PANDEMONIUM  OIL  WAR  WATCH 

NEW YORK TIMES 

Oil Higher as U.S. Presses Iraq

Filed at 7:32 a.m. ET

LONDON (Reuters) - Oil prices ticked higher on Monday as top U.N. weapons inspectors spent a second day in Iraq and the United States said time was running out for Baghdad to prove compliance with disarmament resolutions.

London Brent blend in early trade added 19 cents to $30.73 a barrel. U.S. crude, closed on Monday for Martin Luther King day, set a new two-year high of $34 a barrel on Friday.

Washington on Sunday issued one of its clearest warnings yet to Iraqi President Saddam Hussein that non-cooperation with U.N. inspectors could be deemed a trigger for a war in the absence of a ``smoking gun,'' or hard evidence of weapons of mass destruction -- and that a decision could be just weeks away.

``The test is, is Saddam Hussein cooperating?'' said Defense Secretary Donald Rumsfeld on weekend television. ``He's not doing that.''

Rumsfeld, presiding over a huge U.S. military build-up of warplanes, ships and tens of thousands of troops in the oil-rich Gulf region, said a final conclusion on Iraqi cooperation could be made ``in a matter of weeks, not in months or years.''

``Of course Rumsfeld is a hawk, but if the test of compliance is cooperation then clearly Saddam is not cooperating,'' said oil broker Nauman Barakat of Fimat International Banque.

Chief U.N. weapons inspector Hans Blix and Mohammad ElBaradei, head of the U.N. nuclear watchdog, say there are big gaps in Baghdad's arms declarations, and are demanding quick answers before they report to the Security Council on January 27 on Iraqi compliance.

``I think (the Iraqis) have said that there are still certain areas they are ready to provide more information. I think that in other areas they said they are ready to reconsider their position,'' ElBaradei said in an interview with Reuters.

``What we tried to do today at this meeting is to impress on the Iraqi authorities that the time is running out.''

U.S. national security adviser Condoleezza Rice, on U.S. weekend television, said: ``Clearly the 27th is an important date ... (It) probably marks the start of a last phase of determining whether the Iraqis have fully complied.''

EXILE

From Beirut, a special envoy of Saddam's dismissed talk of the Iraqi president going into exile.

``As we have said before, we reiterate now that this is merely nonsense and one of the tactics of psychological warfare,'' said Ali Hassan al-Majeed, a member of the Revolutionary Command Council and a cousin of Saddam.

Rumsfeld said he hoped Saddam would choose exile, but he was unsure of the prospect. ``There is at least a possibility,'' he said. ``His neighboring states are in a process now of trying to avoid a conflict there by having him leave the country.''

Saddam remained defiant.

``After putting our faith in God, victory is absolutely assured. We don't see it on the horizon, rather it is in our grasp and inside our chests,'' he told a group of army officers.

Oil traders said Venezuela's general strike, now in its seventh week, also was keeping the heat under crude prices.

Venezuelan President Hugo Chavez said on Sunday he was ``winning the oil war,'' restoring crude flows and restarting ports and refineries. He said oil output which fell to 500,000 barrels per day this month was now at 1.2 million bpd, versus three million bpd normally.

Striking oil workers said that production was only half the volume given by Chavez.

Leading OPEC producer Saudi Arabia is moving to fill the gap by raising output by between 500,000 and one million barrels a day, industry sources said.

Riyadh is opening up the taps and by February could be pumping nine million bpd, the industry sources said on Sunday from eight million recently.

``The Saudis are cranking it up. The message is that there is a big increase on the way,'' said one senior Western oil
executive.
http://www.nytimes.com/reuters/business/business-markets-
oil.html 

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Venezuela Oil Chief Urges End to Strike

Filed at 10:32 a.m. ET

CARACAS, Venezuela (AP) -- The president of Venezuela's oil monopoly urged striking workers to return to the job Monday, saying their bid to oust President Hugo Chavez was hurting the country and would fail.

Former President Jimmy Carter, meanwhile, planned to attend negotiations between the government and opposition leaders Monday to try to help resolve the crisis.

The countrywide strike, which began Dec. 2, has severely disrupted the oil industry, which provides half of government revenue for Venezuela. About 35,000 oil workers have joined the strike, and Chavez has fired more than 1,000.

``I urge you as citizens, appealing to whatever reserves of rationality there may be, to stop these activities, stop this campaign that affects the whole country,'' Ali Rodriguez, president of Petroleos de Venezuela S.A, said on state television station Venezolana de Television.

``The objectives you have set are unreachable,'' said Rodriguez, who was appointed by Chavez and is one of his chief allies.

Production is down to 800,000 barrels a day, according to the government, though opposition leaders put the figure at 400,000. Venezuela is the world's fifth-largest petroleum-exporting nation and produced 3 million barrels a day before the strike.

Chavez has the support of Venezuela's military and has sent troops to seize striking oil tankers, keep strikers out of oil installations, and commandeer gasoline delivery trucks.

In his weekly television call-in show Sunday, Chavez warned the government could walk out of negotiations with strike leaders, accusing them of using unconstitutional means to seek his ouster.

``We are carefully evaluating the possibility that our representatives will leave the (negotiating) table,'' Chavez said. ``We don't talk with terrorists.''

Negotiations sponsored by the Organization of American States began in November but have failed to resolve the situation. Six countries -- Brazil, Chile, Mexico, Portugal, Spain and the United States -- have begun an initiative called ``Friends of Venezuela'' to help the talks.

Carter, who won the Nobel Peace Prize in October, arrived in Venezuela on Wednesday for a fishing trip with Venezuelan businessman Gustavo Cisneros. He was to meet with Chavez and Cesar Gaviria, the secretary-general of the Organization of American States. Carter's Atlanta-based Carter Center is also sponsoring talks.

Chavez was elected to office in 1998 and re-elected in 2000 on promises to redistribute the country's vast oil wealth among the poor majority.

His opponents say his leftist policies have driven the country toward economic ruin, citing 17 percent unemployment and 30 percent inflation. They also say his autocratic style erodes democratic institutions.

Political parties, business leaders and labor unions called the general strike to pressure Chavez to resign or call early elections if he loses a Feb. 2 referendum on his rule, which election authorities agreed to organize after accepting an opposition petition.

Chavez says opponents must wait until a possible recall referendum midway through his six-year term, or August. A Supreme Court ruling on the matter is pending. 
http://www.nytimes.com/aponline/international/AP-Venezuela-
Strike.html
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Venezuelan Is Unyielding, Warning Businessmen

ARACAS, Venezuela, Jan. 19 — Despite mounting international pressure to resolve the political conflict that has pushed this country to the brink of anarchy, President Hugo Chávez hardened his public stand against his opponents today.

In appearances throughout the weekend, Mr. Chávez hinted that he would use military force if necessary to break a strike, now entering its eighth week, that has crippled most of the formal economy and caused shortages of food and fuel. Today, he appointed two loyal military officers to top security posts and threatened new raids on businesses he accused of hoarding essential goods.

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Mr. Chávez stirred international outrage late last week when he ordered national guard troops to seize private warehouses full of soft drinks, beer and bottled water, charging that the companies, including a Coca-Cola bottling affiliate and Venezuela's largest food corporation, with holding back food staples to support the strike.

Officials for the companies, however, responded that they had shut down operations after the strike started because of fuel shortages and security concerns.

In his weekly television appearance today, Mr. Chávez said he might intervene again. "Some businessmen have reflected and have started to open their factories," he said. "Those who refuse, who resist, well, be sure that today, tomorrow, or after we will raid your warehouses and stockpiles."

His comments came as new rounds of negotiations were to begin Monday between Mr. Chávez and a coalition of business people, union leaders and civic groups that began the strike in an effort to force the president from office. They accuse him of being an authoritarian leader who has undermined the country's four decades of democracy. They have vowed to keep up the strike until he agrees to call elections.

The strike has shut down most oil wells and refineries in Venezuela, the world's fifth largest exporter, cutting off supplies.

Negotiations overseen by the secretary general of the Organization of American States, César Gaviria, have dragged on since November. Last week, Mr. Gaviria's work was reinforced by the formation of a so-called group of friendly countries, including the United States, Mexico, Chile, Brazil, Spain and Portugal. On Monday, former President Jimmy Carter is scheduled to meet with Mr. Chávez and opposition leaders.

Mr. Carter reportedly spent this weekend on a fishing trip with Venezuela's most powerful businessman, Gustavo A. Cisneros, considered a key figure in the opposition against Mr. Chávez.

Mr. Chávez has denounced the opposition as "oligarchs" and "coup plotters." In his television broadcast today, he appointed Gen. Lucas Rincón, a former defense minister and former armed forces chief, as interior minister. He also appointed Gen. Jorge García Carneiro as the new chief of the army — the most powerful branch of the armed forces — replacing Gen. Julio García, who had held the post since an unsuccessful coup against Mr. Chávez in April.

Both generals are close allies of Mr. Chávez, himself a former lieutenant colonel.