Investment research firm praises Chávez government

According to an interesting new economic report by the California-based investment research firm Condor Advisers, the Venezuelan government's restructuring of the country's state-owned oil company --Petroleos de Venezuela (PdVSA)-- is "dramatically increasing cash flow into Venezuela's economy, laying the foundation for sustained, robust economic growth." Condor Advisers President Jephraim Gundzik writes: "Despite being vilified by his political opposition at home and the Bush administration in the US, President Hugo Chavez has reversed years of Washington-influenced economic policies in Venezuela, spurring strong economic recovery."

Prior to the restructuring of PdVSA, Gundzik finds that the state-owned oil company's predominantly anti-Chávez management team "focused on keeping company assets and revenue offshore to avoid mandated tax and royalty payments to the government." Gundzik says that the state oil company's anti-Chávez managers developed their own "self-serving style of management cronyism," making highly questionable investments that "siphoned enormous resources out of Venezuela."

According to Gundzik, the government's restructuring of PdVSA --which followed the management-led "strike" in late 2002 and the mass firing of PdVSA employees in early 2003-- has ushered in progressive, growth-enhancing reforms, including the dismantling of PdVSA's tax and royalty avoidance schemes.

Gundzik says that strong GDP growth in the first quarter of this year has bolstered Chavez's popularity and that the economy is likely to expand by more than 10 percent for all of 2004.

According to Gundzik, increased revenue from the restructured PdVSA has enabled the government to fund social development projects and to subsidize loans to farmers and small businesses, thereby "laying a solid foundation for continued economic growth."

Gundzik concludes:

"Though strongly contradicting the Washington Consensus, the Chavez government is proving that social development and firm state influence in the economy can produce strong economic growth. Other countries in South America are beginning to implement economic policies similar to Venezuela's. Such developments are natural, as the Washington Consensus has proven to be economically disastrous for South America."

Need we say more?