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Venezuela below Haiti and Cuba in the Economic Freedom Index

By Gustavo Coronel

January 20, 2004 - The Heritage Foundation and the Wall Street Journal have just published their 2004 Index of Economic Freedom. This index ranks countries on the basis of how open their economies are. The 10 categories the index measure are: trade policy, fiscal burden of government, government intervention in the economy, monetary policy, foreign investment, banking, wages and prices, property rights, black markets. Those countries with a higher ranking in this index also show higher per capita incomes and a higher standard of living. There is a close correlation between this index and the Human Development Index generated by the United Nations. There is also a close correlation between these economic and social indexes and the type of political regime the countries have. Dictatorships, repressive governments, in general, countries in the hands of primitive bullies, such as Zimbabwe, Libya and North Korea, have very impoverished and ignorant societies.

This index subdivides the 155 countries analyzed in four groups of economies: Free, Mostly Free, Mostly Unfree and Repressed. While Hong Kong, Singapore, United Kingdom and the United States have free economies, countries like Nigeria and Haiti are examples of mostly unfree economies. Further down the ladder, Cuba, Iran, Zimbabwe, Libya, North Korea and Venezuela are examples of repressed economies. In a regional basis most of Latin America countries lowered their scores, Venezuela becoming the worst country in the hemisphere, below Haiti and Cuba. Our country deserved the position 147 in the group of 155 countries, only marginally better than Iran, Burma, Laos, Zimbabwe, North Korea and Libya.

This ranking of Venezuela comes soon after the Human Development Index of the United Nations had placed our country 23 positions lower than only 5 years ago. The combination of these two indexes covers almost all economic and social aspects of national life and represent as objective a diagnosis of the Venezuelan society as can be obtained today. The emerging picture is that of a very backward country, highly impoverished and with little or no free economic activity. Transactions, which are normal in almost any country, are now impossible to make in Venezuela, such as foreign exchange transactions and the use of credit cards abroad or, even in many domestic sectors. The Venezuelan government at this moment controls foreign exchange and most of the food distribution and is trying to sack the country's international reserves kept by the Venezuelan Central Bank. In many ways Venezuela resembles today a war economy. As a result, all bonds issued by the government have decreased their value in the international markets, in spite of the high volume of international reserves the country has accumulated, as a result of the foreign exchange control, which has already lasted over a year.

These indices are generated by international analysts and have little or no political contamination. They can be defined as objective since they are based on dozens of measurements, both social and economic, which include employment, income, cost of living, State control of the economy, freedom of economic activity, health, education, rate of inflation, life expectancy, foreign investment and many others. The weight one must give to these indices has to be much greater than the weight we must give to speeches lacking statistics and facts given by the members of the Venezuelan government, in special to the speeches given by the President of the country. The Venezuelan President has been getting progressively incoherent, as time has gone by. The vision of the country he is trying to project bears little or no resemblance to the tragic country we are living in. His credibility abroad has been shattered, as shown in the last Summit of the Americas, where he arrived late, left Fox waiting for him, did not show up to the formal dinner, refused to agree with his colleagues and gave a couple of embarrassing speeches that would have been the envy of Cantinflas. His government is spending huge amounts of money, badly needed by Venezuelans, in inviting foreign mercenaries to Venezuela to laud his government. The insistent argument these mercenaries make is that the Venezuelan media is to blame for the misinformation about the country. This arguments breaks down in the face of the indices produced by the international organizations mentioned above, which treat Venezuela as just one more country in their analyses.

The truth is that the more the Presidents talks, the deeper the country becomes immersed in a deep social, economic and political crisis. In today's Venezuela the tragic merges with the grotesque. A Cesar named his horse consul. Old Dictator Trujillo, from the Dominican Republic, named his son Ramfis General of the Army when he was 12 or so. This week, yet another mediocrity will be designated by the President as Commander in Chief, the highest ranking a Venezuelan military officer can possess. In 150 years we had two: Bolivar and Lopez Contreras. During the last three years we have had two more: Lucas Rincon and, now, Jorge Garcia Carneiro. Bolivar was the father of the Republic. Lopez Contreras was the father of our Democracy. But these two other little men, what have they done to merit this distinction, totally illegal by the way, since it can only be won in the battlefield? Lucas Rincon holds the key to the mystery which surrounds Chávez's resignation in April 2002. Garcia Carneiro is to Chávez what Noriega was to Torrijos in Panama: a personal bodyguard.

A government which acts in this manner lacks dignity and an Armed Force which witness this impassively lacks honor.



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