| Venezuela
at the Edge of the Abysm
Source: Gato
Encerrado
By Miguel Antezana Corrieri
Translated and edited by Maritza Agena
15 de Mayo de 2005
Recently, reading the newspapers and listening to
the news in our country is an “enlightening”
experience. The dissemination of evidence that shows
mismanagement by the “revolutionary” government
of Venezuela represents the rise of the tip of an
iceberg above the surface, only that in this particular
case, considering the magnitude of corruption and
inefficiency of the Chavez administration, instead
of an iceberg we will probably see an entire new continent
emerge from the waters.
In a previous article "Testing
Warm Waters" 04/20/05, we stated that: “something
smells rotten, really rotten in the way the Chavez
administration has been managing the oil revenues."
Venezuela is a nation submerged in an exchange rate
control, prices and interest rates controls, in the
nationalization of bankrupt enterprises, in the expropriation
of privately- owned land, in the political persecution
of those who dare to publicly criticize Chavez’s
policies and now in what seems to be an evitable economic
collapse.
Knowing that President Chavez is a former military
official who led an attempted Coup d’Etat against
a democratically elected government, someone who idolizes
Fidel Castro and other leaders of moribund regimes
around the world, someone who proclaims to be a modern
socialist – whatever that means, and whose style
is similar to that of Alan Garcia of Peru during the
late 80s, is sufficient to understand the challenges
faced by Venezuelans under the Chavez administration.
The Achilles’ heel of populist governments has
always been their inability to develop and implement
appropriate economic policies. In Venezuela, the best
example is the state-owned Venezuela Oil Company (PDVSA)
– the goose that lays the golden eggs.
1) The refineries have not been properly maintained
and resources have not been allocated to exploration
activities. Chavez has admitted that there are no
resources to comply with certain requirements foreseen
in the Hydrocarbons law, concerning the maintenance
of the industrial processing plants.
2) There is no money, no properly maintained infrastructure
and no knowledgeable human resources currently working
in the oil industry. A large percentage of oil experts
– who were trained around the world with PDVSA’s
money – have been fired for political reasons.
A number of these oil experts have become Venezuelan
expatriates working for the competition in Latin America
and Arab countries. They have fled the country because
they are considered criminals in their homeland for
not sharing President Chavez’s revolutionary
vision. The financial losses and number of accidents
caused by the absence of competent personnel are enormous.
Obviously, official reports do not reflect the reality
of the situation.
3) Oil related revenues from PDVSA, by law, must be
remitted to the Venezuelan Central Bank in exchange
for local currency. Chavez has stated publicly that
some of the oil related revenues have not been reported
to the Central Bank and instead have been destined
to finance social programs part of a populist apparatus
designed to create the illusion of economic prosperity
to manipulate the most needy. In other words, Chavez
is the prime violator of the exchange rate control
he implemented.
4) Other fiscal revenue among which we can mention
a series of taxes – some of them absurd –
like the bank debit tax, are not generating the levels
of income Chavez requires to maintain the central
government spending levels. In fact, not even the
oil revenues – for the reasons explained above
– are contributing to reduce the government’s
deficit.
5) Chavez pretends to tax multinational corporations
in a retroactive manner, violating legal rulings.
The president has also used as collateral oil reserves
and assets of the Venezuelan Oil Company to seal deals
with foreign multinational oil corporations. In other
words, Chavez, the king of socialism, an anti-imperialist
and anti-capitalist prophet is selling out the goose
of the golden eggs to those who represent what he
supposedly hates the most.
6) The icing of the cake, is the order given by the
“leader of the revolution” to create a
bill that allows the government to use international
monetary reserves for programs destined to strengthen
the economy. The argument that Chavez uses to support
the request is that there is an excess of international
monetary reserves, showing one more time his ineptitude
in economic matters. If the bill is approved, which
is most likely to happen, the Venezuelan monetary
unit will become merely a patriotic symbol with only
sentimental value, just like the Bolivarian revolution.
This is all “for now”, quoting Chavez,
when he announced on national television the failure
of his plan to overthrow President Carlos Andres Perez
during an attempted Coup d’Etat in 1992. You
do not need to be an academic to understand the dramatic
Venezuelan situation and what is doomed to happen.
Unfortunately, many people in our country believe
the stories that Chavez preaches. Stories that incorporate
fantastic elements such as: international and national
conspiracies to destroy the Venezuelan Oil Company,
intricate plans of sabotage, and CIA presence among
the opposition movement to oust him from power. Laughable
stories created in a desperate attempt to justify
what is unjustifiable. Chavez is destroying the country.
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