October fire sale! Russian credit & Rubles accepted

Rigzone reported today that a Russian oil consortium would not have the pay the $1 billion usd Venezuela had previously requested as a down payment in order to partake in tapping Venezuela's Orinoco oil fields.

Instead, the Russian consortium will only have to pay $600 million usd. Sounds like a nice 40% bargain to this blogger. It's a nice deal if you ask me, which coincidentally comes on the heels of Venezuela's securing a large credit line from Russia to buy military equipment.

Orinoco Belt Regions - [Rigzone, 10-6-09]

According to this Dow Jones Newswire published by Rigzone,

The Chavez-led government has talked about plans for nearly $70 billion in oil investments over the coming years as this oil-rich nation seeks to ramp up dwindling production numbers and boost its sagging economy.

But so far, nearly all those plans are based only on memorandums of understanding, with no solid investment commitments from foreign oil companies.

Sounds like Venezuela is becoming increasingly hungry not only for foreign investment, but also to cement its relations with a geopolitical power like the Russian Federation.

Click here to read the newswire article from Rigzone, which I must admit does a far better job at detailing the situation than the concise, and slightly cynical analysis published here at China South America (CSA).

Ideology vs profit; Colombia and Venezuela's trade dispute gets nasty

Economist Article --

Venezuela and Colombia -- Politics versus trade

Sep 10th 2009 | SAN ANTONIO DEL TÁCHIRA
From The Economist print edition
Hugo Chávez stamps out regional economic integration

BUSINESS is slack at José Nelson Uribe’s tiny grocery store in San Antonio del Táchira, just a stone’s throw from Venezuela’s border with Colombia. “I’m not selling even a quarter of what I sold before,” says Mr Uribe. His woes are a result of the political conflict between his namesake, Colombia’s president, Álvaro Uribe, and Venezuela’s Hugo Chávez. “Before” means before July 28th, when Mr Chávez declared a “freeze” on diplomatic ties and said he would seek alternatives to Colombian goods. This was officially a response to an agreement formalising American use of seven Colombian bases for anti-drug operations, but it also coincided with questions as to how anti-tank rocket-launchers sold by Sweden to the Venezuelan army ended up in a camp belonging to the FARC guerrillas in Colombia. It is not the first time that Mr Chávez has threatened trade sanctions, but this time he seems serious.

The impact on the border region was swift. For each country, the other is the second-biggest trading partner (after the United States in both cases). Bilateral trade totalled $7.2 billion last year, of which $6 billion consisted of Colombian exports, mainly of food, live animals, clothing and cars. Four-fifths of that trade passed along the twisting mountain road that links San Antonio with the state capital, San Cristóbal. “That represents 50,000 direct jobs and 250,000 indirect [ones],” says José Rozo, a local business leader. Many of these are in transport firms and customs agencies. “Before, the local lorry drivers were doing around 500 trips a day,” Mr Rozo says. “Now it’s down to about 80.” Industry in Táchira has been hit too, since many companies depended on imports from Colombia.

The border is not closed. But few of the 30,000 Colombians who used to cross each day to shop do so now, because Venezuela’s National Guard confiscates their goods when they recross the border, says Mr Uribe, the shopkeeper. Venezuela’s government has stopped issuing import permits, nor is it providing dollars at the official exchange rate for imports from Colombia (a dollar costs almost three times more on the parallel market)...

Click here to read the complete article from the Economist

Newswire: South America

[Brazil] -- Brazil strengthens state control over offshore oil reserves -- Xinhua
Brazil announced on Monday new oil exploration rules to increase state control over its recently discovered offshore oil reserves.

Under the plan, the state-owned oil and gas giant Petrobras will be the sole operator of the new oil reserves. It will also have a minimum 30-percent stake in all future projects in the pre-salt layer fields.

Brazil Tries to Maximize Offshore Oil Bonanza-- Latin America Herald Tribine
Brazilian President Lula revealed the government's plans to make Brazil one of the top 10 oil producers in the world and develop what he believes are the world's 9th largest oil reserves, but his announcement of increased state control and further equity sales shook markets, causing Petrobras to lose $7 billion in value in one day.

Petrobras Loses $7 Billion Value as Lula Seeks Stake -- Bloomberg
Brazilian President Luiz Inacio Lula da Silva’s plans for the development of the country’s offshore oil fields stripped Petroleo Brasileiro SA investors of $7 billion in a day.

The proposal, announced yesterday, may allow the state to boost its stake in the company and ensure most income from oil exploration “stays in the hands of our people,” Lula said at a press conference in Brasilia. Petrobras, as the Rio de Janeiro- based company is known, led the Bovespa stock index to the biggest drop in the Americas yesterday after the announcement.


[Venezuela] -- Chavez Says Venezuela Will Continue Oil Exports to U.S. -- Latin America Herald Tribine
Venezuelan President Hugo Chavez said that his country will continue exporting oil to the United States because it is in the Andean nation’s interest.

Chavez said in a statement published in the Lima daily El Comercio that “many people don’t know” that Venezuelan state oil giant PDVSA, through its Citgo subsidiary, has seven large refineries and more than 10,000 service stations on U.S. soil.

“Venezuela can’t take a decision against ourselves. We send the oil to our refineries and to our distribution systems in the United States,” he said.

Caracas Stock Market Up 3% for the Week -- Up 41% for the Year -- Latin America Herald Tribine
The Caracas Stock Index rose 3.16% for the week to close at 49,507 mostly on the back on the continued rise of Sivensa shares on continued optimism over the buyback of its shares to be considered at its shareholders meeting next week. Sivensa shares rose sharply, closing at Bs. 16.5 for a 37.5% rise.


[Peru] -- Two Wounded in Rebel Attack, Peruvian TV Reports -- Latin American Herald Tribine
At least two soldiers were wounded in an attack apparently mounted by Shining Path guerrillas Monday against a counterinsurgency base in central Peru’s Junin province, Canal N television reported.

The guerrillas opened fire around 3:30 a.m. on the Jose Olaya base in the strife-torn Valley of the Apurimac and Ene rivers, known as the VRAE region, Canal N said.


[Bolivia] -- Morales Named “World Hero of Mother Earth” by UN General Assembly-- Latin America Herald Tribine
The president of the United Nations General Assembly, Rev. Miguel D’Escoto Brockmann, on Saturday declared Bolivian President Evo Morales as “World Hero of Mother Earth” in a ceremony at the presidential palace in this capital.

With a medal and a parchment scroll, the General Assembly of the United Nations Organization named Morales “the maximum exponent and paradigm of love for Mother Earth” in the resolution for his decoration that was read during the ceremony.

Bolivia Cries Foul Over Peru Plans for Drilling in Titicaca -- Latin America Herald Tribine
Bolivian President Evo Morales’ government will present a formal complaint to Peru over its plans to drill for oil in Lake Titicaca without consulting La Paz, state-run news agency ABI reported.

Hydrocarbons Minister Oscar Coca sent Bolivia’s Foreign Ministry a note requesting that a formal complaint be made since the body of water straddles the border between the two nations, ABI said.

“Since Lake Titicaca is a bi-national area, it’s obvious that there can’t be unilateral actions” and therefore the matter requires a diplomatic solution, Coca said.


[Cuba] -- Cuba endeavors to raise farm output amid economic downturn -- Xinhua
Pressured by a global economic crisis and a stern U.S. economic blockade that has lasted nearly half a century, Cuba is actively seeking ways to boost its agricultural production.

The measures include turning over land close to cities to residents to plow, replacing fuel-burning tractors with oxen, redistributing fallow land and raising the prices of state-regulated farm products.

Chavez: "Golf if a sport of the bourgeoisie"

Reuters Video:



Venezuela's golfers react after Chavez says their sport is bourgeois and calls players lazy, as the government shuts down courses to build low-income housing.

Newswire: South-South / Emerging Market Cooperation

[China - ASEAN] - China to Boost Cooperation With Asean on Investments - Bloomberg

China wants to boost cooperation with members of the Association of Southeast Asian Nations to develop trade and increase investment, said Chinese Commerce Minister Chen Deming.


[ASEAN] - Five Asean Nations May Form Rice-Trade Body, Thai Official Says - Bloomberg

Five Southeast Asian nations may set up a rice-trade association next year to cooperate in stabilizing rice prices, a Thai official said.

Thailand, Vietnam, Cambodia, Laos and Myanmar will also cooperate on other issues related to food security and production, said Chiya Yimvilai, a spokesman at a meeting of Asean economic ministers in Bangkok. The countries would also work together on developing rice products, he said.


[Venezuela - Russia] - PDVSA, Russian Group to Start $30 Billion Oil Venture - Bloomberg

Petroleos de Venezuela SA and a group of Russian oil companies plan to spend $30 billion on a joint venture in Venezuela’s Orinoco region.

The 40-year venture will seek to produce crude in the Junin 6 area and may expand to other Orinoco blocks, Russian Deputy Prime Minister Igor Sechin told reporters in St. Petersburg today after meeting with Venezuelan Vice President Ramon Carrizalez. Russian investors will include OAO Gazprom, OAO Rosneft, OAO Lukoil, TNK-BP and OAO Surgutneftegaz. The venture will be signed “in the coming months,” Sechin said.


[Mexico - Uruguay] - Mexico/Uruguay sign strategic association accord and advance trade - MecroPress

Mexico president Felipe Calderón and Uruguay’s Tabare Vazquez signed on Friday in Montevideo a Strategic Association accord to strengthen political dialogue and bilateral trade relations in the framework of the 2004 free trade agreement.


[Mexico - Colombia - Venezuela - Ecuador] - Mexico offers to mediate between Colombia and Venezuela and Ecuador - MecroPress
Mexican president Felipe Calderón on an official visit to Colombia offered his country’s mediation in the conflict between Bogotá and neighbouring Ecuador and Venezuela.


[Peru - Brazil] - Brazilian President to visit Peru to strengthen strategic alliance - Andina
The next arrival to Lima of Brazilian President Luiz Inacio Lula da Silva will contribute to create a new strategic alliance to face Asian markets when signing several trade agreements, the President of Peru-Brazil Integration Chamber Miguel Vega Alvear.

“The arrival of Brazilian President will strengthen the progress achieved up to now in this Peru-Brazil strategic alliance and it will create a new stage in which both countries can face Asia-Pacific markets,”

Newswire: South-South Cooperation

[Peru – Brazil] - Eletrobrás sets sights on Peruvian generator – BNAmericas

Brazilian federal power holding company Eletrobrás (NYSE: EBR) is planning to buy a Peruvian generator to participate in an upcoming hydro auction in Peru, company CEO José Antonio Muniz Lopes told journalists. The executive declined to say which generator Eletrobrás was looking to acquire but said the purchase was essential for the Brazilian holding group to operate in Peru.


[Peru – Brazil] – Brazil, Peru Work Out Details of Hydro Plants – Latin American Herald

Energy ministers from Brazil and Peru announced details of plans for several hydroelectric plants to be built in the Andean nation, saying after a meeting that 80 percent of the energy generated by the stations would go to Brazil and the rest to Peru.

Both partners will have the right to sell their respective energy quotas to other South American countries, Brazilian Mines and Energy Minister Edison Lobao said Friday after a meeting in Rio de Janeiro with his Peruvian counterpart, Pedro Sanchez.

The first five power stations – to be built in Peru’s eastern lowlands at a cost of between $12-15 billion – will generate a combined total of 6,000 megawatts annually once they come on stream in 2015.


[Peru – South Korea] - Peru, S Korea examine tomorrow progress of APEC bilateral agreements – Andina

Peru and South Korea examine on Wednesday the progress of the bilateral agreements achieved by Presidents Alan Garcia and Lee Myung-bak during the summit of leaders of the Asia Pacific Economic Cooperation (APEC) held in Lima in November 2008, the Korean Embassy reported. "The agreement achieved last year includes mutual cooperation in oil, mineral and natural gas sectors", the Ambassy reported.


[Peru – Japan] - Peru, JICA to invest US$ 23.3 million in 6 new docks in Peru – Andina

Peru’s Government and the Japan International Cooperation Agency (JICA) will invest 70 million soles (around 23.7 million dollars) in the construction of 6 new docks located along the Peruvian coast, reported today Production Minister Mercedez Araoz.


[Venezuela – Russia] - Russia Promotes “Energy Alliance” with Venezuela – Latin American Herald

Prime Minister Vladimir Putin said Tuesday he was ready to promote an “energy alliance” of global oil giants Russia and Venezuela, and confirmed his willingness to study Caracas’ requests for additional arms purchases.

Putin told Venezuelan Energy Minister Rafael Ramirez that Russia will employ “the most modern equipment and technologies” to carry out plans for cooperation with Venezuela in the oil and gas sector.


[Venezuela – Brazil] - Brazil To Export Coffee Immediately to Venezuela – Latin American Herald

The accord was struck by representatives of the ministry and the state-run firm Cafe Venezuela last Friday and represents $4.1 million in revenue for small producers and family cooperatives in southeastern Brazil.

How much of this map will be red when The Economist does a story on this in 20 years?

Oil and land rights in Peru -- Blood in the jungle

FOR seven weeks tens of thousands of Amazonian Indians blocked roads and rivers across eastern Peru. They seized hydroelectric plants and pumping stations on oil and gas pipelines to try to force the repeal of decrees facilitating oil exploration...

Weekend Newswire: Latin America

OAS can’t agree on Cuba, while Havana ridicules the organization
The task force created by the Organization of American States, OAS, in an attempt to bridge different members’ proposals to consider the readmission of Cuba seems to have stalled with the main actors clearly underlining their stance.


Colombia Cuts Benchmark Lending Rate to Record Low 5% to Stimulate Growth
Colombia’s central bank cut its benchmark interest rate to a record today and signaled it’s ready to lower it further in an effort to ward off an extended recession as inflation eases


Braskem Taps Peru, Venezuela in $3.6 Billion Expansion Outside of Brazil
Braskem SA, Latin America’s largest petrochemicals producer, plans to invest $2.5 billion in a polyethylene plant in Peru, said Cleantho de Paiva Leite, Braskem’s director of international projects.

Sao Paulo-based Braskem, which holds a 50 percent share of Brazil’s resins market, also is working on engineering studies for a $1.1 billion petrochemical plant in Venezuela with state- owned Pequiven SA, de Paiva said in an interview in Lima.


Venezuela Expropriations: Chávez Talks Himself into Trouble with Argentina's Fernández de Kirchner
The spark for the conversation sought by Fernández de Kirchner was a remark Chávez is reported to have made in private to Brazilian President Inacio Lula da Silva. That remark, it’s said, was to the effect that Venezuela was on course to take over foreign companies except for Brazilian ones.

President Hugo Chávez’ strategy of nationalizing companies including foreign ones, and a remark he did or did not make in seriousness to Brazilian President Ignacio Lula da Silva, appear to have posed problems for him and his Argentine friend and colleague, Cristina Fernández de Kirchner.

Chávez has depicted Fernández de Kirchner as an ally and soulmate in his bid to build a regional alliance to counter what he sees as the undue influence and power of the United States in Latin America. But his peremptory takeover of steelmaker Sidor and his tendency to talk off the top of his head may well have put her in between the proverbial rock and a hard place at home.


Argentina May Be Sanctioned By Manhattan Judge in Bondholder Litigation
Argentina may be sanctioned for failing to comply with a U.S. court order to turn over to bondholders documents regarding its pension funds, a federal judge in Manhattan said.

U.S. District Judge Thomas Griesa ruled in October that Argentine pension funds nationalized by that country’s government and held in the U.S. may be used to satisfy bondholder judgments against the republic. Argentina has appealed. Griesa later ordered the South American nation to turn over documents related to its pension funds to bondholders.


Argentina's Construction Activity Declined 5.5% in April From Year Earlier
Argentine construction activity fell the most in five months in April, as Argentines delayed investment plans amid the global financial crisis and political concern ahead of next month’s mid-term elections.


Mexico GDP to Sink Most Since 1932 in Fall `Hard to Fathom,' Goldman Says
Mexico’s economy will contract this year by the most since 1932 as a slump in the U.S. curbs demand for exports and slows dollar flows from tourism and remittances, Goldman Sachs Group Inc. said.

Corporacion Andina de Fomento Sells $1 Billion of 10-Year Notes

Corporacion Andina de Fomento sold $1 billion of 10-year notes, according to a person familiar with the transaction.

CAF sold the bonds to yield 4.5 percentage points above U.S. Treasuries, said the person, who declined to be identified.

[Source] -- Bloomberg

Laying the foundation for a tri-nation Boliviaran mining giant in South America

[South-South Cooperation] -- Ecuador, Venezuela, Bolivia

The Ecuadorian government announced plans yesterday of the establishment of a joint mining company with the country of Venezuela and possibly Bolivia. You can read all the vague details in this article from Chinamining.

"We are going to build a great mining company in association with Venezuela and perhaps with Bolivia to exploit some veins of mine ore returned to the State from private hands,"said Ecuadorian Minister of Mines and Petroleum Derlis Palacios.

Weekend Newswire: Latin America

Bolivia and US agree to improve bilateral ties
Bolivian President Evo Morales has called for a complete overhaul of his country’s strained ties with the US. He urged “mutual respect” between the two nations, saying Washington should not interfere in Bolivia’s affairs.


Venezuelan Bonds Sink to Six-Week Low as Chavez Takeovers Fuel `Distrust'
Venezuela’s benchmark bonds fell to a six-week low after President Hugo Chavez announced the government will take over the hot-briquetted iron industry and other metal companies.


Chavez Takes Control of Venezuela's Hot-Briquetted Iron, Steel Industries
Venezuelan President Hugo Chavez announced the government will take over the hot-briquetted iron industry and other metal companies, increasing its control over the nation’s mineral-wealth industries.

Venezuelan Oil Keeps Attracting Bidders in Bets That Chavez Isn't Forever
Chevron Corp. and Total SA are pursuing new Venezuelan oil projects after President Hugo Chavez tore up past agreements, seized assets of contractors and expelled producers that wouldn’t accept new terms.


Cash short Venezuela negotiating loans from Brazil
Venezuelan President Hugo Chavez, whose administration is facing cash shortages as oil revenues plunge, is negotiating loans from Brazil’s development bank to fund infrastructure projects, revealed the Brazilian newspaper Folha de Sao Paulo.


Brazilian Stocks Gain on Signs of Rising Demand, Commodities; Bolsa Rises Brazil’s
Bovespa index climbed, capping a weekly advance, on speculation domestic demand is recovering and as investors bought commodities to hedge against a weakening dollar.


Brazil's Vale Lowers This Year's Planned Investments to $9 Billion From $14 Billion
Cia. Vale do Rio Doce, the world’s biggest iron-ore producer, said falling costs and a stronger dollar allowed it to cut 2009 planned capital spending by 37 percent.


Mexican Billionaire Salinas May Enter California to Boost Hispanic Banking
Banco Azteca, controlled by Mexican billionaire Ricardo Salinas, says the financial crisis offers the bank a chance to enter the U.S. market and lure Hispanic customers.


Pemex Is `Too Optimistic' About Chicontepec Development, Board Member Says
Petroleos Mexicanos, the state-owned oil company, should reconsider its $11.1 billion plan for the Chicontepec field because lower oil prices make the investment less attractive, said newly appointed board member Fluvio Ruiz.

Newswire: South-South Cooperation

[China - Venezuela] -- CNPC, Venezuela Plan to Build Two Oil Refineries in China
China National Petroleum Corp. and Venezuela plan to build two oil refineries in China, Jiang Jiemin, the president of the Chinese company, told reporters in Beijing today.


[China - Trinadad & Tobago] -- Alutrint: Chinese labor needed due to lack of local expertise
China's EXIM bank placed as a condition on its consent to provide a US$400mn loan to the Trinidad & Tobago government to build the Alutrint aluminum smelter - in the La Brea region of Trinidad island - that the project hire Chinese contractor CMEC to provide labor and technology for the plant, Alutrint manager of communications and community relations Josieann Richards told BNamericas.


[China - Russia] -- Chinese Envoy to Russia: Oil Pipeline Serves Strategic Goals of Both Sides
The construction of the China-Russia oil pipeline conforms with the strategic goals of China and Russia to diversify the former's energy imports and latter's energy exports, Chinese Ambassador to Russia Liu Guchang has said.


[South Korea - Peru] -- Peru hopes to complete 70% of FTA talks with Korea this week
Peru hopes to complete 70 percent of free trade negotiations with South Korea this week because of the similarities found between the two negotiating teams, allowing them to progress quickly, Peruvian chief negotiator Nathan Nadramija said Monday.

During the first round of FTA Negotiations in Seoul on March 16, both countries successfully concluded four chapters relating to electronic commerce, border services, as well as two other chapters related to institutional issues.


[India - Argentina - Bolivia] -- Jindal Begins Producing Gas in Bolivia for Export to Argentina
India’s Jindal Steel & Power has started producing natural gas in Bolivia that will be exported to Argentina, a company executive told Efe on Monday.

Luis Carlos Kinn, manager of Jindal subsidiary Gas to Liquids Internacional S.A., confirmed the successful completion of the first production test at the well drilled in the El Palmar field, some 50 kilometers (31 miles) from Santa Cruz, the capital of the likenamed eastern province.


[Chile - Bolivia] -- Chile Open to Tunnel Proposal Giving Bolivia Access to Sea
The Chilean government is willing to study the proposal by a group of architects that would provide landlocked Bolivia with access to the sea through a tunnel to an artificial island in the Pacific Ocean.


[Venezuela - Angola] -- Venezuelan Government Bank BANDES To Open Branch in Angola
Jesus Alberto Garcia, Venezuelan ambassador to Angola, stated in an interview with Radio Nacional de Angola that Banco de Desarrollo Económico y Social de Venezuela (BANDES), the state development bank of Venezuela, will open a branch in Angola. He added, “This is one of the main things President Chavez wants to do with Africa.” Branches of BANDES outside of Latin America and the Caribbean include Syria and the Republic of Mali.


[Latin America - Spain] -- Spain Wants Closer Ties with Latin America
Spain’s King Juan Carlos and Prime Minister Jose Luis Rodriguez Zapatero said Monday that the upcoming bicentennials of Latin American independence should be used to promote Spanish and European Union ties to the region.

Weekend Newswire: Venezuela

*** Venezuela is a difficult subject to report on. Unless you dig, finding reporters/ journalists with integrity who strive to present a story that is unbiased, it is extremely difficult to get accurate perspectives on the country.

Therefore, when reading articles from major media I tend to focus on the hard data from reliable sources and perspectives which come in the form of direct quotations of "experts," whom represent different points of view. I then disseminate the entire article and form my own opinion.

Hey that's how I do it, you might have your own system. Regardless, in situations such as this where I am publishing a Newswire post on Venezuela where the posts come mainly from:

1. Bloomberg, a U.S financial news giant that loves capatalism and therefore tends to look down on such things as nationalization of private industry.

2. The Latin America Herald, a publication which does a concise job of reporting on all the major headlines that are worthy (in its opinion) for its fan base of wealthy Miami/Ft. Lautherdale dwelling Latinos.

Ok, here we go. Lets start off with a more feel good story about martial arts in Caracas.



Venezuelans aim to kick crime out
Ask most residents of Caracas what the city's biggest problem is, and the vast majority will say "crime". Official figures show a huge increase in violent crime in the Venezuelan capital over the past decade, reaching a total of 130 murders per 100,000 population last year compared to 63 per 100,000 in 1998.

Little wonder then that demand for self-defence classes is at an all-time high. Some martial arts teachers report a five-fold increase in their attendance levels over the past few years.

"My classes have become noticeably larger in the past months," says Karin Yamur, who teaches taekwondo in different parts of the city.


Venezuela Seizes 60 Oilfield Service Company Assets
Venezuelan President Hugo Chavez seized assets from 60 oilfield services companies including Oklahoma-based Williams Cos., using a law the national assembly passed yesterday.


Chavez’s Oil Seizures May Cause ‘Substantial’ Output Decline
Venezuelan President Hugo Chavez’s seizure of assets at 60 oilfield service companies threatens to reduce the OPEC-member country’s output.

“Petroleos de Venezuela doesn’t have the management and strategic capacity to operate these companies properly,” said Jorge Pinon, a fellow at the Center for Hemispheric Policy at the University of Miami, referring to the state-owned oil company. “You’ll see a substantial drop in oil production.”


Chavez Seizes Farms, Says Land Is People’s Property
Venezuelan President Hugo Chavez said land should be considered the property of the people and ordered the government takeover of a group of farms that he said were being underused.


Arsenal Seized from French Expat in Venezuela
An “arsenal of war” including high-powered rifles, grenades, explosives and a flame-thrower, was seized Friday from the home of a French citizen residing in the Venezuelan capital, authorities said.


Venezuelan Broadcaster Facing Sanctions for Quake Coverage
Conatel, the agency that regulates telecommunications and broadcasting in Venezuela, notified Globovisión television of a suit being filed against it for reporting on this week’s moderate earthquake in the Andean nation before any announcement by officials or state-run media.

Bank of the South - South American leaders reach a definitive agreement

A definitive agreement for the launching of the Bank of the South was reached in Buenoes Aires on Friday afternoon. Everything seems set to go with one minor change to note, The Bank of the South will begin operations with $7 billion in working capital, not the $10 billion reported previously.

South-South Cooperation is a term historically associated with the exchange of resources, technology and knowledge between developing countries. This latest initiative by the countries of Argentina, Brazil, Bolivia, Ecuador, Paraguay, Uruguay and Venezuela is especially exciting for the region as it:

a) Involves seven South American countries
b) Includes countries with very different political and economic ideologies
c) Includes the regional powerhouse of Brazil
d) Is not dominated by one power, but rather uses a fair system to calculate member country donations
e) Sends a message to member countries that what is good for the region is good me

What is mysterious, and surely politically motivated, is the fact the most staunch US allies in the region; Colombia, Peru and Chile, have not been included...

Here's the scoop from what went down over in Buenos Aires on Friday, courtesy of MercoPress.


“We’ve closed all pending issues and therefore this is the last ministerial meeting on the subject, said Argentine Finance minister Carlos Fernández who nevertheless added that the final stitch is “the technical review of statutes” of the new bank and the “parliamentary approval by the seven founding countries”.

[Arg Finance Minister, Carlos Fenandez]


The Bank of the South, started at the end of 2007 (and the brainchild of Venezuela’s Hugo Chavez), will have an initial capital of 7 billion US dollars (originally it was planned 10 billion), of which Argentina, Brazil and Venezuela will supply 2 billion US dollars each; Ecuador and Uruguay 400 million US dollars each and Bolivia 200 million.

“The terms of the agreement are acceptable, so the statutes should be easily approved without much discussion”, said Brazil’s Finance minister Guido Mantega. “This is the missing step for financial integration”, he added.

“Given the current international context the bank should be operational as soon as possible” added Argentina’s Fernandez. “It’s not easy to create a financial institution of this kind in the midst of an international crisis”.

According to the statutes each country member will have “one vote” in the board but for approval of loans 70 million US dollars plus, support from votes representing two thirds of capital subscription will be needed, explained Fernandez.

At the same meeting Argentina and Brazil also agreed to a 1.5 billion US dollars swap to reinforce their international reserves. The operation is similar to that recently agreed between Argentina and China and the one signed by the Federal Reserve and fifteen other countries, including Brazil.

The swap is “preventive” and enables each country access to a credit in Brazilian Reales or Argentine Pesos equivalent to 1.5 billion US dollars and valid for three years.

Brazilian minister Mantega said that when Brazil signed the agreement with the FED he advanced that the scheme would be expanded to the region, with Argentina and Uruguay as first interested parties.

“It’s a precaution mechanism to reinforce international reserves. Let’s hope this becomes available as soon as possible and operational for the two central banks”, said Fernandez.

The Bank of the South -- A step towards regional integration in South America

[South America Analysis] -- The significance of creating a new regional bank in South America.

** Note the opinions reflected in this article are my own and do not reflect any resource used in writing this analysis.



As high level Economy and Finance ministers from seven South American countries meet in Argentina with the goal of moving forward the creation of the Bank of the South (El Banco Sur), it is imperative to examine the bigger picture. I have synthesized two major points I would like to highlight.

1) South American countries are experimenting with new institutions. If found to be viable and efficient, these institutions can potentially form the building blocks of larger and more complex ones. The end result will be the promotion of legitimate regional integration in South America.

2) The Bank of the South, along with other efforts such as the Andean Development Corporation will provide South American countries first-hand experience in promoting economic development through South-South Cooperation. Development via this avenue takes advantage of the strengths and weaknesses of other developing countries to promote development from within. South-South Cooperation has great potential to create a new channel in which to promote sustainable economic growth and empower developing countries with the tools and means in which to help each other develop, thus cutting their reliance on external aid from wealthy donor countries or multi-lateral organizations such as the IMF (eventually).

The Bank of the South, which has been financed by the South American countries of Argentina, Brazil, Bolivia, Ecuador, Paraguay, Uruguay and Venezuela, will begin operations with an initial capital pool of $10 billion. This figure was agreed upon during the last meeting held in March in Caracas, Venezuela (MercoPress).

When you casually see hundreds of billions of dollars being thrown around in today’s headlines, it is easy to dismiss this $10 billion effort as menial, at best…

The real point however is not to rock the boat, the boat in this context being the International Monetary Fund (IMF) and other multilateral lending institutions. Hugo Chavez may be full of rhetoric that says otherwise, but as much as he would like the Bank of the South to counter the influence of the IMF, he knows at the moment it cannot.

Consider two major lending institutions—the IMF and the Inter-American Development Bank (IDB). Ideas are being floated around to increase IMF capital to $500 billion (see this BBC article). Granted not all this will go to Latin America, but no less this is a substantially larger capital pool than the Bank of the South will have. The IDB, which is a Latin America specific regional lender, has $101 billion of its own of capital.

However, if we look at one other regional lender—the Andean Development Corporation, which includes some of the remaining South American countries which are not participating in the Bank of the South (Peru, Chile and Colombia), has a capital pool of $5 billion. The Bank of the South, with seven founding members and $10 billion in capital to lend is a definite step forward for the region

Consider for a moment, the fact South American countries have not always been as successful as they are now at managing inflation, debt, budgets, political stability, etc. Today in 2009, South American countries have international reserves. Click here to access a great article with some straight forward data that illustrates this phenomenon from Victoria Saddi’s site, Brazil and Economics. In a few years the United States may have to add to their Chinese and Middle Eastern credit lines by opening up new ones with countries in Latin America.

Definitely not a good thing for U.S self-esteem, but that is another story all together. Discussion welcome for those who would like to share their opinions on the subject.

The Bank of the South will not tip the international balance of power in either the worlds of regional and or international lending institutions. It will however help create the foundation for future organizations and institutions which one day will rival the influence of first world institutions like the IMF.


~ Analysis by Bennett Reiss

Moving forward, Creating a Bank of the South

South-South Cooperation: The Bank of the South


Back in March I did a small piece on the creation of the Bank of the South, a.k.a, El Banco Sur (click here to see post). Currently working on my own analysis to this development and my general view on this South American effort to create a regional bank.

For now, here are a few excerpts from today's MercoPress article.

Economy and Finance ministers from seven South American countries are scheduled to meet Friday in Buenos Aires to advance in the creation of the Bank of the South, a financial institution to fund infrastructure and development projects in the region.

“At the meeting participants will advance in the founding multilateral agreements for the establishment of the Bank of the South“, said the Argentine Central Bank in a short release.

Participating ministers are from Argentina, Brazil, Bolivia, Ecuador, Paraguay, Uruguay and Venezuela.

Venezuela's to do list: Sell China 1 million barrels oil/ day by next year

Chavez's tour de Asia produced a new bit of news on Friday:

"I proposed that given the global situation we study the possibility and we agreed to move up the target set in the strategic accord for 2013," said Chavez on Friday.

Basically this means that in the context of the current global economic crisis Venezuela needs to increase its oil revenues which account for about 90% of the country's budget. Second, China which only a year ago was paying astronomical prices for all its commodity inputs (including oil), is now on a shopping spree in order to secure future supply while the price is good.

Click here to access a concise article which covers the major points on this development from Rigzone -- Efe

Sino-Venezuelan Cooperation

Good old Hu Jintao and señor Chavez met in Beijing today and agreed to step up their efforts to advance cooperation in energy, agriculture and technology.

The two also agreed to take joint steps to combat the financial crisis. How they hope to achieve such a grand goal, one can not say. All in all it's not much different than all the talk that has been going on about fighting the global financial crisis.

Chinese President Hu Jintao (R) meets with Venezuelan President Hugo Chavez
at the Great Hall of the People in Beijing, capital of China, 4/8/09. (Xinhua)

APEC, the UN, IMF, US-Euro, the "G2," etc. All these multilateral organizations and the major economies of the world seem to be making a lot of pledges these days. If anything I think its a good thing in order to restore confidence around the globe. As for this recent foray of China-Venezuelan Cooperation, it is nothing THAT special.

It indicates Chavez continues to aggressively pursue new export markets for Venezuela's oil. Chavez was in Japan earlier this week where he also succeed in getting Japan to promise over $30 billion in investments for Venezuela's oil and gas industry in exchange for guaranteeing a healthy supply for the island (see this Bloomberg article).

Chavez also thanked China for the successful launch of Venezuela's first telecommunications satellite, which according to Chavez will help the "Bolivarian Nation," (a.k.a. Venezuela) achieve scientific and technological independence (see this CNN article about the launch).

Second, it shows that even in the wake of a financial crisis, developing nations are mutually interested in building their relations for the long-term. This means that they remain optimistic about the long-term picture.

A good thing considering growth in the developing world and rising demand from domestic economies is going play a siginificant role in helping the global ecoonomy emerge from this financial crisis.

Of all the announcements, the most important would have to be Hu Jintao's rhetoric. China has its poker face on and is planning its next couple of moves VERY carefully.

The financial crisis has given it a golden opportunity to assert it self on to the world stage. Personally, I believe leaders in China would have preferred to wait a while longer before being forced onto the world stage as a major decision maker and agent of change.

By forging strong alliances with the other developing countries like Venezuela and more importantly the fellow members of the BRIC block (Brazil, Russia, India and China), Hu Jintao and the rest of China's leaders are slowly building allies to support China in a new global framwork.

Venezuela and Iran seal the deal

Hugo Chavez and Mahmoud Ahmadinejad

China_South America: News and Analysis has been following the development of this new "10-year strategic alliance" between Venezuela and Iran. For an old post on this topic click here.

My personally derived conclusion...It is all talk.

Economically speaking Chavez knows the people of Venezuela would be far better off buying tractors (among the many things it needs) from China, Japan or even the United States than they will be from Iran.

Second, both countries are endowed with very healthy supplies of crude oil so there's no need for one another on the energy front.

Politically, Chavez and Ahmadinejad succeed in aggravating the US.

The two, also make a point that developing countries, even ones which make the US mad can and should be allowed to cooperate with one another in achieving sustainable development.

Hugo Chavez and Mahmoud Ahmadinejad

The bi-national bank being created with the initial funding of $1.6 billion sounds nice, and might actually help the two considering international lenders are increasingly scared of Venezuela and are banned from doing business with Iran.

However, whether this "10-year strategic alliance" will actually help either country in their path toward development is probably unlikely.

Bloomberg News Wire -- International Relations, G20, Asia, Latin America, Commodoties, Emerging Markets, Equities and the crazy lady in Argentina

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G-20 Shapes New World Order With Lesser Role for U.S., Markets

April 3 (Bloomberg) -- Global leaders took their biggest steps yet toward a new world order that’s less U.S.-centric with a more heavily regulated financial industry and a greater role for international institutions and emerging markets.

At the end of a summit in London, policy makers from the Group of 20 yesterday delivered a regulatory blueprint that French President Nicholas Sarkozy said turned the page on the Anglo-Saxon model of free markets by placing stricter limits on hedge funds and other financiers. The leaders also pledged to triple the resources of the International Monetary Fund and to hand China and other developing economies a greater say in the management of the world economy.

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Emerging-Market Bond Sales Surge to Two-Year High (Update1)

April 3 (Bloomberg) -- Emerging-market governments and companies borrowed more in international bond markets this week than at any time in the past two years as interest costs plunged on optimism the worst of the global recession may be over.

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China GDP Growth May Quicken to 10% by Year End, Nomura Says

April 3 (Bloomberg) -- China’s economy may grow as much as 10 percent by the final quarter of this year as the government’s 4 trillion yuan stimulus package ($585 billion) takes effect, Nomura Holdings Inc. said.

“An investment boom led by the government’s stimulus package and a very low growth rate in the fourth quarter of 2008 may push growth to rebound to around 10 percent” by the fourth quarter of 2009, Sun Mingchun, an economist at Nomura in Hong Kong, said yesterday. The economy grew 6.8 percent in the fourth quarter of 2008.

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Chavez Says Trip to Japan, China for Financing for Oil Projects

April 2 (Bloomberg) -- Venezuelan President Hugo Chavez said he’ll seek investment agreements this week during a trip to Japan and China to secure financing for oil projects in the South American country.

Chavez is making stops in Asia and the Middle East to deepen economic ties after a plunge in oil prices forced him to cut government spending last month. He met yesterday with Iranian President Mahmoud Ahmadinejad to inaugurate a joint development bank

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Kirchner Restates Argentina’s Claim to Falklands, AFP Reports

April 3 (Bloomberg) -- Argentine President Cristina Fernandez de Kirchner reiterated her country’s claim to the Falkland Islands and called on the U.K. to renew talks on their sovereignty, Agence France-Presse rep

... is this woman smoking crack? Didn't Argentina learn that you do not mess with the British, they ruled the friggin world for nearly two centuries.

WHAT ON EARTH DO YOU WANT WITH SOME ISLAND IN THE MIDDLE OF THE ATLANTIC OCEAN, WHERE THE PEOPLE FEEL BRITISH...