February 8, 2011

For the most current version of this Note, see Background Notes A-Z.

PROFILE

Geography
Area: 912,050 sq. km. (352,143 sq. mi.); slightly more than twice the size of California.
Cities: Capital--Caracas (metro. area pop. 3.2 million). Other major cities--Maracaibo, Valencia, Barquisimeto, Maracay, Merida, Ciudad Bolivar.
Terrain: Andes Mountains and Maracaibo Lowlands in northwest; central plains; Guiana Highlands in southeast.
Climate: Varies from tropical to temperate, depending on elevation.

People
Nationality: Noun and adjective--Venezuelan(s).
Population (Dec. 2009 est.): 28,385,627.
Annual population growth: 1.6%.
Religion: Roman Catholic 96%, Protestant 2%, other 2%.
Language: Spanish (official), numerous indigenous dialects.
Education: Years compulsory--9. Literacy--95%.
Health: Infant mortality rate (2008)--16 deaths/1,000 live births. Life expectancy (2007)--73.58 years.
Ethnic groups: Spanish, Italian, Portuguese, Arab, German, African, Amerindian.

Government
Type: Federal Republic.
Independence: July 5, 1811.
Constitution: December 20, 1999.
Branches: Executive--President (head of government and chief of state; 6-year term); Council of Ministers (cabinet, appointed by president). Legislative--unicameral National Assembly (5-year term). Judicial--32-member Supreme Court (elected by National Assembly; 12-year term). Electoral--National Electoral Council (elected by National Assembly; 7-year term). Citizen Power--Prosecutor General, Public Defender, Comptroller General (elected by National Assembly; 7-year term).
Subdivisions: 23 states, one federal district (Caracas), and one federal dependency (72 islands).
Major political parties: United Socialist Party of Venezuela (PSUV), Communist Party of Venezuela (PCV), Democratic Action or Accion Democratica (AD), Christian Democrats or Comite Organizador Politico por Elecciones Independientes (COPEI), Homeland for All or Patria Para Todos (PPT), Movement to Socialism or Movimiento al Socialismo (MAS), Radical Cause or La Causa Radical, First Justice or Primero Justicia, the National Convergence or Convergencia, For Social Democracy (Podemos), Un Nuevo Tiempo (UNT), and Project Venezuela.
Suffrage: Universal, age 18 and over.
Principal government officials: See listing under History and Political Conditions section.

Economy
GDP (2009): $326 billion.
Annual growth rate (2009): -3.3%.
GDP per capita (2009): $11,509.
Government expenditures (2009): 28% of GDP.
Natural resources: Petroleum, natural gas, coal, iron ore, gold, diamonds, bauxite, other minerals, hydroelectric power.
Petroleum industry (11.6% of 2009 GDP in constant 1997 dollars): Oil refining, petrochemicals.
Manufacturing (15.2% of 2009 GDP in constant 2007 dollars): Types--iron and steel products, paper products, aluminum, textiles, transport equipment, consumer products.
Agriculture (4% of GDP): Products--corn, sorghum, rice, bananas, vegetables, coffee, beef, pork, poultry, milk, eggs, fish.
Trade: Exports (2009)--$60.9 billion: petroleum ($57.6 billion), aluminum, steel, chemical products, iron ore, cigarettes, plastics, fish, cement, and paper products. Major markets (2005)--U.S. 57.5%, the Netherlands 5.2%, Mexico 4.5%, Colombia 4.5%. Imports (2009)--$38.5 billion: consumer goods, machinery and transport equipment, manufactured goods, construction materials. Major suppliers (Jan.-Oct. 2009)--U.S. 27.0%, Colombia 12.6%, China 10.2%, Brazil 8.2%.
Exchange rate (2010): Beginning January 2010, two official exchange rates were established--2.6 bolivares fuertes=U.S. $1 for some transactions, and 4.3 bolivares fuertes=U.S. $1 for other transactions. The exchange rate under the so-called SITME system, a bond-swap mechanism established under the supervision of the Central Bank in June 2010, averaged 5.3 bolivares fuertes=U.S. $1. On December 30, the dual exchange rate system was eliminated, and the exchange rate was unified at 4.3 bolivares per dollar.

PEOPLE
An estimated 28 million people lived in Venezuela as of 2009. The population growth rate is 1.6% per year, and roughly 50% of Venezuelans are under the age of 25. According to the 2001 census, almost 90% of the population lives in urban areas. Metropolitan Caracas, the country's largest city, has an estimated 3.2 million inhabitants. Venezuela is proud of its tradition as a melting pot, and the majority of its citizens have a mixed racial heritage of Caucasian, African, and American Indian elements.

HISTORY AND POLITICAL CONDITIONS
At the time of Spanish discovery, the natives in Venezuela were mainly agriculturists and hunters living in groups along the coast, the Andean mountain range, and the Orinoco River. The first permanent Spanish settlement in South America--Nuevo Toledo--was established in Venezuela in 1522. Venezuela was a relatively neglected colony in the 1500s and 1600s as the Spaniards focused on extracting gold and silver from other areas of the Americas.

Toward the end of the 18th century, the Venezuelans began to grow restive under colonial control. In 1821, after several unsuccessful uprisings, the country succeeded in achieving independence from Spain, under the leadership of its most famous son, Simon Bolivar. Venezuela, along with what are now Colombia, Panama, and Ecuador, was part of the Republic of Gran Colombia until 1830, when Venezuela separated and became a separate sovereign country.

Much of Venezuela's 19th-century history was characterized by periods of political instability, dictatorial rule, and revolutionary turbulence. The first half of the 20th century was marked by periods of authoritarianism--including dictatorships from 1908-35 and from 1950-58. In addition, the Venezuelan economy shifted after the First World War from a primarily agricultural orientation to an economy centered on petroleum production and export.

Since the overthrow of Gen. Marcos Perez Jimenez in 1958 and the military's withdrawal from direct involvement in national politics, Venezuela has enjoyed an unbroken tradition of civilian democratic rule. This earned Venezuela a reputation as one of the more stable democracies in Latin America. Until the 1998 elections, the Democratic Action (AD) and the Christian Democratic (COPEI) parties dominated the political environment at both the state and federal level.

The Caracazo and Popular Dissatisfaction
Venezuela's prevailing political calm came to an end in 1989, when Venezuela experienced riots in which 200 people were reportedly killed in Caracas. The so-called “Caracazo” was a response to an economic austerity program launched by then-President Carlos Andres Perez. Three years later, in February 1992, a group of army officers led by then-Lt. Col. Hugo Chavez mounted an unsuccessful coup attempt, claiming that the events of 1989 showed that the political system no longer served the interests of the people. Chavez was convicted of rebellion and jailed for his role in the coup, but was released in 1994. A second unsuccessful coup attempt by other officers affiliated with Chavez followed in November 1992, while Chavez remained in jail. A year later, Congress impeached Perez on corruption charges.

Deep popular dissatisfaction with the traditional political parties, income disparities, and economic difficulties were some of the major frustrations expressed by Venezuelans following Perez's impeachment. In December 1998, Hugo Chavez Frias won the presidency on a campaign for broad reform, constitutional change, and a crackdown on corruption.

Constitutional Reforms
President Chavez also had campaigned for the election of a National Constituent Assembly to write a new constitution. The National Constituent Assembly (ANC), consisting of 131 elected individuals, convened in August 1999 to begin rewriting the constitution. Venezuelans approved the ANC's draft in a national referendum on December 15, 1999. The political system described below is that defined by the 1999 constitution.

The president is elected by a plurality vote with direct and universal suffrage. The term of office is 6 years, and subsequent to a national referendum to amend the constitution on February 15, 2009, there are no term limits for elected officials. The president appoints the vice president. He decides the size and composition of the cabinet and makes appointments to it, in consultation with the National Assembly. Legislation can be initiated by the executive branch, the legislative branch (either a committee of the National Assembly or three members of the latter), the judicial branch, the citizen branch (public defender, prosecutor general, and comptroller general) or a public petition signed by no fewer than 0.1% of registered voters. The president can ask the National Assembly to reconsider portions of laws he finds objectionable, but a simple majority of the Assembly can override these objections.

The National Assembly is unicameral, consisting solely of the Chamber of Deputies. Deputies serve 5-year terms, and may be re-elected indefinitely. These legislative agents are elected by a combination of party list and single member constituencies. When the National Assembly is not in session, a delegated committee acts on matters relating to the executive and in oversight functions. In December 2005 pro-government parties took all 167 seats in the National Assembly after opposition parties boycotted the election over concerns with electoral conditions. When President Chavez created the United Socialist Party of Venezuela (PSUV) in 2007, the “Podemos” party, previously affiliated with the government, refused to join the new umbrella party. Consequently, Podemos, with its 7 seats, and another later breakaway group, the Ecological and Humanistic Front, with 5 seats, were the only caucuses in the National Assembly not affiliated with the government during the 2005-2010 National Assembly session.

The constitution designates three additional branches of the federal government--the judicial, citizen, and electoral branches.

The judicial branch is headed by the Supreme Tribunal of Justice (TSJ), which may meet either in specialized chambers (of which there are six) or in plenary session. The National Assembly appoints justices, who serve 12-year terms. Under the 1999 constitution, the TSJ was composed of 20 justices. The 1999 constitution was amended in 2004, and the number of justices was expanded by 12 to a total of 32. In December 2004, the National Assembly selected new judges to fill these new positions. The judicial branch also consists of lower courts, including district courts, municipal courts, and courts of first instance. In December 2010, the National Assembly selected 9 new judges to replace outgoing judges.

The citizens branch consists of three components--the prosecutor general ("fiscal general"), the "public defender," and the comptroller general. The holders of these offices, in addition to fulfilling their specific functions, also act collectively as the "Republican Moral Council" (RMC). The RMC challenges actions they believe are illegal before the Supreme Tribunal of Justice, particularly those which violate the constitution. The leadership of the RMC rotates among the three officials for 1-year periods. The holders of the "citizen power" offices are selected for terms of 7 years by the National Assembly.

The "Electoral Power," otherwise known as the National Electoral Council (Consejo Nacional Electoral or CNE), is responsible for organizing elections at all levels. Its five members are also elected to 7-year terms by the National Assembly. In the event of a hung vote in the National Assembly, the Supreme Tribunal of Justice can be called on to appoint the members.

Political Turmoil
In July 2000, voters re-elected President Hugo Chavez of the Fifth Republic Movement (MVR). The election occurred under the new constitution in elections that the international community found to be generally free and fair. The MVR and the pro-Chavez Movimiento al Socialismo (MAS) parties won 92 seats in the 165-member legislature. In April 2002, the country experienced a temporary alteration of constitutional order which included the temporary departure of Chavez from the presidency. When an estimated 400,000 to 600,000 persons participated in a march in downtown Caracas to demand President Chavez's resignation, gunfire broke out, resulting in as many as 18 deaths and more than 100 injuries on both sides. Military officers took President Chavez into custody, and business leader Pedro Carmona swore himself in as interim President. Less than 2 days later, military troops loyal to Chavez returned him to power. A national reconciliation process, with participation by the Organization of American States (OAS), the UN Development Program, and the Carter Center, was unsuccessful in stopping further conflict. Opposition leaders called a national work stoppage on December 2, 2002. Strikers protested the government and called for the resignation of President Chavez. The oil sector joined other sectors of the economy and effectively shut down all economic activity for a month. The OAS Permanent Council passed Resolution 833 on December 16, 2002, calling for a "constitutional, democratic, peaceful, and electoral solution" to the crisis in Venezuela. The strike formally ended in February 2003 as political opponents of Chavez changed tactics, focusing on a recall referendum to revoke the mandate of the president.

The Recall Referendum Process
For a recall to occur, the promoters must obtain signatures for 20% of all registered voters. Preparations for the recall were delayed by the lack of a quorum in the National Electoral Council (CNE). In September 2003, after an impasse in the National Assembly, the Supreme Court resolved the issue by naming a new CNE board of directors. After months of intense deliberations that included two conflicting signature drives overseen by the CNE, deep disagreements and occasional violence over the CNE’s disqualification of signatures on the petition, and the intervention of international electoral observers, the CNE certified that the opposition had obtained sufficient signatures to trigger the vote mechanism and set the date of the recall referendum for August 15, 2004. According to the CNE, President Chavez won 59% of the vote. His opponents immediately claimed electoral fraud. However, international electoral observation missions carried out by the Organization of American States and the Carter Center found no indication of systemic fraud.

From Referendum to Elections
In the wake of the referendum victory, pro-Chavez candidates continued to sweep other electoral contests. Chavez supporters won 20 out of the total 22 state governor positions up for election in October 2004. Chavez supporters also won a majority of the seats in the August 2005 municipal council elections. Pro-Chavez parties won all 167 seats in the December 2005 National Assembly elections, after most opposition candidates boycotted the elections over voter secrecy concerns. The final reports of the European Union (EU) and OAS observer missions to the 2005 legislative elections, which were marked by record-high abstention, noted high levels of distrust in electoral institutions. The reports made specific recommendations to increase transparency and help voters regain the confidence necessary for participation. Most recommendations were not implemented.

A New Term and New Administration
President Chavez was re-elected by an overwhelming majority (63%) in the December 3, 2006 presidential elections. He defeated Zulia Governor Manuel Rosales, whose Un Nuevo Tiempo (UNT) party formed an alliance with several significant opposition parties. Though international observers found no evidence of election fraud, they did note concerns over abuse of government resources used to support the Chavez campaign, voter intimidation tactics, and manipulation of the electoral registry.

In January 2007, President Chavez announced a renewed effort to implement his vision of "21st Century Socialism" in Venezuela. He asked the National Assembly to grant him special constitutional powers via an "enabling law" to rule by decree with respect to a broad range of issues. The all-“chavista” Assembly granted those powers, for a period of 18 months. Chavez used that authority to take major steps to nationalize the telecommunications and electricity sectors, as well as to finalize a majority government share in many oil projects, all sectors with significant foreign investments.

On August 15, 2007, President Chavez proposed a package of reforms to the 1999 constitution, including measures that allowed indefinite presidential re-election, a reorganization of the geographic boundaries of government, and a redefinition of private property. On December 2, 2007, the proposed reforms were narrowly defeated in a public referendum after student groups, traditional opposition leaders, and former Chavez allies urged Venezuelans to reject the package. The vote was the first electoral loss for President Chavez since he assumed office and was seen as a rebuke of his efforts to consolidate greater power in the executive office. President Chavez has since passed some of the changes defeated in the referendum by presidential decree or legislation. Indeed, Chavez organized a vote on a constitutional amendment to end term limits for all elected officials, which was approved on February 15, 2009.

Gubernatorial and mayoral elections were held nationwide in November 2008. These state and local elections were deemed largely free and fair, although electoral nongovernmental organizations noted some irregularities, such as prohibited election-day campaigning and extended polling hours in pro-government neighborhoods.

In the first months of 2009, the Chavez administration passed a series of new laws, including laws to centralize control over ports, roads, and airport; nationalize major industries; and strip the opposition mayor of Greater Caracas of authority and resources.

In legislative elections held on September 26, 2010, Chavez’ PSUV party won 98 seats, the opposition’s Democratic Unity Table (MUD) 65 seats, and the “third way” Patria Para Todos (PPT) party 2 seats. Debate continues over the national popular vote, with Chavez claiming the PSUV won a majority (by 100,000 votes) and the opposition claiming a 52% majority when all non-PSUV parties are counted together.

Following the September 26 elections, the PSUV moved quickly to accelerate implementation of President Chavez’ "Bolivarian Revolution" in advance of the January 5, 2011 convening of the new National Assembly. In addition to appointing nine Chavez loyalists to the TSJ, PSUV deputies approved a series of laws aimed at creating a “communal” state and economy; limiting internal rules for assembly debate; prohibiting party defections; and increasing government control over the independent media, Internet, banks, and non-governmental organizations (NGOs). It also approved a fourth “enabling law” granting President Chavez decree powers for 18 months, effectively marginalizing the legislative power of the newly-elected opposition deputies.

Principal Government Officials
President--Hugo CHAVEZ Frias
Vice President--Elias JAUA Milano
Minister of Foreign Affairs--Nicolas MADURO Moro
Minister of Defense--Carlos Jose MATA Figueroa
Ambassador to the United States--vacant
Ambassador to the Organization of American States--Roy CHADERTON Matos
Ambassador to the United Nations--Jorge VALERO Briceno

The Venezuelan embassy in the United States is located at 1099 30th St. NW, Washington, DC 20007 (tel. (202) 342-2214). In addition to Washington, DC, Venezuela maintains consulates in Boston, Chicago, Houston, Miami, New Orleans, New York, San Francisco, and Puerto Rico.

ECONOMY
Real GDP contracted 3.3% in 2009, indicating a decrease in government expenditures and private consumption as a result of a drop in oil prices. The economic contraction continued in 2010 when real GDP decreased by 3.5% during the period January-June 2010 compared with the same period of 2009. The Consumer Price Index increased by 27.9% from September 2009 until September 2010, following increases of 25.1% in 2009, 30.9% in 2008, and 22.5% in 2007.

All requests for foreign exchange at the official exchange rate must be approved by the National Exchange Control Administration (CADIVI), and the Central Bank (BCV) completes all legal purchase and sale of foreign currency. On January 11, 2010, the Venezuelan Government devalued the bolivar and established two official exchange rates, one of 2.6 bolivares=U.S. $1.00 (for certain prioritized transactions) and another of 4.3 bolivares=U.S. $1.00 (for other transactions). A legal alternative exchange market called the parallel or “permuta” market was abolished by the government in May 2010. A replacement market called the Transaction System for Foreign Exchange Denominated Securities (SITME) began to operate in June 2010. SITME is accessed through authorized Venezuelan financial institutions and operates by means of a bond-swap mechanism through the Central Bank. The SITME exchange rate has averaged 5.3 bolivares=U.S. $1.00 since transactions began. Any other foreign exchange transactions are not legally permitted, although a black market is reported to exist. Central Bank international reserves were U.S. $29.4 billion at the end of September 2010. On December 30, the government announced the elimination of the dual exchange rate system and unified the exchange rate at 4.3 bolivares per dollar.

The Venezuelan Government dominates the economy. The state oil company, PDVSA, controls the petroleum sector. Government companies control the electricity sector and important parts of the telecommunications and media sectors. In 2008, the government nationalized cement and steel producers, as well as select companies in the milk and meat distribution sectors. In 2009 it nationalized assets in the oil (including assets owned by U.S. oil services companies), chemicals, tourism, agribusiness (including a processed rice plant owned by a U.S. company), retail, and banking industries. In 2010, the government nationalized companies in the agricultural and construction sectors as well as U.S. assets in the petrochemical and packaging industries. A number of U.S. companies whose assets have been nationalized in Venezuela have chosen to pursue their claims through international arbitration. Threats of continuing nationalizations, as well as other threats to property rights and an uncertain macroeconomic environment characterized by high inflation and foreign exchange controls, have led to reduced space for the private sector and low levels of private investment.

There is considerable income inequality. The Gini coefficient was 0.39 in the second half of 2009. According to government statistics, the percentages of poor and extremely poor among Venezuelan households were 23.8% and 5.9%, respectively, in the second half of 2009.

Petroleum and Other Resources
Economic prospects remain mostly dependent on oil prices and the export of petroleum. The oil sector accounts for roughly 12% of GDP, 94% of export earnings, and more than half of the central government's ordinary revenues. Venezuela remains an important supplier of imported crude and refined petroleum products to the United States.

In the 1990s, the Government of Venezuela opened up much of the hydrocarbon sector to foreign investment, promoting multi-billion dollar investment in heavy oil production, reactivation of old fields, and investment in several petrochemical joint ventures. By the late 1990s almost 60 foreign companies representing 14 different countries participated in one or more aspects of Venezuela's oil sector. On November 13, 2001, under an enabling law authorized by the National Assembly, President Chavez enacted a new Hydrocarbons Law, which came into effect in January 2002. The new law provided that all oil production and distribution activities would be the domain of the Venezuelan state, with the exception of the joint ventures targeting extra-heavy crude oil production. Private investors cannot own 50% or more of the capital stock in joint ventures involved in upstream activities. The new law also provided that private investors could own up to 100% of the capital stock in downstream ventures. A Gaseous Hydrocarbons law promulgated earlier by the Chavez government also allowed substantial participation by private investors with respect to gas production ventures.

During the December 2002-February 2003 general strike, petroleum production and refining by PDVSA, the state-owned oil company, almost ceased. Despite the strike, these activities eventually were substantially restarted. Out of a total workforce of 45,000, over 20,000 PDVSA management and workers were subsequently dismissed because the government asserted they had abandoned their jobs during the strike. Current levels of production remain a subject of debate, with considerable difference between the levels cited by the Venezuelan Government and those cited by private sector and international observers.

In early 2005, the government informed companies with operating service contracts for mature fields that they must migrate the contracts to joint ventures that conform to the 2001 Hydrocarbons Law. The government threatened to seize fields operating under the services contracts on December 31, 2005 if oil companies did not sign transition agreements to migrate their contracts. All but three companies ultimately signed joint venture agreements with the government. One company was bought out by its partner, while the fields operated by two other companies were ultimately taken over by the government. These disputes were handled by negotiation. In early 2007, President Chavez announced that the Venezuelan Government would take a majority government share in the remaining foreign investments in the oil sector, including the four heavy-oil "strategic associations" in the Orinoco belt. Several international oil companies agreed to migrate their interests to joint ventures with majority government ownership. Two U.S. companies decided to pull out of Venezuela and have filed for international arbitration.

In May 2009, the National Assembly passed an oil services sector law reserving to the state all primary hydrocarbons activity. This legislation laid the foundation for the expropriation of nearly 80 oil services companies, including three U.S. firms. The National Assembly in June 2009 passed legislation to require private-sector petrochemicals producers to enter joint ventures with Petroquímica de Venezuela (Pequiven, the state chemicals company). This will affect many foreign companies operating in Venezuela.

In February 2010, the government announced winning consortia in the Carabobo bid round, allowing two private sector consortia to negotiate the formation of mixed companies to produce crude and to develop heavy oil upgraders in the Carabobo region of the Orinoco belt. This was the first new bid round in the oil sector conducted since President Chavez came to power in 1999.

Trade, Manufacturing, and Agriculture
Despite political tensions between the United States and Venezuela, the United States remains Venezuela's most important trading partner. In 2009, bilateral trade topped U.S. $37.4 billion. Venezuelan exports to the United States were U.S. $28.1 billion (accounting for at least 42% of total Venezuelan exports), and U.S. exports to Venezuela were $9.3 billion (or 24.2% of total Venezuelan imports). The U.S. is the single most important customer for Venezuelan oil. Venezuela shipped an average of 1.1 million barrels of crude oil and petroleum products per day to the U.S. in 2009, a figure which accounted for at least half of Venezuelan oil exports and 10.9 % of U.S. oil imports.

Manufacturing contributed an estimated 15.4% of GDP in real terms in 2009, according to the Central Bank of Venezuela. The manufacturing sector remained hindered by a marked lack of private investment and a highly overvalued official exchange rate that inhibits exports and makes it difficult to compete against imports. Venezuela manufactures and exports steel, aluminum, textiles, apparel, beverages, and foodstuffs. It produces cement, tires, paper, fertilizer, and assembles cars both for domestic and export markets.

Agriculture accounts for approximately 4% of GDP, 10% of the labor force, and at least one-fourth of Venezuela's land area. Venezuela exports cigarettes, fish (primarily domestically raised crab and shrimp), tropical fruits, cocoa, and manufactured products. The country is not self-sufficient in most areas of agriculture. Venezuela imports about two-thirds of its food needs. In 2009, U.S. firms exported $ $967 million worth of agricultural products, including wheat, corn, soybeans, soybean meal, cotton, animal fats, vegetable oils, fruits, nuts, dairy products, processed fruits and vegetables, and other items to make Venezuela one of the top two U.S. markets in South America. The United States supplies roughly one-quarter of Venezuela's food imports.

Labor and Infrastructure
Official unemployment statistics registered 6.6% unemployment at year-end 2009, although such statistics do not account for workers in the informal sector of the economy, which constitutes approximately half of the country’s total workforce. The public sector employs about 20% of the workforce. Only 12% of workers are unionized. Of those employed, a significant proportion work in the “informal” sector.

Labor unions allege the government repeatedly violates International Labor Organization (ILO) agreements on freedom of association and the right to organize and bargain collectively. Specifically, the constitution and laws permit undue influence in the internal elections of unions. The government has told the ILO it will correct the problem; draft legislation remains pending in the National Assembly.

Venezuela has an extensive road system. With the exception of air service, transportation has failed to keep pace with the country's needs. Much of the infrastructure suffers from inadequate maintenance. Caracas has a modern subway but only one functioning rail line serves the rest of the country. Venezuela’s ports, recently nationalized, do not currently match the country’s status as a trader. Venezuela’s importers and exporters complain of delays and high costs.

FOREIGN RELATIONS
President Chavez has promoted his "Bolivarian Revolution" as a model for other countries to follow. The policy calls for the establishment of a "multi-polar" world, the end of alleged U.S. hegemony, and greater integration among developing countries. Venezuela supports regional integration through its PetroCaribe and PetroSur petroleum initiatives, the further institutionalization of the South American Community of Nations (UNASUR) through the appointment of a secretary general, the establishment of a new Community of Latin American and Caribbean States (CALC), and the Bolivarian Alliance for the Americas (a political, economic, and social integration project proposed by President Chavez as an alternative to the Free Trade Area of the Americas). In April 2006, President Chavez announced he was withdrawing Venezuela from the Andean Community trade bloc. In July 2006, Venezuela officially joined the Southern Common Market, MERCOSUR. Before it can become a full member of MERCOSUR, Venezuela must conform to the trade bloc's economic regulations. Congressional approval by Paraguay is also still outstanding. The Venezuelan Government maintains very close relations with Cuba.

The Venezuelan Government broke diplomatic relations with Colombia after a July 22, 2010 special session of the OAS Permanent Council in which Colombia charged that the Venezuelan Government was permitting members of the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN) to use Venezuelan territory to rest and regroup, engage in narcotics trafficking, and extort protection money and kidnap Venezuelans to finance their operations. On August 10, 2010, newly-inaugurated Colombian President Juan Manual Santos and President Chavez met in Santa Marta, Colombia, and announced the restoration of diplomatic relations, including the establishment of a bilateral commission with five working groups, including one on security. Since then, there have been ministerial-level meetings to discuss bilateral security issues. On November 19, 2010, Venezuelan Minister of Interior and Justice Tarek El Aissami and Colombian Defense Minister Rodrigo Rivera publicly announced their intention to begin bilateral cooperation to combat narcotrafficking and said a bilateral agreement reflecting this commitment would be signed at a summit meeting in February 2011. Following a December ministerial-level meeting, the Venezuelan Government announced that it would share real-time information on drug trafficking routes with the Colombian Government.

Since 2005, President Chavez has deepened relations with Iran, a U.S.-designated state sponsor of terrorism, by signing multiple economic and social accords and publicly supporting Iran's controversial nuclear program. Chavez continued to define Iran as a close "strategic ally." During 2010, the two governments announced further measures to strengthen their bilateral relationship, especially in the energy sector. On August 18, the Venezuelan Ambassador to Iran publicly said, "We are at the service of Iran and whenever Iran needs it, we will supply it with gasoline." On October 28 the Minister of Energy and Petroleum said that Venezuela had ceased to sell gasoline to Iran because Iran had "resolved its issues with gasoline." During President Chavez' October visit to Iran, he signed 11 agreements in the oil, energy, industrial, and commercial sectors. In a June 10 communique, the Venezuelan Government condemned UN Security Council Resolution 1929, which imposed new sanctions on Iran, claiming the resolution "attacks again the dignity" of Iran. The statement reiterated the Venezuelan Government's "unrestricted support for the legitimate aspirations" of Iran for the use of nuclear energy for peaceful purposes. During his October visit to Iran, President Chavez underscored his opposition to the "illegitimate" sanctions against Iran and asserted that the Venezuelan Government "will back Iran under any circumstances and without conditions."

President Chavez has also reached out to North Korea, Belarus, and Syria, the latter another state sponsor of terrorism. The Venezuelans have also embarked on a worldwide effort to increase their presence in embassies overseas in Africa and Asia and strengthen economic, political, and military ties with Russia and China. President Chavez has also launched a major arms purchase program for the Venezuelan Armed Forces, including the purchase of new and advanced weaponry. Since 2005, Venezuela has purchased over $4 billion in arms from Russia. These purchases include 100,000 AK-103 rifles from Russia; the construction of a rifle and ammunition complex; Russian Mi-35 HIND attack and Mi-26 transport helicopters; 24 Sukhoi Su-30 fighter jets; IGLA-S man-portable air defense systems; and K-8 jet trainers from China. Other proposed purchases include an advanced integrated air defense system, over 90 T-72 tanks, a few hundred armored personnel carriers, Smerch mobile rocket launchers, and four KILO class diesel submarines, all from Russia.

During 2010, the Spanish Government asked the Venezuelan Government for information regarding allegations that it was providing support to the Basque terrorist group Euskadi ta Askatasuna (ETA). In October, the Spanish Government requested the extradition of Arturo Cubillas Fontan, a naturalized Venezuelan citizen, in connection with an ongoing investigation in Spain about ETA-FARC links in Venezuela. Chavez "dismissed and denied" the accusations that ETA members had received training in Venezuela. The Venezuelan prosecutor general said the constitution prohibited the extradition of Venezuelan nationals.

Venezuela has longstanding border disputes with Colombia and Guyana, but seeks in general to resolve them peacefully. Bilateral commissions have been established by Venezuela and Colombia to address a range of pending issues, including resolution of the maritime boundary in the Gulf of Venezuela. Relations with Guyana are complicated by Venezuela's claim to roughly three-quarters of Guyana's territory. Since 1987, the two countries have held exchanges on the boundary under the "good offices" of the United Nations.

U.S.-VENEZUELAN RELATIONS
U.S.-Venezuelan relations have been tense in recent years, although both nations agreed at the April 2009 Summit of the Americas in Trinidad to seek a relationship based on mutual interest. President Chavez continues to define himself in opposition to the United States, using incendiary rhetoric to insult the U.S. Government and U.S. influence in Latin America. President Chavez ordered the expulsion of the U.S. Ambassador on September 11, 2008 in solidarity with the Bolivian Government's decision to expel the U.S. Ambassador in La Paz. The U.S. Government ordered the reciprocal expulsion of the Venezuelan Ambassador in Washington. Venezuela and the U.S. returned the ambassadors to their posts in June and July 2009, respectively, after an unusual agreement by each country to declare without effect the “persona non grata” designations. On December 20, 2010 the Venezuelan Government revoked agrement for Ambassador-designate Larry Palmer, which had been issued in May, and on December 27, the United States revoked the diplomatic visa of Ambassador Bernardo Alvarez. Notwithstanding tensions in the bilateral relationship, the United States continues to seek constructive engagement with the Venezuelan Government, focusing on areas where cooperation is in both nations’ interest. Examples of such overlapping interests include cooperation in confronting narcotics trafficking and terrorism, as well as the commercial relationship.

U.S.-Venezuelan commercial ties are deep. The United States is Venezuela's most important trading partner, with U.S. goods accounting for about 25% of imports and approximately 50% of Venezuelan exports going to the United States according to Bancoex, the Venezuelan Bank of Foreign Commerce. In turn, Venezuela is the United States' fifth-largest export market in Latin America, purchasing U.S. machinery, transportation equipment, agricultural commodities, and auto parts. Venezuela is one of the top four suppliers of foreign oil to the United States. The Department of State is committed to promoting the interests of U.S. companies in overseas markets. For contact information and a list of government publications, please go to the end of this document.

Venezuela is a minor source country for opium poppy and coca but a major transit country for cocaine and heroin. Money laundering and judicial corruption are major concerns. In 2004 and early 2005, counternarcotics cooperation between the U.S. and Venezuela deteriorated significantly. In March 2005, the Venezuelan National Guard removed its highly experienced members from the U.S.-supported Prosecutor's Drug Task Force. In August 2005, the Government of Venezuela accused the U.S. Drug Enforcement Administration (DEA) of espionage and terminated cooperation with the DEA pending negotiation of a new cooperation agreement, which had gone unsigned as of October 2006. The United States has concluded that Venezuela demonstrably failed to meet its international counternarcotics obligations every year since 2005.

In June 2009, Venezuela was listed for the second year as a Tier 2 Watchlist status in the State Department's Trafficking in Persons Report. Tier 2 Watchlist status indicates that a country does not fully comply with the minimum standards for the elimination of trafficking; however, it is making significant efforts to do so.

Approximately 18,000 U.S. citizens living in Venezuela have registered with the U.S. Embassy, an estimated three-quarters of them residing in the Caracas area. An estimated 13,000 U.S. tourists visit Venezuela annually. About 500 U.S. companies are represented in the country.

Principal U.S. Embassy Officials
Charge d’Affaires, a.i.--John Caulfield
Political Counselor--Robin Meyer
Economic Counselor--Darnall Steuart
Acting Commercial Counselor--Eric Olson (Quito)
Regional Security Officer--Wendy Bashnan
Public Affairs Counselor--John Connerley
Consul General--Mark Ellis (Acting)
Management Counselor--Cecilia Elizondo-Herrera

U.S. Embassy
Calle F and Calle Suapure
Colinas de Valle Arriba
Caracas, Venezuela
(tel. 58-212-975-6411)

Office hours are 8 a.m. to 5 p.m., Monday through Friday.

Other Government Contacts
U.S. Department of State
Bureau of Western Hemisphere Affairs
2201 C. Street, NW
Washington, DC 20520
Main Switchboard: 202-647-4000 (http://www.state.gov)

U.S. Department of Commerce, Trade Information Center, International Trade Administration
14th and Constitution Avenue, NW
Washington, DC 20230
Main Switchboard: 800-USA-TRADE (http://trade.gov)

Venezuela-American Chamber of Commerce
Torre Credival, Piso 10
2nda Avenida de Campo Alegre
Campo Alegre, Apartado 5181
Caracas 1010A, Venezuela
Tel: 58-212-263-0833, Fax: 58-212-263-1829/0586
E-mail: Venam@ven.net

[This is a mobile copy of Venezuela (02/08/11)]