International Centre for Settlement of Investment Disputes (ICSID) ordered Venezuela to pay Vestey Group. The country must pay close to $100 million (£70 million) for taking over its ranch under the late Hugo Chavez's asset nationalization campaign.
In 2005, Hugo Chávez sent his soldiers to seize major ranches and repopulated rural areas. According to Daily Mail those rural areas are practically abandoned since the country's oil industry began to flourish in 1920's.
Venezuela's late president Hugo Chávez in 2005 sent in soldiers to seize major ranches and repopulate rural areas largely abandoned since Venezuela's oil industry took off in the 1920s. The late president also refused to pay compensation in foreign currency for the land he took, insisted to pay in Venezuelan bolivars.
Following the seizure of assets, president Hugo Chávez handed the vast number of nationalized cattle land to thousands of farmers. They hope to cultivate crops, but found it to be futile as the flood wiped out the harvest. Some critics said the land previously owned by ranches are swampy plains which only suitable for cattle herding, not to grow crops
Nationalization campaign from Chavez also reached steel and energy industries, His action followed by major arbitration disputes which achieve actualization in the recent years. In Vestey Group case, Hugo Chávez confiscated 717,000 acres from Agropecuaria Flora, a local subsidiary of British company. Recently, Reuters reported that ICSID has ordered Venezuela to pay $98 million (£68 million) plus interest, according to a copy of the award seen by Reuters which was first announced by Investment Arbitration Reporter site.
Lawyer for Venezuela Diego Brian Gosis said he will analyze the decision further. He also said the most-likely option for Venezuela is seeking to annul or challenge the arbitration, including other arbitration decisions.
The decision gives a huge blow to Venezuela's economy, which had been hurt by the continuous plunge of oil price. The country's economy has been dependant to oil price when oil was first discovered in Maracaibo, northwest Venezuela in 1922. The country's economy took off since then and Venezuela's economy has been one of the strongest and the most prosperous in South America.
However, as the oil price nosedived, the country's economy faced a pressure, especially after OPEC's meeting in Doha last Sunday failed to reach agreement to freeze oil output. The failure which Venezuelan Oil Minister Eulogio Del Pino blamed on the pressure by United States as quoted by CNBC.
"The United States was behind the pressure. They have a problem with Venezuela, Russia... They are doing this for political reasons and are ignoring their own people suffering. Ask any oil company in the U.S. — they are all very sad because of what happened yesterday,"
ICSID decision to order Venezuela to pay Vestey Group nearly $100 million (£ 70 million) has strained the country's economy even more. The nationalization campaign from late president Hugo Chávez has proven to be worthless and burdened the economy instead.
