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Hugo Chávez’s expropriations begin to cost Venezuela dearly | International

ICSID condemns Venezuela to pay more than 1,480 million for the expropriation of Spanish investments
ICSID condemns Venezuela to pay more than 1,480 million for the expropriation of Spanish investmentsEUROPA PRESS/VENEZUELA PRESIDENTIAL PRESS (Europa Press)

When Hugo Chávez took over Agroisleña —a company with Spanish capital and owners with 50 years of history in Venezuela— he was already accumulating miles expropriating Robin Hood; that is, without paying and without any legal procedure. Extensive herds, thousands of hectares of land, companies of all kinds, buildings. Chávez signed the decree in early October 2010, almost at midnight, while making one of his usual telephone contacts on the programs of the prime time of the state television station VTV. “This is decree number 7,700. I like that number”, she commented while reading the resolution on the phone. “Agroisleña’s time is over. Now it will be of popular property”.

The commander of the Bolivarian revolution then claimed to fight against a supposed oligopoly to guarantee food security. The decision taken now returns like a boomerang, with one more debt that the Venezuelan State must pay. This week, the ICSID international arbitration tribunal —International Center for the Settlement of Investment Disputes, an instance of the World Bank— ruled in favor of the company founded in 1958 by Enrique Fraga Alonso, a Canarian who, like many Spaniards, emigrated to Venezuela to end of the forties of the last century.

Now Venezuela must pay the Ibero-American Agroinsumos Group more than 1,400 million euros as compensation for the breach of the Spain-Venezuela Agreement that protects Spanish investments in the South American country, to which the company clung to claim for its assets with a lawsuit that he introduced in 2016. To this amount are added the administrative expenses of this procedure for both the company and the company, the company reported in a statement.

At the time of its expropriation, Agroisleña had been founded in the country for 52 years, with more than 60 stores, silos, distribution centers, close to 3,000 employees and a conglomerate of companies associated with the agricultural business such as International Insecticides, Proyefa and Venezolana de Riego. Thus, it provided and gave technical advice to more than 18,000 small and medium producers, which represented 70% of the sector. For Venezuelan agriculture there is a before and after Agroisleña.

After the occupation by the Government of all the facilities of Agroisleña came the name change. Agropatria assumed control of the importation of all the inputs of the sector, taking advantage of the preferential dollars of the years of the exchange control that governed for 15 years in Venezuela and became a centrifuge of corruption.

Chávez promised the sale of seeds and fertilizers at lower prices and what happened with all the companies taken over by Chavismo happened. The products began to be scarce, the production of the countryside plummeted until Venezuela ended in 2020 on the United Nations list of countries in the world facing food crises along with Yemen, Syria and Haiti. After Agropatria was shipwrecked, Nicolás Maduro gave the green light in 2013 for a company from the National Armed Forces, Agrofanb, to enter the land. With the military monopoly of both states, the situation did not improve.

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Data from Fedeagro, the farmers’ association, reveal the drop in production in a decade. In 2009, a year before the expropriation of Agroisleña, 17 million metric tons of the main crops were produced: corn, rice, sorghum, sugar cane, coffee, potatoes, onions, tomatoes, sunflowers and paprika. By 2020, almost six times less was being produced, just 3 million metric tons.

The ICSID decision comes days after it became known that the Sambil Candelaria shopping center, a huge building in the center of Caracas, owned by businessmen of Jewish origin and expropriated in 2006, returned to its owners. Maduro has reversed the policy of seizures and occupations of private property that marked Hugo Chávez’s so-called 21st century socialism. For a couple of years, the Government has begun to privatize some of the more than 500 companies it owns as part of the turn forced by the economic debacle of the oil country. The case of the Sambil would be atypical, because it is the first to return to its owners, although the details of that negotiation have not been disclosed. Many other companies have passed into other hands, in many cases with capital linked to Chavismo, under the shadow of the anti-blockade law approved in 2021 that puts a veil of confidentiality on all these transactions.

Until last year, the Venezuelan government had made more than 5,500 direct confiscations and expropriations and owed more than 30,000 million dollars (27,400 million euros) only in litigation and arbitration, according to the Cedice Public Expenditure Observatory, a local economic research center. , not including commitments with PDVSA bonds. Among the most expensive are those of the Canadian mining companies Gold Reserve and Crystallex. With Agroisleña there were also attempts at negotiation, but the lawsuit has finally led to the ICSID and bulges a monstrous debt for the future of a bankrupt country.

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