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OPEC Won't Share in Dollar's Drubbing
// And won't mind raising oil prices even more
The third summit in the history of OPEC has taken place in Riyadh. The main event of the summit was Iran's suggestion that the dollar be replaced as the main currency for the oil market. Venezuela was in favor of that proposal, but all other members rejected it, since their economies are tied to the dollar. Thus, Iran and Venezuela failed to turn OPEC into an anti-American political bloc. But all the members agreed that $100 per barrel is still a low price for oil.
Big Politics
Meetings of leaders of oil-exporting states are always contentious affairs. This time, no one knew which of the leaders would be coming to Riyadh, so hotel rooms and limousines were reserved for all of them. Libyan leader Muammar Qadhafi unexpectedly did not arrive. He and Saudi Arabian King Abdullah II have personal enmity for each other and argue publicly at all summits they attend together. Therefore, Col. Qadhafi decided not to attend this one. Indonesian President Susilo Bambang Yudhoyono sent his vice president in his place.
Venezuelan President Hugo Chavez and Iranian President Mahmoud Ahmadinejad were to be the main characters in the show, and they came on time and create their share of unpleasantness for King Abdullah as well.
Chavez and Ahmadinejad had obviously worked out their own plan for the summit. They had big hopes for the summit – convincing the leaders to turn OPEC into a powerful, permanent political organization. They had divided their labors. Chavez, the more experienced orator, was to express the ideological base of their thoughts, while Ahmadinejad proposed actual political action for the organization.
Chavez was not the equal of his ambitions. Being accustomed to a Latin American audience, he crossed himself, raised his hands toward heaven and twice mentioned Jesus Christ – for him, reliable rhetorical devices. The hosts of the summit did not remind him that it is prohibited in Saudi Arabia to demonstrate non-Muslim religious affiliation. But the Arab leaders, who make up the majority in OPEC, were not impressed with his speech.
The entirety of Chavez's speech was devoted to turning the oil cartel into a political bloc. In his opinion, OPEC should "become a stronger player in the geopolitical domains." He reminded the other leaders of the “good times” of the 1960s and 1970s, and recalled the world oil crisis OPEC provoked in 1973 with particular relish. He proposed the following basic goals for OPEC activity: to demand respect for the oil exporting countries throughout the world and force the West to stop threatening cartel members. “In light of the aggressive statements made against Iran,” OPEC should strengthen itself and protect defend the sovereignty of member states.
“We all see what is happening in Iraq,” Chavez said. “We see the continual threats to Iran. I am sure that OPEC should be strong and protect the sovereignty of its members, if the leading countries of the world want to continue to receive oil. If the United States was foolish enough to attack Iran or aggress Venezuela again, the price of a barrel of oil won't just reach $100, but even $200.”
Everyone there knew in advance what Chavez was going to talk about. They essentially came to Riyadh to listen to his proposals. The summit was only the third in OPEC 47-year history. Usually member states' oil ministers mange the organization's affairs, and a meeting of the heads of states is a powerful political gesture all by itself. The very fact that 11 out of the 13 OPEC leaders attended the summit in Riyadh shows that the are in agreement with Chavez in principle and are aiming for political clout.
King Abdullah of Saudi Arabia, the host of the summit, decided to lower the level of anti-Americanism, however. "Those who want OPEC to take advantage of its position are forgetting that OPEC has always acted moderately and wisely," the king stated firmly. "Oil shouldn't be a tool for conflict, it should be a tool for development." The king also set goals of the organization in his speech, and they practically coincided with those of Chavez. First to protect the interests of its members, he said, and second to protect the world economy from sudden jumps in oil and fuel prices. The king did not speak about defending Iran from possible American aggression but it was obvious that such a conflict could lead to the sudden jump in oil prices the king referred to. Thus, he too wants to make OPEC a political organization, but not under the leadership of Chavez and Ahmadinejad.
But while Arab leaders listened to Chavez with cautious sympathy, the president of Ecuador was ecstatic over his speech. “We should not be afraid to imagine OPEC as a political organization,” he said. “Cane we deny reality?”
Fewer Dollars
Ahmadinejad carried out part two of the joint Irano-Venezuelan plan, and did so even worse than Chavez did in part one. To show his political power and independence, the Iranian president proposed replacing the dollar as the main currency of the world oil market. Teheran has already done that for its own oil, which now sells for euros. But no one else, except Chavez was interested in doing so.
The economies of all the oil-exporting countries are based on the dollar. The U.S. is the main buyer of OPEC oil and most of the leaders of the oil cartel keep their savings in dollars. So a rejection of the dollar, which would further weaken the currency, would directly hit the oil-exporting countries. “We would very much like the dollar to stabilize,” said Algerian Oil Minister Chakib Khelil. King Abdullah was against even mentioning OPEC's concern over the weakness of the dollar in the final declaration of the summit. He thought the very fact that it had been discussed could lead to further weakening of the American currency.
After the summit, Chavez flew to Tehran to continue discussing long-term strategy with Ahmadinejad. In spite of the Saudi king's rejection of their ideas, the summit was a success for them on the whole. It may not be possible to turn the oil cartel into a real political bloc, but it may be possible to blackmail the West with the threat of it. And that is what the Iranian and Venezuelan president have already done. In addition, OPEC members have shown unity in pricing policy. Both Chavez and King Abdullah said that current prices are not too high and, even if oil costs over $100 per barrel, it is cheap all the same.
Mikhail Zygar
All the Article in Russian as of Nov. 19, 2007
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