Tag Archives: Economy

Jul
22
2011
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In Case You Missed It… Articles Roundup Week of 7/22/11

In this week’s roundup… The Chávez administration moved forward with the new Law of Costs, Prices and Salary Protection. It is likely to fuel more product shortages and inflation in Venezuela. After an unsuccessful attempt to persecute presidential candidate Henrique Capriles, the Venezuelan courts dropped their investigation.  Koch Industries filed an arbitration claim with the World Bank seeking compensation for the expropriation by the Venezuelan government in 2010 of one of its companies; Chavez continues to receive treatment in Cuba as his global appeal dwindles; and in Venezuela, crime and unemployment continue to hurt the average citizen.

Venezuela to oversee product prices, limit profits, Reuters

Government claims measure meant to control inflation, ensure “fair” prices. Critics say rules may fuel product shortages. Venezuela is creating a new agency to limit profit margins for companies operating in areas such as food and medicine, the vice president said on Monday, in the latest effort to boost state control over the economy.

Venezuela’s Docs Flee—So Does Chávez, The Wall Street Journal

It’s no coincidence that the president has returned to Cuba for medical attention.

If we are to believe Hugo Chávez, doctors have removed a cancerous tumor the size of a baseball from somewhere inside his body.

Election Official Says Venezuelan Courts Targeting Chavez Rivals, NASDAQ via Dow Jones Newswires

An electoral official in Venezuela said Wednesday that criminal investigations against possible challengers to President Hugo Chavez’s re-election bid suggest “a strategy of the government to choose who will be his opponent in the presidential elections.”

Venezuela court drops complaint against Chavez foe, San Francisco Chronicle via AP

Venezuela’s Supreme Court annulled a corruption complaint against a leading opponent of President Hugo Chavez on Tuesday.

World Bank to hear Koch arbitration against Venezuela, Reuters

Chavez nationalized Koch fertilizer plant in 2010. Multiple Venezuela arbitration cases outstanding. The World Bank will hear an arbitration case requested by U.S. Company Koch Industries after Venezuela’s President Hugo Chavez nationalized a fertilizer plant it owned with the OPEC nation’s state oil firm.

In Cuba, a Prayer for Chávez, The Wall Street Journal

Castro Regime’s Survival Depends Greatly on Ill Venezuelan Leader’s Largess

Venezuela’s ailing President Hugo Chávez says he is praying to Jesus Christ, the Blessed Virgin and the spirits of the Venezuelan savannah to help him beat his cancer.

Analysis: Cancer may further dim Chavez’s global influence, Reuters

Venezuelan President Hugo Chavez’s public battle with cancer has added to his global fame but it may also weaken his already waning influence in Latin America and beyond.

Unemployment rate up to 8.6%, El Universal

No matter the hike, INE President Elías Eljuri points to “effective performance” in the labor market

Unemployment rate stood at 8.6% in June 2011, based the monthly report on workforce prepared by the Venezuelan National Statistics Institute (INE

Venezuela town — home to Chávez, home to crime, Miami Herald

Oscar Pineda keeps a wary eye on the rearview mirror as he pulls up to a coffee shop. He steps inside, spots two policemen, and rushes back to his car — one of the few places he feels safe talking.For the past three years, Pineda has been engaged in a controversial activity in this agricultural town: tracking crime.

 
Jul
19
2011
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Rice expropriations to be followed by…water?

There is one thing President Chávez did not forget to do before leaving for Cuba to receive chemotherapy treatment for cancer: he delegated the power of expropriation to his Vice-President Elias Jaua.  And, why not? Expropriating private companies is about the only thing the government appears to be efficient at executing.

Last week,  among the other decrees signed by Chávez was the expropriation of a rice processing plant in central Guarico state, which he said had been violating labor laws and other requirements.  He made this announcement via his Twitter account. The process came to its expected conclusion after first being seized by government officials a year ago. The government’s intervention with the rice industry, a very important staple in Venezuela’s consumer market, started in 2009. Since then, the government has seized a variety of privately owned rice processing plants, twelve to be exact. This translates to 48 percent of the rice industry in the country at the hands of the government, ironically since it is against “capitalist monopolies.”  Venezuelans soon learn that when the government takes over these industries, it is not capable of producing the products. The scarcity of basic goods in Venezuela is well documented. Just last week, the Venezuelan daily El Universal reported that its own survey of six supermarkets and government-owned food outlets found that out of 16 price-regulated staples, at least 10 were scarce.

But the expropriations do not stop there. On Saturday, during a typical-style TV marathon appearance, Chávez raised the specter of expropriating water-bottling companies in Venezuela. In his usual bombastic style, Chávez alleged that private companies “own the water” in Venezuela.  This is not the case. The fact is that water in Venezuela is completely managed by the State. The State then provides concessions to private companies to bottle water and sell it throughout the country. In a country were water is not potable in many areas, the ability to distribute and purchase drinking water is a valuable commodity for the Venezuelan people. Yet despite an attempt by his Environmental Minister to correct him, Chávez ignored the facts and continued his rant against water bottling companies. This may be the first case of the government expropriating something and in this case water- that it is already in full control of.

Over the past 12 years that Chávez has been in office, the government has repeatedly attacked private businesses and frequently accuses them of hoarding products, leading to food shortages and contributing to the high inflation rates. Referring to them as speculators, Chávez has also charged them with trying to destabilize the economy in a bid to remove him from office.

This systematic takeover of the food industry is causing catastrophic failure with the country’s food supply. Food shortages are on the rise, inflation is rampant, and meanwhile the Chávez administration’s answer to these problems is to continue to intervene with the country’s food supply.

 
Jul
18
2011
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In Case You Missed It… Venezuela’s Docs Flee — So Does Chávez

Venezuela’s Docs Flee — So Does Chávez
It’s no coincidence that the president has returned to Cuba for medical attention.

By Mary Anastasia O’Grady
The Wall Street Journal
July 18, 2011

If we are to believe Hugo Chávez, doctors have removed a cancerous tumor the size of a baseball from somewhere inside his body. The type of cancer he has and the stage of its advance remain a Venezuelan state secret, but it is likely that he is a very sick man.

This news, for a leader who is only 56 years old, might have elicited a wide sweep of public sympathy under different circumstances. Instead, Mr. Chávez’s first-class treatment in a Cuban medical facility from a Spanish doctor has served to elevate the resentment many Venezuelans have about the declining quality of health care in their country.

The scarcity of basic goods in Venezuela is well documented. Just last week, the Venezuelan daily El Universal reported that its own survey of six supermarkets and government-owned food outlets found that out of 16 price-regulated staples, at least 10 were scarce.

Admittedly this was a narrow survey, but it garnered attention because it confirmed the daily experience of millions of Venezuelans. No cooking oil of any variety could be found in the six stores, and this included soy oil, which is not subject to price controls. Regulated cuts of meat were not available in the supermarkets; no price-controlled cheeses were found anywhere; processed corn flour was available in only one store.

Producers know why this is happening. In June, the food processor Polar asked the government to raise the price cap on corn oil because of the high cost of “the imported raw material.” Other companies have made similar appeals. But the government has good reason to resist: The easy money policy of the Central Bank of Venezuela (BCV) has provoked the highest inflation in the region, even with price controls on many products. According to the Spanish-language news outlet Noticias Financieras, the BCV reported that the cost of personal-care products was up 30.5% in the 12 months ending June 30. Food and nonalcoholic beverages climbed 22.3% over the same period.

Yet it is in health care where Venezuelans are feeling the inflation pain most. Hospital services are up 39.7% year over year, doctor and paramedic services are up 21.5%, and the cost of medicines and medical equipment has risen 17.4%.

These cost increases refer, of course, to private clinics and goods that are not subject to price controls. Wherever prices can’t be raised, both quality and supply are deteriorating rapidly.

One needn’t be sick enough for a hospital to appreciate the problem. Venezuelans report shortages of everything from aspirin to cholesterol drugs, and it’s likely this has triggered hoarding, which has exacerbated the situation.

Most medicines sold in Venezuela, prescription or over-the-counter, are imported or contain imported materials. This means that the distributor has to pay the market rate in dollars to suppliers abroad. Obviously if the government sets the retail price below the cost for the importer, the transaction will create a loss.

Chávez-nomics has been even more devastating for doctors in the public hospitals. Dr. Douglas León Natera of the Venezuelan Medical Federation (FMV) told El Universal on June 16 that doctors earn a mere 2,600 bolivars (roughly $325 at the market exchange rate) monthly, and that even though hospitals have become targets of the country’s rising crime, the government has failed to provide protection for health-care staff. Doctors also cite scarce and low-quality resources and long hours. On June 30 the FMV called a strike to protest low pay and arduous working conditions. Last week Mr. Chávez offered them a 30% raise. They refused to yield. They are, however, continuing to treat urgent cases.

Pharmaceutical importers have been reluctant to complain publicly about their difficulties; large companies that offend Mr. Chávez can become targets of nationalization. It’s a bit more difficult to nationalize a doctor. A strike is just one option. Many of Venezuela’s best doctors have fled the country, which explains how it is, according to the FMV, that in public hospitals there are 130,000 patients waiting for surgery.

In its 2010 annual report, the ministry of health acknowledged the shortage of doctors, particularly in specialties such as anesthesiology, neonatal care, cardiovascular surgery, neurosurgery and child cardiology. Private hospitals are also deteriorating now as the poor turn up for care with government medical insurance, but the insurer doesn’t fulfill its obligation to pay.

The government has admitted that a large number of doctors have fled, but it says it’s not worried. More than 25,000 Venezuelan students are now enrolled in Venezuela’s new Bolivarian medical schools or in medical schools in Cuba. Unfortunately the curriculum is not public, and Venezuelans are worried that the students spend more time studying revolutionary politics than anatomy. Mr. Chávez seems to understand this, if nothing else. His surgeon hails from Spain.