Friday, January 31, 2003

THE WEEK IN REVIEW: FROM VENEZUELA (part 2, this and that)
January 20-27, 2003

This past week was rather active and since I was not here it is difficult to piece together a solid narrative, as if it were possible with the amount of craziness that we are subjected every day. The best way is just to give you a few vignettes in no particular order of date or importance.

Jimmy Carter’s visit

Some people never seem to learn, but given a Nobel Prize they think that they should try again. Bless his heart at least he shook up things.

The previous week Carter had arrived to fish in the Orinoco as a guest of his good friend Cisneros, one of the three richest men in Venezuela. Chavez was furious enough to threaten Cisneros publicly in one of his now apocalyptic speeches. Carter refused to declare to the press saying that Monday he would be in Caracas for business and then he will speak. But everybody knew that he was going to do more than fish with Cisneros.

Monday came and Carter was supposed to visit Chavez, offer a proposal and then be the official guest for luncheon (or dinner, I forgot). Things must not have gone well, because the food scene was cancelled. Carter made his declarations and plainly said that he had offered Chavez his pick of different electoral scenarios and constitutional amendments. Chavez wants no election, now or ever. He was furious.

However this started the ball rolling because it was clear for everybody that the international community patience is running thin and Carter was the messenger. The message? “Chavez, you either fix this thing real quick by serious negotiations or you have to go to elections to bring in somebody that will”.

Marches, in general

In the central valley of Miranda State, Valles del Tuy, which have become Caracas Metropolitan areas (a fast rail for commuters is even under construction), the opposition organized a big march. Well, the local town halls in chavistas hands did not like the idea and the police actually helped some crazed chavistas to attack the opposition march. 1 death and a couple dozen injured. One of the mayors even proudly declared that “we, chavistas, are not going to yield back any territory” or such nonsense. Unfortunately the videos showed clearly the cooperation of the municipal police with the chavista hordes, and was able to identify one of the guys that was riding atop a jeep shooting at people. Considering the state of the judiciary there is little hope for prosecution.

If this type of situations seem to become routine here, it seems that the brazenness of this particular one has touched a chord.

Marches in particular, El 23 de Enero

January 23 1958 is a big date for us since a popular movement helped to overthrow Perez Jimenez, our last official dictator. The ancient system used to claim that date as the glorious foundation of the democracy. First Chavez tried to discredit it by saying that on that date the politicos pacted to exploit the people (Pacto de Punto Fijo, a famous agreement between political parties that insured that Venezuela entered for its longer historical period of peace and democracy, albeit a pseudo democracy). But the memory of the 23 de Enero seems too strong for Chavez to discredit it and last year he decided to try to co-opt it by chairing a rally to commemorate it. Unfortunately the opposition, true heirs of the 23, had their first big success when for the first time they outnumbered chavistas in the street. Of course Chavez said that the true democrats were in his march.

This year Chavez decided to try to regain some of the lost ground in the street. For two weeks gas has been hoarded, transport mobilized, civil servants told to attend, etc… For two full weeks! He did manage to gather around 100 000 people on Avenida Bolivar. And the psychological war of nerves made people afraid that that day he would try “something” so the opposition called for a “stay at home day” in Caracas while a few marches did take place in the provinces. Still, chavistas felt good. Not for long. This past weekend the opposition did a camp out on Caracas main highway. This thing organized within 24 hours had a total attendance estimated at around 600 000. Both of these numbers are calculated by a serious agency that measures the surface, the time the event lasted, camera surveys, how many people can you put per square meter, etc…

Chavistas are livid again, besides feeling ridiculous. Indeed, two weeks with all the official advantages cannot yield results as good as the opposition. This one is able to mobilize in Caracas alone, and way faster than the chavistas, way more people in way less time. Not to mention that chavistas dispose from funds to treat people they ferry from the provinces with food and drink when they come to their march to Caracas, and many with lump sum monies. Actually RCTV filmed people being ferried by plane from the provinces!!!!

This speaks volume about the real support for Chavez, at least that fervent militant support of days past. And you wonder why chavistas have stopped paying for polls long ago.

Oil industry

Government claims to be back to 1 200 K barrels. The oil strike claims that they are barely reaching 500 K, down from a potential 3 000 K. The government does not allow anyone in the militarized installations.

Meanwhile the pace of firing keeps up. 5 111 top management guys have been fired and Chavez claims “that this demonstrate that the oil industry was overstaffed”. Now firings in middle echelons are increasing. Note that the total payroll of PDVSA is around 40 000.

I know somebody in these high echelons. He has not been fired yet. But his office has been locked up, his two secretaries have been fired, and he is waiting for his name to appear in the newspaper anytime soon. He even confessed to us that he was sort of looking forward it since his “ex” colleagues wonder how come he has not been fired yet, what kind of deal he might have cut. Since his area was neither exploitation nor production we think that they just did not get around to it yet.

Of course, all of the failures of Chavez scalawags are blamed on “sabotage” from the striking workers who have been threatened to be sued and put in jail. Proofs are not forthcoming, in spite of a pro Chavez judiciary. I suppose that they are as incompetent at making up fake evidence as to run the oil industry.

But this is actually very, very damaging for the prospects of recovery. It is clear that Chavez people will not be able to reopen refineries to something close to 50% levels for at least a few more months. Meanwhile these fired workers will eventually have to look for jobs and they are rather good. The best will find jobs out of the country. And then, when, and if Chavez goes, whom will we get to restart everything?

Currency exchange controls

Last Wednesday, 22, unable to stop the hemorrhage of dollars from international reserves, the government recurred to one of the last tools of governments whose economic policies fail dramatically: currency exchange control. In this system the government fixes the exchange rate of the local money against, say, the US dollar. The government also decides who gets to exchange what and in which quantities. This is what left me without credit cards in Atlanta last week as all USD purchases were blocked. Of course there is a period of a few days during which nobody can buy a single dollar.

Of course the potential for corruption is awesome since it will become a matter of knowing who signs what to get importation licenses. In what is perhaps the most corrupt government in our history, one can imagine what the consequences will be on the economy.

This type of measure has been tried by past governments so Chavez in all fairness cannot be blamed for trying again, even though the clear story of failure is for all to see. The last time this was attempted PDVSA offered its business savvy and it computer brute force to install exchange control. This time this is not a solution for obvious reasons. After 4 days the government has decided to extend until February 5 the ban on purchases. Apparently they are unable to set up the system. And a recent rumor has that Chavez has opted for the system that allows maximum control on who gets what dollars, even though it is a system that does not allow for a slow recuperation of international reserves. The ideal system would include, for a few months maximum, a fixed rate by permit, and a free rate which is usually 10 to 20% higher than the official one. Thus the government does not need to provide for travel, luxury imports, etc and can make people that want these services overpay for their dollars. Chavez prefers a single rate where he can personally decide who gets what. Need I say more?

Gas distribution

It is basically in the hands of the military. Priority industries get to pay to jump ahead of the line. The price of gas has jumped even though the official price is fixed. If you do not like it you go back at the end of the line. If you complain, your priority papers are torn by the soldier monitoring. I know people that have experienced this. When you finally buy gas more often than not you cannot get a receipt.

I leave it to your imagination to decide where all the extra cash goes.

Food items

After the burp scene of two weeks ago people are trying to get rid of any reserve they might have. These reserves are low any way and production is not going very well. The result will be that rationing might come sooner than expected.

You can still go grocery shopping. Prices are already experiencing serious hikes. But you can fill up adequately your cart even though the choices are meager. For example items that have completely run out are soda pops and beer. Many are very rare, such as fresh milk (only powder milks is plentiful). Some are limited in the amount you can purchase such as corn flour and wheat flour.


I will write later on the referendum cancellation and other legal aspects taking place. These were just a few vignettes to illustrate where we stand this last week of January. But it should be clear that the government is on the offensive and does not care whether the economy totally collapses as long as it remains in charge.

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