Chavez’s curse of oil
THERE’S A WIDESPREAD VIEW that rich national resources are a curse rather than a blessing. That’s extremely illogical. For example, South Africa didn’t have a dismal economic record between 1981 and 1990 because of its treasure chest of gold, platinum, coal and other metals and minerals. The problem was apartheid, white minority rule and the consequent upsurge in international political, trade and financial sanctions.
But country after country does sadly appear to provide compelling evidence, superficially, in support of the “resources curse” case. The latest important instance is Venezuela. Some analysts reckon Venezuela has more oil reserves than any nation other than Saudi Arabia.
Unfortunately, Venezuela also has great political turbulence. That arises from typical Latin American class struggles – and an authoritarian maverick leftist President Hugo Chavez. To support his revolutionary goals for the South/Central American region, and his particular animosity towards the United States, Chavez has sold oil at whacking discounts to almost every buyer except the US.
But he hasn’t paid much attention to maintaining efficiency at his nationalised oil industry. As a result, Venezuela’s oil output has fallen from 3,2m/barrels/day in 1998, when Chavez came to power, to the current 2,4m. Since oil revenues fund 40% of its national budget – and world oil prices have slumped sharply from their peak earlier this year – that’s increasingly serious.