Past Deeds Catch Up with Venezuela

The news is full these days of the disaster that is happening in Venezuela, basically a collapse of the economy and massive emigration. These people’s lot was not helped in any sense by last week’s 7.3-Richter earthquake – that’s pretty damn strong, it made buildings in Caracas sway. You’d imagine there were extensive casualties, although I have yet to see reports about that: perhaps, even as they were hit by those shifting tectonics, the Venezuelans realized they still have bigger ongoing problems and just quickly moved on.

That derelict economy is a complicated issue, but it is at least clear that it is due to disastrous past decisions made by the national government. Some additional after-effects of those recently popped up which you have likely not heard about. For Curaçao and a couple of its five other associated islands (Aruba, Bonaire) lie rather too close offshore from Venezuela, pretty much a stone’s-throw from the chaos prevailing there. So, for example, these islands regularly encounter their own boat-loads of refugees coming from the south, desperate for sustenance.

Curaçao and its five associated islands are in fact still in a loose political relationship with the original colonizer, the Dutch state, so the Dutch press is always interested in what is going on there. Lately there was this:

“Curaçao relieved: Confiscation of Venezuelan national oil company [property] lifted.” That property on the island is basically the refinery there and associated ships at anchor, which oil company ConocoPhillips had succeeded in having impounded – via judicial means, of course – as a means to gain compensation for the seizure of its own oil refining property in Venezuela proper by the government there around ten years ago.

As you can imagine, as long as that equipment was impounded, the Venezuelan national oil company PDVSA was not inclined to send any more of its property to Curaçao, neither crude oil nor the ships carrying it, as that would be confiscated as well. And so refining operations basically shut down: rather bad for the Curaçao economy. Of the brother islands, Bonaire and Sint Eustatius faced similar dilemmas with PDVSA property on their territory; on the former, the oil storage-tanks (also confiscated) were the only source of energy for the island’s electricity grid.

Everything is coming to a resolution now, though, although that is hardly good news for Venezuela. The confiscations are being lifted only because Caracas has agreed to abide by an arbitration ruling from the International Chamber of Commerce (based in Paris) that it has to pay ConocoPhillips 2 billion Yankee dollars to compensate for that earlier nationalization.

This is naturally the last sort of obligation the Venezuelan government needs, yet its strategy for righting its economic ship clearly involves getting PDVSA working right, i.e. earning big money again from oil, so it needs to hold on to those assets. Those authorities received at least a small break, in that they only have to pay ConocoPhillips $500 million up-front and can pay the rest over the next 4.5 years. (Of course, whether there will even still be a PDVSA, or a Venezuela, over that period . . .)

And then we have yet another such incident – Venezuela in trouble over its past foreign-property seizures – involving the Canadian gold-mining company Crystallex, but this report is from Reuters and you can read it for yourself. (The Canadians have managed to confiscate Venezuelan holdings in the US.)

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