I have been to Venezuela many times and this post I am about to write is breaking my heart. OK no it isn’t, the situation requiring me to write this post is. Venezuela in the 1980s was a pretty wonderful place and most certainly so by South American standards.
The fact that Chavez’s communist policies is proving what any 10th grader should know, and nearly no university student does know at this point, that economies all begin and end with agriculture, is a hollow victory. A little like when the people at Richter conform an Iranian nuclear detonation and we the rational will get to say ‘I told you so’.
Chavez has a badly neglected oil industry which is failing to produce the kind of revenues that his populist (using the term properly) policies require. But it does provide some revenue at least. What he does not have at this point, is enough local food production to feed his own people.
Until recently, Venezuela was importing the bulk of the basic food stuffs it needed from it’s neighbor Colombia, a nation that for reasons that have little to do with the well being of his people, Chavez has created conflict with including some serious brinkmanship to war. Fortunately it appears that Bogota does not take Chavez seriously enough to do the kind of Damage to the Venezuelan state they are more than capable of delivering without taking much damage in return unless Iran has handed Chavez a lot more than we are aware of at this time. Caracas now looks to the USA to make up for the foods that Colombia is not selling to Venezuela. This of course has to be a more expensive solution as shipping costs alone would jack the price up a lot even if the cost of the food stuffs where identical. Which they most likely are not.
The most important aspect of all this, is the communist-‘Bolivarian’ notion that you can command a price at which goods that require resources to produce, can be sold for sustainably. At some point, you simply cant make more when you sold what you had at a loss. Suppliers may not share your vision and even if they did, sooner or later the ground itself will not give up it’s bounty unless you plant seeds, water it, fertilize it, harvest it, then process ship and store it.
The fact that Chavez is now raising the price of food officially for the second time in a year and a half shows that there are serious cracks in whatever-it-is he thinks of as a ‘system’ for regulating his economy, which appears to be, ‘demand that prices be what he dictates, and when people break his commands, nationalize the industry, only to find that the industry has the same problems no matter who works there’.
Below, I will paste two paragraphs from an excellent STRATFOR analysis in keeping with the copyright agreement with them. However if you are a member of Stratfor, you may want to go read this yourself at their website, and if not, you may want to sign up for a membership. Occasionally they offer a two week free trial of their service. Might be worth a go. In any case, they have a solid eye on Hugo and his ‘rush to flush’, the nation of Venezuela.
Eeyore for Vladtepesblog.
Venezuelan Food Minister Felix Osorio on Feb. 25 announced an upcoming increase in the price of regulated food — the second food price increase in about 18 months. Whatever the reason behind the government’s decision to raise food prices, the development shows the severity of Venezuela’s economic situation and creates concern for the country’s economic stability.
While food shortages have been an intermittent issue for years in Venezuela, STRATFOR sources have reported that they are becoming more frequent (albeit still temporary). Government officials also have been growing increasingly defencive about the issue. Still, the Venezuelan government may have little choice but to resort to risky measures like food price increases to stave off the politically explosive situation of large-scale food shortages coupled with extended electricity blackouts, which could have an extremely destabilizing effect on the regime.