Venezuela is a haven for drug traffickers and terrorists and needs a new government to restore democratic values, former Colombian President Alvaro Uribe said.
“Venezuela is a paradise for terrorists from Colombia, for narco-trafficking,” Uribe said today at the Bloomberg Latin America Investing Conference in New York. “It needs a new government, a new orientation in Venezuela, for this country to get rid of narco-trafficking, to get rid of terrorism and to get rid of dictators.”
Uribe clashed often with Venezuelan President Hugo Chavez during his time in office, accusing his neighbor of harboring drug-funded guerrilla groups. Chavez, who is undergoing cancer treatment before he seeks another term in October elections, ordered tanks to the countries’ border in 2008 after a bombing raid by Colombia’s air force on a rebel camp inside Ecuador, which he called a threat to regional sovereignty.
Uribe said his successor as president, Juan Manuel Santos, needs to keep focusing on security to preserve the military’s successful advance against insurgents during the past decade.
Santos has been less vocal than Uribe in his criticism of Venezuelan policies since taking office, representing one of his most significant breaks with the prior administration, said Adam Isacson, an analyst at the Washington Office on Latin America.
Uribe “left Colombia’s foreign relations in a shambles,” Isacson said in a phone interview yesterday. “Santos reversed a lot of that immediately.”
Entitled to Criticize
Uribe said he is entitled to criticize Venezuela, since the principles of democratic values take precedence over the right to national autonomy. Markets have a clear understanding of the differences among Latin American nations, and can distinguish between countries like Venezuela and Argentina on the one side, and Colombia, Brazil and Chile on the other, Uribe said.
The former president said that investors are punishing Argentina for its seizure of oil producer YPF SA (YPFD) by demanding higher compensation to hold its dollar debt.
“The markets know how to read every country, not the region as a whole,” Uribe said. “The spreads are a clear indication that the markets know how to establish the difference between Colombia and Venezuela, between Chile and Argentina.”
Colombia and Brazil have developed successful models for their oil industries by avoiding the extremes of nationalization and total privatization, Uribe said, referring to state controlled companies Ecopetrol SA (ECOPETL) and Petroleo Brasileiro SA (PETR4), which have publicly traded shares. The Colombian Finance Ministry forecasts foreign direct investment may rise to $16 billion this year, more than five times the levels of a decade ago, led by the oil and mining industries.
Bond Spreads
The extra yield investors demand to hold Argentine dollar bonds instead of U.S. Treasuries has soared 140 basis points, or 1.40 percentage point, to 980 since the end of January, when speculation first emerged that YPF would be nationalized. Argentine dollar bonds have posted a loss of 5.6 percent this month, the worst performer among major emerging markets, according to JPMorgan Chase & Co.’s EMBIG index.
Uribe said that decades of rebel violence has left only 13 percent of the national territory explored for oil. During Uribe’s 2002-2010 presidency, attacks on oil infrastructure fell as the army gained the upper hand in a 50-year war with Marxist guerrillas. Improved security for oil and mining companies helped lure a record $13.2 billion last year from investors including billionaires Carlos Slim and Eike Batista with companies such as Tabasco Oil Co. and MPX Energia SA.
Senate Approval
Argentina’s Senate today approved President Cristina Fernandez de Kirchner’s proposal to seize YPF, the country’s biggest energy company, as the government seeks to boost oil production and reduce imports.
Fernandez announced the takeover plan April 16, saying a lack of investment and a decline in oil output was threatening South America’s second-biggest economy.
Colombia last year garnered an investment-grade credit rating from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, 11 years after it was cut to junk when guerrilla and mafia violence and a banking crisis helped trigger six straight quarters of contraction beginning in 1998.
