CATO on Hugo Chavez

HUGO THE HYPOCRITE
Beggar Thy Neighbor


Venezuelan President, Hugo Chavez, last week called for economic self-reliance in South America. He said the proposal for a Free Trade Area of the Americas (FTAA) should be “buried,” and castigated US “imperialism” in South America. He also announced a financial package to help reduce poverty in other South American nations.

It’s an interesting message from an unlikely messenger.

Boom Times

No South American country benefits more from trade with the US than Venezuela. Venezuela exports more to the US than any other country in South America. These exports have grown dramatically under Chavez as he has shipped more and more barrels of oil at ever higher prices to the US.

Soaring U.S. demand has created an economic boom for Venezuela. Last year its economy grew by almost 20%. This expansion was not only faster than any other county in all of Latin America, but actually greater than China and India combined.

But President Chavez has never been one to let the facts get in the way of a good 3 hour speech.

“Yanqui Go Home”

Chavez’s argument is classic beggar-thy-neighbor policy, disguised as anti-Americanism.
As its exports to the U.S. continue to increase, other Latin American nations, which lack Venezuela’s oil wealth, are falling behind.

The FTAA proposal would actually lower US tariffs for poorer South American countries struggling to increase their exports to the US. Latin American countries who follow Chavez’s rhetoric, rather than his practices, will deny themselves expanded access to US markets. Rejecting this source of potential economic wealth will substantially limit growth prospects in the region. You can argue the FTAA's positive impact upon the United States economy, but you cannot on poorer South American nations.

Do as I say, My Latin American brethren, not as I do.

Combating Poverty

This dovetails neatly with Chavez’s plan to provide assistance to Latin American’s poor. Chavez announced a $10 billion fund to reduce poverty throughout South America.

However, poverty in Venezuela has increased by double digits since Chavez became President, despite its explosive economic growth.

Perhaps President Chavez should do a little homework before he takes his poverty- fighting show on the road. Better yet, maybe other South American leaders should just say “no.”

-CATO