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Reply #3: Investment IS the same thing as privatize [View All]

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Braulio Donating Member (860 posts) Send PM | Profile | Ignore Sun Nov-22-09 01:13 PM
Response to Reply #2
3. Investment IS the same thing as privatize
Control isn't the issue. In Venezuela, control had always been in the government's hands - it's a sovereignity issue. What Venezuela did by changing the investment medium was to eliminate international arbitration, and exercise CLOSER control - which PDVSA had chosen not to exercise in the past.

Today, Mexico chooses not to allow ANY form of private investment - it's a dinosaur from old times. Regarding Brazil, it allows investment and close operational control by private firms. Colombia has a similar system. Venezuela's problem is more serious, because nobody is going to invest if they're denied external arbitration - the Chavez government has shown it's too erratic and prone to nationalize private enterprises, therefore nobody in their right mind will invest large sums of money in Venezuela any more. I suspect the Venezuelan government is going to understand this point eventually, and agree to international arbitration, or they won't have much investment.

Mexico could use a form of investment similar to what Venezuela had under their old system, which worked a lot better than the system they have now. However, they should learn from Venezuela's mistakes in using such a system (there were mistakes made, but the system itself just needed fine tuning). Such a system would allow international arbitration, and control can be carried out by an oil ministry - which can exercise very close control due to its sovereign nature.

In other words, don't let the propaganda coming out of Venezuela to confuse you. They ALWAYS had control, the had chosen not to use it as much as they could have. The new system has led to LOWER production, and PDVSA is not able to carry the load by itself - it lacks the ability to do so, period. International arbitration, which has been eliminated in Venezuela, is needed by companies when investing in nations with a poor track record, which means Latin American nations in general. Neither Mexico nor Venezuela can escape this reality. Therefore nobody will invest in Venezuela (not real cash), and Mexico needs to implement something similar to what is used in either Brazil, Colombia, or what they had in Venezuela in the 1990's, to get the foreigners to invest.
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