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Capital Markets

Chávez reveals his master plan

Venezuela's president, Hugo Chávez, wants to build his influence in Latin America through the creation of a regional debt market. But emerging-market analysts are unimpressed.

THE PRESIDENT OF Venezuela, Hugo Chávez, never misses an opportunity to quote Simón Bolívar, the early 19th-century liberator of Spanish-ruled South America. Indeed, Chávez considers himself a modern-day Bolívar, destined to carry on the task of unifying the Latin American republics, countering the "imperialist" weight of the US to lead a "new socialist revolution". But Chávez is not given to military action, and emboldened by record oil prices has devised an unusual strategy: the creation of a region-wide television station, Telesur, which aims to rival Cable News Network, and plans to set up regional energy companies, Petroandina and Petrosur, as well as a regional development bank.

Chávez's latest proposal is for a Latin American debt fund to provide financing for his neighbours and, out of self-interest, to deepen Venezuela's influence in the region. "The plan is dominated by Venezuela's idea to find alternative means to broaden diplomatic ties with Latin America," says Vladimir Werning, vice-president at JPMorgan. "To that end, Venezuela has been selling subsidized oil to several Latin American countries for some time."

In May, Bandes (Banco de Desarrollo Económico y Social), Venezuela's development bank, purchased $100 million-worth of Argentina's 2012 Boden Libor bonds, paying a semi-annual coupon of 9.45%.

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