Oil, a Hot Issue at South Summit

By Patricia Grogg, IPS, 13 April 2000

HAVANA, Apr 13 (IPS) - The presence of delegations from the members of the Organisation of Petroleum Exporting Countries (OPEC) at this week's South Summit of Third World nations in Havana, and the still oil high prices, have made the question of oil a focus of the gathering.

A number of heads of state and government have held bilateral meetings, in which the question of oil has inevitably cropped up, according to diplomats following the sessions that continued behind closed doors Thursday.

Cuban President Fidel Castro said Wednesday at the inauguration of the three-day Group of 77 (G-77) meeting of heads of state and government that oil is such a vital product of universal need that it should not be left to market forces.

Castro, whose country is a net importer of oil, proposed a system of price scales, according to which poor countries would pay less for oil imports. Venezuelan President Hugo Chavez, meanwhile, offered to put his country's abundant oil at the service of the developing South.

The initial reactions by the rest of the oil producer countries to Castro's suggestion ranged from outright rejection to evasive responses. The market sets the prices, said the representative of one Middle East oil exporter nation.

Mexican Foreign Secretary Rosario Green commented that her country was not interested in high oil prices, but in a stable market. With the latest decisions by OPEC, the market has been stabilised, she said.

OPEC members and non-OPEC oil exporters like Mexico agreed in 1999 to cut production in order to shore up prices, which had hit rock bottom. Now they are preparing to increase production, which will pull prices down from peak highs, as the United States has been urging for the past few months.

The great energy and oil potential of Venezuela, one of the world's leading exporters of crude, is one of the instruments that will be put at the disposition of the developing South, said Chavez.

Chavez, the only Latin American president attending the South Summit, met Thursday with Algerian President Abdelaziz Bouteflika, as well as representatives of Iran and Nigeria.

Members of the Venezuelan delegation denied, however, that Caracas was trying to organise a mini OPEC summit in Havana.

OPEC members Venezuela, Algeria, Iran, Nigeria, Saudi Arabia, Kuwait, Iraq, Indonesia, Libya, United Arab Emirates and Qatar have all sent delegations to the first summit held by the G-77 since the alliance of developing nations was created in 1967.

Chavez invited the heads of state and government of the 11 OPEC members to meet Sep 28-30 in Caracas at the second summit the cartel will hold since its founding in the 1960s.

The president, who took office in February 1999, has closely stuck to OPEC's decision on cutbacks, and criticised his predecessors for their weak commitment to the oil syndicate and for following what he has called mistaken oil policies.

Two weeks ago OPEC agreed to ease up on production cutbacks to keep prices in the 22 to 28 dollar a barrel range, aimed at market stability.

On Thursday, Castro set forth his proposal of price scales for oil, and said the San Jose Pact was a good example of what can and should be done.

Through that agreement, Venezuela and Mexico supply cheap oil to 11 small Central American and Caribbean nations.

Chavez told the press in Cuba that his country was willing to expand the mechanism beyond the current 11 beneficiaries, and to even set up a similar instrument if Mexico is not interested in admitting new members to the San Jose pact.

He pointed to the agreements on oil that Venezuela has signed with Cuba, Ecuador and the Dominican Republic.

We are willing to create bartering mechanisms with nations in our area. Where there's a will, there's a way, announced the president, after meeting with the president of the Palestine National Authority, Yasser Arafat.

Castro said that while high prices benefited exporters and were easily paid by rich countries, they were destructive for the economies of many nations of the South.

Differentiated treatment for countries in unequal conditions of development would be a fair and indispensable principle, he maintained.

Cuba has been in the grip of a severe economic crisis since the late 1980s, in the wake of the collapse of the Soviet Union and the disappearance of the east European socialist bloc.

The Caribbean island nation depended heavily on its close trade ties with the socialist bloc, which sold it cheap oil and purchased Cuban sugar and other products at preferential prices.