Tuesday, January 13, 2009

What Global Recession?

Yesterday it was reported that Venezuela donated $30.4 million to fund social projects in Cuba. These social projects will be in Cienfuegos, where Venezuela has already invested a great deal of money in the refurbishment of the Cienfuegos oil refinery.

So, this donation doesn't come completely out of the blue, however it is somewhat unprecedented considering the plummeting price of oil.

It has been reported that Venezuela's 2009 budget was based on the price of oil maintaining itself above $60 per barrel. Now that the price is below $40 per barrel, one has to wonder from where Chavez will get this money.

Well, an idealist might wonder. The fact is that the Venezuelan people will simply have to do with less as Chavez continues to bail out the failing Revolutionary government. In order to have any sort of political credibility for his "Socialism of the 21st Century," Chavez simply cannot allow the Cuban economy to sink (sink any further than it already has, that is).

So, even though Chavez cannot meet his own people's needs, he will continue giving the Cuban government billions of dollars worth of aid. After all, this $30 million is nothing compared to the billions worth of oil subsidies and credit that he extends to the Communist government.

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