Connecticut Latest State to Accept Venezuelan Oil

Caracas, Venezuela, March 2, 2006—Residents of Connecticut become the latest northeasterners to receive discounted heating oil from the Venezuelan owned oil company Citgo, after the state’s attorney general dismissed questions by the state governor that the program might be illegal.

Record crude oil prices in the wake of hurricanes Katrina and Rita contributed to the increase in heating oil prices. According to the US Department of Energy, 8.1 million of the country’s 103 million households use heating oil as their main heating fuel. Of these, 82 percent are in New England and the Central Atlantic States.

But the deals brokered, which in most cases give eligible low-income houses a 40 percent break on their heating bills, have not come without controversy. Critics of the program say that Venezuelan President Hugo Chávez, an outspoken critic of the Bush administration, is merely trying to gain political capital within the US or interfere in energy policy, a complaint which program proponents chalk up to sour grapes, since, as a major supplier of oil to the US, Venezuela is already a force in energy policy.

Others have gone so far as to question the legality of the program. 

Republican Connecticut Governor M. Jodi Rell, for instance, raised questions to her state’s Attorney General, asking him to address the “legality of the state of Connecticut sanctioning participation in [the] program.” 

Richard Blumenthal, Connecticut’s Attorney General, responded that the program was “consistent with [Connecticut’s] laws.”  

Though Rell’s request appears to have been resolved, it echoes that of an ongoing inquiry into Citgo initiated by Rep. Joe Barton, R-TX, chairman of the House Energy and Commerce Committee, and Ed Whitfield, R-KY, chairman of the Subcommittee for Oversight and Investigations. Last month, the sent a letter to Citgo saying, “We want to understand whether the beneficiaries are being selected in an objective, equitable fashion, or whether this is merely part of a larger political agenda.” 

In 2004, Barton received $224,398 in campaign contributions from oil and gas interests, the second highest of any candidate running for House of Representatives, and Whitfield received $15,500, according to the Center for Responsive Politics.  

Larry Neal, deputy staff director for Barton's committee commented on the inquiry, saying, "The bellicose Venezuelan decided to meddle in American energy policy, and we think it might prove instructive to know how."  

Felix Rodriguez, CEO of Citgo, had offered an explanation for the policy in January, at the opening of the Pennsylvania program. "After Hurricanes Katrina and Rita, oil companies were asked to help Americans in need. We are happy to respond, by offering people here in Philadelphia help this winter, and we hope that no one has to make sacrifices to stay warm," said Rodriguez.

Citgo’s offer came as Congressional attempts to elicit funds for discounted heating oil out of petroleum companies failed.

In response to one such request, Jim Mulva, the CEO of Conoco responded, "We feel it's not a good precedent for one industry to fund a program as such. We think that's a responsibility of the government."

However, the initial idea for selling discounted heating oil to the United States came from Venezuelan President Hugo Chávez, and pre-dated the hurricanes. In late August, Chávez first mentioned his intention to supply discounted oil to low-income US communities on a trip to Cuba. The next week, on his Sunday TV show Aló Presidente he reiterated his plan, saying, “There is a lot of poverty in the US…Many people die of cold in the winter…We could have an impact on seven to eight million persons.”

Originally, much of the negotiation between Citgo and those trying to broker the deal in the US was to ensure that all benefits of the program would go to intended recipients, rather than middlemen. Cities and states have worked this deal out in different ways. Connecticut’s Attorney General laid out the program was intended to work within his state, “Citgo has offered to sell—over a period of weeks—about 4.8 million gallons of heating oil to Citizens Energy, a Boston-based non-profit energy company, at a 40% discount from the wholesale price to Global Oil, a large heating oil wholesaler. Pursuant to its agreement with Citgo, Citizens Energy will use the profits from the sale of this oil to provide financial assistance to heating oil customers in Connecticut.”

According to New York Daily News, the average Massachusetts resident would save about $180 every three weeks. So, despite the political upheaval surrounding the program, recipients of discounted oil across the Northeast have been pleased.

“[Chávez’s] biggest crime is he's a socialist, but he's not a fascist” Elaine DeRosa, manager of a low-income child-care center in Massachusetts told the AP. "It's going to help a lot of low-income people who the U.S. government isn't talking about.”

Alan Francis, an ironworker, echoed her comments. “It felt like Christmas,” he told the AP. “This extra 53 gallons was awesome.”

U.S. Intelligence Director Negroponte Slams Venezuela

Caracas, Venezuela, March 02 2006—Venezuelan Vice President José Vicente Rangel responded to CIA Director John Negroponte’s criticisms of Venezuela, saying they were, “another aggression” against Venezuela. 

At a presentation to the US senate on Tuesday, Negroponte said Chavez, “is spending hundreds of millions, if not more, for his very extravagant foreign policy.” The Venezuelan government was also failing to help the poor, said Negroponte.

The CIA Director said if Chavez wins the December Presidential elections he will “suffocate” democracy in the country. Negroponte made these comments in a speech that was otherwise focused on Iraq.

The Venezuelan Vice-president responded strongly to Negropone’s remarks, saying they, “reflect a victory for the hawks in US policy.” Rangel also suggested the Pentagon was trying to make an atmosphere more suitable for intervention in the region.

Rangel denied Venezuela was not helping the poor. Venezuela’s achievements in helping the poor are an, “unquestionable success that is noted all over the world,” the Vice President said.

Rangel personally attacked the CIA Director and his past record. Negroponte had been involved in drug trafficking and human rights violations in Honduras in the 1980s and is, “a shady character,” said Rangel. 

The Venezuealan Justice Minsiter Jesse Chacon supported Rangel’s statement by saying the US government had no moral grounds to criticise Venezuela. Chacon added, “But if there is someone who has less moral grounds than the US it is Mr. Negroponte.”

Ricardo Lagos, the outgoing Chilean President said it was a, “mistake to demonize Hugo Chavez.” Lagos said Chavez is, “a man with a great charisma who has his own way to fight against poverty.” 

The US ambassador William Brownfield said that the US expressing its opinion, “is not necessarily a provocation.” Brownfield said he hoped that Venezuela and the US could have, “a less polemical and rhetorical dialogue so that we may reach agreements.”

Relations between the two countries have been poor since the US was implicated in the 2002 coup to overthrow Chavez’s democratically elected government. They reached a new low point recently when both countries expelled members of each others embassies from their countries.

On February 16 there was a meeting between Bernardo Alvarez, Venezuela’s Ambassador to the U.S., with Assistant Secretary of State Thomas Shannon, which was supposed to mend relations between the two countries.

Within a day, though, US Secretary of State Condoleeza Rice called Chavez’s Venezuela the greatest threat to democracy in the Western Hemisphere and for the need for it to be isolated. Negropontes comments should only worsen relations further.

Venezuela Lowers Foreign Debt by $4.7 Billion

Minister of Finance, Nelson Merentes
Credit: Archive

Caracas , Venezuela , March 01 2006—Venezuelan Finance Minister Nelson Merentes has said the Venezuelan Government will pay off $4.7 billion of foreign debt in 2006. Merentes said this is to, “free up money that can be invested by the government to spur economic growth.”

The majority of the debt being paid off is made up of $3.9 billion in Brady Bonds. Another $600 million comes from 15 private banks. The remaining $243 million is from the World Bank. On March 1, $700 million worth of Brady Bonds were bought.

Brady Bonds, named after former US Treasury Secretary Nicholas Brady, were created in 1989 to respond to the inability of many Latin American countries to pay their foreign debts. The Brady Bonds were supposed to make debt repayments more flexible.

Once completed, the Venezuelan pay off should see total national debt fall by 15.2%, to $26.3 billion. Merentes says the government aims for Venezuela’s debt to be lower than 25% of Gross Domestic Product, or GDP, by the end of 2008.

Venezuelan national debt grew during 7 years of high public investment on welfare programs, a devastating oil strike in 2003 as well as general political instability. From the beginning of Chavez’s Presidency in 1998 to the end of 2005 public external debt increased from $23.3 billion to $31 billion.

Profits from high oil sales are helping the Venezuelan government pay off the debt. A special development fund set up last year called Fonden is providing $1.5 billion to buy Brady Bonds. Fonden is made up of foreign currency reserves which have been boosted by the recent high oil prices.

Money to pay for the debt also came from profit made on bond sales last year, Merentes said. The Finance Minister said the government sold $1 billion of Argentinean bonds to 25 Venezuelan banks for a profit of $75 million.

Merentes said if the government kept on buying and selling bonds, “Venezuela could get profits exceeding $400 million or $500 million a year.” Merentes also said, “We want to create an international financial center in Caracas”.

By saving money that would otherwise be used on debt repayments $600 million will become available for public spending this year, Merentes said. The government indicated this money will be used on social and welfare spending.