Oil prices rise for seven days straight on supply worries and Iran

Oil prices have risen for an entire week now. This is the longest rally since January 2010. Sanctions against Iran are also now threatening global oil supplies as well.


Oil futures rose to the highest level in nine months. Some favorable economic news in the U.S. and improvement in consumer confidence in the U.S. France and South Korea could mean higher consumer demand.

Gene McGillian a U.S. based analyst and broker said:"The bulls have the oil market by the throat," "There's an undercurrent of fear about the Iranian nuclear situation and what that will mean for global supplies as people scramble to replace Iranian barrels." Crude for delivery in April rose 31 cents to 108.14 a barrel. Contracts reached the highest level since last May 5.

April Brent oil added 9 cents to $123.71 a barrel on the London-based exchange. While downside risks from economic slowdown are receding somewhat at the same time worries about disruption of oil supplies is increasing driving prices up. For more see this Bloomberg article.

Oil over $100 dollars a barrel on New York exchange

    A Bloomberg article suggests that the rise is caused by plans by Enbridge to reverse the direction of the Seaway oil pipeline. However uncertainty about Nigerian production and other factors may also contribute to the rise.
    Enbridge has bought Conoco-Philipps share of a pipe line that runs from Cushing Oklahoma to the Gulf Coast. Reversal of the flow will allow oil from central U.S. states and Canada to flow to the Gulf Coast. Cushing Oklahoma had become a bottleneck in the system with large amounts of oil in storage. This lowered the price of oil. Now the backlog is being cleared the price of oil has increased. The decision may to some degree mitigate the effects of the delay in approval of the planned Keystone XL pipeline.
    TransCanada Corp. CEO Russ Girling said that the Keystone XL pipelines may now be able to gain State Dept. approval with six to nine months. It is now negotiating a changed route with the state of Nebraska that will not pass over the Ogalala aquifer.See this article.. However the U.S. State Dept. has claimed that studying the new routes would cause a longer delay of 12 to 18 months. The longer delay would postpone any decision until after the U.S. elections next year.
   

   

Ecuador: Lawsuit against Chevron

The whole article is at Vanity Fair
I wonder if the judge will survive until the end of the case.

Big Oil


Jungle Law
In 1972, crude oil began to flow from Texaco's wells in the area around Lago Agrio ("sour lake"), in the Ecuadorean Amazon. Born that same year, Pablo Fajardo is now the lead attorney in an epic lawsuit—among the largest environmental suits in history—against Chevron, which acquired Texaco in 2001. Reporting on an emotional battle in a makeshift jungle courtroom, the author investigates how many hundreds of square miles of surrounding rain forest became a toxic-waste dump.
by William Langewiesche May 2007 In a forsaken little town in the Ecuadorean Amazon, an overgrown oil camp called Lago Agrio, the giant Chevron Corporation has been maneuvered into a makeshift courtroom and is being sued to answer for conditions in 1,700 square miles of rain forest said by environmentalists to be one of the world's most contaminated industrial sites. The pollution consists of huge quantities of crude oil and associated wastes, mixed in with the toxic compounds used for drilling operations—a noxious soup that for decades was dumped into leaky pits, or directly into the Amazonian watershed. The company that did much of this work was Texaco—an outfit with a swashbuckling reputation worldwide. It signed a contract with Ecuador in 1964, began full-scale production in 1972, and pulled out 20 years later. In 2001, Texaco was swallowed whole by Chevron, which by integrating its operations nearly doubled in size. The lawsuit against it in Lago Agrio was filed in 2003, though the legal antecedents go back much further. Having dragged on for four years, the suit may continue for half again as long. Chevron is represented by high-priced firms of experienced lawyers in Quito and Washington, D.C., whose collective fees run to millions of dollars annually. Its antagonists are 30,000 Amazonian settlers and indigenous people, who call themselves Los Afectados—the Affected Ones. These plaintiffs are represented by a low-budget but serious team of North American and Ecuadorean attorneys, who are backed by a Philadelphia law firm that is known for class-action securities litigation and has gambled that this case, though risky, can actually be won.

Chevron objects vociferously, and presents itself as the victim here. Its attorneys have repeatedly claimed that the company is being extorted for "two juicy checks," one to be divided among the plaintiffs and the other to enrich their North American lawyers. The North American lawyers are indeed working on a contingency basis, but unapologetically so, and for a percentage significantly lower than the norm in high-risk cases; they would like to be well compensated for their efforts, but as much, they say, to encourage other lawyers to bring similar suits elsewhere in the world as to pad their personal bank accounts. The most active among them is a New York–based Harvard Law School graduate named Steven Donziger, who has invested 14 years in the case and would certainly be more secure had he pursued a conventional career involving the preservation of wealth. He counterclaims that Chevron's lawyers are the real mercenaries here. It is a philosophical quarrel that will never be resolved.

As for the plaintiffs themselves, under Ecuadorean law they are not suing individually, and personally may never see a dime. They have sued to seek compensation for past damages and to force Chevron to clean up the residual mess that continues, they believe, to taint the soil and water today. It is unclear how a cleanup would proceed and to what extent it could succeed, but over decades the cost might run to $6 billion or more—making this potentially the largest environmental lawsuit ever to be fought. And fight is the word. The case has become emotional for both sides, with few signs of willingness to compromise. Worldwide the oil industry is watching. Lago Agrio is a forsaken little town where something rather large is going down.

This is not, however, a U.S.-style legal drama. The Lago Agrio court follows Ecuadorean procedures, which minimize oral arguments and rely heavily on submitted documents to get at the truth. So far the proceedings have generated close to 200,000 pages. There is no jury to sway. There is a single presiding judge, drawn from a pool of three on a rotating basis for a two-year term of unusual pressure. Currently the judge is a rotund middle-aged man, a reader of Dostoyevsky and a convert to Islam. He must be the only Muslim in town. He told me it is not easy to be a judge there. Five years ago he was ambushed and machine-gunned while driving his car. His companion was killed, but he himself escaped. The attackers were hired killers, of whom Lago Agrio has an ample supply. Colombia's largest cocaine-production area lies just over the border a few miles to the north, and is peopled not only by narco-traffickers but also by leftist guerrillas and right-wing paramilitary groups. The police in Lago Agrio make a show sometimes of directing traffic. They did not investigate the attack, the judge believes, because they feared retribution. The judge accepted this without complaint, as if he had learned to believe in fate. Lago Agrio means "sour lake." He told me that the only safe choice there is to run away. Chevron would probably agree. It denies that the judge is fair, denies that the plaintiffs have legitimate complaints, denies that their soil and water samples are meaningful, denies that the methods the company used to extract oil in the past were substandard, denies that it contaminated the forest, denies that the forest is contaminated, denies that there is a link between the drinking water and high rates of cancer, leukemia, birth defects, and skin disease, denies that unusual health problems have been demonstrated—and, for added measure, denies that it bears responsibility for any environmental damage that might after all be found to exist. If Chevron can convince the court of the validity of even a few of those points, it will win the case and leave town.

Given the resources that Chevron has brought to bear, it seemed for a while that this indeed would happen—and for various reasons it may yet. But over the past two years there has been a change that, metaphorically, looks something like an inversion of Tiananmen Square, in which a lone man stands resolutely in front of a maneuvering tank, not to hold it off but to keep it from escaping. In Lago Agrio that lone man is a mestizo named Pablo Fajardo, aged 34, who was born into extreme poverty and toiled for years as a manual laborer in the forest and oil fields, yet managed by force of intellect to complete his secondary education in night school, and through a correspondence course to earn a degree in law. He became a lawyer only three years ago, in 2004, yet has assumed the lead in the suit against Chevron in this, his very first trial. Chevron is represented by lawyers from Ecuador's ruling class, an oligarchy whose women fondly sing "Y Viva España" at Quito garden parties. They may have assumed that they could run Fajardo over. No one makes that assumption now.

In Lago Agrio the men wear hats against the equatorial sky. The women carry umbrellas for the shade they provide. Even the Indians complain about the heat. On a sweltering morning, I went to Fajardo's threadbare quarters in a small house that serves primarily as a file room and office, but that has a space for sleeping, and a crude kitchen and bathroom, usually without running water. Fajardo was sitting at his desk studying a document in preparation for a scheduled argument before the judge. He wore an open-necked short-sleeved shirt, slacks, and street shoes. He was the only person in Lago Agrio who was not sweating. In this story, where so much is disputed, it is an observable fact that Fajardo never sweats, and furthermore that when he moves through the jungle in his tidy-lawyer clothes he does not get dirty or wet. I sat across the desk from him and asked if at first he had been intimidated by the case.

Kirkuk and ethnic conflict.

This city with its three-fold ethnic division is coveted by the Kurds who apparently already occupy the oil fields. While the Kurds may win a referendum there will be a huge disgruntled minority who will probably not accept the results.

Oil-rich Kirkuk at melting point as factions clash
By Patrick Cockburn in Kirkuk
Published: 22 March 2007
Seven bombs detonating in the space of 35 minutes sent up clouds of black smoke over the centre of Kirkuk earlier this week. The explosions in Arab and Turkoman districts killed 12 people and injured 39 but exactly who was behind them is unclear.

Kirkuk is a place where trust is in short supply. "I firmly predict there will be a rumour the Kurds were behind these bombings," sighs Rafat Hamarash, the head of the Patriotic Union of Kurdistan, the Kurdish political party that largely controls the city. He said somebody wanted to stir up ethnic divisions between Kurd, Arab and Turkoman before they vote on the future of Kirkuk in nine months' time. Mr Hamarash is probably right about the motives for the latest attacks. The city is approaching a critical moment in its long history. In December, there is a referendum, its timing agreed under the Iraqi constitution, when 1.8 million people of Kirkuk province will vote on whether or not to join the highly autonomous Kurdish region that is already almost a separate state. Kurds will vote in favour and probably win; Arabs and Turkomans will vote against and lose.

The Kirkuk issue is as notoriously divisive in Iraq as sovereignty over certain parts of Ireland used to be in British politics. Winston Churchill famously complained that, after all the political and military cataclysms of the First World War, the question of who should have "the dreary spires of Fermanagh and Tyrone", remained as ferociously contested as before the war.

The control of Kirkuk divided Kurds from Arabs in Iraq under Saddam Hussein and continues to do so. The city is commonly called "a powder keg" though it has yet to explode. But that does not mean it will not happen and the referendum might just be the detonator for that explosion.

The Kurds believe they were a majority in the city until ethnically cleansed by Saddam and replaced by Arab settlers. As the regime crumbled in April 2003, the Kurds captured Kirkuk and its oilfields. They have no plans to give them up.

In negotiations in Baghdad with Arab political parties, they fought for and won the right to take back Kirkuk constitutionally.

First comes "normalisation", to be concluded by the end of this month, whereby Arab settlers leave and Kurds return. After that there will be a census and, finally, before the end of 2007, a referendum on becoming part of the Kurdistan regional government.

It now looks as if the referendum will have to be postponed. No Kurdish leader I spoke to thinks it can take place on time. "Normalisation" has not really taken place, governments in Baghdad have persistently dragged their feet. The Shia religious parties may be allied to the Kurds in order to form a government but they fear political damage among their own followers if they are seen to be handing over Kirkuk to the Kurds.

For a city so coveted by Arabs and Kurds, Kirkuk is a dismal place, drearier than anything to be seen in Fermanagh or Tyrone. Its main street, with little booths selling shoddy goods, looks like an Afghan shanty town.

It has never benefited from its oil riches; Saddam deliberately neglected it. Rezgar Ali, the head of the local council, says Baghdad starves the city of money. At one point, he threatened to retaliate by stopping the supply of cement from local factories to Baghdad.

The Kurds may delay the referendum but not indefinitely. Kirkuk is too central to their national demands. Militarily they could overcome Arab resistance though they might have to cede certain areas. Whatever happens, the approach to the referendum is generating more violence.

A delicate ethnic balance

* Kurds in Kirkuk pre-date all other ethnic groups. Turkomans began arriving in the Ottoman era.

* Under British occupation in 1921, population about 61% Kurd, 28% Turkoman and 8% Arab.

* Official census in 1957 found 48.3% of residents to be Kurd, 28.2% Arab and 21.4% Turkoman.

* From 1963, Baathists sought to enforce Arab nationalism. By 1988 an estimated 200,000 Kurds had fled. Shia Turkoman villages were also destroyed.

* After the 1991 Gulf War ethnic cleansing intensified. In 1996 a law compelled all Kurds and other non-Arabs to register as "Arab", with expulsion for those who refused.

* Between 1991 and 2003, 120,000 to 200,000 non-Arabs were expelled from in and around Kirkuk.

* Arab and Turkoman politicians claim that around 350,000 Kurds have returned since 2003.

This is an interesting article but I am surprised at the lack of statistical evidence backing up the claim that the US is somehow in decline. Although no doubt economies such as that of China are growing faster than the US I suspect that the US is still dominant. It is in order to maintain that dominance that military force may be increasing. Also, there are some alternative fossil fuel sources such as the Alberta and other tar sands and there is at least some movement towards alternative energy sources that over time will lessen the importance of areas such as the mid-east where the US is heavily involved. The concentration on a military buildup also involves a type of military Keynesianism that helps keep the US economy growing and the military-industrial complex thriving. This is from the World Socialist Website.


The historic decline of the United States and the eruption of militarism
Part two
By Nick Beams
13 February 2007


The following is the second part of a report delivered by Nick Beams, national secretary of the Socialist Equality Party (Australia) and a member of the International Editorial Board of the World Socialist Web Site, to a meeting of the SEP membership from January 25 to January 27. 2007. The first part was published on February 12 and the remaining part will be published tomorrow, February 14.

Having lost its economic dominance, the US is increasingly resorting to the one area where it does enjoy overwhelming superiority—the use of military force—in order to maintain its hegemony.

It is upon this point that the plans of various critics for a “reform” of the Bush foreign policy founder.

Consider the editorial published in the Financial Times of January 12, 2007, under the title “Surge towards debacle in Iraq and MidEast.” The FT, which represents the interests of the City of London, but which would like to think of itself as the voice of reason, warned that the new policy, far from succeeding in fixing a traumatised Iraq “may end with the US ‘surging’ into Iran—and taking the Middle East to a new level of mayhem that will spill into nearby regions and western capitals.”

The editorial scathingly dismissed Bush’s rationale for the new offensive, dismissing his portrayal of Iraq as a “young democracy fighting for its life”. “The invasion has solidified a system divided into sects and operating on the basis of patronage and intimidation. The composition of the parliament is two-thirds Islamist. There are no institutions. Ministries are sectarian booty and factional bastions. The one institution that did more or less survive Saddam Hussein, the national army, was disbanded by the occupation and current attempts to reconstitute it have failed to move beyond rebadged militia.”

It concluded: “The only feasible way forward is the approach of the bipartisan Baker-Hamilton commission—which the new US Congress should embrace and insist on. This would make support for the Iraqi government and army conditional on their real effort to promote national reconciliation, which would in turn, as it progressed, be rewarded with billions of dollars in long-term aid from the US and Iraq’s neighbours. This external support—from Turkey to Saudi Arabia and Iran to Syria—would be built up within a wide-ranging diplomatic offensive in the region that would include Tehran and Damascus. Mr Bush is instead threatening to expand the war.”

Similar proposals have been made before. They all rest, in the final analysis, on the United States instituting some kind of Marshall Plan in the Middle East, involving the outlay of billions of dollars. But who would benefit from such a scheme? Above all, US rivals, including the old capitalist powers such as France and Germany, as well as the newly emerging ones such as China and even Russia. In the new “free market” Middle East, it would not be American firms that would benefit from the exploitation of the huge oil resources, but their competitors.

Moreover, as former national security adviser Brent Scowcroft noted in a recent article, a US retreat would have far-reaching global consequences. He emphasised that while the ISG report pointed to the “grave and deteriorating” situation in Iraq, it failed to advance a perspective beyond withdrawal of American forces. Such a withdrawal would represent a “strategic defeat for American interests, with potentially catastrophic consequences both in the region and beyond.”

“The effects would not be confined to Iraq and the Middle East. Energy resources and transit chokepoints vital to the global economy would be subjected to greatly increased risk. Terrorists and extremists elsewhere would be emboldened. And the perception worldwide would be that the American colossus had stumbled, was losing its nerve and could no longer be considered a reliable ally or friend—or the guarantor of peace and stability in this critical region.”

In other words, there are vital interests at stake, necessitating military action.


A new colonialism

Former US national security adviser Zbigniew Brzezinski is one of those in foreign policy circles who has been continuously critical of the Bush administration. He developed further criticisms of Bush’s State of the Union speech of January 10. Writing in the Washington Post of January 12, he concluded: “The speech reflects a profound misunderstanding of our era. America is acting like a colonial power in Iraq. But the age of colonialism is over. Waging a colonial war in the post-colonial age is self-defeating. That is the fatal flaw of Bush’s policy.”

Brzezinski is correct. Notwithstanding all the trials and tribulations and setbacks of the past 100 years—all the vicissitudes of the class struggle—the world in 2007 is a vastly different place than in 1907. It is characterised, as Brzezinski himself has noted on other occasions, by the intervention of the masses on a world scale.

But this only raises the question: why has the United States, which throughout its whole history has cast itself as an anti-colonial power, now undertaken the colonisation of Iraq?

Let us try to answer this question through a consideration of the origins and history of colonialism itself, especially the burst of colonisation that took place at the end of the nineteenth century and the first decades of the twentieth.

In the 1840s, the future British prime minister Disraeli referred to the colonies as “millstones around our neck”. This was the high point of British free trade. Britain had no need of a colonial empire because it had established a commercial empire based on free trade. By the last quarter of the nineteenth century, however, the situation had changed dramatically. Britain was now challenged by new powers—on the continent of Europe by Germany, as well as Italy and France, and in the West by the United States.

The basis of colonialism was exclusivism. Whichever great power took control of a colony was able to exclude all the others from its markets. This fear of exclusion, in turn, provoked a rush for colonies.

In the twentieth century, the United States entered the world arena under the banner of the “open door”—the breaking down of old empires and restrictions; the establishment of the free movement of goods and money. This policy reflected the economic superiority of the US over its rivals, just as the free trade agenda of Britain in the nineteenth century was an expression of the superiority of British industry.

Now, the US is confronted by economic rivals in every corner of the globe, as a series of recent reports confirm.

In February 2001, the Center for Strategic and International Studies (CSIS) produced a report entitled “The Geopolitics of Energy in the 21st century”. It was the product of a bipartisan committee that included former Senator Sam Nunn and former Secretary of Energy James Schlesinger.

The report noted that “the geopolitical risks attendant to energy availability are not likely to abate” and that, under these circumstances, “the United States, as the world’s only superpower, must accept its special responsibilities for preserving access to worldwide energy supply.”

The CSIS report concluded that world energy demand would increase by over 50 percent during the first two decades of the twenty-first century.

“The Persian Gulf will remain the key marginal supplier of oil to the world market, with Saudi Arabia in the unchallenged lead. Indeed, if estimates of future demand are reasonably correct, the Persian Gulf must expand oil production by almost 80 percent during 2000-2020, achievable perhaps if foreign investment is allowed to participate and if Iran and Iraq are free of sanctions.”

The report underlined the contradiction between this demand and Washington’s policies.

“Oil and gas exports from Iran, Iraq, and Libya—three nations that have had sanctions imposed by the United States or international organizations—are expected to play an increasingly important role in meeting growing global demand, especially to avoid increasing competition for energy with and within Asia. Where the United States imposes unilateral sanctions (Iran and Libya), investments will take place without US participation. Iraq, subjected to multilateral sanctions, may be constrained from building in a timely way the infrastructure necessary to meet the upward curve in energy demand. If global oil demand estimated for 2020 is reasonably correct and is to be satisfied, these three exporters should by then be producing at their full potential if other supplies have not been developed.”

In other words, ending the embargo imposed on Iraq was critical if the energy demands of US capitalism were to be met and if the US was to remain in control of global supplies. But there was a problem here. Simply to lift the embargo would benefit US rivals.

This issue, as we now know, was under active discussion in Cheney’s office from the spring of 2001. Among the documents being studied was a two-page chart entitled “Foreign Suitors for Iraqi Oilfields”. It identified 63 oil companies from 30 countries and specified which Iraqi field each of them was interested in. Baghdad had “agreed in principle” with the plan by French company Total Elf Aquitaine to develop the rich 25-billion-barrel Majnoon oil field. Prior to the US invasion in March 2003, foreign oil companies were nicely positioned for future investment in Iraq, while the major US companies were largely out of the picture. US firms would have been the big losers if sanctions had simply been lifted. As a report by Germany’s Deutsche Bank noted in October 2002: “The US majors stand to lose if Saddam makes a deal with the UN (on lifting sanctions).”

The US faced a dilemma. Lifting the sanctions would hand over the rebuilding project to Moscow and Paris. The only way to cut the Gordion knot was to implement “regime change” in Iraq and the setting up of a colonial regime, based on the exclusion of US rivals.


Energy supplies and US foreign policy

During the past five years, the position of the US has only worsened, as a study prepared by the Council on Foreign Relations and published in 2006 makes clear. In its report, the CFR panel, also co-chaired by Schlesinger, sets out the problem as follows: “The lack of sustained attention to energy issues is undercutting US foreign policy and US national security. Major energy suppliers—from Russia to Iran to Venezuela—have been increasingly able and willing to use their energy resources to pursue their strategic and political objectives.”

The report insisted that the US had not only to coordinate energy issues, but to integrate them into its foreign policy.

One of the problems the CFR panel identified was the role of China in oil rich countries and its attempts to “lock up” particular supplies for the Chinese market. In addition, some governments “use revenues from hydrocarbon sales for political purposes that harm US interests. Because of these realities, an active public policy is needed to correct these market failures that harm US economic and national security. The market will not automatically deliver the best outcome.”

The report said the high price of oil and its impact on the US economy, as well as the impact of the build-up of petro dollar surpluses on US capital markets, were not the only causes for concern.

“Our concern is not primarily with the economic consequences of this adjustment process but rather with the reduced freedom of action and influence for the United States in the conduct of its foreign affairs. In addition to constraining US action, the revenues and dependencies in the world oil market empower oil-rich countries—such as Iran and Venezuela—to carry out foreign policies that are hostile to that of the United States.”

Oil, the report said, was not going to run out in the immediate future but “supply is expected to continue to concentrate in the Persian Gulf, which holds the world’s largest geologically attractive reserves, and is a region that has been unstable and includes countries that have periodically used their oil exports for political purposes unfriendly to the United States.”

The report sums up the problems confronting the US as follows:

“ ... the control of enormous oil revenues gives exporting countries the flexibility to adopt policies that oppose US interests and values. Iran proceeds with a program that appears to be headed towards acquiring a nuclear weapons capability. Russia is able to ignore Western attitudes as it has moved to authoritarian policies in part because huge revenues from oil and gas exports are able to finance that style of government. Venezuela has the resources from its oil exports to invite realignment in Latin American political relationships and to fund changes such as Argentina’s exit from its International Monetary Fund (IMF) standby agreement and Bolivia’s recent decision to nationalize oil and gas resources. Because of their oil wealth, these and other producer countries are free to ignore US policies and pursue interests inimical to our national security.”

Furthermore, oil dependence caused political realignments that impinged on the ability of the US to form partnerships with others to achieve common objectives.

“Perhaps the most pervasive effect arises as countries dependent on imports subtly modify their policies to be more congenial to suppliers. For example, China is aligning its relationships in the Middle East (e.g., Iran and Saudi Arabia) and Africa (e.g., Nigeria and Sudan) because of its desire to secure oil supplies. France and Germany, and with them much of the European Union, are more reluctant to confront difficult issues with Russia and Iran because of their dependence on imported oil and gas as well as the desire to pursue business opportunities in those countries.

“These new realignments have further diminished US leverage, particularly in the Middle East and Central Asia. For example, Chinese interest in securing oil and gas supplies challenges US influence in central Asia, notably in Kazakhstan. And Russia’s influence is likely to grow as it exports oil and (within perhaps a decade) large amounts of natural gas to Japan and China.”

What a picture this adds up to: everywhere in the world—Latin America, Central Asia, the Far East, Europe, the Middle East—the influence of the US, either directly or indirectly, is on the decline and is being jeopardised either by the oil producers or by rising powers such as China.

And even this stark picture was not drawn sharply enough for two of the participants in the team of experts that prepared the report. They presented an additional view, declaring that while they subscribed to the report’s analysis and recommendations they found that it “understates the gravity of the threat that energy dependence poses to US national security.”

“Energy is a central challenge to US foreign policy, not simply one of many challenges. Global dependence on oil is rapidly eroding US power and influence because oil is a strategic commodity largely controlled by regressive governments and a cartel that raises prices and multiplies the rents that flow to oil producers. These rents have enriched and emboldened Iran, enabled President Vladimir Putin to undermine Russia’s democracy, entrenched regressive autocrats in Africa, forestalled action against genocide in Sudan, and facilitated Venezuela’s campaign against free trade in the Americas.”

Here we have presented a graphic account of the decline in the global position of the United States, under conditions where it confronts rivals and potential enemies on all fronts—in the sphere of economy, of politics and even militarily.

In order to retain its global dominance, the US is turning to military measures. But the use of such measures is increasingly incompatible with the forms of bourgeois democracy that prevailed in the past.

In the 1930s, Trotsky made the point that the maintenance of democratic forms in the US and Britain, as opposed to the emergence of right-wing authoritarian and fascist regimes in Germany, Italy and across Europe, had nothing to do with the democratic proclivities of the American and British ruling classes. In England, democracy rested on the resources amassed by the ruling elite from its plunder of the empire, while in America it rested on the resources derived from the exploitation of a whole continent.

At the beginning of the twenty-first century, the situation is very different. The institutions of bourgeois democracy are now being stretched to the limit.

To be continued

Venezuela will move to nationalise oil

I wonder what would happen if Bush faced a recall vote! It will be interesting to see what will happen with respect to international oil companies' remaining shares in oil. Perhaps they will stay in a minority position. There is no mention of what if any compensation will be given if the oil fields are appropriated.

Venezuela's Chavez Sets Oil Fields Takeover for May; Says Bush Should Resign

Saturday, Feb 03, 2007 Print format
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By: Liza Figueroa-Clark – Venezuelanalysis.com



President Chavez signs the enabling law, which will allow him to pass laws by decree for the next 18 months.
Credit: ABN

Caracas, February 2, 2007 (venezuelanalysis.com)— Venezuelan President Hugo Chavez announced the government’s planned takeover of the Orinoco belt oil fields, and the re-nationalization of the electricity sector at an international press conference yesterday. He also responded to U.S. President George W. Bush’s “concerns” over Venezuelan democracy.

Oil fields takeover

In front of the assembled audience of foreign correspondents, President Chavez signed the Enabling Law, passed by the National Assembly Wednesday. The law will allow Chavez to pass laws by decree in eleven different areas for a period of 18 months.

At the news conference, Chavez outlined plans for Venezuela 's state oil company Petróleos de Venezuela SA (PDVSA) to become the majority stakeholder in four projects in the Orinoco belt oil fields, with a minimum stake of 60%.

The Venezuelan Head of State expressed his hope that the five foreign firms operating in the Orinoco Oil Belt, which include Exxon Mobil, Chevron Corp., British Petroleum PLC, Total SA and Statoil ASA, would remain as minority partners.

"I'm sure that they [the foreign companies] are going to accept because we are going to continue being partners, but if they aren't in agreement, they are totally free to leave," he said.

However, Chavez expressed hope that “these companies cooperate. We are not causing any conflict. We want to negotiate… but I have given instructions that on May 1 all those fields should awake under our control.”
The Minister for Energy and Mines, Rafael Ramírez, who has been quoted as saying the oil fields will be seized if no agreement is reached with the international oil companies, announced, “We are going to take control as of May 1,” and explained that definitive agreements could be signed at a later date.

Chavez told the press conference that the 3 to 4 thousand workers who are currently employed by the companies operating in the Orinoco Oil Belt will become part of PDVSA once the nationalization scheme is specified, and said that they will have “all the rights and obligations of a [PDVSA] worker.”

Speaking from Miraflores Palace, Chavez explained that the nationalization process would be regulated through a law included in the Enabling Law and noted that “all the laws are aimed at national development, through the eleven areas indicated here.”

Under article 74 of the Constitution, all laws are susceptible to being annulled by popular referendum.

Chavez also said pointed out that nationalizations would always be limited “to strategic areas,” in an attempt to assuage those who fear moves to expropriate private companies.

Electricity sector nationalization

President Chavez also took the opportunity to announce that as part of the government’s recently announced nationalization plan for the energy sector, six electricity companies will be turned over to State ownership.

“The nationalization of the electrical sector is one of the first laws to be approved [because] it is a necessity, not a whim. One of the priorities is the nationalization of the electricity sector. It was a monumental mistake to have privatized it,” Chavez declared.

In January, Chavez announced a plan to nationalize strategic companies in the telecommunications, electricity, and oil sectors, in what he called a first step to deepen the socialist revolution.

The measure to nationalize the electricity sector will involve Electricidad de Caracas (EDC) and its subsidiaries in four states. “All of this will be nationalized,” Chavez said.

Chavez asserted that 87% of EDC workers, who own 1% of the company’s shares would maintain their stake, but added, “if they want to sell, they will be compensated.”

"The nationalization measure requires the enactment of a specific law and the modification of the present electricity sector law,” Chavez stated, adding that the reform to the electricity service law would, in turn, require the go ahead from the Venezuelan Supreme Court of Justice (TSJ).

Chavez will decree the new nationalization law and reform other laws in a package of legal measures that must be approved over the next 18 months while he has special powers to legislate.

Chavez’s Response to Bush

During the press conference, Chavez also personally responded to remarks made earlier this week by George W. Bush and recently designated deputy Secretary of State, John Negroponte. The pair had raised concerns over Venezuela’s democracy, with Negroponte calling President Chavez “a threat to democracy.”

The Venezuelan leader condemned the U.S. war in Iraq and said that Bush and Negroponte, a former director of national intelligence, should be tried for "war crimes" committed by the U.S. military across the globe.

“The two of them are criminals. They should be tried and thrown in prison for the rest of their days,” Chavez told his audience.


The Venezuelan Head of State called on Bush to resign saying, “If he had any dignity, the president of the United States would quit. The U.S. president no longer has any political or moral capacity to govern,” he stated.

“If only the United States had a democracy like Venezuela’s. If only the people of the United States had the power to call a recall referendum,” Chavez lamented, adding, “he would be voted out of the United States’ government right away.”


“This Constitution is the broadest and the most profoundly democratic in the world, and I have no doubts about that […] this Constitution allows the people to annul laws. I would ask that this be noted,” Chavez said.

The Venezuelan constitution, passed into law by referendum in December 1999, emphasizes participation at all levels and incorporates a series of articles that enable ordinary citizens to have a direct influence over public affairs. Crucially, article 72 states that ‘all elected posts’, from the president down, can be subjected to a recall referendum after officials reach the midway point of their term in office.


In August 2004, a recall referendum on Chavez’s mandate took place, which Chavez won with 59.1% of the vote.