Zoellick: Venezuelan Economy in Trouble
On Saturday, June 16, 2007, a story written by Ioan Grillo of the Associated Press was carried by the world's news outlets. Yahoo News published it as Zoellick: Venezuela economy in trouble.
The story's message is simple. At a news conference in Mexico City recently, Robert Zoellick, the new President of the World Bank replacing Paul Wolfowitz, said that Venezuela's economic and political troubles were growing under President Hugo Chávez's leftist government. His exact quote was: "It's a country where economic problems are mounting and we are seeing (that) on the political and press side it's not moving in a healthy direction." Unfortunately, Zoellick gives no details about the economic problems.
A few paragraphs later, the article's author writes "The country's economy grew by 10.3 percent last year, the fastest in the region, and government statistics show poverty has declined.
Which is it? Is the Venezuelan economy in trouble or is it the fastest growing economy in the region? Of course, it could be both: the Venezuelan economy could be in trouble and all other countries in the region are doing worse. If that were the case, the article would not have Zoellick: Venezuela economy in trouble as its title and Zoellick would not be talking about Venezuela exclusively.
If we do a bit more research, we come up with news stories that report on the increased inflation resulting from Venezuela's increased government spending on its social programs. One such article is Venezuela Bank Loans Surged 84% From Year Ago in May by Matthew Walter of Bloomberg. Could this be what Zoellick is referring to? If only a reporter in Mexico City asked the question, we might know.
There appears to be another story behind this story. A few clues:
- Robert Zoellick was appointed to the World Bank post by George W. Bush and would be expected to honor the administration's talking points.
- On April 30, 2007, Chávez announced he would pull Venezuela out of the World Bank and the International Monetary Fund (IMF) because Venezuela has already paid off its debts to these lending institutions. The debts were paid off five years ahead of schedule, saving Venezuela $8 million.
- Chávez has said Latin America would be better off without the U.S.-backed World Bank or IMF. He blames their lending policies for perpetuating poverty in Latin nations.
- Chávez wants Latin American nations to set up their own lending institution, which he calls "Bank of the South".
Questions
- Is Zoellick telling the truth about Venezuela's economy?
- Is he trying to discredit Chávez and Venezuela to sabotage the establishment of a Bank of the South? Such a bank would compete with the World Bank and the IMF.
- Is this just a continuation of the Bush/Chávez war of words?
- Is increased inflation from government spending a necessary evil when trying to improve the quality of life for citizens in a short period of time?
- Should Chávez spread his social reforms over a longer period of time to keep inflation in check? What's the impact of this?
Additional Notes