CARACAS, Venezuela (AP) â¿¿ Venezuela has formally begun its withdrawal from a World Bank-affiliated arbitration body, the government announced Wednesday, a decision made by President Hugo Chavez as cases have accumulated against the country's seizures of companies and their assets.
Chavez and his allies say that disagreements with foreign companies operating in Venezuela should be settled with local authorities and within its judicial system.
The Foreign Ministry announced Venezuela's withdrawal from the Washington-based International Centre for Settlement of Investment Disputes, known by its initials as ICSID, in a statement, calling the government's decision "irreversible." It suggested the arbitration center unfairly favors foreign companies.The ICSID's website lists 18 pending cases against Venezuela, while top government lawyer Carlos Escarra said recently that Venezuela faces a total of 28 arbitration cases, many of them before the ICSID. The cases include multimillion-dollar claims by the Houston-based oil company ConocoPhillips Co., U.S. glass manufacturer Owens-Illinois Inc. and Canadian mining company Crystallex International Corp. Diego Moya-Ocampos, an analyst with the IHS Global Insight consulting firm in London, said Venezuela's withdrawal from the center would not affect pending cases. But he said the move could scare off foreign investors, particularly oil companies with potential interest in forming joint ventures with the state-run oil firm Petroleos de Venezuela in the Orinoco Oil Belt, which holds vast deposits of extra-heavy crude. Studies confirming those deposits in a swath flanking the Orinoco River have allowed Venezuela to surpass Saudi Arabia as the nation with the world's biggest proven reserves, according to the Organization of Petroleum Exporting Countries. But Venezuela urgently needs cash to develop its industry in the Belt. Leaving the ICSID "could seriously affect foreign investment, especially in the Orinoco region," Moya-Ocampos said in a telephone interview. "It could also affect Venezuela's credibility in international market and increase the cost of borrowing."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV