\u201cIt\u2019s more likely that this ends up like Libya\u201d than a replay of orderly transitions, such as the one that led to the end of the dictatorship of Augusto Pinochet in Chile, said Pedro Burelli, a former board member of state oil firm Petroleos de Venezuela, or PdVSA, and an outspoken critic of the Chavez and Maduro governments.<\/p>\n
\u201cYou take fragmentation of political power, a dire political situation, high social expectations, no cash, and a lot of people involved, and that to me is the recipe for a mess,\u201d he said.<\/p>\n
Crude prices continued their slide on Monday, falling to about $64 a barrel in New York and $67 in London. Global benchmark prices have now shed 40 percent since their June highs. For a country like Venezuela, which is dependent on oil for nearly all of its export earnings, the threat is becoming more urgent by the day.<\/p>\n
Last week, Venezuela\u2019s government announced a 20 percent spending cut<\/a>. While President Nicolas Maduro vowed that the cuts won\u2019t affect the country\u2019s cherished social spending\u2013a key to maintaining what little popular support the successor to Hugo Chavez still enjoys\u2013it\u2019s clear that Venezuela\u2019s inability to drum up fresh sources of revenue is tearing at the sinews of an economy that was already reeling from rampant inflation, consumer shortages, and widespread (if underreported) unemployment.<\/p>\n Complicating everything is the country\u2019s byzantine currency<\/a> exchange rate, which officially values the local currency, the bolivar, at huge multiples of the black-market exchange rate, despite stealth devaluations<\/a> over the past year. That means that even Venezuela\u2019s oil earnings tend to evaporate when they are converted into artificially inflated local coin.<\/p>\n Although the country has vowed to repay its debt, traders are dumping are Venezuela\u2019s sovereign bonds and there are signs that the market is increasingly pricing in the possibility of a default.\u00a0 Venezuelan bonds are trading at 50 cents on the dollar and offering sky-high yields, while bond traders are preparing to cover themselves\u2013with debt swaps\u2013in the event that Caracas follows the path of other troubled Latin American countries such as Argentina.<\/p>\n There\u2019s one telling indication of Maduro\u2019s desperation to secure short-term cash, even at the cost of mortgaging the nation\u2019s much-needed future revenues: The country is reportedly in talks with U.S. investment bank Goldman Sachs to sell it debt obligations owed by other countries, such as the Dominican Republic, at a hefty discount. Media reports suggest that Venezuela is mulling the sale of about $4 billion worth of IOUs from its Caribbean neighbor for less than half that amount.<\/p>\n Not all the dysfunction in Venezuela\u2019s economy is caused by falling oil prices, of course: Toilet paper disappeared from store shelves even when crude was trading at $115 a barrel. Large protests rocked Caracas and other major cities earlier this year, a reflection of growing discontent with Maduro\u2019s ability to keep the flame of \u201cChavismo\u201d alive. Recent opinion polls show support for Maduro has cratered to about 25 percent.<\/p>\n What\u2019s ominous about the latest oil-induced pressures is that it seems to be pushing the government to take even more desperate measures than it did earlier this year. Last week, the Venezuelan government charged opposition leader and member of Congress Maria Corina Machado with allegedly conspiring to assassinate Maduro, a charge that could put her behind bars for years. The U.S. State Department criticized Venezuela\u2019s \u201carbitrary use of prosecutorial power to silence and punish government critics.\u201d<\/p>\n At this point, the opposition movement is cowed and divided. But even if it were possible to replace the unpopular Maduro government with leaders from the opposition, it wouldn\u2019t likely cure what ails the country, Burelli said. He likens Venezuela to a broken-down bus careening toward a cliff with no brakes, no gearshift, frozen steering, and a drunk driver: simply making a change behind the wheel won\u2019t be enough to keep the bus from crashing sooner or later.<\/p>\n \u201cWe\u2019ve confused the problem of, \u2018who will run this country?\u2019 with \u2018what is the state of this country?’\u201d Burelli said.<\/p>\n Is there a story that is not being reported here?\u00a0 Is the US more interested in demolishing dysfunctional regimes and in providing oil producers with big profits?\u00a0 Is the State Department involved in these decisions?\u00a0 They have supported the Keystone … Continue reading ![\"Oil](\"http:\/\/www.w-t-w.org\/en\/wp-content\/uploads\/2014\/12\/Oil-Prices-and-Politics-300x247.jpg\")
<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"