Venezuela Prepared for “Onslaught” of Global Economic Crises, says Finance Minister

Merida, August 10th 2011 (Venezuelanalysis.com) – On Wednesday, Venezuelan Minister of Planning and Finances, Jorge Giordani, reiterated comments made by other members of the ruling socialist party that their country’s people and economy are largely protected from the global economic crisis thanks to the socio-economic policies of Venezuelan President Hugo Chavez. Amongst said policies, explained Giordani, is the investment of some $400 billion USD in health, education, housing, and agriculture in the past 10 years.

Speaking to Venezolana de Television on Wednesday, Giordani affirmed that “inclusive social policies are the basis of the Venezuelan (economic) model,” policies that “will serve to fight off the onslaught of capitalism’s crises” in the near- and long-term.  

Referring to global market instability, including the 519 point drop in the Dow Jones Industrial Average yesterday, Minister Giordani explained that the Venezuelan economy is “different” from other economies because the Chavez government “places the human being” at the center of economic planning.

Giordani pointed out that public spending on health, education, housing, agriculture, technological development, and infrastructure has reached some $400 billion USD since the year 2000, investments that he said are largely responsible for the “steady, stable growth” in the Venezuelan economy.

According to the United Nations Economic Commission for Latin America and the Caribbean (UNECLAC), CELAC in Spanish, Venezuela’s economic growth for the year 2011 will likely reach 4.5%.

Defense Mechanisms against U.S. Economic Crisis

Jesus Faria, international economy analyst for the ruling United Socialist Party of Venezuela (PSUV), explained that “a crisis in the most powerful economy on the planet, that of the United States, is going to affect the global economy and will obviously affect us (Venezuela)” as a result.

The main threat posed to Venezuela by an economic crisis in the United States, said Faria, is linked to oil prices, since Venezuela continues to sell some 50% of its oil exports in the U.S. market. He added that Venezuela currently obtains 60% of all imports from its northern neighbor.

According to Faria, while “the United States continues being the principal trading partner,” his country “now has defense mechanisms” against a possible U.S. economic collapse, including “elevated international reserves” worth close to $30 billion USD and the “diversification of markets” to which Venezuela sells its principal source of income, oil.

As an example, Faria pointed out that Venezuela currently sells 500,000 barrels of oil per day to China.

“We have an integration project that gives us strength and allows us, with the help of and incorporation with friendly nations, to keep our heads above the water in the continental context and maintain ourselves resistant to the onslaughts of the (global) crisis.”

According to Minister Giordani, the Chavez government “has decided that the resources that come from the sale of oil are to be invested in Venezuela, not only to strengthen the social development model” in Venezuela, but throughout Latin America.

Referring to Venezuela’s regional efforts to consolidate a Bank of the South, the Bolivarian Alternative for the People’s of the Americas (ALBA), and the Community of Latin American and Caribbean States (CELAC), Giordani affirmed that “the people of Latin America have come to understand that we must unite in the context of a crisis that will not only affect each of us individually, but all of us collectively.”

“Responsible” Economic Policies

Speaking to reporters on Wednesday, PSUV lawmaker Andres Eloy Menendez stated that the current global economic crisis “is not just financial” but “all encompassing.”

Beyond the current “financial crisis, which is similar to that of 2008,” explained Menendez, the global crisis of today is also present in “energy and food production, overall economic activity, and a speculative economy that faces a real economy in decline.”

Venezuela’s decision to base government spending on a 40 dollar per barrel income, “was the most prudent and responsible thing the Venezuelan state could have done. This allows us, by reducing the likelihood of unnecessary wasteful spending, the possibility to lay aside savings.”

According to Menendez, Venezuela maintains a 20% debt with respect to its Gross Domestic Product (GDP), and this “allows Venezuela, in the context of a (worldwide) debt crisis in the countries that face a possible default, to say that we are an example of serious economic administration.”

Credit Suisse, the Swiss multinational that issues country risk reports to global investors, recently sent a report to its clients saying it believed “there is little risk that policies contrary to the wishes of President Chavez be implemented” in the near future.

In the context of Venezuelan President Hugo Chavez’s current battle with cancer, Credit Suisse affirmed that Venezuelan Executive Vice President Elias “Jaua and Giordani find themselves among the most trusted and loyal advisors” to Chavez and are unlikely to “deviate the trajectory of the normal policies of recent years.”

Speaking to reporters on Tuesday, Minister Giordani affirmed that the Chavez government’s socio-economic policies are part of a “national project” based in the Constitution of the Bolivarian Republic of Venezuela, a project he has “no doubt will continue for the 2013-2019”period.