Ecuador, Venezuela: Chavez's Ecuadorian Charm Offensive

Venezuelan President Hugo Chavez is using oil dollars to cement an alliance with the government of Ecuadorian President Alfredo Palacio. Chavez has taken some of Venezuela's foreign exchange earnings from oil to buy Ecuadorian debt and to help the Palacio government finance its budget in 2006. Chavez also has offered to help state-owned oil firm Petroecuador reverse its production decline. If Chavez's courtship of the Palacio government succeeds, he could derail U.S. strategic policy interests in Ecuador and tilt the balance of power in the Andean region against the United States.