Thursday, January 16, 2003

Wednesday 15, January 2003

This week seemed eerily like a déjà vu of sorts. Things keep slowly degrading and one is still amazed that somehow we have not yet reached the bottom. The bottom of course is civil war so we are in no hurry to get there.

So far this week we had other marches that ended up gassed or beaten up. The army again intervened independent police departments. Chavez proffered more menaces and insults. Yet… Something is different. For example the Washington Post and the New York Times have indicated that things started to soften in the opposition positions, going as far as to say that Chavez might be getting the upper hand. The upper hand of what? This is not what we feel here. The fact is that the opposition is starting to measure the side of the abyss that is waiting in front of us and is trying to catch its breath while it decides what to do. People that have been marching on and on are not going to go back home just like that.

My interpretation is that the opposition is realizing that Chavez has no qualms in destroying the country and they are wondering what to do about it. For example, the opposition needs to have means to fight and a destroyed country can only benefit Chavez. Thus my title today: I am going to try to describe briefly how Chavez has destroyed the country, long term and short term.


The Bolivar has gone down from around 700 to the dollar one year ago to above 1700 today! In particular from 1403 to 1704 since January first. This is due to a total lack of confidence in the policies of Chavez and I will recall that the first wave of devaluation took place before the April 11 events. Then it had fallen from 700 to 900, that is 28%. The second wave was after April 11. So the intrinsic weakness of the Bolivar has come from Chavez policies. He received the currency at 500 +. The result of this is pretty much the end of commerce as importation decrease dramatically, supplies for production cannot be imported and cost too much for the local market. Exportations just cannot start like that. The spiral of inflation, jobless, bankruptcy starts.

Refusing to modify some of its economic policies seem now a calculated plan to break the spine of private business. By refusing to budge you promote flight of capital as people refuse to invest. Flight of capital means weakening of enterprises and their demise on the long term.

The governmental theory is to try to manage to blame the private sector for the country bankruptcy. It is aided in that by the lack of economic knowledge from most people, be it here or in the US for that matter. This might or might not succeed. But the fact is that Chavez only believes in small enterprise and stores and big multinationals. Anything in between, or local big capital, is regularly excoriated and sabotaged when possible. For example by promoting land grabbing schemes against productive farms. Or by removing tariff protection for industry sectors. Mind you, this is good when well planned as it forces industries to become competitive. But the government has used tariff manipulation to hit some sectors such as commerce by allowing illegal import and favoring street vending for example. This makes unavoidable a slow but sure a general disorganization of the productive and distributive apparatus, perhaps leading people to ask, plead, for state intervention.

The oil strike might be an unexpected blessing for Chavez. The numbers given by oil workers on strike show the following drops in the oil industry sectors: oil barrel production down by 87%, gas compression 70% (a minimum production had to be maintained for technical reasons), refinery production 94%. Only one of the 4 Venezuelan refineries is partially open, and it was supposed to shut down in part for maintenance so it might blow up any time soon. The government claims that things are much better but refuses to give verifiable numbers, nor to allow independent observation of the production sites which have been militarized. Why could this benefit the government? The PDVSA elite is pro business, western style. Too big of a counter power for Chavez, so he will be better off getting rid of them. If the economy is bankrupt anyway and he establishes authoritarian rule, he can manage with less than half of the income that he gets form PDVSA today. He will use the PDVSA strike the way Castro has been using the US blockade to justify his economic troubles. In such ways do dictators’ perverse minds work.

Finally there are discretionary powers of the executive that can be used to further wreak havoc with the private sector. One is the fixation of minimal wage. This is not a great tool has it also engages the government in the amounts to be paid to its own workers. Though they could be paid in junk bonds as many contractors have been paid in 2002. More useful is the right to establish labor freezes. That is, forbid firing of people for limited period of time. Yesterday Chavez labor secretary has prorogated the current freeze that came form last June until July 15, 2003! That is any worker that makes less than 3 times the minimum wage cannot get fired unless you go to a lengthy process with the labor inspectors. A difficult task at best. And since oil workers earn more than 3 times the minimum wage by collective conventions he can fire at will there, which is rather convenient these days. Since the strike began he has fired around 2000, that is 6 % of the oil work force, without breaking its will to strike so far. And adding all sorts of foreigners to the payroll he probably intends to lower morale rather than get results. Results would be difficult to get from people that do not speak Spanish and are not probably the best in the industry since they accept to work as scalawags in Venezuela.

But what does labor freeze means for a small business like mine? If it cannot meet payroll it will be obliged to close. Period. This is the only easy way to lower your personnel, by firing all or none. Layoffs are of course always a nasty business and quite often rather unjust. But should you sacrifice the jobs of the other workers because you cannot lay off in response to the markets? If you add to this a deepening crisis you can see that the pressure on small and medium business is quickly becoming unbearable. And it serves Chavez in his twisted mind as we will not be able to feed the opposition and will need to battle our workers, presumably.

It is clear that the economical suicide that a 45 days general strike might seem to the casual observer is actually a fight by small business to have a life. We, and I say “we” knowingly, recognize that Chavez policies are slowly but surely driving us out of business. So we are motivated to make a stand. It is that simple.


This is pretty much straightforward. Concentrate all power in one hand and quickly nothing works. This all-in-one-hand might work at some level, but it always end up bad if you do not have adequate help.

Chavez’s constitution created a 4th power that included a fiscal comptroller of the nation, a general prosecutor and a people’s defender. The first one was meant as checking out that the accounts matched records and that corruption would be fought. The second one was to guarantee an independent prosecuting system that would allow people protection against abuses from the state. The third one was meant as an organization that would monitor that public service and public servants would fulfill their obligations by creating a specialized judicial branch.

Well, by naming three cronies he has managed to totally discredit the institutions. No corruption case is on trial, even from the pre Chavez corrupt officials that Chavez used as example to win the 98 election. The general prosecutor has yet to open any trial form April 11 events, and for many other events such as the press attacks that predate April 11 by months. The defender is the most pathetic of all openly defending chavistas, for example sending his subordinates to prevent arrests of the hoodlums that attack routinely anti Chavez rallies. So people have stopped looking for their supposed protectors knowing that they do not stand a chance in court system since prosecution will not take place. Period.

What is left? Well, the police since it is in the hands of city hall. Chavez does not like it at all and his underlings in the National assembly are trying to find a way around the constitution to create a “National Police” to supervise and diminish the autonomous polices. The Caracas Metropolitan Police is the main target since it is the main independent police force, and the one that provides security during the huge marches, in particular. It is also the one that tries to put some order into the high crime rates of Caracas. The next link will tell you of the recent second take over of the MP against court orders.

All the riot control gear has been taken away “for investigation” as a consequence for the two people killed a few days ago. No judicial order was shown. The operation was done in the dark of the night. The high court ruling that invalidated the intervention of 2 months ago was ignored. The immediate result is that the mayor has announced that the MP cannot protect the marches anymore, cannot protect banks and bank money transfers, cannot protect at night bad neighborhoods since hoods have better weaponry than they do. Chavez’s people intention? To scare people away, to try to make sure that they do not go out anymore, be it a march or at night to plot against him.

To reinforce that image one can look at yesterday’s attack by chavistas, attack that I have not seen reported anywhere yet. In brief, a pacific march was attacked by a gang of chavistas that had tear gas etc… They attacked among other things the stand of two networks and try to set up one on fire. All live of course on TV. And all in front of the National Guard headquarters, without them sending a single soldier to try to re-establish order. A closed MacDonald was attacked by the way.

Clearly the idea is that you are defenseless and that only if you let Chavez do as he pleases you will get order back. Where have I heard this before?

This also makes real the threat Chavez pronounced about 3 weeks ago when he said that military that obeyed his orders to fight counter revolutionaries could disregard orders of the high court. High court has not responded and I wonder what it thinks of itself these days when the threat comes to fruition.


Chavez has lost hearty grassroots support. His marches and rallies do not have the appeal of before even with the free distribution of money and booze (pictures have been widely shown of official vehicles shopping for cases of alcohol, confessions abound of people that complain that they were not paid their promised money). His economic debacle cannot bring people back to the original fervor, at least not for the foreseeable future. The next best thing is of course to scare the opposition away from the streets. How do you do that? You make them worry for food or jobs. You make them know that they will get no help if they are attacked. That no judge will be able to pull them out of jail, or soccer fields.

And all for what? To gain time. To see what can be done to outwit the opposition. To find a way to stay in power for good without an opposition that could best him someday.

Lately Chavez and his underlings have been reviving the “”Bolivarian Ideal” of a united Latin America, of course against the Yankee imperialism. Bolivar thought that Venezuela Colombia and Ecuador should be a single country. Chavez goes one step further, offering union to Peru and of course Bolivia. At Lula inauguration in Brasil he even offered to merge PDVSA with Petrobras. That is, selling the provider to the client, in a most anti economy self destructive piece of hubris.

It should be clear that the objective of Chavez is to make people happy the Chavez way. And meanwhile himself should enjoy all the riches of power. He has been doing good so far, gaining lots of weight, improving his wardrobe quite well, buying his own airbus which has probably more luxury inside than US Airforce 1 (no inside pictures have been revealed, a detail that says a lot).

I will leave you with a BBC link that gives you a few facts about Venezuela. It is quite complete for the non-Venezuelan data needs ;-)

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