Latin America, the European Union and the US: The New Polarities
… In fact Venezuela’s huge Orinoco heavy oil fields, the richest reserves of oil in the world, are still owned by foreign capital. The controversy over President Chavez’s radical economic measures revolves around a tax and royalty increase from less than 15% to 33% – a rate which is still below what is paid by oil companies in Canada, the Middle East and Africa. What produced the stream of vitriolic froth from the US and British media (Wall Street Journal, Financial Times, etc) was not a comparative analysis of contemporary tax and royalty rates, but a retrospective comparison to the virtually tax-free past. In fact Chavez and Morales are merely modernizing and updating petrol-nation state relations to present world standards; in a sense they are normalizing regulatory relations in the face of exceptional or windfall profits, resulting from corrupt agreements with complicit state executive officials. The harsh reaction of the US and EU governments and their energy MNCs is a result of having become habituated to thinking that exceptional privileges were the norm of ‘capitalist development’ rather than the result of venal officials. As a result they resisted the normalization of capitalist relations in Venezuela and Bolivia in which state-private joint ventures and profit sharing , common to most other countries. It is not surprising that the president of Royal Dutch Shell, Jeroen van der Veer, advised his oil colleagues that the nationalist position of oil rich countries and their redrawing of contracts is a ‘new reality’ that international energy companies have to accept. Van der Veer, the realist, puts the nationalist reforms in perspective: ‘In Venezuela we were one of the first to renegotiate. Under the circumstances we are quite satisfied we can work our future there. We have harmony with the government, which is very important. In Bolivia, I assume we will come to a solution’ (Financial Times, May 13, 2006 page 9). Likewise Pan Andean Resources (PAR), an Irish gas and energy company stated it could successfully operate in Bolivia following Morales ‘nationalization’ declaration. David Horgan, President of PAR, in justifying a joint venture in gas with the Bolivians, stated, ‘We don’t really care what precedents it (PAR’s gas agreement with the Bolivian state) sets. What the majors (big oil companies) see as a problem, we see as an opportunity’ (Financial Times, May 13, 2006, page 9).
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