[progchat_action] Venezuela Congress urges World Bank court pullout
 
Date: Sat, 16 Feb 2008 00:54:31 -0600 (CST)



Venezuela Congress urges World Bank court pullout

Reuters
Thursday February 14 2008

Caracas, Feb 14 - Venezuela's Congress wants to pull out of an international
body arbitrating a multibillion-dollar fight with Exxon Mobil Corp, part of
a compensation battle that threatens already thorny ties with Washington.

In a largely symbolic motion published on Thursday, Congress called on
President Hugo Chavez to withdraw from the World Bank's International Center
for Settlement on Investment Disputes over a battle with Exxon on payment
for an oil project nationalized last year.

Venezuela Oil Minister Rafael Ramirez criticizes previous governments for
allowing international arbitration in disputes with foreign oil companies.

But far from threatening to pull out of the body, he has instead vowed to
win the case, which could last several years.

The congressional motion also backed a conditional threat Chavez made last
week to stop exporting oil to the United States and urged the government to
prosecute former officials who signed "harmful" contracts with foreign oil
companies.

While there is little sign Chavez will take up Congress' move, it helps
amplify Venezuela's political noise against Exxon and Washington, which have
been demonized by state media in the dispute as working to attack
oil-producing nations.

Anyway, a withdrawal from the World Bank's body would not affect outstanding
arbitration cases, said Eurasia's Latin America analyst Patrick Esteruelas.
Even after a pull-out, companies operating in Venezuela would still have a
six-month window to present their claims before the bank, he added.

"That is to prevent sovereign nations from cutting if off whenever they want
and revoking company rights to file for international arbitration,"
Esteruelas said.

Chavez, a foe of the United States, says Exxon Mobil's court victories which
resulted in $12 billion in Venezuelan assets being temporarily frozen over
the seizure are part of an "economic war" to unseat him directed by the Whit
e House.

On Wednesday, Washington backed Exxon Mobil's tough legal strategy "to get a
just and fair compensation package," but denied it was trying to oust
Chavez. Exxon Mobil was pushed out of Venezuela along with ConocoPhillips
last year during a nationalization drive by Chavez, who wants to turn
Venezuela into a socialist society. Conoco is still in talks over
compensation. Analysts say Exxon's legal offensive is a negotiating tactic
to set a price tag for the nationalized Cerro Negro project at $12 billion.
Venezuela says the project is worth less than $6 billion. Chavez has slowed
his reform drive this year after a stinging defeat in a referendum to
increase his powers and allow him to run for re-election.

Last year, Chavez vowed to pull out of the International Monetary Fund but
backed down when he realized it would have allowed private bond holders to
demand immediate payment for their debt.

Leaving the World Bank would not trigger a technical default of Venezuelan
bonds, according to Eurasia's Esteruelas. Economists say, however, that the
move could also be costly for Venezuela because it would cause a chill on
investment and likely put the country in violation of contracts with foreign
companies.

Venezuelan ally Bolivia, which has also nationalized energy projects, last
year called for several left-wing countries in Latin America to pull out of
the body of the Washington-based World Bank. (Reporting by Frank Jack Daniel
in Caracas, Walter Brandimarte in New York; editing by Jim Marshall)

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