West failed to recognise the star who revived OPEC

The crisis over petrol prices is almost entirely due to the myopia of governments and markets over the past 18 months in failing…

The crisis over petrol prices is almost entirely due to the myopia of governments and markets over the past 18 months in failing to recognise the emergence of a new star in the global political firmament. The youthful Hugo Chavez, aged 46, elected president of Venezuela in December 1998, is the principal figure behind the price rise.

Last year he single-handedly revived the moribund Organisation of Petroleum Exporting Countries (OPEC) by calling for and securing a cut in oil production. This year he has single-mindedly persuaded its members to stand firm in defence of a reasonable price.

He recently toured all the OPEC states and sought agreement on an optimum price of $25 a barrel. He will host a great jamboree of OPEC presidents in Caracas at the end of the month.

This man means business. The West has had plenty of warning of what he has been up to, and where he is coming from. But, blinded by the arrogance of globalisation, it has taken no steps to prepare for the dramatic developments of recent days.


Although OPEC has usually appeared to Western eyes as an organisation dominated by Arabs, it was actually conceived and founded by Venezuela. In the 1990s, when Venezuela was ruled by unpopular governments that signed up to the dominant strand of neo-liberalism which spread like a plague across the whole of South America, OPEC was abandoned and ignored.

Venezuela was one of the great cheaters of the organisation, ignoring the quotas and bringing in foreign companies to help increase production. When the world oil price dropped below $10 a barrel the West fondly imagined that the exporting countries were permanently defeated and that this low price would be the established pattern of the future.

Col Chavez - for he was originally a military officer - had other ideas. Petroleos de Venezuela, the state oil company nationalised in 1975, is the country's chief source of wealth. Col Chavez needed a steady and larger flow of income from the oil wells to finance his ambitious plans to transform the country and to satisfy his voters in the poorest section of society.

He was well aware that his radical rhetoric, avowedly hostile to what he describes as "savage neo-liberalism" imposed on Latin America by the US, would do him no favours with nervous foreign investors. He decided to play the oil card.

At an OPEC meeting in March 1999 his oil minister, Mr Ali Rodriguez Araque, was instructed to announce that Venezuela would in future respect the cutbacks in production already agreed, and would support a further cutback of 4 per cent. It was "a change of 180 degrees" in the policy of previous governments, Col Chavez proudly announced. Mr Rodriguez is now OPEC's president, and the oil price has risen from $10 to over $30 a barrel.

Although the Latin American military are usually remembered for the right-wing dictators whom they spawn, Col Chavez belongs to another tradition, that of radical junior officers in touch with the raw conscripts, whose revolutionary politics are fuelled by anger at the degenerate state of the nation.

Col Chavez is also an heir to a civilian tradition of rebellion in Latin America, that of the left-wing guerrillas of the 1960s inspired by Fidel Castro and Che Guevara. Some of his advisers were once associated with a Chinese-oriented split from the Venezuelan Communist Party which went on to make lasting contacts with radicals in the Arab world in the 1970s.

Ali Rodriguez himself was a guerrilla in the 1960s, before becoming a labour lawyer and an oil expert for one of the smaller radical parties. One member of that generation, Ilich Ramirez Sanchez, aka Carlos the Jackal, famous among other things for an armed attack on OPEC headquarters in Vienna in December 1975, now languishes in a French jail.

Col Chavez is a good friend of President Fidel Castro and a frequent visitor to Cuba, and his ambitions are as grandiose as those of the Cuban leader. He hopes that his reconstruction of OPEC will help him to forge a new "Bolivarian" alliance in Latin America that will fulfil the dreams of Simon Bolivar, the South American liberator of the 19th century, who sought continental unity against the outside world.

Yet Col Chavez is no populist demagogue. He seeks a fair price for OPEC oil, not an exorbitant one. This would mean price stabilisation, as OPEC has reiterated throughout the summer, in a band between $22 and $28 a barrel.

This week's OPEC decision to increase production by 3 per cent might just allow that to happen eventually, but no amount of pressure from Tony Blair or Bill Clinton on individual countries is likely to break the fresh sense of purpose which Col Chavez has infused into the organisation.

In the Shadow of the Liberator: Hugo Chavez and the Transformation of Venezuela by Richard Gott is published by Verso