How the U.S. Navy Inadvertently Supports Hugo Chávez
By: James M. Roberts
The Heritage Foundation | Tuesday, March 18, 2008
U.S. Navy and Marine personnel purchase gasoline at their local Navy
Base Exchange, they might be unknowingly supporting America's enemies.
This is happening because the Navy Exchange buys its gasoline from a
company owned by Venezuelan Dictator-President Hugo Chávez. A
designation by the Bush Administration of Venezuela as a
terrorist-sponsoring state would allow the Navy to end this awkward
Hugo Chávez is on an arms-buying spree. Chávez has already bought $3.4 billion
worth of Russian weapons, including "100,000 AK-103s and AK-104 assault
rifles, a munitions factory, 53 helicopters--including a dozen Mi-17
military helicopters--and 24 SU-30MK fighter jets."
Venezuela is negotiating a multi-billion dollar, multi-year contract to
purchase from Russia "five Project 636 Kilo-class diesel submarines and
four state-of-the-art Project 677 Amur submarines....and several Tor-M1
air defense missile complexes." A Chávez military adviser boasts that the Russian submarines will "make Venezuela's navy the strongest in the region," potentially putting the U.S. Navy in harm's way at some point in the future.
The Chávez-Terrorist Connection
addition to this military build-up, new evidence is emerging that
documents Chavez's sinister intentions and actions in the region. The
government of Colombia, assisted by the U.S. government and Interpol,
is analyzing the contents of a laptop belonging to the
second-in-command of the Revolutionary Armed Forces of Colombia (FARC),
Raul Reyes, who was killed by the Colombian military in an attack two kilometers inside Ecuador's border on March 1, 2008.
The U.S. Secretary of State designated the FARC as a Foreign Terrorist Organization in 1997.
In 2003, President George W. Bush designated the FARC as a "significant
foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin
Designation Act due to its extensive narcotics trafficking activities."
The FARC has also been designated as a terrorist organization by the
European Union, Canada, and the Latin American Parliament.
Evidence from the three captured FARC laptops has revealed that Chávez was planning to send $300 million to the FARC
and was pressuring European governments to drop FARC's terrorism
designation. With political legitimacy, FARC could then mount a
political campaign against Colombian President ÁlvaroUribe's party in
the 2010 national elections. There is also evidence from the laptops
that Chávez funneled money to his Chavista ally, Ecuadorian President Rafael Correa, during Correa's 2006 election campaign.
An Awkward Contract
part of Chavez's oil-based financial windfall comes from the U.S. Navy.
Its "Navy Exchange (NEX) Service Command" has a contract, running until
2010, which specifies that Citgo supply gasoline to all NEX service
stations. Formerly known as Cities Service, an American-owned refiner
and gasoline retailer, Citgo was sold in the 1990sand is now owned by
PDV America, Inc., an indirect, wholly owned subsidiary ofthe
state-owned oil company, Petróleos de Venezuela, S.A.
(PdVSA), which is in turn wholly owned and controlled by the Hugo
Chávez-led government of the Bolivarian Republic of Venezuela.
Citgo's refineries are the only ones in the U.S. (and among the few in
the world) built specifically to refine Venezuela's heavy, dirty, and
high-sulfur crude oil, so the Chávez regime is heavily reliant on them for income.
the aggressively anti-American actions of Hugo Chávez, it is at the
least a great irony that the U.S. Navy is buying gasoline from him. A
Navy press spokesman says that "Citgo's competitively bid $60
million-a-year contracts to supply the Navy Exchange with gas run
through 2010....Citgo's relationship with the exchange dates back to
1989." The spokesman reported that any action to prohibit Citgo from
bidding on future contracts could be taken only by Navy headquarters in
The Navy did demonstrate its sensitivity about the issue in 2006,
however, when it replaced Citgo signs with "NEX" signs at all of its
service stations in the aftermath of Chávez's speech in September of
that year at the UN General Assembly, where he called President Bush
A State Sponsor of Terror?
Bush Administration is reportedly investigating whether the actions
taken by the Chávez regime to support and promote the FARC could lead
to Venezuela being placed on the U.S. government's list of state
sponsors of terrorism. 
This action would result in the imposition of four main sets of U.S.
government sanctions: (1) a ban on arms-related exports and sales; (2)
controls over exports of dual-use items for goods or services that
could significantly enhance the terrorist-list country's military
capability or ability to support terrorism; (3) prohibitions on
economic assistance; and (4) imposition of miscellaneous financial and
other restrictions, including: (a) requiring the United States to
oppose loans by the World Bank and other international financial
institutions; (b) lifting diplomatic immunity to allow families of
terrorist victims to file civil lawsuits in U.S. courts; (c) denying
companies and individuals tax credits for income earned in
terrorist-listed countries; (d) denial of duty-free treatment of goods
exported to the United States; (e) authority to prohibit any U.S.
citizen from engaging in a financial transaction with a terrorist-list
government without a Treasury Department license; and (f) prohibition
of Defense Department contracts above $100,000 with companies
controlled by terrorist-list states. 
by the U.S. of Venezuela as a terrorist-sponsoring state would put into
jeopardy the billions of dollars the Chávez regime takes in annually
from the sale of oil to the United States. It would also, incidentally,
give the Navy a way out of its awkward contract with Citgo.
Pablo Bachelet, "U.S. Alerted to Cuba Migration, Chávez Weapons," Miami Herald, February 27, 2008, at www.miamiherald.com/news/americas/cuba/story/435985.html (March 12, 2008).
RIA Novosti, "Venezuela to buy Russian Submarines, Air Defense Systems--Source."
U.S. Department of State, Office of the Coordinator for Counterterrorism, Foreign Terrorist Organizations (FTOs), Fact Sheet,October 11, 2005, at www.state.gov/s/ct/rls/fs/37191.htm (March 12, 2008).
Bajak, "Letters: Ecuador Leader Got Rebel Funds."
Kevin McKenzie, "New Navy Brand; Bases Pull Off Citgo Logo for Their Own Label," The Commercial Appeal (Memphis, TN), May 11, 2007, Page MTB 1.
Department of State, Office of the Coordinator for Counterterrorism,
Country Reports on Terrorism, Chapter 6: State Sponsors of Terror
Overview, April 28, 2006, at www.state.gov/s/ct/rls/crt/2005/64337.htm (March 12, 2008).
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