from Follow the Money

So how, exactly, is Venezuela able to outspend the US in the Western Hemisphere?

February 6, 2007

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There has been a lot hand wringing in the foreign policy community about the increase in Venezuela's influence in Latin America.    Not everyone is keen on following Richard Lapper's advice. Venezuela has lots of oil -- and, even thought its oil is rather heavy and somewhat sour, it still has lots of oil revenues.  And it has been willing to use its oil revenue to buy friends.

But compared to what the US has been spending on Iraq, Venezuela's oil revenues are, well, not so impressive.  My colleague Rachel Ziemba prepared the following graph:


Not all of the proceeds from Venezuela's oil go directly to the budget -- most analysts think some revenues are held off budget and then allocated through various government-controlled funds to projects at home and abroad.    But even so, the basic point holds:  Venezuela's oil revenues are a lot smaller than what the US is spending on Iraq.   And in any case, most of Venezuela's oil revenues are spent internally, not externally.  Venezuela just seems to be getting a bit more political-value-for-its money in Latin America, so to speak, than the US seems to be getting in Iraq.

I also suspect Francis Fukuyama may be on to something ....

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