The oil-rich countries backed by socialist governments have overseen a long economic meltdown due impart to the lack of private sector investments.
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“The polarization of those economies is really the fundamental flaw because you have no economic incentive for private actors to invest successfully in Venezuela,” ClearView Energy Partners managing director Kevin Book told FOX Business’ Liz Claman on Wednesday.
Venezuela’s state-run oil company, Petroleos de Venezuela (PDVSA), was originally part of an ideological socialist project intended to revitalize the country and Latin America. Former President Hugo Chávez nationalized the state’s oil industry and destroyed the private incentive to invest.
“When you chase away the capability from the resource base and you just leave the military in charge of the oil company, you find yourself in dire straits even without the sanctions the U.S. has put in place,” Book said on “Countdown to the Closing Bell.”
The regime of embattled President Nicolás Maduro has been plagued with corruption, contributing to Venezuela’s economic demise.
In January, the Trump administration imposed sanctions on the state-owned oil company of Venezuela and the Maduro regime. Treasury Secretary Steven Mnuchin said PDVSA provided the South American country an outlet for embezzlement and corruption.
“[PDVSA sanctions] will help prevent further diversion of Venezuela’s assets by Maduro and will preserve these assets for the people of Venezuela where they belong,” Mnuchin said.
PDVSA also owns the Houston-based oil company Citgo Petroleum Corporation (or Citgo), which has been run by the Venezuelan government since the 1980s.