<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, April 24, 2003 By: Mark Weisbrot

USA-based international commentarist Mark Weisbrot writes: With the war in Iraq receding from the media spotlight, the Bush Administration is now turning some attention to our traditional "back yard" of Latin America.

US Treasury Secretary John W. Snow has just completed a visit to Brazil, Ecuador, and Colombia. In Washington circles such attention is seen as a positive development. It is widely acknowledged that our government has no policy toward Latin America other than those dealing with drugs and terrorism, and this is not exactly the best way to make friends.

Anti-US sentiment in Latin America is running about as high as it has been since riots forced Vice-President Richard Nixon to cut short his 1958 goodwill tour of South America. The war in Iraq has been immensely unpopular, leaving many Latin Americans wondering what "regime change" might be next on Washington's hit list.

Closer to home, Latin Americans are increasingly rejecting "neoliberalismo," the economic experiment that their governments have adopted -- at Washington's urging -- over the last two decades. There can be no doubt as to the failure of this experiment, which has included indiscriminate opening to foreign trade and investment flows, large scale privatizations, and the widespread implementation of unsuccessful macro-economic policies advocated by the International Monetary Fund (IMF).

From 1980 to 2000, income per person in Latin America grew by only 7% over the whole period. In the pre-experimental years of 1960-1980, it grew by 75%. No statistical test is needed to see that something has gone terribly wrong.

The opening years of the 21st century are looking like the beginning of another "lost decade." The downturn of 2001-2002 in Latin America was its worst in nearly two decades. The current recovery is anemic: the IMF projects regional growth of 1.5% for the year, which would still leave income per person -- which is what matters for living standards -- stagnant for 2003.

And given the weakness in the US economy -- including a $3 trillion housing bubble that has yet to deflate -- things could turn out even worse. Latin America sends nearly two-thirds of its exports to the United States, so a recession in our economy tends to drag the rest of the Americas down with it.

Latin Americans have increasingly taken to the ballot box, as well as the streets, to demand more effective and fair economic policies. The elections of populist presidents -- Hugo Chavez in Venezuela in 1998 and 2000, Luis Inacio Lula Da Silva in Brazil (last October) and Lucio Gutierrez in Ecuador (November) are among the results of this rebellion.

Washington refuses to acknowledge that any of its economic policies have failed, and since the US Treasury Department controls the IMF -- which heads up a creditors' cartel that most developing countries must deal with -- it has a tremendous influence on economic decision-making throughout the region.

And for our government, the slogan appears to be "not one step back." Treasury Secretary Snow praised Brazil during his visit for its extraordinarily tight monetary and fiscal policies: short-term interest rates are set by the central bank at 26.5%, and the government is running a large (4% of GDP) primary budget surplus. (The primary surplus is the government's surplus excluding interest payments). The economy is unlikely to grow very much under these conditions, and it will be difficult if not impossible deliver on the social improvements for which millions of Brazilians voted.

In Argentina, the IMF recently signed an agreement that could easily stall the country's slow recovery after the worst depression in its history -- which was itself largely a product of the Fund-supported policies. Yet the IMF continues to prescribe the same medicine of fiscal and monetary austerity.

Other aspects of US foreign policy have stirred deep resentment in Latin America. The Bush administration's support for a military coup last April against the democratically-elected government of Venezuela was reminiscent of the worst outrages of the Cold War era. That seems to have been recognized here -- at least in most policy circles -- as a mistake. Not so for the long-term failure of Washington's economic policies, which have brought enormous harm to almost the entire region.

Until these change, the United States' standing among our southern neighbors will continue to decline.

Mark Weisbrot is Co-Director of the Center for Economic & Policy Research at 1621 Connecticut Ave NW, Suite 500, Washington, DC 20009-1052 -- +1 (202) 293-5380; Fax +1 (202) 588-1356.  You may email Mark Weisbrot at weisbrot@cepr.net

Forums

The War in Iraq, effects and consequences discuss the role of the United Nations towards an equitable solution for the Iraqi people

Venezuelan Foreign Policy discuss the relative merits of Venezuela's foreign policy and its effects

Referendum 2003 discuss the pros and cons of a revocatory referendum

President Hugo Chavez Frias express your opinions on the Presidency of Hugo Chavez Frias and his Bolivarian Revolution

Bolivarian Circles Are Bolivarian Circles a Venezuelan form of Neighborhood Watch Committees or violent hordes of pro-Chavez thugs?

Venezuela's Opposition What is it? Is a force to be reckoned with or in complete disarray?

Our editorial statement reads: VHeadline.com Venezuela is a wholly independent e-publication promoting democracy in its fullest expression and the inalienable right of all Venezuelans to self-determination and the pursuit of sovereign independence without interference. We seek to shed light on nefarious practices and the corruption which for decades has strangled this South American nation's development and progress. Our declared editorial bias is pro-democracy and pro-Venezuela ... which some may wrongly interpret as anti-American. Roy S. Carson, Editor/Publisher Editor@VHeadline.com

The Business Journal-Minneapolis

Lemna International Inc. in Minneapolis has been selected to build a municipal wastewater treatment plant for the city of Maturin, Venezuela.

The company will also design the $12.5 million facility, which will use one of the company's proprietary wastewater treatment technologies.

Lemna is a worldwide developer of wastewater treatment transportation, water supply, irrigation, solid waste management and other infrastructure projects.

<a href=www.ipsnews.net>Inter Press Service News Agency Mehru Jaffer

VIENNA, Apr 24 (IPS) - OPEC, the exclusive cartel of eleven oil-producing and exporting countries stands at the crossroads as it tries to balance supply in a world where the demand for oil seems unlimited.

Adding to the uncertainty is the future of Iraq within the organization that comprises of member nations from Africa, Asia, the Middle East and Latin America

”For the first time in its 43 year old history a decision is taken by OPEC in the absence of Iraq,” Abdullah bin Hamad Al-Attiyah, Qatar's minister of energy and industry told a roomful of reporters at Vienna's OPEC Secretariat.

He met with journalists after a day-long consultative meeting where it was decided to cut back OPEC's contribution by two million barrels a day by June first. Al-Attiyah called this a unique situation especially since little is known as to what is going on in Iraq.

There is uncertainty over who will be responsible for marketing the oil in Iraq. The Security Council has to first say goodbye to the UN resolution that allowed Iraq to exchange oil for food in the past before the United States, in control of Iraqi oil fields now, can dream of pocketing the profits.

Iraq is a founding member of OPEC but has not been contributing its quota to the cartel since 1990 after its invasion of Kuwait, a fellow member country, followed by sanctions imposed upon it in 1991.

However Dr. Amer Mohammad Rasheed Baghdad's minister of oil till January this year remained a familiar face at all OPEC meetings and an official from the Iraqi embassy in Vienna represented the country at an earlier OPEC meeting held here in March.

It was Baghdad that hosted the first meeting in 1960 which led to the birth of OPEC as a permanent intergovernmental organisation of oil producing countries. In 1965 OPEC moved its headquarters from Geneva to Vienna where oil ministers meet regularly but under tight security. The membership of Iraq within OPEC is now a question mark in capital letters.

”We wait to welcome any future minister of oil of a free and democratic Iraq to the OPEC premises as soon as possible. There is no question of discussion about the state of oil in Iraq with the Americans as it is not America that is a member of OPEC,” Al-Attiyah said.

Anxious to continue control over the world's oil production, OPEC is concerned about news trickling in from the oil fields of Iraq that crude from the country could return to the market within weeks.

Today's decision to return to OPEC's lower but original official output target of 25.4 million barrels a day from 27.4 million barrels a day follows on the heels of information that Iraq's Rumeila oil fields have started to release limited amounts of crude into storage tanks in Basra, Iraq's southern city.

OPEC's collective contribution is about 40 percent of the world's output and it sits on more than three quarters of the total crude oil reserves. The cartel now hopes that by curbing over-supply it will help to stabilise the price of crude at 24 dollars a barrel, equal to about 160 litres of oil.

Iraq has the potential of being the world's second largest supplier of crude after Saudi Arabia. It already has 112 billion barrels of crude in reserve and OPEC is nervous over the world market's expectation of more oil from Iraq.

The demand for oil is on the rise in a world that already guzzles 78 million barrels a day. In anticipation of Iraqi crude OPEC has decided to return to its original official output target.

Once United Nations sanctions against Iraq are lifted, the country is expected to start selling up to two million barrels a day within weeks. According to reports from Iraq, the immediate flow will go to feed refineries and power plants within the country before it is sold abroad.

Uncertain over how much crude the Iraqi fields will ultimately yield, OPEC fears that a glut in the supply of oil could drown markets, forcing prices to slump. OPEC would like to see prices balanced between 22 dollars to 28 dollars per barrel.

In January OPEC increased its average from 24.5 million barrels a day by 1.5 million barrels a day to make up for production failures caused by unrest in Venezuela and the war in Iraq, two member countries with most of the additional crude contributed by Saudi Arabia the world's largest owner of crude oil.

From 9.1 million barrels a day, Saudi Arabia's quota is now reduced to 8.2 million barrels a day. Ali al Naimi, Saudi Oil Minister told reporters that producers were defending crude at 25 dollars a barrel and hoped that the target would remain stable for the next decade.

”The big players in the oil market need to rally around the current price levels to have enough investment in the next ten years, to meet demand that is why we need to keep the 25 dollar target not lower, not higher,” Al Nuami said.

The minister feels that it is in the interest of all oil producing countries, non-OPEC states, the International Energy Agency and oil companies as well as consumers if prices remain around 25 dollars a barrel.

But a sluggish world economy, the spread of the SARS disease and uncertainty over Iraq is not the only frown on OPEC's brow. ”It is also elections, strikes and the quota from Nigeria,” oil specialist Valerie Marcel told IPS referring to domestic troubles faced by yet another member country. (END/2003)

By Bruce Stanley, Boston.com-Associated Press, 4/24/2003 08:18

VIENNA, Austria (AP) Pressure on OPEC to cut its crude production mounted Thursday when Venezuela's oil minister added to other cartel members' calls for action to soak up a perceived excess in global supplies.

Representatives of the Organization of Petroleum Exporting Countries gathered in Vienna for hastily arranged talks to reassess the group's output levels now that the war in Iraq is over.

Several OPEC members who boosted their production before the war to head off a possible supply shortage worry that they now are pumping too much crude just as seasonal demand is drying up. Prices have tumbled from a pre-war high of almost $40 a barrel for U.S. crude in recent weeks, and OPEC fears a further decline if it doesn't rein in production soon.

OPEC president Abdullah bin Hamad Al-Attiyah has argued that oil producers are already pumping 2 million barrels a day in excess of the world's needs. Venezuelan oil minister Rafael Ramirez appeared to agree.

''It is important to reduce oversupply,'' Ramirez told reporters. ''We have to have more discipline, and it is important to take measures and remove that amount from the market.''

If not, OPEC wouldn't be able to maintain its price target of $25 a barrel, he said.

Many energy analysts expected OPEC to agree to curb production. The question was whether OPEC would try do so by lowering its official output target or by taking the much less drastic step of reining in the amount of oil its members were pumping above their respective quotas.

On Thursday, contracts of U.S. light, sweet crude for June delivery were trading in New York at $26.85 a barrel, up 20 cents from Wednesday's close. In London, June contracts of North Sea Brent crude were trading at $24.52, up 26 cents a barrel.

Although OPEC's official output target is 24.5 million barrels a day, the group pumped an average of 26.2 million barrels in March, according to estimates compiled by investment bank J.P. Morgan.

United Arab Emirates' Oil Minister Obaid bin Saif Al-Nasseri was among those voicing support for OPEC to take steps to reduce supplies and avert a price crash.

The prospect of an eventual revival in Iraqi crude exports was a key factor in OPEC's decision to call its emergency meeting. Indeed, Iraq's eventual reintegration into the group it helped found 43 years ago colored the calculations of every oil minister arriving for Thursday's talks.

Iraq's enormous oil reserves make it a force to be reckoned with as it rises from the ashes of war to assume its rightful position as one of the world's major crude producers.

Yet Al-Attiyah, the OPEC president, insisted Iraq wasn't on the agenda, and for the first time in the cartel's history, no one even planned to represent Iraq when the delegates gathered.

All this has served to perpetuate Iraq's role as the biggest wildcard among OPEC's 11 member countries. With a new government yet to take shape in Baghdad, the speed and timing of a resumption in Iraqi oil shipments is one of the biggest unknowns for OPEC.

A sign of recovery for Iraq's lifeblood oil industry came when modest amounts of crude began flowing Wednesday from Iraq's Rumeila South oil field to a storage tank near the southern city of Basra. It was the first time since the war that oil coursed through the country's largely undamaged pipelines.

''The volumes are very limited, and they certainly don't suggest an imminent resumption of Iraq's exports,'' said Raad Alkadiri, an Iraq specialist at The Petroleum Finance Co., a Washington consultancy. All the same, he said, ''It's a start.''

Analysts and U.S. military engineers say Iraq, with 112 billion barrels of proven reserves, could resume overseas crude shipments within weeks.

OPEC pumps about a third of the world's crude. To keep control of oil production, it will eventually need to finesse the potentially explosive task of accommodating Iraq's future output, probably by having other members reduce their own production.

OPEC delegates billed their talks as consultations rather than a formal meeting a nicety that enabled OPEC to avoid holding an official session where Iraq would have been represented only by a miniature flag and an empty chair.

The lack of a recognized Iraqi government meant that no one from Baghdad would be attending. The cultural attache at the Iraqi embassy in Vienna had done so at two previous group meetings, but he turned down an invitation to participate again, an OPEC official said.

By <a href=www.newsday.com>The Associated Press April 24, 2003, 12:33 PM EDT

VIENNA, Austria -- OPEC members agreed to cut their current oil output by 2 million barrels a day, or 7 percent, in a move aimed at preventing a further decline in prices, the cartel announced Thursday.

At the same time, the Organization of Petroleum Exporting Countries temporarily raised its official output target to 25.4 million barrels, up 900,000 barrels a day from its existing ceiling. The new quota would take effect June 1, OPEC President Abdullah bin Hamad Al-Attiyah told a news conference.

The delegates announced their decision after emergency talks in Vienna. Crude prices have tumbled in recent weeks, and OPEC feared a further decline if it didn’t rein in what it saw as an oversupply juist as crude demand reached a seasonal low.

The group based its decision largely on what it said was sluggish global demand exacerbated by the outbreak of severe acute respiratory syndrome, which Al-Attiyah said has dampened demand by 300,000 barrels a day.

OPEC plans to review its decision when it meets again June 11 in Doha, Qatar.

“We feel we may need another cut in June,” Al-Attiyah said.

OPEC also was ready to welcome Iraq back as a participating member, he added.

“I hope Iraq comes back tomorrow,” he said, adding later: “We will accommodate Iraq at the right time.”

Several OPEC members had boosted their production before the war, hoping to head off a supply shortage. The rapid end of the conflict left them facing what they see as a surplus of 2 million barrels a day.

“It is important to reduce oversupply,” Venezuelan oil minister Rafael Ramirez told reporters before the hastily arranged talks began. “We have to have more discipline, and it is important to take measures and remove that amount from the market.”

If not, OPEC, whose 11 members pump a third of the world’s crude output, wouldn’t be able to maintain its price target of $25 a barrel, he said.

OPEC representatives called Thursday’s meeting to reassess the group’s output levels as oil began flowing again in Iraq for the first time since the war.

Many energy analysts had expected OPEC to agree to curb production. The question was whether OPEC would try do so by lowering its official output target or by taking the much less drastic step of reining in the amount of oil its members were pumping above their respective quotas.

In the end, it took the unusual decision of slashing its actual production — which it calculated as 27.4 million barrels a day, including Iraq — while also raising the nominal ceiling for OPEC’s 10 members excluding Iraq. OPEC’s current target is 24.5 million barrels a day.

The decision means Saudi Arabia, OPEC’s most powerful member, would reduce its production by 1 million barrels a day, Al-Attiyah said.

In the days leading up to hostilities in Iraq, U.S. crude prices peaked at almost $40 a barrel. On Thursday, contracts of U.S. light, sweet crude for June delivery were trading in New York at $26.05 a barrel, down 60 cents from Wednesday’s close. In London, June contracts of North Sea Brent crude were trading at $23.62, off 6 cents a barrel.