Friday, June 25, 2010

A Case for Reprisal

The Wall Street Journal reports that Hugo Chavez's Venezuela has taken control of oil rigs owned by an American company:
Venezuela, which plans to nationalize 11 idled oil rigs owned by Helmerich & Payne Inc. (HP), said Friday it has seized control of the rigs and slammed the U.S.-based firm for refusing to renegotiate rates in 2009, when oil prices were falling.

...

The rigs in question have been sidelined for more than a year. Helmerich turned them off because PDVSA owes it some $43 million for work the Oklahoma firm already performed. Helmerich says it wants to be paid first before turning them back on because it doesn't aim to work for free.
An American company is owed a large sum of money by Venezuela's state run PDVSA and PDVSA decides to steal the American company's 11 oil rigs. The US Constitution provides a remedy in Article 1, Section 8:
The Congress shall have Power ... To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water
Letters of marque and reprisal have not been issued by the United States in over a hundred years. Their purpose is to right a wrong by empowering commercial vessels to capture or destroy assets owned by the party that committed the wrong. Often they've been used to create an auxiliary naval force during a war. Historically, ships operating under letters of marque have been called privateers by the country issuing the letters and pirates by those targeted.

Assuming an offshore oil rig cost about $150M, Helmerich has been wronged to the tune of about $1.7B. They may not have the resources and equipment to pursue letters of marque, but there may be an adventurous financier who does. The financier would secure letters of marque and reprisal and then offer a bounty contingent on the capture or destruction of $1.7B of Venezuelan assets (or the limits imposed by the Congress). Think of it as an X Prize for international justice.

I don't think the financier would have to be an individual. Perhaps a core group would start a non-profit which would solicit donations to fund its mission of peace through strength.

Wikipedia describes how to apply for letters of marque and reprisal; however, I think the process today would be a little different:
During the American Revolution first the state legislatures, then both the states and the Continental Congress, then after ratification of the Constitution, Congress authorized and the President signed Letters of Marque. A ship owner would send in an application stating the name, description, tonnage and force (armaments) of the vessel, the name and residence of the owner, the intended number of crew, and tendered a bond promising strict observance of the country's laws and treaties, and of international laws and customs. The commission was granted to the vessel, not to its captain, often for a limited time or specified area, and stated the enemy upon whom attacks were permitted.

4 comments:

H.C. said...

That WOULD be a war issue.
What a jerk!
I bet Obaby would do the same thing.

I like your You Tube page!
I guess there are instructions when you register?

dsm said...

@H.C.,

Arguably, Obama did the same thing when he took over the auto companies and jumped line on their creditors.

Thanks for the praise for my YouTube page! What do you need instructions for? What do you want to do? Feel free to email me at dsm012-at-gmail-d0t-com (some assembly required).

H.C. said...

Are any American citizens being held?

H.C. said...

Are any American citizens being held?