VENEZUELA - The Bush Effect On Chavez.

Obsessed by President George W. Bush, Chavez has repeatedly said the US wants to take control of his country's oil. In a two-hour news conference in Paris beamed live to Venezuela on Oct. 20, Chavez said: Venezuela is preparing for a possible US invasion, warning that such an "aggression" would send US gasoline prices soaring. Chavez, a vocal critic of "imperialism", capitalist excess and the Bush administration, said he was not against the American people - just the current government. "If the United States tried to attack Venezuela by a direct invasion, forget the oil. Everyday, we send 1.5 million barrels to the United States... We are sure that it will be very difficult for the United States to attack Venezuela".

Chavez said his country had eight refineries and 14,000 gasoline stations in the US. He said the price of crude oil could hit $150/b in the event of a US attack. He also said: "That's why Pat Robertson, the spiritual adviser of Mr. Bush, is calling for my assassination - that would be much cheaper than an invasion". (US religious broadcaster Robertson in August said Chavez should be killed, then later apologised for saying so).

Chavez used the news conference mostly to explain what he called his "alternative" vision of a world which had to work for the poor - not "capitalist" corporations seeking profits. He reiterated long-time claims that the US was financing his opponents, seeking his ouster and sabotaging efforts to move the country forward. He said: "We have detected with intelligence reports plans of a supposed invasion, one that would never happen. But we have to denounce it... Venezuela is used to defending itself...and fighting imperialism. We're ready to resist any attack, but we pray to God and do our utmost so that this does not ever happen".

Chavez previously said Venezuela was organising an expanded military reserve and civilian defence units to protect his country. In an interview with BBC radio aired earlier on Oct. 20, Chavez said he had evidence to prove that the US government was planning an invasion. He said he believed the reason the US was plotting an invasion of Venezuela was to take control of its oil reserves. US officials have denied that. "A coup happened in Venezuela that was prepared by the US. What do they want? Our oil, as they did in Iraq", Chavez said, referring to a failed coup attempt in April 2002, for which he holds the US responsible. The US administration denies the claim.

The Chavez bid to acquire nuclear technology alarms his neighbours as he seems bent on a belligerent crusade to challenge US influence in the region. But experts say it would be a mistake for Bush to over-react. Nuclear power makes little economic sense for Venezuela. If extra energy is needed to liquefy the heavy crude oil in the Orinoco belt - as the government claims - it would be more sensible to build non-nuclear thermal plants. True, Caracas is flush with cash as a result of the rise in oil prices. But there are many more urgent priorities (see DT).

On the other hand, Chavez may feel that access to nuclear technology would assist his geo-political ambitions. He is hoping to secure the co-operation of Argentina and Brazil, both having modest nuclear power capacity, and Iran. In recent months he has deepened economic ties with Cuba and accelerated plans to introduce what he has called "21st century socialism".

Radical changes have included moves to take over private business interests in Venezuela and tighten the contract terms under which foreign oil and mining companies are operating. If - as is expected - Chavez's supporters secure a bigger majority in the national assembly in elections due in December, the government can be expected to unveil a new constitution, further undermining property rights. It will not be easy to fashion an adequate policy to deal with these challenges.

Nuclear stations would have to be subject to a most rigorous international scrutiny. Wild verbal attacks favoured by the US president's more right-wing supporters, such as Pat Robertson, simply play into the hands of Chavez, confirming his anti-gringo credentials among supporters and boosting his image in a region where the US is unpopular. Chavez thrives on confrontation. The US should not help him.

Venezuela has fallen from the world's third-largest exporter in 2000 to the fifth largest. Since Chavez took office in early 1999, Venezuela has pursued a hawkish stance in OPEC, but lost market share in the process to non-OPEC countries such as Mexico and Russia.

The Chavez government is attaching greater importance to its heavy oil reserves at the strategic, long-term level. Although these would be hard and expensive to exploit, Venezuela wants OPEC to include them in counting its available oil, thus allowing it a much larger OPEC output quota. Venezuela has at least 275 bn barrels of extra heavy oil in the Orinoco Belt. If these were added to its existing reserves of over 80 bn barrels, Venezuela would leap above Saudi Arabia, which has the world's biggest proven reserves of 264 bn barrels. But Saudi Oil Minister Ali Naimi recently said the Saudi reserves could be increased by another 200 bn barrels.

There are already four existing heavy oil strategic associations producing synthetic crude oil, and multinationals involved in them include ConocoPhillips, ExxonMobil, Total, Chevron and Statoil. However, under a hydrocarbons law decreed in 2001, foreign investors are required to pay high royalties - compared with a 1% rate which had made the existing associations very profitable. Energy and Petroleum Minister Rafael Ramirez insists new projects will not escape the higher royalties. The foreign companies have had no choice but to accept.