Monday, December 18, 2006

What is the financial world to do with Venezuela?

Sir, In Venezuela, as in most other countries, Congress is supposed to exercise control over the executive branch. For instance, its Constitution establishes that ‘No contract in the municipal, state or national public interest shall be entered into with foreign states or official entities, or with companies not domiciled in Venezuela, or transferred to any of the same, without the approval of the National Assembly.’

Now, even though Venezuela is currently known as a very polarized nation, the fact is that after the elections of December 4, 2005, its Congress includes 167 members who are in favor of and obedient to him who wishes to be called ‘Commander’, and 0 representation for those many who are not in the least in agreement with chávez´s confused ramblings of his vision of a twenty-first-century socialism. This indeed poses some serious questions about its legitimacy and therefore some serious challenges for those who issue opinions.

For instance, what are legal counselors or credit-rating agencies to do after they might receive a letter from a Venezuelan citizen (or perhaps even read this letter in FT) informing them that sooner or later the debts now contracted by Venezuela might be questioned as ‘odious debt’, as they are not duly approved by a legitimate congress (167-0), nor are they needed, as can be evidenced by the many donations Venezuela, with its own so many very poor, has recently made, among them, to the relatively few somewhat poor of Massachusetts.

Sir, if a company like Nike has to worry about the labor conditions in the factories to which they outsource their production, why should the financial world be allowed to ignore civil representation issues in those countries it helps to finance?

This is an extract from Voice and Noise, 2006, a book that I wrote after my experience as an Executive Director of the World Bank (2002-2004) and that now, after having duly marked the extract above, I give freely to any lawyer who might have to prepare a due diligence on Venezuela and to anyone from the credit rating agencies who has to rate Venezuela with the words... “and do not forget that a citizen from Venezuela, who has all the intentions of tomorrow, when given a chance, to protest all the odious debts and gifts told you so… I have not the faintest idea if I have a legal case… but are you really sure I don´t?”