Archive for December 6th, 2011

Some Winners at Chavez’ CELAC summit

December 6, 2011

Chavez’ CELAC shindig is over and it went well for Hugo, attendance was better than expected, while everyone thought Dilma will show up, they weren’t sure about others like Felipe Calderon of Mexico and Piñera of Chile.

But beware of visitors coming to a Summit they don’t believe in. They always do at a price and there were some very nice winners for attending.

The biggest winner was the President of Mexico Felipe Calderon. He got Chavez to pay US$ 1 billion for nationalized Cemex Venezuela to Cemex, Mexico’s premier international company, which has been having financial problems due to the construction crisis all over the place. I noted this in the previous article.

But Calderon had another card up his sleeve, he managed to have Chavez reverse the nationalization of Gruma’s Monaca and turn it into two joint ventures with the Venezuelan Government to produce flour, rice, pasta and oatmeal. Not a bad change of terms for Gruma, as it places a long term bet that things may change in Venezuela.

Cemex probably preferred the money with US$ 15 billion in debt coming due in 2014.

Finally, Chavez signed a deal with Brazil’s Dilma Roussef to buy 20 jets built by Embraer, Brazil’s airplane company. Now, Embraer is a private company, formerly Government owned, trades in New York and while it is true the Brazilian Government owns a symbolic golden share, this is not the type of deal that President’s get involved in, unless…

Venezuela was dealig with Embraer and Dilma just gave the whole thing a little push at the end.

It is indeed a strange revolution. It pays money to its natural enemies in the region to gain favors. It pays high interest rates to capitalists and it gives preference to foreigners over Venezuelans. Just today, it gave a nice “windfall” to holders of Fertinitro bonds, much like it did with PDVSA, CITGO, EDC, Petrozuata and Cerro Negro before. If it fits the goals of the revolution, the money is there to pay for it.

Nothing says a revolution has to have scruples.

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