by Greg Palast
It’s a whole lot cheaper than starting a war, and I don’t think any oil shipments will stop. This is a dangerous enemy to our South controlling a huge pool of oil that could hurt us very badly…. We don’t need another $200 billionwar…. It’s a whole lot easier to have some of the covert operatives do the job and then get it over with.
When I met with President Chávez in Caracas, in April 2002, he offered to write the introduction to the Spanish translation of my last book. I’m not crazy about politicians endorsing journalists, but I agreed on condition he meet the deadline: He’d have to write it before he’s dead.
Chávez wasn’t overly concerned. “It’s a game of chess, Mr. Palast. And I’m a very good chess player.”
He’s more than that. He is, as Robertson says, a dangerous man. But dangerous to whom?
Mr. Beale, the Arabs have taken billions of dollars out of this country, and now they must put it back. It is ebb and flow, tidal gravity.
In October 2005, Hugo Chávez defied gravity and withdrew $20 billion of Venezuela’s petro-dollars from the United States Federal Reserve and deposited the money in an account with the International Bank of Settlements for investment in Latin America.
There is no Third World, there are no nations, Mr. Beale, there is only IBM and Exxon.
Maybe. At the beginning of 2001, Venezuela instituted a new “Law of Hydrocarbons.” Henceforth, Exxon, British Petroleum and Shell Oil, the major oil extractors in Venezuela, would get to keep only 70% of the sales revenues from the Venezuelan crude they sold. The oil majors had grown accustomed to their usual take—84%. The reaction to the reduction in Big Oil’s share of the Venezuelan pie was swift. Otto Reich, Assistant Secretary of State for Western Hemispheric Affairs, met with Venezuelan “dissident” billionaires and shortly thereafter, on April 11, 2002, Chávez was kidnapped. The President of Venezuela’s Chamber of Commerce, an oil industry lawyer, declared himself President of the nation—giving a whole new meaning to the term “corporate takeover.” The coup d’état against the elected president, Chávez, was endorsed by The New York Times.
On April 12, banking and oil industry chiefs held an inaugural party in Venezuela’s Presidential Palace. The U.S. Ambassador rushed down to have his picture taken with his arms around the partying coup leaders. But within twenty-four hours, the party was over. I learned later that Chávez, geopolitical grandmaster, had expected the coup and planted commandoes inside secret passages of the Presidential Palace. When informed that Chávez had secretly moved his knights into kill position, the partygoers took off their custom-made Presidential sashes and costumes and returned the real President to his desk, without bloodshed, within 48 hours of his capture. The Times apologized.
But not the White House. Bush’s spokesman conceded Chávez “was democratically elected,” but, he added, “legitimacy is something that is conferred not just by a majority of the voters.” I see.
Chávez was just warming up. Exxon had begun tapping into Venezuela’s heavy tar oils in the Orinoco Basin. Despite rising oil prices, Exxon figured the government should be satisfied with a 1% tax on the profits. Chávez changed that to a 16.6% tax.
Shell Oil and other foreign extractors had made a habit of not paying taxes on their oil windfalls. Shell, when handed the back-tax bill, balked and was surprised to find itself, in 2005, bounced out of a lucrative natural gas project. Chávez redirected the gas, meant for export, back to Venezuela’s own consumers.
Venezuela has landless citizens by the millions. It also has unused land by the millions of acres locked up in fallow plantations on which a tiny elite had squatted for four centuries. In 2001, a new law required selling untilled land to the landless. It was a program long promised by Venezuelan politicians at the urging of John F. Kennedy as part of his Alliance for Progress. Progress waited for Chávez.
Heinz Ketchup’s Venezuela division didn’t like the new terms for doing business and shut its plant in the state of Maturin. Venezuela seized the multinational’s property and put the workers back to work.
Pat Robertson was not the first to suggest terminating Chávez with prejudice. In response to previous threats, the very good chess player instituted a kind of “assassination tax” on U.S. oil companies. Every time a new plot to shoot the President was foiled, Chávez’s tax authorities would send another bill for those “back taxes.” Shell was hit with a new $130 million tax bill and got the point. In June 2004, neo-con Otto Reich, friend of the coup plotters, was dis-employed by the U.S. State Department.
And what does Chávez do with Shell Oil’s tax money?
In Caracas, I met with a reporter for the TV station whose owner is generally credited with having backed the failed 2002 coup. She pointed to the “ranchos,” the slums, above Caracas where shacks, most made of cardboard and tin, were quickly transforming into homes of cinder blocks and cement. “He gives them bread and bricks, so they vote for him, of course.” She was disgusted. By “them,” she meant the 80% of Venezuela that is “negro e indio” (Black and Indian). This poor, dark 80% had, until Chávez ran for President, left the running of government, and the spending of the nation’s wealth, to the minority white 20%.
The bread and bricks, and jobs and new health clinics, are intimately tied to the “ebb and flow” of capital; and now Chávez was standing in its way. In early 2003, his government overturned the keystone of borderless globalization and imposed controls on the movement of capital. The Wall Street Journal reported, with surprise, that instead of economic doom:
…the controls trapped liquidity within the economy, which in part led to reduced interest rates and helped boost economic activity.
Lots of economic activity. In 2005, their economy grew by 9.4%, the highest in the Western Hemisphere, following a blazing 17.9% in 2004, with the biggest boosts occurring in the non-oil sector. Government services for health, education and food subsidies didn’t drain the economy, as “flat world” globalizers predicted, but added to economic demand and productivity.
Chávez then waded further into the rushing flow of international finance to build another economic dam. His backers in Venezuela’s Congress voted to require all private banks to dedicate 20% of their lending portfolio to “micro-loans” for small businesses and small-plot farmers. As a result, a large portion of the oil wealth in Venezuela would have to stay there, barred from flowing northward as is the custom with petro-dollars. Most important, 20% of the working class’s savings would be channeled back to it rather than rising upward to fund the extravagant high-rises in Caracas.
There’s no question that Chávez’s largesse to the “negros e indios,” for the bricks and medicine and loans abroad, is made possible only by wildly high prices of petroleum. That still makes Chávez one of a rare breed. After all, the new oil riches of Kazakhstan ended up, at least $51 million of it, in the Swiss bank account of its President (according to the bagman who deposited it). At the same time, pensions in Kazakhstan are half of what they were in 1993. Despite the windfall of receipts from privatization of the Kazakh oil fields, the Red Cross reports that the unequal distribution of the nation’s oil wealth has pushed “three-quarters of Kazakhstan’s 15.7 million population below the poverty line.” Tuberculosis is now epidemic in the oil-rich nation. Kazakhstan’s manufacturing employment has fallen by 36% and its GDP has imploded. Other developing oil states—Nigeria, Indonesia, Sudan—show just as little interest in distributing their petroleum wealth to the mass of their citizenry.
And, after all, Venezuela itself was a wealthy oil exporter long before Chávez, without much to show for it except massive international debts. Three decades ago, I wrote about the “peasants under the bridges in golden Caracas in shacks made of packing boxes.” That was after the real price of oil hit $80 a barrel. Then, in the 1970s, in Caracas, no one passed out bricks and bread.
Chávez is called a Marxist and a socialist. He is neither. His reformist, cooperative and redistributionist program, and his handling of oil wealth, is clearly �
�Norwegian-ist.” Chávez is a dramatist, calling his Scandinavian-style reforms the “Bolivarian revolution.” It seems to drive Washington just crazy that brown people are demanding Nordic privileges.
It’s one thing to be kind to poor folk, another to rearrange the global flow of petroleum. After bouncing Shell from one project, Chávez signed major development deals with the state oil companies of Brazil, China and India. Now, for the first time, a flow of crude would bypass the oil majors. Chávez was cruising for a bruising.
And it was Chávez, of course, who played Latin Lone Ranger to Ecuador and Argentina, writing checks to support their bond sales. And when Ecuador’s indigenous population seized Occidental Petroleum’s fields, it was Chávez who arrived in Quito with two million barrels of oil products in tow to keep the nation on wheels. The point was clear: Petroleum and petro-dollars could ebb and flow without Occidental or Chevron.
And without the IMF and World Bank. It was The Wall Street Journal that dubbed Chávez “a tropical version of the International Monetary Fund, offering cut-rate oil-supply deals and buying hundreds of millions of dollars of bonds from financially distressed countries such as Argentina and Ecuador.” The un-tropical International Monetary Fund in Washington was not amused, nor were money center banks of New York and London. Petro-dollars are supposed to move from Venezuela to New York and only then return to Latin America as loans carrying interest rates up to 16%. Chávez, bypassing the side trip to New York, showed that the costly financial cycle is not, Mr. Beale, “tidal gravity… an immutable law.”
And to underscore the point, Chávez traveled to more Third World nations with gifts of low-cost oil: the Bronx, New York, and Chicago’s West Side. In September 2005, Chávez offered these poor racial Bantustans within the USA (Hispanic neighborhoods in finally ’fessed in the Bronx) discounted heating oil through CITGO, the U.S. retail outlet of Venezuela’s oil company. A public relations gimmick? Undoubtedly. But Chávez is making a point: The public, American public included, does not have to remain hostage to the Saudi-Houston cartel.
Chávez is a wily gamester. He pushes only so far. He may tax the oil majors, sell to their Brazilian competitors and spend oil loot in Ecuador, but his state oil company has, at strategic moments, waived most of the higher royalties and signed lucrative contracts with Exxon and Shell to extract offshore gas reserves. His government sells tantalizing morsels of concessions in the Orinoco Basin to keep industry majors mollified.
Nevertheless, Chávez has challenged the great ebb and flow of international finance capital and petro-dollars. If Chávez were president of Kazakhstan, he could play Robin Hood with his nation’s oil money without incurring the fanatic wrath of the White House. Venezuela is a different matter altogether. Chávez is, correctly, seen as a class warrior, a crafty opponent of what George Bush calls “the impressive crowd, the Haves and the Have-Mores.” Chávez wanted me to film him under the larger-than-life oil painting of Latin America’s “Great Liberator,” Simon Bolívar. Chavez sees himself as Bolívar, taking his class war beyond his borders, from Argentina to the Bronx, tilting the flat world back to level.
Can he? The difference between a grandiose nut and a grand visionary is the economic power to impose the vision. What makes Chávez’s declaration of worldwide class war credible can be understood by returning to Hubbert’s Peak.
Chávez Scales the “Peak”
We need to bring Guy Caruso back into this discussion. Caruso, you’ll recall from Chapter 2, is the former CIA oil expert, now the Energy Department information chief, who gave Paul Wolfowitz’s Pentagon the realistic projections of Iraq oil production that the U.S. public never sees.
In June 2005, Caruso flew to Kuala Lumpur, Malaysia, to present a series of charts to a select crowd of state oil chiefs.
One chart Caruso presented in Malaysia was a reproduction of Hubbert’s famous 1956 “peak oil” graph. Caruso did not challenge Hubbert’s total crude oil potential reserve figures. Rather, in two other charts, Caruso added to Hubbert’s liquid oil reserves an additional sum for heavy oils, petroleum with a “viscosity over 10,000 centipoise”—that is, tar sands and tar oil.
The sums were significant. Canada holds 80% of the world’s “bitumen” sands. The chart shows an even bigger pool of untapped oil, the super-heavy tar oils of Venezuela. And there’s a lot of it: 1.36 trillion barrels in Venezuela, more oil than Hubbert suggested lay under the entire planet. Venezuela, warns Caruso, holds 90% of the earth’s heavy oil reserves. Ninety percent. This reserve remains hidden, “off the books,” unless and until the price of oil rises permanently above $28 a barrel, at which point the Venezuelan oil is worth pulling up.
Caruso didn’t need to translate the charts into Arabic. Middle Eastern oil men in the room would have understood his message. At $14 a barrel, the long-term historic price of oil, Saudi Arabia holds the world’s biggest reserve of oil. But at $30 to $40 a barrel, Venezuela is, by a long way, the oil reserve champ. Add Venezuela’s liquid reserves to its “tar oil” and Saudi Arabia becomes a poor cousin, a bit player.
The geopolitical implications are monumental. Saudi Arabia’s control of OPEC (and, by extension, the kingdom’s control of world prices) depends on its overwhelming reserve superiority. If the Saudis insist on keeping the price above $30 a barrel for the coming decade, Caruso’s chart suggests, the fulcrum of power in OPEC shifts back west to the Americas; not to the USA, but to Venezuela—a Venezuela with a President who does not believe his country’s petro-dollars, Mr. Beale, should ebb and flow but insists that this oil money remain south of New York.
Caruso/Venezuela
Guy Caruso—former CIA, now DOE—presentation to oil industry and ministers, Kuala Lumpur, Malaysia, June 2005. Caruso warns that if oil stays above $30 a barrel, OPEC’s power center shifts—to Venezuela.
This information, you can imagine, does not bring joy to the White House. Dick Cheney didn’t invade Iraq to make Hugo Chávez the Abdullah of the Americas.
Caruso’s charts sharpen the question confronting Saudi Arabia and the White House: How can Hugo Chávez be stopped from becoming the Bill Gates of petroleum?
There are two methods to undermine Chávez’s power. First, the unattractive choice: Cut the price of oil. Option two: Kill him.
CHAPTER 4
THE CON
Kerry Won. Now Get Over It…
…because they’re putting ’08 in their pocket. Republicans just seem to have that winning spirit. They also have caging lists, felons of the future, rotting ballots, snuffed canaries, and a lock on the votes of Kissinger-Americans and the undead.
WARNING! There are cranks and kooks and crazies out there on the Internet who say that George Bush lost the 2004 election, like one titled, “Kerry Won” published on the TomPaine.com Web site two days after the election. I wrote it.
On November 11, a week after TomPaine.com published it, I received an e-mail from The New York Times Washington bureau. Hot on the investigation of the veracity of the vote, the Times reporter asked me pointed questions:
Question #1: Are you a “sore loser”?
Question #2: Are you a “conspiracy nut”?
There was no third question. Investigation of the vote was, for the Times at any rate, complete. The next day, the paper’s thorough analysis of the evidence yielded this front-page story, “VOTE FRAUD THEORIES, SPREAD BY BLOGS, ARE QUICKLY BURIED.”
As America’s self-proclaimed Paper of Record had no space for the facts, I thought I’d share some with you here.
“Kerry Won” was not a two-day inquiry à la Times. It was the latest in a series of investigative reports coming out of a four-year team examination, begun for BBC Television’s Newsnight, Britain’s Guardian papers and Harper’s magazine, dissecting that greasy sausage called American electoral democracy.
And, by the way, the answer to Question #1: I didn’t lose, so I’m not sore. This investigation isn’t about John Kerry. As a journalist, I don’t give a toss which rich white kid won t
he game. But I’m not so blasé that I don’t care about the disappearance of American democracy. And I really wanted to know how the Bushes swallowed the sausage.
How’d they do it? Again. And how will they do it in ’08? The answer arrived just after midnight on October 8, 2004, three weeks before the official voting, in a series of extraordinary e-mails. The e-mails were intended for the chieftains of the president’s reelection campaign in Washington. Strangely enough, they were misaddressed and ended up in my mailbox. Such things happen.
Night of the Uncounted: How to Disappear Three Million Votes
But the e-mails and their technical attachments won’t mean a thing unless you understand some arcane facts about elections American-style.
First, take a look at these two balls on the next page.
These are CNN’s Ohio exit polls broadcast just after midnight after the voting ended on Election Day. They show John Kerry defeated George Bush among women voters by 53% to 47%. And among men voters, Kerry defeated Bush 51% to 49%.
So here’s your question, class: What third sex put George Bush over the top in Ohio and gave him the White House?
Answer: the uncounted.
CNN Exit Poll 1:05 AM
The nasty little secret of American democracy is that, in every national election, ballots cast are simply thrown in the garbage—millions of them. Most are called “spoiled,” supposedly unreadable, damaged, invalid. They just don’t get counted.
