Oiling the wheels

This week, London became the latest stop in Hugo Chávez’s global spending spree. Venezuela’s president has poured petrodollars into South American clinics and refineries to promote his anti-US agenda and ideas on social redistribution. Now London buses will run on his cut-price oil under a deal worth up to $32m with the city’s mayor, Ken Livingstone. The stunt is ludicrously poor policy – but it could still prove a canny bargain for both leaders.

Mr Livingstone, representing one of the world’s richest cities, has lined up alongside Iran, Cuba and Belarus in the queue for handouts from Venezuela, a country with a per capita income of $6,600. Even by “Red Ken’s” quixotic standards, it is an unedifying spectacle.

In return, Venezuela will receive a proselytising mission of London officials to advise on traffic management and urban planning, their prescription to treat Caracas’ chronic congestion will no doubt contain a mixture of bus lanes, Oyster cards and public private partnerships. In the real world, raising the domestic petrol price above five cents a litre would be a far cheaper way to shorten traffic jams.

Economic logic, moreover, dictates that Mr Chávez’s overseas largesse puts Venezuela’s future prosperity at risk. It threatens to squeeze much-needed investment in boosting oil production. In the end, the explanation for the “oil for brooms” deal comes down to little more than a publicity stunt.

Mr Chávez, hungry for international recognition, wins credibility in the UK – cheap at the price, compared with the billions spent to cement other friendships. The deal mirrors one already sealed with the Democrat, Joseph P Kennedy, in the US, supplying cut-price heating oil to deprived households. Mr Chávez is proving adept at forging links in countries with hostile central governments.

As for Mr Livingstone, he can argue that the UK deals with any number of unsavoury regimes to ensure its supply of energy. Moreover, the £16m gift horse from Venezuela will halve bus fares for up to quarter of a million Londoners on benefits. That might well help his bid for re-election in next year’s mayoral elections – though some Londoners may question his new friendship with an international mischief-maker with plans to perpetuate his grip on power.

Mr Livingstone once again has shown a penchant for self-promotion. His next plan for London’s commuters is a self-service bike scheme of the sort Paris has just adopted. Now if he could persuade the French to finance the scheme, that would be a coup.