Political scientist Gustavo Coronel, an oil expert and former member of the Venezuelan congress, believes the plummeting petroleum payouts will seal the fate of Hugo Chávez’s Bolivarian dreams, thanks to the Venezuelan leader’s habitual failure to invest in any form of state infrastructure.
Speaking at the Andes colloquium organized by the George Washington University and the Strategic Studies Insitute, Coronel explained just how deep mismanagement runs within the state-run oil sector. This threw me for a bit of a loop:
“Under Chávez the company [PDVSA] has lost about 500,000 barrels per day of production capacity, which amounts to a loss of income of about $30 to $50 million a day, depending on the price.”
Ouch. Today, a barrel of crude petroleum is at a mere $39 on the Venezuelan market, down from soaring highs of roughly $145 earlier in 2008. To Coronel, this reality merely exacerbates the “termites” that have been eating the regime from within.
Coronel outlined three steps Chávez will now be forced to take, which may ultimately lead to his downfall:
- Cutting his vast handouts to Venezuela’s poor constituents, thus isolating his key demographic.
- Eliminating/reducing foreign aid to sympathetic governments, who remain essential for his regional opposition to the United States..
- Devaluing the Bolivar, inflicting further economic woe upon an economy already reeling from stark inflation and lack of foreign investment.
Having taken these steps, Coronel predicts Chávez will not only lose a constitutional referendum that would permit indefinite reelection — similar to the failed attempt to ratify the country’s constitution by popular vote in December 2007 — but also fizzle well before his current term runs out in 2012.
Whenever he’s suffered setbacks in the past, Chávez has always promised to accept the situation ‘Por ahora’ (For now). Save a petro rally, por ahora might be a while.
Photo: JUAN BARRETO/AFP/Getty Images