Venezuela is one of the world’s largest suppliers of oil. President Hugo Chavez’s economic strategies may, however, be leading the country down a path already travelled by his Zimbabwean counterpart. BONTLE SENNE reports.

Despite Chavez’s apparent star status at home, South America’s neighbours to the North don’t have much love for him, and they might have good reason for that. From the moment he strutted onto the international scene, Chavez has been shouting anti-Americanisms to whomever will listen. His passionate displays have in turn led to anti-Chavez-isms, including a call for his assassination on American national television. Considering the man’s history, however, it’s unlikely that this concerned him very much.

Chavez has survived more than just idle threats to kill him: in 1992, he led a military coup to take the presidency by force. He failed, but after serving some time for his transgression, he cruised to victory on a socialist ticket in the 1998 general election. Three years later, he was kidnapped in a United States-backed military plot to kill him and only regained power because young officers refused to follow orders and massive street demonstrations called for his return. Since then, Chavez has been riding high on approval ratings in the region of 71 percent. Indeed, a referendum earlier this year gave him the constitutional go-ahead to seek re-election as many times as he desires. It puts him one step closer to what seems to be his dream of being president for life.

The prospect of the leftist South America for which Chavez pushes is a cause for anxiety for every American administration. Before the recession and the election of Barack Obama as the new American president, Washington seemed to be creating contingency plans for a potential cut-off of Venezuelan oil. In the midst of the global slowdown, however, Obama seems to have no such intentions, especially if oil once again becomes a hot commodity.

As Chavez has repeatedly said, oil “is a geopolitical weapon” and in the short-term, Venezuela might continue with its policy of selling oil at very low prices to win allies and forge an anti-American front. However, with the plummeting oil price, petroleum revenues are down and Venezuela might have to change some of its policies to weather the economic storm. Chavez will have to start courting favour with Western oil companies, whose oil fields he nationalised back in 2007. The situation he risks if he doesn’t is what Dr Manoel Bittencourt, University of Cape Town lecturer and Brazilian economist, calls a “natural resources curse”: having the resources is a blessing, but only when you can use them. With government spending on the increase, primarily to finance Chavez’s socialist reform programmes, and with very limited investment in infrastructure, Venezuela will soon find itself in trouble.

Venezuela has a guaranteed supply of 78 years of crude oil but when that oil runs out, the country will not have any other industry to compensate for the loss in revenues. Unlike South American powerhouse Brazil, Venezuela has not attempted to diversify its economic activities, and has rejected the teaching of modern economics. Venezuelans have placed too much stock in their oil reserves. In times such as these, it pays to have a diversified portfolio: a lesson learnt by many in recent years but one especially relevant to those with questionable political and economic agendas. With an exponential rate of inflation and a very near complete economic breakdown, brought on by wildly irresponsible government spending and the nationalisation of all the major energy services, Chavez moves his country closer to political and economic ruin with each misstep.

This is a path we’ve seen many, including Zimbabwe’s Robert Mugabe, take. As in Zimbabwe, a country once renowned for its richness in natural resources, Venezuela is headed into a macro-economic black hole if its government continues marching to the populist drum. Bittencourt notes that towards the end of the ’90s, the Zimbabwean government urged the central bank to print more money in order to fund the regime’s promises to the poor and ‘buy votes’ to maintain power. With excess money floating around in the economy, inflation turned into hyperinflation and hyperinflation became economic history as the Zimbabwean dollar continued to depreciate and a once prosperous country all but imploded. Venezuela runs the same risk: runaway inflation, fuelled by a president’s need to remain popular and in power, together with ever-increasing government spending.

Despite a distinct lack of growth-friendly infrastructure and institutions to fall back on, Chavez, for his part, doesn’t seem too concerned: he’s relying on his friends, China and Russia, to get him out of a possible fiscal mess. He forgets, however, that they too are headed for a few rough years. A refinery and oil-export deal with China was expected to help Venezuela out of its economic struggles with cheap oil prices. The weapons and energy deal with Russia is designed to combat the problem of low oil prices but also to ‘protect’ Venezuela from any US plans to ‘destabilise’ the Chavez government. Like Mugabe, Chavez seems obsessed with the possibility of the imperialists coming in to take his country and, like Mugabe, no one besides the leader himself and his supporters is really sure exactly how that’s going to happen. Nevertheless, in a particularly vitriolic and oft-recounted denunciation of the ‘imperialists’, Chavez in 2006 addressed the United Nations the day after former US president George W. Bush had spoken in the General Assembly, announcing that the room reeked of sulphur. It was evidence, he said, that “the devil” had been there.

It’s clear that Chavez spends a lot of time shouting, especially with the cameras rolling, but he’s yet to prove he really has anything worth making so much noise about. If anything, it will be interesting to see if he ever begins to quiet down a bit and focus on problems a lot bigger than his supposed imperialist arch enemy to the North. His first concern might be, what to do when the oil runs out?

Bontle Senne is in her final year, studying Philosophy and economics