For your reading pleasure I have two things today.
Simon Romero writes a major article, major as in big here, on what the referendum to be held in two is about. Yet I am not quite satisfied with this New York Times piece. I understand that Romero cannot be outright against Chavez constitutional changes where he is publishing. I sense that he certainly feels the danger behind Chavez move and he has the smarts to quote Barrera Tyszka who coins the "tyranny of popularity" to describe Chavez regime. The reader will come out of that article definitely worrying about the future of Venezuela (at least the democratic reader which I do hope are the NYT majority readers). But there is still something missing. Could it be that Romero includes academics in Chavez power base when all the evidence is to the contrary as chavismo is unable to win a faculty election in all serious and independent university, when not a single high flying Venezuelan academic is supporting the regime, where the only luminaries are imported mediocrities such as Spain's Monedero?
Perhaps that is what is missing in Venezuela coverage today: that there are few noteworthies that are willing to support the regime and that all support comes from a love relationship between Chavez and a large section of the masses. Romero gets it right when he senses that fervent chavistas will vote SI even if they do not agree with the changes because they trust Chavez no matter what. But perhaps Romero should have been more careful about judging the support to Chavez elsewhere. Also, he could have underlined that after all these chavismo excesses are only made possible through US diplomacy mistakes and its refusal to grow less dependent on Venezuelan oil.
At any rate, Romero at least offers a clear glimpse at what is awaiting Venezuela, a legally elected autocracy without hope of return to democracy except through violent means. But he only hints at the implications (well, the article can only be so long, the NYT is not a blog). If you want to look at the consequences you could start very well on the story of Citgo as researched and told by the Wall Street Journal (hat tip AC). There you will read how Chavez policies have been slowly but surely gutting Citgo, making miss its chance to become one of the leading oil companies in the world, leaving it now to face a slow extinction.
Of course, at 100 USD a barrel Citgo with Venezuela support will not go bankrupt, but that is not the point. The point is that Citgo under a good management and the insured Venezuelan oil supply could have become a leading US company, one of these whose words shape US policies. Instead it is slowly but surely becoming an average business at the sufferance of the US public who is more and more staying away of Citgo. Not that it matters much anyway as Citgo has become unable to supply its clients and gave up hundreds and hundreds of its affiliates.
The reason behind the dismantlement of Citgo is the need for fast cash by Chavez. Not for him long term business plans: it is now or never. Thus, the purchase of Citgo which cost a considerable effort to the old PDVSA. Now, by just signing some contract sale, oil terminals and refineries in the US are sold and the revenue is spent happily by Chavez in unproductive social programs, gifts to other countries, corruption and what not. That is right, assets go up in intangible smoke of no benefit for Venezuela except for a temporary political benefit for Chavez. The assets that PDVSA acquired at difficult times with rather sharp acumen are squandered. It is difficult to see how the new PDVSA would recover them someday if it needed them again. The opportunities of the 90ies are gone for good in the oil industry.
The WSJ paper also tells us two very interesting items about the future of Venezuela, even if only Citgo is studied. First, the secrecy that now surrounds Citgo. Citgo has sold any stocks or bonds it might have and is now out of SEC control. That is not too important in a way, through worrying. What is more important is that now Citgo is managed through a board of directors that are not US (it is not clear if there is at least one US guy on it), and a board which acts in total secrecy. Secrecy! That is a word that characterizes well the new look of the Chavez movement and one of the goal of the new constitution where the people will have definitively no access to the government accounts. In other words there is no way for an independent inquiry to see how well Citgo (or any state controlled business in Venezuela ) is doing. At least for Citgo we can have some day tax returns at the IRS which will give us profits over revenues. But for the rest of Venezuela we will only know how much the revolution of Chavez has cost us once he is out of office. A reason by the way powerful enough for him to cling to power for ever and ever.
The other item expanded in the WSJ ties up with what I wrote above, that none of the Venezuelan best and brightest are in bed with chavismo. The board of Citgo includes two foreigners, Bernard Mommner described as a French Marxist mathematician (and a very discrete power player within chavismo with a reported lavish European life style) and the Mexican Juan Carlos Boué (who, by his name, might also be of French origin). These two characters had espoused in the past the theory that PDVSA was not bringing home enough of its profits by investing too much overseas. In such way they demonstrated clearly that they did not know how a capitalist business must work, through constant investment to keeps its competitive edge, its market share and its future prospect. After all, whatever PDVSA bought overseas was still owned by Venezuela and could eventually ensure a comfortable income once the investment was absorbed.
The strategy of PDVSA was based at a time where Venezuelan oil was not well quoted and where oil in general was thought as a long term cheap commodity. But PDVSA had planted the seeds to become a major world player once oil woudl go up again. Instead by listening to advisers such as Mommer and Boué Venezuela is reverting to a colonial exploitative system where it will sell its oil to the highest bidder, becoming thus economically dependent on the highest bidder, being that one the US, China, India or Europe. Because the higher bidder will also pose its conditions and the unquenchable thirst of Chavez will make him eventually accept the conditions imposed.
And thus we see the future of Venezuela where Chavez will repulse the Venezuelan intellectual elites and thus will have to rely more and more on international mercenaries. Meanwhile in the streets even people that know better are deciding to vote SI because they just love Chavez.