The Americas Post - Just think of Chavez' show "Alo Presidente" as the ultimate in reality TV

Venezuela President Hugo Chavez threatened on Sunday to nationalize any private bank that fails to comply with local legislation setting standards for agricultural finance and other projects in the country.

The leftist leader, who since 2008 has increased state involvement in the financial sector, has criticized banks repeatedly for their lack of support with  agriculture and housing.

“The private banks, if they don’t comply with the Constitution and the law, well I have no problem, I repeat, to nationalize them.  We have to enforce the Constitution and laws of this Republic,”  Chavez said in his weekly TV show.

The new ruling, to promote financing for agriculture in the oil-producing country, says a bond issue will provide banking resources for the agricultural  sector.  But Chavez provided no details,  requesting a meeting with executives of banks Banesco and commercial premises, and the Spanish Banco Provincial.

The Provincial Bank, a subsidiary of Spanish bank BBVA is one of the largest in the country.

“(Vice President) Elijah (Jaua), this week you call the presidents of the largest banks, namely Bank Banesco, the Provincial and Commercial, call them to the vice presidency and talk to them but do not fall for flattery, “Chavez said in the third edition of his program.

The retired army officer, who claims to be cured of his cancer diagnosed in mid-2011, passed a law enabling private banking fund transfers to portfolios directed at agricultural financing.

“I am ready, if they do not comply, to nationalize the banks.  I have no problem, I repeat,” said Chavez, who said he is willing to work on “coordination and cooperation with private banks “.

The program also announced that Vice President shall resume the country’s Ministry of Agriculture and Lands.  Since taking office in 1999, Chavez, seeking reelection in the presidential election of 2012, has nationalized large sectors of the Venezuelan economy. In July 2009 he completed the nationalization of Spanish financial group Santander.

The Americas Post - Chevron managers could end up in Brazilian prison

Brazilian prosecutors are planning to file criminal charges against Chevron Corp within the next several weeks, adding the possibility of prison time to an $11 billion civil lawsuit for a November oil spill offshore.

The federal court filing in Campos, Brazil, will probably include a criminal indictment of Chevron Brazil CEO George Buck and other staff, Brazilian government officials have revealed.

Transocean Ltd, whose rig was used in the operation, and some employees in Brazil will also be charged, according to the officials.  A judge will then decide whether to accept the charges and move ahead with indictments.

Buck and Chevron acted in a “careless and irresponsible way,” said one official who investigated the 2,400-barrel spill.  He admitted it is unlikely that people facing charges will be arrested soon or be prohibited from leaving Brazil. As the case advances however, those measures could be applied.

The charges would come more than a month after a Federal Police investigator submitted a report saying Chevron and Transocean took “unacceptable” risks in the Frade oil field off Brazil’s southern coast, and recommended that 17 individuals be indicted.

Police and prosecutors alleged that Chevron knew it was drilling in a high pressure area and that rock structures above the reservoir were fragile, factors that should have prompted more caution.

“This well could not and should not have been drilled,” the Federal Police said in a December 20 report.

Chevron denies taking undue risks and says Brazilian authorities approved drilling plans.  Oil from the leak did not reach shore and was less than 0.1 percent of BP’s 4.9 million barrel Gulf of Mexico spill in 2010. The Frade leak was also much smaller than several previous spills in Brazil by Petrobras.

Credit Inphographics IMFdirect

“There’s no doubt that with the growth of China, we’ve seen a re-commoditization of Latin America,” said Colombia’s Mining Minister Mauricio Cárdenas, an economist and former Director of the Latin America program at the Brookings Institution in Washington DC.

In terms of economic development, Latin America did not take any advantage of the rising prices of  commodities -raw-materials-  , which prices nearly tripled from 2000 to 2010.

In that sense, Latin America’s share of global merchandise trade remained the same (5.7 %), and service exports  fell to 3.4 percent from 3.9 percent.

It is difficult to do business in Latin America.  The World Bank´s 2012 competitiveness ranked Brazil -the region’s biggest economy- as No. 126 out of 183 countries.

READ MORE HERE.

In short, the continent’s decade-long boom may be ending. According to the U.N.’s Economic Commission for Latin America and the Caribbean (ECLAC), Latin American growth, which topped 6% last year, will slow to 4.3% this year and 3.7% in 2012. Brazil’s economy, the region’s largest, actually flat-lined in the third quarter; Argentina’s scorching growth of 9% this year will be halved to 4.8% next year, and capital flight is expected to be robust. Mexico’s growth, meanwhile, will drop from 4% to 3.3%.

That’s hardly doomsday news, but it’s one reason the Montevideo summit’s main action was to raise protective import tariffs…READ MORE HERE

The IMF’s latest Regional Economic Outlook: Western Hemisphere sheds light on Latin America’s reliance on commodities from a historical perspective.  A study conducted by Gustavo Adler y Sebastián Sosa  also looks at the effect of a sharp decline in commodity prices on emerging market economies and on the policies that could shield countries from that shock. READ  MORE HERE

The Americas Post - That isn't the Exxon Mobil logo on the side of that storage tank

Venezuelan President Hugo Chavez announced on Sunday that his nation will not recognize any decision by a World Bank tribunal in a multibillion-dollar arbitration case against Exxon Mobil Corporation.

Exxon has called Venezuela before the World Bank’s International Center for Settlement of Investment Disputes, or ICSID, demanding $12 billion in compensation for nationalization of the Cerro Negro oil project by Chavez in 2007.

“I tell you now: we will not recognize any decision by ICSID,” Chavez said in a televised speech.   He repeated accusations that the U.S. oil producer has used unfair practices to rob the South American OPEC member of its resources.

“They are immoral … How much could they steal in 50 years? Who would dare launch this madness without any foundation?  They wanted $12 billion. From where?” he said.

“We are not going to bow before imperialism and its tentacles, understand that … They are trying the impossible: to get us to pay them. We are not going to pay them anything.”

Exxon declined to comment.

Some interpreted the statement to mean Venezuela would reject rulings in the 20 other cases pending before the World Bank’s tribunal, responses to multiple state takeovers in recent years.  They include separate multi-billion dollar claims filed by another U.S. oil company, Conoco Phillips.  Two statements issued later however, by Venezuela’s Petroleum and Mining Ministry and by its state oil company PDVSA, only mentioned the Exxon case.

Last week an arbitration panel at the International Chamber of Commerce, awarded Exxon $908 million in a separate case about the Cerro Negro nationalization.  On Saturday, Venezuelan Oil Minister Rafael Ramirez said he did not expect a verdict in Exxon’s World Bank case before the end of this year.

Both cases are being monitored by the industry for precedents in future disputes between companies and producing states, which have demanded a larger share of oil profits as prices increase and new reserves grow scarce.

For years, Venezuela’s socialist president has accused foreign oil companies of looting that nation’s resources, while still maintaining close ties with many of them.

Exxon says the World Bank case is to compensate for its assets, and experts say it could result in a larger award.  The government has insisted Exxon receive only slightly more than the $750 million it said was invested in the project.  In September, Venezuela offered to settle for $1 billion.

For years, Chavez has hit oil companies with tax hikes and contract revisions  to fund public anti-poverty programs.

Venezuela’s push for more control over its oil has been emulated by other producing nations.  Critics say it has scared investors away from that country and reduced production volume.  Regardless, some companies remain eager to invest in Venezuela’s Orinoco extra heavy oil belt, one of the world’s largest untapped reserves of crude.  Chevron and Spain’s Repsol both signed deals in 2010 for new projects there.

The Americas Post - Chinese Vice President Xi Jinping is Hugo Chavez' new best friend.

Venezuelan President Hugo Chavez claimed this week that China may replace the U.S. as Venezuela’s leading trade partner, thanks to a strategic alliance between those two nations.

Chavez said that commerce between Venezuela and China has reached $20 billion this year, up from $600 million a decade ago, and is now growing by $2 billion per year.

Trade between the United States and Venezuela is running $33.5 billion so far this year, according to the U.S. Dept of Commerce.

Chavez has always been at odds with Washington, and trade between the two neighbors is expected to remain stagnant until a long-running diplomatic conflict is resolved.  The U.S. embassy in Caracas has not had an ambassador since July 2010, when Chavez rejected U.S. nominee Larry Palmer, accusing him of disrespect towards his government.  Washington revoked the visa of the Venezuelan ambassador in retaliation.  Venezuelan Foreign Minister Nicolas Maduro said on Tuesday that diplomatic relations with the United States are frozen and he sees no immediate solution to the dispute.

Chavez, a frequent critic of U.S. President Barack Obama, says growing ties with China are crucial for his country’s development.

“I believe it’s possible … not just in Venezuela, but also in Latin America,” said Chavez, speaking at a news conference.

China has become Venezuela’s largest foreign lender in recent years.  Last month, Chinese officials signed $6 billion in new loans to improve the South American country’s oil industry.  The Asian giant had already promised over $32 billion in loans. Venezuela, in turn, is ramping up oil shipments to China.

The injection of Chinese cash has helped Chavez  boost spending ahead of next year’s presidential election.

The United States remains the main consumer of Venezuelan oil.

The Americas Post - Why is this such a familiar sight? Photo Credit: AP

The Brazilian Federal Police department announced that it has begun investigating an oil spill in an offshore field operated by multinational producer Chevron Corporation off the coast of Rio de Janeiro.

Federal Police department environmental affairs division chief Fabio Scliar told government news service Agencia Brasil that his division began looking into the causes of the spill and its extent on Thursday.

Chevron spokesman Scott Walker released a brief statement, saying only that the company “continues to fully inform and cooperate with Brazilian government agencies.”   The company said it has 18 ships working on a rotating basis to collect oil off the surface and monitor the slick.

Chevron admits only that between 400 and 650 barrels of oil have leaked from a well it was drilling off the coast of Rio de Janeiro.  The company said the spill occurred when drillers underestimated the pressure of an underwater oil reservoir, causing oil to rush up the bore hole and escape into the surrounding seabed.  It then began to leak from seven cracks in the ocean floor within 160 feet of the well head, continuing to release between 420 gallons and 4,200 gallons daily.

The Americas Post - Will they call it LAN AM?

Chilean airline LAN has avoided a lawsuit from local competitor PAL and reached an agreement that will allow LAN to proceed in their planned marriage with Brazilian airline TAM.   The merger would create one of the largest airline groups in the world.

LAN, one of the leading carriers of Latin America, announced Tuesday that PAL agreed to drop objections to the merger raised some weeks ago in the Chilean Supreme Court, in return for compensation of US$5,000,000.

Based in Santiago and owned by the local Cueto family, LAN operates in Argentina, Colombia, Chile, Ecuador and Peru, with additional cargo service in Brazil and Mexico.  Over a year ago the company announced their intention to acquire TAM, thus creating the largest airline in Latin America with over 10.5 billion in revenue.

Based in Sao Paulo and controlled by the Amaro family, TAM is the largest airline in the largest economy of Latin America.  The company has announced it will not renew four aircraft leases next year as originally planned, saving $50 million a year and reducing their fleet to 159 planes instead of 163 at the end of 2012.  TAM reported profits of 38 million dollars in the second trimester, leaving behind their losses for the same period last year.

LAN plans to invest heavily in their fleet as part of an aggressive expansion plan for 2011-2014.  The Chilean carrier reported a year-over-year revenue decline of 11% for the third trimester, due to restructuring of their Colombian operation and foreign exchange losses.  From January to September the company reported profits of US$207,700,000.

Expected to be complete by mid 2012, the merger is expected to save almost 400 million dollars per year by combining operations.  Both companies plan to ask the Chilean Supreme Court to approve the deal by waiving three remaining legal obstacles imposed by the local anti-monopoly tribunal.

Humala still has something to smile about

Approval ratings for Peruvian president Ollanta Humala declined 3% in October but remained at a relatively high 62% as the new head of state nears the end of his first 100 days in office, according to a poll by firm Ipsos Apoyo.

The numbers seem to indicate that Humala’s center-left policies and promises to reach out to the poor while re-establishing investor confidence are giving fruit.

The retired military officer is approved of by 59% of Peru’s richest voters and 56% of the poorest, which his popularity among the middle class is running over 60%.  The survey, published in the daily newspaper El Comercio, indicated that voters believe Humala to be following through on his campaign promises and fight against corruption.  Before elected, he had promised new social programs to support the one-third of Peru’s populace that lives in poverty.

Some programs are already taking effect, including an increase in the minimum wage.  Others, such as a pension for those over 65, will begin before the end of the year in some parts of the country.

Humala obtained congressional approval to raise bonuses and taxes in the mining industry, which accounts for 60% of Peru’s exports.  Analysts say the challenges of a battered global economy will continue to be a challenge for his economic goals during the coming year.

The remaining 22% of those polled who disapprove of Humala’s performance has increased by 4% from the prior poll.  The latest study, conducted among 1,200 people from October 12-14, has a 2.8% margin of error.

Russian-Venezuelan "techno-military" cooperation

Relations between members of the Organization of Petroleum Exporting Countries (OPEC) appear to be suffering as a result of the Arab Spring and unilateral decisions to increase production taken by members of the Gulf Cooperation Council.

This week Venezuelan president Hugo Chavez told visiting Russian vice minister Igor Sechin and energy minister Sergei Shmatko that he had “a modest proposition, one of those ideas that one throws out:  to discuss how we can create a new organization for this new world that is surging forth.  An organization of petroleum giants, which don’t number more than four or five, of which Russia and Venezuela are two.  It’s something to talk about”, he said.

Chavez’ declarations come as Iraq and other Persian Gulf OPEC member countries have granted diplomatic recognition to Libya’s National Transition Council government, which overthrew Chavez ally Muammar Gaddafi.

The chief of state added that OPEC would not be affected in any way.

“OPEC is an organization with a history, a profile, a trajectory.  It has and will continue to play an important role of internal equilibrium in historic times like we are living:  the invasion of Iraq, the invasion of Libya, conflicts between member countries.”

Following Chavez’ suggestion his Minister of Petroleum and Energy Rafael Ramirez also referred to OPEC, in the context of production quotas.   “Countries that produced additional volumes need to reduce them from the market before we go back to talking about anything else”, he said.  ”There are people who have been led astray from OPEC; they have to return to the system of disciplined production.”

In OPEC’s last meeting this June, US ally Saudi Arabia led a group proposing to increase production to stabilize oil prices and offset shortages resulting from the revolution in Libya.  Venezuela and Iran led the resistance to that idea. Although the quotas were not changed, the Saudis and United Arab Emirates unilaterally hiked production to help lower prices, which approached 120 dollars per barrel in April.

During the visit it was announced that joint Russian-Venezuelan company Petromiranda would begin early production of 50,000 barrels daily by May of 2012, from wells being drilled by December of this year.  The parties signed an agreement to speed formation of the company, which is expected to swell volume to 450,000 barrels daily, according to Ramirez.  He said that the partners are investing US$525 million financed by bilateral Russian-Venezuelan institutions or other financial entities.

Chavez also announced an agreement extending credit worth four billion dollars to support military technical cooperation between Russia and Venezuela.  ”That’s two billion next year and two billion for 2013″, he said from Miraflores Palace.

The arms business has stopped booming

Activity in the global arms trade declined 38 percent last year, according to a report released by the US Congressional Research Service.  Sales dropped from $65.2 billion in 2009 to $40.4 billion, the lowest level since 2003.

In spite of its financial crisis the US continues to lead the pack with 57.2% of the market, far ahead of second-place Russia with 19.3%.  The other top arms-exporting countries in descending order include France, United Kingdom, China, Germany and Italy.

The document, considered one of the most detailed reports available to the public, said that developed countries account for the majority of the global arms trade.  Developing countries that export the tools of war were led by India, followed by Taiwan, Saudi Arabia, Egypt, Israel, Algeria, Syria, South Korea, Singapore and Jordan.

Author Richard Grimmett attributed the reduction to uncertainties in the global economy.