Financiers for the Revolution

Published: Wednesday, May 26, 2010 By VenEconomy

VenEconomy: This weekend, Venezuelans were witnesses to a depressing Alo Presidente broadcast from the site of the Puerto Cabello-La Encrucijada railway, which has ground to a halt owing to improvisation and bad administration that have resulted in delays in payments to contractors.

Faced with the paralysis of these and other projects, the best idea the President could come up with was to peremptorily urge the foreign contractors to put their hands in their pockets in order to finance completion of the work. He warned that he would not make any "advance payments" and that the company that did not finance itself would not be welcome. He claimed that there were no cash flow problems, but that the State could not cope with everything.

Today, Venezuela is paying the price for the lamentable deterioration of the oil industry, the dismantling of the private domestic productive sector, and the ruining of the basic industries, which has undoubtedly culminated in the cash crisis that is denied by the President's statements but confirmed by his actions.

Another situation that reveals the economic straights in which the government finds itself is the compulsive seizure of food products, which end up in the government's food distribution network: Mercal, PDVAL, and the recently expropriated Exito hypermarkets (today Supermercados Bicenternario). Last Thursday, 120 tonnes of food products were confiscated from Empresas Polar's warehouses in Barquisimeto's Industrial Zone III on the grounds of alleged inconsistencies in the company's inventory records.

The confiscation was carried out by the National Guard under the command of General Luis Bohorquez Soto, one of the military officers who are registered members of the PSUV according to accusations made some days ago by Rocio San Miguel. The shipment was immediately sent to the government's food distribution network, leaving dozens of local retailers without merchandise.

On Saturday, two trucks of supplies belonging to Polar were also seized when they arrived on Margarita Island. Then, to top it all, on Sunday, the President ordered the Public Prosecutor's Office to open an investigation of the company and, if necessary, to take it over if it "continues hoarding."

Also last week, Friosa was taken over by Indepabis for a period of 90 days. This is a wholesale company in Puerto Ordaz that supplies more than 5,000 small and medium merchants in Bolivar state.

Communist ideology aside, the government's cash crisis seems to be what is behind the recent rash of confiscations, company takeovers, and threats to contractors. It would seem that the government lacks the funds for continuing to lavishly import food products, never mind completing projects.

There are grounds for thinking that this is a desperate effort to find scapegoats to cover up the government's innumerable mistakes.

All this type of behavior will do is to worsen the situation for everyone, as it will eventually wipe out the few companies that are still producing.