"Sowing the Oil" in the Venezuelan

In Venezuela, there is an expression "sow oil", that is to use substantial revenues from oil exports for the development of a diversified economy. Such a task set for themselves many Venezuelan government, but the results they have not achieved. Russia too long "sow" their oil revenues without visible progress in the economy. So for us, it is interesting to everything that happened and is happening in the Latin American country.

New attempt

In 1999, to power in Venezuela by a new president, a young and energetic Chavez, who undertook to change the situation and immediately began to implement first political and then economic reforms intended to increase the role of government in economic and social orientation in its development.

Feature of government policy is the intensification of foreign economic relations, including non-traditional - with China, Russia, India and the European Union. The priority is the development of relations with Latin American countries. However, the realization of the plan, the government was faced with many difficulties. The economic situation in Venezuela, which is in the middle of 2001 is nothing to fear, dramatically destabilized in the second half of the year due to the fall in international oil prices and the deterioration of the political situation in the country. The reason for this deterioration was the adoption in November 49 presidential decree laws, provides the legal framework of the new economic policy of the country.

The opposition was not satisfied with not only the content of these laws, but the President's refusal to discuss them, amend them. Especially a lot of criticism voiced against the three laws: the oil, land and coastal areas. Their adoption has led to a sharp deterioration of the investment climate in the country.

In particular, the oil law is intended to increase the role of government and increasing taxation in the oil sector. In companies for exploration and development of oil fields the state's share was set at not less than 51%. Significantly increased and the cost of the subsoil (royalty) - from 16.7% to 30%, which is much higher than in many other oil-producing countries.

The Land Law provides for increasing taxation, and in certain cases and under-utilized land expropriation.

The law on the coastal areas showed that all property adjacent to the water surface of the strip width of 80 m belongs to the state, ie after the passage of all private property in the area actually confiscated. In late 2001 - early 2002 on a wave of strikes and protests. This further spooked investors. Increased capital flight. Foreign exchange reserves of the country for three months decreased from $ 18.5 to $ 15.0 billion to counter the outflow of capital, in February 2002, adopted a package of stabilization measures. In particular, the Government announced the introduction of a floating exchange rate of the bolivar. In this case, it was to raise interest rates in order to remove from the market over the money supply, which could be used to buy dollars. Lending rate for one month after the introduction of the new currency regime has increased from 36% to 70%. However, the increase in the price of borrowing led to a further deceleration of investment. In addition, due to the depreciation of the bolivar and the price of imported goods inflation has started to rise. Began to decrease consumption, which further hampered the productive investment and stimulate investments in securities. And increased unemployment. Increased popular discontent.