www.scoop.co.nz Friday, 14 March 2003, 12:08 pm Press Release: United Nations

Includes Video Report: United Nations Secretary General Kofi Annan made yet another appeal today for united Security Council action in ridding Iraq of weapons of mass destruction as the 15-member body continued to wrestle over whether to give UN inspectors more time or to declare Baghdad in default by next Monday.

“I think what is important is that governments have to find a way of working together,” Mr. Annan said in reply to reporters’ questions at UN Headquarters in New York. “Regardless of how this crisis or the current issue is resolved, the Council will have to work together, and the Members States will have to work together to deal with the situation in Iraq, in the Middle East and in many other issues.”

The Secretary-General said he had spoken to British Prime Minister Tony Blair on Monday night and “he seemed very genuinely looking for a compromise and a way forward.” He also said Brazilian President Luis Inacio Lula da Silva had sent him a message proposing a summit meeting of world leaders, not necessarily Security Council members, who are also searching for “a compromise to get us out of this crisis.”

The United States, United Kingdom and Spain have introduced a draft resolution that presents Iraq with a 17 March deadline to cooperate fully with disarmament demands, which France says it will veto. France, Germany, the Russian Federation and other Council members have voiced opposition to action at this time and seek continued and enhanced weapons inspections.

After meeting with the Russian and British Ambassadors on Wednesday, Mr. Annan is holding a series of one-on-one meetings with the remaining Council members today. He is “urging them to continue their strenuous efforts to find compromise and exploring with them what might be done to further their objective to define a united position,” spokesman Fred Eckhard said at a press briefing.

The Council has scheduled closed-door consultations this afternoon to continue discussions on Iraq.

news.pacificnews.org Commentary, Alicia Torres, Pacific News Service, Feb 27, 2003

Beyond gaining support from the military and portions of the underclass, Venezuelan President Hugo Chavez has channeled the historical, mythical, and to some, mystical figure of 19th century General Simon Bolivar. PNS contributor Alicia Torres examines a popular religion with indigenous roots to find one secret to Chavez's continuing rule.

As Venezuela's fate seems locked between President Hugo Chavez's militant, underclass supporters and the middle class, media and business communities arrayed against him, a third force lurks behind the scenes.

Pacing the labyrinth of Venezuela's popular imagination, the unnamed actor is the magical, long-dead General Simon Bolívar, the nation's founding father. The Bolivar myth, skillfully channeled by Chavez, is key to the former paratrooper's grip on power.

After leading a failed and bloody coup attempt in 1992, Chavez famously spent many months in jail and emerged from his "captivity" with a powerful rhetorical and symbolic ace card. Reaching into the confusing current of Venezuela's political history, he found one untainted image, a myth untouched by decades of rampant political corruption and squandering of the country's vast oil wealth, a messy recent history that started long before Chavez.

Hugo Chavez's deft ability to incorporate into his campaign persona the historical legacy of the brilliant general who liberated half of South America from the control of the 19th century Spanish empire helped propel Chavez to the Venezuelan presidency in 1998 with over 80 percent of the vote. Today, Chavez's cult of personality is centered on his image as Bolívar's heir, the modern-day liberator of Venezuela's poorest.

In the United States, no figure commands the same kind of reverence as Bolívar does in Venezuela. The country's currency, plazas and universities carry his name. His maxims are taught in schools, broadcast on radio and emblazoned on government buildings. Bolívar is a liberator idealized in oral culture by small-town storytellers, and in the lyrics of traditional music such as contrapunto.

Chavistas, as the president's supporters are known, call the areas they control the "liberated zones of the Bolivarian Republic" and adorn offices and homes with giant portraits of Bolívar. Chavez trumpets Bolívar's dream of a politically unified South America, calls his political movement the Bolivarian Revolution and he has organized poor neighborhoods into political cells called Bolivarian Circles.

And, as Chavez well knows, besides the historical Bolivar there is a supernatural one, a figure of popular religious devotion who takes his place alongside other cult figures on home altars.

Alongside the Catholic religion, another spiritual tradition thrives in Venezuela, a popular religion with indigenous, African and Catholic roots called the religion of María Lionza. Based on the worship by Indians of a fertility goddess known as María Lionza, the syncretic faith predates any other touchstone of Venezuela's national identity. Many Venezuelans would not inhabit a home lacking an altar to the religion's principal divinities, each of which represents Venezuela's vibrant ethnic mixture of white, Indian, and black.

These religious altars usually feature a portrait of Simón Bolívar, and the religion's priests hold ceremonies in which the spirit of Bolívar is channeled through a medium who coughs when the general is present, since Bolívar had tuberculosis.

The official Bolívar celebrated in textbooks, statues and hymns still elicits the respect and devotion of Venezuelans, even if they inhabit luxury apartments. But in the figure of Chavez, some in Venezuela, including some of the nation's poorest, also see the spirit of Bolívar incarnate. The tradition of María Lionza has fed Chavez's grip on the country's imagination.

Chavez encourages this by echoing Bolívar's words and making his nationally televised speeches with a portrait of Bolívar placed next to his head. Venezuelans joke that Chavez always sets an extra place at his dinner table for Bolívar, and say that he parades the long hallways of his presidential mansion wearing the famed general's cape. Whether the stories are true or not, Chavez is definitely obsessed with Bolívar's legacy and exploits it to maintain power.

The president's posturing as a 21st century manifestation of Bolívar has helped radicalize the conflict in Venezuela. On one side, he is still revered by a significant part of the population as Venezuela's last hope -- a second liberator. The enraged opposition, on the other hand, thinks Chavez has betrayed Bolívar's legacy and 50 years of Venezuelan democracy with his authoritarian style and incendiary class rhetoric. It's one reason the new Bolivarian Revolution is in danger of ending in a civil war.

Torres has published several books of poetry in Venezuela and was a columnist for Caracas daily El Universal. She currently lives in the San Francisco Bay Area.

news.pacificnews.org News Analysis, Roger Burbach, Pacific News Service, Mar 13, 2003

The "zero-hunger" programs of recently elected Brazilian President Luiz Ignacio Lula da Silva -- and the country's whole economy - may be threatened by a U.S. war in Iraq.

RIO DE JANEIRO--In Brazil, the U.S. war with Iraq hangs heavily over the country's future, threatening its economy and putting in jeopardy the hunger-fighting programs of recently elected President Luiz Ignacio Lula da Silva.

"We have no idea what the war will mean. We could be thrown back to a period like the 1930s, when all of Latin America was in a depression," says Marcos Arruda of PACS, an independent research center. Arruda fears that war will make it virtually impossible for Brazil to continue paying its immense foreign debt.

Lula, as the president is known popularly, won election three months ago by promising to mitigate the country's tremendous social and economic inequalities. His "Zero Hunger" program has been launched with pilot projects nationwide, and, as he promised in his campaign, he has formed councils comprised of members of civil society to make recommendations on key policy issues.

Francisco Meneses, a member of the newly formed Council on Food Security, says that the council in its first meeting in January doubled the amount of free food distributed to schools. In February, Meneses says, the council directed the Ministry of Agriculture to move away from its historic policy of supporting agribusiness interests and instead "support cooperatives, small-scale agricultural producers, and food self sufficiency at the local level."

But Lula's plans for transforming Brazil are threatened by the nation's longstanding economic difficulties. One challenge is a bankrupt social security system. Cesar Benajamin, a social policy analyst and leader of the Popular Consultative Movement, blames former president Fernando Henriquez Cardoso's neo-liberal free market policies, which "undermined the country's stable work force, greatly expanded the informal sector, and thereby curtailed the number of contributors to social security."

The number of retired beneficiaries in major states like Rio de Janeiro now significantly exceeds the number of people paying into the system.

"Lula faces a financial time bomb that could explode at any time," says Reinaldo Gonzalves of the Economic Institute of the Federal University of Rio de Janeiro. "The government is facing a major fiscal crisis because of the skyrocketing debt, both internally and internationally. In the medium or long term, it is unpayable."

When Lula took office, the debt burden had expanded dramatically due to a significant drop in the value of its national currency, the real, in international markets. Today, Brazil's debt is equal to 56 percent of the country's gross domestic product.

To the dismay of many leading figures in Lula's Workers Party, the new government has so far adopted fairly traditional economic measures to deal with its economic problems. To help meet payments on the debt, the Minister of Economy has ordered the government to cut expenditures and to raise the expected budgetary surplus, not including debt payments, from 3.75 percent to 4.25 percent. To stop capital flight the Central Bank has raised interest rates from an already astounding 25.5 percent to 26.5 percent.

The agricultural and anti-hunger policies have not faced the immediate budgetary squeeze of other government programs because the U.N. Food and Agricultural Organization, along with the World Bank, see Lula's Zero Hunger program as a global model and pump around $5 billion into Brazil to support it. But "this is only a temporary fix," Gonzalves notes. "These are almost exclusively loans that will add to Brazil's already enormous international debt."

A U.S. war with Iraq will almost certainly affect even the hunger program. Lula's economic advisers already recognize the conflict will have a shock effect on the Brazilian economy, causing a drop in exports and upsetting the country's ability to deal with its debt and capital flows. Threat of war has already shaken Brazil's financial markets.

Lula, who has been outspoken in his opposition to war in Iraq, declared in a recent phone conversation with Chancellor Gerhard Schröder of Germany that he would join Mexico, Chile and Angola -- three members of U.N. Security Council with which Brazil has historic ties -- in voting against a new U.S. resolution authorizing attack on Iraq.

Though few here are optimistic the war can be stopped, some think it may compel Lula to follow through on a more radical agenda. "Sooner rather than later, Lula and his economic advisers will have to break with the past," Meneses says. "A war may well compel him to call for popular mobilization and the formation of participatory councils at the grass roots to challenge the stranglehold of the domestic and the international elites over the Brazilian economy."

PNS contributor Roger Burbach (censa@igc.org) is director of the Center for the Study of the Americas (CENSA) and has written extensively on Latin America and globalization. His next book, "The Pinochet Affair: State Terrorism and Global Justice," will be released by Zed Books this fall.

www.dailytelegraph.co.uk (Filed: 16/03/2003)

A war could have ruinous consequences for Western economies, but there are also rich pickings to be had for the oil majors and the construction industry. Mary Fagan and Edward Simpkins report

If Sheikh Yamani, the feted former Saudi oil minister, is to be believed, the imminent war with Iraq is all about oil.

Many people, including the American and British governments, fiercely disagree with Yamani's assessment, but what no one can deny is that the conflict could have enormous consequences for the price of oil and the world economy. 

Oil prices have already soared by almost 60 per cent since the middle of last year when fears that there might be war with Iraq began to crystallise. Last month crude oil prices in the US nudged $40 a barrel, a level not seen since 1991 in the aftermath of the Gulf War.

In America, the situation has been hugely exacerbated by a severe winter and a shortage of gas. But prices of crude in the UK have also soared above $30 and increased the cost to consumers at the petrol pump, with prices up by 4p a litre within the past few weeks.

The optimists in the market say that, assuming a quick and "clean" war, the oil price will go up further but then fall back rapidly when hostilities end, as happened after Iraq invaded Kuwait.

The doomsayers fear wider instability in the Middle East (and in particular in Saudi Arabia, the world's largest producer with an output of 8m barrels per day) could see prices clinging to $50 or more.

The experience of previous oil shocks in 1973/74, 1979/8 and 1990/91 shows the damage that can be caused to global economies. In this case, the big question is whether the aftermath of war will release Iraq's potentially huge reserves for world consumption. Or will Saddam Hussein wreak havoc on his (and neighbouring) oilfields to terrible effect?

Yamani, speaking to The Telegraph, warns that the consequences for the world economy could be "disastrous".

"Is it going to be a quick war? Is Saddam going to resign? Will America go in and restore and manage the oil fields. If so the price will drop," he says.

"But if Saddam sets fire to the oil fields or damages those fields in any way then the price will jump. All these ifs. If he has chemical and biological weapons [and manages to mobilise them] there could be an absence of crude from the market. Its a disaster. We do not know the outcome and anyone who says they do is just taking a guess."

The short-term problem is that when war breaks out the world will lose Iraq's oil exports of between 1.5m and 2m barrels per day. The Organisation of Petroleum Exporting Countries, led by Saudi Arabia, has been quick to reassure markets that it will increase production to plug any gap in world supplies.

Opec, however, has already been increasing output to offset the shortage caused by a crippling general strike in Venezuela. There is growing concern as to whether, in the short time available, the cartel can do much more.

On Wednesday the International Energy Agency warned that world oil production capacity would fall short of demand this month by 1.68mbpd in the event of war. The IEA also said that Opec's spare capacity is just 900,000bpd, which is well below the amount estimated earlier by the US government.

One oil price expert with a major Western oil producer says people are panicking unnecessarily and that, assuming any damage is limited to Iraq, there is no shortage.

"The reason Opec's capacity is down is that Opec has been increasing production in anticipation of war. There is oil loaded on tankers out there. The world has more than enough oil to get through war. We are talking about 2mbpd [at risk] out of a daily consumption of 77mbpd," he says.

That said, the tenaciously high oil price even before the start of war is putting pressure on Western governments to release precious emergency reserves.

The US has been steadily building its strategic petroleum reserves to a record level of about 600m barrels and could, say analysts, release up to 4mbpd when war breaks out. That would be more than enough to account for the Iraqi shortfall, but it may not be enough to make up for potential disruption in production from neighbouring Kuwait.

According to Vincent Cable, the Liberal Democrat spokesman on trade and industry and former chief economist at Shell, the severity of the pre-war "oil shock" means that Western governments should be acting before it is too late.

"There is genuine scarcity. Why on earth are the Western governments not releasing strategic stocks? This is the time to do it," he says.

"The oil price is doing a lot of damage which may not be percolating through yet. It is almost certainly having a severe effect on oil importing developing countries such as India and China.

If this goes on for a few weeks, let alone months, we would have the kind of adverse effect on the world economy we had in 1991. We are back to 1991 with the potential for worse if the war does not go smoothly."

It is the prospect of the war "not going smoothly" which strikes fear in the heart of many industry experts. The main worry is that Saddam will attack oil reserves and infrastructure beyond his own - notably in Kuwait or Saudi Arabia.

Cable says that the most serious risk is if the new Gulf war were to hasten the collapse of the Saudi regime. That could happen, he believes, either because of an intensification of anti-Western feeling or because of a sharp post-war rise in Iraqi production. That could, in turn, cause prices of oil to slump to the detriment of the Saudi economy and its ability to provide cheap public services.

"The potential for revolution is all too plain. And regime change could bring to power people with little interest in worldly problems such as oil, much like the mullahs did in Iran in 1979," Cable says.

Philip Lambert of Lambert Energy Advisory is also deeply concerned about the effect of potential instability in the Middle East on the oil price. And he argues that the markets appear to be forgetting about the wider political difficulties in the oil world.

"What worries me is that Iraq is not the only place that is politically difficult. Our view is that political instability could create an almost permanent risk premium in the oil price," he says.

"A solution in Venezuela is not yet certain. Nigeria (which produces 2mbpd) is unstable and the Middle East will almost certainly be unstable after war. We have to ask whether there will be a fundamentalist backlash. All that has to be priced in by the market. What this crisis has proved is that there is not a lot of spare capacity in the world."

www.forbes.com Reuters, 03.13.03, 5:40 PM ET

BRASILIA, Brazil, March 13 (Reuters) - Brazil's Senate on Thursday approved three new Central Bank directors who had been nominated to the bank's board by the new government of President Luiz Inacio Lula da Silva, lawmakers said. Luiz Augusto Candiota, who is replacing Luiz Fernando Figueiredo as monetary policy director, won 60 votes versus six against. Paulo Sergio Cavalheiro, who will become the bank's new oversight director, and Joao Antonio Fleury Teixeira, who will head the bank's administration department, won similar-sized votes, lawmakers said. The three new directors were nominated by the government last month.