Gustavo Coronel
*** NORWAY AND VENEZUELA: a problem of chromosomes?
Approximately 20 billion barrels of oil have been produced by Norway during the last 32 years, since the Ecofisk oil discovery in 1971. Under the 15 year government of Hugo Chavez, since 1999, Venezuela has produced about 15 billion barrels of oil. The Oil Fund of Norway has about $760 billion, this is, about $150,000 for each of Norway’s 5.2 million people. The Oil Fund of Venezuela has…. Zero.
In fact, the Venezuelan national debt during those years has grown to about $7,000 for each of Venezuela’s 30 million people.
What can explain this dramatic difference? As an explanation a Venezuelan politician, Manuel Peñalver, once said: “We are not Swiss”. We could add now: “We are not Norwegian, nor are we Chileans”, since the Chilean Stabilization Fund had about $ 21 billion in 2012 and is very well managed.
The Norwegian Oil Fund
This fund collects the surplus wealth and is now the largest in the world. It has become the largest investment fund in the world, accounting for one percent of the global equity markets. It is also the largest stock owner in Europe. This fund was established in 1990, in order to balance the potential declines in oil income due to oil price volatility. It is managed by the Norwegian Central Bank and is forecast to reach $1 trillion by the end of 2014.
The fund invests 60 percent of its portfolio in the international stock market and up to 5 percent in real state. The political sector of Norway has left the principal of the fund untouched, exhibiting an unusual degree of restraint for politicians.
The U.S. based Peterson Institute for International Economics has awarded the fund 97 points out of a possible 100, the first place in a ranking measuring responsibility, quality of management and other factors. The Sovereign Wealth Fund Institute also ranks it first in size and transparency.
The Venezuelan Oil Fund
The concept of an anti-cyclical fund, designed to smooth out the effects of feast and famine cycles derived from changes in the price of oil, dates back to 1960, when such an instrument was incorporated in the law of the Venezuelan Central Bank. In 1974 it was transformed into the Venezuelan Investment Fund. An Oil Stabilization Fund was specifically created in 1998, during the last year of Rafael Caldera’s government. In 2003 the Hugo Chavez government changed its name and some of its mechanisms, calling it Investment Fund for the Macroeconomic Stabilization, giving the president total authority to utilize the money as he saw fit. The rules of the fund were changed 4 times during the Chavez regime.
In 2000 the Venezuelan Fund had about $3, 2 billion. In 2003 it had about $1.1 billion. I consulted the link: http://www.bcv.org.ve/fem/fms.htm that was supposed to give details on the performance of the fund but all I could read was: Information not available.
In 2005 the Venezuelan Central Bank law was, again, reformed and the international reserves, long sacred, became usable by the president, who could place it at will into a new fund created by presidential decree for this purpose, the so-called Fondo de Desarrollo Nacional, FONDEN. This fund rapidly became one of the main nests of corruption in government, with a total lack of transparency and managed at will by four persons: the president, the minister of Planning, the minister of Finance and the minister of Energy and Petroleum. About $80 billion have gone into this fund from the oil company, PDVSA, and from the Venezuelan Central Bank. A good portion of this money remains unaccounted for. See also: http://www.frentepatriotico.com/inicio/2012/04/11/la-manipulacion-del-regimen-venezolano-al-fondo-de-estabilizacion-macroeconomica-apariencia-de-riqueza-hambre-para-manana/ and the excellent expose by Miguel Octavio in : http://devilsexcrement.com/category/the-fonden-papers/
Conclusion
It is true that we are not Norwegians or Chileans but I refuse to believe honesty and common sense are chromosomal. They can be taught through civic education. How? this will be discussed in another article.
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