Wednesday, August 03, 2005

Venezuela - The Economist on Chavez' Buying Influence

Boz, points out the Economists recent article on Venezuelas ruler.

The article first summarizes the mischief that the Venezuelan ruler is up to, buying suport by throwing oil money around, starting with the recent launching of the new television station:

Venezuela has bought $538m of Argentine debt. It is talking about doing the same for Ecuador's new populist government. Venezuela has also promised to build houses in Cuba and to finance co-operatives in Argentina.

Most of the schemes involve oil. They began with a pact to expand subsidised shipments to Fidel Castro's Cuba, in return for the services of 17,000 Cuban doctors. In May, under the label of Petrosur, energy ministers from Argentina, Brazil and Venezuela agreed to develop a field in Venezuela's heavy-oil belt in the Orinoco, a refinery in Brazil's north-east, and an oil and gas venture in Argentina. In June, Venezuela set up Petrocaribe, under which it is offering 12 Caribbean countries cheap credit for oil imports. On July 22nd, at a meeting of Andean presidents, Mr Chávez proposed Petroandina, under which these oil-producing countries would co-operate on pipelines and refining.

A lot of the grandes schemes, will no doubt go nowhere given Chavez' short attention span, and propensity to mouth off.

The evidence shows that all this foreign scheming, has done little to improve the lives of ordinary Venezuelans:

All the same, Mr Chávez's successes are fragile ones. For one thing, it is hard to see what tangible benefits Venezuelans derive from this diplomacy. Mr Chávez has alienated both of his country's main trading partners, the United States and Colombia. Oil revenues are increasingly being spent without democratic scrutiny. A once-professional diplomatic service has been turned into a branch of the revolution, its dissidents either purged or neutralised. And although the alliance with Cuba has brought new social programmes, their cost and long-term benefits are hard to determine. Despite the oil boom, unemployment officially stands at 11%.

Internally that is a time bomb. At some point, in my opinion, the massive thievery going on in Venezuela's Oil Company will become a real issue for the president, that will turn even supporters against him.

Externally, the magazine says, his neighbors are wary of him - though they gladly will take the petro-dollars.

[Argentine officials] are cooling towards Mr Chávez. Were evidence to emerge of his hand in Bolivia's turmoil, South America would become even warier. Should Lula's troubles deny him a second term, Brazil is likely to move to the centre-right, shifting the regional balance. The death of Mr Castro, who is 78 and frail, would be a body blow to Mr Chávez. So, of course, would a fall in oil prices.

Lula for one, is taking a harder line with Chavez, he has already advised the Venezuelan to cool it, through Brazilian diplomats. Brazil is not happy with Chavez interfering in Bolivia, for one, because Petrobras - of which the government owns a big stake- has a huge investment in Bolivia, that is in jeopardy now. Argentinians are hardly thrilled at the prospect of Bolivia imploding with the resulting flood of refugees, Chileans want stability and the Peruvians do not want an indigenous government next door.

In the end, Chavez is like Somoza in Nicaragua, internally a total thug to his opponents, and outside a loudmouthed bully, who taunts his neighbors, spreads rumors, and provokes fights. The best thing to do with him is let the South American countries take care of it themselves. Brazil has too much of a strategic interst in giving him carte blanche in Bolivia, as does its neighbors. Colombia, despite actively fighting an insurgency, still has a formidable and battle-tested army, which certainly acts as a deterrent to Chavez. Ultimately it will be pressure from all these countries, the large-scale corruption, and Chavez' own propensity to blunder that will cause his downfall.