|
 Signs of the country's waning influence are becoming more
apparent. In early November, Guatemala withdrew from the Petrocaribe
oil alliance launched by Chavez, saying it didn't receive the
ultra-low financing rates it had been promised by Venezuela when it
first sought to join the 18-nation pact in 2008. Also in recent
weeks, representatives of Brazil and Colombia have held meetings
with their Venezuelan counterparts to collect overdue payment for
food, manufactured goods and other imports.
While Venezuela has fallen behind on payments before, the latest
cash crunch is more severe, and the economic outlook more uncertain,
than any time in 15 years of socialist rule.
The reason is a dependence on oil, which accounts for 95 percent of
exports. Although Venezuela sits atop the world's largest reserves,
production has steadily declined in recent years. Global prices for
crude are also lower as hydraulic fracturing technology boosts
supplies in the U.S. at a time that Europe's economic woes and
weaker growth in China limit global demand.
The result is a hemorrhaging of Venezuela's foreign currency
reserves, which are down 27 percent this year, according to the
country's central bank.
To meet its obligations, the government is quietly scaling back the
subsidies, investments and aid programs that were the cornerstone of
Chavez's plan to curb the influence of the U.S. "empire" in Latin
America and that total an estimated $100 billion since 1999.
While President Nicolas Maduro's government has yet to acknowledge
the shift toward austerity, central bank data show that foreign
trade credits, consisting mainly of loans and subsidies under
Petrocaribe, fell to $1.7 billion in the first nine months of this
year, compared with more than triple that amount for the same period
last year.
"It's a lot easier to reduce foreign aid than cut wages or fire
workers," said Francisco Rodriguez, an economist in New York for
Bank of America-Merrill Lynch.
The country most hurt by the pullback is Nicaragua, which receives
$600 million in annual transfers from Caracas. Starting next year,
former guerrilla leader Daniel Ortega's government will begin
funding monthly $30 "socialist" cash transfers to poor Nicaraguans
that until now have been paid for by Venezuela. Construction of
Central America's largest oil refinery has also stalled as
Venezuelan investment has dried up.
Analysts said Venezuelans are now feeling the financial stresses
that worsened seven months ago, after Maduro defeated Gov. Henrique
Capriles by a razor-thin margin to succeed Chavez following his
death from cancer. Faced with growing spending demands spurred by 54
percent inflation, the state agency that administers the nation's
dollars has been restricting access to hard currency to pay
suppliers overseas. That's pushed the value of the dollar in the
black market to 10 times its official rate and led to record
shortages of everything from toilet paper to cooking oil.
Maduro blames it on his opponents in Venezuela and the U.S., saying
they're conspiring to sabotage the economy.
Trading partners grew more concerned after the government proposed
paying for imports with bonds issued by state-run oil company PDVSA.
In October, Brazilian Trade Minister Fernando Pimentel met with
Maduro to discuss the unpaid bills, according to a Brazilian
official who insisted on speaking anonymously because the talks were
private.
The delays pose a much bigger risk for smaller Panama and Colombia.
Business in the Colon Free Zone adjacent to the Panama Canal is down
about 10 percent this year, due to declining Venezuelan purchases,
said Severo Sousa, who represents exporters in talks with the
Venezuelan government.
Sousa estimates Venezuela owes Panamanian companies about $1
billion, of which only 10 percent has been recovered.
"The results of talks have been very limited," said Sousa.
[to top of second column] |
It's not just less economic muscle that is freezing Venezuela's
outreach, said Carlos Romero, an international relations expert at
the Central University of Venezuela. Maduro's inability to replicate
Chavez's charisma and a rapprochement with the West by Iran and
Syria, whose previous hard-line stance Chavez embraced, are
undermining the politics of confrontation that the late Venezuelan
leader relished, Romero said.
Interventionist policies, like Maduro's seizure of appliance stores
last month, are also on the decline in much of Latin America. Even
communist Cuba, its staunchest ally, is opening up to more private
investment.
"Maduro's conduct came as a big surprise to activists, academics and
many in the international media who had sympathized with Chavez and
were expecting moderation," Romero said. "There's greater scrutiny
of his human rights record and economic policies, and that has
repercussions on Venezuela's international reputation."
Venezuela's Foreign Ministry declined to comment when contacted by
The Associated Press.
To be sure, Venezuela isn't retreating into a hole. Maduro last
month ordered the creation of a medical university in Venezuela to
turn out doctors from around Latin America. He'll present the
proposal at this month's summit in Caracas of the Bolivarian
Alliance of nine leftist nations that includes Bolivia, Cuba and
Ecuador.
And Maduro may have some reasons for hope. Oil production declines
may soon bottom out as the government gives foreign companies a
freer hand. Last week, the government secured a $1 billion loan from
Russia's Gazprom, bringing to almost $10 billion the amount it has
raised this year from foreign partners. Economists also expect
Maduro to devalue the bolivar after Dec. 8 mayoral elections, a move
that would substantially reduce a deficit estimated by Bank of
America at 11.5 percent of GDP.
A debt crisis also seems unlikely with Wall Street banks lining up
to lend money. Even as Maduro accuses the U.S. of conspiring to
destabilize his government, the central bank is reportedly
negotiating with Goldman Sachs a credit line using its sizable gold
reserves as collateral. The government has an extra cash cushion in
an off-budget fund known as well as a strong lender in China, which
in September wrote Maduro a check for $5 billion.
Still, the days of geopolitical chest thumping, best captured when
Chavez in 2006 laid out plans to build a pipeline stretching across
South America, are a fast-fading memory as Maduro tries to get his
house in order. A sign of the times: Brazil's state-owned Petrobras
last month officially pulled the plug on a joint oil refinery with
PDVSA after Venezuela failed to pay for its share of the project.
"It would be very difficult for Maduro to attempt anything as
audacious again," said Juan Gabriel Tokatlian, director of
international relations at the Universidad Torcuato Di Tella in
Buenos Aires, Argentina. "Latin America's strategic options are
changing rapidly, and they no longer pass through Caracas."
[Associated
Press; JOSHUA GOODMAN]
Associated Press writers
Juan Zamorano in Panama City and Luis Galeano in Managua, Nicaragua,
contributed to this report.
Joshua Goodman on
Twitter: @APjoshgoodman
Copyright 2013 The Associated
Press. All rights reserved. This material may not be published,
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