Hugo Chavez sent his army to carry out another round of confiscations from private industry this weekend, and in the process made a fairly revealing comment. The dictator-in-all-but-name of Venezuela used a Biblical reference, and either called himself God or Caesar. You pick:
A fresh round of expropriations in Venezuela has raised fears that the Opec producer’s already declining oil output could sink to its lowest level in the past 20 years.
Troops were mobilised over the weekend to assist Venezuela’s state-owned oil company, PDVSA, in seizing the assets of some 60 oil service companies, after a law was approved last week that paves the way for the state to take increasing control over its all-important oil industry.
“To God what is God’s, and to Caesar what is Caesar’s,” said Venezuela’s President Hugo Chávez, as he presided over the expropriation of at least a dozen rigs, more than 30 oil terminals and some 300 boats.
Since God doesn’t usually send troops out to seize oil companies, we’ll assume Chavez considers himself Caesar in this analogy. Caesar did follow a Roman tradition of sorts of seizing assets from political enemies in order to aggrandize himself. Chavez claims to have seized private companies for the “people,” but thus far, it’s been the people paying the price for disruptions in energy production.
In this case, though, Chavez seized the companies to keep from paying them what PDVSA owes. In February, these companies announced that they would suspend work until the state-owned oil company began responding to their invoices. With oil prices falling around the world and with his nationalized oil production falling farther and farther behind, Chavez didn’t have the money to pay. Instead, he seized the companies in order to get the work started again, although some of the outfits had abandoned Venezuela already, seeing the writing on the wall.
This, as Financial Times notes, creates an even bigger problem for Chavez. He may have wiped the bills off the books and made PDVSA look better for a brief moment, but this compounds his production problems. With this nationalization, Chavez has eliminated even more of the expertise he needs to improve or even maintain production at state-seized facilities. He’s not likely to get much more assistance from commercial outfits after seeing the seizures that Chavez implemented rather than paying his bills. PDVSA’s decline will likely accelerate as political hacks take the places of experienced oil-production experts, and as untrained workers take the places of skilled labor in a highly technical industry.
Eventually, Caesar made so many enemies that they found a way to dispatch him. Right now, Chavez still maintains his popularity through Fidel Castro-like speeches about returning wealth to the people, but when the illusion of wealth gets destroyed in the collapse, Chavez may find himself much more like Caesar than he wants …. or perhaps Mussolini … or Ceaucescu …
Update: I changed the caption on this post. It was in bad taste, and I apologize.