Congress Follows Lead of Venezuela's Confiscatory Oil Policy

The next time U.S. lawmakers criticize Venezuelan president Hugo Chavez for reneging on valid contracts that the Venezuelan government has signed with U.S. firms, he can just hold a mirror up to the U.S. Congress.

The House of Representatives has just voted to renege on contracts that the U.S. government signed with oil companies. That’s exactly what Chavez did, and Bolivian president Morales has followed suit.

Neither Chavez nor Morales nor the House of Representatives has suggested that the contracts they want to “renegotiate” were signed under false pretenses. Of course, the payments agreed to in the long-term contracts would have taken into account the possibility of steep price drops or rises.

The actions of the two South American presidents are more draconian and more likely to damage their economies in the long run than anything the House of Representatives has voted to do. But that’s a difference in degree, not in principle.