The Miami Herald Posted on Tue, Jun. 03, 2003 BY TIM JOHNSON tjohnson@herald.com

WASHINGTON - Jack Kemp, a former NFL quarterback, legislator and vice presidential candidate in 1996, apparently wants to get into the lucrative oil business on behalf of Venezuela.

Kemp is a key figure in a proposed and unusual deal by a company with offices in New York to supply Venezuelan crude oil to help fill the U.S. strategic petroleum reserve.

The deal would allow Free Market Petroleum, which has Kemp on its board of directors, to supply 50,000 barrels of crude a day for three years to the U.S. government oil reserves in Texas and Louisiana.

If the deal goes through, which is still uncertain, it could bring Free Market Petroleum business of more than $1 million a day or as much as $1 billion over a three-year period.

The proposed transaction brings together Kemp, a widely known conservative who espouses free-market values, with a leftist government accused of being unfriendly to business. President Hugo Chávez has slapped controls on the Venezuelan economy and presided over a dramatic recession.

Perhaps as significantly, the accord signals that Venezuela wants to regain its image as a reliable supplier of crude to the U.S. markets following a calamitous two-month strike that briefly paralyzed its state oil industry.

Several facets of the deal are unusual.

Free Market Petroleum is a new company with no presence on the Internet and few known business deals under its belt. Its president, William Hickman, said in a brief telephone interview that the company is a year old and has offices in New York and London.

''We're a subsidiary of a larger company about which I can't go into,'' Hickman said.

The deal between Free Market Petroleum and the Venezuelan government has set off sparks in Caracas as well, for reasons unrelated to the U.S. firm.

The state oil company, Petroleos de Venezuela S.A., ''traditionally never has sold petroleum through intermediaries -- not only because it loses a margin through intermediation but also because the practice opens all sorts of doors to corruption,'' a newsletter last Friday by the Veneconomia consulting group said.

Venezuela's ambassador to the United States, Bernardo Alvarez, said Kemp arrived in Caracas last year with other representatives of Free Market Petroleum and pitched the idea of the company serving as a middleman to sell crude to the U.S. government.

''We talked to him,'' Alvarez said. ``We checked them out and, as I said, it's a registered company. It presented to us all the requirements we needed.''

Kemp's office said he was unavailable for comment.

Since 1977, the U.S. government has maintained stocks of crude oil in huge salt caverns in Texas and Louisiana. The stocks serve as an economic buffer against potential disruption of world oil supplies.

The Strategic Petroleum Reserve holds about 602 million barrels of crude, and the White House has directed that stocks increase to 700 million barrels.

U.S. policy bars direct purchases of oil from foreign governments, however, and that is where private companies such as Free Market Petroleum can do business.

Most of the oil accumulated in the salt caverns comprises in-kind contributions made by companies drilling along the U.S. continental shelf. The companies owe royalties for rights to pump the oil. Since some of the offshore oil is of poor quality, companies swap for better crude with other firms -- such as Free Market Petroleum -- to turn over to the U.S. government.

Venezuela, which supplies U.S. consumers with about 14 percent of their oil, says it is pleased with the prospect of selling to the Strategic Petroleum Reserve.

''There is a willingness in the government to increase our energy relationship with the United States,'' Alvarez said. ``It's a good business for Venezuela from an economic point of view. It's another client.''

The two-month strike in Venezuela last December and January paralyzed the state oil company, bringing production to a trickle. Since breaking the strike, Chávez has fired more than 17,800 of the company's workers, remaking an institution that had become a hotbed of discontent with his populist government. Venezuela claims it has recovered oil production to prestrike levels of more than three million barrels a day.

The Washington Times

    The Venezuelan government and opposition members committed to a cold peace Thursday, by signing a deal that establishes cooperation guidelines for easing tensions. The deal has been largely billed as benefitting Hugo Chavez. But the government's need to sign such a deal highlights the domestic and international pressures it is under. Those pressures on Mr. Chavez's ability to govern will continue to prevail, demanding from the president some ostensible conformity with democratic norms.

    The long-anticipated agreement between the Chavez government and opposition forces reinforces the public's constitutional right to hold a referendum on the holding of new elections after Aug. 19, but fails to set a date for such a referendum. Many observers of Venezuela fear that Mr. Chavez will rob the people's right to such a referendum by some technical slight of hand, such as stonewalling on the establishing of the necessary electoral body to confirm the validity of signatures. Leading opposition members downplay the potential for such an outcome.

    "There shouldn't be any problems," said Rafael Alfonso, one of the six opposition members to sign the agreement, adding the government has plenty of time to establish the electoral body. Mr. Alfonso also noted that "the circumstances that aggravated this very complicated social and economic situation remain current, even aggravated."

    The president may have a limited ability to prevent the public from holding the referendum, enshrined in Venezuela's new constitution, which was established, in effect, by Mr. Chavez himself. The president is therefore especially beholden to the public's new constitutional rights. By signing the pact, Mr. Chavez has further entrenched himself in this constitutional framework. Should he later try to break the rule of law, Mr. Chavez would have to answer to the Venezuelan street.

    And then there's the international pressure on the Venezuelan president. The Bush administration and Latin American leaders are viewing with concern Venezuela's ability to export instability in an already vulnerable region. Venezuela is a key provider of oil to the United States and borders violence-ridden Colombia. The truce signed on Thursday was mediated in large part by Cesar Gaviria, secretary-general of the Organization of American States, but was born, to a large degree, of the energetic and calibrated engagement of the United States, Brazil and other governments.

    There are still some obstacles to holding a referendum. Most importantly, the government and opposition haven't agreed on the political makeup of the electoral body that would oversee a referendum and potential election, according to Mr. Alfonso. While the government insists on having a political majority on the body, the opposition has reasonably insisted that the government and opposition get two representatives each, with a fifth member being neutral. "They are accustomed to holding a majority. They already dominate all institutions and can't accept not having another majority on the" electoral body, said Mr. Alfonso. Since the final makeup of the electoral body must be approved by two-thirds of the legislature, the opposition's more neutral proposal for the body seems most fair.

    The recent agreement is a step in the right direction. It also attests to the positive reforms that Mr. Chavez established for holding government more accountable. The president should abide by these advances that he pushed forward. The international community, particularly the United States and Brazil, continues to have some important work to do in terms of closing gaps between the Mr. Chavez and the opposition. Now is the time to intensify engagement.

Tuesday, 3 June 2003, 5:11 pm Press Release: Council on Hemispheric Affairs

www.coha.org Council on Hemispheric Affairs Monitoring Political, Economic and Diplomatic Issues Affecting the Western Hemisphere Memorandum to the Press 03.27 30 May 2003

COHA Research Memorandum: Chávez and the Opposition Sign an Agreement that is Anything But Binding

• Weakened and divided since the failure of the December/ January strike, the opposition has been unable to achieve its principle goal of a guaranteed August referendum by yesterday's agreement with Chávez.
• The agreement is a victory for Chávez, allowing him to claim that the turmoil is ending, without actually having to risk his presidency.

Yesterday, after nearly seven months of intermittent negotiation, Venezuelan President Hugo Chávez and the leadership of the opposition signed an agreement in an attempt to diffuse the country's current political crisis. In their public statements, both sides are praising the accord as evidence of support for the constitution and as a step towards ending the violent turmoil in Venezuela. In reality, however, the agreement is a strong victory for Chávez and demonstrates that the weakness of the opposition was very much a factor at the negotiating table. The agreement calls on both sides to respect the constitutional principle of allowing a referendum only after an elected official has served half of his or her elected term, insinuating that any possible referendum will include not only the president, but also opposition governors and mayors. Although the opposition was seeking early general elections, the agreement does not even guarantee that a referendum will take place, nor does it prohibit Chávez from blocking opposition efforts to stage such a vote.

With current opinion polls showing that the Venezuelan president would not win an August referendum, Chávez has little motivation to facilitate it. While hailing the agreement as a step by the opposition to acknowledge the primacy of the Constitution, the president maintains that, "The referendum is only a possibility. It is not certain that there will be a referendum." Even César Gaviria, OAS secretary-general and one of the chief moderators of the negotiations, acknowledged, "the document does not put an end to the crisis." The opposition does have some victories to show its supporters. In the agreement the government finally acknowledged that human rights abuses and an armed citizenry are current problems plaguing the Venezuelan population. However, the main threat posed by the agreement lies in the language referring to any possible referendum. Since the document refers to all elected officials, it is likely that Chávez will threaten to force referendums for some of the opposition governors and mayors, should he himself have to face a vote.

The Venezuelan president has proven himself a master strategist. During both the coup and recent strikes, Chávez defied opinion polls and not only managed to survive, but quite possibly has emerged stronger than before. The opposition should keep this in mind as it uses the agreement to press towards a referendum in August. Chávez was forced to concede little in negotiations and is not bound to facilitate such a vote. Even if it does takeplace, Chávez has sufficient time to court anew the part of his population that he had previously lost and may once again be able to overcome his current low popularity ratings in opinion polls to retain power. It is also possible that Chávez could lose any referendum, but win the subsequent presidential election, in which he would be allowed to run. While Chávez does not have a majority of the Venezuelan population behind him, the opposition is weak and divided. If the economy revives and the president is able to rebuild his constituency, his re-election prospects may be anything but bleak.

This analysis was prepared by Katherine Wells, research associate at the Council on Hemispheric Affairs. Issued 30 May 2003

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being "one of the nation's most respected bodies of scholars and policy makers." For more information, please see our web page at www.coha.org; or contact our Washington offices by phone (202) 216-9261, fax (202) 223-6035, or email coha@coha.org.

Tuesday, 3 June 2003, 5:08 pm Press Release: Council on Hemispheric Affairs

www.coha.org Council on Hemispheric Affairs Monitoring Political, Economic and Diplomatic Issues Affecting the Western Hemisphere Memorandum to the Press 03.27 30 May 2003

COHA Research Memorandum: Rio Group Makes a Big Statement- But Will it be Heard in Washington?

• Rio Summit meeting in Peru fails to salvage Peruvian president's popularity, but succeeds in establishing a "Latin American agenda," which distances member nations from U.S. policy, and sends a message of renewed solidarity among the 19-member group. Partnership between the Rio Group's two largest members, Mexico and Brazil, is destined to be an increasingly important factor in the inter-American relationship.
• The Group expresses its unconditional support for the United Nations, and encourages a reinvigoration and reform of that body. Heads of state in attendance achieve a consensus in requesting an increased UN role in Colombian conflict, as opposed to the U.S.-funded Plan Colombia, which is being exclusively directed from Washington.
• The so-called Cusco Consensus agrees on a regional approach to security, democratic governance, and alleviating poverty, and thereby broadly challenges the U.S.-promoted Washington Consensus that has dominated U.S.-Latin American relations, as well as having largely defined for several decades Latin America's relationship with the International Monetary Fund and World Bank.
• Recent developments in Latin American electoral politics have combined with the recent conflict at the UN - and the White House's continued benign or malign neglect toward the rest of the hemisphere - to place U.S.-Latin American relations at a crossroads. The diplomacy of the next year could decide, among other things, the direction and even fate of the Free Trade Area of the Americas.

In Cusco, in the highlands of southeastern Peru, an increasingly unpopular Peruvian president, Alejandro Toledo, played host May 23-24 to the seventeenth summit of the 19-member Rio Group. Founded in 1986, the Group has become the preeminent all-Latin American forum on hemispheric issues, and an institution that may have been significantly strengthened by its most recent gathering.

The dignitaries attending the Cusco summit were brusquely greeted by rowdy protests led by Peru's Union of Education Workers. Helmeted police officers held off hoards of protestors attempting to march on the city's impressive colonial-era Plaza de Armas. Police intermittently volleyed tear gas into the crowd, which had gathered in the former capital of the Inca Empire, Peru's foremost tourist attraction. The protests were a reminder that the issues before the summit are very real, as governments throughout the region are being forced to deal with acute problems of lapses in the rule of law, deepening social stratification and troubled economies, leading to dramatically lower standards of living.

Consensus of Independence?

The teachers and protestors were certainly not the only ones demonstrating against paternalistic indifference. A theme of the meetings was the need for a "Latin American agenda" of cooperation that could counter overweening U.S. influence over the region.

Predictably, it was Venezuelan President Hugo Chávez who spoke out most forcefully against inviting any sort of unilaterally propelled outside military intervention in Latin American conflicts. He found his sentiments later incorporated in the newly named Cusco Consensus, which the assembled body proudly distributed at the close of the meeting. The Consensus pointedly promised its support to the United Nations and suggested that the Charter be strengthened to ensure the further vibrance of the organization.

In bringing in what could be dramatically new ideas regarding the ongoing civil war in Colombia, however, the Rio Group leaders may have made their strongest statement. As an alternative to ritualistically announcing their support for the U.S.-funded Plan Colombia, the Consensus notably asks that the United Nations - and not the United States - take a more prominent role in resolving the Colombian civil war.

Brazilian President Luiz Inácio Lula da Silva extended the snub of U.S. influence when he expressed his warm regard for absent Cuba - in the wake of Washington's recently stepped-up efforts to isolate Havana in response to its crackdown on dissidents. He expressed a desire to see Cuba - who has never taken part in the Rio Group's meetings since the organization's founding in 1986 - attend the next meeting, "at least as a special guest."

New Dogs, New Tricks

Among the heads of state present, this particular summit certainly had a more independent tone than recent meetings of the Rio Group. In the month prior to the meeting, the presidents of Costa Rica, Peru, and Brazil (the troika which is taking its turn as chair of the Rio Group) had shared a warm meeting in Moscow with Russian President Vladimir Putin, who promised that the visit would usher in a new era of political and economic partnership between Russia and Latin America.

The assembled body in Cusco was no doubt emboldened in its solidarity by the previous year's electoral results throughout the region, which saw the election of several populist candidates and the expansion of opposition to neo-liberal economic reforms by new political movements.

The Rio Group meeting was set against the backdrop of Washington's continued neglect of the Western Hemisphere over the past year, and, more generally, the refocusing of the Bush administration on its war on terror. In this context, the past year witnessed the continued chilling of U.S-Mexico and U.S.-Chile relations as a result of the Iraq war, as well as the revival and reinvigoration of the Chávez administration in Venezuela after an effort to economically asphyxiate his administration by the middle-class opposition narrowly failed, and the election as president of former Brazilian trade union leader Lula.

New Friends

Lula and Mexican President Vicente Fox - presidents of the Rio Group's two largest member nations - met before the formal meetings commenced and apparently found considerable common ground: both have had long careers as opposition party leaders in their countries, and they seem to have found a natural rapport with each other. Both acknowledged that the two countries, which share the largest volume of trade between any two countries in the Group, should further intensify their relations. Fox, in particular, would like to finalize trade agreements between Mexico and Mercosur (a trade community that consists of Brazil, Argentina, Paraguay, and Uruguay). Both presidents agreed that the United Nations should be reformed, and would like to see that one or both of their delegations be given a permanent seat on the Security Council. The two will together attend the upcoming G8 Summit in Evian, France, when they will request that the creditor countries consider their proposal that they reinvest some of the debt service payments they receive from Latin America back in the region.

Led by the example of Fox and Lula, the heads of state present at the gathering adopted projected regional integration measures among the Rio Group countries - and not necessarily including the United States - as a major theme of the meetings. Much of the final agreement, in fact, can be interpreted as a manifestation of regional solidarity in denouncing the Washington Consensus, which has dominated Latin America and the Caribbean and has been predicated on the supremacy of the White House's operational ties with the International Monetary Fund and the World Bank. While they did seek to create "by consensus a Latin American free trade zone," the Rio Group heads declined to discuss the larger Free Trade Zone of the Americas. If they had, the drift of their economic plans to deal with issues of debt and poverty would not necessarily have been congruent with the designs of the Bush administration: various leaders at the gathering, particularly Lula, railed against the developed world, and the Consensus focused on decreasing poverty throughout the region, emphasizing government expenditure, by utilizing debt relief savings and short-term loans to boost employment.

The Upshot

On Tuesday, the era of good feelings continued, as a number of leaders adjourned to Buenos Aires to meet with newly inaugurated center-left President Néstor Kirchner. These included Toledo, Chávez, Alvaro Uribe of Colombia, Jorge Batlle of Uruguay, Lucio Gutierrez of Ecuador, and Cuba's Fidel Castro - all of whom championed Latin American cooperation, including Kirchner in his inauguration speech. As its representative in Buenos Aires, the White House sent Secretary of Housing and Urban Development Mel Martinez - rather than a higher-ranking official whose presence might have served to deliver a stronger message of support to the new president. The snub, intentional or not, was not lost on the Argentine media or the Latin American leaders present.

Elsewhere, Lula spoke candidly about the summit's conclusions and talked of creating "balanced globalization" that will benefit the global south as well as the north. His country now assumes the presidency of the Group, and Lula appears poised to use his new pulpit to advance the cause of Latin America and the developing world. Due to the anticipated strong leadership he will offer, and given Washington's continued low hemispheric profile, next year's Rio Group summit in Brazil could serve to culminate a year of real change in the region's relations with the United States, particularly if the Colombia situation has come to a head by then. By this time next year, a meeting of Latin American heads of state could serve as a pivotal moment in determining the fate of the Free Trade Area of the Americas. In a broader sense, next year's meeting could very well further the hemisphere's regional movement toward autonomy from U.S. dominance.

This analysis was prepared by Charles Willson, research associate at the Council on Hemispheric Affairs. Issued 30 May 2003

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being "one of the nation's most respected bodies of scholars and policy makers." For more information, please see our web page at www.coha.org; or contact our Washington offices by phone (202) 216-9261, fax (202) 223-6035, or email coha@coha.org.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Monday, June 02, 2003 By: Patrick J. O'Donoghue

Concern has been steadily growing in Venezuela and other Latin American countries about news that US Choice Point Co has been collecting databases on Latin American citizens to sell to the USA government. 

According to a report issued by the Electronic Privacy Information Center (Epic), the USA government has been purchasing electronic registers of more than 10 countries in the Hemisphere for around $11 million. The leak came out after declassified State documents linked the US Justice Department, Immigration Services (NS) with the Choice Point Company. 

It has been learned that the Venezuelan Attorney General's Office and National Assembly are supposedly unaware of the situation and have not yet ordered an investigation.  

Epic adviser, Christopher Hoofengale says the US government used Choice Point to obtain the registries as one way of avoiding legal problems regarding privacy laws, especially in the case of Venezuela, the special law against computer crimes, which penalizes unlawful collection of data with 4-8 years in prison. 

Hoofengale maintains that it is basically a problem of corruption because despite the strict laws, people are selling and buying data in many Latin American countries.

Last year 12 persons were arrested in connection with a Venezuelan National Electoral College (CNE) database found in the possession of street hawkers. 

In Mexico, Choice Point was subject to investigation  after purchasing a copy of the electoral register, creating a minor scandal, which seems to be gathering into a storm, as more countries discover the depth and possible implications of the deal.