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Colombia, Venezuela row worsens

Venezuelan President Hugo Chavez has threatened to cut oil supplies to the United States in case of a military attack by Colombia as a row escalates over charges that Venezuela is harboring Colombian rebels.

world Updated: Jul 27, 2010 01:10 IST

Venezuelan President Hugo Chavez has threatened to cut oil supplies to the United States in case of a military attack by Colombia as a row escalates over charges that Venezuela is harboring Colombian rebels.

The latest crisis between the OPEC nation and its US-allied neighbor erupted last week when Chavez cut diplomatic ties after Colombia's government presented evidence it said showed Colombian guerrillas were hiding in Venezuela.

The move elevated tensions in a region plagued by clashing ideologies, guerrilla armies and drug trafficking.

Here are some possible scenarios in the dispute:

ALL-OUT CONFLICT:

Despite dire warnings by Chavez that a Colombian attack is imminent, most analysts think this is very unlikely. Neither Bogota nor Caracas has anything to gain from open warfare, and there would be heavy pressure regionally to stop the dispute reaching that stage.

Venezuela's fears are largely based on the precedent of a Colombian bombing raid on a FARC rebel camp in Ecuador in 2008, but Chavez has made it clear that a similar attack on Venezuelan soil would result in war.

Colombia has chosen to pursue public diplomacy, accusing Venezuela publicly of harboring rebels, rather than strike the camps directly, which is a sign it has no appetite for war.

Colombia's army is much bigger and more battle-hardened than Venezuela's, but Venezuela has an array of new equipment. Chavez recently spent billions of dollars on Russian fighter jets, helicopters, anti-aircraft missile systems and other arms.

The Colombian military has benefited from U.S. military aid and training to tackle rebels and drug gangs and as the main U.S. ally in the region Bogota could likely count on support from Washington's. The U.S. military uses several bases in the Andean country for operations against drug smuggling cartels.

IMPACT ON PRODUCTION AND EXPORTS:

Chavez has not carried out several previous threats to cut oil shipments to the United States, Venezuela's main customer, despite frequent heated rhetoric against "Yankee imperialism".

Cutting supplies, most of which go to CITGO refineries owned by Venezuela in the United States, would be a huge blow for the economy, which is already shrinking and has an inflation rate of more than 30 percent. The government would struggle to quickly increase sales elsewhere.

Oil production in the two countries is unlikely to be affected. Colombia's oil output is growing but modest, at around 780,000 barrels per day (bpd), while Venezuela sits on some of the world's biggest crude reserves and produces close to 3 million bpd.

Venezuelan state oil company PDVSA signaled the importance of the U.S. market in May when it resumed exports of reformulated gasoline to the United States for the first time in five years.

It would also be hard to stop U.S. sales completely, since U.S. buyers could still purchase much of the oil on the spot market -- unless PDVSA shut down its refineries, which would be a financial disaster.

Another factor is natural gas shipments from Colombia to Venezuela. Chevron Corp is sending around 175 million cubic feet across the border a day, and there is no immediate sign of this stopping.

BORDER INCIDENTS:

Perhaps more likely than cutting oil exports are isolated border incidents that could raise tensions. The heavily guarded frontier has remained calm since Chavez cut ties on Thursday.

But with so many weapons held by rebels and armed paramilitaries there is always a potential for shots to be fired without it being clear who pulled the trigger. Venezuela has some 20,000 troops along the porous 1,375 mile (2,200 km) border and says they are "operationally prepared."

The two countries have a long history of spats and almost went to war in 1987 over a maritime border in the Caribbean.

DIPLOMATIC STAND-OFF:

The two countries will likely remain at loggerheads for some time. New Colombian President Juan Manuel Santos will be inaugurated on Aug. 7, and some analysts see last week's charges by outgoing Colombian leader Alvaro Uribe as a way for Uribe to settle scores before he leaves office.

Santos has pointedly refrained from commenting on the latest row in public, and Chavez has repeatedly said he hopes for better relations with the next Colombia president. Santos has said he favors dialogue with Caracas.

But the aftershocks could rattle for some time. When Colombian forces bombed a Colombian rebel base in neighboring Ecuador two years ago, Ecuador cut ties with Bogota and they have yet to be fully repaired.

Latin American governments including Brazil and Argentina are seeking to defuse the rift between Caracas and Bogota. An earlier row about the U.S. bases in Colombia choked off trade between the two nations worth $7 billion a year.

VENEZUELA MOVES AGAINST REBELS:

Venezuelan action against the rebels seems unlikely. Chavez has always denied that Venezuela allows any guerrillas on its territory, and calls photos, videos and maps presented by Colombia a "hoax."

But in a sign that the FARC may be proving a headache for him ahead of Venezuelan legislative elections in September, Chavez said late on Friday the rebels should reconsider their armed strategy.

Colombia has said it could take allegations of cross-border attacks by Venezuela-based rebels to the International Criminal Court (ICC) in The Hague. But that is unlikely to worry Chavez much. The ICC has been mired in African cases since it came into force in 2002 and has yet to secure a conviction.