Paranoia And Purges For Venezuela As Oil Misery Continues
By Nick Cunningham
OilPrice.com
Thu, 26 February 2015
As the finances of Venezuela continue to deteriorate under the collapse of crude oil prices, the government of President Nicolas Maduro is becoming more paranoid and vindictive.
Venezuela derives the vast majority of its export earnings from sending oil overseas. With the largest endowment of crude oil reserves in the world, the oil-driven economy worked well for the late Hugo Chavez: he provided generous support for the poor, and built allies in the western hemisphere by dispensing cash and cheap oil in exchange for political allegiance.
But state-owned PDVSA has struggled to keep production up. Rather than using its earnings to develop more fields, much of its earnings have been diverted for political and social projects. Chavez also purged PDVSA of thousands of experienced workers, leaving the company short of well-trained staff.
Chavez could paper over the decay of PDVSA’s production base because oil prices were so high in his final years. And for the first year or so of Maduro’s tenure, while the economy began showing worse signs of stress, he too didn’t feel any urgency to solve PDVSA’s problems.
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