Venezuela News Summary #60

Venezuela news summary #60, July 20 - August 7, 2008

I. Venezuela’s Chavez Pushes for New World Financial System in Argentina

Venezuelan President Hugo Chavez met with Argentine President Cristina Fernández de Kirchner and Brazilian President Luis Inacio “Lula” da Silva in Buenos Aires on Monday. Chavez declared that the South American countries are constructing a new international financial system. Chávez also announced that the recently nationalized Bank of Venezuela will be expanded to serve more municipalities in Venezuela and it will emulate the model of Brazil’s Caixa Económica, the largest state-owned bank in Latin America. Chávez also met with Argentine business leaders to improve commercial ties and discuss the projects with Argentina’s National Agricultural Technology Institute, which has a contract to construct 200 “socialist” factories with Argentine technology. Chávez also proposed a bi-national investment fund with Argentina that “would be a powerful motor” for the integration of the two countries. Venezuela has purchased several billion dollars worth of Argentine debt in the past three years, and the two countries have signed economic accords to exchange Venezuelan energy for Argentine food. Venezuela is currently launching similar bilateral investment funds in team with Iran, Russia, and China.

II. Chavez Nationalizes Bank of Venezuela on Last Day of Presidential Decree Period

Meanwhile, still in economic news, Venezuelan President Hugo Chávez announced last week that the Venezuelan government will nationalize the Bank of Venezuela, the country’s third largest bank. Venezuela assured the Bank’s private owner, the Spanish Santander Group that the government will pay a fair price for the bank. Nonetheless, several Venezuelan officials predicted that the Spanish media would respond harshly to the nationalization, even in the wake of Chávez’s recent visit to Spain to renew diplomatic relations with both President José Luis Rodríguez Zapatero and King Juan Carlos I. Chávez guaranteed the clients of the Bank of Venezuela that the nationalization is no cause for alarm. While complementing the private management for achieving a “high level of efficiency”, the president made clear that his administration plans to shift the bank’s priorities from profits to social investments. The 120-year old Bank of Venezuela was privately owned until 1994, when the Venezuelan government became the majority stockholder. Two years later, the bank was re-privatized and the Santander Group acquired the controlling share.

III. Chávez Signs 26 Law-Decrees on Final Day of Enabling Law Power

On the final day of the 18-month period during which the Venezuelan National Assembly granted President Hugo Chávez the power to pass laws by decree, Chávez signed more than 2 dozen new laws regulating the armed forces, public administration, social security system, banks, agricultural production, and the tourism industry. The government says the laws seek to increase state management of “strategic” sectors of the national economy and public institutions that are considered vital for ensuring the well-being of all Venezuelans, in progress toward “21st Century Socialism.” Chávez said the laws are part of the state’s plans to build up a “great public sector” which will rival the private sector and prioritize the social good. Opposition leaders criticized the “autocratic” and “non-consultative” process by which the laws were created and called on the opposition to prevail in upcoming regional and local elections in order to impede Chávez’s political project. In response, Vice President Ramón Carrizalez asserted Monday that the Enabling Law and Chávez’s decrees were in accordance with the national constitution, which was passed by popular vote in 1999, Chávez’s first year in office. According to Carrizalez, the ideas behind the decreed laws stem from the constitutional reforms proposed in 2007, because many of them were originally written with the expectation that the reform would be approved by voters.

According to Carrizalez, 16 proposed laws were not decreed because they are still in discussion, and they will be voted on in the Nation Assembly in the coming months.

IV. Venezuela to Represent Latin America in Non-Aligned Movement

Venezuela’s Foreign Minister, Nicolás Maduro, was elected to represent Latin America and the Caribbean at the XV Ministerial Conference of the 120 member Non-Aligned Movement. He advocated “multilateralism” as non-aligned countries forge a “new historical era” in which respect, not imperialism, rule. The foreign ministers at the summit voted unanimously to elect Maduro as the spokesperson for Latin America and the Caribbean, and Venezuela was also elected to become one of the vice presidents of the organization, although its new position has not been confirmed. According to Maduro, the non-aligned movement was born as an alternative to the “bipolar world” of the 1950’s, 60’s, and 70’s, and has since become, quote, the most important effort of the peoples to constitute an instance of dialogue, brotherhood, and respect, without empires, colonialism, exclusions, racism, or dominations of any kind.”

V. Brazil, Venezuela to Lend Bolivia US$530 Million for Cross-Continent Road

Last month, Brazil and Venezuela promised more than a half a billion dollars in low-interest loans for Bolivia to complete a highway linking the Atlantic and Pacific Oceans. Brazil is pledging a 20-year, US$230 million loan to pave 315 miles (510 kilometers) of roadway, while Venezuela is promising US$300 million for the rest.

Presidents from all three countries signed the deal in July in rural Bolivia.

The 3,800 mile (6,100 kilometer) road stretches from the Brazilian port of Santos to Arica in Chile, boosting cross-continent trade. More than half the highway’s path through Bolivia is still unpaved.

VI. Venezuela Launches New Child Care Program

In July, Venezuelan President Hugo Chavez announced the launch of a new child care social program designed to assist children in situations of risk or separation from their families. For the first nine-month step, Chavez has approved a budget of more than 120 million U.S. dollars. During the first nine-month period, the plan will designate substitute families for 250 children, the construction of 10 shelters for 300 children and the construction of communal houses for 2400 children in at-risk situations. The program also covers correctional facilities and therapeutic treatment for teenaged drug abusers.

VII. Venezuela’s Chavez Approves $566 Million in Infrastructure Projects

Venezuelan President Hugo Chavez also approved more than a half a billion dollars in funds for the construction of a series of new infrastructure projects on his Sunday talk show Aló Presidente in late July . Among the new projects are extensions to the nation-wide mass transit systems already in progress. The Venezuelan president opened the show at the construction site of a new system of Austrian-made cable cars known as MetroCable. The cable car system is being constructed as a solution for the thousands of families who live in the hill-side shanty towns of Caracas and whose houses are not accessible by road. The MetroCable will carry residents up and down the steep hills to and from various subway stations, relieving them of the long and many times dangerous walk up hundreds of cement stairs. President Chavez discussed his recent trip to Europe, and pointed out that many firms from Russia and Belarus have agreed to transfer technology for the construction of trains, tractors, and other goods. Chavez also stressed that Venezuela obtain not only the technology necessary to manufacture the goods, but also the capacity to produce the capital goods needed by the factories, and therefore break dependency on imported technology.

VIII. Venezuela Anxiously Awaits Supreme Court Decision on Disqualified Candidates

Venezuelans on both sides of the country’s political divide await with bated breath an imminent decision of the Supreme Court on the constitutionality of the Comptroller General’s disqualification of candidates for public office, due to accusations of corruption. Meanwhile, some opposition figures have taken their case to international bodies, such as Mercosur and the OAS. Both opposition candidates and government officials testified before the constitutional chamber of Venezuela’s Supreme Tribunal of Justice last week. Opposition leaders argued that the law that regulates the country’s main corruption watchdog is unconstitutional. More than 2 dozen opposition figures who have been disqualified appeared at the court last week. Among them was Leopoldo Lopez, the mayor of the wealthy Caracas neighborhood of Chacao, who is running for mayor of Greater Caracas in November. Lopez is accused of illegally donating oil company money to an NGO run by his mother while he was working at the state oil company. Lopez declared that the right to run for office cannot be denied to any citizen unless there is a final court decision against them.

IX. Chávez Gives Ultimatum to Socialist Allies as Venezuelan Elections Approach

Meanwhile, last week, Venezuelan President Hugo Chávez gave a one-week ultimatum to the rest of the parties in the pro-Chavez Patriotic Alliance, to decide whether they will unite behind PSUV candidates in the local elections scheduled for late November. Chavez vowed never to give into the “blackmail” of those who say the revolutionary parties are divided, and the president dared his allies to run their own candidates. Chavez pointed out that they lack the base of support that the United Socialist Party of Venezuela mobilized through its unprecedented primary elections in June, in which 2.5 million members voted. In response to the ultimatum, leaders of the Venezuelan Communist party and the PPT reaffirmed their support for Chávez as the leader of the Bolivarian Revolution, but maintained their intention to run separate candidates at a critical distance from the PSUV in some states.

X. Venezuelans Optimistic and 54% Approve of Chávez

Meanwhile according to a yearly poll conducted by the Iberian-American Consortium of Market Investigation, more than half of Venezuelans approved of President Chávez’s management of the country as of last May, and Venezuelans are optimistic about their economic future. The Chávez administration was evaluated most favorably in the areas of education, health care, and relations with neighboring countries. However, the Venezuelan government’s management of security, unemployment, and corruption, received positive ratings howevering only around 20%.

XI. Venezuela Marketing Coffee through Citgo Gas Stations

The Venezuelan ambassador to the US and the chief executive officer of Citgo, the US subsidiary of Venezuela’s state-oil company PDVSA, launched what they hope is a lucrative new trade relationship based, not on fuel, but on stimulants. Venezuela began to retail its own coffee last week through it’s Venezuela-owned Citgo gas stations and convenience stores. Cafe Venezuela, a group of 3,000 coffee growers provided the first seven-ton shipment to Citgo and is using the Citgo relationship to add more growers.