Archive for July 17th, 2008

Hugo Chavez keeps giving away Venezuela´s wealth at our expense

July 17, 2008

After ten years with little new infrastructure built by Chavez, bad funding for state
universities, no environmental projects and poverty and malnutrition still
rampant in Venezuela, Hugo Chavez continues to give away Venezuela’s wealth
in order to promote his image abroad. The most recent of his largesse:

—Citgo gave
away half a million energy efficient light bulbs to the American poor. As
if that giveaway was not sufficient, Citgo published full-page ads in
nationwide newspapers in the US to publicize the effort. Meanwhile in
Venezuela there is not ONE project by the Chavez Government to save energy,
as cars and gas are heavily subsidized and traffic everywhere has become simply unbereable. Yes, there was a similar light bulb
project, but that was made so that the Government could buy the light bulbs
from Cuba and that country made money on the deal. That program by the way
is no longer in place.

—And while Venezuelan universities are
short of funding, Hugo Chavez donated US$ 3 million to Universidad Arcis in
Chile, a private University. Why? It’s a leftwing university…

—But the most amazing giveaway by the man who thinks he
owns Venezuela is the changes made on Sunday to the Petrocaribe agreements.
Using this agreement Venezuelan exports oil to many countries in the
Caribbean, some of which have a better standard of living than Venezuela.
Basically, Venezuela exports about 60,000 barrels a day to these countries
(This does not include Cuba, which I am sure gets even better terms, like free).

Up to now, the agreement had very
generous terms for these countries. But on Sunday they probably figured
they could squeeze a few more bucks out of Hugo, using the high price of oil and his sinking popularity
as an excuse. And Hugo rapidly
agreed.

Under the new terms, if oil exceeds US$ 100 per barrel (the
oil sold to these countries), then they will pay 50% in 90 days, with the
remainder financed by Venezuela over 27 years with a two-year grace period
and at 1% interest for the other 25 years.

If oil exceeds $140 per
barrel, then the terms will be the same except they will pay 40% in ninety
days and the remainder with the same generous scheme. Finally, if oil
exceeds US$ 150, then they will pay 30% and the remainder stays the
same.

To put some perspective in those numbers, let’s assume the
“cheapest” scenario of more than US$ 100 and less than US$ 140. Let’s say
US$ 130 per barrel. That comes out to US$ 7.8 million per day. But, if
inflation runs at an average of 3% for the next 27 years, this means that
Venezuela is discounting the oil 40%. If inflation runs as 4%, then it is a
discount of 55% and if inflation runs at 5% it is a discount of
65%.By discounting I mean that by the time Venezuela gets paid, the money it will receive would have llost that much purchasing power because of inflation.

Thus, Hugo Chavez is giving away to promote himself US$ 1.56
million in the 3% inflation scenario every single day, US$ 2.145 million in
the 4% CPI scenario and US$ 2.535 million in the 5% inflation
scenario.

Of course, this is not his money but our money,
particularly that of those that go hungry every day, have no running water
or spend hours in traffic in poorly run public transportation.

Such are the ways of this strange so
called revolution.

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