February 19, 2007 [LINK / comment]

Shortages plague Venezuela

The bloom may be coming off the rose for Hugo Chavez, as his radical populist economic policies have discouraged private sector output while boosting demand. The result: widespread shortages and price hikes. Chavez has reacted in typical authoritarian fashion by imposing price controls and threatening to jail any grocery store owners who violate. This may be the next big step toward a large-scale nationalization of businesses in Venezuela, which would come as no surprise given his avowed campaign to create a socialist revolution there. Another bad sign: there was a net outflow of foreign direct investment in Venezuela during the first nine months of 2006. See New York Times; via Daniel Drezner.

Bribery charges in Peru's Navy

President Alan Garcia has accused Italian businessman Sergio Siragusa of bribing several admirals in the Peruvian Navy, in connection with the purchase of replacement Otomat anti-aircraft missiles in the mid-1990s. See La Republica (in Spanish). This comes as rumors spread about possible cabinet changes in Peru. During the 1980s Peru built four frigates based on Italian design and using Italian high-tech components. For a while Peru was a regional leader in armaments production, but this came at a heavy economic cost, and the effort was drastically scaled back under President Fujimori in the 1990s.