The New York Times ���������������� September 20, 2004 Monday������  Pg. 25

Picking a Fight With Venezuela���������������������������������������������������� By Michael Shifte.��������������������������������������������������������������������� Michael Shifter is a vice president at the Inter-American Dialogue, a center for policy analysis.

The Bush administration's decision to stop supporting $250 million in loan requests that Venezuela has before international financial institutions has gone virtually unnoticed. Yet, by invoking such sanctions now, Washington risks making another mistake in dealing with Venezuela's mercurial strongman, President Hugo Chavez.

 In announcing its decision earlier this month, the White House cited Venezuela's role in the international trafficking of women and children for sexual exploitation. The administration deserves credit for making this issue a high priority. 

 There are, however, serious questions about the motives behind the decision. The trafficking rationale seems particularly odd. It is hard to see what the sanctions could actually accomplish, and how they might work to promote the interests of the United States, inter-American relations and democratic stability in Latin America.

 This is not a smart way to deal with Mr. Chavez, especially since his popular appeal was ratified in a referendum last month. Though the election has been disputed and is still regarded as fraudulent by many opposition forces, Mr. Chavez has emerged with enhanced legitimacy in the eyes of the international community. Given the shrill exchanges between the Bush and Chavez administrations, however, over the past few years, it was still predictable that Washington accepted the results only grudgingly.

 The moment seemed propitious for the two countries to pursue a more pragmatic relationship. That Venezuela is the fourth-largest oil supplier to the United States -- at a time of great uncertainty in the Middle East -- should in itself impel a search for a modus vivendi.

 Instead, the decision will discourage a better relationship. While the sanctions may have satisfied some hard-liners in the Bush administration, they are also likely to give further ammunition to hard-liners in Caracas who have long insisted that it is futile to seek to engage a hostile Washington. Rather than contributing to the Chavez administration's moderation, the decision could foster radicalization.

 The sanctions will amount to little more than a pinprick in any case, and the loans could still be approved by the World Bank and the Inter-American Development Bank, with backing from other nations. The $250 million involved is small change for Mr. Chavez, who is enjoying a tremendous windfall from record oil prices. This hardly constitutes real pressure. The impact -- either in reducing trafficking or making Mr. Chavez more democratic -- will be minimal at best. The measure will also probably prompt other Latin American governments to vote in favor of the loans to Venezuela -- if for no other reason than to get back at the United States. They will regard the sanctions as politically motivated, and be perplexed by Washington's reasoning and timing. They will be reminded of the longstanding, counterproductive United States policy towards Cuba (recall Washington's recent charges of biological weapons in that country).

 The human trafficking rationale for the sanctions risks trivializing, and politicizing, one of Latin America's most critical problems. Independent human rights experts say that Venezuela's record, though of great concern, is no more egregious than many other countries that have somehow managed to escape similar treatment. In the State Department's 2003 report on human trafficking, Venezuela did not even appear among the five worst offenders in the Western Hemisphere. True, in the same report released in June, Venezuela had moved to the most problematic category (Tier 3). But the Bush administration has not provided compelling and persuasive evidence that warrants singling out one country.

 At some point, sanctions that actually respond to and fit the violation may be an appropriate lever to induce democratic change. But for now, it is far more important for the United States, along with other Latin American countries, to engage Venezuela for the long term in hopes of keeping Mr. Chavez's autocratic tendencies in check and encouraging democratic progress. Washington's initial, tacit approval of a coup two and a half years ago against Mr. Chavez undermined its ability to influence democracy in Venezuela. The latest decision will not help restore Washington's credibility.