Venezuela's Moscow Maneuvers

All enlightened governments, including Canada's, which just signed an investment agreement, should deem Venezuela a "no-go" zone. This is because the country, under Hugo Chavez, has descended into a kleptocracy. Industries like coffee and rice have just been nationalized and confiscations without compensation are underway.

Two Canadian mining companies are victims, as are Venezuelan business interests, and there are gross human rights abuses, says Canadian lawyer and activist Robert Amsterdam. In his white paper entitled "The Erosion of Judicial Autonomy under Hugo Chavez," Amsterdam and his Venezuelan legal colleagues recite a case involving Eligio Cedeno who has been jailed without charges for two years because he opposes the Chavez regime. Here is their executive summary:

"The rule of law and liberal democracy in Venezuela are crumbling under the leadership of President Hugo Chavez. Chavez has subverted the fundamental institutions of government converting theminto tools for maintaining and consolidating personal power," they wrote.
"He and his supporters harass those who do not align themselves politically and ideologically with the Bolivarian Revolution. They use various means to persecute their opponents, including assaults in the media, violence, censorship and false criminal charges. Chavez has gained complete control of the criminal justice system. A growing class of political prisoners has emerged, including businessman Eligio Cedeno."

"Intervention by the international community is both necessary and appropriate in order to preserve the rights of Venezuelan citizens."

Official theft
So where is the Canadian and other governments when it comes to preserving the rights of foreign firms and individuals. Take the case of the two embattled Canadian mining companies -- Crystallex International Corporation and Gold Reserve Inc. They have spent years exploring and millions obtaining rights to develop two world-class ore bodies in Venezuela only to have them confiscated, de facto, through illegal means. Both trade for pennies as a result.
Crystallex's statement in its 2009 Second Quarter was:

"The Company's principal asset is its interest in the Las Cristinas gold project located in Bolivar State, Venezuela. The Company's interests in the Las Cristinas concessions are derived from a Mine Operating Contract (the "MOC") with the Corporacion Venezolana de Guayana (the "CVG") which grants Crystallex exclusive rights to develop and mine the gold deposits on the Las Cristinas property."

"The Company has not received a response from the Minister of Environment and Natural Resources ("MinAmb") to its June 16, 2008 appeal of the Director General of the Administrative Office of Permits at MinAmb denying its request for the Permit for the Las Cristinas project."
"On March 2, 2009, the CVG confirmed that the Company was in compliance with the MOC. This corroborates the Company's position that is not in default of the MOC and there is no change in control under the terms of the MOC. The Company plans to remain compliant with the MOC in order to protect the option of proceeding to international arbitration."

That's theft through government obstruction and stone-walling.

The other case involves a combination of Venezuelan tactics to obstruct and reduce the value of Gold Reserve Inc. combined with a hostile takeover bid this winter by Rusoro Mining Inc., a Moscow favorite. The bid failed because it was declared illegal by the Ontario Superior Court because a financial intermediary was collecting fees from both parties without disclosing this to Gold Reserve.

Canada bye bye unless you bear arms
Lest anyone discount this as just the usual maneuverings in the world of mining, the secret intentions to steal from the Canadians were published last fall in a blog out of China.

"Venezuela said it will offer a joint venture to Russian-owned miner Rusoro to operate the Las Cristinas and Brisas gold projects, currently under contract to two Canadian companies, Mining minister Rodolfo Sanz on Thursday. He told a Russian delegation that a memorandum of understanding would soon be signed with Rusoro. It appeared that Sanz intends to replace the Canadian companies who operate the projects that contain some of Latin America's largest gold deposits, with Rusoro, but he did not mention their names."

Why would this be happening, given the fact that the Canadian companies had signed a deal and invested millions in good faith already?

"What's happening in Venezuela is not understood by Canadians," said Amsterdam in a recent interview. "Chavez has political prisoners, he is killing opposition without due process.I have a client who is victim to phony charges, no trial and has been in jail for two years. there are two million people on Chavez's black list who are denied decent jobs. In the meantime, he is causing problems with neighboring countries and has bought US$10 billion worth of arms from Russia. We just don't get the danger."

Lloyds of London does. In June, it withdrew maritime "war risk" policy cover for Venezuela, "the first such exclusion of a Latin American country for 20 years. the move is the latest sign of Venezuela's deteriorating business environment," wrote Oil and Gas Insight in June.

 

Comments

[PunditBasher]

Are you seriously going to use another blogger from this site as a source for your accusations?
Robert Amsetrdam? give me a break. He is not an analyst, he is a paid advocate. A corporate lawyer. And one that supported dissolving the parliament and judiciary of Venezuela in favor of an all powerful executive branch (dictator) only a few years ago

What you don't seem to get is that international corporations don't have claim to Venezuela's natural resources.

[Ira7]

Thank you for the great article. As they say, the proof is in the pudding, and with Chavez, it's been all about cheating foreign companies--time and time again.

And for those who still wish to consider VZ as being a democracy, I suggest you learn more about VZ. Not only have the elections been a sham--where Chavistas use STATE resources (illegal) to promote Chavista candidates--but in order to work for a state-owned company like PDVSA (and more and more companies are becoming state-owned), you HAVE to vote Chavez's way or you're out. Let's also not forget Chavez's demonizing all those with opposing views, and conspiring false charges and removing powers from opponents who win. (See Caracas Mayor Ledezma and State Governors.­)

The leftists would like to ignore this thievery, this corruption, and they gloat at Chavez's success at manipulating the system, perverting democracy where it can hardly be called that any longer.

But it is what is--the highest form of political corruption and fascism known to man, and it stinks.

[FloresdelaHoz]

I have been to Venezuela over a dozen times on business before and after Chavez came to power.

Chavez would not have come to power if it were not for the failure of the Venezuelan oligarchy to address the economic inequalities in the country. Having said that, there is no excuse for Chavez's destruction of Venezuela's economy. Caracas used to have a large and vibrant educated middle class. Today the middle class barely exist. Thanks to Chavez's infantile understanding of economics, capitalism is on its last breath. The Cuban economic disaster is unfolding rapidly in Venezuela.

Unfortunately, Anglo-American capitalism has been servely undermine by the financial bail out of the American Oligarchy's interest in Wall Street. I no longer believe in the integrity of Anglo-American capitalism but I definitely know that the Cuban - Venezuelan economic model is a disaster.

We must find a third way similar to German or Nordic capitalism. if we fail, the LatAm left will only continue to grow. A united leftist LatAm would be a nuclear Superpower within 10 years. Had Castro had control of the USSR's nuclear missile in Cuba during the Cuban missile crisis, the US today would just be emerging from the stone age.

[arvay]

I think these Latin American oligarchies are beyond redemption, and I distrust their influence on our media and military-industrial complex.

I agree with much of what you say, but we Americans need to keep our hands off and let Latin Americans sort things out for themselves.

I think the jury is still out on Chavez, the fact that he still obeys election results gives me some optimism -- the Cuban government would never allow free elections. If he trashes the economy, but remains obedient to the popular will, he can be removed and replaced with someone who may do a better job.

If Chavez invests much of his country's oil wealth in education and raising the living standards of the poor, I think he can make a lot of progress. If he develops a fear of the middle class that will arise, he could become an obstacle, like Castro.

I agree with your views on capitalism -- it's a useful but dangerous force, that needs to be regulated like atomic power. Successful small businesses need to be encouraged and cultivated, but larger companies need to be prevented from taking over the government, as ours have here.

[arvay]

Many people, myself included, are very suspicious of all the "alarm" over Chavez.

Venezuela, like all Latin American countries, is "blessed" with an overclass of extremely wealthy people, heirs of the Spanish and Portuguese colonialists. They have been and continue to be the major obstacle to most people of the region toward progress and economic improvement.

Chavez' approach seems a bit more radical than, say, Lula in Brazil, but both leaders are attempting to alter this fundamental "poison pill" wealth gap in their societies. These wealthy are fighting back by trying to entice their North American neighbors to help them.

The bottom line is that Chavez is democratically elected and he has bowed to electoral rejection of his proposals to extend his power.

How he treats foreign businesses is not a matter for general concern: he will either get good results for Venezuela or not, that will be on him. The Brazilians are contemplating a more nationalized approach to their windfall oil discoveries -- and I fully expect that oil company lobbyists and pr departments will start cranking our anti-Lula screeds soon.

Chavez' constant charges of expected American aggression may sound paranoid, but one needs to look at the totality of our relations with Latin America to see why this looks so credible.

As the Mexicans say -- "so far from God, and so close to the United States of America."

[raaf]

Chavez is elected by the Venezuelan people for the Venezuelan people. He isn't there to look after the business interests of western corporations who together with the Venezuelan elites have been the primary beneficiaries of Venezuela's natural resources for far too long.

[serg36]

That is absolutely correct. I would wager a pretty penny that they were paying their workers dirt and loop-hole out of their taxes. All these mining companies are plundering the resources and giving nothing back to the actual people of Venezuela.

[Ira7]

Chavez is paying all of the workers at the expropriated companies less--a lot less.

Didn't you know that?

[Lavina]

I meant to say, besides The Center for Economic and Policy Reseach, here are some more good sources of information: http://www.multinationalmonitor.org, http://www.globalexchange.org, http://www.democracynow.org, http://www.veninfo.org,

[LuxSF]

Thank you so much for this article. I'm amazed on how the Huff Post has barely covered what is really happening in Venezuela. Some people seem to be giving President Chavez a free pass just because of his anti-United States rhetoric. I am from Venezuela, and I will certainly start sharing this with my Venezuelan friends.

[onemorecraig]

I'm Canadian and this is total BS! the Canadian mining companies have been exploiting this area for a long time, including violations of human rights. I doubt the Russian ones will be any better, but the Russians have been a lot more supportive of Chavez. The companies want to perpetuate the right wing oligarchies - and their militias, because they can get what they want and leave the devastation to the local indigenous people to suffer with - if they let the indigenous peole survive at all. On top of that - as with most extractive industries- almost no money from rolayties goes into the local or national coffers. So big surprise, Chavez wanted more royalties and the companies didn't want to pay. Well, unlike our own Conservative waste of skin (PM Harper), Venezuela's democratically elected leader is standing up to the imperial forces of the Western countries. Why do you think Chavez was subjected to a coup a few years back? Chavez isn't perfect, but i'd take his sorry leadership over our Canadian leadership.

Please note that all the cited comments in the article come from industry related groups... and that includes the National Post - a pro-business conservative waste of Canadian trees.

[altohone]

Are contracts obtained through corruption valid?

Is the author mad about the Russian arms deal due to the seller not being the largest arms supplier..­. namely USA?

We're setting up military bases next to Venezuela, not the other way around.
Who is dangerous?

[Lavina]

Touche'

[Ira7]

U.S. Military bases? Really? Is that what you're going to call them? Gee, I must be stupid. I thought they were Colombian bases.

What about Chavez's offer to host the Russian Navy?

[Brewerstroupe]

Under Chavez:

GDP has grown 13.5 percent annually.

The private sector has grown faster than the public sector.

The poverty rate has been cut by more than half.

Extreme poverty has fallen even more, by 72 percent (does not take into account increased access to health care or education.­)

The percentage of households in poverty has been reduced by 39 percent, and extreme poverty by more than half.

Real (inflation­-adjusted) social spending per person more than tripled from 1998-2006.

From 1998-2006, infant mortality has fallen by more than one-third.

Primary care physicians in the public sector increased 12-fold from 1999-2007.

Huge gains in education, especially higher education, where gross enrollment rates more than doubled from 1999-2000 to 2007-2008.

Unemployment down from 11.3 percent to 7.8 percent. During the current expansion it has fallen by more than half.

Total public debt has fallen from 30.7 to 14.3 percent of GDP. The foreign public debt has fallen from 25.6 to 9.8 percent of GDP.

Source
Center for Economic and Policy Research

(The CEPR advisory board includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; plus Janet Gornick, Professor at the CUNY Graduate School, Richard Freeman, Professor of Economics at Harvard University; Eileen Appelbaum, Professor at Rutgers University.
http://www.cepr.net/documents/publications/venezuela-2009-02.pdf

[LuxSF]

Totally bias information that is all based in the government's own statistics. I'm tired of seeing the same post every time someone writes anything against President Chavez.

You left out the political persecution, the fact that schools and semi-hospitals recently built are falling apart, corruption and the rise of the new government oligarchy, one prisoner dies each day in average in Venezuelan jails, Caracas is the most dangerous city in Latin America (and I believe 2nd or 3rd in the world), express kidnapping is happening everywhere in Venezuelan setting a new record, the first cause of death in Men between 15 and 28 is violence related (guns and knifes), how the drug trafficking and money laundering business is flourishing because of total impunity, how there is massive emigration of young Venezuelan professional, families are being torn apart, the abuse and control of the government and the fact that more access to education and health does not mean a better one.

Why do know this? Because I am actually from Venezuela; I could not care less where this information comes from. We know how all this can be manipulated.

Thanks for the article Ms. Fracis.

[Brewerstroupe]

No doubt you were more content under Carlos Andreas Perez, when the social conditions you describe were markedly worse.

If you are unsatisfied with Nobel prize winner's analysis, suggest you post a few links to information you consider to be more accurate.

"the fact that more access to education and health does not mean a better one. "

Hmmmm.

......and what does more access to education and health mean to you? Uppity peasants who support the left wing? Is that the problem?

[revbob22]

GDP grew because OIL Prices reached $120/ barrel, not because industry and services grew.

The private sector has consistently lost ground, the government preferred to import, mostly from Colombia. Trade Balance in favor of Colombia by about 7 BILLION $ last year. 10 years ago the balance favored Venezuela by a few hundred million.

Inflation this year predicted to be 26%, over ten years inflation accumulated is over 200%

Unemployment figures count informal street workers, which account for about 30% of that figure. Informal street workers do not belong in data that defines employment.

Debt figures emanate from the Central Bank, controlled by Chavez. No figures from it can be trusted, it is no longer an independent actor.

Mark Weisbrot is a paid propagandist of the Chavez government. And the principal author of the statistics report quoted. Grain of salt time, folks.

[LMPE]

Isn't a head of state supposed to serve his/her own people before serving foreign interests?

Y'know, like how Chavez has established public education in Venezuela and Morales is requiring schools to teach indigenous languages in Bolivia?

[ModernTimes1]

The tale of woe. The true leftists repudiate liberal dogma and morality. How can this be?!

Bravo Chavez!