February 6, 2006

Don Regalon's Sums...

I got excited when I saw this article in El Nacional claiming that an independent think tank had tallied up the costs of Venezuela's "international solidarity." They came up with the eye-popping total of $25.8 billion. Zowee that's a lot of money!

Actually, as you think it over, it's a totally unlikely sum. It would mean Venezuela has handed out three times as much money as Japan, or Germany or France spend on foreign aid in a year.

Then, I looked at this chart and started to see the catch. The study adds up all government spending abroad, including not just direct aid but also investments in things like Argentine bonds and Brazilian oil refineries and contracts to buy tankers for PDVSA. Now, while buying Argentine bonds may very well be bad business, you can hardly think of it as "spending" - those bonds are worth something.

My suspicion was aroused further by the mysterious "Centro de Investigaciones Economicas" credited for the study, and the fact that no actual names are cited as authors. Maybe I'm just ignorant, but I don't know what think tank they're talking about - or who's actually behind the study. Maybe somebody can help me out here.

Anyway, the El Nacional article was by veteran reporter José Suárez Núñez - the closest thing Venezuela has to a dean of independent journalism. To his unending credit, Suárez Núñez can claim to have been harrassed by literally every single Venezuelan government since the 50s, and generally has all my respect. On the other hand, the guy is old, and it's hard for me to shake the feeling he's being played here.

What we really need is not a naive tally of all government outlays abroad. For a country prone to Dutch Disease, investing windfall oil revenues abroad is not necessarily a bad thing. What we need is something much trickier - an estimate of the implied subsidy in foreign outlays, of the patrimonial loss to Venezuela from such foreign spending. That's something we're not getting in this study - though the headline figure is sure to get tossed around in attacks on the government.

Of course, it's also true that the government courts this kind of attack by spending abroad in the least transparent way imaginable. Constitutionally, it's the government's job to provide reliable, clear information on all its spending - both internal and external - and it's the Comptroller General's job to check out those sums and make sure they're in order. Since they don't do that, third parties have to go out and try to estimate these things on the basis of what fragmentary information they can find.

Still, for once, I agree that this study seems like just so much underhanded mud-slinging. I'm curious to read the full study, though, and to find out who's actually behind it. Anybody know?