Venezuelan President Hugo Chavez is steering his oil-rich country toward an almost inevitable economic collapse.
That’s the warning from Richard W. Rahn, director general of the Center for Global Economic Growth, a project of the FreedomWorks Foundation.
“What has not been reported is the full extent of the corruption in Venezuela and how this ultimately will destroy the economy,” Rahn writes in a commentary that appeared in The Washington Times. “Venezuela has had a rapidly growing economy for the last few years, due to high oil prices, but the house of cards is about to collapse.”
Chavez was first elected president on an anti-corruption platform. But he has been steadily dismantling independent political institutions and is taking control of the oil, telecommunications, and energy sectors as well as the media. He has also misappropriated much of the Central Bank’s reserves, according to Rahn, who reports that since 2004, the Bank has transferred about $22.5 billion to accounts abroad — and about $12 billion of that remains unaccounted for.
Chavez’s government has used the nation’s wealth to buy foreign political influence and loyalties in Cuba, Bolivia, Nicaragua, and other countries; and to buy weapons from Russia, Spain, and elsewhere. T
he money has also gone to local cronies for inflated economic development projects and to buy the loyalty of government officials, according to Rahn, who writes in the article reprinted in Petroleumworld: “The Venezuelan economy will collapse, despite massive oil revenues, because we know socialist economies perform poorly . . . “Venezuela no longer has an independent central bank, and inflation is already up to 17 percent and rapidly rising . . .
“Venezuelans will be increasingly squeezed, and you can bet the blood from the innocent Venezuelan people will be drained long before those on the take from Mr. Chavez agree to have their looting stopped.”