November 18, 2007

ROBERT NOVAK novakevans@suntimes.com

Agents of Sen. Hillary Clinton are spreading the word in Democratic circles that she has scandalous information about her principal opponent for the party’s presidential nomination, Sen. Barack Obama, but has decided not to use it. The nature of the alleged scandal was not disclosed.

This word-of-mouth among Democrats makes Obama look vulnerable and Clinton look prudent. It comes during a dip for the front-running Clinton after she refused to take a stand on New York Gov. Eliot Spitzer’s now discarded plan to give driver’s licenses to illegal aliens.

Experienced Democratic political operatives believe Clinton wants to avoid a repetition of 2004, when attacks on each other by presidential candidates Howard Dean and Richard Gephardt were mutually destructive and facilitated John Kerry’s nomination.

Lou for president?

The name of longtime CNN commentator Lou Dobbs has entered speculation as a possible independent candidate for president. At age 62, he never has engaged in politics, but is reported by people who know him as pondering a presidential run.

New York Mayor Michael Bloomberg has been the most likely independent candidate, particularly if Hillary Clinton and Rudy Giuliani win the Democratic and Republican nominations. But Dobbs’ hard-line positions on immigration, international trade and globalization starkly contrast with the three New Yorkers.

If Dobbs really chooses to run, his problem would be finding sufficient campaign funds. While billionaire Bloomberg can handle this difficulty by writing a check, Dobbs would be getting a late start in campaign finance.

Out of Iowa

Sen. John McCain soon will consider opting out of the Jan. 3 Iowa presidential caucuses to take the sting out of a probable fifth-place finish there.

McCain skipped Iowa in 2000 while nearly seizing the presidential nomination from heavily favored George W. Bush. But when McCain was the early front-runner for 2008, it was decided he would contest the state this time.

The rationale for leaving Iowa now would be total concentration on the subsequent New Hampshire primary. Although McCain defeated Bush by landslide proportions in New Hampshire eight years ago, he did so with overwhelming support from independents who are likely to vote in the Democratic primary this time.

Absentee chairman

Sen. Christopher Dodd’s absence from Washington while campaigning for the Democratic presidential nomination has not only created a backlog of House-passed legislation at the Senate Banking Committee that he chairs. It also has resulted in unconfirmed presidential appointees, including three governors of the Federal Reserve Board.

The three proposed Fed governors — financier Larry Allan Klane, banker Elizabeth A. Duke and economist Randall S. Kroszner (now serving on the board) — all were nominated in May. Hearings were held by August, but the Banking Committee has taken no action on them.

No hearings have been held on other nominations referred to the Banking Committee: two members of the Council of Economic Advisers; director of the Federal Housing Finance Board; president of the Government National Mortgage Association, and under secretary of commerce for international trade.

Non-Republican leader

Senate Republican Leader Mitch McConnell, starting early on his bid for election next year to a fifth term from Kentucky, is running a television ad that omits one spoken word: ”Republican.”

McConnell does not flaunt his GOP credentials in a heavily Democratic state where Republican Gov. Ernie Fletcher was just defeated for re-election in a landslide. The ad features an endorsement by Alben Barkley II, grandson of a Kentucky Democratic icon, Vice President and Senate Majority Leader Alben Barkley. ”Mitch McConnell is helping build a new Kentucky,” says the grandson, as he connects the Republican leader to ”the Barkley legacy.”

McConnell is not listed among the most seriously threatened Republican incumbent senators for 2008, and the strongest prospective Democratic challenger — Rep. Ben Chandler — has announced he will not run for the Senate. But facing what could be a dismal year for Republicans with unexpected defeats, McConnell is preparing an aggressive campaign.

This weekend’s summit focused mostly on poor nations, climate change, and the euro vs. the dollar.

By Dan Murphy | Staff writer of The Christian Science Monitor

Cairo

A rare meeting of the heads of state of the Organization of Petroleum Exporting Countries (OPEC) in Saudi Arabia this weekend was predictably focused on prices. But the price most often discussed wasn’t the cost of oil, but rather the plummeting US dollar.

As oil hovers near $100 a barrel, it’s causing global jitters. Some economists worry that price, which depending on whose math you use is either near or above an inflation-adjusted record, could push many world economies into recession.

But the organization that was created in 1960 to stabilize prices, today wields less clout than it once did over the cost of crude. The 13-nation cartel once controlled prices often by just talking about pumping more or less oil. But now its leaders say booming world demand – largely from India and China – and concern over a possible US attack on Iran are driving prices.

“OPEC is still a major force, but it’s certainly far less influential that it was in the 70s or 80s,” says Mustafa Alani, at the Gulf Research Center in Dubai, United Arab Emirates. “What we saw at this conference is that the leaders of OPEC were giving assurances that they’ll do all they can to maintain the stability of the oil supply. But can they do it? We don’t know.”

OPEC’s biggest producers – Saudi Arabia and its Gulf neighbors – say they’d like prices to be a little lower but are pumping near capacity now. After all, their currencies are pegged to the dollar, so a weak US economy hurts them, too. Analysts say that while Saudi Arabia and others might be able to squeeze out an extra 1 million barrels a day, that’s only 3 percent more than estimated current OPEC production of 31 million barrels a day.

The new reality facing OPEC left the ministers over the weekend discussing once peripheral issues: pricing oil in US dollars, climate change, and developing nations. Political opponents of the US – Iran and Venezuela – have been pushing for the market to be moved from the US dollar into stronger Euros. While analysts say that is unlikely to happen anytime soon, the fact that such issues – not oil prices – got so much attention reflects changing times.

US Energy Secretary Samuel Bodman said earlier this week that he did ask OPEC members to increase supply, though he said that the request seemed to have fallen on deaf ears.

Anyone hoping that the OPEC Summit – the first meeting of the leaders of its member states since 2000 – would bring relief from gas prices that have jumped 25 percent this year to above $3 a gallon in the US, is going to be disappointed.

On Friday, crude oil traded in the US rose $1 to over $95 a barrel after Venezuela’s Oil Minister Rafael Ramírez said, “OPEC can’t do anything about the price … there is enough oil in the market.”

Venezuela – whose leftist President Hugo Chávez appears to revel in tweaking the nose of the US, which he alleges backed a failed coup against him five years ago – has been pushing for higher oil prices in tandem with Iran, as well as a move away from the US dollar.

In this, both countries failed. Saudi Arabia – which accounts for about 30 percent of OPEC production – clearly signaling its opposition to what it views as the politicization of the commodity.

After Mr. Chávez urged OPEC’s leaders to use their oil wealth to become an “active political agent” and warned that oil prices would rise above $200 a barrel if the US takes military action against his ally, Iran, Saudi King Abdullah dismissed his arguments.

“Oil … should not become a tool for conflict and emotions,” he said. “Those who want OPEC to become an organization of monopoly and exploitation ignore the truth.”

The joint OPEC statement released at the end of the summit said that the “stability of the oil market is essential,” which oil analysts said was a repudiation of Venezuela’s and Iran’s aims.

Chávez also called on oil producers to sell to poor countries at prices at about one-fifth of the current market price, an idea that gained no traction and appeared designed to bolster his populist credentials. The only support for this idea came from Ecuador’s leftist president, Rafael Correa. Even Iranian President Mahmoud Ahmadinejad, who Chávez was scheduled to meet later Sunday in Tehran, failed to back to him on this suggestion.

Mr. Ahmadinejad has portrayed himself as a man of the people and the promise of his 2005 election campaign to spread Iran’s oil wealth to every dinner table struck a chord with voters. During a visit to Venezuela last January, Ahmadinejad kept that populist touch, announcing with Chávez the creation of a $2 billion anti-US fund. And on Sunday, after meeting with President Correa, Ahmadinejad promised to use his country’s oil wealth to fight “imperialism.”

But his promises remain unfulfilled for most Iranians, though Iran has seen its oil revenues surge in the past five years. Despite the cash boom, Iran’s economy is struggling under the weight of high unemployment and rising inflation, not to mention US sanctions. He simply isn’t in a position to back up his rhetoric, analysts say.

“Iran can’t even think about this case [of cut-rate sales to poor countries], because the oil price works in the market economy,” says Abbas Maleki, a former deputy foreign minister of Iran, and chair of the International Institute for Caspian Studies.

“The best way for Iran is to establish a fund for development, to support development projects,” says Mr. Maleki, who was recently a fellow at Harvard University’s Belfer Center for Science and International Affairs. “OPEC already has a development fund for Africa and Third World countries … Iran wants to spend all oil revenues in Iran.”

Indeed, though OPEC made it clear it isn’t in a position to lower prices, a silver-lining for the US is that Chávez’s efforts to build a populist bloc within OPEC fizzled.

“There are basically two camps, Iran and Venezuela and one led by Saudi Arabia,” says Mr. Alani, the oil analyst. “What happened at this conference was that the leaders of OPEC – Saudi Arabia and the Gulf states – made it clear they oppose the use of oil as a weapon, so the radicals within OPEC were isolated.

“What’s going to happen now is the leaders will do everything they can to maintain supply. But there’s very little they can do if there’s an attack on Iran or something of that nature. In that case, prices will double, perhaps go to $300 a barrel.”

Scott Peterson contributed reporting from Tehran, Iran.