www.abs-cbnnews.com Tuesday, January 14, 2003 9:10:56 p.m By MARK WEISBROT Special to The Washington Post

Weisbrot is codirector of the Center for Economic and Policy Research, an independent nonpartisan think tank in Washington.

Walking around Caracas late last month during Venezuela’s ongoing protests, I was surprised by what I saw. My expectations had been shaped by persistent US media coverage of the nationwide strike called by the opposition, which seeks President Hugo Chavez’s ouster. Yet in most of the city, where poor and working-class people live, there were few signs of the strike. Streets were crowded with holiday shoppers, metro trains and buses were running normally, and shops were open. Only in the eastern, wealthier neighborhoods of the capital were businesses mostly closed.

This is clearly an oil strike, not a “general strike,” as it is often described. At the state-owned oil company, PDVSA, which controls the industry, management is leading the strike because it is at odds with the Chavez government. And while Venezuela depends on oil for 80 percent of its export earnings and half its national budget, the industry’s workers represent a tiny fraction of the labor force. Outside the oil industry, it is hard to find workers who are on strike. Some have been locked out from their jobs, as business owners -- including big foreign corporations such as McDonald’s and FedEx -- have closed their doors in support of the opposition.

Most Americans seem to believe the Chavez government is a dictatorship, and one of the most repressive governments in Latin America. But these impressions are false.

Not only was Chavez democratically elected, his government is probably one of the least repressive in Latin America. This, too, is easy to see in Caracas. While army troops are deployed to protect Miraflores (the presidential compound), there is little military or police presence in most of the capital, which is particularly striking in such a tense and volatile political situation. No one seems the least bit afraid of the national government, and despite the seriousness of this latest effort to topple it, no one has been arrested for political activities.

In the United States, a strike of this sort -- one that caused massive damage to the economy, or one where public or private workers were making political demands -- would be declared illegal. Its participants could be fired, and its leaders -- if they persisted in the strike -- imprisoned under a court injunction. In Venezuela, the issue has yet to be decided. The Supreme Court last month ordered PDVSA employees back to work until it rules on the strike’s legality.

To anyone who has been in Venezuela lately, opposition charges that Chavez is “turning the country into a Castro-communist dictatorship” -- repeated so often that millions of Americans apparently now believe them -- are absurd on their face.

If any leaders have a penchant for dictatorship in Venezuela, it is the opposition’s. On April 12 they carried out a military coup against the elected government. They installed the head of the business federation as president and dissolved the legislature and the supreme court, until mass protests and military officers reversed the coup two days later.

Military officers stand in Altamira Plaza and openly call for another coup. The government’s efforts to prosecute leaders of the coup were canceled when the court dismissed the charges in August. Despite the anger of his supporters, some of whom lost friends and relatives last year during the two days of the coup government, Chavez respected the decision of the court.

The opposition controls the private media, and to watch TV in Caracas is truly an Orwellian experience. The five private TV stations (there is one state-owned channel) play continuous anti-Chavez propaganda. But it is worse than that: They are also shamelessly dishonest. For example, on December 6 an apparently deranged gunman fired on a crowd of opposition demonstrators, killing three and injuring dozens. Although there was no evidence linking the government to the crime, the television news creators -- armed with footage of bloody bodies and grieving relatives -- went to work immediately to convince the public that Chavez was responsible. Soon after the shooting, they were broadcasting grainy video clips allegedly showing the assailant attending a pro-Chavez rally.

Now consider how people in Caracas’s barrios see the opposition, a view rarely heard in the United States: Led by representatives of the corrupt old order, the opposition is trying to overthrow a government that has won three elections and two referendums since 1998. Its coup failed partly because hundreds of thousands of people risked their lives by taking to the streets to defend democracy. So now it is crippling the economy with an oil strike. The upper classes are simply attempting to gain through economic sabotage what they could not win at the ballot box.

From the other side of the class divide, the conflict is also seen as a struggle over who will control and benefit from the nation’s oil riches. Over the past quarter-century PDVSA has swelled to a $50 billion a year enterprise, while the income of the average Venezuelan has declined and poverty has increased more than anywhere in Latin America. Billions of dollars of the oil company’s revenue could instead be used to finance health care and education for millions of Venezuelans.

Now add Washington to the mix: The United States, alone in the Americas, supported the coup, and before then it increased financial support of the opposition. Washington shares PDVSA executives’ goals of increasing oil production, busting OPED quotas and even selling off the company to private foreign investors. So it is not surprising that the whole conflict is seen in much of Latin America as another case of Washington trying to overthrow an independent, democratically elected government.

Where does the US government stand on the question of democracy in Venezuela? The Bush administration joined the opposition in taking advantage of the December 6 shootings to call for early elections, which would violate the Venezuelan constitution. The administration reversed itself the next week, but despite paying lip service to the negotiations mediated by the OAS, it has done nothing to encourage its allies in the opposition to seek a constitutional or even a peaceful solution.

Sixteen members of Congress sent a letter to Bush last month, asking him to state clearly that the United States would not have normal diplomatic relations with a coup-installed government in Venezuela. But despite its apprehension about disruption of Venezuelan oil supplies on the eve of a probable war against Iraq, the Bush administration is not yet ready to give up any of its options for “regime change” in Caracas. And -- not surprisingly -- neither is the Venezuelan opposition.

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www.newsmax.com NewsMax Wires Tuesday, Jan. 14, 2003 NEW YORK -- Oil markets reacted with a modicum of bullish skepticism Monday to OPEC's decision to hike its production of crude.

Futures prices went up instead of down Monday on the New York Mercantile Exchange and London's International Petroleum Exchange amid an apparent consensus that the increase in OPEC production by 1.5 million barrels per day would not fully offset the ongoing reduced exports from strife-torn Venezuela.

February crude settled up 58 cents on NYMEX at $32.26 per barrel while the IPE gained 53 cents to $30.20 per barrel.

OPEC voted during the weekend to increase its output by 6.5 percent to 24 million barrels per day. However, the tensions between the United States and Iraq continued to add long-term bullishness to the markets while mechanical difficulties at a North Sea oil field and a refinery in Louisiana contributed short-term price support.

The problems at Marathon's Garysville, La., contributed to a 2.71-cent increase in NYMEX gasoline futures and a 1.85-cent rise in heating oil that contributed to the firmer crude prices, although Iraq and Venezuela appeared to be the greater concern.

"The global market is going to remain tight with ongoing war fears," David Thurtell, a strategist with Commonwealth Bank in Sydney told the British Broadcasting Corp.

The additional OPEC production begins in February, but it takes an additional 4-6 weeks for tankers to sail from the Middle East to the United States.

Meanwhile, Venezuelan President Hugo Chavez has been unable to break the political turmoil and labor strife that has centered on the state oil company Petroleos de Venezuela S.A. (PdVSA), a major source of oil and gasoline for the U.S. refining industry.

In addition, the OPEC increase includes a higher quota for Venezuela -- an integral member of OPEC -- and is believed to be currently capable of shipping nowhere near its present quota due to ongoing labor strife that reached its 44th day Monday.

While Chavez's government has pledged to have PdVSA's production up to 2 million barrels per day by Feb.1, analysts aren't confident that level can be reached without a prompt labor settlement.

Venezuela also produces and markets gasoline in the United States under its Citgo subsidiary. A spokesman for the Lyondell-Citgo Refining (LCR) joint venture said Monday that it expected to increase its production at its Houston plant next week after it had been cut to 50 percent by the Venezuela strike.

"We're pleased that shipments to LCR are now increasing and that LCR has successfully plotted a course that we expect will take it to near-full rates over the next month," said Lyondell Executive Vice President Morris Gelb.

Prior to the strike, the LCR refinery received 230,000 barrels per day of crude from Venezuela and had a total processing capacity of 268,000 barrels per day.

www.vanguardngr.com

Monday, January 13, 2003

  VIENNA — UNITED Arab Emirates Oil Minister, Obeid bin Saif al-Nasseri said, Saturday that OPEC was discussing a production hike of around one million barrels per day (BPD) to stop prices rising due to a six-week-old strike in Venezuela and the threat of a US-led war against Iraq. “Obviously there is a shortage, but we have to see what quantity it requires. We have to discuss it to see if it is one million more or less,” he said upon arriving in Vienna for an extraordinary meeting, Sunday of the Organisation of Petroleum Exporting Countries (OPEC). Saudi Oil Minister, Ali al-Nuaimi said OPEC would move to prevent oil shortages. “I can tell you I support making sure the market is well balanced. There will be no shortage of supply in the market when the market is well balanced,” he said. Al-Nuaimi refused to give figures for what is expected to be an increase of one to two million barrels per day (BPD) in oil production, with the strike in Venezuela keeping some two million barrels BPD off the world market, and hitting the United States particularly hard.

OPEC President, Qatar Oil Minister, Abdullah bin Hamad al-Attiyah said all options are still open as OPEC ministers get ready to meet. OPEC member, Venezuela accounts for around 13 per cent of US oil imports. The strike there has caused US oil stocks to fall at a time when Washington needs them to increase as it prepares for a possible war on Iraq. If the United States launches a war in Iraq before the Venezuelan strike ends, markets could be deprived of about five million barrels of crude oil per day, or even more if the war were to destabilise other Middle East producers.

“Five million barrels a day is a significant shortfall ... There are severe disruptions out there,” said Washington-based analyst, Raad Alkadiri of the PFC Energy consulting firm. “There certainly is a crisis, a crisis OPEC is responding to,” he said. He said the Saudis wanted to show “they can be relied on to provide stability in the market.” But he said the United States may still be forced to dip into its 600-million-barrel strategic oil reserve to make up for shortfalls. 

OPEC increased its combined output ceiling by 1.3 million BPD to 23 million BPD excluding Iraq on January 1, together with a pledge to cut actual production to try to restore credibility in the face of chronic quota busting. A source at the cartel’s Vienna headquarters said that any rise in OPEC production quotas would take effect on February 1 at the earliest, and would probably be rolled back once exports recovered in troubled Venezuela. OPEC’s oil supply is estimated at 75 million BPD. Eight of its 11 members are Arab or Middle Eastern: Algeria, Iran, Iraq, Libya, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. The others are Indonesia, Nigeria and Venezuela. The cartel has a target price band of $22 to $28 per barrel.

OPEC, which produces about one-third of the world’s crude oil, agreed to meet for the second time in a month after oil prices roared above $30 per barrel in London and New York. A “compromise” agreement on the table here is for an output increase of around one million BPD, with Saudi Arabia pushing for a bigger hike, the Middle East Economic Survey (MEES) reported in its edition to appear Monday, monitored in Nicosia.

“In telephone consultations ahead of the Vienna meeting, Saudi Arabia has pushed for a substantial increase in the ceiling, but has faced opposition,” the industry news letter said, adding that spare OPEC production capacity is now mainly limited to Riyadh and the United Arab Emirates. Indonesia, Iraq, Kuwait and Iran will not be sending their ministers to the hastily called OPEC meeting, although they will still be represented. Analysts said some countries may be staying away since they have no excess capacity to offer.

abcnews.go.com — By Barbara Lewis

LONDON (Reuters) - Oil prices weakened on Tuesday after Mexico said it would increase crude exports, adding to an OPEC production hike, while traders speculated that U.N. talks might help to end a supply-choking strike in Venezuela.

London Brent crude futures stood at $30.07 a barrel, 13 cents down while U.S. light crude fell 21 cents to $32.05 a barrel.

Dealers and analysts said the market remained volatile and was unusually sensitive to news headlines that could trigger major buying or selling by big investment funds.

"It's a market which is having to digest an awful lot of news," said analyst Paul Horsnell of J.P. Morgan.

"Will Mexico increasing output solve the Venezuelan problem? No. Will talks with (UN secretary-general) Kofi Annan solve the Venezuelan problem? Probably not, but it's something to trade on while the market is waiting for the big headline, whether that's something on Venezuela or something on the Gulf," he added.

Prices gained more than half a dollar on Monday despite a weekend decision by the Organization of the Petroleum Exporting Countries (OPEC) to raise official production by seven percent to try to calm the markets and help to compensate for the effects of a protracted Venezuelan strike.

The general strike, which began on December 2, has reduced to a trickle exports from the world's fifth largest oil exporter and key supplier to the U.S. market.

OPEC ALONE NOT ENOUGH

Dealers on Monday expressed concern that the OPEC increase would do little to ease the supply shortage given that Venezuelan crude shipments take only around five days to reach U.S. shores compared with the four-to-six week sailing time from the Middle East.

However, late on Monday, non-OPEC Mexico said it would also increase crude exports by 120,000 barrels per day (bpd) to 1.88 million bpd.

Traders were also speculating that mediation by U.N. Secretary-General Kofi Annan could help to break the deadlock between Venezuelan President Hugo Chavez and opposition leaders.

Chavez is to hold talks on Thursday with Annan.

The United States is concerned that the loss of Venezuelan oil could aggravate the effects on the U.S. economy of a war against Iraq, which President Bush has threatened if Baghdad fails to disarm in line with U.N. Security Council resolutions.

Dealers said that oil markets had weakened slightly on hints that any U.S.-led attack on Iraq might be pushed back until later in the year, but at the same time the United States and its ally Britain have been maintaining pressure on Baghdad.

British Foreign Secretary Jack Straw said on Tuesday that Britain reserved the right to take military action against Iraq without a second U.N. resolution.

www.voanews.com VOA News 14 Jan 2003, 09:01 UTC

Venezuela's long-running general strike has contributed to a rise in global oil prices as the political strife in the South American nation enters its seventh week.

Crude oil on the New York Mercantile Exchange climbed to $32 per barrel Monday. In London, Brent crude was selling for more than $30 per barrel. Last week, prices reached $33 per barrel before OPEC announced its decision to boost production.

Analysts say the Venezuela unrest and the threat of a U.S. war with Iraq are contributing factors. Both nations are OPEC members.

On Monday, Venezuela's military fired rubber bullets and tear gas to disperse pro-government demonstrators in downtown Caracas. Similar incidents were reported in western Zulia state. Venezuela's opposition called the strike to force President Hugo Chavez to resign and call early elections. He refuses to give in to their demands.

Venezuela's energy minister said Monday the strike has cost the country four billion dollars. Venezuela is the world's fifth largest oil exporter. Meanwhile, President Chavez is expected to meet with U.N. Secretary-General Kofi Annan Thursday in New York to discuss Venezuela's political crisis.

International pressure is building for a solution to the conflict in Venezuela, which usually provides 13 percent of U.S. oil imports. South American leaders are preparing a compromise plan they hope to present to Venezuela to end the crisis. Brazil's new leftist President Luiz Inacio Lula da Silva and the secretary-general of the Organization of American States, Cesar Gaviria, are expected to discuss the plan Wednesday in Quito, at the inauguration of Ecuador's new president, Lucio Gutierrez.

Some information for this report provided by AP, AFP and Reuters.