Is Venezuela Collapsing ?

UPDATE #2: The western bloc is growing while the Atlantic bloc stagnates.

Venezuela, Brazil and Argentina are languishing in differing shades of turmoil, steadily losing ground to regional underdogs. The Pacific Alliance, an historic trade agreement between Mexico, Peru, Chile, and Colombia (and coming soon: Costa Rica), has the potential to recolor Latin America’s economic map and introduce some new regional powerhouses to the world stage.

More here.

Four nations are developing an initiative that could add new dynamism to Latin America, redraw the economic map of the region, and boost its connections with the rest of the world—especially Asia. It could also offer neighboring countries a pragmatic alternative to the more political groupings dominated by Brazil, Cuba, and Venezuela.

UPDATE: More on the role Cuba is playing in Venezuela now.

Belmont Club has a good post today on the collapse of Venezuela. The car manufacturers have announced they are closing their plants.

Toyota Motor Co. said it would shut down its assembly operations in Venezuela due to the government’s foreign exchange controls that have crippled imports and made it impossible to bring in parts needed to build its vehicles.

The country’s other car manufacturers, including General Motors and Ford, haven’t even started operations this year, while waiting for needed parts to arrive.

The oil field workers left years ago when the Chavez government cut oil workers’ pay.

Workers’ protests continue at Venezuela’s Puerto La Cruz refinery, in the northeastern state of Anzoátegui. The oil workers are requesting the payment of their contractual benefits. Workers gathered and had some meetings in the refinery and handed out fliers. These actions will continue until the authorities of state-run oil company Petróleos de Venezuela (Pdvsa) meet each of their requests. Oil workers complained that the oil industry has violated 80% of the current collective bargaining agreement.

Army officers had no such limit on pay raises.

[They] got a 40 % raise last year. So let’s see, they get a 40 % raise in 2010, and a 50 % raise in 2011, and meanwhile oil field workers, the ones who create the wealth the government uses to give these obscene pay raises to the military, are protesting low pay and lack of legal payments they are supposed to get.

‘Brazil is becoming Argentina, Argentina is becoming Venezuela, and Venezuela is becoming Zimbabwe’

The oil workers who could, all left for Canada. That was about the time that the Alberta oil sands fields were coming on line. Those workers, and especially the engineers, are not going back to Venezuela any time soon.

Welcome to Hugo Chavez’s Venezuela, a country with the fifth largest oil reserves in the world and absolutely broke. It’s a remarkable achievement for Chavismo. A just-wow moment. Socialism is useless at everything except for smashing things in record time. There it excels. It’s hard to imagine that as late as the 1980s Venezuela had the highest standard of living in Latin America. But then in 1960 Detroit was the richest city in the world in per capita income. Now it’s well … Detroit.

Cuba is helping the post-Chavez government to cope.

The violence against unarmed citizens is reminiscent of the April 11, 2002, bloodletting, when 17 individuals who were part of a peaceful opposition march in the streets of Caracas were similarly gunned down by snipers. That was the day the head of the military told Hugo Chávez that he would not move against the crowd and that he was removing Chávez from office. Chávez prevailed, in part due to U.S. dogma against “a coup” and in part because the opposition bungled what ought to have been a transition to democracy.

Obama is a friend of Venezuela and will oppose any attempt to overturn the tyranny. He showed his true colors in El Salvador by rewarding the bad behavior of the current government.

What we see today in El Salvador is a government heading in the opposite direction from those core principles. In 2000, El Salvador was ranked as the 11th-freest economy in the world, according to the annual Index of Economic Freedom co-published by The Heritage Foundation and The Wall Street Journal. Today, it is 53rd and has registered declining scores in six of the 10 economic freedoms, including investment freedom, the management of public spending, labor freedom, and freedom from corruption. El Salvador’s performance in other world economic indices has also plummeted.

Obama’s friends seem to have dodgy records on civil liberties.

The deterioration in central and south America continues apace . There is an interesting pattern.

‘There are two Latin Americas right now. The first is a bloc of countries—including Brazil, Argentina and Venezuela—that faces the Atlantic Ocean, mistrusts globalization and gives the state a large role in the economy. The second—made up of countries that face the Pacific such as Mexico, Peru, Chile and Colombia—embraces free trade and free markets.’

The results are becoming clear.

Stifling bureaucracy, protectionist trade barriers, widespread corruption, lack of investment in infrastructure and the limited scope of economic reforms have been piling up like wood on a bonfire for a number of years. Inflation and weak government finances have provided the starter fluid and it maybe that lower demand for commodities will be the spark.

The divide has been developing for years. As Luhnow reports, ‘ A key moment in creating the two Latin Americas came in 2005, when Brazil, Argentina and Venezuela (then led by Mr. Chávez) lined up to kill the proposed Free Trade Area of the Americas—a free-trade zone stretching from Alaska to Patagonia and promoted by President George W. Bush. Troubled by the FTAA’s demise, the Pacific Alliance set out to create its own free-trade area, eliminating tariffs on 90% of goods and setting a timetable to eliminate the rest.’

Obama seems more interested in the Atlantic states.

The genius of the Left — Chavez’s for example — is that it destroys things from the inside out. They pervert religion, collapse the mores, abolish the family, shred the constitution and gradually expropriate the property. The differences from one day to the next are apparently imperceptible, but it is harder and harder to go back until finally there is no reversal of ‘progressive gains’ possible at all. The public is finally faced with the stark choice between chaos or authoritarianism. And most people will chose the Boss over the Mob.

Does any of that sound familiar ?

Most people are spurred into resistance by a crisis. But they remain lulled into complacency while the crisis remains imperceptible. Progressive tyranny benefits from image management, and takes great pains to keep crisis from view. The most insidious thing about a secret police is its very secrecy, because the mayhem it wreaks is upon the intangibles, among things we call legitimacy. So it goes until only a facade is left. Until the day of death the victim is largely asymptomatic, except for a gradual weakening. When the onset comes he discovers that his immune system is completely gone and the end is sudden.

And Iran is allying itself with Venezuela.