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News Roundup: Exxon vs. PdVSA, Bullet Trains, and a New Arms Deal

February 12, 2008

Exxon vs. PdVSA  

Caracas announced intentions to cut oil supplies to Exxon Mobil, the largest U.S. oil company, after the corporation won court orders to freeze assets worth more than $12 billion owned by state-owned Petroleos de Venezuela (PdVSA). Exxon's move was designed to secure payment from oil operations lost to Venezuelan President Hugo Chavez’s nationalization movement last year. In response, Chavez and called Exxon's judicial action "hostile" and said crude oil supplies to Exxon officials will end. Senior Exxon officials had expressed intentions of getting into “substantive discussions” with PdVSA to agree on a fair tag price for their expropriated assets in Venezuela. But the Financial Times reports that “the value of the frozen assets is far beyond what Exxon could hope to receive in compensation for the project it abandoned in the Orinoco Belt.”

Oil prices rose following the PDVSA announcement. But an analyst told Reuters that, while the move could harm the U.S. economy, "it would arguably be much more devastating to Venezuela itself."

IN OTHER NEWS:

Brazil and France Seal Arms Deal

French President Nicolas Sarkozy met with his Brazilian counterpart Luiz Inácio Lula da Silva at the Brazil-French Guiana border to discuss details of a new arms deal that includes a nuclear-powered submarine, helicopters, and military technology. In addition, plans were unveiled for a new bridge connecting Brazil and French Guiana as well as an increased military presence to curb illegal gold mining. The leaders also pledged to support a humanitarian deal between the FARC and the Colombian government to secure the release of the hostages.

Read an AS/COA analysis of Brazil’s growing defense budget.

Bolivian Floods Blamed on Global Warming

Bolivian President Evo Morales declared flooding caused by heavy rains in the country’s eastern lowlands a national disaster. The official tally of victims reached more than 40,000 homeless and 51 deaths. As a Los Angeles Times blog reports, Morales blamed the floods on global warming caused by industrialized nations and called on them to pay an ecological debt to developing nations.

GM Relocating Colombian Plants

General Motors Corp (GM) announced plans to relocate a portion of its automobile production from Colombia to Venezuela due to restrictions on imports by Caracas. GM announced it will not fire Colombian employees but will eliminate the projected hiring of 470 workers planned for 2008. Colombia scrambled to diversify its exports portfolio as well as pressing the U.S. congress to ratify a free trade agreement.

In a new Viewpoints Americas article, AS/COA President and CEO Susan Segal explains the urgent need to ratify the U.S.-Colombia free trade agreement.

Argentina’s High Speed Train Lines

President Cristina Fernandez de Kirchner unveiled plans for a second high speed train line, announcing that three European consortia had offered bids for the line between Mar del Plata and Buenos Aires. The news came following a January contract between the Argentine government and French company Alstom to build a high speed line connecting the cities of Buenos Aires and Cordoba by 2011.