Chavez Picks a New Fight, with Colombia

Venezuela and Ecuador mass troops on the Colombian border as rhetoric about a rebel ratchets higher. But the real risk may be to the Venezuelan President

Venezuelan President Hugo Chávez. Jaime Razuri/AFP/Getty Images

by Peter Wilson

Venezuelan President Hugo Chávez is no stranger to conflict. Now, in a dispute over the killing of a rebel leader, he may be leading his country to the brink of war with Colombia, one of Venezuela's largest trade and investment partners.

Confronted by growing domestic woes, many claim Chávez is deliberately hunting conflict to divert attention from his government's inability to resolve food shortages and soaring inflation, not to mention growing dissension among his followers. But the conflict comes at a price: Colombia is Venezuela's second-largest supplier of goods as well as an important provider of natural gas. "Chávez is always seeking a fight with someone," says Ramon Hernandez, a 62-year-old Colombian farmer who recently acquired Venezuelan nationality. "He needs conflict to survive, and it doesn't matter to him if it's with poor or rich, young or old."

South American Showdown

On Mar. 2, Chávez ordered 10 troop battalions, including tanks and aircraft, to the Colombian border and withdrew all Venezuelan diplomats from Colombia, closing the embassy, after Raul Reyes, the No. 2 leader in the Revolutionary Armed Forces of Colombia (FARC), was killed just inside Ecuador. Chávez claimed Colombia violated Ecuadoran sovereignty by sending in troops to kill Reyes and was acting on behalf of the U.S. He also threatened military action if Bogotá sent its troops into his country.

"We don't want a war but we are on alert, and we support Ecuador," Chávez said during his weekly TV broadcast. "Colombia is a terrorist state." Chávez also showered insults on Colombian President Alvaro Uribe, calling him an American lackey, a mafiosi, a criminal, and a liar. Colombia was quick to respond: Colombian police chief Oscar Naranjo said Mar. 3 at a televised press conference in Bogotá that documents retrieved from Reyes' computer showed Chávez had recently sent $300 million to the rebels. Other documents showed Chávez had allegedly received financial support from the guerrillas when he was imprisoned in the 1990s after leading an abortive coup.

Chávez had no immediate comment but his vice-president, Ramón Carrizalez, said Venezuela is "accustomed to the lies of the Colombian government." Countries throughout South America, including Brazil, Chile, and Argentina, rushed to mediate the dispute.

Domestic Difficulties

The conflict comes as Chávez is grappling with Venezuela's mounting domestic woes. The oil-rich nation has South America's highest inflation rate, topping 22.5% in 2007, or almost double the government's goal of 10% to 12%. Inflation shows no signs of abating this year, leading the central bank last week to raise the interest rate on savings accounts and credit cards in a bid to dampen consumer spending. Shortages of key food staples, such as milk, cooking oil, poultry, and eggs, persist, cutting into Chávez's popularity.

Oil prices rose to a new record of $103.95 on Monday, primarily in response to a new record low for the U.S. dollar. A barrel of West Texas crude settled at $102.45 on the New York Mercantile Exchange. Large investment funds have been piling into crude and other commodities in recent weeks as a hedging strategy against the weakening dollar.

In December, 2007, voters rebuffed Chávez's effort to rewrite Venezuela's constitution to grant him greater powers and allow him to remain President indefinitely. Chávez has also been unable to boost the country's oil output, especially as he has nationalized large oil projects founded by Exxon Mobil (XOM) and ConocoPhillips (COP). The two companies are now seeking compensation through arbitration. Less than a month ago, Exxon Mobil secured a court order freezing more than $12 billion of assets belonging to the state oil company.