Venezuela has recalled its ambassador in Lima to protest Peru's decision to grant political asylum to a prominent opponent of President Hugo Chavez.
Venezuela's foreign ministry says Peru should have arrested and extradited Manuel Rosales rather than granting asylum to the Venezuelan opposition leader facing corruption allegations in his homeland.
The ministry said in a statement issued on Monday that Peru's decision "constitutes a mockery of international law."
It stated Venezuela was recalling its ambassador in Lima and evaluating its diplomatic relations with Peru.
Rosales has called the charges against him a "political lynching" ordered by Chavez and says a fair trial in Venezuela is impossible.
The Palestinian Authority and Venezuela have established official diplomatic relations.
P.A. Foreign Minister Riyad al-Malki met with Venezuela's Nicolas Maduro Monday to establish the bilateral relations and open a Palestinian representative office in the nation's capital, according to the Venezuela Ministry of Information.
"Today we've signed an agreement establishing diplomatic relations," said Al-Malki. "Venezuela has shown their solidarity."
Venezuela severed all ties with Israel in early January to protest Israel's military offensive in Gaza, dubbing it a "massacre." Israel responded by kicking out all of Venezuela's representatives in both Tel Aviv and to the Palestinian Authority.
Chavez subsequently said during a summit with Arab nations that his government had no plans to reestablish ties with the "genocidal" state.
Historically, Venezuela has adopted a more balanced stance in its relations with the Middle East, favoring neither Israel nor its Arab neighbors. Chavez has dramatically tipped the scale during his decade in power, declaring Iran one of its best friends and uprooting entirely the Israeli diplomatic mission.
Members of the Jewish community in Venezuela say public outbursts of anti-Semitism, once rare in Venezuela, have become more common as Chavez has adopted a vehemently critical tone against Israel's military operations, beginning with its war with Hezbollah in 2006.
Venezuelan state oil company PDVSA is planning a $2.5 billion 2-year zero-coupon bond issue with proceeds to be used to pay down growing debts with service companies, a company source told Reuters on Tuesday.
PDVSA is saddled with debts to contractors, which soared to $8 billion as of last September, as oil prices began to plummet. The company faces a cash flow crunch as it bankrolls the social programs that keep leftist Hugo Chavez popular.
"The initial idea is to carry out the issue at the end of May, but this still has to be approved by President Chavez," said a PDVSA employee who asked not to be identified.
The company, the backbone of OPEC nation's economy, seeks cash as oil prices remain below $50 per barrel following their 2008 peak near $150 and tight credit markets leave the company with few financing options.
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