The following is an editorial by Dr. Nimrod Raphaeli, editor of the MEMRI Economic Blog (www.memrieconomicblog.org), on the recent OPEC meeting. Readers may subscribe to a free weekly newsletter, which contains highlights from the material published by the Economic blog each week, either by clicking on subscribe on the website (www.memrieconomicblog.org) or sending an email to economiceditor@memri.org with the subject line: Subscribe

This past weekend, the Organization of Petroleum Exporting Countries (OPEC) held a summit meeting – the third in the history of the cartel that was established in 1960. Of the 13 heads of the member states, 11 were present at the two day-meeting in Riyadh, the capital of Saudi Arabia. Conspicuous in his absence was the Libyan leader, Muammar al-Qadhafi, whose large entourage, including his smartly-attired female body guards who always accompany him in his foreign travels, would have created quite a problem in the conservative kingdom.

Any gap created by the absence of Qadhafi was more than adequately filled by the presence of the two global demagogues and soul mates, Mahmoud Ahmadinejad of Iran and Hugo Chavez of Venezuela, whose devotion to roguish behavior is exceeded only by their hatred of America. Warming up for the summit, Ahmadinejad penned a personal letter to French President Nicholas Sarkozy, calling him "a little boy with no experience." The respectable daily Le Monde called the letter "crude."

Technical Mishap Brings out Saudi-Iran Disagreement on Agenda

Preceding the official opening of the summit scheduled for Saturday was the meeting of the foreign, finance, and oil ministers of the member states. That meeting, which convened the night before the summit, was supposed to be closed to the media. However, because of a technical mishap, a microphone was left open and the "off-the-record" meeting was seen live on the large TV screens installed in the hall where journalists were congregated. What become quickly evident is the sharp disagreement between Saudi Arabia's foreign minister Prince Saud al-Faisal, who was chairing the meeting, and Iran's foreign minister Menouchehr Mottaki.

In a written statement, Mottaki expressed his country's demand that the final communiqué of the summit express the member states' concerns about the "persistent decline in the exchange rate of the dollar" (in which currency oil price is denominated). The Venezuelan minister of oil took the floor to support the Iranian position. The chairman, Prince Saud, rejected the position taken by the two speakers, and, supported by Ecuador's leftist regime, asserted that the subject was "sensitive" and could lead to "the collapse of the dollar" and would "aggravate the difficulties [the members] are in."

Prince Saud also rejected another proposal made by the Iranian foreign minister that the issue of the dollar should be referred to OPEC's ministers of finance. He said, "The very indication that we have designated to the finance ministers the task of looking into this problem would mean that a decision on the subject was taken by OPEC." The Saudi position was reiterated by OPEC's secretary general Abdullah al-Badri, who stated categorically: "There will be no mention of the dollar in the final communiqué."

In an article published in Tehran Times today, Javad Yarjani, head of Iran's OPEC affairs, denied that there were "structural differences between Tehran and Riyadh."

Chavez and Ahmadinejad Seek to Politicize Oil Summit

As the outgoing chairman of the previous summit, which was held in Caracas in 2000, Hugo Chavez opened the meeting. As one would expect, he preached socialism to his Saudi hosts and their brethren in the Gulf, who are continuing to move their national economies into open and competitive market regimes just as fast as Chavez moves his country in an entirely opposite direction. After threatening that the price of oil would go into "hundred of dollars" [per barrel] if the U.S. "were crazy enough to attack Iran or to threaten Venezuela," and after telling his audience how, at the age of six in 1960, he followed with admiration the anti-colonial struggle of Algeria's current president Abdelaziz Bouteflika, Chavez called on the leaders of OPEC to place their revenues in a special bank to support their own people as well as poor people everywhere. According to Reuters, the octogenarian Saudi monarch sat "stony faced through Chavez's 35 minutes speech," and he was heard joking to the Venezuelan president afterwards: "You went on a bit." In fact, the Saudis have done their utmost to deny the Venezuelan leader an opportunity for grandstanding.

In his statement at the meeting, Iran's Ahmadinejad called on OPEC to discard the dollar in favor of "a combination of hard currencies, or to create an entirely new hard currency as a basis for transactions. Ahmadinejad also called on the members to create a new stock exchange for oil to serve 'humanitarian objectives and national interests.' He denounced 'some arrogant countries' which, in his words, have put an end to peace and expanded the threats of war in some rich areas of the world."

Final Communique

In OPEC's final communiqué, the heads of states pledged to provide "adequate, timely and sufficient" oil supplies to the market. Saudi Arabia prevailed and the dollar was not mentioned even once. Nor was there any mention of increasing oil production.

Warning About Iran's Threats from Abd al-Rahman al-Rashed

The most profound comment on the oil summit was made by Abd al-Rahman al-Rashed, the director general of Saudi al-Arabiya TV which operates from the United Arab Emirates. In an Op-ed in the pan-Arab daily al-Sharq al-Awsat, al-Rashed had this to say:

"The Riyadh summit is a political, not an oil summit… Heavy responsibility falls specifically on Iran far more than on Venezuela, not only because of the volume of Iranian oil, but because of the quarters it occupies in respect to the rest of the Gulf oil countries. It neighbors Iraq, Saudi Arabia, and five other Gulf countries. Venezuela could perhaps raise the price of oil by fiddling with its quota of production or by its threatening statements, but it is not as dangerous as Iran, which threatens 18 million barrels of oil produced within short range of its missiles. Hence we believe that Iran will not be permitted to control the destiny of the region, whatever defense or political justifications it offers [for its nuclear weapons]. And this [Iranian threat] will be translated later, whether within a year or a decade, into another major war."[1]