Saturday, February 09, 2008

The PDVSA 12 billion: They are missing or not? They matter or not?

There was this little country of Podunkistan who got entangled into some bad management of his sate monopoly of scented geraniums. When the big seed reseller of Empiristan got mad at some joint project for its spring catalogue that went bad it blocked a lot of Pedevesia Stinkera seeds in some storage room on the island state of Netherlandia. Soon the benevolent dictator for life of Podunkistan, Sabaneto Farcosy, sent his scented geranium minister to explain in great details where all the seeds were coming from and who paid for them. It was just a big misunderstanding and the lawyers of both sides went home with only the cab fare for their expenses.

This story unfortunately will not happen in the latest bolivarian debacle, the freezing of 12 billion USD in PDVSA assets. Tonight, getting spinning art in high gear, Ramirez, the PDVSA minister and main "alcahuete" (enabler) of Chavez went on a cadena on his own to explain that all were lies, that PDVSA was immune to the financial actions of Exxon, that the opposition was betraying the fatherland for not supporting the country, that the media were manipulating the whole thing. Which was what he already said earlier today (in English here)

Unfortunately since we have no idea about which are the real numbers of PDVSA considering that no real audit has taken place in years, and since he did not disclose the court injunction details and the documents that would establish that the foreign courts were mislead, we have only his word to validate his speech. And that, after a few years of his tenure plagued with lies and threats, after illegal money bags flying out of PDVSA vaults to Argentina and Bolivia, is not enough.

In other words, when Chavez himself does not come to the forefront, when he sends a rather discredited understudy to defend his polices, well, you know that he is in big deep shit trouble. Though he could be breaking glass at Miraflores again, or visiting the Castro live mummy for advice, or prostrated in one of his bipolar depressed moments. We have seen that in the past.

So, what is the situation today?

True, the 12 billions are spread enough around and involve limited amounts of actual cash (1 billion total?) that a giant like PDVSA can manage for a while. True, the money is not lost, as long as PDVSA wins its trial. True, Fitch did not downgrade (yet?) the Venezuelan debt though at BB- it is far form stellar already and probably does not require further downgrade.

But it is also true that PDVSA has 12 billion less of collateral to keep up its activities, its ability to borrow temporary bridge loans and what not. And since the Venezuelan economy is more than ever PDVSA, then our own ability to borrow and to do business is going to be seriously hampered sooner than later.

Let's look at some of the data reported through the day (all links in English).

First some of details of the financial deal, and the PDVSA top executive flying in a hurry to London (not on tourist fare, I am pretty sure: what is a first class ticket when 12 superdupper grands are at stake?). From the list mentioned there, the assets blocked are not as small as what Ramirez would have us believe. Since chavistas always speak on relative Manichean terms, he might think them small compared to the whole PDVSA, but they are big alright on their own and cost a lot to the state when they were established.

Through 2008 Venezuelan reserves have already dropped by 884 million USD to 32 billion. That is, the 12 billion blocked represent A THIRD OF VENEZUELAN RESERVES!!! Ouch! But we also learn in the same article that PDVSA contributed in the last two years by 13.5 Billion to the FONDEN. In other words the PDVSA blocked assets do represent a very significants hit on Venezuelan assets and finances, no matter what Ramirez burped tonight.

In Europe Venezuelan debt took a further beating as Europeans are simply afraid that Chavez will go crazy on this. It seems that they have taken full measure of the guy.

The political front data is more complex.

We got the usual jingoistic speeches. The one from PPT, a small political party that cannot find enough ways to bend backwards to please Chavez said that it was an imperialist adventure of the UK. It also added, without any sense of ridicule, that the whole thing was done to stop progress form ALBA and the Chavez very own FMI, Banco del Sur. It was thus a litmus test for the Venezuelan opposition who has NEVER consulted on all these mistakes by chavismo that the spokesjerk was mentioning, but should still rally behind Chavez without even a sigh. And sure enough, it called for a protest at the British embassy since he probably thinks that the judicial in the UK is as servile to Exxon as the judicial in Venezuela is servile to Chavez.

The ABN, the official agitprop of Chavez after a long silence, instead of explaining and justifying went to the offensive: the head lines this evening indicated that the "national interests were above those of any private business", it underlined the more checkered past of Exxon, and of course Bush is behind it all. The usual shoot the messenger, certainly not a study on badly managed PDVSA is.

And of course the inénarrable speech from the National Assembly head of energy commission, Angel Rodriguez. "...comes as part of an exercise of full oil sovereignty in Venezuelan territory. Any dispute or lawsuit should be addressed under the jurisdiction of domestic courts only.". Yeah right, the Venezuelan courts are going to be fair if Exxon is a plaintiff.... But beyond this ridiculous statement we must see one sad reality: Rodriguez not only actually thinks that a biased judicial system is alright, but he also has no idea on how investing operates. When Exxon went to the Orinoco it probably chose that investment over another one in, say, Podunkistan. Now, it cannot go back there and will lose sales and access to oil reserves just because Chavez woke up one morning deciding that all oil should be done by PDVSA alone. Exxon is justifiably suing for breach of trust and fraud. No matter how much we are allowed to despise Exxon after the Valdez, they have the right to sue not only for the equipment seized, but also for the lost business that chavismo accepted for many years. If you accept that Exxon can be spoiled just like that, then you accept that Chavez can take away your land or home or business without fair compensation whenever he will feel like it.

It is that simple.

If that makes me a traitor, so be it.

-The end-

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