Global Policy Forum

By Pascal Fletcher

Venezuela's oil strike, which has cut off over 13 percent of U.S. petroleum imports, may force Washington to hold back from launching a war against Iraq until the crisis in the South American oil producer is resolved, a Venezuelan energy expert said Monday. Humberto Calderon Berti, a former Energy Minister, said he believed it would be too risky for the United States to move against Baghdad at a time when the turmoil in the world's No. 5 oil exporter was choking off key shipments to the U.S. market.

Venezuela's leftist President Hugo Chavez, who survived a brief coup in April and is resisting intense pressure to resign, is fighting to beat the two-week-old opposition strike that has cut oil output to less than a third and brought exports to a virtual standstill. "I believe the United States won't make any war decision against Iraq until the situation in Venezuela is resolved," Calderon, who has also served as president of the giant Venezuelan state oil firm PDVSA, told Reuters in an interview. "It looks to me very difficult to be able to press ahead with a military initiative in Iraq when you have Venezuela going through a situation of immense instability," he added.

Talks between the government and opposition representatives, brokered by the Organization of American States, have so far failed to reach an accord on an electoral solution to the Venezuela crisis.

Calderon said a full-scale U.S. war against Iraq, if it was launched while the crisis in Caracas was still halting Venezuelan shipments, could mean at least five-and-a-half million barrels of oil per day being cut off from the market. Venezuela has a total output capacity of more than three million barrels per day (bpd) and Iraq, the world's eighth largest exporter, sells about 1.2 million bpd to international markets. Between them, the two OPEC members cover roughly 7 percent of the world's more than 76 million bpd of crude oil demand.

This could also push oil prices skywards to as high as $40 a barrel, pressuring the U.S. and world economy. "We'll be heading for a tremendous crisis,' Calderon said. Pushed to two-month highs by the Venezuelan oil drought, U.S. crude oil futures settled Monday at $30.10 a barrel, up $1.66 or 5.8 percent.

The conflict in Iraq also risked dragging in other big producers in the Middle East, disrupting supplies from a region that produces a third of the world's oil.

CHANGE IN U.S. ATTITUDE

Calderon said there had been a "change in attitude" by U.S. President George W. Bush's administration towards Venezuela's crisis, from a more neutral U.S. position a few weeks ago to a public call on Friday for early elections to solve the conflict. "It is very important for them to understand that the presence of Chavez in Venezuela is destabilizing," he added.

Opponents of Chavez, who was elected in 1998 promising to carry out a "revolution" to help the poor, accuse him of ruining the economy and dragging Venezuela towards Cuba-style communism. They also say he has weakened the country's traditional alliance with the United States by forging closer ties with anti-U.S. states like Libya, Iran and Iraq. "There has never been an oil industry strike in Venezuela like the one we have now ... and while Chavez remains in power, this will be a recurring event," Calderon said.

A U.S. diplomatic envoy, Thomas Shannon, visited Caracas at the end of last week and urged both Chavez's government and the opposition to reach a negotiated political deal on elections. Shannon said Washington was very worried about a possible escalation of the political confrontation in Venezuela but denied that his visit was directly linked to U.S. plans to launch a possible strike against Iraq.

Former paratrooper Chavez, who says the strike is an attempt by his foes to overthrow him again, has deployed troops to try to move strike-bound tankers and restart idled refineries and oil loading terminals. He has also said he will bring in foreign oil experts if necessary to beat the strike. The Venezuelan oil strikers, who include PDVSA executives, tanker captains, navigation pilots and refinery and port terminal operators, have said they will stay out until the Venezuelan leader agrees to quit and hold early elections.

USING MILITARY WILL NOT HELP

Calderon predicted the Chavez government's efforts to restart the oil industry by replacing the strikers would fail. "We're not talking about just hundreds. We are talking about thousands of oil industry employees that cannot be replaced," he said. Calderon said it would make no difference if Chavez took over refineries, tankers and terminals with troops. "You can't militarize oil operations or tankers. Soldiers can't operate a refinery, a shipping terminal, a production field, a high-pressure gas plant," he added.

Calderon, who served as Venezuela's Foreign Minister in 1992 was skeptical about Chavez's assertion that fellow members of the oil cartel OPEC had offered to send trained technicians to Venezuela to help beat the oil strike. "Anyone who knows the oil situation in the Middle East knows perfectly well there is no surplus there of thousands of people to operate oil installations in Venezuela," he said.

He also dismissed Chavez's claims Sunday, made during a five-hour television and radio broadcast, that the government had succeeded in breaking the strike by restarting domestic gasoline supplies and export shipments. "He's a big mouth," Calderon said.