[PolEconAnalysis.org's Paul Kellog argues that ExxonMobil isn't suing PDVSA because it needs the money. The world's largest publicly traded corporation recorded profits of $40.6-billion (U.S.) in 2007, up three per cent from 2006's record of $39.6-billion. The truth is, ExxonMobil's ultimatum has more to do with politics than economics.]
Venezuela: the spectre of Big Oil
"Never again will they rob us – the ExxonMobil bandits. They are
imperial, American bandits, white-collared thieves. They turn
governments corrupt, they oust governments. They supported the invasion
of Iraq." This was the response from Venezuelan president Hugo
Chávez to the successful lawsuit by the world's biggest corporation
(ExxonMobil), freezing $12 billion in assets of Venezuela's state-owned
oil company, PDVSA – a serious escalation in Big Oil's long running
dispute with Chávez and the movement he represents.
ExxonMobil isn't suing PDVSA because it needs the money. The world's largest publicly traded corporation recorded profits of $40.6-billion (U.S.) in 2007, up three per cent from 2006's record of $39.6-billion. "If Exxon were a country, its 2007 profit would exceed output of two-thirds of the world's nations. Its 2007 revenue of $404-billion (U.S.) would place it among the 30 largest countries, ahead of such middle powers as Sweden and Venezuela."
ExxonMobil claims it is suing PDVSA because of a June 2007 deadline given by Chávez to Exxon and other Big Oil corporations operating in Venezuela, demanding they cede majority control in their heavy-crude upgrading projects in the country. ExxonMobil and ConocoPhillips filed arbitration requests with the International Center for Settlement of Investment Disputes, and ExxonMobil simultaneously took legal action in courts in the U.S. and Britain, which on February 7 agreed with their claim, and ordered the freeze of PDVSA assets.
But there is much more at stake than a simple legal disagreement. First – many other Big Oil companies have agreed to Chávez' terms and not gone to court – among them, Chevron Corp., Norway's Statoil ASA, Britain's BP PLC and France's Total SA. Second, Venezuela is not the only country to confront Big Oil and demand that old contracts be renegotiated. Here in Canada, Newfoundland's Danny Williams demanded and won an ownership share in the multi-billion-dollar Hebron offshore oil deal. Even the Tories in Alberta are forcing Big Oil to pay higher royalties. And in Russia, "both BP PLC and Royal Dutch Shell PLC have ceded control in big, lucrative Siberian projects to Russian gas monopoly OAO Gazprom."
The truth is, ExxonMobil's ultimatum has more to do with politics than economics. Russia's ruler Vladimir Putin holds office because of his ties to the secret service, his crackdown on public debate, and his commitment to pushing Russia back into the world of Big Power politics. That world of corruption and repression is comforting and familiar to the owners of ExxonMobil. Chávez, by contrast, holds office because millions have again and again been willing to put their bodies on the line against multinational corporations and their local allies. That revolutionary movement is terrifying to ExxonMobil.
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