investments, the most important development in the hydrocarbons sector was a result of Chávez’s decision to handpick China and Russia for the right to exploit the so-called Junín Block in January 2010.65 According to the Venezuelan authorities, the plan is that Chinese corporations will pour $40 billion into the rundown Venezuelan oil sector by 2017.66 These dramatic figures are allowing China to make a decisive entrance into Venezuela’s oil sector while simultaneously supporting its own policy to diversify energy supplies, thereby reducing its dependency on the unstable Middle East.67
José Toro Hardy, the renowned Venezuelan economist and former adviser to the Venezuelan oil company Petróleos de Venezuela S. A. (PDVSA), recalls that “in 1994, 1995 and 1996, when the oil sector opened up to foreign investment, things went very badly for China. It was an era of total transparency: the tenders were all made public and broadcast on television so that the offers made by all the different companies could be seen at once. It was completely different to how it is today.” Venezuela’s Bolívarian experiment is now happening in inverse proportion to the rise in China’s interests in the country. “Caracas isn’t interested in a commercial relationship with China. It wants to create political and diplomatic ties in order to stand up to the United States. I have no doubt that China is taking advantage of the fact that Venezuela wants to trade its oil for ideological reasons,” Hardy insists.
To carry out this “great leap forward” in bilateral relations, Chávez decided to use the Venezuelan economy’s pride and joy and its biggest source of support: PDVSA, the flagship company of the regime. As well as being one of the world’s largest oil companies, the state-owned PDVSA is in charge of managing Venezuela’s oil resources, contributing vast sums of money to the Republic.68 Chávez also uses this corporation, which has been transformed into a multi-purpose fund during his presidency, to carry out his social justice projects such as nationalizing companies and distributing Chinese electrical appliances throughout the country. Furthermore, it is through PDVSA that Chávez has managed to secure the supposed preferential treatment which, he assures the world, Venezuela receives from China. However, perhaps things are not entirely as they seem. “China sees Venezuela as a fool with lots of money and lots of resources. It sees a country where it is easy to take things. This is more a case of Venezuelan stupidity than Chinese colonialism.”
The above diagnosis of Brigadier-General Guaicaipuro Lameda, Chávez’s right-hand man and president of PDVSA between 2000 and 2002, leaves no room for doubt. During a two-hour interview at his home in an upmarket area of Caracas, this stern man, who held what is considered to be the second most important public role in the country after the Presidency, told us that he believes China is taking advantage of Venezuela’s Chavista hysteria to gain access to its natural resources. Among other things, he recalls that during his leadership of what was then the biggest company in Latin America he was forced to give special treatment to the Chinese company CNPC against the interests of PDVSA. “In the year 2000 the idea of negotiating with China over a contract to develop Orimulsion [a type of fuel] was put forward. We didn’t support the plan at PDVSA because it wasn’t in the company’s interests. However, Chávez personally pushed for the contract and asked me to ensure that it would be signed before the changes to the hydrocarbons law came into place, because once the law was approved it wouldn’t be possible to endorse the benefits he planned to give to China. Chávez wanted to give Beijing special treatment, which explained his urgency to sign the contract. I had to choose somebody with personal ties to the government to carry out the negotiations with the Chinese, because nobody at PDVSA was in favor of the agreement. It wasn’t economically beneficial for us,” he recalls.69
“There were two levels of negotiation in our conversations with the Chinese company: one between PDVSA and CNPC and another between the Chinese ambassador and Chávez. As the talks progressed between the two companies, CNPC’s representative would call the ambassador whenever things were getting tough. Then the ambassador would call Chávez, and Chávez would call me. Everything we had agreed the previous day would end up taking a step backwards, and things always went in favor of the Chinese.” One of the things that China managed to squeeze out of Venezuela in this way was the removal of a clause limiting the final uses of the Orimulsion. As a general rule, PDVSA always endorsed agreements tying the use of this type of technology to the sole purpose of generating electricity. This is because this type of crude oil is sold at a price equivalent to the price of coal, which has similar uses, and is therefore much cheaper than conventional oil. “This clause was removed on the insistence of the Chinese delegation. In other words, they can technically do whatever they like with the heavy oil, as it can also be used to make asphalt. But, of course, they only pay the price of coal.” According to Lameda, Chávez justified this unfavorable agreement for PDVSA by arguing that it was carried out within the framework of the country’s overall relationship with China. Chávez argued that the fact that Venezuela would lose money with the Orimulsion contract was acceptable under those circumstances because Beijing would undertake many future projects in the country.
It wouldn’t be the only time that China would gain privileged access to Venezuela’s oil reserves under occasionally unbelievable conditions: a cable from a PDVSA official published by WikiLeaks revealed that China had been buying Venezuelan oil at prices as cheap as $5 per barrel, when the market price for a barrel was $78. Far from being grateful for the Venezuelan leader’s generosity, mercantilist China had resold the crude oil to the United States, Africa and Asia, thereby obtaining significant capital gains—much to the chagrin of the Venezuelan government which saw Beijing as a loyal ally.
This type of “offering” given to countries with ideological ties to Venezuela, such as Ecuador, Argentina, Iran, Bolivia, Belarus and Cuba, is typical of Chávez’s regime.70 As such, the guarantees in oil which Venezuela has
brought to the table have allowed China to provide the $6 billion in financing needed to remodel the Cienfuegos oil refinery in Cuba. A similar project within the same framework—Venezuelan guarantees, Chinese loans and Cuban benefits—is also planned for Cuba’s other refinery in Matanzas.71 Therefore, while Beijing extends its tentacles across the length and breadth of Venezuela’s oil sector, it is also indirectly getting caught up—almost by accident—in Chávez’s schemes and crusade against the “American empire,” on this occasion with another “old friend” of the United States—Cuba. For Beijing, however, this is nothing personal: it’s just business, pure and simple.
“There’s a world of difference between what China says it is doing out of solidarity with our country and its real actions. In actual fact, China just robs you and takes away everything it can.” These are the words of Hector Ciavaldini, another former president of PDVSA who was once one of Chávez’s most staunch supporters. Ciavaldini, who visited Chávez in prison to convince him to stand in the 1998 elections, looks back at the naïveté shown by the Venezuelan president on his visit to China in 2000: “He studied Mao’s teaching very closely before going out there, but in Beijing at that time all the paintings of Mao had already been hidden away in the attic.” In this way, Ciavaldini strongly condemns China’s ambiguous relationship with Venezuela. “You tell the Chinese that you’re a Fascist-Leninist and they buy into it for their own gain.” Ideology doesn’t exist when it comes to business interests. Chávez does not escape Ciavaldini’s criticism either: “Nobody in Venezuela knows the conditions under which we are selling crude oil to China. It’s shocking because you start believing that these are disadvantageous conditions and, if that’s true, it represents a betrayal of our country. And he’ll have to pay for it, because crimes like that can’t just be written off.”72
5
The Foundations of the Chinese World
“The Americans come here to drop bombs. We are in Sudan to construct roads, buildings and hospitals. We are here to bring happiness to the Sudanese people.”
Fan Hui Fang, Chinese businessman and owner of
an arable farm on the outskirts of Khartoum
Dawn is breaking when we pull up alongside a row of adobe houses at the edge of the road for a breakfast of tea and sugared buns on the outskirts of Omdurman, a vibrant commercial hub to the north of Khartoum. It is six o’clock in the morning and many of the locals are stretching themselves sleepily. The light of the new day reveals a savage, lonely landscape torn apart by poverty and extreme weather conditions—and yet, at the same time, it is immensely beautiful. The black asphalt road gleams brightly as it stretches out across a horizon of golden sand dotted here and there with camels, herds of cattle and odd donkeys tied to shrubs.
Soon after leaving Omdurman, our two Toyota 4×4s begin to slow down as they reach the first military control post of the day, impossible to pass without the necessary permit. The soldiers on guard duty recognize the vehicles and stand to one side, saluting. Without stopping, we continue on towards the north of the country and the border with Egypt, traveling along a road that runs parallel to the Nile River. This would never have been possible if we had not arrived hand in hand with the Dam Implementation Unit (DIU),1 an all-powerful organization operating under the direct supervision of Sudan’s president, Omar al-Bashir. Its task is to co-ordinate the construction of dams so that the country will have access to the foundations necessary to introduce a new economic model less dependent on crude oil once rates of oil production begin to drop in 2013. It is a strategy in which China is set to play a crucial role.
Out of all of the dams built along the banks of Sudanese rivers, the most important and controversial is on the Nile at Merowe, 350 kilometers north of the capital. Inaugurated in 2009, President al-Bashir’s favorite structure is the clearest indication of the recent co-operation between Beijing and Khartoum. This explains why we were heading to Merowe, although in order to do this we had to pass ourselves off as university professors, submit to various interrogations and demonstrate endless reserves of dogged determination.2 It is impossible to get to Merowe without an official permit because of the area’s completely restricted access and a string of military controls. Therefore, our only option that summer of 2010 was to be escorted and “guided” by a delegation from the DIU as we headed towards one of the most contentious infrastructure projects carried out by China outside its own borders.
Khartoum publicizes the dam and its accompanying infrastructure work as the beginning of a new era for the country’s economy. According to its promoters, the importance of the dam stems from the 1,250 megawatts of power generated by its ten turbines, as well as the possibilities offered by the water canal system in terms of the large-scale development of agriculture which will revive Sudan’s old dreams of becoming the breadbasket of Africa.3 “Merowe is the biggest ever work of hydroelectric engineering to take place in Sudan, and probably in the whole of Africa,” boasts Awad, the master of ceremonies provided by the Sudanese authorities to chaperone us throughout our visit to the dam. Encouraged by the sense of status provided by wearing a tie in the middle of a desert, our friendly guide tells us about the project’s many benefits, but neglects to mention the fact that this shining example of Sudanese infrastructure is also one of the most controversial in the country, both because of its exaggerated costs and the complete lack of transparency in terms of the project’s social and environmental impact.
Still 150 kilometers from Merowe, we head along a new road built by the Chinese which forms part of the infrastructure package accompanying the project. In the heart of the Nubian desert there is barely any traffic or any sign of life apart from a few random settlements where humans and animals defy death in one of the hottest places on the planet. In fact, the terrible heat is precisely one of the arguments put forward by the dam’s critics, who question its location because of the high rates of evaporation in the area: in this place where temperatures can easily reach 50 degrees, over 8 percent of the water brought into Sudan by the Nile is lost when the river becomes stagnant. Experts point out that if the dam had been built in another location, such as on the Ethiopian side of the Nile, water loss would have been seven times smaller. Another source of criticism is the fact that studies measuring the environmental and social impact of the installation were carried out after the building work had already begun. “The research on this subject was also superficial and incomplete. We are repeating the same mistakes made in Egypt on the Aswan Dam, which was an ecological disaster,” says Asim al-Moghrabi, Sudan’s leading environmental expert on the Nile River, who has been studying this essential life source for over forty years.
On the outskirts of Merowe, we turn off the road towards “New Amri 3,” one of the new settlements that the authorities have built in the heart of the desert to house the people displaced by the dam’s construction. The village is home to hundreds of families who live in simple adobe houses surrounded by walls which protect them from sandstorms. There are hardly any signs of life: a handful of children in school uniforms are chatting at the side of the road; a pair of women in white headscarves walk across a dirt track; and a policeman on guard duty sits on a plastic chair with an assault rifle resting on his lap. As our 4×4s make their way along the village’s dirt tracks, we pass two mosques, a health center, a school, two mobile phone masts and a stretch of sand with two iron goalposts which passes for a football pitch. The village may be new, but it is clearly dead: an impossible place with no hope of a future.
Awad strictly refuses to let us get out of the cars at New Amri 3, probably to avoid a repeat performance of what happened the first time we stopped, when a local inhabitant approached us to protest against the damage done by the dam. Looking visibly tense, Awad responded with a forced smile before his assistants made the aggrieved local go away. This sense of deep dissatisfaction among the local population is all too evident in a hostile climate caused by the forced relocation of tens of thousands of people. This is on
top of years of violence and repression, inadequate compensation and the unannounced flooding of dozens of villages which were home to 4,700 families, who lost everything.4 The region’s indigenous Manasir, Amri and Hamdab tribes claim that the dam has completely swept away their traditional agricultural way of life. The fertile land along the banks of the Nile, where generation after generation of their families sowed dates and other crops, celebrated weddings and prayed for their ancestors, is now entirely submerged. Nowadays they live in a sterile environment where farming is impossible, putting an end to the communities’ only source of livelihood. After losing their homes, the communities are barely managing to survive by fishing and the money sent by relatives.5
At the top of a steep slope looking down on the village, at a safe distance from the protests of the people, Awad acknowledges that the relocation process is the biggest problem they have had to face over the course of the project. “Twelve thousand families have been affected; that’s ninety-six thousand people.6 It’s not easy to turn people away from the place where their ancestors lived off the land,” he admits. However, he quickly reverts to describing the many advantages of the dam for the local population. “Before the dam, some of the villagers had to go out in the morning in search of water and wouldn’t get back until the evening. Now they just turn on a tap and they have water. The children go to school, they have healthcare and mobile phones and they can get to Khartoum in just over three hours.” Among all these benefits, he plays down the fact that these people have been left without a way of life. “They can do other kinds of jobs. They can work in transport, hospitals, public services or jobs connected to Khartoum … The dam will develop the whole region and bring new opportunities for everyone,” he insists.
China's Silent Army Page 18
