Chavez Blames US for His Failures

When one is a jumped up, tin pot, Castro wannabe like Venezuela's Hugo Chavez and things start to go wrong, Plan A is to blame the Americans. So, it comes as no surprise that he claimed to have scrambled two F-16 of the Venezuelan Air Force to intercept a US military plane that had provoked him by violating Venezuelan air space twice last week. Why was it no surprise? Because at almost the exact same time he was devaluing the currency and preparing for rolling black outs to save electricity.

His policies are the usual Latin American populist nonsense. Rather than use his nation's oil wealth to diversify the economy and create a society of well-educated, reasonably well paid citizens, he has decided to fritter the money away to inherent Castro's revolutionary mantle. After 12 years, it is chickens coming home to roost time.

Exchange controls are a way of life in his Venezuela. The local currency, the bolivar, had an official exchange rate of 2.15 to the US dollar. The black market rate was somewhere between 6 and 7 to the American unit. He surprised the country by announcing a two-tiered rate: 2.6 bolivars to the dollar for food and medicines, and 4.3 for things like imported TVs and plane tickets. With the economy shrinking 2.9% last year, and with elections coming up, he is hoping this will jump start the economy, improve the balance of payments, and give him cash to throw at the electorate. Its immediate effect was to create lines for durable imports because people know prices will rise despite his ukase that prices must stay stable.

By creating a two-tiered exchange system, Mr. Chavez achieves nothing but corruption. People will fiddle the system if they have connections, getting HDTVs for medical monitors and paying the more attractive rate. The black market in currencies will continue as before, and it may even expand.

In a nation awash in oil, the best way to judge the government's ineffectiveness is in whether it can keep the lights on in the capital city. It could not. The government planned power cuts of 4 hours' duration, but the plan was so badly executed that some people suffered two cuts a day, and anger among Mr. Chavez's supporters forced the resignation of Electricity Minister Angel Rodriguez and an indefinite suspension of the rationing "only in Caracas." The water levels at the El Guri dam that accounts for much of the electrical generation capacity are low, and if they continue falling, the loss of power would prove catastrophic. He had 12 years to build oil fired back up plants, but Mr. Chavez chose not to do so. This means that companies like Pequiven, the nationalized petrochemical company, has to cut production at two of its three plants, further messing up the economy.

Venezuelans deserve better than this. Mr. Chavez needs to go.

© Copyright 2010 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.

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