Venezuela's Oil Deal for U.S. Poor Draws Heat

Venezuela has been selling oil — far below market cost — to people in poor neighborhoods in New York and Massachusetts. Since Venezuela's leftist President Hugo Chavez has fragile relations with the Bush administration, the gesture has created diplomatic fallout.

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MADELEINE BRAND, host:

This is DAY TO DAY from NPR News. I'm Madeleine Brand.

As a trading partner, Venezuela is the fourth largest oil supplier to the US. As a hemispheric neighbor, Venezuela is a major annoyance to the US. The governments of Hugo Chavez and George W. Bush have not gotten along. And this winter, Chavez has bypassed official channels and embarked on a program to give heating oil to the neediest US citizens. It's working so well that dozens of communities want in on the discount. NPR's Mike Pesca has more on the origins of the program.

MIKE PESCA reporting:

Viewed one way, you have an oil company with gas stations on hundreds of street corners throughout the Northeast, delivering discounted heating fuel to the inner city, a city, by the way, which counts the oil company's sign as its biggest advertising landmark; winners all around. Or the same story viewed through a lens darkly looks like this: a quasi-autocratic ruler of a poor country, distrusted by the US, buys some favorable coverage by giving away his country's resources at below market prices. And you thought "Syriana" was a muddled tale of oil and international diplomacy. The story of Venezuela's gift to needy Americans goes back to at least autumn of last year when a dozen Democratic senators wrote to nine oil companies to ask for assistance with oil.

One company responded, Citgo, the ones with the big sign above Boston's Fenway Park. They're also the ones now wholly owned by Petrovesa, the national oil company of Venezuela. Rafael Gomez, Citgo's vice president for public affairs, explained that the senators' letter was unnecessary as Citgo was already donating funds in the wake of Hurricane Katrina.

Mr. RAFAEL GOMEZ (Citgo): Then we say we don't need the letter. We are working on that. We have this responsibility.

PESCA: As the senators were making their requests, two Democratic congressmen were going through their own channels. One was William Delahunt of Massachusetts, the other was Jose Serrano of the Bronx, who persuaded Hugo Chavez to visit his district last September. While there, the president leaned over to the congressmen with a proposal

Representative JOSE SERRANO (Democrat, New York): As he's reading, he says, `Among some things I'd like to do, I'd like to see if Citgo would be able to provide folks in your district with low-cost home heating oil.

PESCA: Serrano's district was a logical recipient of Citgo's charity for two reasons. One is the neighborhood Serrano serves.

Rep. SERRANO: I still represent the poorest congressional district in the nation.

PESCA: The other is his opinion of Chavez.

Rep. SERRANO: It's hard to find someone who supports that government more than I do.

PESCA: President Chavez calculated that this program would, for once, make him look good in the eyes of the US media. Though democratically elected, Chavez has aggressively taken on his opposition, who, it should be said, is aggressively opposed to the populist left-wing president. Through a new constitution, Chavez weakened the Venezuelan legislative and judicial branches while strengthening the office of the presidency. His opposition to a recall petition included instances of forceful intimidation. He also brought charges of treason against his political rivals. Perhaps most alarming to US officials is his embrace of Cuban leader Fidel Castro and his severe rhetoric. Florida Governor Jeb Bush is fat, according to Chavez; Condoleezza Rice, illiterate; and President Bush is a fool. Serrano says he personally counseled Chavez to drop the confrontational language.

Rep. SERRANO: I know how that frustration can get you to be angry and shoot from the hip when it comes to making comments, people who are trying to keep you down. You're now el presidente; you don't have to react that way. Don't lose that in your heart, don't lose that in your soul, but just measure your words.

PESCA: But for years Chavez's name in a US paper was rarely unaccompanied by a critique. The low-cost oil program changed that. Citgo and public officials made sure that the people who got the benefits were actually the needy and not building owners. In the Bronx, oil went to three non-profits, one of them Mt. Hope housing company managed by CEO Sean Bell.

Mr. SEAN BELL (Mt. Hope Housing Company CEO): We're going to give all of our tenants a rent credit for 25 percent of the 40 percent savings that we yield from this program.

(Soundbite of music)

PESCA: As merengue music escaped from the first-floor window Bell was standing before, it was hard to imagine that this building was once a bombed-out edifice uninhabitable by anyone other than vagrants. Throughout the winter it will be heated with discounted Citgo oil. But one resident of 1815 Davidson Avenue, who didn't want to give her name, showed that Hugo Chavez's largesse made international news but didn't penetrate the very walls that his country's oil was keeping warm.

Do you know anything about the program where Citgo is giving discounted oil to this building?

Unidentified Woman: No. Never heard of it.

PESCA: Oh, has anyone told you about a rent reduction that might be in the works because of the savings that they made off of the oil donations?

Unidentified Woman: Never heard of it.

PESCA: Really? There was a press conference and everything. It's--Citgo's giving oil. The president of Venezuela was involved. But you never heard of that?

Unidentified Woman: No. Never heard of that.

PESCA: A spokesman for Venezuela and the company has employed a number of high-priced American PR firms and top lobbyists in recent years says that later this week the states of Maine and Rhode Island will be announcing deals with Citgo. Even if it butts up against official US policy, or raises the question of helping America's working class at the expense of Venezuela's destitute, dozens of cities, states and Indian tribes are trying to be part of this program. It looks like it will be a cold day in Caracas before diplomatic tension trumps the promise of cheap oil. Mike Pesca, NPR News, New York.

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