- It pays a percentage of its profits in income tax, just like everyone else -this happened even before nationalization in 1975.
- On top of that, it pays a percentage of the gross value of oil lifted royalties because the state owns the stuff – this also pre-dates nationalizaation.
- Since 1975, the state has been PDVSA’s only shareholder, so it gets dividends from the oil industry, too.
So that’s the zanahoria stuff: all three mechanism transfered oil rents into a single pot – the National Treasury – and all three are well established, transparent, and unquestionably legal.
Then, Chávez happened. Slowly at first, strange new ways of shifting petrodollars into state coffers came to be used. As time passed, PDVSA came up with new ways to bypass the National Treasury finance state programs directly.
Now, the difference between this kind of direct spending and the Zanahoria Fiscal Contribution might seem arcane, but it’s profound. By spending money directly instead of handing it to the National Treasury, PDVSA abrogates a privilege the constitution reserves to elected members of Venezuela’s National Assembly. In picking and choosing government programs and handing them cash discretionally, PDVSA becomes – what was that phrase, again? – a state within the state; utterly beyond the reach of democratic oversight and accountability.
You’ll search high and low in Venezuela’s 1999 constitution for PDVSA’s right to spend money this way. In the polite fictions of Bolivarian constitutional doctrine, Venezuela operates under the principle of the “Unidad del Tesoro” – all funds paid to the state are meant to go into a single pot. Once there, representatives elected by the people to the National Assembly must give explicit permission, through a budget law, before the government is allowed to spend any of it.
That obviously can’t happen if PDVSA skips the whole parliamentary rigamarole and starts spending money on whatever the president orders that day. Which, more and more, is what actually happens.
PDVSA’s Direct Spending (a.k.a. the Hanky Panky Budget) started out as a marginal sliver of Venezuela’s fiscal math. In 2001, it was $34 million, in 2002, just $14 million. Soon enough, though, that particular frog was boiled all the way through, and the Hanky Panky stuff started to balloon. With the single exception of 2009 – the closest thing we’ve had to a non-election year in that time, since the only vote happened in February that year – PDVSA’s Hanky Panky Budget has grown every single year since 2002:
The thing is that PDVSA’s Zanahoria fiscal contribution is no longer keeping up. While from 2005 to 2008, its fiscal and parafiscal contributions grew in tandem, over the last three years it’s starting to look like Hanky Panky spending is replacing PDVSA’s Zanahoria Fiscal Contribution.
Notice the contrast between 2008 and last year. The total amount PDVSA dished out to the state didn’t change that much: $55.4 billion in 2008, vs. 58.6 billion last year. But while in 2008, twice as much of that was spent legally than illegally, by last year those proportions had been reversed.
Which allows us to have a look at our Petrocaudillism Index in historical context. Again, we’re dealing with a simple ratio here: the amount of money PDVSA spends illegally divided by the amount it spends legally. It’s looking bad:
As recently as 2009, just 24 petrocents were spent without legislative approval for every petrodollar spent under legislative oversight. Last year, that proportion had jumped to 2.08 to 1.
Which is why I can say, with scientific precision, that today we are 8.7 times more Petrocaudillistic than we were three years ago.
All the Data for this post comes from PDVSA’s “Informe de Gestión Anual 2011”, pages 158 (for the Hanky Panky stuff) and 214 (for the carrot juice), with additional data from the 2009 Report (page 200.)