Here’s a novel idea: let’s not bail Chavez out as he ruins his country

Chaves spent the weekend seizing and expropriating oil rigs from the private sector, guaranteeing that Venezuela’s oil output, already down 20% as the result of earlier state seizures, will plummet further. We’re sure to Jimmy Carter and Sean Penn down there shortly, befriending this dictator and blaming Cheney for his woes. Why not revoke their passports while they’re visiting?

A fresh round of expropriations in Venezuela has raised fears that the Opec producer’s already declining oil output could sink to its lowest level in the past 20 years.

Troops were mobilised over the weekend to assist Venezuela’s state-owned oil company, PDVSA, in seizing the assets of some 60 oil service companies, after a law was approved last week that paves the way for the state to take increasing control over its all-important oil industry.

“Today we also say: to the people what is the people’s,” the socialist leader said to roars of approval from red-clad supporters on the shores of Lake Maracaibo, the heartland of the nation’s oil production.

This move forms part of a broader assault against the private sector, which Mr Chávez has increasingly blamed as Venezuela slides into recession. Simultaneously he is engaging in what opposition leaders say is a campaign of persecution of his political foes.

Manuel Rosales, a former presidential candidate, has been granted asylum in Peru to escape arrest over corruption charges, while congress has removed almost all the spending powers of Antonio Ledezma, the anti-Chávez mayor of Caracas. Other opponents have been jailed or gone into hiding.

The move is the latest sign of the deepening cashflow crisis that has bedeviled the state oil company for at least two years as it has become overburdened with responsibilities far removed from its core business – in particular funding and running the massive social programmes that have become the bedrock of Mr Chávez’s support.

But analysts say that by shifting its problems onto its suppliers, PDVSA is storing up even bigger problems for the future. Not only does it lack the ability to operate as efficiently as the service providers, but it sends a grim signal to companies considering investing in Venezuela. Consequently, future oil production is under threat.

Taxes and royalties have been hiked four times since 2004, with an 85 per cent windfall tax introduced last year, while companies were ordered to give up operational control over four multibillion-dollar projects in the Orinoco two years ago, prompting Exxon Mobil and ConocoPhillips to exit the country and opt for international arbitration.

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One response to “Here’s a novel idea: let’s not bail Chavez out as he ruins his country

  1. The Duke of Deception

    We should use the old exploding cigar trick on this guy.