Venezuelan Governmental Action - Chavez

Venezuelan Governmental Action - Chavez Attempting to Abstract

In my paper below, I shall state the policies of Hugo Chavez the president of Venezuela and discuss his obvious abuse of power and their repercussions not only on America and the world but also on Venezuela itself.

NEW POLICIES OF HUGO CHAVEZ:

Venezuela currently supplies the United States with over 15% of its oil, making the South American nation its 4th largest supplier, after Saudi Arabia, Canada, and Mexico."(Jim Bencivenga). It is this position that Hugo Chavez is trying to take advantage of by enforcing his 2001 Hydrocarbon law according to which royalties on foreign operators doubled from 16.67% to 30% and a majority government stake was required in any joint venture taking place in the future. He has also banned dollar payments. "From now onwards, we won't be paying a cent in dollars (of costs) to these transnational companies" (Venezuela Bans Dollar Payments To Oil Firms)

Such expropriations could threaten foreign and international investments of major oil companies such as Mobil, Chevron basin and ConocoPhillips.

What Chavez is actually trying to do is shift the customer base of PDVSA, the oil company owned by the state of Venezuela towards Asia where the increasingly oil-thirsty China would welcome it. This would make Venezuela less dependent on U.S. And other neighboring states. Chavez has signed a deal to build oil and gas pipelines between Maracaibo Basin in Venezuela and the Caribbean and Pacific coasts in Colombia which would enable him to ship petroleum to China without using the Panama canal. This would allow him to cut deliveries to those who oppose him and hence forcing them into seeking other sources of oil at of course greater costs. As if this wasn't enough; Chavez has also announced plans to annul all mining concessions, which were previously granted to private companies. The state mining corporation of the country Corporacion Venezolana de Guayana, CVG, is reviewing many of its contracts and each of them would be modified according to the new laws.

Chavez said, "We've decided to revoke a group of mining concessions given by previous governments, including our own government. No more concessions."(Anonymous)

Many companies are likely to get affected with concessions according to a member of the National Assembly's mining commission. "Mining decision could have repercussions in Canada."(Virginia Citrano)

CHAVEZ'S UTOPIA:

President Chavez in order to put his "Bolivarian revolution" in effect has to come up with sources to fund it. It's a vision that's utopian n Chavez knows it. Still he continues to outrageously increase the prices of oil and now these laws on mining, which might only help in further increasing the inflation instead of causing deflation

He has very close ties with Fidel Castro of Cuba, which is evident from the fact that he offered concessions on 53,000 barrels of oil per day in exchange for Cuba's doctors, teachers, and intelligence experts.

ILLEGITIMACY OF THE ACTIONS OF CHAVEZ:

Chavez took over PDVSA in 2002; he fired some 18,000 skilled oil workers, which temporarily paralyzed PDVSA. The 2002-2003 strike caused utter devastation in the oil giant. Some 35,000-40,000 skilled workers, which included fire fighters, walked out while the spillage and fires continued to ensue. Production capacity plunged from three million barrel per day to only 600,000 barrels. To regain and maintain the pumping capacity at an estimated 2.5 million barrels per day, PDVSA engineers are reported to have "goose" wells by pumping in air and water into them to cajole the viscous petroleum to the surface, which has endangered the long -term sustainability of these existing oil fields.

The information technology company, which was jointly owned, by PDVSA and the U.S.-based Science Applications International Corporation (SAIC) was apprehended by the Venezuelan military during the national strike in December 2002.

Chavez said his government may sell eight U.S. refineries as part of a strategy by the world's fifth-largest supplier of oil to reduce dependency on sales to the U.S."

Venezuela's Chavez Considers Sale of Refineries)

His attitude towards the press is not only condescending but he has also curtailed its freedom. He has coerced the T.V channels and radio stations into broadcasting his speeches without leaving fair time for the opponents.

He has his eyes set on the upcoming elections of 2006 and has taken it upon himself to ensure that his position remains secure as the president of Venezuela. In order to gain the sympathies of the poor people of Venezuela who constitute about 80% of its population "Chavez has allocated $1.6 billion to $3.7 billion worth of state oil income which would be spent on the poor voters during the campaign."(Anonymous)

In order to enforce his 2001 Hydrocarbon law he altered the 60-year-old agreement with the foreign oil companies, increased royalties and enforced heavy taxes.