President Hugo Chavez formally withdraws Venezuela from the World Bank. File photo of Chavez at National Assembly in Caracas, Venezuela, Friday Jan. 13, 2012.(AP Photo/Fernando Llano)

CARACAS, Venezuela (AP) — Venezuela has formally begun its withdrawal from a World Bank-affiliated arbitration body, the government announced Wednesday, in a decision made by President Hugo Chavez as cases have accumulated against the country’s seizures of companies and their assets.

Chavez and his allies say that disagreements with foreign companies operating in Venezuela should be settled with local authorities and within its judicial system.

The Foreign Ministry announced Venezuela’s withdrawal from the Washington-based International Centre for Settlement of Investment Disputes, known by its initials as ICSID, in a statement, calling the government’s decision “irreversible.” It suggested the arbitration center unfairly favors foreign companies.

The Centre’s website lists 17 pending cases against Venezuela, including claims by the Houston-based oil company ConocoPhillips Co., U.S. glass manufacturer Owens-Illinois Inc. and Canadian mining company Crystallex International Corp.

Diego Moya-Ocampos, an analyst with the IHS Global Insight consulting firm in London, said Venezuela’s withdrawal from the center would not affect pending cases.

But he said the move could scare off foreign investors, particularly oil companies with potential interest in forming joint ventures with the state-run oil firm Petroleos de Venezuela in the Orinoco Oil Belt, which holds vast deposits of extra-heavy crude.

Studies confirming those deposits in a swath flanking the Orinoco River have allowed Venezuela to surpass Saudi Arabia as the nation with the world’s biggest proven reserves, according to the Organization of Petroleum Exporting Countries.

But Venezuela urgently needs cash to develop its industry in the Belt.

Leaving the ICSID “could seriously affect foreign investment, especially in the Orinoco region,” Moya-Ocampos said in a telephone interview. “It could also affect Venezuela’s credibility in international market and increase the cost of borrowing.”

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