[Marxism] Venezuela: oil royalties versus capital flight

Jurriaan Bendien andromeda246 at hetnet.nl
Thu Aug 19 05:09:34 MDT 2004


To get Chavez's "oil rents" in perspective, I was curious to find out a few
facts.

The proportion of annual export sales going to Venezuelan government
actually dropped massively since 1992. Between 1976 when a large part of the
oil industry was nationalised and 1992, the Venezuelan government collected
an annual average about 71% of total export sales. In the period 1993-2000,
this annual average was halved to about 36%

For example in 1981, you had US$ 19.1 billion of export sales, which yielded
US$ 13.9 billion in royalties and income taxes. But in 2000, US$ 27.3
billion of export revenue generated only US$ 11.3 billion in royalties and
income taxes. That is to say, royalties and income taxes were 73% of export
revenues in 1981, but only 41% in 2000.

So all that Chavez's government is economically attempting to do, in an
aggregate sense, is to recover to some extent to the previous government
position qua income and expenditure.

Venezuela's GDP 2003 was valued at about US$117.9 billion in ppp terms, the
same as Ireland; the output of the petroleum sector is between a quarter and
one-third of GDP and generates 80% of export earnings, and half of
government operating revenues; the total government budget is about US$27
billion).

However... now consider that during the 1970s and 1980s, an estimated US$34
billion in private capital exited Venezuela, and that this drain of capital
has continued to increase year by year.  Thus,  since 1990, the overseas
assets bought by  Venezuelan residents have exceeded Venezuela's foreign
borrowing by about US$20 billion.

In 2000 alone, an estimated $4.65 billion in capital fled Venezuela (mostly
to Miami). That capital outflow alone was equal to 4% of Venezuela's GDP,
and 12% higher than in the preceding year, when GDP shrunk by perhaps 7%.
Then just in January 2002 alone, a reported $1.6 billion in private
investment funds were taken out of Venezuela.

Whatever "oil rents" are obtained, they canb hardly compete with that.

So anyway, while the opposition to Chavez talks about "improving Venezuela's
democracy and economy", in reality what consistently happened for three
decades, is that private investment capital owned by Venezuelans is taken
out of the country, and not invested in the country. This is balanced only
to some extent by foreign direct investment in Venezuela.

The average gross income per head of population in Venezuela (abstracting
from the very unequal distribution of incomes) is now about 15% of that in
the United States (ppp terms), and that is actually less than in the former
Dutch colony of Suriname !

Jurriaan






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