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Venezuela to pull out of World Bank-affiliated arbitration body
CARACAS, Venezuela -- Venezuelan President Hugo Chavez said Sunday that his government should pull out of a World Bank-affiliated arbitration body and won't recognize its decisions.
Exxon Mobil Corp. is one of more than a dozen companies with arbitration cases against Venezuela pending before the Washington-based International Centre for Settlement of Investment Disputes, or ICSID.
Chavez announced his decision while referring to a more than $900 million award that Exxon Mobil recently won in another arbitration case before the International Chamber of Commerce.
"Now they're threatening us in the ICSID," Chavez said on his Sunday television show. "We have to get out of that ICSID. And I'll go ahead and say it: We won't recognize any of ICSID's decisions."
Exxon Mobil sought arbitration after Chavez's government nationalized an oil project in the country in 2007. The Irving, Texas-based oil company did not immediately respond to Chavez's latest announcement.
The ICSID's website lists 17 pending cases against Venezuela. They include claims by Houston-based oil company ConocoPhillips Co., U.S. glass container manufacturer Owens-Illinois Inc. and Toronto-based mining company Crystallex International Corp.
The Caracas-based consulting firm Ecoanalitica estimated recently, before the latest Exxon Mobil decision, that the bulk of the government's nationalizations involved more than $33.7 billion in assets, including about $23 billion in outstanding obligations.
Venezuela has reached negotiated agreements after taking over the operations of other companies such as Swiss cement maker Holcim and Mexican cement company Cemex SAB.
Decisions in the arbitration cases could put major financial pressures on Chavez's government.
"Why do we have to go there, to the United States?" Chavez said of the ICSID. "The World Bank, what's that?"
Chavez had mentioned previously that the government was considering abandoning the arbitration body, following the moves of leftist governments in Ecuador and Bolivia, which have pulled out in the past several years. But many experts had described a Venezuelan pullout as unlikely because it could hurt the country's ability to obtain credit internationally and attract oil investment.
Chavez said Ecuadorean President Rafael Correa "is proposing something that is absolutely necessary, creating an organization in [the regional bloc] Unasur where some differences between governments or businesses in Latin America can be settled."
In the case of Exxon Mobil, Chavez said the company had initially demanded about $12 billion in compensation but will receive much less after the recent arbitration decision.
"They're trying for the impossible, that we pay what we're never going to pay," Chavez said. He suggested Exxon Mobil could also try to freeze the assets of Venezuela's U.S.-based oil company, Citgo Petroleum Corp.
"Citgo should be worth around $20 billion at least," Chavez said.
"Well, they'll see," he added. "The Yankee government will see ... but we aren't going to yield to imperialism and its tentacles."