Monday, January 20, 2014

The Latest News from Venezuela, Aug 18, 2011

article from August 18, 2011
By Jamie Douglas

The past few days have brought several interesting news items from the Bolivarian Republic of Venezuela to the forefront. Let’s get the one out of the way right away: President Hugo Chávez returned from Cuba after the latest round of chemotherapy, and according to his blog, he is feeling better and his cancer has not metastasized. Personally I am still in the dark as to why he could not find proper treatment in his own country.

The good news about Venezuela’s crude oil industry is the proclamation by OPEC that Venezuela now is sitting on top of the largest proven reserves in the world, exceeding those even of Saudi Arabia. The national oil monopoly, PDVSA, is fourth in the world’s rankings of oil companies.

The country should be sitting on a big pile of cash, but for years of unchecked spending and corruption. Unfortunately, many if not most of the social programs that have been announced to gain the support of the masses never really got off the ground. Added to this lack of proper fiscal planning, with Chávez having promised the Moon to many poorer Latin American nations, is an astonishing level of corruption that, together, have cost the Venezuelan treasury billions of US dollars (half a billion has been stolen from the PDVSA’s pension fund by a Ponzi scheme).

In spite of this wealth in the ground, the nation’s leader has been in direct contact with Russian Prime Minister Vladimir Putin to obtain an express loan worth US$4 billion. Time will tell what that Wiley Russian Fox will extract in concessions from Venezuela in exchange for the loan, but one thing seems certain: It will come with not just strings, but ropes attached. It is a given that the New Russia, while not so much engaged in a “communism vs. capitalism” struggle as during the Cold War, is finding itself playing second fiddle to China in Latin America. Getting a good foothold in Venezuela will at least make for some face saving. While Russia itself has an abundant supply of energy resources, it is never enough in a world of shrinking supplies.

These latest twin announcements from the president also involve the nation’s currency reserves and gold stash. The finance ministry is studying a plan to transfer over US$6 billion in cash away from US and European banks to more allied countries’ financial institutions. Brazil, Russia and China are of prime consideration in the transfer of the cash. They are also considering moving 211 tons of gold that is being held in European banks to the Caracas Central Bank vault, where it would be added to the 154 tons already there, making it a total of 365 tons in local storage.

Then cometh the announcement that President Hugo Chávez wants to nationalize the gold industry, so as to gain complete control of production and increase the output of the mines. He stated that it will be “by a decree to take the gold sector, which still remains in the hands of the mafia and smugglers.”

Chávez is preparing to make some new friends again. Venezuela certainly is a nation in flux. So stay tuned for the next exciting future history episode of the Bolivarian Colossus.

Jamie Douglas
San Rafael, Mendoza
Where the Malbec Wine is Always Fine!

[Image of Venezuelan President Hugo Chávez via Wikipedia]

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.