Although Venezuelan dictator Hugo Chávez insists that he is making a miraculous recovery from cancer, a series of revelations in recent months paint the picture of a regime bracing for impact.

In mid-August, opposition congressmen denounced a plan by the Chávez regime to move the nation’s $29 billion in international reserves out of traditional havens in Switzerland, Britain, and the United States to banks in Venezuela’s principal creditor nations, China and Russia. Just this week (note: September 13, 2011, WSJ), it was disclosed that Chávez is planning to renounce a respected world panel for settling business disputes, further undermining investor confidence in doing business in his country.

These momentous decisions by the ailing leader and his nervous cronies suggest that they are more concerned with their ability to hold on to power when Chávez falters than they are the well-being of the Venezuelan economy.

Regarding the reserves, Chávez rushed to explain that he is merely securing his country’s capital by withdrawing it from unstable financial institutions in the West; he failed to mention that China and Russia keep most of their international reserves in U.S. and European banks. As for the $11 billion in gold, it will be relocated physically to the vaults of the Venezuelan Central Bank - a risky operation that will cost about $400 million. Chávez says this is a “healthy decision,” but to his opponents it looks like a slow-motion bank heist by a government known for its corruption. One Venezuelan economist told me that the country will be left effectively with no international reserves, casting doubt on its ability to function in the global economy.

The recent decision to abrogate agreements with the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) is another troubling sign. There are 18 claims against Venezuela, totaling $40 billion, brought before ICSID by foreign companies cheated out of their investments during Chávez’s tenure. Although Venezuela cannot jump bail on these pending claims, the decision to abrogate the ICSID process suggests what the regime has in mind for current or future foreign investments. Without some recourse to the sort of independent arbitration offered by ICSID, for anyone looking to put capital in Venezuela, all bets are off.

Taken together, this series of highly unorthodox measures will burn the ashes of Venezuela’s credibility among investors and within global capital markets. Why would Chávez, who recently professed his wish to govern until 2031, be doing such self-inflicted damage to his nation’s economic viability?

For a decade, many observers in an out of Venezuela have blamed incompetence for Chávez’s infamous mishandling of the economy. Others have recognized his policies as purposely destroying the private economy to decimate the ranks of potential opponents - except for a few favored opportunistic and pliant plutocrats who benefit from sweetheart deals with the regime.

Another entirely plausible explanation is that Chávez is a devout socialist who is committed to putting politically reliable state apparatchiks in command of strategic industries. His 2001-02 purge of the state-run oil company, Petroleos de Venezuela S.A., was a politically risky move that sparked a costly strike and popular uprising, but he emerged from the crisis with PDVSA in his grip and its trillion dollars in revenue as his petty cash fund. PDVSA is treading water, but everyone knows who’s the boss.

There may be a more proximate cause for the recent decision to move the international reserves. Confidential documents from Chávez’s desk, which were leaked to the opposition, suggest that the regime is seeking to minimize its vulnerability to Libya-style sanctions should it have to resort to violence or electoral fraud to hold on to power. Recent reports that Gaddafi looted $1 billion of his country’s gold reserves in a desperate bid to buy time is another clue about what Chávez’s team has in mind.

[[What ever the reasons behind these recent fool-hardy economic moves, the impact on Venezuela’s economic viability will do deep and lasting harm to the people. Chávez would not be the first dictator who holds his own people in contempt or shows more regard for his selfish interests than for the nation. That’s what dictators do.]]

Venezuelans may have to wait to sift through the rubble of the Chávez regime before they get a clear explanation for Chávez’s recent reckless decisions. In the meantime, regardless of whether Chávez knows he is dying sooner or hopes he is dying later, it is apparent that he doesn’t give a damn about the harm he is doing to the Venezuelan people or the mess he will leave behind.

Roger F. Noriega was Ambassador to the Organization of American States from 2001-2003 and Assistant Secretary of State from 2003-2005. He is a visiting fellow at the American Enterprise Institute and managing director of Vision Americas LLC, which represents U.S. and foreign clients, and contributes to www.interamericansecuritywatch.com.

Source: InterAmerican Security Watch