Maduro will save only the barrel of Brent for $140

  • And
  • +A

Presidential elections in Venezuela has not brought sensation. The majority in this country gained the acting head of state Nicolas Maduro. After counting more than 90% of the ballots, he was supported by 5.8 million, and his opponent Henry Falcon gave their votes to 1.8 million voters. The turnout was very low — 46%. The U.S. Department of state, the presidents of Chile and Argentina refused to recognize the election results, calling them “undemocratic”.
However, the IMF recently stated that the situation in Venezuela is the most devastating in the last half century. The economy was hit by the fall in oil prices, which resulted in the twenty-first century socialism has died. Now oil prices are gradually recovering, has already reached last week at $80 per barrel. However, of all the countries-exporters of oil from Venezuela’s worst situation. For the stabilization of Venezuela need a price of black gold in the amount of $140 per barrel.
Looking at the economy of Venezuela, unwittingly comes the idea that better a horrible end than horror without end. Socialist experiments sooner or later, but always end up empty store shelves, hyperinflation and currency crisis and flight of most of the professional staff abroad. The situation in Venezuela has exacerbated closure of industrial facilities, power plants, and the growth of bureaucracy and corruption. The national currency, the Bolivar devalued: now for $1 give 700 thousand bolivars. Qualified professionals are leaving the country, the flow of refugees went to neighboring States to Colombia, Brazil and Guyana – the only country left 1.2 million people.
The retention of power in Venezuela current leader, of course, very advantageous to Russia. This is a guarantee of the preservation of Russian oil investment. Besides military-strategic ally of Russia is not exactly hurt. The increase in oil prices greatly expanded the financial opportunities of Russia on support of Venezuela. However, the position of the current government is weak on real market reforms it is not willing and able. Capitalism is the main enemy of the current Venezuelan government. However, the problem is that only a complete return to the market and tight monetary policy can stabilize the situation in the economy, hope for the oil price of $140 per barrel is unlikely.
For Moscow, Caracas is a suitcase without a handle. What to do with the situation – is not clear. The financial injection will only prolong the agony is absolutely unsustainable economically, but politically absolutely loyal to Moscow regime. As we can see on the example of Western Europe, the Americans are trying to solve their economic problems at the expense of its allies. However, many, not only of Venezuela, nor the other allies of Russia to solve their economic problems at the expense of Moscow. Russia – still a generous soul.
______________
Alexander Razuvayev,
The Director of analytical Department,
Alpari