Venezuela and Columbia have had a tumultuous recent history with threats, counter-threats, border skirmishes and contested border crossings demolished, and yet what does it all mean? Is this a great struggle between the decadent capitalist pawn and the ongoing socialist revolution? Chavez's rhetoric would lead one to arrive at that conclusion, and in theory could lead to an, albeit small-time, arms race. If this were to happen Venezuela would probably win with its natural resource superiority, barring some significant increase in military aid to Columbia. That being said this is a perfect opportunity to use a neo-containment policy.
Venezuela has the benefit of sitting on some of the largest known oil reserves in the western hemisphere, and in theory could use revenues from that to fund social spending, like Norway, but instead chooses to spend it on military hardware including 400 helicopters and 100,000 AK-103s (one of most advanced small arms in the world). These purchases indicate great wealth and sound fiscal policy right? Wrong, earlier this year the government of Venezuela nationalized a French grocery store chain after it "raised it's prices" in response to a 50% devaluation of the Bolivar, the national currency.
Such devaluation demonstrates a series lack in economic planning and merely shows Chavez's attempts to externalize internal problems. The problem is not the raising of prices by the store, but the fiscal and monetary problems of the Chavez government.
The US, and its allies in South America, should:
1. Strengthen ties between Columbia, Guyana and Brazil to isolate Venezuela politically and economically.
2. Build intergovernmental and inter-institutional laboratories, "collaboratories" if you will, using the National Renewable Energy Laboratory to help reduce the wealth generated by Venezuela's oil fields.
3. Use the increased presence of US troops in Columbia to train for low-intensity conflicts and cross-border raids.
4. Rebuff any attempts by Chavez to escalate militarily, i.e. defend but do not pursue/retaliate. While this will be unpopular to the masses in Columbia it will not allow Chavez to point towards outside aggression to further his policies. In addition, an increase in the use of radio communication to reach the masses inside Venezuela would serve to undermine the Chavez regime and perhaps as a side-benefit undercut the FARC movement within Columbia
Ultimately, change will come from within as the economic policies of Chavez fail to increase the general welfare of Venezuelans. Generally, this is a case of "if we don't lose, we win," and the waiting game is the best policy.
Some of the sources used for this post: