His hair is growing back, he is as talkative as ever and he has clearly lost none of his combative spirit since being diagnosed with cancer last June.

Among the more provocative statements that Hugo Chávez made during his characteristically lengthy Sunday television show, Aló Presidente, was a refusal to pay US oil giant ExxonMobil whatever is decided it should by the World Bank’s investment disputes tribunal, ICSID.

Although Chávez has threatened to withdraw from the ICSID several times in the past, first in 2007, he has never been quite so unequivocal. “I’ll say it once and for all: we will not recognise any ruling by the ICSID,” he told the thrilled audience of his first Aló Presidente show for the past seven months, much of which he has spent recovering in Cuba (he now claims to be completely cured).

In fact no ICSID ruling on the case is expected any time soon, perhaps not even this year (after which there’s a chance Chávez won’t even be president any more). And Chávez’s words follow the announcement on January 1st of a settlement at the Paris-based International Chamber of Commerce (ICC), which awarded ExxonMobil a net payment of just $747m, significantly less than the $6.5-7bn it was said to be seeking after its assets in Venezuela were expropriated in 2007.

Venezuela appears to have accepted the ICC decision – indeed it has never denied it would give ExxonMobil what it considers to be fair compensation. But it was clearly also a favourable decision for Venezuela, even if experts say ExxonMobil was never entitled to much more than that under the terms of its contract.

Chávez leaves us in no doubt, however, that he will not accept whatever the ICSID thinks Venezuela should pay, no doubt partly because the sum could be far larger. There is also a big difference between the rulings: the ICC examined ExxonMobil’s contract, while the ICSID is looking at a bilateral investment treaty that is broader in scope.

It is less clear whether Chávez meant he would not respect any decision that the ICSID makes. Whatever his intention, it sets a poor precedent as Venezuela has nearly 20 cases pending at the body, adding up to potential payouts of as much as $40bn according to some analysts.

If Venezuela really were to ditch the ICSID it would likely do so at its cost, as it would have a hard time attracting investment it badly needs for its hugely expensive plans to develop the oil-rich Orinoco belt, likely to cost well over $200bn.

The choice is yours, Chávez.

Related reading:
Iranian president starts Latin American tour, FT
Venezuela ordered to pay $900m in Exxon claim, Reuters
Cemex Venezuela: we’re outta here, beyondbrics
Venezuela v Multinationals, beyondbrics
Chávez wants out of ICSID (again), beyondbrics

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