Girish Gupta



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Venezuela Remains Angry at US Sanctions
Jun. 2, 2011

Published by Minyanville

Venezuela’s government remains angry at US sanctions against state oil company Petróleos de Venezuela (PDVSA), thanks to its trade with Iran. Thousands of people, clad in the red of President Hugo Chávez’s socialist revolution, packed into a Caracas plaza on Sunday to demonstrate against the sanctions.

“Nobody messes with Venezuela,” said oil minister Rafael Ramírez. Last week he told the “imperialists” to “go to hell” on the news.

The oil company is banned from dealing with any US government contracts, US import-export financing and any export licenses for sensitive technology. However, the sanctions have been described by analysts as toothless since they allow Venezuela to continue to sell oil to the US. As the fifth biggest supplier to the US market, this is not something Washington would want to change with too much haste.

“The fact that the US chose not to curtail its own supply of oil from Venezuela is evidence of the dramatic effects such a reaction would have on the US domestic oil markets,” says Boris Segura, a strategist at New York-based Nomura. “In particular, in 2010, Venezuela accounted for 8.4% of US’ gross imports of crude oil and products and was 9.1% in 2009.” However, Segura went on to describe the sanctions as a “warning shot” fired at Venezuela.

Ramírez suggested that PDVSA is keen to reduce Venezuela’s dependence on the US and so may increase trade to China and other nations. Foreign minister Nicolas Maduro, who also joined PDVSA’s board of directors last week, said that Venezuela was easily able to focus its business elsewhere.

Chávez was in fine form talking about the US this week, describing the “Yankee empire” as “one of the most abominable empires in the history of the world.” On links with Iran, Chávez described the windmills on his country’s coast “pointing directly at Washington,” playing on rumors of Iranian missiles being hidden in the region. He often jokes at links with the Middle Eastern pariah and has said that Iran’s nuclear program is solely peaceful.

Iran’s foreign ministry spokesman Ramin Mehmanparast even weighed into the row describing the sanctions as “outdated” and demonstrating the States’ “isolation … in the international community.” He continued: “These stances show that the illegitimate and arrogant US measures have no effect on the independent and freedom-seeking resolve of nations.”

In other news:

PDVSA Directors Replaced
PDVSA’s board of directors saw changes last week as the company, and Chávez, were keen to distance themselves from a $500 million loss in pension funds thanks to a Ponzi scheme. Head of finance Eudomario Carruyo, internal director of production Luis Pulido, planning director Fadi Kabboul, head of gas Carlos Vallejo and research director Hercillo Rivas are all out.

PDVSA will cover all losses according to Ramírez, who as well as being oil minister is president of the company.

Chavez Requests More Funds Before Major Election
Chávez has requested $10.5 billion in new bonds from the National Assembly this year, in order to bolster housing initiatives, job creation programs and to respond to the heavy rains which have damaged homes and infrastructure. The projects will come just in time for next year’s presidential elections. The government plans to build 150,000 homes this year and 2 million by 2017.

China Sets Up Auto Plant, Shared Satellite
Chinese auto manufacturer Chery is to build a $245 million factory in Venezuela. In a deal signed between China Development Bank and the Venezuelan government, the factory will be the second-largest Latin American property owned by the Chinese company. Its largest is its plant in Brazil. The new plant will be the first Chinese auto manufacturing factory in Venezuela.

The two nations are increasingly working together, with an observation satellite set to be launched next year in a partnership between China and Venezuela. Venezuelan science and technology minister Ricardo Menendez announced last week that the project would cost $140 million and would be used to monitor troop movements and illegal mining.

“We will have a satellite with the ability to monitor our territory 24 hours a day,” he said. “The Venezuelan state will monitor the development and impact of natural phenomena such as earthquakes, floods and heavy rainfall.”

The contract is between the government in Venezuela and the state-owned China Great Wall Industry Corporation.

Chavez's Influence Said to be Fading
Benedict Mander in the Financial Times this week lamented the ‘waning’ of the Chávez star. Mander, the FT's correspondent in the country, suggests that the left is becoming disenfranchised with Chávez. “Gone are the days when Mr Chávez would elicit rapturous applause for describing George W. Bush as ‘the devil’, as he did at the UN general assembly in September 2006,” says Mander.

“Chávez’s ability to influence international politics successfully has deteriorated dramatically in a short space of time,” Heinz Dieterich, an ideologue of so-called “21st-century socialism” who has advised Chávez and once considered him a friend, told the Times. Dieterich added that Chávez has “lost moral authority” and that his socialist discourse is “worn out.”

Public Puffing is Outlawed
Tuesday saw the introduction of a nationwide ban on smoking in public indoor spaces such as clubs, bars, restaurants and offices. The law comes in time for the World Health Organization’s “World No Tobacco Day” campaign.


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© Girish Gupta