International
Venezuela’s Chávez creates mess. Sooner or later, a clash between Venezuelan President Hugo Chávez and the country’s business establishment was bound to occur. Since taking office in early 1999, Chávez has systematically dismantled virtually every major economic policy promulgated by the previous administration. He fondly portrays his scrapping of policies as equalizing a battle between the haves and have-nots. To a degree, this is true, and he has succeeded in brainwashing the impoverished majority into believing that he will transform their lives by sprinkling them with magic oil-revenue dust. However, his bullheadedness and irrationality lead one to question his motives. No, this is really about the stubborn imposition of one would-be strongman’s will upon a country, without regard for sacred institutions, procedures and constitutional safeguards. Meanwhile, resentment grew throughout 2001 among a business community that was fond of the previous administration’s free market practices. Frustration with Chávez began to peak in November, when he decreed a package of 49 new economic laws. Many Western observers said this would deter investment by tightening state control over everything from oil to fishing. In typical dictatorial fashion, Chávez decreed the measures under "special powers" that allowed him to bypass Congress.
Perhaps the most debilitating measure is the new Hydrocarbons Law, under which state firm PDVSA must now hold a minimum 51% share in all future joint-venture projects of any kind. It also raises royalty rates to one of the world’s highest levels, jumping to 30% from 16.7%. There is a compromise clause that allows payments as low as 20% for the highest-risk projects, but this did not impress local economist Orlando Ochoa. In an editorial published in the Caracas daily El Universal, he said, "(the 20% rate) can only be considered a gesture. This doesn’t change the law’s central objective, which is to impose absolute state control over the oil industry." Mr. Ochoa should have added that the law’s central objective also feeds Chávez’s ego. The president insists that all 49 laws were "widely consulted." This means that the hydrocarbon measure was rubberstamped by a presidential commission that included Energy and Mines Minister Alvaro Silva Calderón and PDVSA President, Brig. Gen. Guaicaipuro Lameda (see World Oil, International Politics October 2001). Inclusion of the brigadier general is nothing to brag about, as Lameda had zero oil and gas experience prior to heading PDVSA. His previous posts included management of military planning and budget offices, as well as the government’s Central Budget Office. Lameda has his own problems. He has clashed with Deputy Energy & Mines Minister Bernardo Alvarez over the country’s natural gas initiative, seeking to keep the project totally within his PDVSA fiefdom. Incensed after Chávez inaugurated the Hydrocarbons Law in Falcon State on Nov. 30, leading business association Fedecamaras called a one-day strike for Dec. 10. Fedecamaras represents companies responsible for 90% of Venezuela’s non-oil activity, so thousands of factories, offices, banks, supermarkets, schools, etc., closed for the day. Ever the strongman wannabe, Chávez responded by staging the annual Air Force Day in Caracas, rather than in Maracay, complete with military jets flying over the capital. With each flyover, residents who supported Fedecamaras responded by banging pots and pans in protest. In turn, Chávez supporters set off fireworks. The strike ended that day at 6 p.m., and with it went the noisemaking, at least for now. At press time, Fedecamaras was claiming a moral victory over Chávez. The president answered by blaming the news media for the strike, and proclaiming that he would implement the new economic laws even faster than originally planned. Brazil puts banker at helm of Petrobrás. In one of the typically bizarre personnel moves that occasionally plague South America’s upstream sector, the Brazilian government replaced one economist with another as president of state firm Petrobrás. The former president, Henri Reichstul, left office on Dec. 21, 2001, yet news of his impending resignation did not surface until Dec. 5. On that date, Mines and Energy Minister José Jorge announced that the 52-year-old Reichstul had tendered his resignation several days earlier, citing health reasons. However, mere hours later on Dec. 5, Petrobrás’ Press Division did an interesting tap dance, releasing a statement that said Reichstul had actually tendered his resignation four months earlier. "He was in no hurry," said the release, "but it was growing increasingly difficult to deny the pressure his family was placing on him to return to Sao Paulo." The Press folks also said that Reichstul was not leaving for health reasons, although a week earlier, he had some nodules in his thyroid gland removed, which proved to be benign. "He was released from the hospital, is feeling well, and he returned to work this afternoon," they said. All this did was to support rumors outside the government that Reichstul quit under pressure, because he was fighting with Jorge. The two had supposedly clashed over key Petrobrás appointments since Jorge took over as minister last March. To be fair, Reichstul’s tenure was marred by a series of accidents, including the sinking of the P-36 production semi and two separate crude oil spills. With a background as an economist, investment banker and government planner, Reichstul was criticized by some officials and observers as being ill-equipped to deal with and/or avoid operational problems. If oil and gas savvy was the goal, officials blew that opportunity by replacing Reichstul with fellow economist Francisco Gros, who had headed Brazil’s National Development Bank (BNDES). Before serving BNDES, Gros worked at a variety of private and governmental financial positions, but he, too, has absolutely no oil and gas background.
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