Venezuela: How to be a Kamikaze Dictator

Hugo Chavez has taken on Exxon Mobil, one of the largest company's of the world. The leader claims the company has teamed up with the United States to wage some type of "economic war" against Venezuela. Exxon Mobil won legal cases in international court against the state owned Petroleos de Venezuela (PDVSA) because the monopoly had taken several assets that belonged to Exxon, and compensation was expected. An article from Stratfor breaks down the situation. The company had basically refused beforehand and now has several billion dollars frozen in assets by international court. Now Chavez has declared that he might cut oil production to the U.S. An excerpt from Stratfor indicates :

Approximately 90 percent of Venezuela’s 2 million barrels per day (bpd) in crude exports either goes to U.S. refineries that are explicitly designed to process Venezuela’s poorer grade of crude or is refined into products subsequently sold to the United States.

Obviously Chavez is making wild threats that he cannot sustain. What's important to notice here is that Venezuela has no real strategic hold over the U.S. The U.S. can easily find new resources or tap into national reserves if necessary. If Chavez does decide to cut oil exports to the U.S. this will be a clear sign that Venezuela will fall apart economically. So how exactly does Chavez plan to fix this economic blunder? An article from the economist gives some clues:

No important new deposits have been found since the president took office
in 1999. Officials admit that PDVSA is short of drilling rigs for exploration
(though Mr Chávez recently loaned two rigs to Ecuador). Much therefore hangs on the development of the Orinoco belt, with its estimated 250 billion barrels of heavy crude. But many of the companies recently invited (without competitive tender) to take part in these projects are state-owned outfits from countries, such as Iran and Belarus, whose governments are friends with Mr Chávez; most lack both the expertise and the financial muscle to develop them.

Chavez may be making friends abroad, but they aren't helping him in the near term. As the article indicates countries such as Iran frankly don't have the funds to develop projects half way around the globe. For now we will most likely continue to see Venezuela's dependence on the U.S. Without proper development and partners abroad, Chavez isn't going to be able to break any deals. Bottom line, If Venezuela finds itself breaching ties with the U.S. it would be in comparison to cutting their own oil filled wrists.