Venezuela, South America
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Venezuela loses billions despite Chavez's controls
By RACHEL JONES, Associated Press Writer
General Motors Corp. is halting production in Venezuela for three months starting Friday. Ford Motor Co.'s subsidiary announced 10 percent cutbacks last week. Other automakers also are shrinking their business — but not because Venezuelans don't want to buy cars. They're closing down because the government won't give them enough dollars to import parts.
It's a crisis entirely brought on by the currency controls imposed by President Hugo Chavez, Gabriel Lopez, president of Ford Motors for Venezuela and the Andean region, told The Associated Press. "Year after year we're shrinking by about 10 percent compared to the year before," he complained.
Chavez began regulating access to dollars and making it harder for businesses and people to transfer money in 2003, after confidence in his government was shaken by a failed coup and a subsequent strike. Venezuelans must now apply to the currency agency Cadivi for dollars at the official rate of 2.15 bolivars to import goods or take vacations.
Venezuela is also cutting back sharply on other types of financial support for its neighbors, a cornerstone of its regional influence. One recent study by the Center of Economic Investigations, a financial consulting firm here, found that Venezuela had announced plans to spend only about $6 billion abroad this year, down from $79 billion in 2008.
These controls have backfired with a vengeance — businessmen, companies and private citizens transferred some $72.7 billion out of Venezuela over the last six years — nearly double the outflow of the previous six years, according to the Central Bank — distorting the economy, fueling inflation and discouraging private investment.
Venezuela ran a trade deficit of $1.4 billion in the first quarter of this year, and $3.7 billion in last year's fourth quarter — its first in more than a decade. >>> Go to Full Story >>>
Venezuela’s Hope of More Sway Dims as Riches Dip
By SIMON ROMERO for The New York Times
President Hugo Chávez’s push to extend his sway in Latin America is waning amid low oil prices and disorder in Venezuela’s own energy industry.
In recent years, Mr. Chávez has used his nation’s oil wealth to drive his socialist-inspired agenda at home and draw other countries in the region into his sphere of influence, helping to consolidate a leftward political shift in parts of Latin America.
But more than a dozen big projects intended to broaden his nation’s reach are in limbo — including a gas pipeline across the continent and at least eight refineries, from Jamaica to Uruguay — as Venezuela grapples with falling revenues and other troubles in its national oil company.
Venezuela is also cutting back sharply on other types of financial support for its neighbors, a cornerstone of its regional influence. One recent study by the Center of Economic Investigations, a financial consulting firm here, found that Venezuela had announced plans to spend only about $6 billion abroad this year, down from $79 billion in 2008.
That includes proposed spending on everything from military purchases to aid, and points to a major weakening of Mr. Chávez’s oil diplomacy. Gone, for instance, are multibillion-dollar outlays to buy Argentine bonds, replaced by modest loans like $9 million for growing rice in Haiti.
Now countries that have been dependent on Venezuelan aid are turning elsewhere. Argentina locked in a $10 billion deal with China to help it buy Chinese imports, while Ecuador, a close ally of Venezuela, is rekindling ties to the International Monetary Fund, the kind of Western-dominated institution that Mr. Chávez scorns. >>> Go to Full Story >>>