Andean Group - December 2007 (ISSN 1741 4466)

At the November meeting of the Organization of Petroleum Exporting Countries (Opec) in Saudi Arabia, President Hugo Chávez backed his aggressive diplomatic push with Venezuela's oil wealth. Chávez sided with his Iranian counterpart, Mahmud Ahmadinejad, to attack Washington's "imperialistic" policies. The Saudis, allies of the US government, tried to avoid a bellicose tone, but Chávez lambasted the US government in his address. He threatened that the price of a barrel of oil would double to US$200 if "the US attacked either Venezuela or Iran".

Such statements have become common-place, revealing Chávez 's policy of seeking to increase the price of oil to gain power. Indeed, while presiding over the Opec from 2000 until last month, Chávez 's government managed to convince other members to limit oil exports to quotas they defined themselves. This was one of the main factors - together with the war in Iraq, and increasing demand in the developing world - which caused the price of a barrel of oil to increase from barely double figures to almost US$100 during the period.

An alliance with a country rich in natural gas like Bolivia, is crucial to Chávez 's policies. He recently declared that Bolivia would "turn into another Vietnam" if opponents of his ally, President Evo Morales, were to attempt a coup d'état. Like Cuban leader Fidel Castro and leftwing revolutionary Ernesto "Che" Guevara before him, Chávez believes that revolution in South America must begin in Bolivia due to its central position in the continent.

At the Opec summit Chávez insisted that the organisation "goes beyond mere energy and has become an organisation with a more geopolitical outlook". Chávez seemed to suggest that the Opec has a crucial role to play in "redistributing global wealth" when he said that rich countries should pay US$200 for a barrel of oil so that poorer nations can pay only US$5.

In the end, little was accomplished at the Opec summit, which was exactly what Chávez wanted. He achieved his PR coup via his aggression towards the US and compassion for the developing world.

Global oil subsidies

Chávez 's idea of subsidising oil for the developing world follows claims by the International Energy Agency that while rich countries' oil consumption will increase by 1.1% annually until 2030, poorer nations' consumption will increase by 2.4% per year over the
same period.