From the editors of Veneconomy:
Ten years in power haven’t been enough for Hugo Chávez to help Venezuelans come out of poverty, eliminate inequality or promote development. On the contrary, his anti-business policies, which attack private property, and his eagerness to control all economic activity have abated the country’s productive capacity and made all problems worse.
Today, Venezuelans are starting to feel the negative effects of ten years of pillage against the country’s productive sector.
For example, Venezuelans are starting to suffer the consequences of the nationalization of CANTV. The phone company, which once offered high-quality services, has been in the hands of the government for less than a year and already presents problems, more frequent by the day, which often leave thousands users without access to the Internet.
Electricidad de Caracas (Elecar), now in the hands of the State, has already started to present problems as well, proof of the government’s inefficiency. Even though Elecar hasn’t reached the levels of inefficiency of Cadafe and other State-controlled companies that offer electrical services to the interior of the country, Caracas is experiencing frequent blackouts. Symbolic of this is the fact that the traditional Cross of the Avila, which is on throughout the month of December, suffered a blackout this past weekend for the first time in its history.
The iron, steel and metal industries are another example of inefficiency and inefficient chavista management. Nothing in this sector is very clear. All that is known about Sidor, for example, is that in the third quarter of this year it reported losses equivalent to $116 million, and that today, it’s not anything like what it was only six months ago, when it was still in private hands.
The worst consequences of the nationalization frenzy, however, will probably be felt by the oil industry, after 20,000 professionals and technicians were illegally fired from PDVSA, robbing the company of talent and years of experience. PDVSA is now in a process of decline without precedent in the country, which has led to an increase in the accident rate and a decrease in production.
Had the Development Plan of the “old PDVSA” been followed, production today would be at 6 million barrels a day, and not at the mere 3.5 million of barrels a day that the government claims to produce, and which, according to international organizations, is in fact about one million barrels a day less than that.
Today, with oil prices plummeting $100 per barrel in 100 days, Venezuela is in deep trouble, especially since the Chávez administration requires a price of $90 per barrel of oil to feed into the frenzy of national and international spending it has fallen into.
With the Venezuelan barrel of oil at around $40, things get even worse for the government and the country, because of two reasons.
One, the world is sinking into a deep recession that won’t hit rock bottom in the next months or years, which seems to indicate that oil prices won’t recover any time soon.
Second, ten years of relentless harassment of the agricultural and industrial sectors haven’t allowed them to invest and increase their productive capacity. In consequence, the private sector of the economy is also severely hurt and, though it is willing to face the challenge of helping the country through hard times, it’s nevertheless weakened.
Let’s hope the government understands that ten years of harassment are enough, and that it is time to work with the private sector to give Venezuelans the wellbeing they deserve.
Veneconomy has been the leading provider of economic, political and financial data in Venezuela since 1982.