CHAVEZ OPENS OPEC 141ST EXTRAORDINARY MEETING

UNCLAS SECTION 01 OF 02 CARACAS 001616 SIPDIS SIPDIS ENERGY FOR CDAY, DPUMPHREY, AND ALOCKWOOD NSC FOR DTOMLINSON E.O. 12958: N/A TAGS: EPET ENRG EINV VE SUBJECT: CHAVEZ OPENS OPEC 141ST EXTRAORDINARY MEETING ¶1. SUMMARY: President Chavez opened the 141st Extraordinary Meeting of OPEC mid-day June 1 with a speech of almost two hours that was long on attacks on U.S. imperialism and short on substance. After giving a rambling verion of Venezuelan and OPEC history, he proposed a 50 USD floor for oil prices, the adoption of the euro for oil transactions, and the incorporation of new members, particularly Bolivia. END SUMMARY -------------- I DON'T THINK HE LIKES US -------------- ¶2. Chavez began his speech by asserting that OPEC is composed of third world countries that are victims of colonization. He then traced the history of Venezuela from the sacking of Latin America 500 years ago by the Europeans to the present, with a heavy focus on the victimization of Venezuela by colonial powers and U.S. oil companies. According to Chavez, the U.S. backed Venezuelan dictator Juan Vicente Gomez who overthrew the first Venezuelan president to enact laws which safeguarded natural resources. Gomez then proceeded to give U.S. oil companies concessions. According to Chavez,"there was never a drop of oil for the Venezuelan people". Oligarchs and the U.S. sucked all of the oil out for themselves. ¶3. Chavez devoted considerable time to a critique of the consumerist culture of the West in general and the American way of life in particular. He called capitalist consumerism unsustainable. Chavez blamed high oil prices on geopolitical tensions, "agression against Iraq", threats against Iran and Venezuela, speculation, a lack of investment in refining, and an increase in consumption. He criticized the model of consumption in developed countries and cited the use of automobiles in Europe and the United States as an example of "extreme individualism". ¶4. Chavez also attacked "U.S. imperialism" at length and stated the U.S. had been in a state of permanent agression against Venezuela for the past seven years and it was also directing its agression against OPEC. He said U.S. opposition to his visit to Bagdad was proof of U.S. agression. He also claimed the April 2002 coup was not only directed at him but at the "heart of OPEC". He went on to add that President Bush is a "threat to the world" and called for the withdrawal of U.S. troops from Iraq and the cessation of threats against Iran. He demanded U.S. troops withdraw from Iraq "to stop the abuse against the Iraqi nation and that the threats against the Iraqi nation, an OPEC country, cease." He requested that OPEC member states be left alone so that they could develop. According to Chavez, OPEC exports peace and progress, not just petroleum. -------------- PROPOSALS FOR OPEC -------------- ¶5. Chavez ended his speech with three basic proposals. He stated it was not necessary to increase production and argued that there is currently an excess amount of production. He then turned to the subject of price bands, which he has raised repeatedly in the past. According to Chavez, OPEC should consider a band with a floor of 50 USD and an "infinite" roof. In other words, there should be no limit on increases in oil prices. ¶6. After proposing a floor of 50 USD, Chavez then stated that Venezuela and some OPEC members were interested in adopting the euro for oil transactions, as the dollar would only weaken due to irresponsible U.S. fiscal policies. OPEC, according to Chavez, should drop the dollar just as the U.S. dropped the gold standard. He asserted the existence of a U.S. "speculative bubble" (based on current U.S. fiscal and monetary policies),which he called a threat to the world. CARACAS 00001616 002 OF 002 He called on OPEC to get rid of the "dictatorship of the dollar". Chavez' observation that "the tomb of the Empire (United States) is already prepared" drew enthusiastic applause from Venezuelan officials, who were a minority in the audience, and a tepid response from the foreign delegates. ¶7. Chavez ended his speech by calling for the incorporation of new members from Africa, Asia, and Latin America. He praised Bolivian President Evo Morales for taking control of his country's natural resources. He concluded by stating he dreams of a day when Venezuela is not the only Latin American OPEC member. BROWNFIELD