Caracas Chronicles

One of the least explored aspects of Hugo Chávez’s foreign policy has been his relationship with Saudi Arabia.

The Saudis have long been advocates of moderation within OPEC, by virtue of their alliance with the United States and their large spare capacity. Economics suggests that countries with lots of spare capacity for producing oil would tend to prefer moderate prices, while countries with little spare capacity prefer high prices here and now.

Iran and other countries frequently argue for reducing production quotas to achieve ever higher prices, but the Saudis and other Gulf partners have been careful to use their spare capacity to (credibily) threaten their partners within OPEC with excessive zeal in driving prices higher … and plunging their customers into recessions.

It seems that Venezuela, by virtue of its close alliance with Iran and its nonexistent spare production capacity, has played a role in countering Saudi power within OPEC.

This would suggest Chávez has been seen by the Saudis as an antagonist. Yet we don’t have any proof of this. Other that Rafael Ramírez’s frequent statements before OPEC summits directly contradicting Saudi positions, there is little inside information on how the relationship has actually evolved.

The Saudi-Chávez relationship – just one of the many mysteries of the Bolivarian revolution.