Dyed In The Wool Conservative: Venezuela heading for collapse

Monday, February 9, 2009

Venezuela heading for collapse

posted at 10:01 am on February 9, 2009 by Ed Morrissey on HotAir.com

The collapse in oil prices has hit OPEC nations hard, but perhaps none more so than Venezuela. Hugo Chavez apparently put more of his profits into his socialization programs than in paying contractors for their work. Now they have stopped working altogether as Chavez has no money to pay their past-due notices, which will curtail production just when Chavez needs it most:

Venezuela’s state oil company is behind on billions in payments to private oil contractors from Oklahoma to Belarus, some of which have now stopped work, even as President Hugo Chavez funnels more oil revenue to social programs.

Petroleos de Venezuela SA, or PDVSA, says unpaid invoices jumped 39 percent in the first nine months of last year — reaching $7.86 billion in September. And that was when world oil was selling for $100 a barrel.

With prices plummeting by more than half, PDVSA is trying to renegotiate some contracts. But analysts say hardball tactics to reduce charges from crucial service providers could backfire by lowering Venezuela’s oil output. And foreign debt markets are reflecting jitters about Venezuela’s finances.

How badly has this already hampered operations? Two rigs run by a Tulsa contractor have shut down, cutting into Chavez’ revenues, and nine more controlled by the contractor will shut down by July unless Venezuela pays the bills — more than $100 million. PDVSA had to take over another off-shore rig when a Dallas company said “Adios” after Chavez reneged on a $35 million debt. Even Belarus, hardly unfriendly to dictatorial strong men, has had enough, ending its work on a gas pipeline and possibly two other contracts in the coming weeks.

Chavez has had PDVSA take over operations where possible, but PDVSA doesn’t have the resources or the skills to replace the contractors. If they did, Venezuela wouldn’t have outsourced the work in the first place. Unless Chavez finds a way to replace the contractors or to pay them what they’re owed, he will start losing as much as $5 million a day in lost output.

Why can’t Chavez simply pay these contractors and secure his revenue stream? He doesn’t have the money. Chavez spent like a drunken sailor on his socialization projects, assuming that the price would remain high even for his sulphuric crude. When the bottom fell out of the oil market in the recession, Chavez was already overextended, and now he’s all but broke. His nationalization of the oil fields had already cut into his output, and the low margin on what he does produce can’t maintain his political projects and the oil fields at the same time.

Chavez faces another key vote this year. If he stops spending money on his pet projects, he’ll lose the support of the poor, practically his only constituency now. If he doesn’t pay the contractors, though, his entire economy could collapse, creating a huge backlash against the man who claimed nationalization would cure all Venezuela’s ills. Chavez may soon reach the end of his rope, and as Benito Mussolini discovered when his dictatorship resulted in disaster, that’s not necessarily a figurative phrase.

This is for my friend Simon, I hope your fiends and family are ok in Caracas!

1 comment:

Editorial Corasim said...: Hey dude Thanks for this post. As I can see, you know every bit of what's going on down here. In fact,we have a referendum (again) in 5 days in order to vote if Chavez may be reelected without limits (what a nighmare).

I wonder if I can translate your post and publish it in a venezuelan political forum. I'm sure it can help the NO cause. We need all the help we can get.

Saludos; February 10, 2009 at 2:24 AM

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A Former Liberal Says Goodbye to George W. Bush

Posted By Eli Bernstein On February 2, 2009 @ 12:00 am In . Positioning, Opinion, Politics, US News 97 Comments
I didn’t always like George.
There was a time I thought of him as a stupid stooge, a man undeserving of power. There was a time I thought he had shattered America’s greatest asset — its democracy.
I had followed every twist and turn in that infamous ballot count, read all the relevant legal proceedings, and felt personally wronged when on December 12, 2000, the U.S. Supreme Court ruled against the man I voted for. I was so incensed by what I saw as an appointment against the will of the people that I inquired about rescinding my U.S. citizenship. Thankfully, I never followed through.
It was nine months later that I felt American again, and a proud one at that.
As I watched the second plane crash into the World Trade Center, I realized the world had changed forever; that a dark new reality has set in; that the world my children will grow up in will not be the world of my childhood.
I understood this in seconds and so did George, my old foe. Some have still to grasp this.
On that day, George grew into his role as leader of the free world. Hanging chads no longer mattered when smoke filled the skies of Manhattan. A man not known for his words was saying exactly what I needed to hear. He spoke on that fateful day:
Terrorist attacks can shake the foundations of our biggest buildings, but they cannot touch the foundation of America. These acts shatter steel, but they cannot dent the steel of American resolve.
America was targeted for attack because we’re the brightest beacon for freedom and opportunity in the world. And no one will keep that light from shining.
It was comforting to hear of good and bad, of right and wrong. It was great to hear some answers when all around me were questions. I now know that this strength of George led ultimately to his demise and I am sure that he understood this as well, but by the then the course was set and history is unwavering.
As a former liberal, I had to get used to living with George’s moral clarity, a world of black and white, good and evil, Cowboys and Indians. But then I realized, even black and white has its place on a full color spectrum. There is a time and place for monochrome. I also realized that the alternate view, proposed by the liberal camp, was even more limiting in its spectrum. Unlike George, their world was painted a single shade of murky grey, a world where perpetrator and victim were morally equaled. This alternate view suggested that America had brought September 11 upon itself and should see itself as its own aggressor and its aggressor as its victim. In this topsy-turvy weltanschauung, old allies and long held values should be abandoned for the sake of expediency. It is the same logic that blames the rape victim for her ordeal: she should have never worn that mini skirt in the first place.
George recognized that the problem was more fundamental than America’s mini skirt; that Osama and the 9/11 crew had little grievance about U.S. policy in the Arab-Israeli conflict but were rather fiercely opposed to the spread of secular thought in the Middle East; that the best way of beating them was to do just that, spread democracy in the region, by whatever means necessary. A government by the people and for the people has no interest in perpetuating ongoing conflict. George was not the first American to hold such a universalist view of freedom and democracy. Some years ago, his predecessors wrote:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just Powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government to effect their Safety and Happiness.
The world has changed a lot since these words were written, and America has changed too — with men and women of all races allowed to vote and run for office — but mankind has not changed much. We all still strive for life, liberty, and the pursuit of happiness. George believed this was true of everyone, even the Arabs.
The Iraqi elections proved that the unspoken notion of non-interventionalists that Arabs are (a) incapable or (b) undeserving of democracy was indeed a fallacy. It took a man of black and white to rid the world of this grey notion. The premise of basic human rights is set on universal principals that apply to all people at all times at all places — an absolutist notion. The relativist approach that opposes the imposition of democracy has pushed human rights championship away from their camp to the political right.
An so I too found myself on the other side of politics. I had become a neocon and have loved George ever since.
I believe history is likely to prove George right. We may not know the full impact of his actions for some decades to come, and by then I know he is unlikely to get the credit for the wheels he set in motion. Meanwhile, we have witnessed democratic elections in Iraq and Palestine; the institution of parliaments in Qatar and Bahrain; municipal elections in Saudi Arabia; Shura (Consultation) Council elections in Oman; increased allowances for opposition parties in Syria, Egypt, and Tunisia; a royal decree granting women rights in Morocco; and the renunciation of terrorism by Libya — to name but a few developments. As George said back in March 2005, “the trend is clear. In the Middle East and throughout the world, freedom is on the march.” His ally John Howard backed this view up when he [1] stated that “these things wouldn’t have been thought remotely possible a year ago and I have no doubt that … one of the reasons … was the overthrow of Saddam Hussein.” Even old foes like Walid Jumblatt, the leftist Lebanese Druze leader, shared the view:
I was cynical about Iraq. But when I saw the Iraqi people voting three weeks ago, eight million of them, it was the start of a new Arab world. The Berlin Wall has fallen.
The Berlin Wall has fallen once again while your news reporters were looking the other way, counting body bags in Iraq and actively embroiling themselves in partisan politics.
And so I bid farewell to the man who sacrificed his legacy to protect America’s greatest asset, freedom and democracy. Ironically, he had become the defender of the asset I had once accused him of robbing.
Article printed from Pajamas Media: http://pajamasmedia.com
URL to article: http://pajamasmedia.com/blog/a-former-liberal-says-goodbye-to-george-w-bush/