As the Obama Administration settles into the White House and reviews its foreign policy agenda, one significant topic likely to emerge early will be U.S. relations with Venezuela and its radical, anti-American president Hugo Chávez. Relations between the two countries deteriorated significantly when Chávez expelled the U.S. ambassador to Car­acas without cause in September 2008. The press will try to make any Obama-Chávez encounter at the April 2009 Summit of the Americas in Trinidad a defining moment for the future of U.S.-Venezu­ela-Latin America relations.

The recent orderly transition from a Republican to a Democratic White House contrasts with the polarizing political battle underway in Venezuela over perpetuating Chávez's ability to remain in office. A new constitutional referendum, the second in less than two years, took place on February 15. Its passage will allow Chávez to run for additional six-year terms in 2012 and beyond, giving him the time he says he needs to consolidate his Bolivarian Revolution. It is increasingly apparent that Presi­dent Chávez equates popular democracy in Venezu­ela with personal immobility in executive power.

During the electoral campaign and in the run-up to his January 20 inauguration, President Obama expressed interest in improving relations with Ven­ezuela. Nonetheless, Obama had also signaled con­tinued concern about Chávez's assault on liberal democracy and his support for non-state actors, such as the narco-terrorists of the Revolutionary Armed Forces of Colombia (FARC). The Obama Administration, like its predecessor, also recognizes the potentially damaging economic and strategic consequences of U.S. dependency on imported oil from Venezuela, a challenge somewhat lessened by the current drop in oil prices.

Chávez generously used Venezuela's oil revenue to maintain popular support and subsidize a range of clients that include totalitarian Cuba, faction-torn Bolivia, and an increasingly polarized Nicaragua. Using the Bolivarian Alternative for the Americas (ALBA) and an oil facility, Petrocaribe, he broadened economic and political ties with much of the Carib­bean and Central America. Argentina, battling chronic economic instability under Nestor Kirchner and Cristina Fernandez de Kirchner, remained a privileged friend of Chávez and a ready recipient of Venezuelan financial largess.

Throughout 2008, President Chávez moved aggressively to strengthen ties with Iran, Russia, and China as he undertook to build a broader, anti-American global coalition. Expanded Venezuela- Iran ties included regular air service between Cara­cas and Tehran and increased Iranian investment in Venezuela. Iranian actions drew closer U.S. scrutiny leading to measures against sanction-dodging finan­cial agencies of the Iranian regime located in Cara­cas. Chávez's recent efforts to offer support to the radical Islamist Hamas regime in Gaza and his expulsion of Israel's ambassador to Caracas are indicators of a tilt in favor of Islamist extremism. Likewise, Chávez's support for Russia during the Georgia crisis, substantial purchases of Russian arms, a highly publicized visit to the Caribbean by Russian warships, and the November 2008 visit of Russian President Medvedev to Caracas highlighted a year of deepening Russian-Venezuelan ties. China has emerged as a major commercial partner, and Chávez is banking in the long run on selling his oil to China rather than to the U.S.

While many are quick to proclaim the demise of the Monroe Doctrine, the U.S. naturally recoils from continued loss of influence and leverage in the Western Hemisphere. A realistic U.S. policy toward Venezuela will also contain an adequate plan for addressing U.S. energy dependence, since President Chávez treats his nation's oil resources as a pressure tool and economic weapon.

Elements of a sound and comprehensive Venezu­ela policy for the next four years make it incumbent on the Obama Administration to:

• Develop a strategy for addressing Andean secu­rity concerns raised by Chávez and Venezuela.
  
• Assign a high priority to acquiring and reviewing intelligence on terror, money-laundering, and drug-trafficking in Venezuela, being especially vigilant of any evidence of Venezuela's ties to FARC, Hezbollah, and Hamas.
  
• Increase support for elements of Venezuelan civil society that support the rule of law, pluralism, media freedom, and respect for human rights.
  
• Not seek agrément for a new ambassador to Ven­ezuela until it is confident that Chávez is ready to address key security concerns, for example, renewed action to prevent drug trafficking (including cooperation with the U.S. Drug Enforcement Administration), an end to all sup­port for FARC, resumption of cooperation on anti-terrorism measures, and an end to virulent anti-Americanism.
  
• Consider, if Chávez refuses to cooperate, 1) stepping up targeted sanctions against individ­ual government officials and unofficial agents of the Venezuelan government, 2) sanctioning Venezuelan institutions, including banks and, potentially, the national oil company, and 3) adding Venezuela to the list of state sponsors of terrorism.
  
• Develop a comprehensive contingency plan for a possible disruption in oil supply from Venezuela.
  
• Work directly with friends, paying special atten­tion to Colombia and Peru, particularly passing the Colombia Free Trade Agreement in order to strengthen a firm democratic counterpoint to the Chávez-ALBA alliance.

Ray Walser, Ph.D., is Senior Policy Analyst for Latin America in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.