FOR Hugo Chávez, sovereignty means never having to say you’re sorry. The Venezuelan president, who sees globalisation as an imperialist plot against developing countries, is determined to break free from all forms of international arbitration. His latest bid to de-couple his country from the rest of the world involves the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID), a tribunal which serves as an arbitrator for foreign-investment contracts. Venezuela, which has over a dozen cases against it pending, will no longer abide by ICSID rulings, the president said earlier this month.

Like many important government announcements, Mr Chávez made this one during one of his rambling, six- or seven-hour Aló Presidente (“Hello President”) Sunday television programmes. It came in response to a ruling in a different tribunal, the International Chamber of Commerce (ICC), on a dispute which is also pending at ICSID, involving the oil giant Exxon Mobil. To the surprise of many analysts, the ICC found Venezuela liable to pay only $908m, in compensation for its 2007 takeover of assets belonging to the company. Exxon had reportedly been looking for a sum rather closer to $6 billion.

Not surprisingly, perhaps, the Venezuelan government said it would abide by the ICC’s decision, which it says will lead to a net pay-out of only $255m. But that, it said, was that. “We don’t expect (to make) any further payment,” said Rafael Ramírez, the oil minister, who also chairs PDVSA, the state oil corporation. “There’s nothing left to decide.”

It may not be quite that simple. Although Mr Ramírez says Venezuela will shortly formalise its withdrawal from the ICSID, such a decision takes six months to become effective. During that time, further claims can be filed. All claims pending at the time of withdrawal remain active, and rulings can be implemented almost anywhere in the world. With assets abroad, especially in the United States, PDVSA will remain vulnerable. Moreover, some two dozen bilateral investment treaties already signed by Venezuela contemplate arbitration by the ICSID.

Regardless of the technical details, the government’s determination to be judge and jury in all international disputes will further damage its already-battered image among investors. Venezuela continues to attract foreign direct investment (FDI), especially in its oil and gas sectors, and in finance and telecommunications, even though nationalisations have taken net FDI figures into negative territory in recent years. But the signs are ominous. The government says henceforth all disputes will be settled in local courts, which are widely perceived to be wholly under the thumb of the executive.

That really comes down to Mr Chávez himself, who is prone to decree state takeovers of land, factories and other businesses with no prior notice, and with scant regard for the law or the constitution. Hitherto, foreign investors have at least had the protection of international courts and arbitration bodies. But local business people and landowners are not so lucky. The constitution forbids expropriation without a court order, and guarantees prompt compensation at a fair market price. Thousands, however, have received no payment at all, while others have been paid only in part. Few judges dare defy the president, so taking him to court is futile.

Mindful of such precedents, investors with enough clout, like the Chinese government, have insisted on international arbitration. Contracts between the China National Petroleum Corporation and PDVSA include a clause that refers any dispute to the Singapore International Arbitration Centre.

Mr Chávez is seeking re-election this year for a third consecutive six-year term. He may be concerned that a series of adverse, billion-dollar rulings by ICSID would knock a big hole in his campaign kitty, although the likelihood of that happening seems remote. Either way, it is possible that sense may eventually prevail. And there is also a chance that, by the time the ICSID notice period has expired, Mr Chávez will no longer be the president.