11/02/2009

(No) Power To The People

Things are not going well in the socialist paradise of Venezuela. Apparently Hugo Chávez and his minions are having trouble keeping the lights on and the water running. Is it really any surprise?

Venezuelans in the capital are bracing themselves for drastic rationing as public services in the oil-rich nation sink ever deeper into crisis, threatening to undermine President Hugo Chávez's support.

Water is to be cut off in Caracas for up to 48 hours a week from Monday, possibly lasting until next May or June. Power rationing is also starting this week, aiming to reduce national useage by 20 per cent.

Venezuela's populist leader says the water shortages are a result of the driest weather in 40 years, which has also intensified the problem of blackouts. The country relies on hydroelectricity for about three-quarters of its power and reservoirs are at record lows. Increased consumption due to high economic growth has exacerbated the problem, he says.

“High economic growth”? Really? In Venezuela?

Hmm. Somehow I find it difficult to believe there is economic growth of any kind in Venezuela, particularly when price controls for various commodities (like food) have made them very scarce. Graft, corruption, and incompetence have severely limited or destroyed various segments of the economy. Even Venezuela's oil reserves, claimed by Chávez to be greater than that even of Saudi Arabia, have been unable to support the government's growing social and economic engineering programs. Of course it doesn't help that their petroleum infrastructure has been decaying since Chávez took power and nationalized the oil companies. Most of the personnel that used to run and maintain the infrastructure have either quit, been fired, or fled Venezuela. The missing workers have been replaced by many of Chávez's political cronies, few of which know anything about running or maintaining the wells and equipment needed to keep the oil flowing.

I wonder how long it will take their wells, pipelines, oil terminals, and other equipment to deteriorate to the point where it doesn't work? All one need do is look at how Iran's once profitable oil infrastructure has crumbled to the point where they can't even refine enough of their own oil to meet their domestic needs.

His fellow Venezuelans haven't been buying his line about the causes of the various shortages, knowing many of the problems they are suffering are due entirely to his actions.

Government critics say that, despite Venezuela being flooded by oil wealth in recent years as energy prices rose, persistent under-investment in maintaining and expanding water and electricity networks lies at the root of the problem. They also point to chronic mismanagement, poor planning and even corruption. Furthermore, frozen tariffs have provided no incentive to conserve water or electricity.

Many remain unconvinced by Mr Chávez's attempts to brush off responsibility for the shortages by attributing problems to the climatic phenomenon known as El Niño .

"It's not the root of the problem," says Norberto Bausson, director of the Municipal Institute for Water and Aqueducts of Sucre, an opposition-controlled municipality in eastern Caracas. He says the rationing is caused by rising demand due to population growth and increased consumption per capita, while an absence of infrastructure investment has caused supply to be lower now than a decade ago.

Eventually Chávez will run out of excuses. He won't be able to blame the rich because there won't be any left, except for his cronies (he'll have made sure of that). He won't be able to blame a drought if the electrical and water systems finally break down and provide neither to the populace even though there's plenty of water available to drink and generate electricity. He won't be able to blame the farmers for the shortage of food if he's driven them all out of business due to his fixing prices at such a low level that the farmers go bankrupt.

The time will come (if it hasn't already) when the only one left to blame will be Chávez himself. But he won't (or can't) admit he's been the cause of Venezuela's economic ills because when it comes to economics he's a total moron. But then most dictators are when it comes to understanding how economies work.

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