washingtontimes.com James Morrison      U.S. ambassadors in South America are raising alarms about terrorism spreading throughout the continent.      Charles Shapiro, the ambassador to Venezuela, relayed his concerns last week to Vice President Jose Vicente Rangel.      "I don't want to accuse anybody, but we are on alert," Mr. Shapiro told reporters in Caracas. "We are ready to collaborate with the Venezuelan government to seek out terrorism that may exist in this country."      He said he also discussed "the possible and very probable war against Iraq" in his meeting with Mr. Rangel.      Earlier last week, Gen. James Hill, head of the U.S. Southern Command, said the Lebanese terrorist group Hezbollah is operating in border areas of Argentina, Brazil and Paraguay and on Venezuela's Margarita Island. Colombia also has accused Venezuela of allowing Colombian guerrillas to use its territory, a charge Venezuela has strongly denied.      In Ecuador, Ambassador Kristie Kenney urged the government to control its 400-mile border with Colombia to stop drug trafficking and guerrilla activities.      She also urged Ecuador to denounce the rebels, known as the Revolutionary Armed Forces of Colombia (FARC), as terrorists.      The kidnappings of three American civilians and execution of one last month "demonstrates that they are terrorists," the ambassador told Ecuador's El Universal newspaper.      "Neighboring countries should help [Colombian President Alvaro] Uribe and Colombia label the FARC as what they are," she said, referring to the rebels by their Spanish initials.      The ambassador said Ecuador also can help by patrolling its border and "not leaving open escape routes for the guerrillas and drug traffickers," who often work together.

economictimes.indiatimes.com REUTERS[ TUESDAY, MARCH 11, 2003 10:07:45 AM ]

NEW YORK: World oil prices dipped on Monday as the United States and Britain struggled to convince wavering nations to back a United Nations resolution that would pave the way for war on Iraq.

Prices fell despite signs that the Opec oil producer cartel, which meets on Tuesday, was backing away from plans to suspend formal limits on oil production should the United States attack Iraq.

US light crude slipped 51 cents to $37.27 a barrel, below its recent peak of $39.99. Oil prices set a record high of $41.15 a barrel during the 1990-91 Gulf crisis.

London benchmark Brent for April fell 35 cents to $33.69 a barrel, below a session high of $34.55, its highest level since November 2000.

Oil prices are up 20 percent this year on concerns that a war in Iraq could upset oil supplies from West Asia.

A draft UN resolution proposed by the United States and Britain has set a deadline of March 17 for Iraq to satisfy all Security Council resolutions that it was cooperating fully with disarmament demands, or face war.

A vote could come assoon as Tuesday. The United States and Britain stepped up efforts to win support for the declaration while veto-wielding members France, Russia and China are opposed to military action.

US officials said on Monday that Iraq appears to have placed explosives at the Kirkuk oil fields in northern Iraq to destroy them if a US invasion occurred. An Iraqi oil ministry official later denied the claim.

More Serious

The prospect of disruption of West Asian oil supplies in the event of war is all the more serious in that it follows a strike that has crippled Venezuela's oil industry.

The Venezuelan stoppage and strong heating demand due to a severe northern winter have helped to reduce stocks in the United States, the world's biggest oil consumer, to the lowest levels since the Arab oil embargo of the mid-1970s.

Opec powers Saudi Arabia and Kuwait had hoped to find backing at a Tuesday meeting of the Organization of the Petroleum Exporting Countries to set aside production quotas if war prevented Iraqi deliveries.

Fellow Opec member Iran condemned the plan. "Iran will not back politically motivated decisions," said Iranian Oil Minister Bijan Zanganeh. Opec should not adopt any policy that implies support for a "US military assault against one of Opec's member states," he said.

Iran and others also fear a seasonal fall in demand in the second quarter could coincide with the end of a short war and send prices spiralling lower.

Saudi Arabia -- which holds the majority of Opec's spare capacity -- is trying to convince the United States and other importers that Opec can compensate for war stoppages without the need for a coordinated release from emergency stockpiles in consumer countries.

US Energy Secretary Spencer Abraham said the United States was prepared to release crude from emergency reserves in the event of supply disruption, but a decision to release stocks would be made only in the event of a supply emergency.

Behind the scenes, Saudi Arabia has made clear that it is prepared to pump at maximum levels, with or without Opec backing. Riyadh has lifted output sharply in recent weeks and is now pumping more than 9 million barrels daily of its 10.5 million bpd capacity.

www.weeklystandard.com by Thor Halvorssen 03/11/2003 12:00:00 AM

LATE LAST YEAR, 16 U.S. congressmen voiced their approval for Venezuelan president Hugo Chavez. Representatives Barney Frank, John Conyers, Chaka Fattah, Jan Schakowsky, Jose Serrano, and others complained in a letter to President Bush that the United States was not adequately protecting Chavez against a groundswell of internal opposition to his increasingly authoritarian rule--an upsurge that might lead to his ouster. Elected to power in 1998, Lt. Col. Chavez has hijacked democracy in Venezuela and is openly moving the country toward totalitarianism. Beyond Venezuela's borders, he celebrates, protects, and does business with terrorists.

A day after the September 11 terrorist attacks, President Chavez declared that "The United States brought the attacks upon itself, for their arrogant imperialist foreign policy." Chavez also described the U.S. military response to bin Laden as "terrorism," claiming that he saw no difference between the invasion of Afghanistan and the September 11 terrorist attacks.

While the United States considers Saddam Hussein a threat to world peace, Chavez has hailed Saddam as his "brother" and business "partner." In the past two years Chavez has continued to cultivate relationships with the governments listed in the State Department's roll of state sponsors of terrorism--he has been particularly vocal in his support for the Iranian regime.

Last December a high-level Venezuelan military defector gave sworn testimony that terrorist links exist between al Qaeda and the Chavez government. The defector, President Chavez's personal pilot, alleges that one operation involved the transfer of close to $1 million in cash to Osama bin Laden.

In January, Judicial Watch, a public-interest legal organization based in Washington, filed a $100 million suit against Hugo Chavez on behalf of a victim and survivor of the September 11th terrorist attacks. The lawsuit alleges that Chavez provided material, financial, and other support and assistance to the al Qaeda terror network.

In February, a Venezuelan Muslim, Hasil Mohammed Rahaham-Alan, was detained in London's Gatwick airport for stashing a grenade in his luggage. He was apprehended after disembarking from a British Airways flight that originated in Caracas. The British Mail reported that al Qaeda operates a training camp on the Venezuelan island of Margarita. The Venezuelan ambassador in London has obtained a "legal stop" preventing the newspaper from commenting on the article.

Also, the congressional signatories turn a blind eye to mountains of hard evidence--most supplied by U.S. allies in the Colombian government--confirming Chavez's support for the FARC and ELN terrorist networks. The Colombian government declared that the head of the FARC terrorist group, Manual Marulanda, is hiding in Venezuela, and the Colombian embassy in Caracas was bombed a day after Chavez made a blistering speech attacking Colombia. The Financial Times reported last week that the perpetrators of the bombing may be FARC terrorists or even members of the Venezuelan secret police. Yesterday in Colombia, Venezuelan Foreign Minister Roy Chaderton gave a press conference where he unequivocally stated that the Chavez government will not refer to the FARC Colombian terrorists as "terrorists," because the Chavez government wishes to remain "neutral."

It is unthinkable that congressmen who enjoy access to detailed intelligence reports are willing so blithely to disregard the Chavez government's track record on matters that directly affect the national security of the United States.

These congressional Democrats are not alone in their misguided support for Hugo Chavez. For years, Representative Cass Ballenger (R-NC) has had a bizarre relationship with Chavez. Ballenger has emphasized that the "Venezuelan Caucus" he established with Rep. William Delahunt (D-MA) exists to "show friendship to President Chavez and to encourage him to embrace democracy." Ballenger and Hunt have embraced Chavez--and served as his U.S. tour guides. In return, Chavez has repeatedly used his friendship with the congressmen to prop himself up by showing strong support from and access to powerful members of the U.S. government.

To their credit, seven of the congressmen who wrote to President Bush have written another letter. On March 6 they wrote Chavez with some questions. They didn't ask about terrorism. Instead they inquired about the arrests and murders of members of the opposition to Chavez's rule. It's progress, of a sort. But we can do better.

Any congressional support of Chavez is particularly galling given that he is vocal about his loathing of the United States and American liberty. Yet unlike Chavez and his paid supporters, the great majority of Venezuelans have great affection for America and its freedoms. A recent Pew survey on "Global Attitudes" demonstrated that, although much of the world--and nearly all of South America--resents and despises America, Venezuelans rank among the greatest admirers of the United States and its people.

Congress should put President Chavez on notice that his dictatorial actions will not be tolerated It should also urge the Organization of American States to expel him, and impose immediate sanctions for his state sponsorship of terrorism. Any appeasement of Chavez sends a comforting message to the enemies of freedom. Additionally, it sends a dispiriting signal to the natural allies of the United States: the millions of Venezuelans who reject the grotesque tyranny of Hugo Chavez.

Thor Halvorssen is a human rights and civil liberties activist in Philadelphia. He grew up in Venezuela.

www.chron.com March 11, 2003, 12:37PM By DAVID IVANOVICH

VIENNA, Austria -- Just days before missiles could be flying again in Baghdad, the OPEC producers are wrangling over how to respond to a possible U.S.-led invasion.

RESOURCES • Graphic: OPEC members' outputWhile the cartel members are united in their desire to avoid an oil supply crisis, they are split politically.

Despite sharply higher oil prices, some OPEC members argued today that the world has enough crude to meet demand and blamed the threat of a U.S.-led war against Iraq for fears of a supply disruption.

Before arriving for today's meeting of OPEC oil ministers, Iran's oil minister was telegraphing his opposition to a plan that would suspend the group's production quotas if war breaks out. The plan is backed by Saudi Arabia, OPEC's de facto leader.

Iran is warning the United States' allies within the group that it will oppose any measure that suggests support for "a U.S. military assault against one of OPEC's member states."

"Iran will not back politically motivated decisions," Iranian Oil Minister Bijan Zangeneh told the Iranian news agency Monday, Reuters reported from Tehran.

While Zangeneh's comments may cause some consternation within OPEC, Iran's objections will have little real impact on oil supplies.

The OPEC countries already are pumping far more crude than their official quotas allow. They are earning top dollar for their crude and fear a supply disruption will prompt the United States and other industrialized nations to release oil from their strategic petroleum reserves, which could lower prices.

Despite their supply efforts, the price of crude oil and other fuels are at near record levels.

In New York, crude oil for April delivery fell 51 cents, or 1.4 percent, to $37.27 a barrel in trading on the New York Mercantile Exchange. April heating oil fell 2.28 cents to close at $1.0857 a gallon.

At the International Petroleum Exchange in London, April Brent fell 35 cents to close at $33.75 a barrel.

Natural gas for April delivery plunged 47.8 cents to settle at $6.515 per thousand cubic feet.

The average pump price of gasoline nationally is just short of the record, while it has hit $1.58 per gallon in the Houston area, up 45 percent from this time last year according to AAA's daily fuel gauge report.

Those oil prices currently include a "war premium" of perhaps $6 to $7 a barrel, Qatari Oil Minister and OPEC President Abdullah al-Attiyah said. That premium could evaporate quickly if a war is won quickly and send prices falling.

With war looming, al-Attiyah vowed the OPEC members "will try to do whatever we can." But he warned that even the OPEC producers have limits.

Agreeing to suspend the production ceilings would send a signal to the markets that the OPEC producers are serious about avoiding a shortage.

Tehran's support of Baghdad is striking, considering Saddam Hussein's 1980 invasion of Iran and the bloody, eight-year war that ensued.

But relations between the United States and Iran have been bitter since the fall of the Shah, the taking of American hostages and the United States' tacit support of Saddam during the Iran-Iraq war. President Bush didn't settle any old grievances when he listed Iran among the "Axis of Evil."

But the OPEC producers are not likely to throttle back now because of Tehran's political sensibilities.

Al-Attiyah tried to downplay the discord Monday in his comments suggesting the OPEC countries are committed to ensuring supplies are adequate.

Saudi Oil Minister Ali al-Naimi said little upon his arrival Monday evening, but his countries commitment to making up for any lost production is well known.

"The Saudis already are producing well over quota," noted Raad Alkadiri, an analyst with Washington-based PFC Energy. "They'll reaffirm that commitment at this meeting."

U.S. Energy Secretary Spencer Abraham, who is in Vienna for another, unrelated conference, planned to meet with OPEC oil ministers, but no details of these meetings were available Monday. Abraham will not -- per longstanding U.S. policy -- attend the OPEC conference.

To avoid release from the U.S. Strategic Petroleum Reserve and other emergency stockpiles, OPEC producers know that if war breaks out they must make up for the lost production in Iraq, as well as in parts of Kuwait and anywhere else where the fighting may spread.

Iraq has been exporting about 2 million barrels of oil a day, 1.7 million under the official United Nations' controlled oil-for-food program and another 300,000 or so smuggled out through Jordan and Syria.

Kuwait, meanwhile, has already acknowledged it may be forced to shut down wells producing 700,000 barrels a day in areas bordering Iraq. It is trying to make up for that loss by boosting production elsewhere in the country.

OPEC also is trying to make up for losses in Venezuela, where political opposition to President Hugo Chavez brought oil production to a virtual halt in January. Despite recovery, its output is still less than it was before the strike.

The 10 OPEC producers supposedly controlled by quotas are pumping as much as 25.3 million barrels a day, according to the U.S. Energy Information Administration. That's about 3 percent more than their official limits allow and about 700,000 barrels more than they were cranking out prior to the Venezuelan strike.

Saudi Arabia, OPEC's largest producer, has increased output to 9.2 million barrels a day, up from 8.5 million in January, sending a strong signal of support to Washington. And the kingdom could continue to increase its production to near 10.5 million barrels a day if the war causes major disruptions.

All the concern about a supply disruption caused by a war is in sharp contrast to last December, when OPEC officials were obsessed about the advent of spring and its resulting seasonal drop in demand. "Today, those calculations are different," Qatar's al-Attiyah said.

Overall, OPEC officials are pleased with their own progress. "We're in good shape," Algerian Oil Minister Chakib Khelil declared Monday. "Supply is pretty good."

If supply disruptions do result from the invasion, "OPEC should not be blamed."

While not party to the quota agreement, Iraq still usually sends a delegation to OPEC meetings. But Iraq will not be represented here today. Saddam has ordered all of his European-based diplomats to return to Baghdad, a diplomatic source said.

Besides the OPEC countries, a number of nonaligned producing nations -- Mexico, Russia, Angola, Oman and Syria -- are here to show their support for the cartel's efforts.

www.nytimes.com By NEELA BANERJEE

VIENNA -- Facing the looming possibility of war in Iraq and the continued shortfall of oil exports from Venezuela, the Organization of the Petroleum Exporting Countries is expected to announce at its meeting here today that it will continue to supply as much oil as the markets need, essentially an affirmation of what it has been doing for months now, although with limited success. Advertisement

Most of the 10 voting OPEC members are now pumping as much oil as they can, but prices have stayed stubbornly high. In New York, crude oil for April delivery fell 51 cents yesterday, to $37.27 a barrel.

But even if OPEC does nothing today, analysts here said, the steps it has taken so far amount to an important political and economic victory. They noted that prices would have been even higher had OPEC not increased output to compensate for the loss of Venezuelan oil production and then to calm a market jittery about a possible halt in Iraqi exports, in the case of war. Recently, consuming regions, led by the United States and European countries, gave the cartel a vote of confidence by announcing that they would allow OPEC to make up for any possible shortfall in supplies if war broke out before they released oil from their strategic stockpiles.

At a time when many in the United States are calling for greater imports of oil from outside the Middle East, OPEC's pre-emptive action has shown that the Persian Gulf states, particularly Saudi Arabia, are the only ones with the spare production capacity that can be called on to dampen prices, analysts said.

"This is Saudi Arabia's crowning glory in its short-term relations with the United States," said Raad Alkadiri, a director at PFC Energy, a Washington consulting group. "They have shown that they have the willingness to keep spare capacity that becomes of enormous strategic importance to Western markets. Despite the stresses and strains in their relations with the United States, they have shown that they are willing to act to keep prices under control."

Yesterday, on the eve of the official meeting, members debated publicly about the need to increase production officially to the maximum by abrogating production quotas, with Iran insisting there was no need to do so. But analysts said that talk of quotas was only a formality, given that OPEC has pledged to provide the market with the oil it needs to stabilize prices. That may involve producing full-tilt, depending on the progress of a possible war — something the cartel has never done before, those analysts said.

"This is the first time the upper limits of their production band will be tested," said Yasser Elguindi, a managing director at Medley Global Advisors, a New York consulting group. "And we don't know exactly what the outcome might be. With everyone going flat-out, they may be able to squeeze 50,000 barrels here or there, but it will be at the margins."

Analysts say that the only OPEC members with any room to produce more oil are Saudi Arabia, and, to a far lesser extent, Kuwait and the United Arab Emirates. OPEC members do not disclose their production statistics, but analysts think that Saudi Arabia is already producing 9.2 million to 9.5 million barrels a day, or about 1.5 million barrels more than its official quota. If need be, the Saudis could increase output by an additional million barrels a day over several weeks, the analysts said.

Still, it takes about six weeks for oil from the Persian Gulf to reach the United States, which may explain why inventories of crude oil and petroleum products have remained low. That trend, in turn, has helped keep prices high. But demand for oil traditionally falls in the spring. While analysts said they thought the persistent cold weather in the northern United States might buoy oil prices, they nonetheless expect demand to slacken somewhat in the weeks to come, which might help curb the rise in prices.

Exports of oil from Venezuela have resumed and are now 1.5 million to 2 million barrels a day, analysts estimated, which is still less than the 2.5 million barrels the country shipped before a general strike began in December against the government of President Hugo Chávez. But analysts warned that Venezuela would remain a far from reliable exporter until its domestic political disputes are resolved. Moreover, the shutdown of the oil fields at the beginning of the strike may have led to a permanent loss of up to 500,000 barrels of production capacity, analysts said, because some of the country's oil production is hard to revive once it has been shut in.

"The reality is that Venezuela is not going to come back to prestrike levels," Mr. Elguindi said. "Its production will probably be erratic. I think people underestimated the impact of its shutdown on markets, and that impact could last through the end of the year."

Most analysts think that OPEC, at maximum capacity, could make up for the inconsistent Venezuelan production and the loss of about two million barrels of Iraqi exports, legal and otherwise. But that leaves no margin for anything else that might go wrong, they warned. What if coming elections in oil-producing Nigeria touched off unrest? What if insurance on oil tankers to Kuwait rose to such prohibitively expensive levels that loading of some oil there stopped for a time? Or Kuwait itself shut down production to the north, near the border with Iraq?

Obaid bin Saif al-Nasseri, the oil minister for the United Arab Emirates, told reporters here yesterday that it would be "very difficult" for OPEC to make up for a halt in Iraqi oil exports and a simultaneous halt of oil production in northern Kuwait.

If OPEC cannot cover for a shortfall in the market, then the United States and other consuming countries would probably release oil from their strategic stockpiles. The United States has about 600 million barrels of oil in its Strategic Petroleum Reserve, and the Bush administration has come under great pressure to release some of it to rein in prices, which it has flatly refused to do.

"From the United States' perspective, they want oil producers to supply as much as they can, because once the government taps the reserve, it can't go to it again if things get even worse," Mr. Elguindi said. "It becomes the measure of last resort for the country."