Analysis: Venezuela-FARC link may hit oil

MIAMI, March 12 (UPI) -- U.S. sanctions against Venezuela over its alleged support of a leftist Colombian rebel group would cripple its oil industry and cause a worldwide spike in already record-high oil prices, experts say.

The Bush administration is reportedly looking into whether Venezuela could be added to the U.S. State Department's list of countries that support terrorist groups, a roll call of nations that includes Iran, North Korea, Syria, Cuba and Sudan.

The White House's supposed interest in adding Venezuela to the state sponsors of terrorism list follows recent allegations that Venezuelan President Hugo Chavez had pledged up to $300 million to Colombia's Revolutionary Armed Forces of Colombia, or FARC. The group, which has been battling Colombian forces for more than 40 years, is designated by the State Department to be a terrorist organization.

The reported inquiry by the White House follows the recent discovery of a laptop that belonged to FARC leader Raul Reyes, who was killed in a raid by Colombian forces earlier this month. According to Colombian officials, the computer contained documents suggesting the Venezuelan government would provide FARC with funds.

Experts from Interpol were reportedly invited by Colombia to help in the investigation of the laptop documents to ascertain their veracity.

National Security Council spokesman Gordon Johndroe would not confirm a report by The Miami Herald saying the White House was investigating whether it could add Venezuela to its terror sponsors list, though he said U.S. intelligence agencies "are going to take a look at the information picked up by Colombia in the FARC raid."

"This is pretty dangerous stuff," said Ray Walser, a former State Department official and senior policy analyst for Latin America at the Heritage Foundation, adding that were the documents authenticated, they would indicate a "clear violation of international law."

The discovery of the allegedly incriminating laptop documents -- coupled with Chavez's pro-FARC rhetoric during the crisis -- could have a lasting effect on Venezuela and its lucrative oil industry.

For the Bush administration to push for sanctions, it would first need the legal framework to do so, noted Jorge Pinon, a researcher at the Institute for Cuban and Cuban-American studies at the University of Miami and former president of Amoco Oil Latin America.

Proof of funding for the FARC on the behalf of Venezuela would be a direct violation of U.N. Security Council Resolution 1373, of 2001, which states that "states shall refrain from providing any form of support, active or passive, to entities or persons involved in terrorist acts."

"Calling Venezuela a terrorist state would give the United States a legal reason to impose sanctions," Pinon told United Press International.

However, designating Venezuela a terrorism sponsor and imposing sanctions against one of the United States' largest oil suppliers could prove too damning to the U.S. economy, he added, noting oil prices would likely increase $5-10 per barrel were oil shipments from Venezuela halted or curtailed.

Venezuela provides the United States -- the South American nation's largest customer -- with about 1.4 million barrels of oil per day, mostly crude.

An end to those imports due to sanctions would force the United States to tap into its strategic petroleum reserves in the short run and likely prompt other suppliers, like Saudi Arabia, to increase its exports, said Pinon.

The fate of U.S.-based, Venezuelan-owned Citgo refineries would also be a major point of contention, he surmised.

Officials at Citgo's U.S. headquarters in Houston refused requests by UPI for comment.