Jan
7
2013
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ICYMI: Venezuela’s endgame approaches

Washington Post
January 5, 2013
By Editorial Board

A Venezuelan government statement Thursday said that President Hugo Chavez, who has been secreted inside a Cuban hospital since undergoing surgery on Dec. 11, was facing “complications” from “a severe lung infection.” As has been the case throughout his nearly two-year bout with cancer, details of the strongman’s condition, treatment and prognosis are unavailable. But Venezuelans are bracing themselves for the death of the caudillo who has ruled them — and wrecked their once-prosperous country — over the past 13 years. The United States and its Latin American allies need to prepare, as well.

Mr. Chavez’s critical condition arrived at a critical moment: He is due to be sworn in next Thursday for another six-year term in office. Having won reelection in October after assuring Venezuelans that he was fully cured, the president disappeared soon afterward; in his last appearance before departing for Cuba, he appointed foreign minister Nicolas Maduro as his vice president and political successor. If Mr. Chavez is too ill to attend his inauguration, authorities are saying, they will simply delay it — a stretch of the constitution’s ambiguous wording. But when and if he dies, the constitution is clear: A new election for president should be held within 30 days.

That will be a critical test of Venezuela’s post-Chavez direction. The ruler’s inner circle, which has been gathering around him in Cuba, may consider postponing the election or even calling it off. Their fear — and that of the Castro regime in Cuba — is that a fair vote would be won by opposition leader Henrique Capriles, who lost the October presidential ballot but is more popular than Mr. Maduro. Mr. Maduro is Cuba’s candidate, the successor most likely to ensure continued deliveries of the heavily subsidized Venezuelan oil that is keeping the Communist regime afloat.

That’s why the first responsibility of the United States and Venezuelan neighbors such as Brazil should be to insist that the presidential election be held and that it be free and fair. The State Department rightly made that demand public on Thursday, following recent private contacts between officials of the two governments. The administration should be prepared to respond quickly if Mr. Chavez’s followers or military leaders — some of whom are under U.S. sanction for drug trafficking — attempt a coup.

Whoever succeeds Mr. Chavez will face a catastrophic economic situation. To win reelection, Mr. Chavez spent wildly last year, increasing the budget deficit to 20 percent of gross domestic product; his successor will be forced to order a sharp and painful devaluation. That will only worsen already high inflation and shortages of staple foods. When poor Venezuelans realize that lavish pre-election promises of new apartments and appliances won’t be delivered, anger toward the new leader may swell.

Sadly, the economic pain caused by Mr. Chavez could, after his death, help create a political movement that will revere his memory. Forty years after the death of Juan Peron, Peronism still haunts and holds back Argentina. If Venezuela is to escape a similar curse, Mr. Chavez’s successors will have to balance economic stabilization against the need to build a political system where democracy, and not autocratic populism, can thrive.

To read this article on the Washington Post, please click here.

 
Aug
2
2012
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Venezuela’s opposition wants to scrap preferential oil deals

Reuters
August 1, 2012
By Marianna Parraga

Capriles in Anzoategui state Venezuelas opposition wants to scrap preferential oil deals

Courtesy of: Reuters / Carlos Garcia Rawlins

Venezuelan opposition leader Henrique Capriles said on Wednesday he would scrap preferential oil deals with foreign allies if he defeats socialist President Hugo Chavez in an October election to lead the South American OPEC member.

Chavez has sought to boost his influence abroad by offering crude deals to nations in Asia, Latin America and the Caribbean — Venezuela’s state oil company PDVSA was not paid directly for almost half the crude it pumped last year.

In Capriles’ first major speech on his future oil policy, the 40-year-old said stopping Chavez’s deals for crude on credit or in exchange for other goods would save $6.7 billion annually, which would be invested in new social programs.

“To have a friend, you don’t need to buy him,” Capriles said during a campaign stop a few kilometers from the Puerto La Cruz refinery. “From … 2013, not a single free barrel of oil will leave to other countries.”

The youthful former state governor named Belarus, Cuba, Jamaica, Dominican Republic, Uruguay and Argentina as countries that would stop receiving oil on preferential terms.

In 2011, PDVSA — the fiscal motor of Chavez’s socialist policies — was not paid directly for 43 percent of its barrels of crude and oil products, rising from 36.5 percent in 2010 and 32 percent in 2009.

Many of the agreements are criticized by his opponents, especially those signed over the last decade with China, Cuba, Argentina, Uruguay, and the more than a dozen countries that are members of Venezuela’s Petrocaribe supply program.

Chavez — who underwent three operations for cancer over the last year — is seeking re-election for a third term on October 7 to extend his self-styled socialist “revolution” and is spending heavily to beat Capriles.

Most opinion polls give him a double-digit lead.

‘NO LEGAL CHANGES PLANNED’

Capriles is seeking to tap into pent-up frustration among many voters weary of high crime, inefficient public services and high prices. He has been on a months-long “house-by-house tour” through Venezuela meant to win over Chavez supporters and draw a comparison with the recovering president.

Capriles — who frequently cites Norway as an example of a nation that has used its oil wealth properly to diversify the economy — said he planned no legal changes to the oil industry, although there would be more supervision of the activities of public and private companies that are partners of PDVSA.

Chavez ordered the nationalization of dozens of crude projects in 2006 and 2007, but Venezuela has still managed to attract partners from Russia, Vietnam, Belarus and Malaysia to join PDVSA-led projects.

Companies including U.S. major Chevron, Spain’s Repsol and Italy’s ENI have also been drawn by the world’s biggest crude reserves, which are mostly located in the Andean country’s Orinoco Belt.

Oil accounts for more than 90 percent of Venezuela’s exports.

Capriles promised to use the extra resources from stopping preferential deals, plus money from a planned doubling of production between 2013 and 2020, to fund programs such as raising benefits for pensioners, scholarships for mothers of handicapped children, and education.

“Where will all these resources go? Not to tanks, not to a hospital in Nicaragua, not as donations,” Capriles said.

(Writing by Jack Kimball; Editing by Daniel Wallis and M.D. Golan)

To read this article on Reuters, please click here.

 
Jul
30
2012
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Does oil giant Chevron want Chavez to win reelection in Venezuela?

Chevron has been in Venezuela since the 1920s when politicians were heavier handed than Chavez. Now, Chevron in Venezuela may be too big to nationalize, writes a guest blogger.

Christian Science Monitor
July 30, 2012
By Steven Bodzin, Guest blogger

0730 world ochevron full 380 300x199 Does oil giant Chevron want Chavez to win reelection in Venezuela?

Courtesy of: Carlos Garcia Rawlins/Reuters

A couple days ago, Raúl Gallegos published a decent little column about how Chevron is, if not betting on a Hugo Chávez reelection, at least setting itself up for a long, happy relationship with the Bolivarian Republic.

Chevron has no illusions about how Venezuela works. It first set up shop there in the 1920s, when strongmen showed heavier hands than Chavez. Scores of populist governments and two oil-industry nationalizations later Chevron is still pumping crude. And when PDVSA asked for a couple of billion to invest in Boscan, a jointly-run field Chevron first came across in the 1940s, the oil major obliged. The 13-year loan is costing PDVSA Libor plus 4.5 percent, far less than the 11 percent that its 2027 bonds pay.

I quibble with a bit of the column, but basically, he’s right. Chevron in Venezuela is now too big to nationalize.

I had thought Repsol fell into the same category. But maybe not. Check out this article from last night.

Venezuela President Hugo Chavez warned Repsol SA (REP) to “think carefully” about taking action against Argentina after it nationalized its YPF SA (YPFD) unit, indicating the Spanish company may face ramifications in Venezuela.

“They have a lot of investment here in Venezuela,” Chavez said on state television after holding a meeting with Argentine Planning Minister Julio De Vido in Caracas. “What happens there in Argentina affects what happens here.”

What jumps out here is that Chávez has never made any similar threats against Chevron over its $18 billion debt to ostensible ally Ecuador. If you haven’t followed that whole story, here’s an article, the plaintiff’s version and the company’s version, but long story short, Chevron was sued in the US for polluting Ecuador. It got the case moved to Ecuador, apparently thinking courts there would be friendlier. Courts there ruled against the company and ordered a huge amount of compensation. Chevron insists that the rulings were flawed by corruption, though I think it’s fair to ask, if they were worried about corruption, why did they get the case moved to Ecuador? The whole thing is a mess.

If Chávez were ideological, you’d think that the anti-Chevron campaigners would find open ears in Venezuela, and would even now be auctioning off the Boscan oilfield to pay the Ecuador debts. Instead, I don’t think Chávez has ever mentioned the case. And Chevron is piling in ever more billions of dollars.

To read this article on Christian Science Monitor, please click here.