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Esso, Nicaragua, Venezuela, ... What's Right?Submitted by fyl on 25 August, 2007 - 07:43.
There is a lot of rhetoric about what amounts to the Nicaraguan government using Esso's storage tanks. The "real" discussion of the whole issue is here. There is an interesting statement in an IHT article that I feel deserves its own discussion.
The emphasis is mine. Whether or not this is true is not the issue I want to discuss. The issue is what the government should do for the people. The reality is that Venezuelan petroleum products cost less. This is because of the "pay 50% now, 25 years to pay the rest" terms being offered by Venezuela. The reasoning behind this play (which was initiated by Hugo Chavez) is to free up money for investment in Nicaragua. Whether or not that can happen is also another issue but the concept is a good one. I assert that it is a responsibility of the Nicaraguan government to encourage the use of Venezuelan petroleum products. If Esso in Nicaragua was an independent entity, it seems it would make sense to them as well rather than having all the overhead of buying from OPEC nations (which include Venezuela), probably shipping to the US and then on to Nicaragua. If the Nicaraguan government had a lot of money and Esso didn't want to use Venezuelan petroleum products, it could either nationalize the oil industry and buy out Esso or it could invest heavily in Petronic creating its own lower-cost petroleum channel. But, it doesn't have a lot of money. Thus the problem becomes one of the bottom line of an multi-national vs. what's best for Nicaragua. Is there an equitable way out? ( categories: )
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Esso/Nicaragua discussion
Thursday Sept. 20th we will be talking about the month-long Esso - government controversy in relation to tax payments, embargos,etc. Analyst Dr. Norwin Solano of CENIDH will be with us.
Jueves, 20 de Septiembre tendremos con nosotros Dr. Norwin Solano de CENIDH compartiendo sobre la controversia entre el ESSO y el Gobierno sobre pago de impuestos, embargacion,etc.
From CasaBenLinder.org,
no fair deals available
Exxon has a net worth exceeding the entire combined assets of Central America. their legal or advertising budgets exceed the Nicaraguan economy, they are the worlds most profitable company. They think nothing of delaying a court case on the Exxon Valdez spill for 18 years using massive legal spending against native Alaskan fishermen.
Their investment in Nicaragua, started in the Somoza times, runs to a small facility at Corinto and a distribution network. Probably less than 0.5% of their world wide assets and long since paid for from Nicaraguan profits.
All of which is fine by me.
However, when people seek a 'solution' or 'help' or 'the right thing' (all very ill defined concepts) then do not look to Exxon.
Rest assured that Exxon will do the right thing for Exxon, its board of directors, its powers behind the throne, its shareholders and, maybe, the United States. In that order. Nicaragua is not on their radar. Period.
...and all of that is fine with me to.
So when DO hits them with a 2X4 at Corinto, I say "Go for it David, for you have found Goliath". Maybe he gets lucky and gets remembered like David. Maybe he gets squashed flat - just another bug on the Exxon windshield.
My sympathy is with Daniel; my money is on Exxon.
Tony X Robins, Jinotega
ESSO
No matter what Daniel does you will support him, Tony. Are you willing to have any of your daughters over Daniel's house for a sleep-over? Does his wrong in illegally seizing those tanks have anything to do with ESSOs corporate global policies? How you can make that leap defies logic and reason. I am not defending ESSO for whatever misdeeds they have taken globally. But your argument is like justifying George Bush for invading Iraq because of Sadam's misdeeds to his own people. Nice analogy; David vs. Goliath. One problem--wrong is still wrong. Ciao, Doug
Nica-ESSO
"Another reason for our high prices is that ESSO Nicaragua has special protection. As the owner of the only pipeline bringing petroleum into the country, ESSO has an effective monopoly. It refines the petroleum then sell it more expensively, charging between $5 an $15 dollars more per barrel. And although Nicaragua would be better off buying the final product than buying from ESSO, not a single authority has said it is going to negotiate with this transnational company.
Some capitalist countries are currently negotiating with the oil companies to reduce the impact of petroleum price rises on their populations. But not in Nicaragua. Nobody is suggesting any such thing here. Nor did it occur to anyone to take out insurance on petroleum purchases before the international oil price crisis exploded."
Source: Revista Envio #283 Nov, 2005
On Esso vs Nicaraguan govt
I am so sorry to have to explain this to you, but the question here is not about bottom line or an equitable way out. The fundamental question is, does the Nicaraguan (or any government for that matter) has the right to take private property away without due process? The government said that Esso did not pay its taxes, then it said Esso paid them late, then that it was not at a rate of 25%, but should have been 30%, and now we find out that the law and evidence shows that Esso pays on time and by the law accorded in 1990 to foreign investors the correct rate is 25%!
Your comments are way out of perspective! Any nation can look after its citizen and obviously seek the best interest of them, as long as there is an open, neutral due process and a violation can clearly be demonstrated. Simply because I will get a cheaper light bill, does not give me the right to take your house, get the furniture and use it at my discretion without consent and due process finalized. This is the heart of the matter between Esso and the government.
A word of advice, this is what gets these governments in trouble with multi nationals and ultimately with the U.S. and finally overthrown.
DAS EMPEROR
Due process
The question here is exactly about an equitable way out because that is the question I asked (and why I created this separate thread from the current "Esso crisis" one). I'm fine with due process--the question is what is the solution.
What gets countries in trouble with multi-nationals is that the government has little control over them because only a small piece legally exists in the country and their goal is to maximize profits for parts outside the country. This is the same as the Union Finosa "problem".
Who defines equitable?
If we follow your logic, then you must define what is equitable? However, the taking of property without due process remains the fundamental question. To respond to your question, what is the solution?
ANSWER: Investment in the infra-structure of the nation-state, but to foment and entice foreign entities to come to Nicaragua and invest, YOU MUST RESPECT DUE PROCESS and allow for any company to maximize profits! The solution is clear, it is the demagogue that violates such international principles and causes friction with the multi-nationals (also with Fenosa). As always they will blame the foreigner, here, in the U.S. (notice China) and so forth. A note about equality, not even the fingers in your hand or foot are equal, but each has an essential role. Therefore, again, it is not about equitable or even about its definition, but about due process and sticking to it!
That is the solution and in international commerce that is what investors, nation-states and non-governmental entities understand, abide and demand for the well being of the client states. Whether you wish to define "well-being" in Nicaragua for the people or its leaders is a fair argument to make.
DAS EMPEROR
That's the goal
To define what is equitable. Your interest in "due process" ignores the issue or at least the realities of being here.
Pick your favorite side: Sandinistas acquiring state property after the 1990 election is one. Somoza selling stock in a cement plant he didn't own. The selloff of Nicaraguan infrastructure at bargain basement prices in the early 1990s, ... There is plenty of "we justified this with ..." going around.
Due process today could be for the assembly to declare state ownership of critical industries to be in the public intrest and then take them over. There are certainly precedents for this including with the US government. (Native land, people moved to build military and government installations both domestically and abroad, ... .) A recent case (within the last two years and talked about here) involved a family being tossed out of their home so the government could acquire and then re-sell the land to a developer to build, as I remember, a shopping mall. The only real justification was that the government would gain more revenue.
We can stick up for the rights of the big guy but under whose law? If it is Nicaraguan, Nicaragua can change it. We can also stick up for the rights of the little guy with the same legal consideration. To get back to my question, it really is one of trying to come up with "a plan" that could be implemented. It certainly could and likely would include changes in laws.
Historically, this process has proved problematic for Latin America. Look no further than the Arbenz government of Guatemala. It offered to buy unused land from United Fruit at what United Fruit declared it was worth on the tax rolls to redistribute to landless peasants. Azbenz was quickly chased out of his country by the CIA.
If the Arbenz story is typical (and I assert that it is) then Nicaragua needs to come up with a plan that will be accepted by more than Nicaraguans. It is pretty clear that if a multi-national is involved, the nation they come from needs to accept the plan. Not an easy game to play but one that must be played.
A decision taken
I think that this governments is just using one of the strategy of those industrialized and rich government which is part of the free-market system, I think it is ok to look for a way out to solve probelms to benefit the people who actually are all of us.
Investors shouldn't feel threaten about this, knowing all the events in both sides government-Esso make people think better, unless there's something shaddy in an organization.
Have this in mind when there's a decision taken along with it, there's benefited and not benefited ones.
Every investor expects a return
Is it really a simple financial decision? Venezuelan oil costs Nicaragua (why can't I underline?) less. Oil has a global market value. Chavez sells to Ortega for less because he expects (& will get) political alignment.
Esso sunk money into Nicaraguan soil when it built the storage facility. It took a risk. It had some expectations of future developments as Nicaragua further integrates into the global economy. But is Nicaragua really chosing that path? Are they negotiating with Esso or muscling them?
Let us not bury our heads in the sand. Ortega is not knocking on every investor's door. Iran, Cuba, and Venezuela are unequivocal in their dealings with the USA. Chavez is spending heavily on arms, mostly from Russia. Russia & China recently ran a joint military exercise, a show for the world whose message is clear.
China has transformed the global economy (just look at what fills Nica store shelves), despite troubles with copyright piracy and cheap (poisonous) substitutes in foods, cough medicine & toothpaste. But their freezing the Yuan betrays their totalitarian core, for it oppresses their own people. And meanwhile they build a modern global military force at an alarming rate.
Rather than coming together by trading & talking the world is once again polarizing, chosing camps.
ESSO deed returned
Picking camps is clearly what Daniel is about. How this foolish move impacts future investments, and the economic future for all Nicaraguans seems secondary to egotistical, and politically polarizing actions and rhetoric. Is that what serves the needs of the Nicaraguan people best? Is the U.S. going to suspend business in Nicaragua? NO! But, is this action, along withe the political alignment with partners that have strong anti-U.S. rhetoric going to cool the foreign investment waters? YES! If you are to set an example as a leader who places the best interest of the people first, this was clearly something Daniel will regret. Remember, to gain power in the global eceonomy you have to deal with those in power, like it or not.
You got it! By heavens! I
You got it! By heavens! I think you are the only person here that has some sense! You are right, once again the world is polarizing into camps, I need not to tell you where I stand. This act (the sandinista move) is simply of a bully, but beware that if you shove, then you may get the first punch.
DAS EMPEROR