VenEconomy // The costs of Venezuela'a Castro-communist Revolution

Venezuela is paying a high price for the imposition of the Castro-communist project.

In the interests of the revolution, the regime has been legislating grotesquely outside the bounds of the Constitution and, resorting to farcical illegality, wiping out private property by dint of "expropriations," which, in fact, is no more than pillage by those who abuse their power in the belief that it is eternal.

These mass "expropriations" of private companies are costing the country dear, not only because this practice has meant the destruction of the domestic productive apparatus, but also because of investments that have not been made. In the first quarter of 2010, direct investment was -US$1.8 billion.

It is proving equally costly in terms of jobs lost, shrinking domestic production, shortages, and inflation caused by the overwhelming and patent managerial incapacity and laxness of the government officials with whom Chavez surrounds himself.

Today not a single erstwhile productive and efficient private company confiscated by the government is the shadow of its former self.

Siderúrgica del Orinoco (SIDOR), just 18 months after being taken over by the State, set its liquid steel production goal for 2010 at 1.6 million mt, 59% less than the 3.9 million mt it produced in 2008. Even the state-owned companies are today are mere relics of what they were 12 years ago.

At PDVSA this deterioration has been more than obvious. Just over a decade ago, the state-owned oil company met with international standards in terms of good management, efficiency, and productivity, comparable with world class companies such as Shell or Exxon. Today, PDVSA only produces 2.9 million b/d (according to official figures), and not the 5 million plus barrels a day it should be producing according to the development plan it had at the start of the century.

Equally serious is the situation of the basic industry companies in Guayana, in particular that of Aluminios del Caroni (Alcasa). According to Alcasa's in-house news sheet, Hoja de Aluminio, the company has an accumulated debt as at July this year of nearly Bs.F.1.40 billion, and its budget for 2011 already has a deficit of Bs.F 1.75 billion, not counting its debt to date, according to an article posted on the web page of the journalist Damian Pratt.

On August 8 this year, Pratt wrote a lapidary open letter to Hugo Chavez on the occasion of his visit to Guayana.

Among other things, he tells Chavez that the instructions he gave in early 2005 to "turn the basic companies into socialist companies" and to "abandon criteria of profitability and productivity" have been followed to the letter, achieving the "feat" of leaving them bankrupt, despite the fact that it was precisely during that period (2005-2008) that aluminum prices reached an all-time high! And, stresses Pratt, "it was savage, vicious statism disguised as socialism that bankrupted them."

The question Pratt (and the entire country) asks Chavez is, "Aren't you and your government going to answer for this disaster?"