<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, April 04, 2003 By: Oliver L. Campbell

VHeadline.com commentarist Oliver L. Campbell writes: May I refer to a couple of points on internationalization made by Kira Marquez in her article about corruption in Venezuela?

At the time downstream investment abroad was proposed, it was felt selling all crude and products f.o.b. Venezuela left the State in a vulnerable position vis-a-vis the competition from the multi-nationals and other national oil companies. One may, or may not, agree with this assessment, but the objective of assuring an outlet for Venezuelan crude oil surely cannot be faulted.

The Veba joint venture was a net-back deal. The value of the oil sold to Ruhr Oel was determined by taking the sales proceeds of the products sold in the German market and deducting marketing, distribution and refining costs. The value thus depended on how buoyant the German market was at any time, and a further complication arose from movements in the DM/$ exchange rate. Both these factors, local market conditions and currency rates, have to be accepted when you invest abroad. CITGO is an exception as regards currency since the local market sales are in dollars.

Anyway, the net-back varied because of those two factors, and sometimes PDVSA got more than it would have done from selling the crude tel quel and sometimes less.

Even if the net-back was at times lower than the crude oil value, it can be argued this was the price for assuring a long-term outlet of crude oil sales.

As regards the refinery crude intake, PDVSA greatly reduced freight costs by buying light Russian crude oil (Ural) for Ruhr Oel in exchange for Venezuelan crude oil sold to Russia for Cuba. You cannot say PDVSA was anything but efficient. The initial problem, later overcome, was that refining and marketing costs in Germany were on the high side

The really large investment downstream was in CITGO and other USA refineries ... PDVSA believes the benefit is in the long-term assurance of crude oil sales to the USA. They assert the added value of refining and marketing directly in the USA is in the order of $1.50 per barrel. Whether you believe this or not, the fact is the refineries abroad refined 1,026,000 bpd in 2001, not far below the 1,246,000 bpd refined in the national refinery system. It is also important to note that, according to PDVSA’s Annual Report for 2001, The Corporation placed 85% of its heavy crude exports in its refineries abroad.

The alternative to not refining around a million barrels per day in refineries abroad is either to sell the crude oil tel quel or construct new refinery capacity in Venezuela. PDVSA is short of funds for the latter and, in those circumstances, upstream investment in new oil fields gives a much better return. Whether PDVSA should sell the refineries abroad, and return to the vulnerability of being an f.o.b. Venezuela seller of crude oil, is something our readers may wish to debate.

I fully share Kira Marquez’s views that more must be done to upgrade Venezuela’s heavy crude oils. Most of the world’s refineries were not designed to process heavy crude oils, and the Venezuelan ones also have many nasty characteristics which damage the plants.

One option is to construct the upgrading facilities in Venezuela, but does PDVSA have the funds available?

Another is to form a joint venture with a refiner abroad under which plants are modified to accept Venezuelan heavy crude oils. Modification costs less than new construction and it certainly takes less time to implement. However, this proposal may meet with the same opposition as other downstream investment abroad.

In brief, investments abroad should be seen as long-term measures to assure outlets for Venezuelan oil. There will be times, particularly in a rising market, when spot prices of crude oil will exceed realizations obtained under the different ventures, and the converse should also occur.

• To measure realizations at one point in time against spot prices is not particularly useful.

Kira Marquez’s concerns are pertinent and it is hoped the above sheds some light on her statement ... it does not explain, however, why PDVSA decided to invest in these refineries in the first place.

Oliver L Campbell, MBA, DipM, FCCA, ACMA, MCIM  was born in El Callao in 1931 where his father worked in the gold mining industry.  He spent the WWII years in England, returning to Venezuela in 1953 to work with Shell de Venezuela (CSV), later as Finance Coordinator at Petroleos de Venezuela (PDVSA).  In 1982 he returned to the UK with his family and retired early in 2002.  Campbell returns frequently to Venezuela and maintains an active interest in political affairs: "I am most passionate about changing the education system so that those who are not academically inclined can have the chance to learn a useful skill ... the main goal, of course, is to allow many of the poor to get well paid jobs as artisans and technicians."  You may contact Oliver L Campbell at email: oliver@lbcampbell.com

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Tuesday, April 01, 2003 By: Kay Onefeather

A Good President

1 - Leadership -- Refuses to bow to wishes of a 'select' few whose self-serving ideas are ... self-serving.

2 - Role Model -- Ability to inspire the People to stand up for their Rights against ALL odds!

3 - Honesty -- Tells it 'like it is' without empty, meaningless rhetoric.

4 - Spirit of Service -- Heroic Persistence in the face of Overwhelming Odds and Malicious Threats.

5 - Management Skills -- Ability to Stop greedy hands from Stealing Venezuela, one bulging bank account at a time.

6 - Helicopter Vision -- Watching the "vultures" circle, while sharpening the 'blades'.

7 - Life Record -- Exemplary life of survival, from dictators, and 'elements' bleeding the country of its life's blood.

EL PRESIDENTE!

Kay Onefeather Kaonefeather@aol.com

washingtontimes.com February 18, 2003 Bernardo Alvarez Herrera

     The rights conferred and guaranteed to citizens in the U.S. Constitution, adopted 214 years ago, endure as some of the most empowering ever written. Not surprisingly, the U.S. Constitution has had a profound impact on the framing of laws and constitutions in countries all over the world. People want to be governed by democratically elected leaders whose power is reflected only by those rights granted to them by the people through a constitution rooted in fairness and equality. Venezuela is no exception. Just 33 months ago, the people of Venezuela ratified a bold, dynamic constitution rooted in the same values used by Madison, Monroe, Mason and others.      Despite the fact that Venezuela's constitution grants rights to her citizens that it took the United States 176 years to accomplish (with the Voting Rights Act) — and guarantees rights that might not ever be ratified in America — The Washington Times uses its own constitutional freedoms to imply that Venezuela's president, Hugo Chavez, "might not keep his pledge to hold a binding referendum in August." Mr. Chavez cares deeply about following (and therefore not exceeding) the wording of the constitution and has — and will continue to respect — such a referendum this August. Mr. Chavez knows a great deal about the rights and responsibilities conferred in the Venezuelan Constitution. As noted by The Times, Mr. Chavez inspired much of the document. In fact, Article 72, which allows the people of Venezuela to hold their elected officials responsible for their actions halfway through their elected term — was promoted into the constitution by Hugo Chavez. The Times' inference, made during a time of such economic turmoil in Venezuela, seems particularly unfair and irresponsible.      Government of, by, and for the people.      One of the values that truly place the United States as a shining city on the hill is the faith in and simplicity of her democracy and the peacefulness of her transference of power. America prides herself on exporting the ideals and values of democracy to countries around the world. In fact, — America spends billions of taxpayers' dollars on programs to promote democracy. So why then question the legitimacy of a democratically elected president? Mr. Chavez was first elected in 1998 and overwhelming re-elected in 2000 with 57 percent of the vote.      Congress shall make no law abridging the freedom of speech?      The protection of those rights granted to Americans by the Bill of Rights has not been an easy road. The civil rights movement in the United States is a reflection of the length of that road. Change is not always easy — it is not expected to be. And, predictably, the freedoms exercised by a small group of people in Venezuela — the opposition's partial economic paralysis (more similar to a "lock out" in the United States) — has, no doubt, caused economic challenges.      Although the results of the opposition's "strike" can and should be placed at the feet of those organizing the opposition and participating in the strike — our constitution allows for and protects their speech.      It's like yelling "fire" in a very, very crowded theater — and getting away with it.      Can you imagine the results in America if more than a third of the U.S. revenue base was literally "turned off" over night by a group opposing the policies of the Bush administration? Can you imagine how disruptive it would be to daily life if hundreds of thousands of working men and women were "locked out" of their jobs by their employers? Can you imagine the pressures of managing a government not knowing who will help you and who will work against you? Can you imagine George Bush trying to manage the United States if CBS, NBC, ABC and all of the nation's newspapers simultaneously attacked and questioned his policies — around-the-clock for months? Those are some of the challenges Mr. Chavez has had to recently overcome. Remember how President Truman dealt with striking steel workers or President Reagan handled striking air-traffic controllers? A country must be allowed to act to protect the best interests of a majority of her people and the long-term growth of her economy. So, too, should President Chavez in dealing with lost oil revenue to Venezuela and the flight of capital during the "strike."      And, although the "strike" has been over for only a few days, our oil production is up to about 65 percent of our full capacity and normalcy has returned to our streets. We are proud of Venezuela's economic independence.      Or the press?      At the cornerstone of America's democracy is the freedom of the media to report, print, produce and broadcast what ever they want. Answering only to those consumers who purchase and use their information (and therefore not to the Government or special interests), the media in the United States has earned a hard-fought reputation for independence and fairness. That is why it is particularly disturbing to witness the uttering of false information and baseless opinions like some expressed in the Editorial to which this response is based.      For example, in your editorial it was implied that Venezuela has a paramilitary group — which "according to their leader" has "over 2 million members." The Washington Times knows — or should know — that such an armed force would be the largest in the hemisphere (almost 30 percent larger than the U.S. Army) — and know that such a statement is just not true.      The Times also accused the Chavez administration of somehow adding "instability" to the region by allowing "certain freedoms" to the guerrilla movement in Colombia. The Colombian government, the third-largest recipient of U.S. foreign assistance in the world, is working closely with Mr. Chavez to stop illegal drug trafficking and guerrilla operations across the more than 1,200 miles between population centers of the two countries. In fact, just this past week, the Colombian government publicly praised the Chavez administration for its commitment working for democracy and peace in the region. No one who knows much about the situation along that border has anything but praise for Mr. Chavez and Colombia's President Uribe.      While The Times readily admits Mr. Chavez is "Venezuela's native son born of tremendous frustration with the politics of privilege," the complex social and political situation should not result in misleading articles or editorials based on illogical reasoning. That's not what your Founding Fathers had in mind — or ours either.            Bernardo Alvarez Herrera is Venezuela's ambassador to the United States.

www.sfgate.com MONTE HAYES, Associated Press Writer Saturday, February 15, 2003

(02-15) 09:15 PST LIMA, Peru (AP) --

Vladimiro Montesinos was once the most feared man in Peru, the untouchable spymaster dapper in his Italian silk ties, Christian Dior shirts and diamond-studded Rolex watches.

These days he's in isolation at a maximum-security prison, sleeping on a thin foam mattress over a cold slab of concrete and taking medicine for depression, high blood pressure and gastritis.

Many Peruvians say Montesinos deserves to spend the rest of his life there because of the criminal empire he ran for a decade while he was the right-hand to since ousted President Alberto Fujimori.

But the wily lawyer is believed to still have powerful friends within the judiciary he controlled during Fujimori's authoritarian rule, and he is striving mightily to avoid long jail time despite a mountain of charges. Many people worry he may walk free in a few years.

With one of the many trials he faces scheduled to begin Tuesday and another Friday, Peruvians are hoping they'll finally get to see Montesinos squirm as he begins to answer to some of the 60-plus charges that include corruption, drug trafficking, arms dealing and running a death squad.

The investigation has implicated a swath of Peruvian society, from politicians and judges to a talk show host and a former soccer star.

The prosecution is considered the most complicated in Peru's history. And in Montesinos, Peru's notoriously inefficient and corrupt court system is confronting a master of manipulation who learned his wiles early from his father, who once faked his own wake to hear what people would say about him.

It has been 20 months since Montesinos was captured in Venezuela after he made a sensational cloak-and-dagger escape from Peru, skipping by yacht and small plane through Central America and the Caribbean.

After his arrest, the 57-year-old Montesinos used his knowledge of the law to delay his trials. His strategy has been to stall, gain time, cooperate on minor charges and deny all guilt on more serious charges.

Montesinos recently complained to prison psychologists that he was having thoughts of suicide, bringing charges from some that it was yet another ploy to win further delay.

"It's part of his strategy. As far as I'm concerned, it's a theatrical act," said Francisco Loayza, a former member of Peru's intelligence service who has known Montesinos since the 1970s and has written a book about him, "The Dark Face of Power."

Loayza introduced Montesinos to Fujimori during Fujimori's first presidential campaign in 1990. The candidate was facing a tax evasion investigation and was desperate for help. Montesinos used his contacts in the judiciary to torpedo the probe, and became Fujimori's most trusted aide.

Montesinos' first two trials are on relatively minor charges. In one he is accused of using his influence to get his girlfriend's brother out of prison. In the second, he is charged with contributing $25,000 in public money to the campaign of a candidate for mayor, an act documented in one of the hundreds of infamous "Vladi videos" he taped during private meetings with Peru's political elite.

"Montesinos' central objective is to be sentenced for minor charges that carry a maximum sentence of 10 years," Loayza said. "With time off for good behavior, he will be out of prison in three to four years. That would be a total success for Montesinos."

Prison sentences do not accumulate in Peru, meaning that if Montesinos was convicted on dozens of charges carrying a maximum of 10 years each, he would serve no more than 10 years.

A judge has already thrown out one drug-trafficking charge carrying a life sentence, ruling there was insufficient evidence. The prosecution has appealed the decision to a higher court.

Ronald Gamarra, a special state attorney assigned to the investigation, said Montesinos' tactics were wearing down the judges.

"I think the judicial authorities could be doing more than they are at this time," he said.

Also working in Montesinos' favor are the changes in Peru since the collapse of Fujimori's 10-year rule in November 2000, two months after a television station broadcast a video showing Montesinos bribing an opposition congressman to support the government.

With the election of President Alejandro Toledo in 2001, Peru returned to a full democracy and plunged back into nasty partisan politics, tumultuous sessions in Congress and allegations of corruption in the new government. As a result, Montesinos has been pushed off the front pages.

Public anger over the hundreds of millions of dollars that Montesinos and his cronies amassed in foreign bank accounts has begun to wane.

"People have to think about putting food on the table, finding a job," said Melissa Dominguez, a 28-year-old lawyer. "In the long run we end up forgetting."

One place where people maintain a vivid interest in Montesinos' fate is Arequipa, the volcano-ringed city where he grew up. Former friends, neighbors and relatives there trace his quest for power and wealth to a childhood dominated by his father, Francisco Montesinos.

An ardent Marxist with a penchant for imported whiskey but little ability to make a decent living, Francisco named the boy after Vladimir Lenin, the Soviet Union's founder.

Vladimiro and his siblings were raised in Tingo, a neighborhood of cobblestone streets and narrow alleys in Peru's second largest city, 465 miles southeast of Lima.

Memories of Tingo's most famous son and his father linger -- particularly about the phony wake.

After adorning his living room with candles and funeral wreaths, Montesinos' father propped open the window and lay in a coffin, his eyes shut and arms crossed over his chest.

"He did it so he could listen to the people talk about him, to hear who held him in high regard and who criticized him," said Pastora Pacheco, a neighborhood pastry vendor.

Andres Bedoya, Vladimiro's second cousin and a newspaper columnist in Arequipa, described Francisco Montesinos as "a complete nut," whose obsessive behavior eventually drove away the son.

The last thing Francisco Montesinos told his son before they parted ways was "never be poor." By all accounts, Vladimiro took that advice to heart.

When the elder Montesinos killed himself in the mid-1970s, Bedoya recalled, Vladimiro's initial reaction was: "Do you think this will affect my military career?"

But it was an accusation in 1976 that Montesinos sold state secrets to the CIA that derailed the then army captain's rise through the ranks. Cashiered from the army, he served a year in a military prison.

He spent the 1980s as a defense lawyer for drug traffickers, cultivating valuable contacts within the judiciary and prosecutor's office, ties that leapfrogged him into government power when he was able to fix Fujimori's tax problem.

Today, Fujimori lives in self-exile in Japan, the homeland of his parents. He is protected by Japanese citizenship from efforts by Peru to extradite him to face charges of embezzlement and sanctioning a death squad to kill suspected collaborators of leftist rebels.

Fujimori denies the accusations and says he was betrayed by Montesinos.

Montesinos answers that everything he did was at the request of his former boss. He has challenged Fujimori to return to Peru so the two of them -- "like men" -- can together face the consequences of their actions.