Another Company International Falls in Venezuela

Another international company falls in Venezuela May 29, 2009 "I'm going to nationalize everything but Brazilian companies?, Chavez promised to Lula. Chavez is so distracted that he did not say in private, and was careful to ensure that the microphones are turned off. The truth is that so far, Brazilian companies are indeed safe from the hand of Chavez nationalized. This process of removing foreign private property in Venezuela does not stop. Chavez continues with its plan to regain control of strategic sectors in the economy. Now their ideology is compounded by the need to become sources of revenue to the difficulties from the oil sector. And while there was a nationalization, this time decided not to extend the Gold Reserve granted a subsidiary of Canadian miner Gold Reserve (AMEX: GRZ) in the Brisas gold project, one of the largest gold deposits in Latin America. concession had expired in April 2008, but the Canadian company had acquired the operating rights to buy in 1992 Brisas del Cuyuni gold company. Gold Reserve could never carry out a large-scale exploitation of this area due to the many obstacles that he was imposing the Venezuelan government that included the failure to provide all administrative and environmental permits required.

The decision has not been taken at random. The control of gold reserves may allow Chavez to the Venezuelan government at least partially offset the fall in oil prices. The need for resources is increasing with rising imbalances that looks at the economy of Venezuela. According to the statement released by Gold Reserve, the Brisas del Cuyuni barrage is about 3% of proven and probable reserves of breeze, but underneath it is the hardrock concession, the project's main gold deposit with estimated reserves of more 10 million ounces of gold.

What happened to Gold Reserve Inc as it had already established in May 2008 the Chavez government denied the Canadian company Crystallex International Corp. (AMEX: KRY). a final permit to start digging into four sections of the mine Las Cristinas, the largest gold deposit in the country, awarding in January this year the award of Las Cristinas to a joint venture between the Venezuelan government and Rusoro Mining Ltd Russian mining (PINK: RMLFF), headquartered in Canada. The joint company is not yet operating at the site and it still is in legal dispute. Venezuela's government needed a partner with skills to be able to exploit the mineral resources of the country and what better than a Russian partner. Rusoro Mining Ltd as part of the operation of the mine's Cristina is also highly likely to do so in Brisas. At least, is the assertion of the early versions. The non-renewal of the concession to Gold Reserve will generate too high a cost. For this reason, the company has already warned that claim more than U.S. $ 5,000 million which is valued its investment in the project.

However, it is likely that even though it benefited from legal action, hardly able to recover much of their investments. But the worst for Gold Reserve, does not end there. The brazenness of the Chavez government came to the point of clarifying that measures shall not relieve the licensee, "the payment of sums due in respect of special benefits, fines, taxes and interest on arrears?. Now was the turn of Gold Reserve. The rest of the Brazilian foreign companies are wondering what will be the next victim of the madness Chavez nationalized? The situation is more complex for foreign companies operating in Venezuela. The only viable strategy is to keep your business running at the lowest possible level of investment to remain that way. Nor are domestic companies incentives to invest in this context of high uncertainty. If you invest and keep their business running is because they do not have too many alternatives to the difficulties encountered to get their resources abroad. The result of this process is a state nationalized will be depleted at an increasing rate non-renewable resources of the country and it will appear unable to generate wealth and to manage the large number of companies under its control.

The first consequences of this policy of control over the economy are already in sight. Prices of commodities continue to fly and the shortage comes to extreme situations. An example of this is provided by a Venezuelan, Francisco Quintero in a government store that sells subsidized staples for the poor, he told "The Miami Herald?:" Today there is no milk, beans, chicken, meat, butter or cooking oil?. Edgar Salas, leader of a guild pharmacist in Caracas, also said: "About a quarter of the products that are normally found in a pharmacy is no longer in existence?. Chavez obvious inability to reassure the population providing basic goods and services seems to indicate that the situation will border the collapse as they are added to state control, more goods and services. The economic scenario of Venezuela is becoming darker. How to add a further complication to the problems of the economy, social unrest is growing and multiplying protests from the government while doing everything possible to silence the press. There is no doubt that Chavez is stubborn to implement a model Socialist though he is doomed to failure before seeing the light completely.

Vargas Llosa recently summarized in one sentence the obstinacy of Chavez '(Chavez insists) even though history has shown us that dictatorships were less efficient than poor democracies?. Chavez still not completed its work and you begin to imagine the end.