Chavez Rift With Uribe Unlikely to Damage Trade Ties (Update2)
Chavez Rift With Uribe Unlikely to Damage Trade Ties (Update2)
By Helen Murphy and Matthew Walter
Nov. 29 (Bloomberg) — Venezuelan President Hugo Chavez’s deepening rift with Colombia’s Alvaro Uribe is unlikely to damage trade ties. It may bolster Chavez’s push to change the constitution in a national referendum this weekend.
The two have traded insults over the past week after President Uribe told Chavez to halt efforts to free 45 hostages held by Colombia’s biggest guerrilla group. Chavez said the falling-out may hurt economic links between the Latin American neighbors, worth an estimated $4 billion. Each country serves as the other’s second-biggest trading partner, behind the U.S.
“They are too important to each other to see any commercial breaks,” said Gianfranco Bertozzi, a Latin America economist with Lehman Brothers Inc. in New York.
Chavez said yesterday that he won’t maintain relations with his neighbor while Uribe remains in office, calling it a matter of “dignity.” His words may be aimed at rallying national pride before a Dec. 2 referendum on his plan to overhaul the constitution with 69 changes, including the end of presidential term limits, said Luis Vicente Leon, a Caracas-based pollster.
“The situation with Colombia has been positive for Chavez,” Vicente Leon said.
`Expansionist’ Plan
Political analysts, including Vicente Leon, say Chavez’s rhetoric has increased since polls signaled this weekend’s referendum may be too close to predict. Venezuela law prohibits the publication of polls in the week prior to the voting.
Chavez, who said he would leave government if he loses the vote, said those protesting the reforms, including former Defense Minister Raul Baduel, are traitors. Government supporters and opposition groups have clashed in recent weeks as campaigning for the referendum began.
“This is him covering up his embarrassment after Uribe fired him,” Bertozzi said
Joel Acosta Chirinos, the former commander of the failed coup attempt that Chavez led in 1992, told Brazil’s O Globo newspaper in an interview that armed forces are divided over the new constitution and that he can’t rule out the possibility that some members may take up arms should violence break out.
Uribe accused Chavez of violating an agreement by contacting Colombia’s army commander directly, instead of going through the president’s office. Chavez called Uribe a “liar.”
`Stepping up Attacks’
Uribe responded by accusing Chavez of attempting to spread an “expansionist” agenda across the continent, and of wanting to install a terrorist government in Colombia. He criticized Chavez’s interaction with other world leaders after tensions flared in recent weeks with Spain and Chile.
Venezuela, South America’s third-biggest economy, relies on imports from Colombia to ease shortages of basic food staples. The demand has given Colombia a $1.8 billion trade surplus with Venezuela this year, according to Interbolsa SA, Colombia’s biggest brokerage. Colombia imports Venezuelan gasoline.
Colombia’s government and business groups have identified 30 countries as possible export destinations should the spat with Chavez undercut bilateral trade, Caracas-based El Universal newspaper said Nov. 28, citing ministers and business groups.
“The whole affair may be over soon, but definitely a good resolution to all this will depend upon the result of the referendum,” said Asdrubal Oliveros, chief economist at Caracas-based research firm Ecoanalitica. “If you see this carefully, it is Chavez, not the Colombians, who is stepping up the attacks.”
Stocks
Colombia’s benchmark stock index fell the most in five weeks on Nov. 26 because of concern the conflict will hurt Colombian exporters. Cia. Colombiana de Tejidos SA, a Medellin- based textile exporter, had its steepest two-day drop in 18 months this week. The IGBC stock index was little changed yesterday, even as markets elsewhere in Latin America rose.
In 2005, a row between the two nations over the capture in Venezuela of FARC leader Rodrigo Granda disrupted trade along the border. Coal and food were blocked from entering either country, and three municipalities in Colombia’s northern Arauca province went without electricity three days after guerrillas bombed an energy line. Venezuela, which usually provides the bulk of the province’s electricity needs in emergencies, refused to help.
“This spat has really brought out the worst in both of them in terms of statesmanship,” said Shannon O’Neil, adjunct fellow for Latin American studies at the Council on Foreign Relations in New York.
Colombian Foreign Minister Fernando Araujo, in comments carried on Bogota-based Radio RCN, said he has received no official word from Venezuela on relations and reiterated his earlier statement that Colombia has no plans to withdraw its ambassador. Venezuela on Tuesday recalled Ambassador Pavel Rondon for consultations.
To contact the reporters on this story: Matthew Walter in Sao Paulo at mwalter4@bloomberg.net ; Helen Murphy in Bogota at Hmurphy1@bloomberg.net .
Last Updated: November 29, 2007 07:33 EST
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