The diplomatic spat between neighboring Colombia and Venezuela may end up hurting political relations between both countries. More crucially, however, is the economic damage that the crisis could cause.Venezuelan president Hugo Chavez was peeved over plans by the U.S. to expand its military presence in Colombia and even more displeased over the alleged selling of arms from Sweden to Colombian rebels via Venezuela. Thus, he ordered on Tuesday the withdrawal of his diplomatic team stationed in Bogota and warned that he might “freeze (economic) relations with Colombia".
As to be anticipated, the financial response in Colombia on Wednesday was not good. The peso fell by over 3% as Colombian investors worry over what will happen to business with their second-biggest trade partner. Exporters have plenty to lose if the spat worsens should there be a cut in trade. Colombia's Trade Minister said that finding suitable alternative export markets is difficult and it could take years to replace a partner as major as Venezuela.
Venezuelan Vice President Ramon Carrizalez said that the government has yet to order a shutdown of trade with Colombia. Perhaps it might be since a possible trade embargo on Colombia would also be very damaging to Venezuela:
Venezuela is Colombia's second-largest market for exports, after the U.S. But a rupture in trade flows would likely be far more problematic for Venezuela - which imports manufactured goods and about two-thirds of the food that it consumes - than for Colombia…Image- Christian Science Monitor (“Trucks loaded with Colombian merchandise wait at customs for permission to enter Venezuela near the border city of La Raya, Venezuela.”)
Venezuela depends on Colombia for basic goods such as dairy, meat, clothing and, more strategically, imports 300 million cubic feet of natural gas a day, twice as much as originally agreed upon.
Petroleos de Venezuela SA, the state-owned oil firm, needs natural gas for its oil reservoirs to increase pressure and boost production, and as raw material for its petrochemical industry.
Online Sources- Colombia Reports, NASDAQ, The Latin Americanist, CNNMoney.com, Bloomberg, BBC News
1 comment:
The Panama Canal surrounded by "Friends" : Chavez, Correa and Ortega ( not counting Fidel )
With such "Friends" you do not need enemies
America should study this situation and riddle of Foreign Policy
Look at this Terrible, Horrible, Incredible Fact :
For a Colombian Peso you get 3 Venezuelan bolivares ( these are the currencies, Black Market )
This is Unbelievable, Venezuela is a Sea of Oil, and Colombia is a poor country, with few resources compared to Venezuela, ravaged by War, and once upon a time you got 10 pesos for a bolivar or better....
What has happened is that Venezuela has been in a Demagogic "Bolivarian" Revolution ....
Venezuela has squandered at least 10 Mashall Plans ( the U. S. Money that saved Europe after 1945 )
The Demagogue has been giving Petrodollars to all his stooges in Latin America and Everywhere.
Giving away Venezuela's Riches while the Venezuelans are starving and in great need.
Venezuela is a Santa Claus Economy, a Free Lunch Economy of spending without care and measure, a Demagogic Populist Paradise.
Transnational Corporations move their offices and factories from Venezuela to Colombia
Because Chavez has no respect for Private Property.
Francis Fukuyama said that Progress and Dynamic Economies have a Basis of TRUST, the Greatest Eras in economic progress were based on TRUST...
But what is the TRUST in a dictatorship that does not respect properties or merits and where the dictator gives everything to his stooges, minions, henchmen, accomplices in sacking the National Treasure, his family becoming very rich ...
So the Poor Colombia ( The most despised and hated Enemy by Chavez ) is a much more organized country than Venezuela ... and with better economic prospects....
And nobody can blame the Colombians if they want to defend themselves of the Vulgar Aggressor and Imperialistic Dreamer Hugo...
And Rafael Correa that is like the little cut doggy of the RCA Victor : "Listening to the Master's Voice" ... also a whiner !
The Loss of Granada, Mother to the Sultan : "Weep like a Woman for what you did not defend like a Man"
The Defense of Colombia may include some American Airplanes or Ships in ports ...
But anyway the invaders of Colombia would have the most horrible terrain of Mountains and Thick Vegetation, where it never stops raining and where the population know very well by hard experience what is Guerrilla Warfare....
Even without American Air Force, the invaders from Venezuela, Ecuador and Nicaragua would have a terrible time.
And remember that there is a Big Canal ( now being enhanced and improved ) next door. ... Very strategic indeed !!
Milenials.com
Vicente Duque
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