This past Monday, Venezuelan President Hugo Chávez ordered the country’s last privately held oil fields in the Orinoco River region nationalized. Compensation for the government’s increased stake in the region’s projects is estimated to cost $17 billion.
According to the Associated Press, this is the largest amount the Venezuelan government will have had to pay out for the takeover of an industry.
Far from surprising, this latest move represents Venezuela’s rather predictable progression toward despotism – the Venezuelan congress granted Chávez the power to rule by decree for the next 18 months, and he hasn’t hesitated to wield his power. He’s already planned to nationalize the country’s telecommunications and electric industries, as well.
Though Chávez may think he can bring “death to the empire,” – a.k.a. America – by flirting with Fidel Castro and flexing the muscle of his oil reserves, he poses little strategic danger to the United States. The crude facts of his country’s oil-based finances – if you’ll excuse the pun – suggest Venezuela to be rather weak.
As discussed in The Economist, the fact that nearly half of the Venezuelan government’s revenue is dependent upon the production of oil renders the country quite vulnerable.
Although conventional wisdom may quickly associate possession of a pricey commodity with prosperity, deeper analysis reveals that dependency upon natural resources puts the dependent in a prickly position.
This is because oil, like other commodities, is traded on markets. If the price of oil spirals downward – as has been the trend these days – profit goes down.
Such is the case with Venezuela. Although Chávez enjoyed the benefits of skyrocketing prices since he took office in 1999, oil prices leveled out last year.
This is particularly bad news for Venezuela’s spendthrift government. Without sustained increases in profit from oil refining and without foreign investment – socialists can be a bit of a bugaboo for profit-minded businessmen – GDP growth is likely to remain stagnant, if not decrease.
And, as the fatal mix of falling oil prices and increased spending show, the proverbial money doled out by Chávez certainly doesn’t grow on trees; the deficit is expected to hit 3 percent this year.
Adding insult to injury, Chávez’s drive to perpetuate Bolivarian revolution in Latin America is arguably carried out at his own countrymen’s expense. Venezuelan oil is sold cheaply or donated in order to curry favor with its neighbors. Chávez, in fact, pledged $1 billion to Ecuador and promised to construct 200,000 houses in Nicaragua. With the coffers that fueled Venezuela’s growth already being consumed, such “philanthropy” is being carried out with particularly bad timing.
Of course, Chávez has been doing his best not to let the opposition rain on his parade. The government has failed to renew the licenses of several private broadcasters, specifically those critical of the Chávez regime. Just last week, a newspaper was fined heavily for accusations of “insulting the honor” of Chávez’s daughter – in fact, a satirist wrote an editorial to her, which requested she ask her father not to treat dissenters so severely.
Meanwhile, the government has been gobbling up airwaves by setting up its own media outlets to broadcast tripe in its favor.
Of course, apologists for Chávez, or at least those looking to turn the other cheek in return for cheap petrol, exist in wealthy Western circles that fully enjoy the basic rights now being denied to Venezuelans.
As reported by the International Herald Tribune, the socialist mayor of London, Ken Livingstone, agreed to accept Venezuelan oil in return for giving Chávez technical instruction for the construction of mass transport so Livingstone could halve subway costs for welfare recipients.
Such shadiness is hardly surprising coming from the likes of the socialist camp – in order to uphold their all-pervading ethic to help the poor, Livingstone’s followers show very little humanitarianism when it comes to abetting the worsening fate of Venezuela’s opposition.
Then there’s Cindy Sheehan. How posing for a photo-op with Chávez will bring back the son she lost in Iraq still escapes me.
Although Chávez makes a lot of noise, his penchant for U.S. politics reveals him to have few answers for the problems facing his own nation.
In February, for example, Chávez was quoted as saying he missed Secretary of State Condoleezza Rice’s castigation.
“It had been days since she had given me any attention,” he told a group of retirees.
This half-joke on Chávez’s end revealed the grim reality behind his firebrand veneer: Without the Machiavellian cover of an enemy, Venezuelans will look inward and wonder why price controls caused shortages in things such as meat and sugar at supermarkets.
A real bummer for a quack-politician, indeed.
Victoria Bekiempis is a sophomore majoring in history and French.