World
Petroleumworld
Bookstore
Institutional
links
OPEC
Petroleumworld
Business Partners
THE FORUMBlogspots
recomended
Le Blog des
Energies Nouvelles
  |
|
Editorial / Commentary / Opinion
Gustavo Coronel : Water
threaten Chavez's political survival
These days Venezuelan strongman Hugo Chavez keeps looking at the sky for signs of rain. He has called on Cuban technicians and voodoo priests to try to bring rain to southern Venezuela, the site of Guri Dam. This huge structure on the Caroni River supplies 65 percent of the electricity to the country but shows record low water levels, good for only 90 more days of electrical generation unless significant rationing is put in place.
Rain has become a key ingredient of Chavez’s political survival.
He has blamed the meteorological phenomenon called “El Nino” for this desperate situation. However, Venezuelans prefer to talk about “El Nino Hugo” as the real culprit. For the last ten years the infrastructure generating both hydroelectric and thermal electricity in the country has been badly neglected, in favor of Chavez demagogic programs of handouts to poor Venezuelans and to friendly politicians in the region.A severe drought has caught the government totally unprepared to deal with the crisis. In a country having so much oil, thermal generation of electricity should be the logical alternative to hydro-electrical shortages. However, thermal electrical plants are in sad state of disrepair. Four years ago the technical staff at the state-owned hydroelectricity company warned the government that about 1000 megawatts of electricity generation capacity should be added every year in order to keep up with the growing demand. This was not done.
An electricity-rationing plan put into effect by the government earlier this month ago collapsed in a matter of hours amid popular protests. Realizing that the political price was too high, Chavez ordered the rationing cancelled and dismissed the minister in charge of the program.
Although critical, the collapse of the Venezuelan electrical sector is only one of the several areas where the Chavez government is showing deep fractures. Just a week ago the currency was devalued in a complex two-tier operation that established a parity of 2.6 Bolivar’s per dollar for some transactions and one of 4.3 Bolivar’s per dollar for other type of transactions, a composite devaluation of about 40 percent.
The main objective of the devaluation is to supply the Chavez government with more local currency. Chavez needs to keep 2010 government spending at high levels since legislative elections will take place this year. He needs to hand out significant amounts of money to recover from his significant loss of popularity during recent months. Although this devaluation will increase Chavez’s war chest it will also increase the rate of inflation, at 30 percent already the highest in Latin America.
In spite of almost one trillion dollars in national income during his eleven years in power the Chavez government has quadrupled national debt, which now approaches one hundred billion dollars. From 2006 to 2009 Chavez has borrowed some $16 billion from China and lesser amounts from Japan and Russia. Since Venezuelan country risk is one of the highest in the world, next to Zimbabwe, Argentina and Ukraine, loans by the international financial community will become increasingly difficult to obtain.
To add to the financial crisis seven small to medium sized Venezuelan banks were closed down by the government in December 2009 for running Ponzi-like schemes. This has been a major scandal, still developing, and involves some of Chavez’s closest followers.
Mounting financial and economic problems have weakened the Chavez government to the extent that a scenario of implosion is becoming more and more likely within the next two years. The “Bolivarian” revolution seems to be approaching the end of its tragic journey.
Gustavo Coronel is a 28 years oil industry veteran, a member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), author of several books. At the present Coronel is Petroleumworld associate editor and advisor on the opinion and editorial content of the site. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by Humans Events, on 01/25/2010. Petroleumworld reprint this article in the interest of our readers.
All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld,
use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.
If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated
Petroleumworld welcomes your feedback and comments,
share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us their views and
comments about this article, write to editor@petroleumworld.comPetroleumworld News 01/26/2010
Copyright© 1999-2009 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source.Other stories you have to get authorization by its authorsSend this story to a friend Any question or suggestions,
please write to: editor@petroleumworld.comBest Viewed with IE 5.01+Windows NT 4.0, '95, '98, ME,
XP, Vista, W7 +/ 800x600 pixels