www.etaiwannews.com Venezuelan standoff could make war in Persian Gulf more costly to America's economy than once anticipated 2003-01-12 / New York Times / WASHINGTON

The crisis in Venezuela is creating major new complications for the Bush administration's campaign to oust President Saddam Hussein of Iraq, causing oil shortages that would probably make a Persian Gulf war more costly to the economy than once anticipated, American officials and industry experts said.

The 40-day strike has virtually shut down Venezuela's oil industry, the fifth-largest in the world, and proven more difficult to resolve than the administration expected, the officials said.

Efforts to end the stalemate between President Hugo Chavez and his opponents have been hamstrung not only by the intransigence of both sides in Venezuela, but also mistrust toward American diplomats, the officials added.

Venezuela has for decades been one of the most dependable sources of petroleum for the United States, where industry analysts say the strike has already hurt some refineries and driven up the retail price of gasoline by at least a dime a gallon.

Those shortages will only worsen, and prices continue to rise, if the United States attacks Iraq, they predicted. That means that war in the Persian Gulf could prove more costly to the American economy than had been projected if the Venezuelan standoff is not ended soon.

For that reason the Bush administration has been debating plans to release oil from the Strategic Petroleum Reserve, which contains nearly 600 million gallons of crude. For now, though, the White House has decided to defer those plans, mainly to keep oil available in case of war in Iraq, administration officials said.

"A few months ago everybody thought that if we went to war in Iraq oil wouldn't be a major problem, because there was enough spare capacity to make up for lost Iraqi oil," said Larry Goldstein, president of the Petroleum Industry Research Foundation Inc., a research organization. "But no one then was contemplating lost Venezuelan oil."

"Now," he said, "we won't have enough spare capacity to take care of both those events."

The crisis could be compounded if President Chavez follows through on a proposal to split the government-owned oil company, Petroleos de Venezuela S.A., into two parts and restructure its central offices.

American officials say Chavez's true goal is to install political loyalists in place of the union leaders and senior managers at the oil company, known as PDVSA, who have joined the strike.

The result could be a more pliable but less efficient company that produces less oil than the roughly three million barrels a day that Venezuela produced before the strike, officials and experts said. That could leave the United States even more dependent on Middle Eastern oil, the experts said.

"Petroleos is one of the few state-owned oil companies in the OPEC group that approximates a normal integrated major oil company," said Leonidas P. Drollas, chief economist with the Center for Global Energy Studies in London. Echoing other industry analysts, Drollas added, "To break it up into anything sounds obviously politically motivated."

The Bush administration, acknowledging the growing danger from the Venezuelan strike, has stepped up its efforts to calm the oil markets, lobbying major oil exporters to increase production. At a meeting in Vienna this weekend, the Organization of the Petroleum Exporting Countries is expected to vote to increase production by 8.7 percent, or nearly two million barrels a day, officials said.

Some oil analysts argue that the administration should have moved faster to stabilize the oil market. Those analysts, along with some members of Congress, have urged the administration to release oil from the Strategic Petroleum Reserve.

Even a relatively modest "loan" of 20 million to 30 million barrels to American refineries would stabilize prices and ease short-term disruptions, giving the OPEC countries time to ramp up production. It typically takes 30 to 45 days for Persian Gulf oil to reach the United States.

The impact of the Venezuelan crisis has been widely underestimated by officials and consumers, oil experts said. Venezuela once exported 2.7 million barrels a day, 1.5 million barrels of that going to Untied States, or about 14 percent of America's crude oil imports.

Now, Venezuela says it is producing about 600,000 barrels a day, though outside experts estimate the volume at less than 400,000 barrels.

That means that more than two million barrels a day of Venezuelan crude have been removed from the global market, making this the worst disruption in supply since the Persian Gulf war of 1991, experts said.

www.chron.com Analysts advise waiting for calm Jan. 11, 2003, 5:44PM By ANDREI KHALIP Reuters News Service

RIO DE JANEIRO, Brazil -- Latin America is treacherous territory for oil and gas investors, awash with fears about Venezuela's unrest and general strike, economic crisis in Argentina and Brazil's new leftist government.

Sector analysts suggest investors sit it out until calm returns to the region, which partly opened to foreign investment in the past decade and is still considered less risky than the former Soviet Union and some Middle East countries.

"It was a time of big shocks last year in Latin America, but it is a big question whether we see any recovery now," said Matthew Shaw of Wood Mackenzie oil consultancy in Edinburgh. "It's time to wait and see, really."

The problems in the region, which in total produces more oil than world leader Saudi Arabia, add to the pressure most foreign companies are facing at home to cut unnecessary risks in a sluggish global economy.

Although some assets have become seemingly cheap, it is difficult for companies to evaluate opportunities because of uncertainties over the region's economic prospects and politics, he added.

With Venezuela's strike still crippling crude output in the world's fifth-largest oil exporter, investors have plenty to worry about, even though higher world oil prices resulting from the strike will still bring a benefit to those with diversified portfolios.

"There is concern about restarting production of heavy oil in Venezuela," said Myles McDougall of ABN Amro in London. It may take months to re-establish wellhead pressure, and some wells may have to be redrilled in costly operations, experts said.

Heavy oil accounts for more than half of the Andean nation's output, which slumped from 3.1 million barrels per day in November to 600,000 now. Some refineries along the U.S. Gulf Coast depend on this kind of crude.

The strike, organized by the opposition seeking to oust populist President Hugo Chavez, affected state oil giant Petroleos de Venezuela's credibility and raised concerns about its debt, threatening Venezuela's efforts to attract fresh foreign energy investment.

Despite a modest economic recovery in the past few months in Argentina, drilling activity is low, and investors are bracing for a new bout of uncertainty ahead of early presidential polls in May.

A freeze on fuel prices and a 30 percent retention of export revenues in dollars are also hampering investment.

Brazil, the region's No. 3 oil producer after Mexico and Venezuela, has lived through a crisis of investor confidence ahead of presidential elections last October that brought leftist Luiz Inacio Lula da Silva to power.

Analysts say the statements by his new energy officials have been moderate so far, suggesting that a free-market fuel pricing system and sales of exploration licenses to foreign firms would be preserved. But they said they needed time to evaluate whether that commitment would last.

As for Bolivia, rich in natural gas, most analysts are skeptical that firms working there would be able to ship liquefied natural gas to the U.S. markets any time soon, because of Bolivia's political problems with sea access.

Most experts singled out Ecuador as the country with the steadiest oil development. Ecuador will sell concessions for one of its big oil fields this year and should finish a 450,000 barrel per day pipeline to coastal ports for export.

www.mrons.com

E-business is taking root just about everywhere—but some countries are pioneers, others laggards. Which are faring best in e-business, and what characterises their success? The answers can be found in the 2002 edition of the Economist Intelligence Unit's e-readiness rankings. ‘E-readiness’ is shorthand for the extent to which a country’s business environment is conducive to Internet-based commercial opportunities. It is a concept that spans a wide range of factors, from telephone penetration to online security to intellectual property protection.

‘Despite the dotcom bust, the Internet is still reshaping the way companies do business, and countries' e-readiness will be a vital feature of the global competitive landscape,’ says Daniel Franklin, Editorial Director of the Economist Intelligence Unit.

Covering the world's 60 largest markets, the rankings provide a useful guide for companies seeking to invest in technology-savvy countries, as well as governments looking to reap the benefits of the digital age. The US leads the pack, as it did in 2000 and 2001. However, due partially to changes in methodology, and mostly to developments in countries’ infrastructure, regulatory environment and economy, there have been significant shifts further down in the rankings. The Netherlands has moved into second place from tenth in 2001, for example, and northern Europe now claims most of the other top spots, thanks not only to sophisticated IT infrastructures and high mobile-phone penetration, but also to smart government policy and a good overall business environment. Asia, Latin America and Africa trail further behind, but a few standouts in each region have made significant gains: Venezuela, for instance, improved its ranking from 47th in 2001 to 37th in the current rankings.

Among the main conclusions suggested by the new rankings:

• Western economies take the lead. North America and Western Europe dominate the top ten places in our rankings, with Australia the lonely outsider. These countries score highest both because consumers and businesses have embraced the Internet, and because their economic and political stability and openness to foreign investment make them good bets for all kinds of business, particularly e-business.
• Other regions have pockets of promise. Outside of Western Europe and North America, e-business is less uniformly developed. Singapore and Hong Kong lead the pack in Asia, taking 11th and 13th place, respectively, while Vietnam and Pakistan languish at the bottom of the heap, in 56th and 57th place. The same is true of Latin American, where advanced Chile ranks 28th, while Ecuador stumbles into 50th place. In the Middle East and Africa, Israel alone ranks among the rankings’ top 30 countries.
• Bigger is not always better. The US may rule the roost, but many of the world’s largest economies, including Japan, Germany and France, are outpaced by smaller, more agile competitors, such as the Netherlands, Switzerland and Sweden. What sets these countries apart is the broad accessibility and affordability of the Internet, thanks to state-of-the-art IT infrastructure and high per capita income.
• Business culture is decisive. The US tops the rankings because of the degree to which the Internet has become embedded in commercial culture. Nowhere is so much business conducted over the Internet so routinely. This explains why the US scored highest in the category for e-business supporting services (the consulting and IT services and back-office solutions used to facilitate online business) as well as in the social and cultural category (which considers, among other things, the degree of innovation and entrepreneurship in business). It also explains why Singapore and Hong Kong rank as the most competitive telecoms markets in the world, and among the best equipped, yet don’t figure among the top ten countries. While high-grade infrastructure is important, more important is how people use it.
• Infrastructure is still evolving. Even top-ranked countries have not yet satisfied consumer demand for fast, cheap, secure and reliable Internet connectivity. High-speed, broadband services are not universally available and Internet-ready mobile phones are still in their infancy—even in mobile-crazed Scandinavia.
• Governments have wide influence. Internet business thrives when governments have a clear strategy—and money to spend—to develop IT infrastructure. But that’s not the only area for official involvement. Successful e-business depends on a strong legal framework that protects private property and encourages entrepreneurship. Increasingly, it also requires Internet-specific legislation. In the crucial category of legal and policy environment, Australia comes in first, followed by Sweden, Switzerland, Finland and the UK. Other countries—even those without a strong e-business culture, such as Mexico and Chile—are enacting smart Internet legislation, recognising that good laws promote industry growth.

This year, working in association with IBM’s Institute for Business Value, the Economist Intelligence Unit adjusted the rankings framework to take into account the shift away from the dotcom era’s emphasis on e-commerce to the new imperatives of corporate efficiency, security and global connectivity. The Economist Intelligence Unit was solely responsible for scoring the 60 countries.

The six categories that feed into the rankings (and their weight in the model) are: connectivity and technology infrastructure (25%); business environment (20%), using the 70 indicators covered by the Economist Intelligence Unit’s for 60 countries; consumer and business adoption (20%); social and cultural infrastructure (15%); legal and policy environment (15%); and supporting e-services (5%).

www.orlandosentinel.com By Christopher Toothaker | The Associated Press Posted January 12, 2003

CARACAS, Venezuela -- President Hugo Chavez insisted Saturday that his "revolutionary" government will overcome a 6-week-old general strike called by the opposition to force him from office, and threatened to fire, or even jail, teachers or school directors joining the work stoppage.

"We are prohibited from failing. Defeat is prohibited," Chavez told a rally of thousands at a stadium in Caracas. "We are going to triumph."

Accusing strike organizers of closing public and private schools, leaving millions of students without classes, Chavez said his backers could take control of schools that remain closed.

"Do the conspirators want the schools to be managed by the people? If that's what they want, that's what we will do. The schools will be managed and directed by the people," he said.

At a separate rally in Caracas' La Vega neighborhood, one of the capital city's poorest areas, government backers voiced support for Chavez's efforts to put an end to food and fuel shortages caused by the strike.

On Friday, Chavez warned businesses hoarding food that he could send troops to seize private property and distribute staples.

Meanwhile, Chavez supporters blocked the route of a planned opposition march through the streets of Maracay, the military's nerve center 42 miles from Caracas. The president's opponents -- who were demanding Chavez's resignation and fresh elections -- delayed the march.

Leaders of the Democratic Coordinator opposition movement quickly responded to Chavez's threats with threats of their own.

"If they touch a media outlet, a private company or a political leader, we will expand the strike by incorporating other sectors," opposition leader Timoteo Zambrano said. "We are ready to retaliate." He did not specify which sectors the strike could extend to.

Carlos Fernandez, head of the country's leading business chamber, said many schools closed or restricted schedules because of low attendance. He insisted most parents were not sending their children to school in support of the strike.

Venezuela's opposition accuses Chavez of attempting to install a Cuban-style communist regime and overriding public institutions such as the Supreme Court. They claim he is intentionally turning this oil-rich South American nation of 24 million into an economic wasteland.

The country's $100 billion economy shrank an estimated 8 percent in 2002, largely due to political instability. Inflation has surpassed 30 percent while unemployment stands at 17 percent.

The 41-day work stoppage is costing Venezuela $70 million a day and is depriving the government of desperately needed income required to pay an estimated 1.5 million public employees.

LOS VENEZOLANOS VIVIMOS momentos que combinan dolores, sacrificios, decisión, aprendizaje, madurez. En ese aprendizaje logramos identificar, censurar y denunciar a muchos países, cuyos gobernantes movidos por la más llana rapacidad, corren a apoyar a Hugo Chávez y un proyecto rechazado por la mayoría de los hombres y mujeres que sin miedo, llenamos las calles en multitudes impactantes pidiendo la salida de un régimen abyecto, totalitario y entreguista.

Argelia, Trinidad, Brasil, para señalar los más descarados intervencionistas, actúan como aves de rapiña sobre una presa codiciada: El petróleo 'boccata di cardinale' que unos irrespetuosos de nuestra soberanía, tratan de agenciarse aún ejerciendo como mercenarios a la orden de un tropero que no busca otra cosa más que la permanencia en el poder y su manía de servirle a un tirano senil cuyo monotema es la cubanización de un continente.

A los ya nombrados y a otros que como Francia o Suiza, se consiguieron su Idi Amin caribeño al que le venden desde un avión hasta un 'lote de intelectuales' a jornal fijo, es importante que una mujer venezolana, les recuerde que aquí, en este país gallardo, hay un bravo pueblo con neuronas, testículos y ovarios en cantidad para impedir tanto sus despojos e irrespetos como los sueños de dominación de Chávez, Castro y cualquier déspota.

A los argelinos comandados por el 'hermanazo Boutef' les recuerdo que no somos un terreno en litigio, ni un pueblo mermado que les permitirá adueñarse de nuestra riqueza como si fuera fosfato sahariano. A los trinitarios, que no se olviden de nuestra esencia libertadora nada parecida a la herencia liberta. A los brasileros que era mejor la cara bonita de Ronaldo y no la del mercachifle ávido, presto a sacar partido.

Cierto es que más de un figurón de esta robolución está dispuesto a dar hasta las posaderas (sin alusiones personales aunque sean harto factibles) con tal de seguir en el poder. Cierto es que hoy la fuerza militar, gracias a un grupete indigno y traidor, quedó para montar templetes de loas al tropero coronado y reprimir al pueblo combativo, mientras rogamos que no se presente un conflicto fronterizo que perderíamos vergonzosamente gracias a su degeneración; pero cuán cierto es, que esa minoría que mata, que miente, que manipula va de paso, que renacerá la Patria Soberana y vuestros cálculos excelentísimos enemigos acreditados aquí, quedarán sin efecto, generando sí la más firme repulsa hacia quienes despreciaron nuestro derecho a la dignidad.

Eleonora Bruzual El Universal 10 de Enero de 2003