FT: Venezuela plans Cuba oil deal By Pascal Fletcher in Havana Published: September 21 2000 21:10GMT | Last Updated: September 21 2000 22:55GMT Venezuela, whose President Hugo Ch�vez has extended a hand of friendship to Fidel Castro's Cuba, is drawing up a new preferential oil supply agreement for Central American and Caribbean states that will include the communist-ruled island. "There is an initial draft of the agreement. . . it should be signed in October," Venezuela's new ambassador to Havana, Julio Montes, told foreign reporters. Mr Montes said the new oil deal was intended to complement, but not replace, the existing San Jose pact, under which Venezuela and Mexico have been supplying crude oil and refined products under favourable terms to 11 Central American and Caribbean nations, not including Cuba. "The new accord will improve the San Jose pact by incorporating Cuba," Mr Montes said. Mexico has so far resisted the idea of allowing Cuba into the existing San Jose agreement. Membership of the proposed "Caracas pact" would allow Havana to buy Venezuelan oil directly under preferential terms. Another difference from the existing San Jose pact would be that beneficiary states would be able to repay the oil supplies not just in hard currency but also in trade and services. This would suit Cuba, which is short of hard currency and starved of credits because of its recent economic recession and the long-running US trade embargo. Cuba, which buys 30,000 barrels per day of Venezuelan crude through international traders, is feeling the squeeze of high oil prices. But Mr Montes said phasing in direct Cuban oil purchases from Venezuela would have to be gradual to allow Havana to settle outstanding debts to oil traders. Another possibility for oil industry co-operation between Caracas and Havana included a project under study to modernise and reactivate a Soviet-built oil refinery at Cienfuegos in Cuba. Mr Montes said this project could involve, besides the Cuban and Venezuelan state oil companies, Cupet and PdVSA, foreign partners such as Spain's Repsol and Petrobras of Brazil. Petrobras' possible involvement in the Cuban refinery would depend on the success of the Brazilian company's continuing oil exploration efforts in an offshore block north of Cuba's central coast. Mr Montes said Cuba's participation in a regional oil supply pact brokered by Venezuela could also be linked to a settlement on Cuba's $69.3m outstanding debt to Venezuela. It could be used to help refinance the Cuban debt, he added. ------------------- FT: Ch�vez takes big risk with Opec By Andy Webb-Vidal Published: September 21 2000 17:39GMT | Last Updated: September 21 2000 22:23GMT Drive down the pot-holed streets of downtown Caracas this weekend and you could be forgiven for thinking a coup d'etat has just taken place. Hundreds of edgy-looking troops stand guard on the main thoroughfares, and sectors near the centre are out of bounds. But the atmosphere is calm, cut only by the pungent smells of freshly-laid asphalt and paint, a sign that preparations are taking place for something unusual. President Hugo Ch�vez failed in his coup attempt in 1992. But now, buoyed by his landslide re-election victory in July, Mr Ch�vez is gambling on what could be his most important diplomatic coup to date: hosting next week's summit of the Organisation of Petroleum Exporting Countries (Opec). Only the second ever in Opec's 40-year history, and 25 years after the first in Algeria, the summit is essentially being billed as celebratory and ceremonial. Yet with angry protests over fuel prices in Europe, and deepening concerns in the US that once again rising oil prices threaten to stunt global economic growth, the event is expected to draw widespread attention. Equally, the spotlight will focus closely on Mr Ch�vez and Ali Rodriguez, Venezuela's energy minister and current president of Opec, given their prominent roles in helping resurrect this fractious and virtually moribund organisation. Observers are warning that Mr Ch�vez will have to tread carefully. "The success of the summit will depend on two key factors," said Humberto Calderon, a former oil minister and head of Petroleos de Venezuela, the state oil company. "That the big producers are sufficiently represented, and what will be on Opec's agenda." Iraq's President Saddam Hussein and Libya's Colonel Muammer Gadaffi, as expected, declined their invitations for security reasons. But most of the other eight heads of state are scheduled to attend. Saudi Arabia will be represented by Crown Prince Abdullah Bin Abdulaziz, and Kuwait by Crown Prince Saad Al-Abdullah Al-Salem. Opec output levels are not officially on the agenda, but there is little doubt they will be discussed informally. Closer commercial ties between members, and the strengthening of relations with non-Opec oil exporters, such as Mexico and Russia, are also expected to be proposed. But perhaps the most important message to emerge next week, Venezuelan government officials say, will be an attempt by Opec to deflect blame for any threat to world economic health. Fuel prices, Mr Rodriguez argues, are at current levels not because of Opec's supply restraint, but because of excessively high taxes in Europe, insufficient refining capacity in the US, and speculation on futures markets in London and New York. "Consumers are tired of seeing oil exporting nations as the scapegoat, they are becoming aware that taxes are behind the exorbitant prices," said Mazhar Al-Shereidah, a Venezuela-based oil consultant. "This constitutes the platform for Opec to make a call for the stabilisation of a market in which each actor must accept responsibility." Despite calls for increased output from Opec, the US has hitherto stopped short of singling out any member state for resisting or for defending the group's new-found unity. But in July Mr Ch�vez sailed Venezuela perilously close to the wind, arousing US criticism with his visit to Baghdad to personally invite the Iraqi president to the summit. Still, Opec and rising oil prices have served to contain Mr Ch�vez's wider ambitions as a self-styled defender of poorer nations from US hegemony, analysts say. Advisers are said also to be warning Mr Ch�vez that his rhetoric could pose a greater danger to Opec's delicate internal political balances than to its relations with the US. Mr Ch�vez, prone to long, confrontational speeches, has in recent months toyed with personally claiming credit for the trippling in oil prices during the past 18 months. "It has been said that Venezuela is now leading Opec, that sort of thing does not go down well with the other countries," Mr Calderon said. "If Mr Ch�vez launches into the type of speech that Venezuelans are used to, rather than benefiting Venezuela's interests, it will damage them." As far as winning political points at home is concerned, though, analysts are sceptical of the benefits of the summit. If anything, Mr Ch�vez is following the steps of former president Carlos Andres Perez, who in the 1970s promoted himself as a Third World statesman but led Venezuela into an ill-fated oil-financed spending binge. "He's tracing the same route that Perez took, an attempt to gain domestic prestige through the promotion of his international image," said Angel Alvarez, a political analyst. "Because of the contradictions inherent in Opec, oil prices could fall at any moment," Mr Alvarez said. "Mr Ch�vez is playing a dangerous game as he doesn't have all the cards in his hands. This is exactly what Carlos Andres Perez did, and he paid a high price for it." --------------- FT: Dazed and confused by protest The [British] government's choices broadly reflect those of the electorate. But it has never learnt the importance of humility Published: September 21 2000 19:13GMT | Last Updated: September 21 2000 19:19GMT We had better get used to street politics. Last week Britain was held to ransom by road hauliers and farmers. This weekend, an altogether different set of protestors in Prague make another stand against the International Monetary Fund, the World Bank and all things global. Direct action is back in fashion. The politicians are confused, and not a little frightened. It is all so inchoate. Britain was brought to a standstill in the less-than-noble cause of lower petrol prices. In Prague, the environmentalists want us to burn less, not more, atmosphere-polluting fossil fuel. Public opinion in Britain seems to be on the side of the demonstrators' demand for lower fuel taxes. Yet that same opinion heartily endorses the decision of Tony Blair's government to put public investment over tax cuts. As for the critics of globalisation, half of them accuse the Fund of economic imperialism while the rest want western governments to impose new standards - environmental and labour - on their poorer cousins in the developing world. These are obstinate contradictions. Reason and emotion are colliding all over the place. There is a genuine confusion out there about where politicians can and should draw the boundaries between government and the market. People want the freedom and prosperity that come with market economics. They also want to be sheltered from its colder winds. They want to fill up their cars with cheap fuel. They also want clean air, low income taxes and decent hospitals and schools. There are one or two threads to be drawn through this tangle of conflicting impulses. At a mundane level, we can see how technological advance has empowered the disenchanted, whether they be hauliers in Britain or France or class warriors in Prague. Mobile phones, the internet and 24-hour television are now the most potent weapons in the protesters' arsenal. Beyond the technical, it is possible to detect a shared cynicism among the angry middle classes and the anarchists. It is directed at politicians and political institutions - national and global - and has become an enduring feature of the post -cold war era. The fracturing of old ideological allegiances robbed politics of a compass. The present generation of political leaders, less wedded than most to principle, must shoulder much of the blame for a deepening popular indifference and mistrust. Some people take to the streets to vent their frustrations; many more simply do not bother to vote. We should not, though, overwork the parallels. Mr Blair's problems reflect a fusion of the general with the particular, the global with the local. There have been protests all over Europe about petrol prices. But those in Britain have been singularly unnerving. The fuel is now flowing again, but the polls say that Mr Blair is still getting the blame. Labour lags behind the Conservatives for the first time in nearly a decade. The temptation is to say there has been a sudden seismic shift in British politics which might yet see Mr Blair turned out of office at the next election. Such instant judgments are for the over-excitable. It is far too early to say the spasm over fuel prices has permanently changed the political landscape. The worst of the three (relatively) bad opinion polls shows Mr Blair five points behind. Margaret Thatcher regularly climbed out of far deeper holes. True, William Hague's Conservatives have sought to capitalise on the public mood by offering a reduction in petrol excise duties. But that is a pledge made in a vacuum, disconnected from any coherent strategy for taxation and spending. It reeks of shallow opportunism. No wonder the whisper among senior Conservatives is that Michael Portillo, the serious politician in the shadow cabinet, was less than enthusiastic about Mr Hague's wheeze. In any event, the strategic initiative lies with Gordon Brown, the chancellor. The government, not the opposition, will mark out the terrain on which the election is fought. The Treasury's coffers are overflowing with the revenues of economic growth. And Mr Brown has at least one more Budget in which to frame the debate over how it can be spent. Having refused to give in to blackmail, he can now weigh objectively the protesters' claim to a rebate from the public purse. I would be surprised if he had nothing to offer by the time of next spring's Budget. What is more, all the evidence is that Mr Brown's basic strategy - fiscal rigour alongside substantial increases in the funding of the public services people care about - is on the right side of the real political argument. Government is about choices. And the fuel price storm notwithstanding, the government's choices broadly reflect those of the electorate. That said, Mr Blair's administration is at present dazed and confused. This is its first encounter with real public hostility. It did the right thing in refusing to be cowed by the blockades. And we should not forget that the protesters gave way. But then it somehow lost it. The return to the front pages of all those stories about cabinet infighting is a reminder of how disfigured the government has been by personal rivalries and petty jealousies. Mr Brown has not been at his best in his public defence of his position over fuel taxes. His brooding intransigence is legendary. And few politicians contrive to sound as stubborn. But the glee with which cabinet colleagues have kicked the chancellor conjures up images of children brawling in the playground. It is a symptom of a bigger problem. From the start this government has had too much of a swagger about it. Perhaps that comes with an impregnable parliamentary majority. Either way, many of those now telling the pollsters they intend to back Mr Hague have no fundamental argument with Mr Blair. Of course, they want to pay less at the petrol pump. What really angers them, though, is the feeling that the government is arrogantly indifferent to their concerns. It is smug them, and neglected us. Focus groups are not the answer. Politicians who bow and bend with every gust in public opinion earn only contempt. But people want to be treated with respect. They want open dialogue. What is wrong, after all, in explaining that taxes have been piled on petrol to pay down the national debt and so make room for decent increases in public spending? One of the great puzzles about a government as politically attuned as this one is why it has never understood the worth of humility. There is no magic formula for leaders to seize on when faced with the politics of angry protest. It is their role to mediate between the sectional interests in society. To give in to the threats of the strongest is to betray the weakest. The best politicians can do is to seek to earn people's trust. As Mr Blair can attest, they pay a heavy price when they lose it. -------------------------- FT: G7 governments unlikely to release oil stocks By Matthew Jones Published: September 21 2000 14:33GMT | Last Updated: September 22 2000 00:17GMT Governments meeting at the G7 summit in Prague this weekend are likely to rule out a collective move to release strategic petroleum reserves, despite oil prices surging to 10-year highs. On Thursday, Bill Clinton, the US president, was expected to be urged by Al Gore, vice-president, to tap into the national oil stocks as a way of stabilising prices. Analysts had predicted any such move would lead to calls for a wider release of strategic stocks in the G7 countries. However, Bill Ramsay, deputy executive director of the OECD's International Energy Agency, charged with ensuring security of energy supplies, said the G7 nations were still a "long way" from reaching consensus on a co-ordinated release. "I don't believe, from what I am hearing from our member countries, that a collective draw-down is on the cards," he said. OECD governments control more than 1.2bn barrels of oil held in tanks and pipelines as a back-up reserve for use during national emergencies. Releases of national stocks are extremely rare - the last time the IEA authorised a draw-down was during the Iraq-Kuwait crisis a decade ago. Oil prices have continued to rise over the last 10 days, despite a decision by the Organisation of Petroleum Exporting Countries to lift headline production by another 800,000 barrels a day. In morning trading on Thursday the November contract for benchmark Brent crude eased 95 cents to $32.80, but remained obstinately above the $22-$28 price band considered desirable by economists and officially targeted by Opec. While government-controlled stocks have remained largely constant over the last 18 months, industry-held stocks have fallen from 2.7bn barrels of oil to 2.5bn. In the past three months production increases by Opec have allowed total industry stocks to recover by 80m barrels of oil, but experts are still concerned about imbalances of certain products such as gasoline and heating oil. Some analysts believe the strategic petroleum reserves should be used to head off inflationary pressures and growing social unrest caused by high energy costs. Peter Odell, professor emeritus of Erasmus University in Rotterdam, said a decision by the G7 nations to use their stocks would ease fears of a winter heating oil shortage. "Instead of just putting pressure on Opec to increase its production, the western world should be playing every card at its disposal. There is no shortage of oil in the world, all that is needed is a decision to release some of these stocks," he said. Professor Odell said countries like the UK and Norway, which are net exporters of oil from the North Sea, should take the lead in releasing stocks and persuading oil companies to increase production. "It is ridiculous that Britain holds 90 days worth of oil stocks when it can more than meet its own needs from domestic output," he said. However, Mr Ramsay insisted that strategic reserves had been built and paid for by taxpayers to cope with supply interruptions and should not be used by governments to swing world commodity prices. "Governments should not meddle in commodity markets - if they did where would it stop and at what price?", he said. _______________________________________________ Crashlist resources: http://website.lineone.net/~resource_base To change your options or unsubscribe go to: http://lists.wwpublish.com/mailman/listinfo/crashlist
