Crude reality. (Editor's Note).Petroleos de Venezuela, Latin America's largest company, used to be an apolitical a·po·lit·i·cal adj. 1. Having no interest in or association with politics. 2. Having no political relevance or importance: claimed that the President's upcoming trip was purely apolitical. , state-run company. Presidents would come and go, but the US$45 billion behemoth behemoth (bē`hĭmŏth, bĭhē`–) [Heb.,=plural of beast], large, fanciful primeval monster, like Leviathan, evoking the hippopotamus mentioned in the Book of Job. always pumped out profits to pay the bills. Those days ended when oil workers joined opposition forces in a national strike aimed at ousting President Hugo Chavez. This month's cover story takes a hard look at the economic consequences of mixing petroleum and politics. Crude is a contentious issue everywhere and always has been. The United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. puts pressure on governments around the world to maintain a steady supply. State-run oil companies in Venezuela, Mexico and Brazil emerged largely unscathed from privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned in the 1990s because they were the "crown jewels crown jewels Ornaments used at the coronation of a monarch and the formal ensigns of monarchy worn or carried on state occasions, as well as collections of personal jewelry consolidated by European sovereigns as valuable assets of their royal houses and the offices they ," too politically precious to touch. Venezuela may ultimately break that taboo. Whatever the outcome of the political impasse, the government is broke and the state-run oil company needs billions to rebuild. The money will most likely come from foreign oil companies. When the politicians finally turn the tap to open the oil sector, billions of dollars will flow into the South American country. The lesson learned in Venezuela could and should change policy in Latin America. As governments clutch precious petroleum, economies stagnate stag·nate intr.v. stag·nat·ed, stag·nat·ing, stag·nates To be or become stagnant. [Latin st , direct foreign investment drops, and state-run oil companies burn through capital. Governments are no good at running oil companies and they should admit it. State control and crude don't mix. The oil-fueled crisis in Venezuela reminds politicians of that. Mike Zellner mzellner@latintrade-inc.com P.S. In an exclusive interview with LATIN TRADE, Nicaraguan President Enrique Bolanos makes the case for pursuing corrupt officials to establish credibility before creditors and constituents. |
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