We noted earlier that Venezuela’s feisty President Hugo Chavez was repatriating his country’s gold hoard from London, apparently fearing international sanctions or seizures by angry foreign creditors. Now he seems to be deepening the country’s defenses against foreign claimants by preparing to withdraw from a major global forum for the settlement of investor disputes. From the Wall Street Journal:
Venezuelan officials have drawn up plans, at Mr. Chávez’s order, to withdraw from the International Centre for the Settlement of Investment Disputes, or ICSID, a unit of the World Bank in Washington, according to recent documents reviewed by The Wall Street Journal.
A withdrawal would be the latest in a series of actions Mr. Chávez has taken to protect Venezuela’s international assets from possible seizure by foreign governments and now, perhaps, creditors. Last month, Caracas announced it would transfer $6 billion in cash reserves held in European and U.S. banks to Russian, Chinese and Brazilian banks. Mr. Chávez also said he would move some 211 tons of gold valued at $11 billion held in foreign banks to Venezuela’s Central Bank vault in Caracas.
If you were a suspicious person, you might think Chavez is laying elaborate preparations to cheat foreign investors because he plans to do exactly that. Unfortunately for Venezuela’s economic prospects, a great many foreign investors are beady eyed, untrusting souls. The ISCID has been one of the last safeguards for investors worried about losing their money in some mad dash toward the Bolivarian utopia; Chavez’s preparations to withdraw from the organization will not encourage them to remain.