Monthly Archives: May 2011

Grip gripe (updated)

Is it tight yet?

Chavez tightens grip in PDVSA shake up, removes CFO
Editorial: Chavez tightens grip on power
Venezuela’s Chavez Tightens Grip On Judiciary : NPR
Chavez tightens grip on media
Chavez tightens grip on economy
Venezuela’s Chávez tightens grip
Chávez tightens grip on Venezuela economy
Chavez tightens grip on energy resources
Chavez tightens his grip on power
Venezuela’s leftists in turmoil as Chavez tightens grip
Chavez tightens grip on foreign oil
Chávez tightens grip on petrochemicals sector
Venezuela’s Chavez tightens grip on power
Worrying Trends In Venezuela As Chavez Tightens Grip
Hugo Chavez Tightens Grip on Venezuela’s Oil

“Chavez tightens grip” gets 19,000 Google hits
“China tightens grip” gets almost 300,000
“Obama tightens grip” gets 647
“Bush tightens grip” gets 276
That is fewer than “Stalin tightens grip”, at 398.

PS, ok, I’ll go there. “Hitler tightens grip” gets 2 hits.

UPDATE: Take a look at what real grip-tightening looks like. And take it from me, this doesn’t happen in Venezuela. Here’s what happens if you dare to dance in Washington, DC:

CFO leaves PDVSA board – is this PDVSA Pension Ponzi-related? (updated)

This is getting downright interesting. Eudomario Carruyo has left the board of Venezuelan state oil company PDVSA. The guy is old and weak, and may just be retiring. But it is interesting, as El Universal notes, that his name has come up in the PDVSA Pension Ponzi case. He was apparently in charge of putting a (perhaps fictitious) half-billion dollars of pension money into a Ponzi scheme in Connecticut. Continue reading

What Misión really matters? Misión Cheap Gas

While everyone is busy talking and worrying about these intentionally symbolic US sanctions against Venezuelan state oil company PDVSA, there is a real news story happening in Venezuela that is getting little play. The Caracas Metro is tripling its fares, from 0.50 bolivars to 1 bolivar in June and 1.50 in December. Meanwhile, a friend who takes language classes at a Bolivarian University, President Hugo Chavez’s new public university system, tells me that the university abruptly announced it would start charging tuition. Retroactively.

Now, I neither have a strong opinion about these fee hikes, nor do I feel I have much of a right to an opinion — this is the definition of an internal matter. However, I think it’s worth pointing out that the biggest Venezuelan public subsidy is to motor fuel. It’s hard to quantify exactly, but if you take PDVSA at their word that they sell 442,000 barrels a day of gasoline and diesel to the internal market for an average of about $7.21 a barrel, that’s currently an effective subsidy of about $110 a barrel, or $48 million a day, or $18 billion a year. Each year, that money could buy about a dozen new entire Metro lines (at least if they were the economical kind, rather than the gold-plated stuff pushed by gringo export-pushers in the 1970s). And language tutors for all.

Brazil forest campaigner killed – is it connected to law debate?

So remember how yesterday morning Quasecarioca told us about Brazil’s new forestry law, and how people are cutting trees like mad in hopes that the law will contain an amnesty provision? Well now, someone has killed a couple in Brazil and removed an ear from each corpse. It happens to be that one of the members of the couple was a prominent forest activist. Could this relate to the debate? It’s hard to rule it out.

Al Jazeerah English has the story:

Anti-logging activist murdered in Amazon
Brazilian police say Jose Ribeiro was likely killed in retaliation for speaking out against illegal forest loggers.

An Amazon environmental activist and his wife were killed late on Monday and the crime is being investigated as a possible assassination to silence the outspoken forest defender, according to police.

José Claudio Ribeiro da Silva, also known by his nickname of “Ze Claudio,” was shot and killed along with his wife, Maria do Espírito Santo da Silva, in Nova Ipixuna, a rural town of 15,000 people in the northeast Brazilian Amazon state of Para, about 40km from the nearest city, Maraba.

Exact details and circumstances of the death are not yet clear. However, Felicio Pontes a federal prosecutor in Para state, as well as Marcos Augusto Cruz, the local civil police investigator, told Al Jazeera by phone late on Tuesday that the killings have all the signs of a cold-blooded murder for hire.

“We are working on a hypothesis that this was an execution because the shooters cut off one ear of each of the victims,” Cruz told Al Jazeera.

“Usually this is done as proof to give back to whoever ordered the killings,” Cruz told Al Jazeera, before adding that is was likely he was killed in retaliation for speaking out against illegal loggers.

Ribeiro was a community leader of a rural Amazon sustainable reserve that produces nuts and natural oils native to the forest.

PDVSA response to sanctions: Hold me back, man, I don’t want to hurt you

In Venezuela, the oil minister and foreign minister are on live TV on all broadcast and domestic cable channels talking about the US’s sanctions against PDVSA. They are “rejecting” the measures as “illegal” and calling for workers to “mobilize in defense of our oil industry.” But when pressed by reporters for information about the specifics of what they’ll do in response, they are holding back. They say they are going to study the effects of the sanctions. Ramirez declined to comment on whether Venezuela actually sent fuel to Iran. He said Venezuela is committed to maintaining oil shipments to Citgo. He said PDVSA would consider cutting sales to Hovensa (a big refinery in the Virgin Islands, jointly owned with Hess) and other US customers that weren’t part of PDVSA.

The short of it is this. I think most people in the Venezuelan government know that these sanctions are just theater, and that they are more about shutting up Connie Mack than about shutting down PDVSA. But they can’t look weak before their public in an issue of national sovereignty, so they are going to huff and puff until they can find an excuse to move on to the next thing and forget all about this. They are responding to hot-air sanctions with a hot-air press conference. If only life could always be so simple. Continue reading

And the sanctions are… ( (Updated)

The US Secretary of State decided to impose the following sanctions on Venezuela’s state oil company PDVSA in response to shipments of fuel to Iran, according to a US government official briefed on the matter. These are the mandatory sanctions required by the US law that imposed sanctions on Iran in an effort to get Iran to halt any possible nuclear weapons program. The sanctions imposed on PDVSA (not on Venezuela’s government, mind you) are:

– A prohibition on US government procurement contracts (just PDVSA, not subsidiaries such as Citgo)

– A ban on new export licenses (existing licenses will be respected)

– A ban on Export Import (Exim) Bank financing (not very important, as Exim Bank stopped lending to Venezuela before the PDVSA strike and lockout in 2003)

Basically, weak sanctions. But still, US sanctions on Venezuela. Expect fireworks.

UPDATE: The Associated Press version.

Sanctions on PDVSA? RLY? (updated second time)

So says Reuters:

WASHINGTON May 24 (Reuters) – The United States will sanction Venezuela’s state oil company PDVSA on Tuesday for dealing with Iran in violation of a U.S. ban on such trade, sources briefed on the matter told Reuters.

(Hat tip to the Devil)

Quoting from my earlier coverage of this topic:

Venezuela’s on-again, off-again approach to fuel sales to Iran has become more intriguing in recent weeks, since Reuters published a story saying that Venezuela had shipped two cargoes of fuel. It would be of purely passing interest except that the U.S. strengthened its sanctions (PDF) on Iran last year to punish companies that provide fuel to the country, as a way of pressuring the Islamic Republic to be more servile about proving it has no nuclear weapons-related program activities.

This makes it explosive that there are supposedly documents proving a sale of reformate from PDVSA to Iran. Josh Shahryar posted three documents purporting to show that the shipments happened. As for describing his sources, he said only “Documents obtained by credible sources close to the matter.”

PDVSA President Rafael Ramirez has repeatedly denied such sales in recent months (news reports from October and February), and a PDVSA spokesman, who requested not to be named citing company policy, referred me to Ramirez’s remarks in response to the Pajamas Media article. I sent him links to the documents and am awaiting a reply about whether the company can confirm their veracity.

A U.S. State Department brochure on Iran sanctions (sorry, no link as my source requested that the document not be distributed in full) says the executive branch has little discretion when it comes to companies known to have violated the law. It’s not like some foreign policy items, like deciding whether a country is cooperative against terrorism or drugs, where judgment can play a role. If a country ships fuel to Iran, sanctions click in:

Iran Sanctions Act … requires the President to impose sanctions on a wide variety of activities in Iran’s energy sector. Activities that can trigger sanctions include … Selling or providing Iran with refined petroleum products, with
– Fair market value of $1 million or more; or
– Aggregate fair market value of $5 million or more in a 12-month period

And the sanctions are:

Three or more out of nine possible sanctions shall be imposed on any person determined to have engaged in sanctionable activities. The nine sanctions would prohibit:
1. Export assistance from the Export-Import Bank of the United States;
2. Licenses for exports;
3. Private U.S. bank loans exceeding $10 million in any 12-month period;
4. If the sanctioned person is a financial institution, designation as a primary dealer in USG debt instruments or services as a repository of USG funds;
5. Procurement contracts with the United States Government;
6. Foreign exchange transactions subject to U.S. jurisdiction;
7. Financial transactions subject to U.S. jurisdiction;
8. Transactions with respect to property subject to U.S. jurisdiction;
9. Imports to the United States from the sanctioned entity.

Under this law, it would be possible to hit PDVSA hard by applying sanctions 7, 8, and 9, or to hit it in an almost insignificant way, with measures 1, 2 and 5, for example. Regardless, sanctions is sanctions.


El Tiempo on Pacific Rubiales: reading this newspaper may be dangerous to your wallet (,

Pacific Rubiales, Colombia’s biggest private-sector oil company, reported its earnings for the quarter last week. They were pretty “meh.” Sales rose to a record, but the company reported a net loss, mainly on some wrong-way bets on oil prices. The company said it had gotten up to 225,000 barrels a day of operated production, in May. They left out the part about how that was the goal for Dec. 31 — a goal they still stood by as late as November. Basically, it’s an oil company, it’s producing oil, but nothing to cause the stock to recover to the frenzied highs of a few months ago. Well heck, don’t take my word for it, look at how the market responded:

Now with full respect, I don’t mean to pick on They faced up to their bad news this quarter much better than the prior quarter. I have some quibbles with them — like that they continue to lie in their corporate presentation, saying that they “produced over 25% of oil in Colombia in 2010,” when they actually produced something like 16.5% (by my math, 129,289 barrels a day of oil output, in a country that produced 785,401 barrels a day on the year).

But it’s nothing like the stuff I wrote a few months ago. The point here isn’t to once again look at the company, but rather to look for a second at El Tiempo, the biggest newspaper in Colombia.

On Saturday, El Tiempo redefined “puff piece” with this truly crappy bit of reporting (my translation). Continue reading

PDVSA Pension Ponzi: Looks like Oswaldo Cisneros had $117.5 million with Illarramendi

Oswaldo Cisneros, one of Venezuela’s richest humans, has long been rumored to be one of the people with big bucks invested with disgraced financier Francisco Illarramendi. His name hasn’t yet appeared in the US court records in the case. But a filing yesterday appears to show that Cisneros had $117.5 million invested with Illarramendi, giving him at least a passing connection to what I call the PDVSA Pension Ponzi.

The filing shows some mysterious investor trying to get back the money that was invested with Illarramendi’s Highview Point hedge fund. The SEC is telling them to go stand in line with the rest of Illarramendi’s investors. The SEC, in its complaint, accused HIghview of being “both victims and beneficiaries” of Illarramendi’s games.

So what is the evidence that this is Cisneros money? Continue reading