So here's the story, folks.  The New York Times, along with every news outlet in the country and many overseas, reported that:

Bracewell & Giuliani, the firm based in Houston that Mr. Giuliani joined as a name partner two years ago, handles lobbying in the Texas capital for the Citgo Petroleum Corporation of Houston. Citgo is the American subsidiary of Petróleos de Venezuela, the state-owned oil company that Mr. Chávez controls.

Mr. Giuliani's duties at his law firm do not include lobbying. But the financial relationship with a company affiliated with one of the most outspoken critics of the United States potentially exposes Mr. Giuliani to new scrutiny as he campaigns to become the Republican nominee for president in 2008.

It's a pretty simple story, but it could have major political implications.  CNN wrote in it's story on the subject:

"Like most lawyers, [Giuliani] chooses his clients on the basis of what salary they're paying him," said Wayne Barrett, who has written extensively about the former mayor's business practices. "He got a chunk of money to join this law firm. They changed the name of the law firm to headline him. ... He's lent his credibility to these folks and sort of tossed the ball in the air."

On the other hand, Citgo came out with their own statement, reported by MSNBC:

David McCollum, a spokesman for Citgo, said the company has had a lobbying contract with the law firm since before Giuliani joined and it was named Bracewell & Patterson.

"I think the only reason this is coming out is because this is a political year, and Mr. Giuliani's name is on the law firm," McCollum said. "But Mr. Giuliani has no personal involvement in this at all ... If this weren't a political year, this would get no attention at all."

OFFICIAL CAMPAIGN NEWS:

So I go to click on Rudy's official site today and I almost had to check my favorites to make sure I'd clicked the right thing.  He's completely revamped his website, now with video on the front page, a la Hillary, and a much more aesthetically pleasing page.  But there's nothing in there about this whole Citgo mess, nothing at all.  

However, he is speaking in his own defense.  Bloomberg posted a story including a written response to the criticism by Giuliani's campaign:

Giuliani's presidential-exploratory committee released a statement that didn't address written questions asking whether he knew his firm did business with Houston-based Citgo and whether he considered it appropriate. The e-mailed statement discussed his views toward Chavez and energy policy.

``Mayor Giuliani has been clear and consistent -- Hugo Chavez is no friend of the United States,'' campaign spokeswoman Katie Levinson said in the statement. ``Chief among the reasons Chavez has so much influence around the world is our ongoing dependence on foreign oil.''

Giuliani is also personally speaking up for himself.  CBS News reported on an interview with Giuliani:

"Oh, they'll exploit everything," Giuliani said in an interview. "There are things that make sense and things that don't make sense and that doesn't make any sense. It was one of those political attacks where you have nothing to do with it, you're not involved in it and so it doesn't really worry you very much. What they're doing is lawful and honorable and helping to protect jobs for more than 100,000 Americans."

WHAT HIS OPPONENTS ARE SAYING:

Nothing yet about Rudy's connection to Chavez, but they have pretty much all spoken out against Chavez at some point or another.  Only Americans get to call Bush the devil, I guess.

WHATS UP IN THE BLOGOSPHERE:

Conservative

A groupblog covering the Republican candidates in 2008, The Right's Field, questioned Giuliani's response to the story:

OK, but why is your firm working for him? I'm sure Republican voters will want to hear a more satisfactory answer than a concession that Giuliani's firm is working for someone who "is not a friend of the United States."

This is an issue that will likely matter more to Republican primary voters and Giuliani's opponents than it does to me. I'm not particularly offended by an American law firm working for a Venezuelan oil company. But Chavez is non-Muslim Public Enemy #1 for the Bedwetter Caucus and has been turned into a bogeyman by Bush and Limbaugh. I expect Giuliani to experience blowback from this.

On the other hand, Captain's Quarters says that not only did Giuliani already have a good response to this "non-starter" of an issue, but that he turned "weak lemonade" into "strong lemonade" by going a step further on Chavez:

Rudy also told reporters that we needed to leverage Chavez more in South America. He causes as much angst in Latin America as he does with the US, but Giuliani said that we had not used that enough to build bridges with other nations in the region. A skillful use of Chavez could help realign the hemisphere in America's favor.

Liberal

The Democratic Party blog posted excerpts of statements by both Giuliani and Citgo and take these statements to mean that Rudy is "defending his foreign dictator clients."  

Wonkette posted the story next to a picture of Rudy in heels and a Rockettes outfit with the picture tag saying "Always plotting against us."  The title of the post is "Hugo Chavez Funding Rudy Giuliani's Campaign." In addition:

Venezuelan oil giant Citgo has paid between $100,000 and $200,000 to Rudy Giuliani's law firm so the opera-loving Manhattan dandy can plot against America's freedoms.

Hugo Chavez runs Citgo; it's where he gets all that money to "help the poor" or whatever.

Mixed

The Gun-Toting Liberal offers Rudy the benefit of the doubt on this one, but also says:

Unfortunately, The New York Times has brilliantly pointed out a pattern that is happening over and over again concerning Mr. Giuliani. These are some very disturbing chains of events from the Mayor's past and present that should raise a few eyebrows over on the right side of the political aisle.

Citizen Journalism Today, however, is not satisfied.

Front runner, Republican presidential candidate Rudy Giuliani's law firm lobbies for Citgo Petroleum, which is owned and controlled by the Venezuelan state oil company and President Hugo Chavez, but the firm said on Wednesday that Giuliani had never worked on the account.

Is that all Mr. Giuliani has to say? How about, "I suggested we quit the Citgo account on moral, economic and human rights issues." [they bolded it, not me]