Venezuelans take their ($19b) ball and leave

According to the Miami Herald this morning, Venezuelans are taking their money out of Venezuela and stashing it outside of the country;

Capital flight out of Venezuela established a record during 2007, the Central Bank of Venezuela has reported, despite strict currency controls adopted in 2004 by President Hugo Chávez’s government to limit the outflow of money.

Much of the money landed in the United States and especially Florida, through various means such as bank accounts, financial investments and asset purchases, said José Guerra, the Central Bank’s former chief economist, and Antonio Jorge, an economics professor at Florida International University.

”Miami is a natural destination for the escape of Venezuelan capital,” said Jorge.

He estimated that at least 60 percent of the $19 billion ended up in the United States, given that nearly 70 percent of Venezuela’s international commercial exchange is with the United States.

When I was in Panama last November, the common complaint of most Panamanians I talked with was that Venezuelans were driving up the price of real estate and luxury goods while they deposited their savings in Panamanian banks (Panama is Latin America’s Switzerland). In 2006, Venezuela’s GDP was $176b, if it remained at that figure, that means that more than 10% of it’s GDP is leaving the country – it’s an equivalent of over a trillion dollars leaving the US in a year.

So that leaves me wondering what Chavez intends to do about it – because he can’t afford to have Venezuela hemorrhaging cash.

Good news for Hugo, though is the fact that a judge in Great Britain overturned the decision that enabled Exxon/Mobil to freeze $12b of Venezuela’s assets (Bloomberg link);

Exxon Mobil Corp.’s freeze on $12 billion of assets belonging to Venezuela’s state oil company was overturned by a U.K. court in a setback for the U.S. energy company in its dispute with President Hugo Chavez.

A London court today said that an injunction freezing assets belonging to Petroleos de Venezuela SA, known as PDVSA, should be thrown out. Judge Paul Walker disclosed the ruling without giving his reasoning.

Exxon, the world’s largest oil company, sought freeze orders in several countries to keep Venezuela from shifting assets out of the reach of an international arbitration commission that’s handling claims against Chavez’s government for last year’s takeover of an oil field. PDVSA had argued that U.K. courts didn’t have jurisdiction to intervene in the dispute.

“The judge hasn’t allowed his court or his country to be an instrument” of Exxon, Samuel Moncada, Venezuela’s ambassador to the U.K., said in an interview. “This decision should have an effect on any reasonable court in the world.”

So he’s still short a few billion bucks.

Category: Foreign Policy, Hugo Chavez, Politics