Thursday, 6 February 2014

Venezuela's non-oil sector 15 years after the military came to power

Boligarchs have a lot of chutzpah. They have repeatedly talked about the need to diversify Venezuela's economy, which is hugely dependent on oil prices. They have done so from the very start and the reason is that they knew they had to do it. And their followers nodded and said "how right our leaders are". That's the way to go. That's how Arturo Úslar Pietri said we should go already back in 1937.

Of course, it has all been hot air, like everything this regime has promised.

This chart, produced with data from the Central Bank, shows the dollar value for export of goods from 1997 until 2012. In green you can see the goods related to oil (mostly crude oil). In yellow you see everything else. The share of "alternative" export sources went from 31% of all exports to 4%. That is quite dramatic. One could say this was unavoidable, as OPEC oil prices rose from 12 dollars a barrel in 1998 to something around $104 today. But then even the total amount of dollars from non-oil sources has dropped. We went from exporting 5541 million dollars in non-oil-related goods to exporting 3694 million dollars fifteen years later.

The Venezuelan government is made up of utterly incompetent people whose only skills are 1) their ability to create new dirty tricks to remain in power in a pseudo-democracy and 2) their ability to become rich while ranting about how terrible the capitalist, fascist oligarchs are.

Maduro is replacing ministers and other high ranking functionaries at a faster pace than the deceased military caudillo ever did. He tried one economist as president of the Central Bank from August until January but went back to a mathematician with no clue about economics. He appointed an economist to be the new Minister of Trade in mid January but replaced him two weeks later for a geographer who had been environment minister for some months before.

This is the mess Venezuela is in. This is not new with Maduro but its whole scope is starting to unravel rather fast.

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