The great American novelist and humorist Mark Twain once said that “water, taken in moderation, cannot hurt anybody.” Not so if you are in Venezuela. Venezuelan President Hugo Chávez is about to expropriate all privately-owned bottled water in the country. Who gets hurt? Besides the Venezuelan people at large, the State’s takeover of bottled water affects none other than the local subsidiaries of U.S.-giants Pepsi and Coca-Cola.
What’s Next Venezuela first warned you about the impending water crisis last week, after Mr. Chávez himself let the cat out of the bag in a recent TV appearance, during which he scolded his Vice President and Minister of the Environment for failing to deliver a plan to nationalize the water-bottling companies. But…who can blame them for stalling?
Venezuela’s Ministers of the Environment and of Health have been traveling in treacherous waters for over a year on this issue. On one hand, they serve at the pleasure of President Chávez. On the other, they are fully aware of the serious health concerns that have arisen from the water bottled by State-sponsored Community Councils. In the State of Zulia, for example, the State-controlled water has resulted not only in cases of cholera but in positive tests for feces and other human waste.
Expropriating important sectors of the Venezuelan economy – and running them to the ground – has become a staple of Mr. Chávez’s economic policies over the past 12 years. A recently published study by experts from the Institute for Higher Studies in Management (IESA) in Caracas looked at the evolution of 16 domestic and foreign companies expropriated by the Chávez government. The experts found significant operational problems and, in some cases, even a complete halt in operations in the State-run companies.
The impending nationalization of bottled water is certain to have a negative impact in Venezuela’s already frail economy and place H2O in the long list of basic goods which are scarce in Venezuela. That is no laughing matter.