In today's Guardian:
The point at which President Hugo Chávez decided that London should serve as a model for services and governance in Caracas was not immediately apparent. He came in May, visited City Hall amid much controversy and fanfare, and was soon gone.
But the result of his visit is likely to be an extraordinary deal struck with London's mayor, Ken Livingstone, that would see Caracas benefit from the capital's expertise in policing, tourism, transport, housing and waste disposal.
London, meanwhile, would gain the most obvious asset the Venezuelans have to give: cheap oil. Possibly more than a million barrels of the stuff.
I can't wait to see the Tories marching in the street, chanting "No governance for oil! No governance for oil!" But wait, there's more. Turns out to not be completely unique. I knew Venezuela had an oil-for-doctors exchange going on with Cuba, but not this:
Last year Venezuela gave more than 45m litres at 40% below market prices to the poor of Boston and New York.
I found that a rather impressive stat until I noticed the litres
part. Who talks about oil in litres? Silly Guardian journos copying out talking points I imagine. That's only about 300,000 barrels, or about 15% of US oil consumption for just 1 day a year, so the one million barrels mooted for London is a slightly larger token then.
I wonder to what extent Chavez' oil-barter diplomacy is a deliberate side-step around supporting the US dollar as the standard of exchange. There's been some talk about the establishment of a Euro-denominated Iranian oil bourse
as a counterweight, which would incidentally thoroughly undermine US economic hegemony, causing some speculation that this was in fact one of the key but unspoken reasons for US emnity towards Iran.
But it seems from this recent interview with Chris Cooke,
the originator of the idea, that plans for the Iranian bourse aren't as far along as imagined. Nor, at least in this interview, is his intent to upset the strategic apple cart.
CC: If we could just look at the Euro first - there aren't enough Euros to go around to even begin to cope with demand that would be needed if we were to start pricing in euros, and I don't think the European Central Bank would start printing those quantities, that would be almost a declaration of war by the ECB on the US. I don't see that as a practicable proposition. Other currencies I see as pretty peripheral. I don't see any other currency other than the dollar being fit for purpose.
Rather, he's looking to hamstring speculators and decrease volatility and possibly price:
If we could go back to your original proposal idea, which as I understand it is putting producers and consumers together - you described it as a "Napster" of the oil industry?
CC: Yes, the logic of the internet is to cut out unneccessary intermediaries - disintermediation - and to connect the ultimate buyer and the ultimate seller more directly. At the moment the middlemen own the market, and set the rules to suit themselves. Profits are far higher by the middlemen than they need to be. They are making super-profits because of the way the market is. I don't begrudge intermediaries a return on capital, but I do begrudge them a ridiculous return on capital, particularly when they are using unfair or inequitable ways of trading, abuse of market information, that sort of thing, which is definitely what goes on now.
Hmm. Bit of a relief really; a systemic change that would undermine the fragile stability of the US economy at this point would be bad for everyone. What a relief we can get back to only worrying about climate change and nuclear proliferation.