Hugo Losing His Jugo?

Interestingly, we see here that despite Hugo Chavez’s recent win, his clout is dropping with the price of oil.  No great surprise, but it’s always good to see your expectations realized.

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Like any traveler who seeks knowledge, experience and hard work, the Cowboy has found himself on a number of ranches, always trying to learn a new skill, gain some additional wisdom, and improve himself in the eyes of himself and his creator.

The Cowboy was once engaged as a ranch hand with a major European outfit, where he was tasked with making predictions about the Venezuelan economy and its political stability (one of many tasks in a day’s work).  Having gained some proficiency therewith, he later found himself similarly tasked while in the employ of a large U.S. outfit.  As those things often go, the Cowboy ended up having close dealings with PdVSA and CANTV, two of the country’s largest companies.

It is sad to see one problem replaced by another.  Venezuela used to be famous, even in Latin America, for its income disparities.  While it was laudable to see someone speaking for the downtrodden and seeking to expand the middle class, as Chavez supposedly sought to do, the reality is the same old authoritarian angle: preserve power at all costs.  The result is the destruction of an economy and a political system.  Before Chavez, Venezuela was known as having one of the longest-standing and most stable democracies in the region.

PdVSA and CANTV were both strongholds of the educated middle class – the exact people who should serve as the model for a country trying to enrich itself and, in particular, diminish its gini coefficient.  However, when loyalty to the regime becomes the test for success rather than technical competence, there is a problem.

PdVSA was known as being one of the best-run of the sovereign oil companies in the world.  Now there is widespread incompetence, falling production, and rampant inefficiency.

ven-crude-output

By the way, the big drop in production that you see in 2003 arose during the strike and subsequent firing of many PdVSA employees.

CANTV, the national phone company, was nationalized again after being privatized a few years earlier.  While less has been written about the changes since expropriation (and the Cowboy has lost touch with his old amigos) it can be assumed that loyalty has become the new recipe for success there too.  Were there problems with the privatized entity?  Sure.  Was nationalization the solution?  No.

So, with oil prices and the global economy sinking, Venezuela, like Russia and Iran, may be facing its own “twister”.  Hugo’s desire to pour himself into the hearts of the disenfrachised of the world may eventually yield to a populace that wants something “como jugo pero mas refrescante” – an alternative that truly will quench a country’s thirst for greater wealth AND equality.

Caracas

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Published in: on March 3, 2009 at 15:59  Comments (1)  

One Comment

  1. Wow, that last photo is incredible. Is that Caracas? Not the Caracas I knew in 1992!


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