Sucker shortage

24 June 2009 By Martin Hutchinson

Japan s mercantilist approach to international trade lending money to secure contracts made it especially vulnerable to ripoffs by Hugo Chavez s Venezuela. With few remaining trusting sugar daddies to loot, Venezuela may now find it increasingly difficult to pay the bills.

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Japan is considering cancelling a $1.5bn loan for two of Venezuela's oil refineries after Venezuelan president Hugo Chavez nationalized Complejo Siderurgico de Guayana SA (Comsigua), whose shareholders included Kobe Steel and Marubeni and the Metor methanol plant, majority owned by Mitsubishi Gas Chemical and Mitsubishi Corp.

Planned Japanese investments in Venezuela include $10bn in liquefied natural gas plants, $8bn in petrochemicals and $1.5bn for the refineries. Japan Bank for International Cooperation loaned Petroleos de Venezuela $3.5bn in 2007, to be paid in cash, crude oil or petroleum products over 15 years.

Venezuela's GDP is expected to decline 5.5% in 2009 and 5.4% in 2010, according to the Economist panel. Its inflation is expected to be 30%, its shortterm interest rate is 16%, its budget deficit is expected to be 7.8% of GDP and its current account deficit zero. The bolivar has halved in value on the black market over the last year.

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