$5.8 Billion More in Oil Revenues and a “New Geometry of Power” for Venezuela

Speaking from La Cabrerita in the state of Anzoátegui during his weekly program Aló Presidente, Venezuelan President Hugo Chavez announced that Venezuela has recuperated US$5.8 billion annually through measures to introduce ‘oil sovereignty’ and elaborated on his vision for the “new geometry of power” in Venezuela.

Caracas, July 31, 2007 (venezuelanalysis.com)— Speaking from La Cabrerita in the state of Anzoátegui during his weekly program Aló Presidente, Venezuelan President Hugo Chavez announced that Venezuela has recuperated US$5.8 billion annually through measures to introduce ‘oil sovereignty’ and elaborated on his vision for the “new geometry of power” in Venezuela.

Describing the Orinoco Oil Belt, “from the savannas of Guárico, to the delta of the Orinoco,” an area of more than 55,000 square kilometers as a “sea of oil” and a “key objective of foreign transnationals who want to take advantage of its vast reserves,” Chavez explained how, through the application of five legislative measures aimed at recuperating oil sovereignty Venezuela has obtained and additional US$5.8 billion a year.

“Venezuela gave oil to the United States, a great part of the oil was given” by the governments of the Fourth Republic, said Chavez. However, “with this historical accounting we eliminated the so called Apertura Petrolera [oil opening], an initiative developed by the Fourth Republic to deliver into the hands of the transnationals the control of all the oil reserves in the country.”

The first “revolutionary measure” was adopted on October 11, 2004, to increase the amount of royalties in the Orinoco Belt, from 1% (since 1943) to 16.6%, which generated an additional $1.9 billion annually, he said.

The second measure, taken on June 24, 2005, fixed the values of royalties for excess production at 30%. Royalties on excess production had been set at 16.6% in the 1990s. The increase to 30% allowed the recuperation of $1.6 billion a year.

The third act of “oil liberation” began in May 2006, when extraction taxes were equalized and set at 33% for all the oil projects in the country, which represented an additional $400 million

The fourth act, Chavez elucidated, occurred in October 2006 when income tax for companies operating in the Orinoco Belt was increased from 34% to 50%. “This sovereign measure permitted the recuperation of $1.1 billion of extra income annually.”

The fifth measure was Decree 5200, adopted on February 26th, and implemented on May 1st of this year, which established the nationalization of the transnational oil companies operating in the Orinoco oil belt.

“PDVSA had on average 40% participation in the Orinoco, and we received benefits accordingly, but now, with the recuperation, we have 78%. This will generate additional increases of $800 million this year”

To celebrate the recuperation of oil sovereignty Chavez renamed the recuperated oil companies after various national liberation heroes from the war of independence. Petrozuata became Petroanzoátegui , “In honor of the liberator José Antonio Anzoátegui.” Sincor became Petrocedeño, in honor a Manuel Cedeño, who was killed in the state of Carabobo. And the companies Ameriven and Cerro Negro were renamed respectively, as Petropiar, in homage to the revolutionary martyr general Manuel Piar and Petromonagas, in honor of general José Tadeo Monagas.

Chavez commented that the recuperated resources from the oil industry are being distributed for the reactivation of strategic industries in Venezuela, such as the aluminum, timber and cement industries as well as for the system of national defense, for the improvement of “Bolivarian” primary and secondary schools, the new universities and for various levels of the health system “Barrio Adentro,” among other projects of national development.

Reiterating his support for Rafael Ramirez, president of PDVSA, under fire last week over allegations of corruption and production problems within the state-owned oil company, Chavez said, “He is a true revolutionary. I ask all to support him,”

Chavez also visited the industrial complex José Antonio Anzoátegui, in the municipality of Libertador (Anzoátegui state), where he spoke to the workers about the importance of the recuperation of the oil industry and the redistribution of its income for the people of Venezuela. Chavez referred to the construction of a socialist model based on the potential of Venezuela’s vast oil reserves, which he described as, “a peculiar configuration of our economic model.” He also affirmed that, “oil socialism cannot be conceived of without the activity of the oil workers.”

New Geometry of Power

Chavez also elaborated on the concept of the “new geometry of power” – his plan for the territorial and structural reconfiguration in Venezuela. The far-reaching proposals, to be included in the pending constitutional reform involve the creation of a number of vice presidents as well as new political and territorial structures, denominated ‘federal areas’ and ‘functional districts.’

In terms of the ‘federal areas,’ Chavez said there would be special projects and referred to a constitutional proposal for designating a number of vice-presidents, including some temporary positions to complete specific objectives. “These vice-presidents would be in permanent contact with the president and the council of Ministers, which would give more strength to the regions and the projects,” he continued.

He cited as examples, a vice-president for the Orinoco Belt, and a vice-president for the frontier, with resources to carry out projects that are required in these zones. These vice-presidents, he said, should live in the regions, “not in Caracas with a bureaucracy and a chauffeur.” Chavez argued that it was necessary to give extraordinary support to regional development, “even with all the work of the mayors and governors, more support is necessary.”

In this vein Chavez called for the municipalities that correspond to the Orinoco belt to be designated as a “special federal area.” However, he affirmed, “those who live in the region will not lose their political rights to elect mayors, deputies or governors, simply that the federal zone will have, from the constitutional point of view, a series of obligations at the level of the national government.”

Similarly he argued that the creation of ‘functional districts’ would give an incentive to the development of economic potential in these regions and mentioned as an example the incorporation of areas that comprise part of the states of Zulia, Merida, and Trujillo . He also indicated the possibility of conferring extra financial and technological resources for special development projects in these areas.

Chavez said he is working “letter by letter” on the proposed constitutional reforms. In reference to the question of removing the limit on the number of times a president may be re-elected, Chavez declared that it will be the Venezuelan people who decide whether to remove presidential term limits.