Venezuela buys foreign oil to help Cuba, despite being on the brink of collapse

By Panos Mourdoukoutas 

Venezuela on the brink of collapse buys foreign oil to ship it to its old ally, Cuba.

That’s according to Reuters report, which reveals that Venezuela’s state-owned oil company PDVSA has purchased close to $440 million worth of foreign crude oil and shipped it directly to Cuba on friendly credit terms – and often at a loss.

And that’s certainly a bizarre policy for obvious reasons. One of them is that Venezuela is major oil producer, and one would expect to ship oil to Cuba from its own reserves rather than buying them in the market. Another reason is that Venezuela is at the brink of collapse, needing all the help it can get from allies rather than subsidizing them.

But nothing no policy is bizarre in a country where there’s a long list of failed government policies, which date back several decades, even before Bolivarian socialism.

Like the wave of nationalizations in the late 1970s, which placed the country’s resources in the hands of government bureaucrats rather than professional managers.

And much more.

Like the currency controls that favored foreign manufacturers over domestic manufacturers.

And the modern version of Bolivarian socialism, which borrowed a couple of failed features from Castro’s Cuban Socialism, and from Che Guevara’s and Salvatore Allende’ Anti-Americanism, to add to the woes of Venezuela’s economy. In fact, Anti-Americanism became the scapegoat for the many failures of Venezuela’s economic policies.

Now comes the last chapter of Venezuela’s long experimentation with failed government policies. And it looks ugly, very ugly. It features severe shortages of necessities, from baby diapers to paper towels, napkins and the like. But no shortages for funds to help old failing allies.

Simply put: it takes a whole lot of stupid government policies to destroy a great economy. And Venezuelan governments of different political sides seem to have raced to pursue all of them to the bitter end.