China’s $20 Billion Bolsters Chávez Regime
China has promised to lend $20 billion to Venezuela, the country’s President Hugo Chávez said over the weekend. This underscores the Asian giant’s push to deepen ties to oil-rich nations in the developing world and single-handedly boosting the rhetoric of the would-be socialist revolutionary when it seemed his support was beginning to truly wane.
The credit—which Chávez claims ranks among China’s biggest foreign loans ever—symbolizes the growing importance of oil in China’s energy mix, and indeed the lengths the fast-growing nation is willing to go to secure it.
In the past, some major international deals announced by Mr. Chávez haven’t come to fruition. However, these funds come at a key moment for Mr. Chávez, whose popularity has come under pressure as a crumbling infrastructure has led to energy shortages and other problems. Venezuela suffers the region’s highest inflation rate of 25%.
Making things worse, Venezuela’s economy has been hit by growing energy shortages. Drought and blatant mismanagement of the country’s hydroelectric resources have forced the government to impose rolling blackouts, further slashing economic output.
Analysts disclosed to the Wall Street Journal that Chávez could utilize the Chinese money to prime the electoral pump as in recent months continuing economic recession and surging crime have eroded his popular support.
The government, which enforces strict currency controls, was forced to devalue Venezuela’s currency in January. Despite the devaluation and issuing millions of dollars in bonds to sop up dollar demand, Chávez has been unable to brake the sharp decline in the value of the Bolivar in the country’s parallel, or black, market.