Lagniappe
Jamie
Dareblum:
Chavez's blustered diversion
President Chavez tried hard to start a war, or at least look
like he wanted to start a war. His excuse, of course, was the
raid on Colombian rebels by Colombian troops — on Ecuadorian
soil. What all this had to do with Venezuela might not have
been clear to outsiders, but Mr. Chavez knew what he was doing.
His posturing was strategic, designed to deflect public attention
from the increasingly evident failures of his regime. He desperately
needed something big to distract disaffected Venezuelans from
his failures, and a skirmish with Colombia might have done
the trick.
Creating an external conflict to distract attention from internal
trouble is a favorite trick of every strongman. Think of Argentina's
General Leopoldo Galtieri who instigated war with Great Britain
over the Falkland Islands in an effort to draw attention away
from his military junta's disastrous policies.
Mr. Chavez
hoped that stirring up trouble with Colombia would serve a
similar end and divert Venezuelans' attention from the
breakdown of his "Bolivarian Revolution." For Mr. Chavez,
it didn't matter that the leader of the Revolutionary Armed Forces
of Colombia (FARC), Raul Reyes, was killed in Ecuador, not Venezuela;
the killing was a useful pretext for diversionary blustering
and threats.
Leave aside
the fact that information found on Reyes's laptop confirms
that Mr. Chavez is a sponsor of FARC, the terrorist
group that has been waging an "insurgency" in Colombia
since the 1960s. Mr. Chavez was goading the Ecuadorian government,
provoking it to overreact to what is finally a fairly mild incident,
because he hopes no one will notice that his "Bolivarian
Revolution" is crumbling and his popular support rapidly
eroding. Not even a $100 price tag on a barrel of oil can hide
his failures anymore.
Among these
failures are food shortages — staples such
as milk are in short supply in much of the country following
years of government interference in production decisions — and
the highest inflation rate in Latin America and the Caribbean — 22.5%
last year, in spite of price controls over many products. This
combination of shortages and high inflation takes a particular
toll on the poor, whom Mr. Chavez had counted among his most
loyal followers, but who are now beginning to doubt the wisdom
of backing him.
To shore
up their support, Mr. Chavez established new price controls,
which — as anyone could have predicted — have
further discouraged production and worsened inflation. The well-off
turn to the black market for goods, but the poor, whom Mr. Chavez
claims to protect from price increases, are increasingly left
in need.
Displaying something like an inverted Midas touch, Mr. Chavez
also has managed to weaken the oil industry, the lifeblood of
Venezuela's economy. Although the regime keeps the data hidden
from the public, many telltale signs point to deep trouble in
this vital industry. Oil output has been declining for almost
three years, ever since Mr. Chavez ousted most of the managers
of the national oil company, PDVSA, and replaced them with his
cronies.
More recently,
PDVSA abruptly ceased permitting customers the usual 30 days
to pay for oil and started demanding payment within
a week after shipment. This new practice has brought to light
the cash shortage afflicting PDVSA — a shortage aggravated
by the fact that contractual disputes with Exxon Mobil and other
oil companies have caused tribunals in London, New York, and
the Netherlands' Antilles to freeze PDVSA assets.
The cash crunch at PDVSA is especially threatening to Mr. Chavez
because he barters oil for support inside and outside of Venezuela.
Right now he makes 300,000 barrels of oil available at below-market
prices every day. Cuba, for instance, gets 65,000 barrels a day
(almost 24 million barrels per year), in addition to other gifts
that amounted to $2.3 billion between 2006 and 2007 alone.
As a result of those blunders, Mr. Chavez is no longer able
to spend his way out of trouble, as he has done throughout his
tenure as president; at least he cannot do so without further
endangering the stability of PDVSA and aggravating inflation.
This hampers his ability to address the growing dissatisfaction
of the Venezuelan people over food shortages and other problems
such as rampant crime.
And this
is why stirring up a conflict with Colombia made so much sense
to Mr. Chavez. Amid mounting internal problems of
his own creation — problems that he can no longer manage
simply by throwing money at them — Mr. Chavez was hoping
that an old trick might just work, and that conflict with Colombia
would distract Venezuelans from their own problems and spark
patriotism and renewed support for his regime. Luckily, Colombia
did not fall into Mr. Chavez's trap. It would be luckier still
if the people of Venezuela came to see once and for all who their "comandante" really
is.
Jamie
Daremblum is a senior fellow at the Hudson Institute. Petroleumworld
does not necessarily share these views.
Editor's
Note:This commentary was originally published by New York Sun,
on Mar 12 2008 Issue . Petroleumworld reprint this article
in
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