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“We will extend a hand if you unclench your fist.”

From the moment of his inauguration, President Obama made it clear that his was a new kind of diplomacy. Rather than dwell on the past and continue the conflicts of old, he would work to further shared interests between the U.S. and any country that was willing to cooperate.

At the recent Summit of the Americas, it appeared Obama’s policy was paying some form of dividend. Under the previous administration, Latin American countries mostly fell into one of two camps: neglected or hostile. But this time around the summit was full of grinning, back slapping, and handshaking aplenty. Even Hugo Chavez, who not long ago claimed Obama had Bush’s “stench” and called him a “poor ignoramus,” could be seen getting chummy with the fresh-faced commander-in-chief.

Back in the United States, talking heads immediately began chattering about the significance of a grinning Obama shaking the hand of Hugo Chavez. To some, the summit-cum-photo-op was an inexcusable betrayal of American ideals and an incalculable propaganda victory for the autocratic Chavez. Many began philosophizing about dictators’ thirst for legitimacy or the psychological impact it would have on democratic movements to see the leader of the free world greeting a despot like an old friend.

There may be some validity to these criticisms, but they miss the forest for the trees. Obama should have been grimacing when he shook Chavez’s hand — not because of the symbolism of a smile, but because Chavez represents the perfect nightmare for Obama’s foreign policy ideology.

Obama’s brand of foreign relations is predicated on the existence of positive-sum games. It depends on the assumption that there are enough shared interests between countries to make cooperation worthwhile. But there are almost no shared interests between the United States and the Chavez regime.

Hugo Chavez wants to steal foreign assets in the name of his Bolivarian revolution. We would like him to compensate others for the things he nationalizes. Hugo Chavez has debauched democracy in his country and wants to weaken it abroad. We are committed to liberty everywhere. Hugo Chavez funds terrorism. We are sworn to fight it.

These are not the positive-sum games of Obama’s ideology — these are zero-sum games. We get stronger only when Hugo gets weaker. There is no middle ground, there is no mutual gain, there is only a winner and a loser.

Only one topic has the distinction of being a true net benefit to each side: oil.

Hugo Chavez is a petrocrat. Oil sales provide a third of his country’s GDP and half of his federal budget. Since taking office, he has maintained his popularity only through a lavish system of public largesse, paid for with our willingly given money.

Back in the wild days of $150/barrel, the world was Hugo’s oyster. Climbing oil prices made it so that the ordinary Venezuelan could enjoy a rising standard of living even as Chavez grossly mismanaged the economy and extravagantly gave away his country’s wealth as foreign aid. Now that oil has returned to

$50/barrel, the government purse is running light and the real damage that has been done to Venezuela’s economy is becoming apparent.

After repeated nationalizations, Venezuela is hardly an attractive area for foreign investment. The country’s credit rating continues to fall. Mr. Chavez knows that he cannot steal foreign assets and raid central bank reserves forever. If he tries to raise taxes or cut the spending of his socialist apparatus, his entire “revolution” could unravel in a sea of popular discontent.

What is poor Hugo to do? More importantly, what will Barack do?

This is a rare opportunity. For once, the oil pendulum has swung back to our side and we hold the upper hand against petro-states. The United States is the only serious buyer Hugo has — distance and the difficulty of refining Venezuela’s exceptionally heavy crude make it much more difficult for him to sell elsewhere. For once, Hugo needs us to buy more than we need him to sell. If we slap a sizable tariff on Venezuelan oil, we can put a serious squeeze on Hugo’s budget without significantly harming American consumers.

Hugo Chavez is not our friend. He is our enemy. Now is not the time to coddle and appease him. This is our moment of greatest leverage, our golden opportunity to give Hugo an ultimatum: change your ways or suffer the consequences.

There is much to be said about the merits of cooperation, but President Obama should not forget that there is a time and place for a good strong cudgel as well.