WASHINGTON — Ten years and $60 billion in American taxpayer funds later, Iraq is still so unstable and broken that even its leaders question whether U.S. efforts to rebuild the war-torn nation were worth the cost. In his final report to Congress, Special Inspector General for Iraq Reconstruction Stuart Bowen's conclusion was all too clear: Since the invasion a decade ago this month, the U.S. has spent too much money in Iraq for too few results. The reconstruction effort "grew to a size much larger than was ever anticipated," Bowen told The Associated Press in a preview of his last audit of U.S. funds spent in Iraq, to be released Wednesday. "Not enough was accomplished for the size of the funds expended." In interviews with Bowen, Prime Minister Nouri al-Maliki said the U.S. funding "could have brought great change in Iraq" but fell short too often. "There was misspending of money," said al-Maliki, a Shiite Muslim whose sect makes up about 60 percent of Iraq's population. Iraqi Parliament Speaker Osama al-Nujaifi, the country's top Sunni Muslim official, told auditors that the rebuilding efforts "had unfavorable outcomes in general." "You think if you throw money at a problem, you can fix it," Kurdish government official Qubad Talabani, son of Iraqi president Jalal Talabani, told auditors. "It was just not strategic thinking." The abysmal Iraq results forecast what could happen in Afghanistan, where U.S. taxpayers have so far spent $90 billion in reconstruction projects during a 12-year military campaign that, for the most part, ends in 2014. Shortly after the March 2003 invasion, Congress set up a $2.4 billion fund to help ease the sting of war for Iraqis. It aimed to rebuild Iraq's water and electricity systems; provide food, health care and governance for its people; and take care of those who were forced from their homes in the fighting. Fewer than six months later, President George W. Bush asked for $20 billion more to further stabilize Iraq and help turn it into an ally that could gain economic independence and reap global investments. To date, the U.S. has spent more than $60 billion in reconstruction grants to help Iraq get back on its feet after the country that has been broken by more than two decades of war, sanctions and dictatorship. That works out to about $15 million a day. And yet Iraq's government is rife with corruption and infighting. Baghdad's streets are still cowed by near-daily deadly bombings. A quarter of the country's 31 million population lives in poverty, and few have reliable electricity and clean water. Overall, including all military and diplomatic costs and other aid, the U.S. has spent at least $767 billion since the American-led invasion, according to the Congressional Budget Office. National Priorities Project, a U.S. research group that analyzes federal data, estimated the cost at $811 billion, noting that some funds are still being spent on ongoing projects. Sen. Susan Collins, a member of the Senate committee that oversees U.S. funding, said the Bush administration should have agreed to give the reconstruction money to Iraq as a loan in 2003 instead as an outright gift. "It's been an extraordinarily disappointing effort and, largely, a failed program," Collins, R-Maine, said in an interview Tuesday. "I believe, had the money been structured as a loan in the first place, that we would have seen a far more responsible approach to how the money was used, and lower levels of corruption in far fewer ways." In numerous interviews with Iraqi and U.S. officials, and though multiple examples of thwarted or defrauded projects, Bowen's report laid bare a trail of waste, including: _In Iraq's eastern Diyala province, a crossroads for Shiite militias, Sunni insurgents and Kurdish squatters, the U.S. began building a 3,600-bed prison in 2004 but abandoned the project after three years to flee a surge in violence. The half-completed Khan Bani Sa'ad Correctional Facility cost American taxpayers $40 million but sits in rubble, and Iraqi Justice Ministry officials say they have no plans to ever finish or use it. _Subcontractors for Anham LLC, based in Vienna, Va., overcharged the U.S. government thousands of dollars for supplies, including $900 for a control switch valued at $7.05 and $80 for a piece of pipe that costs $1.41. Anham was hired to maintain and operate warehouses and supply centers near Baghdad's international airport and the Persian Gulf port at Umm Qasr. _ A $108 million wastewater treatment center in the city of Fallujah, a former al-Qaida stronghold in western Iraq, will have taken eight years longer to build than planned when it is completed in 2014 and will only service 9,000 homes. Iraqi officials must provide an additional $87 million to hook up most of the rest of the city, or 25,000 additional homes. _After blowing up the al-Fatah bridge in north-central Iraq during the invasion and severing a crucial oil and gas pipeline, U.S. officials decided to try to rebuild the pipeline under the Tigris River at a cost of $75 million. A geological study predicted the project might fail, and it did: Eventually, the bridge and pipelines were repaired at an additional cost of $29 million. _A widespread ring of fraud led by a former U.S. Army officer resulted in tens of millions of dollars in kickbacks and the criminal convictions of 22 people connected to government contracts for bottled water and other supplies at the Iraqi reconstruction program's headquarters at Camp Arifjan, Kuwait. In too many cases, Bowen concluded, U.S. officials did not consult with Iraqis closely or deeply enough to determine what reconstruction projects were really needed or, in some cases, wanted. As a result, Iraqis took limited interest in the work, often walking away from half-finished programs, refusing to pay their share, or failing to maintain completed projects once they were handed over. Deputy Prime Minister Hussain al-Shahristani, a Shiite, described the projects as well intentioned, but poorly prepared and inadequately supervised. The missed opportunities were not lost on at least 15 senior State and Defense department officials interviewed in the report, including ambassadors and generals, who were directly involved in rebuilding Iraq. One key lesson learned in Iraq, Deputy Secretary of State William Burns told auditors, is that the U.S. cannot expect to "do it all and do it our way. We must share the burden better multilaterally and engage the host country constantly on what is truly needed." Army Chief of Staff Ray Odierno, who was the top U.S. military commander in Iraq from 2008 to 2010, said "it would have been better to hold off spending large sums of money" until the country stabilized. About a third of the $60 billion was spent to train and equip Iraqi security forces, which had to be rebuilt after the U.S.-led Coalition Provisional Authority disbanded Saddam's army in 2003. Today, Iraqi forces have varying successes in safekeeping the public and only limited ability to secure their land, air and sea borders. The report also cites Defense Secretary Leon Panetta as saying that the 2011 withdrawal of American troops from Iraq weakened U.S. influence in Baghdad. Panetta has since left office when former Sen. Chuck Hagel took over the defense job last week. Washington is eyeing a similar military drawdown next year in Afghanistan, where U.S. taxpayers have spent $90 billion so far on rebuilding projects. The Afghanistan effort risks falling into the same problems that mired Iraq if oversight isn't coordinated better. In Iraq, officials were too eager to build in the middle of a civil war, and too often raced ahead without solid plans or back-up plans, the report concluded. Most of the work was done in piecemeal fashion, as no single government agency had responsibility for all of the money spent. The State Department, for example, was supposed to oversee reconstruction strategy starting in 2004, but controlled only about 10 percent of the money at stake. The vast majority of the projects – 75 percent – were paid for by the Defense Department. ___ Online: Special Inspector General for Iraq Reconstruction: http://www.sigir.mil/learningfromiraq/index.html ___ Follow Lara Jakes on Twitter at https://twitter.com/larajakesAP
Protests and divisions in small, peaceful oil-rich country include calls to boycott ballot which may have repercussions in regionNovember evenings are balmy on Kuwait City's waterfront, and there is a festive atmosphere in Irada Square as crowds gather for another protest rally. Women swathed in black mix with others in jeans while men in dishdashas and red-checked ghutra headdresses sip tea on Persian rugs spread on the spiky grass.Speakers are hammering home the call to boycott this Saturday's elections because the emir, Sheikh Sabah al-Ahmad Al Sabah, has decreed a change to voting rules that will weaken the opposition. Stewards display spent teargas canisters that were fired to break up an unlicensed protest last month.Unlike elsewhere in the Middle East and North Africa , Kuwaitis are not seeking to overthrow their regime. Irada (the Arabic name means "will") is tamer than Cairo's Tahrir Square. Violence is very rare.Yet there is no mistaking the depth of divisions in this small but fabulously wealthy country – and the anxiety about how they will play out. Its ultraconservative Saudi and Emirati neighbours are watching nervously."The emir's decree was the straw that broke the camel's back," said Sultan al-Majrubi, a young activist who was injured when special forces broke up October's big demonstration. "The Sabah family need to change from the inside. They are not thinking about the future and their credit with the people is running out."Kuwait is still the most democratic state in the Gulf. Its "springtime" dates back to 2006, long before the overthrow of the autocrats who ruled Tunisia, Egypt and Libya.Last November the prime minister, the emir's nephew, was forced to quit in the face of allegations that MPs had been bribed to support the government. Protests then were the largest ever seen in the region. Parliament was dissolved in June.The opposition is a coalition of youth groups, disgruntled tribes and Islamists. Many sport orange ribbons – a nod to the revolution in distant Ukraine. Social media play a vital role. The Twitter hashtag #KarametWatan ("dignity of the nation") has been used with stunning effect to organise protests and outwit the government."If you look at the slogans, the empowerment of the grassroots and the emergence of civil society activism then yes, we are part of the Arab spring," argues political scientist Shafeeq Ghabra. "People want dignity and political participation and equality before the law. But it's not a revolution here."Kuwaitis suffer neither hunger nor poverty. The country's oil riches have funded for a lavish welfare system since independence in 1960. Its 1.2 million citizens pay no tax but the system is rife with paternalism and wasta (connections or nepotism). Last year the emir gave every citizen 1,000 dinars (£2,210) in grants and free food coupons. "Kuwait is a wealthy society so people have a lot to lose," smiles Jaafar Behbehani, a businessman. "That's why many support the status quo."In the capital's diwaniyas – informal all-male gatherings held in private homes – the election boycott is being hotly debated. Ostensibly, the emir is modernising the system by reducing the number of votes from four to one.But his aim seems clear. "They are crafting a new parliament by having it customised for their own needs," complains a twentysomething consultant handing out boycott badges under the palm trees in Irada Square.Kuwait's hybrid political system, enshrined in its constitution, is famously dysfunctional. Near permanent deadlock between MPs and the emir has stymied development. The capital's iconic water towers dominate the waterfront but no new hospitals have been built for decades and the international airport is a 1960s relic compared with its gleaming counterparts further down the Gulf.Oil still accounts for 90% of state revenues, and little progress has been made in diversifying the economy, promoting the private sector and reducing state subsidies. Inward investment is sluggish. Underlying this malaise is a lack of trust in the system and resentment at corruption and a lack of accountability from ministers and officials.Protesters warn that fiddling with the electoral system will not help if root causes are not addressed. "The government blames the national assembly for being an obstacle to development," says engineer Ghazi al-Shammar. "But the problem really is that they want to make it into a one-man show."For Ghabra the conclusion is clear: "By not listening to the people the government is creating a bigger problem."Profound social changes lie behind the unrest. Tribes that came from Saudi Arabia in the 1970s have multiplied and tensions grown between them and Kuwait's urban community, descendants of the pearl merchants and traders of old. "We are against corrupt institutions run by some of the sheikhs and businessmen in their own interests," says Mohammed Ruwayhil of the opposition people's bloc. And like elsewhere in the region, over half of the population are under 25, many educated abroad at government expense.Deference has faded. "We were always told by our fathers that at a diwaniya there was a strict seating pattern," reflects a thoughtful Sabah minister. "The further you were away from the centre the less you were expected to speak. But with Twitter and WhatsApp and all the social media everyone can speak their mind."Repression is mild by regional standards. State security agents hanging around Irada Square are easily spotted. "People do get slapped around and sometimes put into solitary confinement but there is no torture," says one activist.Still, official patience is wearing thin. Arrests for the Kuwaiti equivalent of lese-majesty have increased. Musallam al-Barrak, the firebrand opposition leader, was imprisoned for 10 days after issuing an unprecedented public warning to the emir over his election decree – and (falsely) accusing Jordan's King Abdullah, (who is also struggling with demands for political change), of sending in mercenaries to crush protests.This month there was a reminder of happier times with a dazzling firework extravaganza commemorating 50 years of the Kuwaiti constitution – winning an immediate place in the Guinness Book of Records as the most expensive pyrotechnic display ever mounted. But the mood is turning ugly.The opposition is "obsolete," and their protests vulgar complains Safaa al-Hashim, a candidate in the third electoral district. In the media, charges of treachery are flying over the boycott and there is a whiff of sectarianism in the air as Shias are accused of standing with the government and the tribes of being backward."My views have shifted from left to right," admits a woman business executive. "I am against the way the opposition is behaving. I understand why they are against the one-man-one vote but this country is still being run by a tribal mentality. The law is only enforced selectively."Liberals and nationalists are quick to lambast the Muslim Brotherhood – known in Kuwait as the Islamic Constitutional Movement – and accuse it of conspiring to create a new caliphate under the orders of the new Egyptian government. But the claims seem wildly exaggerated and western diplomats privately dismiss them. "There is an Islamist presence, but they are very pragmatic," is the assessment of Ghanima al-Oteibi, a secular student leader. "The Kuwaiti government is attacking the Ikhwan (Brotherhood) because they need Gulf support," suggests Saad al-Ajmi, a former minister.Turnout in Saturday's election will be crucial in determining whether the new parliament enjoys sufficient legitimacy, or whether, in the words of one sceptic, it is just a "Mickey Mouse assembly". Whatever the outcome it is hard to see how the country's underlying tensions can be resolved any time soon. "Kuwait is different but we are not isolated from what is happening around us elsewhere in the Arab world," sighs the businesswoman."The Sabah have always ruled by consensus, but now it is breaking down."Sheikh to visit BritainSheikh Sabah al-Ahmad Al Sabah will get a brief respite from troubles at home when he pays a state visit to Britain this week. The 83-year-old emir is being hosted by the Queen at Windsor Castle and will be her guest at a royal banquet, visit the Royal Military Academy at Sandhurst and meet David Cameron and business leaders who are keen to pursue opportunities in the lucrative Kuwaiti market.Kuwait is the UK's fourth-largest trading partner in the Gulf, with exports worth £1.1bn to the emirate in 2009. Britain is also Kuwait's the emirate's "partner of choice" for delivering much of its £70bn development plan, comprising 1,000 infrastructure projects including a £4.6bn metro system and a new Kuwait International airport terminal designed by Lord Foster. But implementation of the plan is being held up because of the ongoing political crisis.Britain is popular for the role it played in helping liberate Kuwait from Iraqi occupation in 1991. Its embassy is the oldest continuously-occupied building in the capital and a relic of the days when British "political agents" ruled the Gulf coast all the way to Aden. Two years ago Tony Blair produced a report – Kuwait Vision 2030 – in which he concluded that the country needed to change if it was to fulfil its potential and avoid an "uncertain future". Kuwait was the first client of Tony Blair Associates, set up by the former prime minister to advise on "political and economic trends and governmental reform".KuwaitArab and Middle East unrestMiddle East and North AfricaIan Blackguardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
As part of a huge expansion plan the Kuwait National Petroleum Company (KNPC), the downstream refining division of the Kuwait Petroleum Company (KPC), has announced that it will invest $32 billion in several large projects by 2019.According to the acting corporate planning manager Khaled al-Khayyat, the projects will include a permanent LNG importing facility, increasing the current import capacity from 500 million standard cubic feet a day (scfd) to 3 billion scfd.An expansion to their crude oil refining facilities will also increase refining…Read more...
Two basic functions are essential to democratic societies: educating the young and defending citizens from attack. But in the U.S. today, quite different attitudes have developed about each of these functions. In a nutshell, our nation's schools are considered failures, while the armed forces are beyond reproach. This double standard is not good for either area. Education is doing better than is generally recognized, but a drumbeat of harsh criticism, along with funding cuts, may discourage further needed progress. Meanwhile, the military's shortcomings are being overlooked as politicians vie to not only maintain but even increase defense funding, which could lead to wasteful spending. For evidence of this dangerous double standard, look no further than the Republican Party platform in Tampa. This document declares that the military "has carried America to victory from the Caribbean and Central American to the Balkans and Southwest Asia" and pledges to stand by "our heroes," the "men and women who wear our country's uniform." The Republican platform also calls for a "consistent and sustained investment" in the military and denounces the mandatory cuts in defense spending slated to occur if Congress fails to override the across-the-board cuts in federal spending, or "sequestration," contained in last year's debt ceiling deal. More specifics can be found on Mitt Romney's campaign Web site, which proposes to set core defense spending for the next several years at a floor of 4 percent of the Gross Domestic Product. This proposal would mean a boost in defense spending of $100 billion for 2013 and an additional $2 trillion over the next ten years compared with the Pentagon's current budget, according to a CNN Money analysis. Governor Romney has not disputed this figure. In essence, Romney and Republican Party leaders are saying that greater honor and more money will address all of the military's needs. This attitude ignores the fact that we are already the biggest military spender in the world by far. The U.S. accounts for 58 percent of the total amount spent on defense by the world's top 10 military powers, according to George Washington University's Face the Facts USA project. We spend almost six times as much for defense as China, the next highest spending country with a population four times that of the U.S. We need a strong defense, and the U.S. has the best military forces in the world due to this national commitment. We should be proud of our troops and recognize their dedication and accomplishments but also remember how much support we give them to do their jobs. In addition, we should acknowledge that the record of the American military over the last 50 years has not been one of consistent victories. While this record includes successes in restoring constitutional government in Grenada, defending Kuwait from Iraqi invasion, and eliminating Osama Bin Laden, it also includes shaky stalemates in Iraq and Afghanistan, failure in Vietnam, and an unsuccessful attempt to rescue diplomats at the American embassy in Tehran. As these and other examples illustrate, our military record is an amalgam of successes, failures, and standoffs. These failures and standoffs stem from a variety of reasons, such as international political and social factors, poor national intelligence, or lack of public support. But the Republicans' demands for higher military spending ignore this mixed record and the complex reasons behind it. In the area of education, the observations and recommendations in the Republican platform are far more negative. The platform criticizes the U.S. educational system for showing "no substantial increases in academic achievement or high school graduation rates" over the last 50 years despite "enormous amounts of money" being spent. It asserts that "if money were the solution, our schools would be problem-free" and includes no pledges to boost education funding or protect schools from the possible harms of sequestration. Like the military, the U.S. education system has not experienced consistent success, for a variety of reasons. Since the early 1970s, student achievement in reading and mathematics has improved for younger students but has not increased significantly for high school students, according to the long-term trend results of the National Assessment of Educational Progress. Gaps in test scores between minority and white students have also narrowed over the past 30 years for some groups, especially Latino students. The percentages of female, black, and Hispanic youth who go on to college have also increased over the past three decades. It's a wonder student test scores have not gone down given that the pressures on our schools are greater than in the past. Every child with a disability must be educated regardless of cost, and usually in the regular classroom. Schools throughout the country include growing numbers of children who do not speak English as their first language. Schools must also comply with demands to raise test scores for all groups of students or face penalties. Schools must devote attention to all these needs while dealing with state and local budget cuts of a magnitude not seen for decades. Over 300,000 education jobs have been lost since June 2009, and the national student-teacher ratio has increased since 2008. Districts facing teacher shortages have also cut preschool and kindergarten programs and shortened the school week or school year. U.S. teachers must cope with all of these stresses while being paid less, relative to other full-time, college-educated workers, than their counterparts in other industrialized countries. Although some progress has been made, we need to do better. Too many students drop out of high school, and too few finish post-secondary education. Many other countries in the world have overtaken the U.S. in educational attainment. Maybe the Republicans are onto something when they maintain that ample funding and a high level of respect are crucial ingredients for success in a major national endeavor. But why have a double standard? Why not use the same approach for education as we have with the military? The U.S. is currently near the top of industrialized countries in education spending, but imagine what our schools could accomplish if we spent six times as much as the second highest-spending nation. Further, following the military example, we should consider all men and women who work to educate children "heroes." Educating our young people is just as important as defending our society. A national agenda that treats both with the same urgency not only would strengthen our economy and improve our society in many ways -- it would also reap benefits for our national defense.
As part of Britain's largest road-building programme in 25 years, more than 40 controversial schemes have been revivedOver 40 controversial road schemes abandoned by successive governments or defeated at public inquiry on environmental grounds have been revived as part of Britain's largest road-building programme in 25 years.Dubbed "zombie roads" because they were declared dead years ago but have now been resuscitated, they include a £100m bypass around Hereford, a new six-lane road through the Peak district, a dual carriageway through the Norfolk broads and a £1bn "super highway" to run much of the way from London to Ipswich. Other revived plans include a new Thames river crossing and the widening of the A303 past Stonehenge.According to the Department for Transport, only 44 national road schemes are presently under way or planned, but research of local authority plans by the Campaign for Better Transport has identified a further 150 schemes ranging from bypasses around villages to motorway-grade road improvements.In addition, roads minister Stephen Hammond has recently floated the idea of a new Oxford-Cambridge road and a possible motorway stretching along the south coast."Plans for [many of] these roads have already been fought and defeated. But like zombies, they keep coming back. Their impacts haven't changed and local opposition will be just as strong," said Chris Gillham, a veteran of the Twyford Down protests.Money for many of the proposed schemes is not guaranteed but groups of local authorities working with businesses are expected to share costs with central government on their priority schemes.Government and business lobby group the CBI expect some of the biggest road schemes to be funded by countries such as Kuwait and Saudi Arabia, pension funds and other international investors.The CBI pressed for privatisation of the English roads to raise the money needed to build more and improve infrastructure. National road pricing has been ruled out on existing roads for the duration of this parliament but the DfT has said it would consider proposals in future to build new roads with private capital through tolling."Without a change of approach, the UK's roads infrastructure will ... continue to slip down the international league tables. We need a gear change in how we manage and pay for our road network in the 21st century. A lack of investment means we are really struggling to increase road capacity, let alone adequately maintain what we already have," said John Cridland, CBI director-general.But the Campaign for Better Transport (CBT), which has calculated that the 190 known schemes would cost a minimum of £20bn and possibly far more, has warned that the new roads would not solve the problems of congestion or kick-start the economy, but would damage the environment and generate fierce local opposition.Many of the schemes will be environmentally controversial. Work is expected to start shortly on the £93m Hastings to Bexhill link road which will destroy a tranquil valley and has been described by green groups as the most environmentally harmful and least economically justifiable road scheme currently being proposed in England. Other schemes will pass areas of outstanding beauty, national parks, green belt land and sites of special scientific interest."It seems like the lessons of the 1990s have been completely lost, with both local and national government going back to a large programme of road building. From playing fields and precious farmland to national parks, every green space is now at risk from these projects. It would be a massive step backwards to put billions into building zombie roads schemes that will, in the end, just generate more traffic. We know now that we can do better with more sensible transport spending, and if the government tries to resurrect the old thinking of the 1990s, we will defeat them again," said Sian Berry, road campaigner with the CBT.In Hereford where Conservative party plans for a city bypass to be built over sensitive water meadows were dropped from the national programme in 1998 by Labour, local groups vowed to keep fighting a new version of the same road. "Nothing has dislodged the road from the county council's top aspirations. It has no qualms about trashing the environment. We will fight another 20 years if we have to. I can see a revival of direct action," said Paige Mitchell who fought the road 20 years ago.The new road programme proposed by local authorities compares with the Conservative party's £24bn "roads for prosperity" programme designed to expand the motorway network, build up to 500 bypasses and massively boost the car economy in 1989. This was said by the Margaret Thatcher government to be "the biggest road programme since the Romans", but most were later dropped after protests in the 1990s."We learned decades ago that the huge cost of new roads makes them very poor value investments. Where the money is spent instead on good maintenance, better public transport, easier-to-find information about buses and trains, safer roads for walking and cycling and technology to use the roads more efficiently, we are seeing real improvements in congestion at a fraction of the cost," said Berry.TransportTravel and transportRoad transportTransport policyJohn Vidalguardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
Hugo Chávez promises to increase production and reduce dependence on US market by doubling crude exports to AsiaWhile giant rallies in Caracas may be drawing the world's attention ahead of tomorrow's Venezuelan presidential election, the global significance of the vote can be found hundreds of miles to the east in the oil-soaked Orinoco Belt.According to studies, Venezuela has overtaken Saudi Arabia to become number one in the world for proven oil reserves, largely thanks to the heavy crude found in this vast alluvial plain.Whether this multi-trillion dollar asset is controlled by Hugo Chávez or the opposition challenger, Henrique Capriles, will influence which countries and companies are given the priority to exploit them and how much drivers around the world pay at the pump. According to a report this year by BP, Venezuela has reserves of 296.5bn barrels, about 10% more than Saudi Arabia and 18% of the global total. At the country's current levels of production, this would last about 100 years.If Chávez wins – as most polls suggest – he has promised to ramp up production and reduce his country's dependence on the US market by doubling crude exports to Asia. To further this goal, Venezuela plans to build a pipeline through Colombia to the Pacific which would reduce costs and transport times to China and other Asian markets.Capriles, who has mounted a strong challenge, says he would fire the oil minister, Rafael Ramírez, and rethink how crude is extracted and used. Until now Russian and Chinese companies have struck the biggest deals for future exploitation."We have to revise every deal. I think they are agreements that are not functioning," he said. During the campaign, he has also said he would halt subsidised oil shipments to Cuba, Belarus, Nicaragua and Syria. Critics say he is a stalking horse for US interests.Both Chávez and Capriles are calling for more investment so that Venezuela can increase not only output but also the quality of oil through the use of upgrading technology. But the volatile mix of politics and oil has made it difficult to secure partners.In recent years Venezuelan oil production has fallen due to poor maintenance, low investment and the loss of key workers. Plans to open new fields have been repeatedly delayed. The state-owned oil company PDVSA says the holdups are over. Last week its joint venture with Russia's Rosneft and Lukoil pumped its first barrel. Another operation, with a Vietnamese firm, has also reportedly begun. Projects with Chevron of the US, Spain's Repsol and others are due to start early next year.But there are still many empty blocks. Officials said BP, Shell and several other multinationals appear to be waiting to see if the government will change today before committing to possible joint ventures in the two main areas for expansion, Carabobo and Junín."There is a danger that British firms might miss out. In this country, oil and politics are intertwined. Many companies are waiting for the election result," said Osmel Molina, deputy manager of the Carabobo region. "They hope for higher profits if the political situation changes. That's why there is so much support for the opposition. They don't necessarily want to oust Chávez, but they do want a weak government so they can control the biggest oil resources in the world."Venezuela has an oil-dependent economy – PDVSA accounts for 95% of the country's export earnings. Domestically, the mix of populist politics, super-abundant oil and second-rate refining technology has left the country with a peculiar system in which the state sells crude for $100 (£61) a barrel, buys back petrol at $400, then sells it on to domestic drivers at such a discount that a full tank is cheaper than a cup of coffee. A gallon costs about 6p, leading to a lucrative cross-border petrol-smuggling business. Neither candidate has dared to commit to a raise.Oil rose to the centre of the political debate in 2003, when the sector was crippled by striking workers. The Chávez government, which had survived a coup attempt the previous year, sacked most of the management and many of the workers, saying that they were pawns in a US-backed effort to destabilise the country.The industry is now a bastion of government loyalists. Molina's office is decorated with portraits of Chávez and Simón Bolívar. Most of the staff wear red Chávez re-election campaign T-shirts. Four oilfields are named after battles of independence.Oil helps to explain why Chávez is vilified in the US. In 2000, a year after taking power, he made his first mark on global affairs with a tour of the Middle East to lobby key Opec members – Iraq, Iran, Libya, Kuwait and Saudi Arabia – to drive oil prices higher. Since then, the cost of Brent crude has risen from less than $20 a barrel to more than $100.Saddam Hussein and Muammar Gaddafi were among the leaders who joined Chávez to drive up prices. Molina believes it is no coincidence that they were deposed and killed: "There's a plan in place to control the global oil market. Anyone who tries to erode the monopoly ends up in conflict with the [US] empire."In the past, Molina said foreign oil firms were paying only 3% royalties to the government, but Chávez pushed this up to 16%. He also helped to raise the value of the output from the Orinoco Belt by relabelling it as valuable heavy crude instead of cheap bitumin or tar, as it had previously been priced.Some accuse the US and multinationals of trying to influence the presidential campaign. "Transnationals want control of the oil here. They want the submission of Latin America to supply the market needs of the US," said Nicmer Evans, a political science professor at the Central University of Venezuela.But the outside influence cuts both ways. Since 2007, the government has received $42.5bn in loans from the China Development Bank, with the biggest tranche coming in the year ahead of an election in which Chávez has increased public spending, the minimum wage and pensions. This is repaid largely through shipments of 430,000 barrels of crude a day to China in repayment.Russian president Vladimir Putin showed his support with the gift of a puppy to Chávez this month.But geopolitics is not the only factor at play in deciding who gets to exploit and use this pool of oil. Geography, market demand and refining technology are also help to explain why the US – despite Chávez's rhetoric – remains Venezuela's biggest customer.The scale of the required investment will also be a struggle for any single country. Chávez has said Venezuela should look to the country's Faja oil belt and promised to invest $130bn in the region to double national oil production to six billion barrels a day, pushing Venezuela past Iran as the world's second-biggest producer. The money is needed to upgrade wells, processing plants, refineries, docks, roads and housing. Dire maintenance has plagued the industry, most recently with a huge fire at the Amuay refinery.Local people say that the main road between Morichal and Maturin has been cut off at least twice in the past month, once because floods swept away a bridge and once because of a protest by nearby residents against power shortages.VenezuelaAmericasHugo ChávezJonathan WattsVirginia Lopezguardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds