abcnews.go.com — By Richard Mably

LONDON (Reuters) - Oil prices ticked higher on Monday as top U.N. weapons inspectors spent a second day in Iraq and the United States said time was running out for Baghdad to prove compliance with disarmament resolutions.

London Brent blend in early trade added 19 cents to $30.73 a barrel. U.S. crude, closed on Monday for Martin Luther King day, set a new two-year high of $34 a barrel on Friday.

Washington on Sunday issued one of its clearest warnings yet to Iraqi President Saddam Hussein that non-cooperation with U.N. inspectors could be deemed a trigger for a war in the absence of a "smoking gun," or hard evidence of weapons of mass destruction -- and that a decision could be just weeks away.

"The test is, is Saddam Hussein cooperating?" said Defense Secretary Donald Rumsfeld on weekend television. "He's not doing that."

Rumsfeld, presiding over a huge U.S. military build-up of warplanes, ships and tens of thousands of troops in the oil-rich Gulf region, said a final conclusion on Iraqi cooperation could be made "in a matter of weeks, not in months or years."

"Of course Rumsfeld is a hawk, but if the test of compliance is cooperation then clearly Saddam is not cooperating," said oil broker Nauman Barakat of Fimat International Banque.

Chief U.N. weapons inspector Hans Blix and Mohammad ElBaradei, head of the U.N. nuclear watchdog, say there are big gaps in Baghdad's arms declarations, and are demanding quick answers before they report to the Security Council on January 27 on Iraqi compliance.

"I think (the Iraqis) have said that there are still certain areas they are ready to provide more information. I think that in other areas they said they are ready to reconsider their position," ElBaradei said in an interview with Reuters.

"What we tried to do today at this meeting is to impress on the Iraqi authorities that the time is running out."

U.S. national security adviser Condoleezza Rice, on U.S. weekend television, said: "Clearly the 27th is an important date ... (It) probably marks the start of a last phase of determining whether the Iraqis have fully complied."

EXILE

From Beirut, a special envoy of Saddam's dismissed talk of the Iraqi president going into exile.

"As we have said before, we reiterate now that this is merely nonsense and one of the tactics of psychological warfare," said Ali Hassan al-Majeed, a member of the Revolutionary Command Council and a cousin of Saddam.

Rumsfeld said he hoped Saddam would choose exile, but he was unsure of the prospect. "There is at least a possibility," he said. "His neighboring states are in a process now of trying to avoid a conflict there by having him leave the country."

Saddam remained defiant.

"After putting our faith in God, victory is absolutely assured. We don't see it on the horizon, rather it is in our grasp and inside our chests," he told a group of army officers.

Oil traders said Venezuela's general strike, now in its seventh week, also was keeping the heat under crude prices.

Venezuelan President Hugo Chavez said on Sunday he was "winning the oil war," restoring crude flows and restarting ports and refineries. He said oil output which fell to 500,000 barrels per day this month was now at 1.2 million bpd, versus three million bpd normally.

Striking oil workers said that production was only half the volume given by Chavez.

Leading OPEC producer Saudi Arabia is moving to fill the gap by raising output by between 500,000 and one million barrels a day, industry sources said.

Riyadh is opening up the taps and by February could be pumping nine million bpd, the industry sources said on Sunday from eight million recently.

"The Saudis are cranking it up. The message is that there is a big increase on the way," said one senior Western oil executive.

www.techcentralstation.com By Arnold Kling 01/20/2003

E-Mail Bookmark Print SaveTCSMy instinct is to oppose any policy initiative that is touted to fight child pornography or the drug menace. It's not that I'm in favor of child porn or drug abuse. However, I am conditioned by experience to expect proposals supposedly aimed at those problems to turn out to be ineffectual while threatening damage to the Internet and/or the Constitution.

But the worst refuge of scoundrels, in my opinion, is the line that "we need to reduce our dependence on foreign oil in order to fight terrorism." When I hear that, my baloney-sandwich detector really starts vibrating. I am ready to reject whatever is on offer, whether it be oil drilling in Alaska, regulations on SUV's, or some new synthetic fuels program.

Oil Is Oil

I teach economics in high school. Here is a good question for an introductory course:

If the United States currently satisfies 10 percent of its demand for oil with imports from Saudi Arabia, by what percentage must the U.S. reduce its consumption in order to be 100 percent independent of Saudi oil?

If you answer "10 percent," you get an F. If we reduce oil consumption by 10 percent, then we will not cut 100 percent of our imports from Saudi Arabia. We cannot arrange to consume only American oil and no Saudi oil. Oil is oil. If we reduce demand by 10 percent, we probably will reduce our demand for Saudi oil by 10 percent, not by 100 percent.

(Actually, oil is not exactly the same everywhere. Saudi oil is somewhat cheaper to extract and refine than other oil. What this means is that if we reduce our demand for oil, the impact is likely to be felt somewhat more on other oil, and somewhat less on Saudi oil. Lowering our demand by 10 percent might not lower Saudi oil exports much at all. But we can leave that aside for now. Just keep in mind that oil is oil.)

But what if we passed a law against importing Saudi oil? In that case, the Saudis would export their oil to us via Venezuela. They might not physically use this channel, but if the Venezuelans sell more oil to the U.S. and the Saudis sell more to other customers no longer served by Venezuelans, it has the same effect.

I have received emails suggesting that I should switch brands of gasoline to a company that supposedly does not use Saudi oil. But if we all did that, then the brand that we switched to would run out of non-Saudi oil and have to start using Saudi oil.

The correct answer to the question of how much the United States would have to reduced oil consumption in order to drive our demand for Saudi oil to zero is 100 percent. Only if we stop using oil altogether can we be sure that we are not contributing to the demand for Saudi oil. Oil is oil, so that any demand for oil creates demand for Saudi oil

Once we recognize that oil is oil, it should be apparent how futile it is to try to reduce Saudi oil revenues by cutting back on our demand. True, if we reduce demand, then total world demand falls, and oil prices and revenues fall, but unless we take truly Draconian steps the effects are likely to be small.

How to Reduce Oil Consumption

I personally do not care much for SUV's, but the way I express my dislike for them is the same way that I express my dislike for cable television. I don't purchase those products. (One could argue that the fact that other people buy SUV's causes me some harm. For that matter, one could make the same argument about cable television. However, those effects are small, below what I would regard as the threshold that might justify regulation.)

As an economist, even if you told me that the policy objective is to reduce oil consumption, I would not opt for regulating the fuel economy of SUV's as my first choice. I would prefer a large gasoline tax (preferable phased in to give people time to adjust). This would give people a clear incentive to conserve, while allowing them to find the most efficient means to do so.

In contrast, regulating fuel economy of SUV's is inefficient. Old SUV's would be exempt from regulation, and they would tend to stay in the market longer. And new fuel-efficient SUV's would cost less per mile to drive at the margin, leading to more miles driven, which would cancel out some or all of the effect on gasoline consumption.

Of course, this still begs the question of why we should be reducing oil consumption below the natural level incented by the cost of oil in the market. One can argue that lower oil consumption would lead to lower pollution, but if fighting pollution is the objective then it is more efficient to tax or regulate pollution than to regulate fuel economy. From a pollution-fighting standpoint, it would be better to have a low-pollution car that gets 15 miles to the gallon than a high-pollution car that gets 40 miles to the gallon.

Just Take the Oil

The issue that leads people to suggest that we need to "reduce our dependence on foreign oil" is the apparent role of Saudi Arabia in funding terrorism. Someone who I love dearly but is a bit naive once said to me, "We've got a powerful army. The Saudis don't have bupkis. We should just take the oil!"

She is naive, because she is not sensitive to the issue of imperialism and world public opinion. To wage a war for oil would be to offend the sensibilities of large numbers of decent, well-educated people.

However, if Saudi funding for terrorism is the crux of the issue, then we have little choice but to confront the Saudis directly. The indirect approach of reducing oil demand is meaningless. Only a worldwide boycott of Saudi oil would effectively cut off their oil revenues. Yet such a boycott would be difficult to orchestrate and would itself be tantamount to war.

The problem with sponsoring terrorism is not that oil revenues are the source of funds. The problem with sponsoring terrorism is that it is grossly immoral. People introduce the connection with oil revenues as a red herring. As we have seen, trying to make a connection between fighting terrorism and regulating SUV's or drilling for Alaskan oil is a violation of Oil Econ 101. At best, it is a way to dodge the challenge posed by apparent Saudi support for terror. At worst, it is an attempt to advance another agenda using terrorism as an excuse.

The real issue is the alleged Saudi funding of terror. No matter how much demand we withdraw from the oil market, the Saudis will have revenue and we have to be concerned with how they use it.

If cutting off funding is critical to winning the war on terror, then we must press the Saudis on that point. We should tell them that we respect their rights as a sovereign nation, but they owe it to the community of nations to not fund terrorists. If that approach does not work, then it is a waste of time to wring our hands over our "dependence on foreign oil." The only fallback position is the one suggested by my wife: just take the oil.

www.globeandmail.com By VLADIMIR TORRES

Monday, January 20, 2003 – Page A13

It was easier during the Cold War. You chose a side; all that was needed to understand any crisis or conflict anywhere was to figure out which side was your side -- and the arguments to support that position were already at hand. Old habits die hard, and so in this era of sound bites, whoever says anything that vaguely resembles what seems to be your position must be supported.

Case in point: Venezuela. The world's fifth-largest oil producer is in the seventh week of a crippling national strike, led by business and union leaders who want to force President Hugo Chavez to call new elections. Outside the country, "progressive left" thinkers and media have made Mr. Chavez a newfound champion. Their analysis is oversimplified, to say the least.

Mr. Chavez was democratically elected with an overwhelming majority in 1998. This mandate allowed him -- through several referendums -- to dissolve Congress, create a Constitutional Assembly that drafted the current constitution, and to be elected once again -- as first president of the newly christened "Bolivarian Republic of Venezuela."

But democratic legitimacy demands consistently playing by the rules. And once re-elected, Mr. Chavez revealed his true nature: the former paratrooper head of the failed military coup d'état of 1992. Soon showing a total disregard for democratic institutions, he moved to gain a stronghold on the country's legislative and judicial systems, and to involve the military in a myriad of civilian affairs, even selling food at cost on the streets.

The President has systematically harassed the media, intimidated his opposition, and alienated critical sectors of Venezuelan society, such as the Church, businesses, the middle class, civilian organizations and NGOs -- those who now march in the streets calling for his ouster. His violent speeches are loaded with diatribes against "them." Anyone who is not a loyal supporter is accused of being a fascist, sometimes in scatological terms. (Despite his claims, Mr. Chavez's "little blue book," as he calls the constitution, does allow for civil disobedience; Article 350 should grant the general strike legitimacy.)

Mr. Chavez likes to paint the strike as a "class confrontation." That's debatable. The President still draws his core support from among the millions of Venezuelans who live in poverty. But now that more than 60 per cent of the population finds itself in that bracket, and the impoverished middle classes make up for most of the rest, his poor-versus-rich scenario makes little sense.

Venezuela used to have one of the highest crime rates in the hemisphere. Now that problem is compounded by the activities of Mr. Chavez's "Bolivarian Circles." These armed bands -- responsible among other things for vandalism against media facilities -- are organized and financed through government agencies. Although inspired by Cuba's "Committees of Defence of the Revolution," they are, in fact, nothing but fascist-like intimidation squads that operate with total impunity.

Ever since the events of April, 2002, when Mr. Chavez was ousted from office for 48 hours, the government has claimed that all opposition is right-wing and antidemocratic. This overlooks the fact that it was only thanks to the deeply rooted democratic sentiments of the vast majority of Venezuelans that Mr. Chavez was reinstated. In fact, those opposing Mr. Chavez include business and labour groups, and social movements spanning political parties and classes. Clearly, it is a genuine democratic movement.

Then there is the oil issue. When Venezuela nationalized its oil industry in 1975, a strong core of Venezuelan managers, engineers and technical personnel -- employees of the foreign oil companies, trained locally and abroad -- took over key positions. Ever since, the industry has prided itself on making promotions and appointments right up to the board of directors based on merit. Not even the most corrupt of the pre-Chavez administrations dared to interfere with that sacred rule. After all, Petroleos de Venezuela (PDVSA), a world-class corporation, is Venezuela's main provider.

But Mr. Chavez, determined to take control of the industry, has been appointing his supporters to key positions. Now, facing the strike, he has decided to "cleanse" PDVSA. The government has already fired 2,000 employees and plans to run the industry with a few unskilled non-striking workers, the military, and technical personnel brought in from other countries. Mr. Chavez calls this "true nationalization."

To supporting such actions, the government argues that the current management wants to "privatize" the company to preserve its privileges. "Privatize" refers to the joint ventures and alternative deals -- already in place or planned -- that enable PDVSA to continue to be a world leader in the oil industry beyond crude oil extraction. "Privileges" refers to the fact that oil-sector wages are above those of most public servants (which makes sense if one considers their technical expertise and the need to prevent a brain drain).

Despite all this, leftists continue to defend Mr. Chavez, and cite his stance in many international forums, where he has come out against neoliberalism, free trade and globalization. What does that mean? He hasn't defined "Bolivarianism"; he improvises as he goes along, and has plunged Venezuela's economy into a deep hole.

Last year, the inflation rate was more than 30 per cent and the GDP was decreasing by about 10 per cent. That was before the strike.

Why do progressives outside Venezuela continue to support Mr. Chavez? It's a nice illusion to believe that with Lula (Luiz Inacio "Lula" da Silva) as President in Brazil, Lucio Gutierrez in Ecuador and Mr. Chavez in Venezuela, the winds of social change are blowing in South America.

But Mr. Chavez is nothing more than another megalomaniac colonel.

Vladimir Torres, a Venezuelan-Canadian, works as an interpreter and Latin America current affairs analyst.

www.africaonline.co.zw Innocent Chofamba-Sithole

LAST week’s lead story in The Sunday Mirror on an alleged transition plan that would see President Robert Mugabe handing over power to a chosen successor before the end of his current term, has sparked off a very interesting and healthy debate, analysts say.

Despite the avalanche of speculative reports that found their way into the newsrooms of the international media and served to obfuscate the real import of the plan, analysts who spoke to The Sunday Mirror concurred that it is inevitable that a national debate on the succession issue should be put on the agenda. “In a healthy society, yes, it should be discussed. But from my perspective, the initiative should come from government, and not from outsiders, as reports in the international media seemed to portray it,” said Amy Tsanga, a lecturer in the University of Zimbabwe’s (UZ) Law School.

Institute of Development Studies (IDS) professor, Brian Raftopoulos also welcomed the debate, saying it echoes the opinion of some in the ruling Zanu PF who believe that “this project cannot continue in its present form.” Feeding off The Sunday Mirror story, the international media created their own speculative versions, in which President Mugabe would be forced to go into exile as part of the exit plan.

She said the international media’s drive to create a crisis situation out of the exit plan could be inspired by their motive to try and influence the course of events in the country. “Drawing parallels with the chaotic situation in Venezuela, where demonstrations have raged on for over a month now, may be in itself a way by the international media of instigating action from the masses here,” Tsanga observed. She also dismissed the idea of an externally-brokered transition plan, saying that serious talk about succession will come from Zanu PF itself.

Speaker of Parliament and ruling party secretary for administration, Emmerson Mnangagwa, who is also widely believed to be Mugabe’s eventual successor, said the international media reports were meant to divide his party. He was responding to questions posed to him by the Zimbabwe Broadcasting Corporation (ZBC) after the media reports had alleged that he was the man behind the exit plan. Adding his voice in response to the reports, information and publicity minister, Professor Jonathan Moyo wrote in The Herald of January 15th that: “Of course, there is nothing wrong with debating succession but there is everything wrong with debating it outside the constitutional and democratic processes. Any succession that takes place outside these processes is tantamount to a coup and therefore unacceptable for that very reason”.

In December last year, Movement for Democratic Change president, Morgan Tsvangirai said in an address to party parliamentarians that there was an “unholy tripartite” plot by the British, South Africans, and Zimbabwean government officials to get him to agree to a round table meeting with President Mugabe, where an alleged transition plan would be discussed, and in which he would emerge as less than president.

But later, Tsvangirai said former army colonel, Lionel Dyck was sent to him as an emissary of Mnangagwa and defence chief, Vitalis Zvinavashe,to discuss the plan.

In the ensuing media reports on the issue, Dyck also initially acknowledged to a local daily that he had been sent by the two gentlemen. But as the issue fast gained global media attention, Dyck has denied any association with Mnangagwa and Zvinavashe, claiming instead that he was acting on his own behalf.

Sources available to The Sunday Mirror last week revealed that the latest succession plan was a resumption of the stalled transitional process that had begun with the draft constitution of February 2000. But with the gradual disappearance of the circumstances that had led to its suspension, the sources said, the plan was coming back into focus, and would involve a peaceful transition in which contenders could openly vie for the top post.

But in the same Herald article, Moyo suggests that there was a British-co-ordinated attempt to use the draft constitution to oust President Mugabe from power. “Put simply, there was a $64 million effort to use the draft constitution as a succession tool…” Tsanga noted that President Mugabe had made reference to his retirement in the past, but was skeptical of the possibility of his stepping down now, in the “midst of untidy ends in the land reform programme”. “That would be widely perceived as an admission of failure, and I’m not sure whether that would augur well with the kind of legacy the president would want to leave behind,” she said.

Responding to media reports about the alleged exit plan in Zambia last week, President Mugabe said he would retire only “when business was done”.

As part of the transition plan, the British government is understood to have pledged over half a billion pounds to jump-start the economy.

UZ political commentator and mathematics professor, Heneri Dzinotyiwei said although he felt there was an element of truth in the argument that a change of leadership would ease relations with the international community and attract external support, the real debate should focus on how to come up with solutions to the economic problems besetting the nation.

“If we do that, it gives us a format of following events, and we can get to a position where we can say either government has failed, or that they should adopt certain policies,” he said.

Tsanga observed that among the most vocal in the Mugabe-must-go lobby are people who seriously believe that the land reform programme can be reversed and that, with Mugabe’s removal from power, there is chance for them to get their farms back.

As the media glare on the succession issue enters its second week, General Zvinavashe has denied having given an interview to The Star of South Africa, which ran a story on January 17th, alleging that Zvinavashe had admitted that there was a crisis in Zimbabwe and had suggested the setting up of a national taskforce.

Speaking on ZBC’s Newshour on Friday, Zvinavashe flatly denied ever giving The Star’s reporter, Basildon Peta an interview.The defence chief, who rarely gives interviews to the media, had apparently given an exclusive interview to the Business Tribune, which was published on Thursday last week. In that interview, Zvinavashe had said: “First we must admit that there is a crisis. Everyone can see that…so we must do something about it. In my view, it is not right to keep quiet and let nature take its course.”

Vienna, Jan 20, IRNA -- The price of the OPEC basket of seven
crudes stood at 31.02 dollars a barrel on Friday compared with
the 30.87 dollars of the previous day, according to OPEC Secretariat calculations here Monday.

The basket price in the last 30 working days in dlrs:

Wed 04 December 25.53
Thu 05 December 25.95
Fri 06 December 25.88
Mon 09 December 26.20
Tue 10 December 26.45
Wed 11 December 26.70
Thu 12 December 27.06
Fri 13 December 27.62
Mon 16 December 28.61
Tue 17 December 28.76
Wed 18 December 29.12
Thu 19 December 29.56
Fri 20 December 29.64
Mon 23 December 30.62
Tue 24 December 30.94
Thu 26 December 30.69
Fri 27 December 31.06
Mon 30 December 30.42
Tue 31 December 29.85
Thu 02 January 30.05
Fri 03 January 30.83
Mon 06 January 30.71
Tue 07 January 29.72
Wed 08 January 28.86
Thu 09 January 29.51
Fri 10 January 29.82
Mon 13 January 29.82
Tue 14 January 30.21
Wed 15 January 30.66
Thu 16 January 30.87

For the first quarter of 2002, the basket price averaged dlrs
19.83 a barrel as opposed to dlrs 18.38 in the 4th quarter of 2001.
For 2001 as a whole, the price of the basket averaged dlrs
23.12 a barrel, compared with dlrs 27.60 in 2000, dlrs 17.47 in 1999 and dlrs 12.28 in 1998.

The OPEC basket comprises Algeria's Saharan Blend, Indonesia's Minas, Nigeria's Bonny Light, Saudi Arabian Light, Dubai of the United Arab Emirates, Venezuela's Ti Juana and Mexico's Istmus Crude.
MN/LS
End