London, or rather Ken Livingstone, has struck its own deal with Hugo Chavez for cheap oil. The fuel will be priced below cost and in return for ferrying around poor people in London, Venezuela will get “assistance” with global warming strategies.
As the article points out, what on earth does Venezuela gain? It could sell its oil at market prices, obtain better or more advice on global warming, if that is what it wants, or it could invest the wealth in its own projects.
The answer of course has nothing to do with economics, and everything to do with expropriation of the political system. I listened to a fascinating podcast yesterday in which Bruno Bueno de Mesquita explained how dictators still require a coalition to help keep them in power; funding that coalition requires wealth which means taxes on people are raised, or, as in Venezuela’s case, the natural resources of the country are plundered. Now the colation is usually presumed to be cronies located within the relevant country, but in the era of globalisation there’s no reason why tht shouldn’t be the case. In fact an international dictator support group may be more helpful if funding your coalition requires selling an international resource like oil.
Thus Chavez’ ‘gift’ to the people of London is actually nothing more than a “bribe” that helps keep him in power, and no dfferent in essence to the many bribes presumably doled out to his friends. An even worse analysis is that we are, in effect, receiving aid from a poorer country. Not the thought that makes me strut my Lambeth walk with any pride.
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