beyondbrics

It is well known that Hugo Chávez is the one that takes the all big decisions in Venezuela, and quite a lot of the smaller ones too.

Indeed, the policy paralysis as he battles cancer from his hospital bed in Havana is becoming all too evident. But there is growing evidence that other important decisions for the nation outside of the government’s control are also being postponed because of Chávez’s absence – in particular regarding investment by foreign companies interested in developing oilfields in the Orinoco Belt.

According to Bloomberg, both Russian and Indian companies with major interests in helping Venezuela’s state oil company, PDVSA, get oil out of the ground from what is one of the largest, mostly undeveloped, unconventional oil deposits in the world are putting a break on investments.

China, too, is said to be equally concerned about the possibility that a departure from power of Hugo Chávez could mean that an opposition government will take over in Venezuela and revise contracts. The Chinese have good reason to be concerned: according to the National Autonomous University of Mexico, they have lent Venezuela $46.5bn since 2008, 95 per cent of which is backed by oil sales.

Pollsters still think that Chavez’s anointed heir, Nicolás Maduro, has the best chance of winning elections if they are held soon – but that likelihood diminishes the longer they are delayed, as problems in the economy intensify.

Indeed, in Chávez’s absence there is as yet no sign that the devaluation that most analysts had assumed would take place at the beginning of this year will happen any time soon.

As Alberto Ramos at Goldman Sachs wrote in a note to clients on Friday:

The macro picture continues to deteriorate and there is a growing perception that major policy decisions (e.g., an overdue VEF devaluation and fiscal consolidation) will not be forthcoming until President Chávez either recovers and returns to Venezuela to take full command of his administration, or steps aside due to poor health.

Yesterday, information minister Ernesto Villegas admitted it could be “weeks” until Chávez returns – and even then, since the condition of his health is treated practically as a state secret, few know in what condition he will return.

It is not only Venezuelans who will be on tenterhooks until then.

Related reading:
Chávez: return at last?, beyondbrics
Counting the cost of Chavez’s absence, beyondbrics
India: Venezuela’s new petro-amigo, beyondbrics
Venezuelan oil: bring it on to Asia, beyondbrics