Lower oil prices are great news for all of us. We can expect the cost of materials to drop proportionally which will bring the cost of overall construction back down significantly. Another bit of good news is that Hugo Chavez will not have the money to fund his Bolivarian revolution or spend billions for weapons from Russia as he had planned. I am sorry to the see the suffering of the Venezuelan people, but those who love freedom in that country are probably happy that Chavez will run out of the lubricant that has funded his socialist agenda.
``You have a country with an oil boom, that doesn't know how to save, doesn't know how to set up productive industries that generate jobs, and goes into debt,'' said Elsa Cardozo, a professor of political science and international relations at the Universidad Central de Venezuela. ``Then oil prices fall and the party ends.''
Chavez is already spending beyond his means, posting a $7 billion budget deficit in the first half of 2008, a period of unprecedented oil prices, on a $63.9 billion budget for the year.
Economists' estimates of the minimum oil price Chavez needs to sustain his economic policies range from $120 a barrel to $65. Oil fell $1.00, or 1.6 percent, to a 17-month low of $63.15 a barrel in New York at 12:12 p.m.
Slashing foreign aid and arms purchases, while diminishing Chavez's influence in the region, will have the smallest political cost domestically, said Alejandro Grisanti, director of Latin American analysis at Barclays Capital Inc.
Venezuela spent $4.4 billion on 12 contracts for Russian weapons, the Kremlin said. The agreements include deals to buy 100,000 Kalashnikov rifles, 50 military helicopters and 24 Su-30 fighter jets, according to a U.S. Defense Intelligence Agency report. Russia last month offered Venezuela a $1 billion line of credit to buy more weapons.
The president has also used his oil-fed largesse to offer subsidized financing for poor countries in the Caribbean and Central America to buy Venezuelan oil products.
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