Latin American Report --Venezuela Again Pumps Up U.S.

Tiana Perez, NewsMax.com June 2003 Editor's note: Tiana Perez, NewsMax's Venezuelan correspondent, will offer dispatches on the turmoil in this crucial and often-overlooked part of the world.

June 27: Venezuela has regained third place as oil supplier to the U.S. with an estimated exporting capacity of 1 billion of barrels a day as Venezuelan President Hugo Chavez bets on keeping the country’s isolation in the political, not economic, realm.

Now that the strike is over in the country and as Chavez continues to capitalize on the Bolivarian revolution on the popular front, the state-owned oil company, PDVSA, has managed to resume oil production to stable pre-strike levels.

Venezuela’s oil partnership with the U.S. has seen itself strengthened with the normalization of oil production in spite of the financial problems that the company faces at the moment.

PDVSA, which now operates minus 30 percent of its former workforce, operates 189 branches and is owner of Citgo, the fifth-largest gasoline distributor in the U.S. The company has seen three directors of finance pass through the office in the last few months and gives faith of having fired 87 percent of the finance departments’ personnel while 5 percent resigned. Six months after the militarization of PDVSA, the company realizes that it cannot cope with its filing requirements before the SEC. Of the 189 branches, only 10 have closed their books. The companies, however, still have a few days until June 30th to do this.

PDVSA has failed to file its portion of taxes to the Venezuelan authorities for 2002. It is obliged to pay taxes as well as royalties to the government of Venezuela. Chavez is trying to bypass the crisis making use of a Royalty-In-Kind scheme, where Jack Kemp’s New York energy trading company, Free Market Petroleum, would act as counterparty.

The scheme exists in the U.S., where energy companies barter among themselves to meet Strategic Reserve’s requirements. Kemp said that his meetings with the Energy Department were aimed at finding out "how Venezuela can sell oil to the Strategic Petroleum Reserve." The U.S. Department of Energy said it "currently has no business agreements with Free Market Petroleum for any reasons."

A Hitch in Venezuela's Leftist Revolution

June 24: The Venezuelan Parliament met recently in a park for an unusual session organized by pro-Chavez congressmen to approve of a change in internal mechanisms for passing laws.

Government supporters in Congress have tried hard to vote on new mechanisms that will make it easier to pass laws. It all started a few months ago, when Chavez-supporting congressmen had tried to exclude opposition votes by casting votes during coffee breaks.

The current attempt to pass the internal restructuring law foresees a lower quorum requisite for casting votes and discards minimum attendance at congressional committees, some of which are now controlled by the opposition. Committees can preapprove of laws.

Sadly for the government, Chavez-supporting congressmen failed to count their votes before the park session; they fell one vote short of majority. The missing congressman apparently had a family matter to deal with and could not attend the session.

Vice President Rangel said the intent of the proposed law was only to have congressional committees relegate laws to the archives without bringing them to sessions in Congress. The move comes as the proposal for the new Law of Contents does not count on a majority during the sessions. The law will curtail freedom of speech by including decade-long treason sentences for journalists who air negative comments about government officials.

Rangel, however, warned that the strength of the administration was not correlated to parliamentary power shares.

Venezuela Steals U.S. Company

June 18: The Supreme Courts of Justice of Venezuela has ruled in favor of PDVSA by ordering assets of a joint venture called Intesa, co-owned with U.S. software company SAIC, transferred to the state-owned company.

SAIC leases equipment from Oracle and other foreign owned software providers and so supplies PDVSA with support for its technical platform. The government of Hugo Chavez claims the company is an arm of the CIA used to spy on the domestic oil industry and has tried unsuccessfully to bring the venture to an end.

Bids to buy foreign shareholdings have failed every time because of the low price offered by the government for the 60 percent owned by the U.S. company. The government of Venezuela refuses to bring the issue to an international settlements court, such as convened by the contract. The Supreme Courts of Justice ordered Intesa to transfer assets to PDVSA without the right to compensation, breaching private property rights and setting a precedent for foreign-owned ventures.

Illegal Aliens Getting Consular ID Cards Hit Roadblocks

June 17: Mexican consulates across the United States are estimated to have issued more than 740,000 matriculas consulares in 2001 and more than 1 million in 2003. This year Guatemala plans to make Tarjetas de Identificacion Consular available to 327,000 Guatemalans living in the U.S.

The cards issued by the Mexican government have built-in security features, such as variable coded texts, images visible only under UV lights and an “advantage” shield to contain illegal falsification.

Immigration reform activists are calling for an interruption of the silent accord that the Bush administration closed with foreign governments on immigration licensing, arguing that the issue threatens national security and U.S. sovereignty in terrorist times.

According to a Border Patrol supervisor, however, the smuggling of Mexicans has slowed and the U.S. is really experiencing a tremendous increase in non-Mexicans. He said “about one in every 10 that we catch is from a country like Yemen or Egypt."

Reformists argue in favor of legal protection for city councils, which would need to respond in lieu of insurance companies that will most likely not cover liability associated with the card.

The Matricula Consular or Identificacion Consular is used for purposes ranging from opening bank accounts and obtaining driver's licenses to accessing public services.

Pennsylvania, Delaware, North Carolina, Tennessee, Indiana, Michigan, Wisconsin, Iowa, Idaho, Washington, Oregon, Utah and New Mexico accept the identification card for the issuance of driver’s licenses.

California, where identification cards were reported to be used in lieu of driver's licenses for purposes of accessing public services, has banned acceptance of the identification card by federal agencies as of January 2003.

A strong reformist lobby lead by Rep. Tom Tancredo, R-Colo., pushing for the prohibition of the ID cards at the state level, managed to get a House bill into law in May. The law rules that identification cards issued by Mexican and Guatemalan consulates for illegal aliens will not be accepted unless federal officials accept it.

Most municipalities, however, have not yet been confronted with a state law hindering acceptance of the identification cards, and 801 police stations accept the identification card as a form of official identification.

Mark Krikorian, executive director of Center for Immigration Studies, said: "This does have homeland security implications in that it compromises our identification system and contracts it out to foreign governments. I think that the White House didn't think through the implications of them giving the green light to Mexico to give an end run around Congress. This has real implications for how policy is made in the United States.”

Chavez Targets Argentina

June 4: Hugo Chavez's international agenda rekindled a few weeks ago with the meetings held with Lula on Brazilian-Venezuelan business cooperation and Colombian President Uribe on easing of relations between the two countries due to guerrilla control of the border.

The Venezuelan president’s latest visit was to Nestor Kirchner, recently elected president of Argentina. Kirchner, of Swiss and Croatian ascent, skipped the second round after Menem, who on April 24 surpassed Kirchner in the first round of presidential elections by 2 percent, retired from the race with 24 percent.

Chavez attended the inaugural ceremony and praised the president-elect’s aim of improving Argentines’ living standard through economic and not social policies.

Kirchner, veteran of the Peronist Party's (Partido Justicialista) center-left wing, announced in his inauguration speech that he would work to combat poverty and hunger.

Kirchner keeps close ties with Brazilian President Inacio “Lula” da Silva, who has also promised to make the fight against hunger his priority.

Argentina and Brazil are partners in the Free Trade Area of the Americas (FTAA) talks and have promised to enforce regional cooperation and negotiate trade tariffs as a regional block, Mercosur, to counter the U.S. on the elimination of agricultural subsidies.

Chavez, the only president opposing free trade in Latin American, has sided politically with Lula and now with Kirchner based on their stated goal of combating hunger. His revolutionary plan being in full swing, he does not give up his attempt to spread the bad seeds around Latin America.

The Wall Street Journal, in an article published the day after Chavez had extended his support to Kirchner, told of a Chavez-led underground movement in Argentina that follows communist ideals.

Chavez came accompanied by a cabinet member who represents the indigenes of Venezuela, in a move possibly meant to symbolize his support for Argentina’s population whose deposits have not yet been given back by the banks. Ecuadoran President Lucio Gutierrez named a representative of the indigenes movement as head of the deposit payback entity to assure his indigene support base that, if worse comes to worse, it would be one of their speakers who will take charge of sensitive measures.

Foreseeing the crossroad of Argentina, which had partially liberalized frozen deposits through a Supreme Court order in March but has not yet established the payback method, the Venezuelan president practically warned that his voice was going to be heard if the Argentine government did not do the right thing.

Neither banks nor the state own enough foreign currency in Argentina to pay back deposits at the rate at which they were acquired before the devaluation of the peso. The currency devalued 70 percent since former President Duhalde ended the peg to the dollar in 2002.

It is possible that five- to 10-year dollar-denominated bonds are issued by the state to ease banks facing the public’s demands. Unfortunately, the decreased credibility in Argentina might prove the bond issue expensive and risky. Argentina still holds a US$141 billion public debt, significantly above its estimated $100 billion GDP. The country strongly depends on the deals that it will be able to reach with the IMF, which allowed Duhalde to put payments on hold, and international investors.

Kirchner’s lack of support by the majority of Argentina’s population will possibly urge him to satisfy depositors’ demands as local elections could otherwise turn to the advantage of populist governors who oppose his proposed austerity measures and commitment to reforms.