VIO News Blog

October 16, 2008

Venezuela Budgets for $60 Oil and Maintains Subsidies for Poor Countries

Oil is the theme of much of today’s news on Venezuela. According to the AP, the national budget for 2009 will be based on estimated oil prices of $60 per barrel, far higher than the rate of $35 per barrel used to determine the 2008 budget. This provides greater government accountability by boosting official spending and leaving less “excess cash” at the discretion of the executive.

A Miami Herald opinion piece claims that economists “agree” that Venezuela will be harder hit by the global financial crisis than any other country. This is, however, untrue; analysts quoted recently in the Financial Times, Bloomberg, and Reuters have all said that Venezuela is well insulated. Reuters reported that Venezuela “will likely emerge unscathed from the current global financial contagion even if tumbling crude prices force the oil-dependent OPEC nation to scale back spending.” AFP reports that Venezuela’s stock market has seen a drop in value of less than one percent, while percentage losses are in the teens for Brazil and Argentina, which are among Latin America’s largest economies.

President Chavez addressed concerns about the price of oil in a speech yesterday and said that Venezuela will maintain programs that provide 300,000 barrels of subsidized oil a day to poor countries in the region. He responded to rumors, saying: “Many want the oil price to continue to drop to see us fall, but Venezuela isn’t going to go under… Although no country can say that it won’t be affected by this economic disorder, the threat that some sectors want this to create in this country isn’t going to materialize.” Reuters reports that after the US government’s recent announcement that it will intervene in major private banks, Chavez said, “Bush is to the left of me now.”

A Washington Post article suggests President Chavez is “ratcheting up his quarrel with Washington” ahead of local elections in Venezuela. The Post presents Chavez’s concerns about US interference in Venezuela as fear-mongering and a tactic to garner support. Little mention is made of the US-backed coup against Chavez in 2002. Former Venezuelan Ambassador to the US, Bernardo Alvarez points out that “United States participation in right-wing destabilization efforts are not new. They are historic.”

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