June 2009 Archives

Alvaro Vargas Llosa, writing in the New York Times under the headline, "The Winner in Honduras: Chávez":

In pushing the limits of democracy by trying to force a constitutional change that would permit his re-election, [Zelaya] set a trap for the military. The military fell for it, turning an unpopular president who was nearing the end of his term into an international cause célèbre.

Although the coup has popular support in Honduras, it has also allowed Mr. Chávez, who is leading the international response, to claim the moral high ground. The coup leaders, who were trying to prevent Mr. Chávez from bringing Honduras into his fold, may end up giving him more strength in the region.

Roberto Micheletti, the president appointed by the Honduran Congress to replace the deposed Manuel Zelaya, on Sunday night warned Venezuelan President Hugo Chávez that Honduras will not sit still if it is interfered with. "If this happens, making a democratic determination of having to go to war would be an extreme abuse of power," Zelaya said in televised statements, adding that he does not accept threats from "this gentleman." Micheletti said that "we understand that some battalions are preparing to come here," while the Honduran army continues to carry out its "investigation". "I don't want anyone to dare doing that to our armed forces, who are ready to defend the territory," he said.

Here the Venezuelan human rights lawyer, Antonio Rosich - a colleague of Robert Amsterdam and co-author of the White Paper, speaks with Telemundo in Los Angeles on the deterioration of rule of law in Venezuela. 

President Chávez yesterday cautioned the military coup plotters in Honduras that something better not happen to the Venezuelan ambassador in Tegucigalpa or the Venezuelan embassy. Chávez has said that it would be "a declaration of war" and that Venezuela might be forced to send troops. "The FANB has already been put on alert," he said. "The military junta there would be entering a de facto state of war. We would have to take action, including military action. I could not do nothing knowing that they are attacking our ambassador." "You have to give a lesson to these guerrillas, these coup plotters," he said. President Chávez said that "they will overthrow" any president sworn in to replace Manuel Zelaya, who was taken out of the country on Sunday by the military, the day he was going to inquire about the possibility of running for reelection. "If Micheletti (Roberto Micheletti, president of the Congress of Honduras), or Peleletti or Gafetti or Goriletti are sworn in, they will be toppled. They will be toppled, I say," Chávez said in a televised speech.

WLTV Noticias 23 in Miami on Friday featured this segment with Attorney Gonzalo Himiob on the recent release of a new white paper on Venezuela's political prisoners (in Spanish).


090627 Ledezma.jpgThe podcast of Ledezma's speech at the Council of the Americas on June 24 is now available. Go to COA's website for the download.
I can't imagine who would be willing to buy PDVSA debt at any price, but nevertheless the state-owned oil company is announcing a planned issue for $3bn worth of zero-coupon debt denominated in bolivars, according to reports in Bloomberg and the Journal, among others.

The government is saying that these bonds are not intended for the secondary market, essentially forcing the investor to have the confidence that they will be paid back at maturity in 2011.

Price/yield info on these is still yet to come...PDVSA will accept orders until July 1, the results will be published July 2 and sales are expected to occur July 8. So stay tuned for more, but I really wouldn't be surprised if they don't raise expected funds regardless of where pricing comes out. In the meantime, see our Energy tab above for recent news that has brought PDVSA to this situation.


U.S. Mayors issue a resolution supporting Ledezma. The Conference of Mayors of the United States, through a communique, expressed its "unequivocal condemnation of the undermining of democratic governance and the principle of administrations, governments and freely and independently elected officials in Venezuela, as well as the intimidation and prosecution of freely elected officers, governments and administrations. The text further expresses that the resolution will be presented to the U.S. House of Representatives Foreign Affairs Committee, the U.S. Senate Foreign Affairs Committee, and the U.S. State Department, and to official representatives of the Government of Venezuela in the United States. Mayor Antonio Ledezma (ABP), continuing his visit to New York, had a private meeting with New York Mayor Michael Bloomberg before participating in the Summit "Creating Employment and Developing the Work Foce," held yesterday at Columbia University. Ledezma came to the United States on Sunday, where he has developed a strong agenda for making the case that "President Chávez sells Venezuela as a wonder of the world (.. .), when the reality shows us that the situation is almost as bad as what is happening in Iran," said Mayor Bloomberg in a press release.

As told to Carmen Muñoz:

Madrid - Attorney of magnates in distress, such as former Yukos chairman now in prison in Siberia, Mikhail Khodorkovsky, Robert Amsterdam confesses he was a pro-Chávez "activist" until President Chávez "radicalized when he began to lose power" in 2002. For fifteen years, the Canadian lawyer has defended economic causes and human rights in Latin America. In late 2008, Amsterdam joined the defense of Eligio Cedeño, the Venezuelan banker detained since February 8, 2007 at the headquarters of the DISIP (political police) in Caracas. His defenders argue that since he is being treated as a political prisoner - accused of supporting opposition leaders such as trade unionist Carlos Ortega - the event has acquired an international dimension. From humble origins, Cedeño became a successful banker until he had to sell Banpro and Bolivar Bank, ABC of Spain was told by Emilio Berrizbeitia, Cedeño's Venezuelan counsel. The banker-prisoner "was involved in an computer import plan in order to obtain foreign exchange," according to his defense, in an investigation open since 2003. Once arrested, he was accused of "diversion of financial resources." Among the "grotesque procedural irregularities," Berrizbeitia lambasted Cedeño's permanent pretrial detention "without being judged, convicted or charged." Robert Amsterdam presented a white paper in Spain yesterday entitled, "Justice vs Bolivarian rule of law", in which he one of three authors and which denounces the "abuses" of the Justice Ministry. Eligio Cedeno is presented in the paper as a "classic case" that shows "how the regime acts in order to its opponents."

- What is your next step in the case of Eligio Cedeño?
- In the coming weeks we intend to take the Cedeño case and the Chávez regime before international courts.

- In Spain, for example?
- We are going to do it step by step. We are working on a case, but not necessarily in Spain. The corruption of the Chávez regime is so extreme that this could be brought not only before international tribunals, but also national courts.

- Why do you consider him a political prisoner?
- This is in the spotlight not for economic or legal reasons. The irregularities in this case are so extraordinary, going two years and four months without trial, as well as the two-year extension of pretrial detention.

- Did he commit a crime as a banker?
- No. There was a trial, it became clear he was going to be released, but the judge was removed from the case at the last minute.

- It is said that he supported the opposition to the government of Hugo Chávez.
- He knew them and when they had problems and were in prison, he was helping their families. In addition, the new ambassador to Spain, Isaías Rodríguez, when he was attorney general of Venezuela, was very annoyed with Cedeño. For the Attorney General to incarcerate Eligio Cedeño was a matter of honor.

"In Venezuela we suffer from an outlaw government, neodictatorial," said Mayor Antonio Ledezma of Caracas during a speech at the New York think tank Council of the Americas, which was attended by U.S. investors and entrepreneurs. He said he wanted to "restore the democracy that we have been robbed of," while stressing that his aim was to draw the attention of the international community to what is happening in Venezuela. He also noted that the situation in Venezuela is a "true nightmare" and that what happens there is a "threat" to the country itself and the rest of the continent. Ledezma met this week with the secretary general of the Organization of American States (OAS), Chilean José Miguel Insulza, and requested his support because he believes the multilateral agency's actions must be "preventive." Antonio Ledezma won the mayoral election of Caracas on November 23, 2008 and was sworn in on January 7, but was unable to take charge of his office due to limitations imposed by the National Assembly. The office's powers have been curtailed by government measures, including the appointment of a municipal government head who oversees his office.

At the beginning of the year, when my law firm joined the legal defense effort of the Venezuelan political prisoner Eligio Cedeño, we set about making some initial inquiries among decision makers in several different countries about the situation of rule of law, judicial autonomy, and political prisoners in Venezuela.  What we found was a staggering lack of awareness, good information or intelligence, and also the presence of some damaging misinformation.  Many would tell us that they simply weren't aware that these problems existed, while others shifted to more hostile positions, citing their belief that the government of Hugo Chávez as democratically legitimate while denying the evidence of judicial abuse. 

In an effort to correct this knowledge gap, we set about preparing an extensive new White Paper to detail the methodology by which the Chávez regime has gradually turned the courts into a powerful political instrument to punish opponents, all under the guise of illegality.  We argue that the unjust process used to railroad Cedeño is not a single occurence, but represents a set of tactics used to persecute some other 50 individuals we cite.  In preparing the paper, we did extensive research, conducted interviews with persecuted judicial officials and family members of political prisoners, and learned a great amount about another side of Venezuela that rarely makes the headlines.  Today, we are launching the paper to the public, available below.  I owe enormous gratitude to my co-authors, the Venezuelan human rights lawyers Gonzalo Himiob and Antonio Rosich, as well as to the rest of the legal team.
- Robert Amsterdam

White Paper Exposes Pattern of Judicial Abuses in Venezuela; Complaint Filed Before ICJ on Behalf of Cedeño


eligiocedeno.jpg

MADRID, JUNE 25, 2009 - A groundbreaking White Paper documenting the case of Venezuelan political prisoner Eligio Cedeño was released today by his legal defense team. "Bolivarian Rule of Lawlessness" details the campaign of persecution against Mr. Cedeño and outlines the determined effort of President Hugo Chávez's government to subvert the judiciary and use the courts as political instruments against opponents. The debut of this report coincides with the filing of a complaint before the Geneva-based International Commission of Jurists (ICJ) requesting intercession and censure of judicial officials involved in the unlawful campaign against Cedeño.


090624 resultados_23_noviembrecolorg.jpgEx-Mayor of Chacao Leopoldo López announced today a new strategy for engaging voters. El Universal carries the article in spanish, and Caracas Chronicles dissects it in English. Honestly, there's really not a lot more I can add at the moment so I leave it to you to peruse.

"There is an increasing evidence that the Government has been unable to contain dissent through dialogue and resorted to the police and repression to do so." The somewhat heated words of the former guerrilla leader of the Venezuelan Revolution Party (PRV), Douglas Bravo, came minutes after troops of the Aragua police and the Military Intelligence Directorate (DIM), detained him yesterday, without specifying any reason. "Four of us were traveling to Falcón, where a forum was being held. When we were near Cagua, the state police stopped us and surrounded us," said Bravo, who has as of late gone public with criticisms and disagreements with the Chávez government. Without any court order, Bravo, who also represents the Humanist People's Front, explained that he had to wait for two hours until the DIM appeared and told them it was simply "routine". "This is a violation of human rights and democratic freedoms. There is a persecution of dissidents. Anyone who has a critical view is immediately harassed," he said.

The following is an English translation of an article from the Spanish newspaper ABC:

robert_amsterdam_abc.JPG"For the Venezuelan prosecutor, imprisoning Cedeño was a point of honor"

The Canadian lawyer wants to sue the Venezuelan government before international courts, "not necessarily in Spain," and also present to them the case of the banker Cedeño


CARMEN MUÑOZ

Updated Wednesday, 24-06-09 at 00:15

As a lawyer for magnates in trouble, as is the case of the former president of Yukos held prisoner in Siberia, Mikhail Khodorkovsky, Robert Amsterdam confesses that he was a pro-Chávez "activist" up until the Venezuelan president "became radicalized when he began to lose power" in 2002. Over the past 15 years, the Canadian lawyer has defended business and human rights cases in Ibero-America.

Bloomberg reports that the Japan Bank for International Cooperation (JBIC), the Japanese government's developing lending arm, is apparently reviewing the terms of its $1.5 billion loan for Venezuela's El Palito and Puerto La Cruz oil refineries. Take a guess why.

Among the several related movements underway:

  • Nippon Export and Investment Insurance or Nexi, is also considering ending coverage for projects in Venezuela, the person said. The agency insures most Japanese holdings in Venezuela. The company has been holding internal meetings to determine its insurance coverage policy for Japanese investments in Venezuela. See Friday's posting for a related development.

  • The head of investor relations at Toyo Engineering, confirmed that Venezuela has been behind in payments for a 60 billion-yen ($631 million) contract to build a fertilizer plant. The accord was signed in 2007.

  • Planned Japanese investments in Venezuela include $10 billion in liquefied natural gas projects, $8 billion in petrochemicals and $1.5 billion for the refineries. Mitsubishi, Mitsui & Co. and Itochu Corp. are among the partners designing two liquefied natural gas plants where Japanese investment may reach $10 billion. 

  • Mitsubishi also has an agreement to finance upgrading the Puerto La Cruz refinery.

  • In 2007, JBIC led a group including Mitsui and Marubeni Corp. that loaned PDVSA $3.5 billion to be paid in cash, crude oil or petroleum products over 15 years.

The latest deconstruction of PDVSA's books gives us the following, thanks to El Universal:

  • Although the price of the Venezuelan oil basket is 33.5 percent higher than in 2007, Pdvsa's revenues from oil exports in 2008 were barely enough to meet its burdensome structure of costs and expenses, which hit a record USD 112.88 billion in the 2008 fiscal year, 31.5 percent higher than in 2007.

  • Despite the efforts announced by the oil giant to cut the costs related to the purchases of oil, particularly from foreign subsidiaries, such costs soared 40 percent to USD 39.5 billion in 2008, compared to the previous year.
  • In 2008, operating expenses climbed 49 percent to USD 22.38 billion, while exploration expenditures grew 143 percent to USD 375 million.
  • The value of the parent company's purchases of crude oil from foreign providers skyrocketed 122.5 percent to USD 15.81 billion in 2008.

  • Cost of production per barrel climbed slowly since 2004 and in 2007-2008 it recorded a sudden increase of 44 percent, reaching USD 7.10 per barrel of oil equivalent, natural gas and liquefied natural gas.
090623 certv macarrulla_chavez.jpg

Following on last week's announcement of the Venezuelan government's plan to take a 49% stake in the Dominican Republic's only petroleum refinery, the president of the DR's National Business Council, Lisandro Macarrulla, said the transaction in itself doesn't concern them and that it could even be advisable for the nation, "although what does worry them is the partner which the Dominican government has chosen in this occasion."

Photo: CERTV

La Mesa de la Unidad requested a national emergency declaration to allow the federal council to convene and the implementation of a consensus plan from all sectors of the country. A spokesperson of Monday's meeting was the president of Un Nuevo Tiempo, Omar Barboza, who outlined the proposals. "There are two; first, declare a national emergency on the issue of national security council and immediately convene the federal government in order to execute as quickly as possible an integrated implementation plan." The second proposal concerns prevention, with the implementation of a plan for disarming the population to ensure the destruction of seized weapons. In the view of the opposition, the government assumes an "ostrich policy of not facing the facts" because of the tendency of the government's public safety plans to "change when changing the Minister of Interior and in 10 years there have been 10 ministers," said Barboza.

Eligio Cedeño's defense attorney rejected on Friday allegations of "diversion of financial resources" made by the public prosecutor. Counsel Emilio Berrizbeitia stated that "the public prosecutor, and the deputies Daniel Medina, William Guerrero and Ana Isabel Hernandez are trying to cover up their lapses. Upon requesting a delay of the measure, that is, that Eligio Cedeño should be freed, the prosecution has realized its error and trying to block out the sunlight with one finger by belatedly introducing this new charge." Berrizbeitia added that they appealed the decision analyzing it, as they had appealed the judge's decision to declare their objection inadmissible.


Ex-presidential candidate and until recently, mayor of Maracaibo Manuel Rosales is applying for political asylum in Peru, according to his lawyers, after being accused of "illegal enrichment" between 2000 and 2004 while governor of Zulia state. The AP carries the story here.
This story caught my eye, from the Oil and Gas Journal.

I have retitled it here in the language of gambling, since political risk insurance underwriters are, essentially, the geopolitical equivalent of the old-school Vegas or Ladbroke's bookmaker. And in the old days, back before we could just initiate a payment instruction from our paypal account to some Guernsey-based entity making book on a South Africa-India test match halfway round the world all while changing the baby's diaper, we had to take our cue - for American sports at least - from Vegas. And on occasion, there would be a confluence of events surrounding some particular matchup so bizarre, so unpredictable, so wild-card-X-Factor-Black-Swan-100-year-flood out-there that the bookies would simply announce "bets are off". Maybe the temperature is going to drop below freezing, the starting and second string quarterbacks are both injured on the favored team, the underdog's star tailback just finished recovering from an injury, there's strong wind, both teams have no chance at making the playoffs...you get the idea. And the little box up on the board that listed the odds for that particular matchup would sit blank, a lone island of uncertainty so uncertain that not even the most studied of oddsmakers was willing to express it in numbers.

The prosecution submitted an indictment against entrepreneurs Eligio Cedeño and Gustavo Arraíz as part of the continuing legal process surrounging the alleged irregularities in the use of foreign currency granted by Cadivi to the Microstar Consortium, an investigation that began in 2003. National prosecutors William Guerrero and Ana Isabel Hernández, as well as Daniel Medina, the official who oversees corruption, banking, insurance and capital markets, accused Cedeño of the crime of embezzlement as stipulated in the General Law on Banks and Other Financial Institutions. Gustavo Arraíz was accused as an accomplice. In the action, prosecutors requested the indictment be admitted and the evidence provided by the Public Ministry. They also requested to maintain the deprivation of liberty and security of goods belonging to Cedeño and Arraíz, issued in due course. It was also decided that the prosecution should once again issue the formal complaint for the alleged act of embezzlement. The prosecution this month asked Court 39° in the metropolitan area of Caracas, in which the indictment was assigned, to extend the deprivation of liberty for Cedeño and Arraíz handed down in 2007. This order was approved.

I'm warning you right now: I have not yet had a chance to actually look through PDVSA's books yet, released last week. But already there have been some rumblings about changes since the February figures. Dow Jones ran a piece yesterday that addresses this. I'm not clear on how much of this article is behind a paywall, so for now I'll just list the highlights here. This will certainly not be the last post we do on PDVSA's liquidity situation:

  • Debts to suppliers were recorded as $7.56 billion at the end of 2008 in the latest audited results, but the bill is nearly half the $13.8 billion originally reported to Congress earlier in the year.
  • The company's profits recorded in the latest audited results sit at $9.4 billion, down from $12 billion in the previous year-end report. The company also states the income tax paid last year was $4.28 billion, 44% less than reported in the February figures.
  • PdVSA now says it deposited $12 billion into the Fonden development fund, President Hugo Chavez's favored spending vehicle, and reduced direct allocations to social programs to $2.3 billion last year. This conflicts with previous figures that put PdVSA's Fonden funding in 2008 at no more than $5.5 billion, due to the oil price decline.
  • The issue of how much oil Venezuela produces is a heated debate among Chavez's supporters, who say it's three million barrels a day, and detractors who claim its one million barrels less.
Robert Amsterdam - Jose Sarney.JPG

Canadian international lawyer Robert Amsterdam was received on June 17th by the President of the Brazilian Senate, Sen. José Sarney, to whom he explained the plight of political prisoners in Venezuela, and in particular the case of Eligio Cedeño, a Venezuelan banker who has been languishing in a Caracas jail for more than two years without trial, and who has recently been committed to another two years incarceration.

"Brazil is a highly respected regional leader and shining democratic model which many Latin Americans look up to," said Amsterdam. "When it comes to these aberrant violations of human rights and imprisonment of political prisoners in Venezuela, no friend, ally, or partner can afford to remain silent."

The following is a translation of an article about Eligio Cedeño and Robert Amsterdam published in the French newspaper L'Express.

cedeno061709.jpg'The prisoners of Chavez'
L'Express, June 18, 2009

In the hope of educating the international community about the fact that political prisoners exist in the Venezuela of Hugo Chávez, the former putchist colonel who became president, a group of Venezuelan and international lawyers are ready to launch their campaign on the subject. Their white paper, coming out later this June, focuses on the symbolic case of Eligio Cedeño, 44-year-old banker close to the opposition, imprisoned for 2 years and 4 months. They emphasize the fact that, at the beginning of 2009, the judges called a halt to his trial at the moment when it became all too clear that there was a lack of evidence against him. His trial was adjourned sine die. Even though the banker's time in prison is well past the legal period of provisional detention, he is still behind bars. "The system of justice is used for purposes of political persecution ", denounce the authors of the white paper, including Robert Amsterdam. The latter is none other than the Canadian business lawyer who, since 2003, has defended the former president of Russian oil group Yukos, Mikhail Khodorkovsky, imprisoned in Siberia. According to the team of Robert Amsterdam, nearly 50 supporters of the opposition are being wrongfully imprisoned in Venezuela.

Last week, Reuters gave us a factbox double-whammy on Venezuela's state expropriations (by the way - I love the factbox), one detailing Hugo's takeovers to date, the other detailing who had yet to be hit. Shortly after, six Japanese firms announced they were leaving for dead their aluminum smelting operations in the country.

Now, we have the National Assembly appoving a law to increase the state's stake in the petrochemicals industry.

So, going back to the hit list, with the Japanese going, who's still left?
The sale of a stake in the country's only refinery aim to guarantee a permanent fuel supply and dispense with fears of shortages when storms and tankers delays occur. A government spokesman said after the negotiations the government will still control the Dominican Petroleum Refinery (Refidomsa), different from what occurred with the previous partner, whose decisions predominated. According to the Listin Diario:

"This it will be an agreement between two States, that is to say, that does not matter if Hugo Chavez leaves the government, it is an agreement that will be made signed properly, and what it is agreed to properly it will be fulfilled and it is not truth that the national sovereignty is in game"

Conatel ordered new administrative sanctions against Globovisión and asked the Public Prosecutor to determine whether or not there is criminal liability against the channel. Counsel Ana Cristina Núñez explained that "Globovisión's grant is in play again." This would be the fourth procedure in recent months "apart from the three procedures that are open, of which two are ready for decision." This procedure is apparently based on Article 171 of the Telecommunications Act, which establishes where the revocation of a media communication grant if the medium was used to assist in the commission of a crime. Alberto Federico Ravell, general director of Globovision, said that there is no legal base to close the channel and the government therefore decided to go after the partners. Ravell reminded officials what happened to the former president Alberto Fujimori and that there are international human rights conventions. To the judges and prosecutors, he asked them to think hard about what they are doing and to consult their consciences. In his view, it is clear that is not an issue of law or the judiciary, but politics and the government made the decision to remove "this nuisance and that stone in the shoe that is Globovisión especially when they are denouncing cases of presumed corruption, such as those of Diosdado Cabello, Rangel Avalos among others," he said.

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Julián Isaías Rodríguez is quite the character. A former Vice President and Attorney General, he was in charge of the public prosecutor's office right when a number of politically sensitive cases came under his supervision, including the murder of prosecutor Danilo Anderson, which is now regarded as one of the most critically botched cases of witness bribery, executive pressure, and political control over the courts that seemingly changed Venezuela's legal system irrevocably. Perhaps not surprisingly given the well worn antics of this government, last week Isaías Rodríguez was nominated as the new Ambassador to Spain.

An article by the columnist Tamara Sujú published on Noticiero Digital takes the ambassadorial assignment of Rodríguez as a starting point to explain the peculiar process at work inside the Venezuelan government, in which some of the most incompetent members of the bureaucracy are promoted to the heights of representative responsibility. Sujú suggests that Spain should be made aware of some of the less flattering details of Rodríguez's career, which included the jailing of innocent citizens, alleged torture of witnesses, and the mounting of show trials against the Guevara brothers, Patricia Poleo, Nelson Mezherane, Añez Núñez and Salvador Rom, among others. Sujú also notes that it was Rodríguez who called the illegal jailing of Eligio Cedeño a "point of honor."

Not one to hold her tongue, Sujú goes on to declare that this "shadowy figure" of the revolution appears to have been awarded a prize for having carried out the orders of the executive to persecute and imprison his compatriots, and that he will go down in history for his conduct and participation in the mounting of false cases against the innocent.

It's a very powerful piece, but one doubts that such details about Rodríguez's career will be recognized by the Spanish public, or even more importantly, whether or not the Venezuelan diplomatic mission is seeking this kind of confrontation anyways....

A communiqué of the Supreme Court noted that the state "can not be subject to foreign courts" without a valid order, expressed clearly and unequivocal. The text says that, "It strengthens Venezuela's immunity from foreign courts," and that "it is incorrect to say that Venezuelan judicial power does not have sovereign power to decide disputes over contracts in the public interest signed by the Republic or that it submits such disputes to foreign courts." The Supreme Court refers to the four judgments 97/09, 1.942/03 1.541/08 and 1.939/08, to assert that "the state is absolutely sovereign, and therefore cannot subject itself to foreign courts as long as there is no a valid order, specifically and unambiguously written to settle their disputes in foreign courts." The sentences show that in the case of arbitrations involving investment or the approval of any other mechanism that assumes the submission to an international court - such as the International Criminal Court, Ciddh, subregional courts, centers of arbitration, conciliation, among others - "its validity and effectiveness require not only the expression of will of the President of the Republic, but also a law that approves the treaty on the part of the National Assembly. "

Following up Andres Oppenheimer's call to arms against UNASUR's plan for the "creation of mechanisms to defend citizens and legitimately elected governments against abuses by the press," US State Department spokesman PJ Crowley has called on governments in the Americas to uphold freedom of expression in accordance with the OAS charter:

"There are a number of countries recently that have taken aggressive actions to intimidate, threaten, attack press. Venezuela's one of them, but it's certainly not the only one."

National prosecutor 61, Jesús Capote, and prosecutors 4 and 7 of Anzoátegui, Oswaldo Salazar Freites and Marietta, respectively, were commissioned to investigate the violent events that occurred on Saturday in El Tigre, where an opposition political activist was shot dead and three others were injured. The shooting occurred on Saturday afternoon in front of the Polisosir command, where 31-year old university student Jonathan José Rivas was killed by a gunshot to the chest. In the same location, Jorge Alfredo Báez Rivero (43), was injured by a shot in the groin region and the former mayor of El Tigre, Ernesto Paraqueima (36), was beaten in the frontal region and right arm. Yesterday, opposition party leaders, led by former Mayor Ernesto Paraqueima (Podemos) and Gustavo Marcano (Primero Justicia) accused President Hugo Chávez, the governor Tarek William Saab and the mayor of El Tigre, Carlos Hernandez, for the events.

Andres Oppenheimer reminds us of yet another reason to be skeptical of the effectiveness of regional multilateral development initiatives. Apart from the ongoing degradation of the OAS we referred to last week, we are now compelled to draw our attention to UNASUR, the 12-nation answer to the question : What do you get when you add Mercosur and the Andean Community? As Oppenheimer tells it:

"Ecuador's President Rafael Correa, a disciple of Venezuelan President Hugo Chávez, said that when he takes over as president of the 12-nation Union of South American Nations (UNASUR) in July he will propose creation of a regional body to defend governments against critics in the media.

I'm not kidding. In what would be seen as a bizarre attack on basic freedoms in most modern democracies, Correa's May 28 statement called for "creation of mechanisms to defend citizens and legitimately elected governments against abuses by the press." The proposal was immediately backed by Venezuela and Bolivia, whose presidents routinely refer to any criticism in the press as "media terrorism."

Nobody has protested this idea just yet, which is the main reason Oppenheimer has issued a call to arms. I agree that this is a worrying prospect, but there are a couple things to keep in mind. For starters, we've seen similarly scary survey results of the American public when it comes to how little the public at large values press freedom. The American Journalism Review in 2004 found four out of 10 Americans think the press actually has too much freedom - and this is just the most immediately handy link I can find. There have been plenty others over the years - Latinobarómetro I know has covered this - if you dig further.

So the first question we have to ask is this: regardless of what one thinks of Latin America's Axis of Evo (Bolivia-Venezuela-Ecuador), is the bigger concern here the reticence coming from the region's leadership or the indifference coming from the public at large?

Second question: regardless of the answer to the first question, how much does UNASUR really matter in the broader comings and goings of hemispheric relations? Let's review for a moment what just else this new body has done of note. Really, one thing only: launched the Bank of the South, Hugo Chavez's brainchild for creating a South American alternative lender of last resort so that the region can reduce its dependence on the IMF, the IADB, or the World Bank, depending on which day of the week it is. How does it measure up? Well, it launched last month (a year behind schedule) with $7 billion (down from varying levels of previous estimates, one of which had Venezuela contributing $15 billion from its central bank reserves). Meanwhile, the World Bank's total 2008 assets were $233 billion while the IMF's were somewhere north of $300 billion and the IADB had around $70 billion in total assets as of the end of 2007.

Clearly, this institution has yet to get its legs. This is not an excuse to sit easy - press muzzling anywhere is a cause for concern and if nothing is done to nip this development in the bud it will likely get worse. But keeping the bigger picture in mind will increase the chances of getting this right on the first try.

090603.Hugo fingers.jpgIt goes without saying that parsing presidential rhetoric is a favorite pastime for political watchers around the world. Indeed the countless contortions of the English language that George W. Bush pioneered gave rise to a brand new addition to the language itself: the Bushism.

On the other side of the Atlantic, Italian media mogul and on-again off-again Prime Minister Silvio Berlusconi has built up his own formidable arsenal over the years of what one of his predecessors once described as "planetary gaffes".

But to the extent that a democratically elected head of state represents popular will, is it also a given that the leader's oratory properly represents popular speech? This is precisely the question that Reuters has attempted to tackle through a rigorous assessment of what Venezuelan Academy of Language linguist Manuel Bermudez calls "Chavezspeak." Let's call it the Reuters Challenge: How to demonstrate a president's untoward language while still maintaining a family-friendly discourse.

"Venezuelans use a particularly lewd version of Spanish packed with references to male and female reproductive organs, genital lice and sexual orientation, and Chavez -- apparently deliberately -- does not seek a more dignified presidential tone."
President Hugo Chávez called on Globovisión Thursday to change its editorial line and to "correct yourself, because if you do not, little time is left on the air." "If in the management of that channel there had been someone rational trying to rectify the situation, the government could be open to changing its stance," said the president in the first edition of his program "Alo, President Teórico". He maintained that if they refuse to do so, little time is left on the air since, "Venezuela does not deserve a channel like that" He said that this is not an issue of dictatorship nor of freedom of expression. "I accept constructive criticism," he said. But he warned that "if this channel continues as is, this country can not tolerate it because it is a public health issue. The channel poisons the mind." He said that Globovisión was again drawing attention to the "attacks" on it and "it does not want to pay the fine imposed on it (5.6 million bolivars), but continues to malign and defame people in keeping with the politics of the channel."

Caracas Chronicles has served a terrific blog post narrating a meeting with one of Venezuela's well known, but anonymous in this case, television pundits who shared his frustrations of the self-limitations that the opposition media has placed on itself, on democracy, and its framing of a solution to the political crisis under Chávez. A very interesting and very controversial discussion which we agree with for the most part.

"Convéncete," he says, "the way the private media operates in this country is incompatible with the exercise of democracy. Chávez knows that, by attacking it, he makes it certain that the opposition will reflexively align itself with the private media. So he has every incentive in making the opposition line up behind a media system that makes democracy impossible. It's win-win for the guy. For the umpteenth time, he's playing us."

Settling back out of rant mode, he seems to remember that this was supposed to be a business meeting, of a sort, and comes back to my pitch.

"But seriously, the thing you want to do with your blog," he says, "it's viable. You could do it without too much money. And it will reach a few thousand people, a smallish but influential elite that wants to, needs to, look beyond the tiny little horizons the escuálido media serves up to them. And that, in itself definitely makes it worth doing, because like you say, those people don't have a place to turn to online."


The government reported yesterday that it took over the transport operations of US crude producer Exterran in an offshore field off the east coast of the country, one more step in the massive nationalization of companies that provide services to PDVSA. The energy minister and president of PDVSA, Rafael Ramirez said on the eve that the State did not take all the oil services, but only those that are core to the business and who were considered "monopolíticas in private hands, the international press reported. PDVSA assumed control of a vessel operated by Exterran as a temporary storage facility for crude Corocoro field, having recently expropriated an electric generating plant and gas compression for the same firm.


President Hugo Chavez has banned Coke Zero but not regular Coke from Venezuela, apparently preferring the old school "real thing" over this zero calorie nonsense. No word yet on whether Troy Polamalu has been banned from entering Venezuela but we're pretty sure Mean Joe Greene remains more than welcome.

The International Press Institute (IPI) requested the Venezuelan authorities to "cease its threats against the press, to annul the charges against journalists who speak freely and to abolish laws that contribute to preventing free speech." For the Institute, "independent media, and those who generally favor the opposition have long been subjected to extremes of the administration of President Hugo Chavez, which increased in 2009. In the resolution adopted after the 58th general Asaemblea in Helsinki, the Institute calls on Venezuela to respect the principles of freedom of expression, as contained in Article 10 of the Universal Declaration of Human Rights. The IPI condemns "the now very frequent harassment" against the chain Globovisión and its employees, "the last independent broadcaster in the country."

A dozen opposition parties, along with student organizations and civic groups, formed on Monday a "single panel" to develop "alternative proposals" for the government of President Hugo Chávez, said the Social Christian leader Luis Ignacio Planas. Planas didn't hide that the unit was set up table after a great deal of dialogue and discussion. After stating that this is a permanent organization, the leader of Copei made clear that it is not an electoral alliance, but one that intends to give a sense of transcendence, of the character of a great social network, whose priority will be to build an agenda with an emphasis on the humane that has the purpose to present a national plan that represents an alternative to the government of Hugo Chávez.
Citing a law not even two months old, authorities have detained the president of the 24-hour news station Globovisión, which frequently points out Chavez government foibles. Coverage in English from the Latin American Herald Tribune and in Spanish from La Verdad.
090608 oilproduction.jpgStill addressing a couple things backlogged from last week...Not a lot of attention paid to the brewing PDVSA-FUTPV fight, but considering that the Federation of Venezuelan Workers of the Oil, Gas and Related Sectors (Futpv) represents some 67,000 workers, something tells me this is not going to end amicably tomorrow. El Universal and the Latin American Herald Tribune carry the story.
Reuters was thoughtful enough to tally for us in one easy-to-access place a list of State takeovers under Chavez. Who could be next? Thanks again to Reuters for another easy-to-access list of oil service and petrochemical assets that have yet to be hit.

Mary Anastasia O'Grady breaks down how the OAS is becoming an apologist mouthpiece for the Latin Left. Meanwhile, Caracas-based Cedice Libertad managed to pull off its 25th anniversary celebration without a hitch for the most part.

090608 VZ prisoners.jpgThe CFR's Shannon O'Neil reminds us in the current issue of Foreign Policy that Venezuela has the region's highest crime rate and does a rather tidy job summarizing why :

"It's no surprise that no one has been able to peg blame on any one factor, since Venezuela's violence problem derives from a number of sources -- from an ill-equipped police department to a dysfunctional justice system. And as the Chávez administration has pushed the legal limits of democracy, undermining institutions along the way, cascading impunity has spread through the system. Rule through ill example has helped push what was always a high murder rate through the roof."

This Sunday, the minister of People's Power for Health, Jesús Mantilla, confirmed the existence of 12 cases of H1N1 virus in the country, after the addition of seven new infections in Colombia, Panama, France and the United States. The declaration was transmitted through a special advance on Venezolana de Television. Mantilla said that of the 329 samples taken, 12 came back positive, 10 are under study and 307 came back negative. He said that the new confirmed cases had been in contact with infected people outside the country and therefore recommended that the Venezuelan people to maintain an exercise of citizenship by avoiding foreign travel, as the virus is present in several countries. He added that the influence of new cases presented very mild symptoms of the disease and the health status of the 12 infected is completely stable.


Any time a state-owned oil company names its break-even oil price, I pay attention. PDVSA R&D chief recently told Bloomberg that the company needs a minimum of "$70 a barrel to reach a target to pump 5 million barrels a day in 2020, up from 3 million today."

Roger Tissot of Gas Energy Latin America recently spelled out just what makes Venezuela's reserves so unique:

"There are only two huge sources of heavy crude in the world -- the Canadian tar sands and Venezuela's Orinoco. It's much cheaper to develop from the Venezuelan Orinoco because of the technical conditions; the Canadian tar sands have to be mined...what has made Venezuela's Orinoco expensive to develop is the policies and the politics."

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The objective of Venezuela Report is to provide quality information, reports, news, translations, and original opinion and analysis articles in both English and Spanish, with the goal of bridging the significant gap between the political dialogue in Venezuela and the rest of the world, and raising awareness of the problems and challenges we see in both the legal system and governing model. ...

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