Anyone trying to conceptualize the economic policies of Venezuelan President Hugo Chavez should forget about the charts and graphs generally used by economists. Concentrate instead on bumper cars at an amusement park, constantly crashing against the walls and into each other, until they end up in a hopeless jam.
The next round of collisions is slated for Monday, when business groups and Venezuela’s largest labor organization have scheduled a 12-hour strike to protest the government’s latest legislative bundle–49 different laws, to be exact. One of the edicts would expropriate some private farmland, presumably to be turned over to small farmers, while another increases royalties and taxes on foreign oil companies.
Chavez’ reaction to the mounting protests is typical. Recently, during his weekly four-hour call-in radio show, “Hello, Mr. President!,” he showered insults on the opposition and exhorted his supporters to take to the streets for counter-demonstrations that likely will turn into a brawl. He threatened to have air force jets buzz the demonstrators, to drown out their protests. Even more creative is his idea to make Monday a national holiday. Presumably a strike is less noticeable if everyone gets the day off.
Significantly, the protests practically coincide with the third anniversary of Chavez’ rise to power. During his tenure, he has displayed great talent for theatrics, rabble-rousing and off-the-cuff policies but little interest in the details of day-to-day governing or tolerance for any opposition.
The new oil law–one of the 49 approved last month–nearly doubles royalty payments and gives majority control of oil projects to the government. Oil accounts for 50 percent of government revenues and 80 percent of all exports of Venezuela, which has the largest proven oil reserves outside the Middle East. About 15 percent of the oil imported by the U.S. comes from Venezuela, which also owns the CITGO oil company and refineries here.
In times of high oil prices the new law would be considered risky–it could drive away international investors who can just as easily put their bucks elsewhere.
But in bad economic times–right now–when oil demand and prices are tumbling, driving away foreign money needed for new exploration and capital investments makes even less sense.
Some analysts figured that with the situation in the Middle East becoming ever more volatile and fears of terrorism rising, it would be a good time for the U.S. and Venezuela to cozy up. Venezuelan oil is only four days away from the U.S. compared to weeks from distant sources in the Middle East or Africa.
Chavez apparently has a far more inventive plan: To kick foreign investors–and Venezuela–on the shins.
Since last year, oil prices have dropped 40 percent, and the worldwide economic slump is likely to keep them there for the foreseeable future. During that same period, though, government spending rose by 42 percent.
The economic math is neither difficult nor reassuring, and many Venezuelans have already done it. Chavez’ popularity is dropping about as fast as the price of oil, from as high as 80 percent at the outset of his mandate to about 48 percent today. Rumors of a coup buzz Caracas regularly.
Yet another one of Chavez’ ideas for dealing with the massive protests expected Monday is to declare a “national state of emergency.” How that would help is difficult to imagine: Whatever emergency exists in Venezuela today was created by Chavez’s own loony policies.
