Saturday, November 22, 2014

Venezuela reaches the limits of procrastination

It has been now two years that the post Chavez era has started and nothing has been done to correct the obvious. It is true that there are many explanations, ranging from the inner divisions of chavismo to their absolute ignorance of how the world really works, not forgetting that Cuban masters have come to the realization that Venezuela is lost and that they need to loot as much as possible before the inevitable bankruptcy. The point I am trying to make here is that the regime does not take any serious decision outside of repression while the opposition is doldrumier than ever, apparently waiting for things to fall of their own weight. But such procrastination has consequences.

It's the economy, stupid!

The problem here is that under Chavez Venezuela has become more dependent on oil than at any time in its history. That this income reached astronomical highs is only part of the explanation, there was also a deliberate and continuing attempt at destroying the private production sector to weaken opposition financing, beyond ideology, of course.


As a consequence the populist system installed under Chavez can only function if the oil production allows for at least 2 million barrel export and at 100 USD a barrel. Today it is neither nor. Unfortunately the regime does not understand that the drop in oil prices is due to new energy sources, to the failure of world economy to recover in full from the 2008 crisis, from Saudi Arabia more interested in keeping market share than actual income, etc.

So what are the strategies of the regime? Well, it sends Ramirez former but still oil Tsar to beg for an oil price at 100. What else can it do? Oil production cannot increase just like that as Venezuela has forsaken the necessary investment that exist in, say, Saudi Arabia, to increase or decrease oil production at will. Never mind that strategies to hold market like having oil refineries abroad or captive products like Orimulsion have been recklessly disposed of.

One strategy that is not seriously contemplated is to release in a hurry some of the nefarious controls over local production in the hope that within a few months Venezuela would depend a little less on imports to feed itself. Say, until oil prices rebound a little.  Instead the regime has done nothing for two years but in the last two weeks has instead extended its controls, increased taxes, decreased dollars to producers. Well, at least according to the latest laws from the enabling law just expired, laws announced but nowhere to be seen yet. Even there, in wring down laws to further its control over everything the regime procrastinated...

But as bad as this is, it is not the worst part.  Years of controls, years of erroneous policies, years of speeches promoting labor instability have deeply damaged the production tissue of the country. Even if controls were to be lifted, it is now impossible for the local producers to rebound fast. As late as 2010-2011 any softening of the regime's controls could have still allowed local production to recover fast a minimum of productivity. But this is not the case anymore. The causes are many.

There is an extremely deleterious work environment were mafia like crime and trade union extortion make many production plants non viable. The infrastructure keeps deteriorating, from lack of power to roads in shambles which make difficult to increase production and distribution. Commerce, a major source of production funding, has been voided a year ago through the Dakazo when the regime has for all practical purposes taken "the right" to nationalize any stockroom. Investment for improving production has been at a minimum for the last few years creating a non competitive structure. And more.

Recovering from the real damage is going to be much harder and slower than it would have been 4 years ago, much harder than what people think, people that are not at ground zero the way yours truly is. The military has allowed it to happen. The regime believed that it was good for them. The opposition has been unable to articulate a message to condemn that destruction and warn of its consequences. Now they are all going to pay.

It is not politics, stupid!

This week and next we are seeing yet more evidence that the only thing people in charge are able to think about is more useless politicking. Both the regime and the opposition look more and more like rival bands playing on the Titanic.

The regime problems, besides the impeding war between the paramilitary colectivo thugs and the army, besides its inner factions at war, is that it has no clue on what to do except holding on to power at all costs and make sure Cuba receives its monthly allowance. All decisions, or lack thereof, come from that dystopia. So, to distract itself, it invents internal elections whose sole real objective is to get rid of some smaller factions like Marea Socialista. For that they are not afraid to mobilize the Electoral Board CNE, to suspend schools for a few days as if these were national elections on a crucial matter. Even El Universal felt obliged to comment on this new abuse.

But the opposition is not faring much better. The abandonment for all practical purposes of Leopoldo Lopez to his jail keeper Cabello has underscored yet again that as far as AD and Primero Justicia are concerned, if they are not the ones leading the opposition they cannot care less about chavismo remaining in office (assuming that this one throws them a few bones, at the very least).  Voluntad Popular of Lopez, at loss for ideas on how to get its leader out of jail, has decided to start a signature campaign to call for a new constituent assembly. As if this would help solving the current crisis... Not that the constitution needs to be changed badly, on that I could not more heartily agree, but the time frame is so dilated in time, if all goes well, that it is irrelevant to the current situation. Never mind that since the Tascon List few people will be willing to sign their names on any list that will ensure state discrimination against them. I, for one, did not go to sign up, not by fear, but for sheer amazement.

And thus we float downstream...


7 comments:

  1. Daniel,

    You don't mention collaboration of the MUD. You don't mention the backroom,dirty things happening behind closed doors between people like Ramos Allup and Barboza (and basically all that sat on the Mesa Del Dialogo) and the PSUV.
    Is it that you don't really believe anything is going on?

    ReplyDelete
    Replies
    1. is that I cannot write about everything... though read carefully and I think that the comment on abandoning Lopez is quite telling by itself. No?

      Delete
  2. Dr. Faustus10:53 AM

    "As a consequence the populist system installed under Chavez can only function if the oil production allows for at least 2 million barrel export and at 100 USD a barrel. Today it is neither nor. Unfortunately the regime does not understand that the drop in oil prices is due to new energy sources, to the failure of world economy to recover in full from the 2008 crisis, from Saudi Arabia more interested in keeping market share than actual income, etc."

    Oh my. One of your best posts ever....

    ReplyDelete
    Replies
    1. Thank you!

      I think it pays to write less often, to let inspiration build up ;-)

      Delete
    2. Actually Daniel you need to write every day as that's how often I check. Your insight into the disaster known as Venezuela is rather nice. What amazes me is that given the corrupt nature of the people in this Gov't, or lack thereof, and they what appears to be stupidity which is limitless, how so many insiders have got stinking rich and yet are not publicly talked about? One would think these insiders would be well known, publicized and hence more readily held accountable.

      Delete
  3. Well, of course we would wish you could write more often. But I'll take what I can get! Thanks!

    ReplyDelete
  4. Anonymous11:57 PM

    Daniel, you do an excellent job. Thank you for your blog.

    ReplyDelete

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