Hugo Chavez Interview

By Greg Palast

"In my interview with the president of Venezuela on March 28, he made Bush the following astonishing offer: Chavez would drop the price of oil to $50 a barrel, "not too high, a fair price," he said -- a third less than the $75 a barrel for oil recently posted on the spot market. That would bring down the price at the pump by about a buck, from $3 to $2 a gallon.

Venezuela, Chavez told me, has more oil than Saudi Arabia. A nutty boast? Not by a long shot. In fact, his surprising claim comes from a most surprising source: the U.S. Department of Energy. In an internal report, the DOE estimates that Venezuela has five times the Saudis' reserves. However, most of Venezuela's mega- horde of crude is in the More...form of "extra-heavy" oil -- liquid asphalt -- which is ghastly expensive to pull up and refine. Oil has to sell above $30 a barrel to make the investment in extra-heavy oil worthwhile. A big dip in oil's price -- and, after all, oil cost only $18 a barrel six years ago -- would bankrupt heavy-oil investors. Hence Chavez's offer: Drop the price to $50 -- and keep it there. That would guarantee Venezuela's investment in heavy oil.

But the ascendance of Venezuela within OPEC necessarily means the decline of the power of the House of Saud. And the Bush family wouldn't like that one bit. It comes down to "petro-dollars."

The Gulf potentates understand that in return for lending the U.S. Treasury the cash to fund George Bush's $2 trillion rise in the nation's debt, they receive protection in return. They lend us petro- dollars, we lend them the 82nd Airborne.

Chavez would put an end to all that. He'll sell us oil relatively cheaply -- but intends to keep the petro- dollars in Latin America. Recently, Chavez withdrew $20 billion from the U.S. Federal Reserve and, at the same time, lent or committed a like sum to Argentina, Ecuador, and other Latin American nations.

Chavez, notes The Wall Street Journal, has become a "tropical IMF." And indeed, as the Venezuelan president told me, he wants to abolish the Washington-based International Monetary Fund, with its brutal free- market diktats, and replace it with an "International Humanitarian Fund," an IHF, or more accurately, an International Hugo Fund. In addition, Chavez wants OPEC to officially recognize Venezuela as the cartel's reserve leader, which neither the Saudis nor Bush will take kindly to."