Saturday, December 30, 2006

Bringing home the bacon 

Readers will recall that the U.S. oil company Citgo is a wholely owned subsidiary of the Venezuelan state oil company, PDVSA. Although it was purchased in the late 80's early 1990's it had, up until Chavez coming to power, never paid any dividends to Venezuela or repatriated any of its profits. Purchasing Citgo was really a scheme for the old PDVSA management to keep profits and assets overseas and outside the reach of the Venezuelan government. This showed the extent to which PDVSA, although nominally state owned, had become an independant actor that pursued its own interests (for more on this please refer back to this EXCELLENT article on how PDVSA was run by Bennard Mommer).

In 1999, under Chavez's orders, Citgo finally began sending its profits back to Venezuela. And with Venezuela's policies of supporting OPEC and boosting prices those profits have been steadily climbing. For 2006 it looks like Citgo will repatriate a record $800 million dollars in profits, or about enough to build a new subway line in Caracas. That is on top of the over $1 billion got for selling an unneeded Citgo refinery and is an increase from the $750 million repatriated in 2005.

So the next time you hear an opposition friend bitch about Citgo giving discounted heating oil to poor Americans you might want to remind him/her that under Chavez Citgo pays hundreds of millions of dollars in profits to Venezuela, which is hundreds of millions of dollars more than it ever paid when they were running it. Whereas before Citgo was run only for the benefit of the privaledged oil executives now it is run to the benefit of Venezuela's poor and the U.S's poor. Sounds like a vast improvement to me.


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