Venezuela’s Bolivarian regime is drawing to an end, at least as far as the movement inaugurated by Hugo Chávez that came to power on February 2, 1999 is historically known. Between that date and the capture/kidnap/transfer (whatever you want to call it) of Nicolás Maduro to the United States, almost 27 years have passed. A failure in economic terms, especially when it comes to the relationship with Argentina. For this country, it was bad business, almost as bad as could be – among the worst in the history of Argentina’s international economic relations with any of its historic partners. Dollars, markets and even Argentine companies were lost, not to mention driving various other firms into crisis.
The economic, financial and commercial interaction between the two countries has four milestones worth mentioning. These describe the way in which the history of monetary relations between Argentina and Venezuela was woven: the dollars loaned by Chávez to Néstor Kirchner between 2005 and 2006; the bids to co-opt the SanCor dairy company; Pescarmona’s position as a de luxe supplier of turbines for the regime; and the nationalisation of the Sidor steel plant in the hands of Techint. Others – the attempt by PDVSA, Venezuela’s state oil company, to install a nationwide network of service stations with cheap petrol, the Banco del Sud, or the Gasoducto del Sud pipeline – were all ideas which would be hilarious anecdotes were it not for the money lost by Argentina.
It all began when Néstor Kirchner commented to Chávez about his country’s financial problems in meeting the commitments pledged to international capitalistic creditors of every kind – a situation complicated even more after the multiple defaults into which Argentina fell after the collapse of convertibility. Chávez decided to “help” out his Argentine friend and ally, starting a series of purchases of Argentine bonds to the tune of several billion dollars. Those were days when a barrel of oil reached around US$100 and the Bolivarian model seemed to be working. The final figures of the public bonds (Boden 2012 and Boden 2015) acquired by Venezuela over 18 months in at least four different operations came close to US$8 billion. It all looked like Venezuelan generosity and a helping hand in times of financial drought for Argentina. The financial mechanism was simple. Venezuela directly purchased the bonds issued by the Central Bank and the country authorised their direct sale on the international financial markets. Argentina obtained immediate financing while Venezuela made a financial profit, apart from increasing its regional political influence. Given this country’s history, it was a win-win situation in theory. The problem was the interest rate collected by Chávez for his aid: an annual 9.8 percent, an extraordinary interest rate in times when, for example, Uruguay could run up debt for less than three percent. Some of those bonds were resold on the Venezuelan market or used to finance domestic needs, generating profits of hundreds of millions of dollars for the Chávez government. It is calculated that the country lost around US$1 billion due to these “Bonos del Sud.”
Another emblematic story concerning the links between Chávez and the post-convertibility Argentina was the commercial agreements sealed between SanCor Cooperativas Unidas Limitadas, the historic Argentine dairy company, and the Bolivarian government so that the Argentine company could become the great supplier of powdered milk to the Venezuelan market. The cooperative, already in serious financial difficulties, would become almost the only supplier to the social plans of child care designed by Chávez in those years, which was to be financed with surplus oil. The agreement was signed in late 2006 with Venezuela’s BANDES (Banco de Desarrollo Económico y Social) pledging around US$80 million. With this move, SanCor avoided falling under the control of Adecoagro, an Argentine company growing in those years which committed itself to maintaining all the productive lines of the local dairy industry. SanCor opted to be salvaged by Chávez and Adecoagro never again took an interest in their operations. With the passage of time, the economic crisis in Venezuela (especially after the death of Hugo Chávez and the deepening of the fiscal problems) made payment difficult. Until now SanCor has continued claiming pending sums for unpaid exports with an estimated US$18 million still outstanding. This situation, combined with internal managerial problems, led to the closure of plants, dismissals and, finally, the calling in of the receivers last February.
Grupo Techint, Argentina’s biggest industrial company, previously operated Sidor (Siderúrgica del Orinoco) in Venezuela, one of its main steel plants. They had won a tender in 1998 (a year before Chávez came to power) and were complying punctually with their investment commitments. Their operations kept Venezuela within the club of countries producing oil and steel, a combination only matched by Brazil and Argentina in South America. Nevertheless, Chávez unilaterally announced its expropriation in May 2008 with the argument of disagreeing with the price of their inputs for Venezuela's oil policies, alongside his onslaught for the “renationalisation” of strategic sectors. A phase of bilateral negotiations then began over the price to be paid for the company, apart from direct Bolivarian threats of imprisonment for the Argentine directors and managers sitting at the other end of the negotiating table. Kirchnerite intervention helped reach the following agreement: some US$400 million to be paid in cash on the day of the agreement and a further US$945 million in six equal quarterly installments with another sum to be paid in a second phase by October 2010, subject to adjustment on the basis of oil prices. The inevitable happened. In 2010, Ternium denounced that Venezuela still owed them US$1.019 billion plus interest. In 2011 the unpaid balance was reprogrammed, again in instalments, and today no debts remain. Anecdotally, Venezuela could not sustain its steel production and Sidor languished.
Industrias Metalúrgicas Pescarmona Sociedad Anónima (IMPSA), the company of Enrique Menotti Pescarmona, had it worse when, under local pressure, it decided early this century to associate itself directly with the Venezuelan state and become one of the main suppliers of energy equipment and turbines, a commercial equipment implying major investments and extended periods of payment. January 18, 2008 was a day of hope and optimism for IMPSA. After years of lobbying and believing that he knew how to spot an opportunity, Enrique Menotti Pescarmona made his company sign a contract for US$520 million with Venezuela to supply turbines to the Tacoma hydroelectric project. It was to be the “gem” of the Chávez régime and the coronation of the smiles exchanged between the Argentine and Venezuelan governments, in conjunction with this country’s private industry. There was even talk in those days of the consecration of the idea of a “Latin American bourgeoisie” with Argentine businessmen as the flagship and the Tocoma contract as the first step of an interminable ladder. Chávez presented to the region the formula whereby 21st-century socialism could somehow coexist gloriously with those from the private sector who understood which way the wind was blowing.
IMPSA had won the contract in a public international tender beginning in 2004 against the competition from General Electric (the United States), France’s Alstom, Germany’s Siemens, the Japanese companies Marubeni, Sumitomo, Hitachi and Mitsui, Austria’s Vatech and the Chinese Dong Fang and Harbin. IMPSA beat them all, demonstrating that for Bolivarian Venezuela no multinational curriculum was of any use when it came time to grant a multi-million business deal. The contract assigned to IMPSA the responsibility for the supply of turbines and generators for Tocoma, which would demand an investment of US$3.061 billion. “The design, manufacture, transport and assembly of this huge hydraulic machinery which will be designed in our country are the pride of national technology,” was how Pescarmona signed a letter composed by the businessman himself. Celebrations all round, all in a single event, the only good thing in those days. Bolivarian integration, the private sector joining in and the “patria grande” waiting around the corner. It was not to be. Venezuela did not pay up. And on September 16, 2014, IMPSA became the first private company to announce that it could not meet its external financial commitments after Argentina entered into “technical” default on July 30.
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