[A-List] PDVSA and Chavez and Bush

["Annewilliamson" <Annewilliamson@xxxxxxx>]

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                            S T R A T F O R

                    THE GLOBAL INTELLIGENCE COMPANY

                        http://www.stratfor.com
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              6 December 2002

THIS WEEK's GLOBAL ECONOMIC UPDATE - FULL TEXT FOR MEMBERS ONLY

  -> ON OUR WEBSITE TODAY FOR MEMBERS ONLY:

      * Sources: PDVSA To Strike Until Chavez Resigns
      http://www.stratfor.biz/Story.neo?storyId=207966

      * EU Meeting Will Impact Turkey's Role in Iraq
      http://www.stratfor.biz/Story.neo?storyId=207957

      * War Diary: Thursday, Dec. 5, 2002
      http://www.stratfor.biz/Story.neo?storyId=207945

      * PDVSA Declares Force Majeure on Contractual Exports
      http://www.stratfor.biz/Story.neo?storyId=207946
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Sources: PDVSA To Strike Until Chavez Resigns

Petroleos de Venezuela will declare a general oil industry strike
on Dec. 6, Stratfor sources in Caracas say. The decision was made
jointly by PDVSA's managers and union leaders, and sources say
the company will maintain the strike until Venezuelan President
Hugo Chavez resigns.

A general strike by PDVSA immediately would remove about 2.5
million barrels per day of crude oil and refined products from
world markets, and it will spike world oil prices immediately by
several dollars per barrel. The state oil company's action also
will have a strong impact on U.S. gasoline and jet fuel prices,
since the United States imports about 1.5 million bpd of crude
and refined products from Venezuela.

Major U.S.-based gasoline retailers such as Citgo will be
affected, since the company is wholly owned by PDVSA and runs
large volumes of Venezuelan crude through its refineries at Lake
Charles, La. and Corpus Christi, Texas.

The PDVSA strike places both Chavez and the Bush administration
in critical situations, though for different reasons. For Chavez,
the company's decision to strike until he resigns likely means
his hold on power is finished -- even if he declares a state of
exception and tries to hold on to power through military force.

If PDVSA is not operating, the government's cash flow will dry up
quickly, Central Bank foreign exchange reserves will plummet, the
currency will drop like a stone and local fuel supplies at the
retail level will be exhausted by early next week, completely
paralyzing the Venezuelan economy. Under these conditions,
Chavez's continued presence in office will become impossible,
even if he resorts to violence to prolong his regime.

For the Bush administration, PDVSA's decision means the U.S.
economy will lose at least 1.5 million bpd of crude and refined
products for several days or even weeks. This could hurt the U.S.
economic recovery. It also could complicate Washington's war
plans for Iraq, since Citgo has major jet fuel supply contracts
with the Department of Defense, according to sources in
Washington.

The Bush administration now will be forced to choose sides in
order to ensure a swift and, if possible, peaceful regime
transition in Venezuela.
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