FoxNews Monday, June 09, 2003

NEW YORK  — Oil prices hit fresh 12-week highs Monday as members of the Organization of the Petroleum Exporting Countries (search) cartel gathered for a Wednesday meeting against a backdrop of tight global supply.

U.S. crude oil in New York rose 31 cents to $31.59 a barrel, hitting the highest price in 11 weeks after rising 20 percent in barely a month. Brent crude (search) in London rose 7 cents to $27.85 a barrel.

OPEC ministers meeting in the small Middle East emirate of Qatar (search) will debate whether they need to cut production to accommodate the expected resumption of Iraq's oil exports this month.

With prices nearly 30 percent higher than the same time last year and Iraq's exports expected to stay below pre-war limits for up to a year, some OPEC ministers have said there seems to be no need for the group to rein in supply.

OPEC, which controls around half the world's crude exports, aims to keep prices in a $22-28 a barrel range for its basket of crude oils. The basket was last valued at $26.77.

"There is no urgent need for the organization to modify its output," said Frederic Lasserre of SG Securities in a report.

"Iraq is still not in a position to harm the balance of supply and demand. Inventories are rising in line with the season but in absolute terms remain very low," Lasserre added.

After falling heavily from 12-year highs near $40 when Middle East oil facilities escaped feared damage from the U.S.-led invasion of Iraq, oil prices have now risen back to the levels that can further undermine already weak economic growth.

OPEC will use this week's meeting to press independent exporters such as Russia, Norway and Mexico to back any supply cuts needed later this year, OPEC President Abdullah al-Attiyah of Qatar said.

Iraq will this month sell its first crude since the U.S.-led invasion in mid-March, tendering 10 million barrels of stored crude oil this month, allowing it to deliver an average of about 750,000 bpd during the second half of June.

Sabotage at oil facilities since the war will keep exports down to one million bpd in July, Iraq's de facto oil minister Thamir Ghadhban said on Monday. Before the war, Iraq was producing about 2.5 million bpd and exporting two million bpd.

U.S. fuel inventories have failed to rebuild after supply disruptions from a strike in Venezuela and ethnic strife in Nigeria drew down supplies earlier this year.

U.S. crude stocks remain in an 11 percent deficit versus last year, while gasoline is down five percent. The next U.S. government supply data will be released on Wednesday.

U.S. average retail gasoline prices fell over the last three weeks, but did so at a slower rate than previously reported as crude oil prices began to rise, according to the Lundberg survey of about 8,000 gas stations.

"In the past three weeks, gasoline price declines are much slower and appear to be ceasing altogether," said Trilby Lundberg (search), editor of the survey.

The national average for self-serve regular unleaded gasoline fell 1.8 cents to $1.51 a gallon -- more than 10 cents above last year in the period between May 16 and June 6.

<a href=www.vheadline.com>Venezuela's Electronic news Posted: Monday, June 09, 2003 By: Jose Gregorio Pineda

VenAmCham's (chief economist) Jose Gregorio Pineda writes: The current exchange control system has provoked excess liquidity in the market, providing a large source of credit for the government. The economic agents' inability to legally acquire external assets leaves the system flush with idle funds, and given the deep contraction of the economy and the enormous operating difficulties with which Venezuelan companies are struggling, the only use the financial system can make of those funds is to buy public securities.

Given the serious Treasury problems, the government plans to issue 4.88 trillion bolivares of internal bonds or the equivalent in dollar, yen, or euro-denominated securities. 3.85 trillion bolivares of that amount will be used to cover internal and external debt service, and 1.02 trillion bolivares for spending this year.

• This month the government will have to make large scale public debt service payments, both externally (US$909 million) and internally (Bs.760 billion).

It is important to note the terms on which the external bonds sales are being made; the dollar-denominated bonds may pay extremely high yields, of as much as 17.65%. There is no question that, in the fact of this extremely high cost of overseas bond issues, the domestic market will continue to be the chief option at the government's disposal.

The availability of funds for public financing, generated by the exchange controls, has allowed the Finance Ministry to carry out its internal debt market restructuring through "voluntary" swaps. Naturally, in the absence of exchange controls, and consequently, the "forced" excess of liquidity, many of the scheduled internal debt swaps would become much less "voluntary" than they now seem.

<a href=www.latintrade.com>LatinTrade June, 2003 Saddam today, Fidel tomorrow. Sound far-fetched? I wish it were. In a policy document produced in September 2000 by conservatives close to U.S. President George Bush, called the “Project for the New American Century,” the United States is urged to increase its permanent military presence beyond the 130 countries where Washington already has troops. It argues that the state of the world demands “American political leadership” rather than that of the United Nations. The paper’s authors—who include Paul Wolfowitz, No. 2 at the Pentagon, and John Bolton, the U.S. undersecretary of state—suggest that the United States “utilize airfields ranging from Puerto Rico to Ecuador” for these ends.

The United States will likely cite the war on terrorism as justification for increasing its forces in Latin America. Washington has already shifted its focus away from the drug war in Colombia by sending more soldiers to help the government in its four-decade-old civil war with leftist guerrillas, primarily the Revolutionary Armed Forces of Colombia (FARC).

U.S. troops could also be sent to the tri-border frontiers of Brazil, Argentina and Paraguay, where some 20,000 Arabs have settled. In January, Gen. James T. Hill, commander of the U.S. Southern Command in Miami and charged with military relations in Latin America, warned that Middle Eastern terrorist groups operate in the border area. Under “Operation New Horizons,” U.S. soldiers are scheduled to train Paraguayan forces in anti-terrorism tactics.

I am worried, as are major Latin American political leaders. What, asks Brazilian President Luiz Inácio Lula da Silva, “gives the United States the right to decide unilaterally what is good and what is bad for the world?”

Good question. Giddy over his victory in Iraq, Bush now could easily expand his “axis of evil” to include not only the hard-line ayatollahs in Iran and North Korea’s Kim Jong Il but also Cuba’s Fidel Castro, Venezuela’s Hugo Chávez and the FARC, which already appears on the State Department’s list of terror groups. He has baldly threatened Syria, Iraq’s neighbor, although talk of war is premature, Britain says. “Tomorrow it could be Andean narco-terrorists,” says Lima daily Correo.

The Castro regime, which the administration has accused—without showing any evidence—of developing biological weapons (sound familiar?), has recently heightened tensions by cracking down on democracy activists, including reported executions of three men who hijacked a ferry to reach the United States. The charge? Terrorism, said Cuban state TV (now does it sound familiar?). Caracas daily El Nuevo País, meanwhile, warns that “North American opinion, especially in the upper echelons in Washington, takes it for granted that Hugo Chávez will be the next objective” after Saddam Hussein.

History repeats. Latin Americans understand better than anyone that pre-emptive military action to force regime change isn’t a Bush invention. Regional commentators recall CIA-orchestrated coups against democratically elected governments in Guatemala (1954) and Chile (1973), and the hundreds of civilians who died the last time Washington removed a brutal despot by force, Panama’s Manuel Noriega, in 1989.

Yet this administration’s hawks are especially dangerous. They distrust the United Nations and multilateralism. They are eager to realign the Middle East, politically. And once they turn their attention away from Iraq, there are signs that it will re-focus on Latin America. Deploying U.S. soldiers on Latin American soil will revive anti-Americanism and undermine economic reforms associated with the United States. Public opinion is boiling over.

In Bogota’s El Tiempo, columnist Luis Noe Ochoa called Bush “perhaps the most hated man in the world today.” Rafael Fernández de Castro, in Mexican daily Reforma, writes that “the United States is willing to intervene in any part of the world, at any moment, to destroy anticipated threats. We are facing the emergence of a new era of global U.S. hegemony and an unknown stage in the history of the international order.”

I hope these predictions are proved wrong. I hope we aren’t headed toward the Bush administration’s dangerous new version of the old gunboat diplomacy: Forget talking softly, just swing a big stick.

Author: Jack Epstein

06/09/2003 - <a href=www.latintrade.com>Source: BNamericas US-based regional telecoms holding SkyOnline will decide in about six months whether to hold a financing round with new investors, CEO Claude Burgio told BNamericas. SkyOnline raised US$50mn in its last financing round in April 2001, is debt free, and still has some of that capital on hand for further acquisition opportunities, but as ever will be very cautious in its acquisitions, Burgio said. In general the company aims to increase its portion of revenues from voice this year, up from 10% in 2002, he said. Data service accounted for two-thirds of revenues and the remaining 23% came from leased carrier traffic, both of which are also expected to grow this year, but not as much as voice. To that end SkyOnline is seeking voice-licensed partners in areas where it can't get the necessary license, particularly Montevideo in Uruguay. Contrary to recent reports that the company will invest US$4mn to start wireless local loop operations in Uruguay, Burgio said the company already offers WLL using LMDS infrastructure it inherited from Diveo (bought late 2002), and in general the company serves some 50 businesses in Uruguay. The extra investment has more to do with adding MMDS infrastructure, which allows better pricing for an additional client niche, and building fiber connectivity to interconnect with SkyOnline's other markets, again most likely by working with operators that already have the license. The company is already working with one such partner, by the name of Dedicado. Burgio's team is still reviewing the potential of the former Diveo assets and deciding which services should be migrated into Uruguay from the other markets. The senior management will be advising sales staff in the next few weeks on which products to push, and Burgio expects to have an idea of growth prospects in Uruguay by year-end. In each market SkyOnline's goal is to perfect the one-stop-shop idea for voice, data and Internet, by providing SMEs with a full range of solutions such as data storage, ADSL, cable modem, LMDS and MMDS. In Brazil the missing link in this scheme is local loop access, to build on the Internet access it can provide through its recent acquisition of Osite and the international big-pipe connectivity obtained through the July 2002 acquisition of Teleglobe's Latin American contracts. SkyOnline's investors include French water, energy and services conglomerate Suez (30%), Luxembourg-based private equity funds NIT (45%) and US-based Pequot Capital investment group (15%). The company also has a presence in Chile, Colombia, Venezuela, Guatemala, El Salvador, Panama and Mexico, and has a total client base of almost 201,000, including some 800 large businesses.

Reuters, 06.09.03, 12:46 PM ET

CARACAS, Venezuela, June 9 (Reuters) - Venezuela's unemployment rate rose to 19.1 percent in April compared with 15.9 percent a year earlier, the government said on Monday.

April's unemployment remained almost steady with 19.8 percent registered in March this year, a spokeswoman for the National Statistics Institute said. Venezuela, the world's No. 5 oil exporter, is mired in its worst recession in recent history after a two-month strike battered its economy.