Venezuelan oil workers go two months without pay

Mise

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http://news.bbc.co.uk/1/hi/business/8093790.stm
Oil workers urge Chavez to pay


Maracaib 420 miles west of Caracas, Venezuela. Oil assets are now in government hands, though workers are not happy.

On the shores of Latin America's largest lake lies Ciudad Ojeda, a town dedicated to oil.

Almost everyone here works in the industry, either directly as contract workers or because their restaurants, bars and other small businesses rely on the free-spending oil workers to stay afloat.

Last month, a significant change happened in Ojeda. Dozens of those contractor businesses were expropriated, along with their assets.

Overnight, 300 boats and an estimated 8,000 workers passed into government hands.

No wages

There were scenes of jubilation as President Hugo Chavez came to the dockside by Lake Maracaibo to meet the newly nationalised oil workers.

They waved red flags and celebrated their addition to the payroll of the state-run energy company, PDVSA.

A few weeks later, and those celebrations have turned to protests.

In the central square of Ciudad Ojeda, a noisy demonstration of about 100 workers is held in the stifling mid-morning heat.

Some say they lost their jobs during the nationalisation, others that their pay has been frozen.

"I haven't been paid for more than two months now," says young father-of-four Jose Cardoso.

"There's no food at home and we're getting desperate," he says, adding that he would be willing to go to prison over his outstanding wages.

Debts or savings?

At the time of the nationalisations, President Chavez said the move represented a $700m saving for the Venezuelan government.

More importantly, he said, all the different parts of oil production in western Venezuela were now in the hands of the Venezuelan people.

But for some analysts, there is an inherent danger in taking the work of specialist contractor companies out of private hands and putting it under the wide-reaching umbrella of PDVSA.

"First off, [President Chavez] owes that money, so I don't know how he can count it as a saving," says former Shell executive Alberto Quiroz.

"Those are services rendered and he has to pay for them, sooner or later.

"Secondly, he claims that PDVSA can perform the same services cheaper than the specialist companies. Well, that's open to discussion. Personally, I think it will end up being more expensive."

Near standstill

Mr Quiroz believes the nationalisation process has created inefficiency in the oil industry, which is being most keenly felt in Ciudad Ojeda.

There are almost daily reports in the newspapers - many of which are firmly opposed to Mr Chavez - of the nationalised tug-boats lying idle in the dock and falling into disrepair.

Such claims are difficult to prove as the military are guarding the nationalised companies and access is difficult.

But one business owner, who has spent more than 25 years in the oil industry in Ojeda, is convinced things have slowed down to a near standstill since May.

"Normally you'd expect to see 30, 40 boats working out on the lake at any one time," says Juan Lacorte, the former head of the now-nationalised Gutesca oil services company.

"These days, you'd be lucky to see three or four. Our companies are being run into the ground and it's hurting the workers the most. I thought this was supposed to be a socialist government."

Important company

Mr Chavez says that complaints from men such as Mr Lacorte are baseless, and he accuses them of being the kind of capitalist businessmen who for too long have been getting rich, at the expense of the poor, from the country's natural resources.

The government also denies any suggestion that PDVSA is in trouble.

The oil minister, Rafael Ramirez, recently produced figures for 2008, which at $9.5bn showed a 50% rise in the company's profits compared with 2007.

"PDVSA is the fourth most important oil company in the world," he told reporters.

Controlling resources

However, jPDVSA's level of debt is significant too, at $7.5bn, and the government's detractors are convinced that the oil giant is on the brink of either financial collapse or an operational shut-down.

"If PDVSA was a private company, I'm sure it would be in deep trouble by now," says Mr Quiroz.

"The difference is that by being state-owned, there are measures the government can take that a private company can't - these nationalisations in the state of Zulia being one of them."

For former government economist Jose Sojo, nothing could be further from the truth.

"Whether the oil price is high or the oil price is low, PDVSA is going to be attacked by the people who don't believe in what President Chavez is doing.

"But the fact is that for Venezuela, as for many other Latin American countries, the base for reaching real economic development is the adequate use and control of our natural resources."

Crucially, the question many observers are asking is whether the lower oil price will affect President Chavez's ability to pay for his popular social programmes in health, education and poverty reduction.

Not at all, says Mr Sojo.

"We have had a reduction in our annual income from the lower oil price, that's obvious. But President Chavez has identified areas that we can reduce without hurting these programmes.

"This government will do all it can to cut back on luxuries and other unnecessary expenditures before it cuts back any social spending."

Nevertheless, the sight of normally loyal President Chavez voters, some still wearing their PDVSA overalls and red baseball hats, protesting outside the gates of their nationalised companies will concern the government.

The oil ministry in Venezuela will no doubt hope the slow recovery of the oil price will alleviate any immediate cash-flow problems that PDVSA is experiencing.

So the government took responsibility for operating oil infrastructure away from highly trained, highly experienced specialist companies, and placed it in the hands of a vast bureaucracy, whilst at the same time piling up debt that it is struggling to pay now because oil prices have plummeted.

Result? Unpaid workers, unmaintained equipment, job losses and wasted productive capacity. I thought this was Socialism?
 
Socialism does not work.

Social democracy and third way do.
 
So the government took responsibility for operating oil infrastructure away from highly trained, highly experienced specialist companies, and placed it in the hands of a vast bureaucracy, whilst at the same time piling up debt that it is struggling to pay now because oil prices have plummeted.

Result? Unpaid workers, unmaintained equipment, job losses and wasted productive capacity. I thought this was Socialism?

So-called 21st century socialism. If the workers controlled the infrastructure then this wouldn't happen.
 
I though the venzuelan economy was doing great and everybod there was swimming in a pool full of money. Guess I was wrong.
 
Mr Chavez says that complaints from men such as Mr Lacorte are baseless, and he accuses them of being the kind of capitalist businessmen who for too long have been getting rich, at the expense of the poor, from the country's natural resources.

Ironic, much? I suppose the capitalists might have not been sharing the profits fairly with the government in Mr. Chavez's eyes, but then he forgets to pay his employees? :lol:
 
You guys have it all wrong. These heroic Pioneers of Socialism have volunteered two months of their time in a dangerous job for the betterment of their country! Viva socialismo! Viva Venezuela! Viva Chavez!

Yeah they were overpaid as capitalists, so now they're 'giving back' by working for free.
 
This article is a lie perpetuated by those intent on smearing the worker's paradise that comrade Chavez has implemented for the good of himself all Venezuelans. Shame on you all for even thinking it could be true.
 
I wonder if Rudy Guiliani's law firm is advising Chavez on this. They have worked on anti-labor matters stateside, so it wouldn't be suprising.
 
So the government took responsibility for operating oil infrastructure away from highly trained, highly experienced specialist companies, and placed it in the hands of a vast bureaucracy, whilst at the same time piling up debt that it is struggling to pay now because oil prices have plummeted.

Result? Unpaid workers, unmaintained equipment, job losses and wasted productive capacity. I thought this was Socialism?

In other news, the private sector ran the world economy into the ground. Conclusion: everybody sucks.

Spoiler :
The point of socialism isn't to create wealth. It's to create more equality. Whether this is best done through nationalisations is not a clear-cut question, IMO.
 
Here's another kind of idiotic maneuver on Chavez's part.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHfRkWQcvqeQ

June 23 (Bloomberg) -- Japan may cancel a planned $1.5 billion loan for Venezuela’s El Palito and Puerto La Cruz oil refineries after the South American nation seized Japanese company assets, said a person familiar with the situation.

The Japan Bank for International Cooperation, or JBIC, is reviewing loans for the upgrades after Venezuela took over Japanese iron and chemicals assets and fell behind on payments to oil-service contractors, according to the person, who declined to be identified because the review isn’t public. The refineries have a combined 327,000 barrels-a-day of capacity.

Venezuelan President Hugo Chavez is risking as much as $33.5 billion in Japanese investment as he takes over plants owned by companies such as Tokyo-based Mitsubishi Corp. Petroleos de Venezuela SA, the state-owned oil company, is also behind on payments to contractors including Japan’s Toyo Engineering Corp., according to the person.

“If that money were to dry out they’d be in a serious pinch,” said Roger Tissot, a consultant with Gas Energy Latin America in Vernon, British Columbia. “It doesn’t matter if you’re from China, Japan, Saudi Arabia or Wall Street, you want your money back and a little bit of return.”

Insurance Coverage

Nippon Export and Investment Insurance, or Nexi, is also considering ending coverage for projects in Venezuela, the person said. The agency insures most Japanese holdings in Venezuela. The company has been holding internal meetings to determine its insurance coverage policy for Japanese investments in Venezuela, Kyoichi Suzuki, the head of the agency’s country risk analysis group, said by phone June 19.

Rafael Ramirez, Venezuela’s oil and energy minister and president of PDVSA, as the state oil company is known, didn’t immediately respond to a request for comment sent to his communications office.

Hirofumi Kawagoshi, the head of investor relations at Toyo Engineering, confirmed that Venezuela has been behind in payments for a 60 billion-yen ($631 million) contract to build a fertilizer plant. The accord was signed in 2007, Kawagoshi said.

Planned Japanese investments in Venezuela include $10 billion in liquefied natural gas projects, $8 billion in petrochemicals and $1.5 billion for the refineries, Chavez said while visiting Japanese Prime Minister Taro Aso in April.

‘Grave Concerns’

“We have grave concerns about Venezuela’s nationalization of the industries and need to continue internal discussions before determining our clear future policy,” Nexi’s Suzuki said.

Japanese companies may lose their appetite for investing in the South American country without Nexi coverage because they would be fully exposed to risks, said Hidetoshi Shioda, a senior energy analyst at Mizuho Securities Co. in Tokyo.

Mitsubishi has an agreement to finance upgrading the Puerto La Cruz refinery, according to a statement from Chavez’s office. A Mitsubishi spokesman, who can’t be named because of the company’s internal rules, declined to comment on the agreement or on future talks on the refinery project.

JBIC, through a spokesperson who wouldn’t be named because of bank policy, declined to comment on any review of the loan because negotiations are still ongoing. Venezuela’s Foreign Ministry didn’t immediately respond to a call and e-mailed questions from Bloomberg News seeking comment.

Exit From Venezuela

“Trading houses and other Japanese investors would get out of Venezuela if they don’t have the Japanese government’s strong financial backing,” said Yasuhiro Narita, an analyst specializing in trading houses at Nomura Securities Co. in Tokyo.

Mitsubishi, Mitsui & Co. and Itochu Corp. are among the partners designing two liquefied natural gas plants where Ramirez said Japanese investment may reach $10 billion.

Mitsui will look into the impact of Venezuela’s possible nationalization of industries and take appropriate action in consultation with its Japanese partners, said a spokesman, who declined to be named because of company policy. An Itochu spokesman, who also can’t be identified because of internal rules, declined to comment.

In 2007, JBIC led a group including Mitsui and Marubeni Corp. that loaned PDVSA $3.5 billion to be paid in cash, crude oil or petroleum products over 15 years, according to PDVSA’s annual report.

China, Brazil, Russia

Venezuela also gets foreign investment from China, Brazil and Russia. China Development Bank Corp. put $8 billion in a fund to invest in infrastructure projects in Venezuela and Venezuela’s legislature last week accepted $747 million in loans from the Brazilian development bank known as BNDES. Venezuela and Russia are forming a joint bank for project finance.

Venezuela has nationalized two industries with Japanese investment this year. Chavez took over the hot briquetted iron industry May 22, including Complejo Siderurgico de Guayana CA, or Comsigua, where shareholders include Kobe, Japan-based Kobe Steel Ltd. and Tokyo-based Marubeni.

The Latin American nation’s legislature passed a law June 16 to take over primary and intermediate chemicals plants, such as the Metor methanol plant where Mitsubishi Gas Chemical Co. and Mitsubishi, both of Tokyo, share a majority stake.

Japanese carmakers have also faced problems in Venezuela. Strikes and delays in the government-run currency exchange system reduced output at Toyota Motors Corp.’s plant to 5,075 cars through May, down 53 percent from a year earlier, according to the Venezuela Automobile Chamber. Mitsubishi’s plant produced 850 through May, down 82 percent.

To contact the reporters on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net; Shigeru Sato in Tokyo at ssato10@bloomberg.net.
Last Updated: June 23, 2009 10:36 EDT
 
In other news, the private sector ran the world economy into the ground.
The Fed and such enabled this; without them loosening the money supply and lowering interest rates, coupled with the Treasury telling banks that they'll cover their losses for high-risk loans, would this economic climate be as bad as it is?

Here's another kind of idiotic maneuver on Chavez's part.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHfRkWQcvqeQ
Indeed, and Japan shouldn't give them one thin 円! :)
 
In other news, the private sector ran the world economy into the ground. Conclusion: everybody sucks.
Conclusion: Unfettered free markets suck. Or perhaps, unwavering devotion to ideological fantasies sucks.

The point of socialism isn't to create wealth. It's to create more equality. Whether this is best done through nationalisations is not a clear-cut question, IMO.
In this particular case, however, it seems pretty clear cut.

Also, and I don't really want to get into arguments over terminology, but I don't believe the goal of socialism is to bring about equality, but rather to bring the means of production into the hands of the workers, rather than the people who paid for the means of production. The goal of certain redistributive policies implemented by socialist governments across the world is certainly to bring about greater equality, but these policies also exist in social democratic countries, fascist countries, and even explicitly capitalist countries like the USA (indeed, the USA's income tax structure, taken by itself, is actually far more progressive than European equivalents; just that there are so many loop holes that it's been rendered basically impotent...).
 
Indeed, and Japan shouldn't give them one thin 円! :)

Looks like China bought it out from under them in a way, later in that article.
 
Which is to say China is the lender of last resort ;)

Or Venezuela is a not too honorable trader. That is a little interesting to see China getting even more oil. First Sudan, now Venezuela.
 
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