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Editorial / Commentary / Opinion
VenEconomy:
Rabbits keep on popping out
This week more rabbits have popped out of Hugo Chávez' communist hat.
The first one of the week was official confirmation of something that all Venezuelans have been feeling in their wallets: Inflation is picking up speed, with an April-to-April rate of 31.9%, and 12.0% so far this year.
That was not all, however. The bad news just kept on coming throughout the remainder of the week:
It wasn't just the news that another turbine at the Guri Dam had broken down. Experts continue to say that the critical situation of the nation's electric power grid is likely to last on into 2013. What the country risks, they say, is the possibility of a “long-lasting national collapse.” Meanwhile, Corpoelec has announced that they will only be able to bring 1,621 MW, of the 5,900 MW needed, on line. Meanwhile, the people are still putting up with rationing and fines if they fail to cut back on their use of electric power.
The scandal of the week was not that the Aban Pearl Platform sank in waters off the east coast of Venezuela, but all the information that bubbled to the surface afterwards regarding another murky government business deal: Despite the fact that it is over 33 years old, is obsolete and has structural flaws, the platform was being leased with a surcharge of $374,000 per day. According to the government, however, this mishap is simply a little “stumble” on the road to reclaiming sovereignty.
The bad news is not that, without any valid financial reason whatsoever, another name has been added to the list of thousands of expropriated companies: Molinos Nacionales (Monaca). It is not even the fact that, with this latest expropriation, the government now controls 37% of the pre-cooked cornmeal market. What does not bode well at all is that, once again, the government has taken over a business about which it knows nothing, while totally ignoring its obligation to provide well-run public services, especially health services. This during the same week that 15 cases of Chagas disease have been diagnosed in a single Caracas parish, and triatomine bugs ( chipos) -- the vector for this disease -- have been found in at least five neighborhoods in the capital city.
The bad omen is not only that, this past Thursday, the National Assembly approved the first reading of an amendment to the Lands and Agricultural Development Act. What points to dire consequences is that that government is reserving for itself “the activities of primary [agricultural] production, industrialization, distribution and marketing,” allegedly for the purpose of consolidating food sovereignty. The major contradiction here is that, even with 50 million hectares to its name, the government depends almost entirely on imports to meet the country's basic food requirements.
As the finishing touch to another black week, following the second reading, the National Assembly passed the new Foreign-Exchange Crimes Act. What is terrible in this case is not the witch-hunt against brokers and alleged speculators. What really spells disaster is that this means the end of the securities-swap market, the market where industry, businesses and the man on the street could still buy foreign exchange, leaving them at the mercy of a black market and a system of justice that does whatever Miraflores orders.
VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by Veneconomy , May 14, 2010. Petroleumworld reprint this article in the interest of our readers
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Petroleumworld News 19/05/2010
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