Venezuela News Summary #79

I.Venezuela Inaugurates New Line for Extensive Rail System Project

I.Venezuela Inaugurates New Line for Extensive Rail System Project
Last week, Venezuelan President Hugo Chavez inaugurated the construction of a 300-mile rail project in central Venezuela, one of more than a dozen major rail lines his government plans to build over the next two decades. The new line will stretch from the city of Anaco in the eastern state of Anzoategui, through Guarico and Aragua, to the town of Tinaco in the state of Cojedes. It is expected to be operational by 2012, with a maximum speed of nearly 140 mph, and its construction will create 1,800 jobs. The Chavez administration’s “National Railway Development Plan” will cover nearly 8500 miles of rails upon its expected completion in 2030, including nearly 400 stations and more than 500 trains. It will be able to transport more than 200 million passengers and nearly 200 million tons of cargo each year. http://www.venezuelanalysis.com/news/4316

II. Nationalized Cement Maker Starts Arbitration Against Venezuela
Holcim of Switzerland, the second largest cement producer in the world, announced last week that it was beginning international arbitration to obtain what it called “full compensation” for its assets. The Venezuelan government took over Holcim Venezuela and other foreign cement companies last year as part of an effort to reduce costs, focus on domestic production over export profits, and to boost housing and infrastructure development. The government nationalized Holcim in June last year, and signed a pre-agreement with the company in August in which compensation was guaranteed to the tune of $550 million dollars. However, Holcim claims the government suspended communications with it in October, and the company says it hasn’t received anything. The arbitration has gone to the World Bank’s International Center for Settlement of Investment Disputes. http://www.venezuelanalysis.com/news/4317

III. Venezuelan Finance Minister Announces Indemnity Agreement for Nationalized Steel Plant
Venezuelan Finance Minister Ali Rodríguez announced last week that the Venezuelan government has reached an agreement with the Argentine-controlled Techint Group on a payment plan for the SIDOR steel plant, which Venezuela nationalized last May. The nationalization came on the heels of a 16-month collective contract dispute between the company and Venezuela’s United Steel Industry Workers Union. Rodríguez did not specify the amount to be paid. When the Venezuelan government privatized the steelmaker in 1997, Techint paid a billion and a half dollars for its 60% share. http://www.venezuelanalysis.com/news/4333

IV. Venezuela to Nationalize Drug Trafficking-Linked Airline Aeropostal
The Venezuelan government has decided to nationalize the operations of Aeropostal. The announcement came from President Hugo Chávez, after the owners of the Venezuelan airline company became implicated in pending drug trafficking cases. Last November, authorities arrested several owners of Aeropostal, the Makled business group, and several employees on the Makled estate for possession of 400 kilos of cocaine and other drug trafficking charges.

In February, Venezuelan authorities arrested a group of hired assassins who worked for the Makled group and are suspected to have taken part in the executions of eighteen people. In accordance with the Venezuelan Law on Illicit Drug Trafficking, since the Makled brothers’ arrests, a government auditing team has controlled the management of Aeropostal. Last week, President Hugo Chávez said quote, “This is a measure against drug trafficking. We are going to re-launch Aeropostal as a socially owned airline,” Chavez said a new national plan will be drawn up to develop Venezuela’s aeronautics industry with a focus on national development priorities and not only profit. http://www.venezuelanalysis.com/news/4335

V. Eleven Venezuelans Are Formally Accused in Synagogue Attack
Last Thursday, Venezuela’s attorney general formally accused nearly a dozen people in the January attack on one of Caracas’ prominent Synagogues.

As the attack occurred just before the February 15th constitutional amendment referendum, it was considered a political act. Of the 11 people who were arrested are eight police officials and three are civilians, one of which was a security guard for the synagogue. The group is accused of aggravated robbery with various degrees of complicity, as well as acts of contempt against a religion, and criminal association under the law against organized crime. All eleven remain in prison. http://www.venezuelanalysis.com/newsbrief/4332

VI. Venezuelan Parties and Associations React to Government’s Revised 2009 Budget
Early last week, the governing United Socialist Party of Venezuela, PSUV, declared its full support for the revised budget announced by President Hugo Chávez three days prior. PSUV Vice President and former Finance Minister Rodrigo Cabezas said the measures contrast with the economic policy recommendations of the International Monetary Fund, which Venezuelan presidents implemented during the decades before Chávez was elected in 1999. Cabezas also echoed Chávez’s demand that top government officials lower their salaries and bonuses and eliminate unnecessary spending. The Communist Party of Venezuela said the measures will fulfill their purpose of helping Venezuela cope with the decline in oil prices brought on by the world financial crisis. However it said the measure are “insufficient” to construct an alternative to capitalism. The economic measures announced a week and a half ago, aim to reduce the 2009 budget by 7% compared to the original budget that was approved by the National Assembly in January. The new budget is based on an estimated average price of $40 per barrel of oil, rather than the original estimate of $60 per barrel of oil. http://www.venezuelanalysis.com/news/4322

VII. Venezuelan Opposition Governors Instigate “Rebellion” Against Centralization of Ports and Airports
As Venezuela’s President Chávez followed through on the decision to transfer control of the nation’s ports and airports to the national government last week, a group of opposition officials from several Venezuelan regions have declared themselves in “rebellion” against the measure. The National Assembly reformed the Law on Decentralization in early march to allow the national government to take control of ports, airports, and highways that they say had deteriorated and become dominated by drug trafficking and contraband mafias. A week later, the National Guard occupied Zulia’s Maracaibo Port, and Carabobo’s Puerto Cabello. Last week, President Hugo Chávez signed a decree to create national companies to administer the ports and airports. All 17 PSUV governors have collaborated with the transfer of the transportation hubs, but Venezuela’s five opposition governors, along with the mayor of Greater Caracas and other top opposition leaders have organized a group of 80 state and local officials to support a quote “rebellion.” They characterize it as quote, “legitimate democratic resistance” in defense of the national Constitution. Last week, Zulia state legislators declared a state of emergency to oppose the centralization of the transportation hubs. They voted 11 to 4 to submit a formal request to the National Electoral Council to organize a state-wide referendum to consult voters on the issue. The council has not publicly responded to the referendum request. http://www.venezuelanalysis.com/news/4328

VIII. President Chávez and Venezuela’s Socialist Elected Officials Meet to Discuss Political Strategy
Last week, Venezuelan President Hugo Chávez convened state governors, city mayors, and legislators from the United Socialist Party of Venezuela to discuss the next stage in the construction of “21st Century Socialism.” The meeting comes following two important electoral victories for Chávez and his supporters over the past four months. Chávez urged governors and mayors to promote debate in their workplaces, and to counter the “media war” waged by the opposition-aligned private media against the government’s policies. Throughout the day, PSUV elected officials divided into working groups organized by region to set up policy priorities for the coming months. Among the topics discussed was the election of constitutional assemblies to re-write state and municipal constitutions to reflect the principles enshrined in the national Constitution. Venezuela’s constitution was written by an elected assembly and approved by popular vote during Chavez’ first year in office, in 1999. http://www.venezuelanalysis.com/news/4331

IX. Venezuelan President Chavez: “I Won’t Wear James Bond Suits”
Last week, Venezuela’s President Hugo Chavez criticized members of his administration as he signed the Presidential Decree to eliminate superfluous spending. The decree was one of the measures announced a week and a half ago in order to combat the effects of the financial crisis, which has seen a declining price of oil. Speaking to pro-government governors and mayors, Chavez criticized a quote, “culture of extravagance” in the government and certain institutions, which he said needs to be eliminated. The decree applies to all entities of the national government. Various expenses will now need approval from the executive vice-president. It also prohibits bonuses and orders the setting of wage limits for workers at high levels in the national government. http://www.venezuelanalysis.com/news/4334

X. South American Nations Meet in Venezuela to Lay Foundation for Bank of the South
Top government officials from seven South American countries met in Caracas Monday to lay the foundation for the Bank of the South. The bank is an international initiative launched in 2007 to improve regional integration and invest national reserves in regional social and economic development. Venezuela, Argentina, and Brazil agreed to contribute $2 billion each as initial capital for the bank. Ecuador, Bolivia, Paraguay, and Uruguay will contribute $1 billion each, bringing the balance to $10 billion. Venezuelan Finance Minister Ali Rodríguez said last week’s agenda also included discussions over the integration of regional energy production, infrastructure, and finance. The Bank of the South was originally proposed by Venezuelan President Hugo Chávez as an alternative to the International Monetary Fund and World Bank, which are considered by many South American nations to have trapped the region in debt and then used this as an excuse to impose policy conditions dictated by Washington. South American leaders have touted the Bank of the South as a method of insulation from the crisis and as a safer depository of their national reserves. The leaders scheduled a follow-up meeting in Buenos Aires in early May to finalize plans for the regional bank. http://www.venezuelanalysis.com/news/4323