VZ: Oiling the wheels

President Hugo Chavez, who made diverting oil profits to the poor a hallmark of his administration, is faced with a series of corruption scandals that are threatening to undermine the state oil company Petroleos de Venezuela (PDVSA).

Earlier in September, PDVSA reported a 65 per cent loss in earnings over the previous year, prompting critics to declare the industry in crisis. They say that Venezuela, hugely dependent on oil sales, is producing less crude since Chavez expelled foreign oil companies from the country.
Government supporters, on the other hand, maintain that PDVSA is still recovering from the deeply damaging 2002 national strike organised by Chavez’s opponents. Historically, the popularity of Venezuelan presidents has been determined by fluctuations in the oil prices. But it is the regularity of accusations of corruption and mismanagement that are chipping away at what would otherwise be a period of unrivalled prosperity for the country.

Accusations have continued to surface from inside PDVSA that those employees deemed to have a “politically unsuitable profile” are subject to discrimination and even outright dismissal.

With a barrel of oil selling at almost $80 on the international markets, the Chavez government can afford to paper over any cracks in the country’s turbulent oil industry. But a significant fall in oil prices would reveal the depths of the difficulties afflicting PDVSA, and raise question about its ability to finance President Chavez’s costly socialist revolution.

New Statesman