This discussion pretty much ignores the facts that 1) sending aid or trying to dictate terms to Venezuela is a non-starter as long as Maduro and the Chavistas are still running the government. They won’t accept that. 2) Any attempt at intervention by the US will just play into the hands of the Chavistas, who prop themselves up with accusations of US schemes to overthrow the government. 3) The opposition, which has an overwhelming majority in Congress, is trying to recall Maduro but is being met by obstructionism at every hand.
Ultimately it is up to the Venezuelans to get rid of Maduro and the Chavistas, which many are trying to do. Until that takes place, discussion of what “we” should do is largely irrelevant. We can’t help the process much without Maduro using that to garner support.
The statement that something “would (not) work in the real world” is based on the supposition that the politicians wouldn’t want it to work. True, if the aid to the population were handled directly, without the palm-greasing and payoffs, the oligarchs and dictators would be very unhappy. But as an American taxpayer I don’t care if they sulk, cry, throw a tantrum, whatever. If my hard-earned money is going to another country I want “bang for my buck.”
The government managed to waste the money from the oil boom and then some. I don’t want to give them more.
Except for the slight problem that Venezuela became independent in 1811 and the Congo became independent in 1960. So, 0 for 2.
Venezuela is a disaster now, but has been quite livable for most of its history. Yeah, bad leadership can screw up a country. Things in the US weren’t so hot under Hoover either. We have friends who live there, now trying to get out, and while it wasn’t the US it was not bad at all.
As for the Congo, I lived there right after independence. You can blame a lot of their problems on the horrible Belgian colonial rule under King Leopold - possibly the worst colonial rule in all of Africa. Despite their being a very nice university outside of Leopoldville, the Belgians only allowed Congolese in right before independence. The entire class became ministers, being some of the most educated people there. And the Katanga war was all about Belgian mining interests looting the country even after independence.
I’d say most of Europe was kleptocracies 300 - 400 years ago, except that the kings didn’t even try to hide it.
And since your USAID already operates almost entirely this way why are you complaining?
Since you do not master even the basic facts of either the post-colonial countries as in when the indepences came or how the aide processes work in the real life, not your imaginings, it is a very boring conversation.
How is this plan going to work? Let’s say the United States Congress approves an aid package for Venezuela. Who does this money go to?
The Venezuelan government? I’m guessing not but I’m including the option for the sake of completeness. It’s one thing to say we shouldn’t care what the Venezuelan government thinks. It’s another thing to try to operate in Venezuela with the local government opposing you.
Local charity organizations? International charity organizations? If so, which ones? Does Congress put conditions on how these organizations spend the money?
The American government? Do we send people into Venezuela to run things? What will the cost of this organization be and where do we find the people who will staff it?
Do we just bundle up the money in envelopes and drop it from planes? Or, slightly more realistically, drop food packages across the country side? That’s a pretty random way to try to direct aid to the people who need it most.
Given that we don’t give significant aid to Venezuela (the figure I’ve googled is $3 million, all focused on democracy and human rights), and donors generally do determine what is done with aid, I don’t really see much to comment on in the OP.
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Well, yes, there’s very good evidence that he was definitely was. He wasn’t born to vast wealth, but somehow his family ended up owning large tracts of land, with multiple mansions, and somehow personally had millions or billions in liquid assets on top. There is strong evidence that one of his daughters alone has over four billion, which somehow just showed up in her multiple foreign bank accounts.
Venezuela does need to privatize its oil reserves. For various reasons, their resource wealth is hard to get at and requires considerable investment and technical expertise… and Chavez’s government wrecked both. Chavez drained the investment funds for more spending - which led to constantly declining output. At the same time, he expropriated from the very international firms who had the technical know-how necessary. In any case, privatizing the wealth would, in effect, be paying somebody to manage the operation. And this is often a smart thing to do when any government needs a particular civilian skillset. Venezuela didn’t independently develop the technology and infrastructure themselves in the first place; this would just be going back to the pre-Chavez days when output was significantly higher.
That said, the problem as it stands right now is that the Chavistas would almost certainly work any such deal so that it benefited them personally.
The notion that privatizing oil extraction means less opportunity for corruption is laughable. If you’re a kleptocrat getting bribe money out of the oil companies is a lot easier than trying to run a profitable oil business yourself.
And how exactly do you think privatization is going to work, exactly? Here’s how it works: the kleptocrat puts the oil wealth of the country up for sale, and pockets that money. Of course, I imagine the big oil companies would be a bit leery of investing in Venezuela due to the past decades of misrule. So how are you going to tempt them into buying your decrepit socialist infrastructure, and getting the pumps going again? You’d have to give them pretty sweet deals. In other words, they end up in control of the oil wells for a pittance, and Venezuela gets nothing. Which is what they have now, sure. Getting nothing from the oil companies is similar to getting nothing from the national oil ministry. Except at least there’s a possibility of turning things around if you can get rid of the Chavistas. Sign away your country’s patrimony to the oil companies, and in a few years some new guy is going to nationalize them right back.
And of course, the OP has no understanding of how foreign aid usually works. I guess he thinks the usual method is some guy from the state department comes by with a few truckloads of hundred dollar bills, hands them over to the local dictators, and sprints to the airport without looking back. Hey, wouldn’t some oversight be better than this method of dumping cash in the lap of the dictators? Yeah, yeah it would. That would be an excellent idea. Maybe someone should alert the state department, and let them know of this idea.
But how would privatizing Venezuela’s oil industry benefit Venezuela?
For example, let’s say I have a car with bad breaks. But I can’t afford to pay for new breaks. But you have plenty of money. So I give you my car and you buy new breaks for it.
The deal benefited you. The deal benefited the car. But how did the deal benefit me? I went from having a poorly working car to having no car. I was better off when the car was running poorly than I am now when it’s working fine because then I owned the car and now I don’t.
That’s how privatizing the oil industry would work for the Venezuelan government. They’re getting more from a poorly managed oil industry they own than they’d get from a well-run oil industry they don’t own.
The obvious objection is that Venezuela wouldn’t just give its oil industry away just as I wouldn’t give my car away. Which is true. But the basics of economics apply. If I try to sell you my car for more than it’s worth, you won’t buy it. If I sell you my car for what it’s worth, how do I benefit? I don’t have enough money to buy a good car. At best, I have enough money to turn around and buy another car that’s no better than the one I sold. Or worse; if I sold you my car for less than its value to convince you to buy it, I’ll now have to spend that money to buy a car that’s less valuable than the one I just sold.
The same principle applies to Venezuela’s oil industry. It serves Venezuela as a source of revenue. And any potential buyers are also going to look at it as a source of revenue. Nobody is going to pay Venezuela more than its oil industry is worth. And there won’t be a lot of interest in paying what it’s worth; private investors are looking for a profit not a break-even situation. If Venezuela wants to sell its oil industry it has to offer it for sale at less than its actual value. And any difference between the actual value and the amount it’s sold for represents a loss of money to Venezuela.
The next objection may be that private owners could buy it at its current value and then make more money by upgrading the industry and making it more valuable. That’s true. But it doesn’t mean Venezuela should sell the industry; it means Venezuela should make those upgrades itself while retaining ownership. Unless you regard private ownership as a form of magic pixie dust, there’s no reason why a government owner isn’t capable of making the same improvements a private owner is. And we depart from my car analogy here; even a poor country has substantial resources. They can pay for the oil industry equivalent of new breaks.
So the answer we should be pushing on the Venezuelan government shouldn’t be to sell their oil industry. We should be pushing them to fix their oil industry.
No. Venezuela’s oil industry has actually been in constant decline ever since nationalization. It is now less efficient and less productive, which basically means it costs more to run AND produces less and less - a situation which will continue indefinitely until resolved. Venezuela’s oil industry was never so productive as when it was private. Production has now dropped to something like half its value before nationalization.
Note that this doesn’t mean they’re giving away any actual commodity or resource. They would simply bring in a private firm and have them take on the task of extracting and selling the oil resources. And yes, this absolutely would have a short-term cost. But the benefits far outweigh that, because the industry has been declining rapidly. This isn’t even a difficult question; Venezuela can probably double its production if they’re willing to pay to do it. If not, they will continue on a downward spiral.
They can’t.
You seem to believe this is some kind of lack of will. Rather, it is a lack of resources - money, manpower, and mental - as much as it is a lack of desire. Venezuelas simply doesn’t have the ability to fix its broken system They might have been able to keep it roughly even a decade ago, with a very different nationalization path. Now they’re sort of stuck and need outside investment badly.
The option of doubling production over the next few years would be a huge gain for Venezuela.
Also, that is… not very good economics. If you sell your car for what it’s worth, you get cash in hand that you can use for other things. That’s not even basic economics. That’s foundation right from Adam Smith.
If the taxes are higher than the profits, how long will a private company continue to operate? Any oil industry that continues to operate must be making higher profits than what it’s paying in taxes.
So which is a better source of income for the government: keep the profits or collect the taxes?
You’re going to have to explain why this is true. If a private company can fix the Venezuelan oil industry, why can’t the government do the same thing?
Don’t overestimate the value of money. If I drop you in the middle of a desert with a million dollars, you’re going to die. The value of money is when you can exchange it for the things you really need.
So if what I need is a car, it makes no sense for me to sell my car for the cash that it’s worth. That would not be good economics.
Because a private company has more expertise in running an oil industry than the government seems to? If the broken system means that they are not pumping enough oil for their own needs, a private company who fixes it can make enough to pay the government more than it is getting now and also make a profit. It can also invest in the system, which the government can’t do any more.
Why can’t the government do it? My friend was a professor at a university, and was hardly getting paid the last few years. Screw petroleum engineers the same way, don’t pay for maintenance, and soon you have nothing.
They lack the money and manpower, and even if they did have those, they lack the knowledge to put those two to work. Venezuela needs lots of engineers in various specialties, access to quality manufacture, and experts in geological science. Even if Venezuela could support this level and training, AND if they definitely had the population to support it* AND they had all the know-how already present and ready to go.
And they don’t. Even assuming they had all the people ready to train today, they don’t have the teachers, institutes, or other education opportunities to make use of them. If they got an aggressive and well-funded start today, you’d probably be looking at a generation to actually have enough trained personnel. BY that time, they’d be lucky to have an oil industry left at all.
*Which is by means certain. Even a rich country of Venezuela’s size might not have enough engineers or geologists to support the oil industry on that scale. It may not be tiny, but obviously it isn’t necessary large enough to provide all the expertise needed. And of course, of the population inclined to science and technology, not everyone will want join PDVSA.
This makes no sense. You sell oil to buy food. This is not complicated.
This is not even getting into your previous claim that trade can’t occur.
Because in many cases private enterprise operates more efficiently (especially due to less corruption) than a nationalized industry. This was the case in Venezuela before the oil industry was nationalized.