Chavez promotes `petro-currency’ over dollar

DOHA, QATAR (AP) - Venezuelan President Hugo Chavez tried Tuesday to court Arab support for another swipe at America as its economy stumbles: a proposal for a new, oil-backed currency to challenge the global prominence of the dollar.

The idea never reached the full agenda of a summit of leaders from South America and the Arab League _ and has little hope of gaining any momentum among the U.S. allies in the Middle East. But it managed to reflect broader sentiments at the gathering: That Western financial leadership has been deeply eroded by the economic meltdown.

Chavez set the tone moments after arriving in Qatar, proposing a “petro-currency” that would have the backing of oil-rich nations such as Venezuela and its Arab partners in OPEC. Chavez has tried before, with little success, to undercut the dollar’s role as the world’s leading commercial currency.

The dollar, however, is facing real pressures elsewhere.

China has struck deals _ most recently this week with Argentina _ to conduct trade in currencies other than the dollar, and Beijing’s central bank governor has proposed creating a new “reserve currency” comprising a basket of global currencies controlled by the International Monetary Fund.

Iran has proposed replacing the dollar with the euro or other currencies to set worldwide oil prices, and other nations are swapping some foreign currency reserves in favor of the euro.

“Venezuela supports … efforts to find an alternative reserve currency,” Chavez told the summit.

Chavez plans stops in both Iran and China _ in addition to Japan _ after the one-day gathering, which focused heavily on trade issues but also touched on Arab worries about rival Iran’s growing influence in Latin America.

“The global economic crisis erupted outside our regions, but nevertheless effect our economies,” said a statement by business envoys from the two regions, who called for a “new international financial system” that includes greater influence from outside the West.

OPEC members _ including Venezuela and many Arab Leagues states _ have been hit hard by falling oil prices, which dipped below $48 a barrel on Tuesday.

Chavez predicted oil prices to rise and called $80 a barrel a “fair” level, according to a government statement. On Monday, Qatar’s oil minister, Abdullah bin Hamad al-Attiyah, said his nation was “OK” with crude oil at $50 a barrel this year.

Brazilian President Luiz Inacio Lula da Silva told the gathering that the economic crisis is having “deep repercussions” on all economies, but it offers an opportunity “to correct the financial system and restore balance to global trade.”

Delegates also encouraged expanding technology exchanges, including nuclear engineering. Argentina helped build one of Egypt’s nuclear reactors and hopes to continue civil nuclear cooperation.

The summit’s closing statement demanded “that all countries of the region, without exception” join the Nuclear Non-proliferation Treaty and open unclear facilities to U.N. inspection. It also appealed for nuclear weapons to be banned from the Middle East.

The message cited no specific nation, but many Arab leaders share Western worries that Iran could uses it nuclear program to develop atomic weapons, setting off a regional arms race. Iran says it only seeks reactors to produce electricity.

Story Continues →