US Military: Post-Chavez Venezuela 2002 to pour oil on troubled waters

[Say_What]

OMFG --This article was posted to a US military website on April 12, 2002--the day after the would-be coup. It may take time to load--I have DSL and it took a while. The entire article is below at VHeadline.com and there's also a link to the .mil site at the bottom of the article.

<clips>

In an article published on a US military website significantly on April 12, 2002, the Pentagon analysts wrote: The oil markets -- reacting to OPEC's supply curtailments, threats of war, rising violence in the Middle East and political instability in Venezuela -- have been on a roller coaster ride over the last month.

In reality, only the Venezuelan situation truly threatened to undermine market stability. With former President Hugo Chavez now removed from power, increased Venezuelan production should bring more stability to oil prices.

The analysis, which bears the hallmarks of a lengthy preparation in anticipation of the April coup d'etat but not its subsequent failure, continues: With former President Hugo Chavez no longer calling the shots in Venezuela following his resignation and arrest April 12, state oil monopoly Petroleos de Venezuela (PDVSA) will quickly increase oil production to both generate income and reassert its desire to become a major global energy player. This will provide enough additional supply to mitigate the recent instability in global energy markets.

Longer-term factors argue for broadly lower prices -- and less OPEC cohesion -- in the future as well. Since his inauguration in February 1999, Chavez transformed Venezuela from OPEC's biggest oil-production quota-evader into its most stalwart quota-enforcer. As recently as December 1999, the country was overshooting its production quota by a million barrels; since Chavez came to power, it has been roughly in alignment.

http://www.vheadline.com/readnews.asp?id=25751

[knowbody0]

1. Chavez is absolutely brilliant

and appears to be blessed with a cunning unknown to the USA. he he ha ha

[KissMeKate]

2. wow. caught red handed. eom

[Say_What]

17. Another article the same day about Chavez 'ouster' hurting Cuba

I Googled "Post-Chavez Venezuela 2002 to pour oil on troubled waters" and came up with the following article. This guy Friedman at Stratfor is some piece of work.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
<clips>

Chavez's Ouster Hurts Cuban Economy

12 April 2002

The forced resignation of Venezuelan President Hugo Chavez on April 12 is likely to be followed within days or even hours by the suspension of a sweetheart oil supply deal that Chavez gave Cuban leader Fidel Castro in October 2000. Under the five-year agreement, Petroleos de Venezuela (PDVSA) was obliged to supply 52,000 barrels per day (bpd) of crude oil financed under conditions very favorable to Cuba.

The PDVSA deal's likely suspension will inflict yet another major blow to Cuba's battered economy and could further erode the Castro regime's political control, as deepening economic hardship boosts popular pressure for meaningful economic and political reforms. While Castro likely will respond to these reform pressures by intensifying his systematic repression of political dissidents, his regime will have a difficult time compensating for the loss of the super-friendly oil supply deal with Venezuela.

Venezuela has become Cuba's largest trading partner since the deal was implemented 18 months ago. Moreover, the supply agreement's importance to Cuba's economy and to the stability of the Castro regime has increased significantly since the Sept. 11 attacks in the United States dealt the island's tourism industry a wallop.

In the past eight months, the collapse of the tourism industry has been aggravated by a hurricane that caused well over $1 billion in estimated damages to Cuba's physical infrastructure and agriculture-based economy. Additionally, Russia's decision to shut down its Lourdes intelligence facility has deprived the Castro regime of more than $200 million in foreign exchange earnings. Although Cuba's official economic data is closely guarded, the loss of 52,000 bpd of crude oil -- at least at the current discount prices -- will hurt the island's economy and put a big hole in Havana's budget.

http://web.nps.navy.mil/~relooney/Stratfor_Oil_6.htm

[EFerrari]

3. Send it to Olbermann. He loves this kind of stuff

[e-mail]
or
[e-mail] (I think that's right, although it may be keith.olbermann@)

[natrat]

4. that is really comical

talk about ineptitude in literally everything they do

[burythehatchet]

5. except for one

bring death and misery to the world. They are good at that.

[Resin]

6. Not for consumption

This isn't as easy as a gay prostitute in a press conference... perhaps a more english explanation to our friends in cyber space is necessary?

[TheWraith]

8. Simple.

The implication is that to have such a detailed analysis up the next day, they had to know it was going to happen beforehand. It's like publishing a book about why X political candidate won, the day after the election.

[NashVegas]

7. Clarification

The article page was lifted off of Stratfor's website and uploaded onto the Navy site.

All that proves is that someone in the Navy reads Stratfor.

[Blue to the bone]

9. Chavez can still run circles around the........

.......monkey man!

[Say_What]

10. Correct

but the fact remains that this highly detailed analysis was posted to Stratfor's site the day after the would-be coup speaks volumns.

[Say_What]

11. Stratfor (Shadow CIA) and George Friedman

Barron's refers to Stratfor as the 'Shadow CIA'. http://www.americassecretwar.com/about_book_author.html

George Friedman--chairman of Stratfor, said publicly in December 2002 and again in March of 2003 that he thought Chavez was gonna be next on MonkeyBoy's military agenda. He brags on his website that he predicted the "economic and political chaos in Venezuela and continuing instability for President Hugo Chavez (2002)".

[oasis]

12. Hugo decided to stick around and have a little fun at Chimpy's expense.

:bounce:

[Judi Lynn]

13. This is unbelievable. Does anyone know why Chavez should have been

"in handcuffs?" What was his crime? Not killing himself when he learned _Bush hates him? Jeezus H. on a go cart.

This portion of the article's hard to overlook:

During his presidency Chavez led the charge for numerous production cuts and toured the world last year to extract commitments from OPEC and non-OPEC states alike. Without his efforts, it is unlikely the cartel's January 1, 2002, cut of 1.5 million barrels per day would have materialized. OPEC Secretary General Ali Rodriguez is a Chavez associate, and it is highly likely that he will soon either be out of a job or singing a radically different tune in regard to production cuts.

Without Chavez's policies and personnel in place, the price spike created by his supply-restricting tendencies and the recent anti-Chavez strikes in the Venezuelan oil industry will quickly settle. Once Caracas revokes Chavez's anti-investment laws -- the new hydrocarbons law in particular -- foreign cash should again flow into the country in earnest, giving PDVSA managers a chance to fulfill their corporate vision of becoming the single-largest oil supplier to the United States.

PDVSA managers have already drawn up a plan for restoring and expanding production that could bring Venezuela 300,000 bpd above its OPEC quota. This plan will certainly have the full backing of the United States. The Bush administration, quietly thrilled that Chavez is in handcuffs, is perfectly happy to let its "aid" to the new Caracas government consist primarily of oil investment. This both saves tax dollars and firms up an oil supplier that is conveniently several thousand miles away from the Middle East.

Elsewhere in the energy markets, standard fundamentals are beginning to reassert themselves. The end of the Chavez regime signals a resumption of steady and slowly increasing oil supply out of Latin America. The willingness of OPEC producers to comply with the January 1, 2002, cut is beginning to crack as well. There are even indications that Russian producers, in league with Moscow officials, are scheming to steal Iraq's market share before the end of Baghdad's 30-day oil export embargo, called earlier this week to protest Israel's recent occupation of Palestinian territories in the West Bank. That leaves only the Iraqi embargo itself as a negative on the supply side.
(snip)

Looks as if _Bush and company really thought they had it all under control, and screw the wishes of the Venezuelan public, those silly people who thought they ELECTED Hugo Chavez as their President!

http://www.alternet.org/images/managed/Story+Image_thumb_bushchav200.jpg

[Say_What]

14. Venezuela's Hydrocarbon Law

Greg Wilpert did a very lengthy analysis of the Oil industry in Venezuela. Meanwhile, Oil-rich Venezuela's economy grew 17.3 pct in 2004

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...Tax reform

The next major target for reform is the way that the Venezuelan government extracts revenue from the oil industry. Here the government introduced a change in the taxation of the oil industry. Since 1943 the government required a royalty payment of 16.6% for every barrel of oil that either PDVSA or a foreign company extracted. In many cases this royalty had even been negotiated to drop to 1% of some foreign investors. A new oil reform that PDVSA was working on in 1998 even suggested eliminating royalty payments entirely. With the new oil reform law of 2001, however, royalty payments were nearly doubled to 30% of the price at which every barrel is sold. At the same time, the government lowered the income tax levied on oil extraction from 67.6% to 50%.

When the government introduced this change, the opposition cried out that the doubling of royalty payments would ruin Venezuela’s cooperation with foreign investors and would practically eliminate foreign direct investment in Venezuela. The government’s main argument for increasing the royalty payments is based on the fact that it is much easier for the government to collect royalty payments than it is to collect taxes on oil income. That is, the government can track very easily how much oil is being extracted and what the royalty payments should be based on the current price of oil. However, taxes based on oil income are much more difficult to control because PDVSA or other oil companies deduct their expenses from the income on which they have to pay the taxes. Since expenses are not that easily identifiable for an outside auditor, the tax payer can attempt to inflate expenses, in order to lower their tax payments. By shifting government revenues from taxes to royalties, the government is basically closing loopholes in the tax collection process.

A second and closely related reason for the change in the oil revenue collection process has to do with PDVSA. Chávez and his supporters have long claimed that PDVSA is providing too little of its revenues to the central government, the company’s only shareholder. One way to make the company more efficient would thus be to increase its contribution to the government, regardless of its expenses. That is, by making fewer expenses tax deductible, which is what the shift from income tax to royalties does, the company is faces a strong incentive to make its operations more efficient. In other words, a tax which allows the deduction of expenses penalizes the oil producer if production is made more efficient. If, on the other hand, the producer has to contribute just as much to the government, regardless of costs or expenses, the “royalty makes the interests of the natural resource owner and of the investor coincide.”<27>

“Re-nationalization”

As mentioned earlier, some critics of PDVSA, such as Carlos Mendoza, have called PDVSA’s 1976 privatization “phony.” Chávez, in his speeches following the collapse of the December 2002 to January 2003 oil-industry shut-down, has thus referred to the regaining of control over PDVSA as a “re-nationalization.” What this regaining of control involves is first and foremost increasing PDVSA’s efficiency and profitability, so that the company can transfer a greater share of its revenues to the government treasury. The government plans to increase the company’s efficiency through the aforementioned changes in taxation, by selling off unprofitable subsidiaries, and by reorganizing the company into two major geographic subdivisions, PDVSA East and PDVSA West. The details of which subsidiaries will be sold and exactly how the company is to be reorganized are still largely unknown as of this writing.

http://www.venezuelanalysis.com/articles.php?artno=1000

[coreystone]

15. "Say_What ", I can't access the "US military website" link......

Is there another manner which you may offer to hook up with your link???

:-)

[Say_What]

16. Worked for me, a little slow loading but worked. Entire article

is also at the Vheadline.com link along with their comments. :-)

[coreystone]

18. Thank you for your response! :-)....

When I click on the link, I get the "The page cannot be displayed"...etc!

Perhaps it may settings on my "puter"!

:-)

[Say_What]

19. Try this...

Google the name of the article below or use the link I posted at the end of this post.

Post-Chavez Venezuela 2002 to pour oil on troubled waters

--its the top return along with the bogus Chavez's Ouster Hurts Cuban Economy article published the same day--one day after the coup

http://www.google.com/search?hl=en&lr=&q=Post-Chavez+Venezuela+2002+to+pour+oil+on+troubled+waters&btnG=Search

Good luck!!