Monday, December 14, 2015

The 2015 election: final review

The good thing about landslides is that detailed study of vote movement is not necessary nor possible since the anger vote is difficult to assess and predict for the future. In democratic countries this is not really an issue: Mauritius had once a 100% district parliament win fort a single party and it never stopped being a democracy. Thus after reviewing the highlights we may try to summarize the whole thing.

I reviewed the worst chavista defeats, the crown jewel falling to the opposition in full, the ill fate of the dissidents, the division in the new majority. For further details Tal Cual has a nice graph about the MUD growth in each district from 2010 to 2015. So let's summarize a few points.

Below is the update of the Caucaguita graph including Sunday 6 result.

Caucaguita went to the opposition and thus the help it supposed to be for chavismo in the gerrymandering did not work out. As reader Boludo Tejano pointed out, that gerrymandering does not work does not mean "it blew up in your face". Though in Barinas it was a clear case of such thing: the newly drawn three seats district could have gone only one or two for opposition before but went down all three. Another infamously redrawn district, Valencia South, went all three seats for the opposition.

What is interesting in the Caucaguita numbers above is that the opposition growth followed its old pattern: the vote to punish Maduro only played a role in that the opposition went above chavismo when in projection it should have been slightly below. There is the bad news for chavismo: there was an anger vote but there was also growing opposition vote. Which one is which will be revealed over the next years, but the trend was there even if in some states the MUD vote had truly circumstantial "angry voter" jumps.

The angry vote as it explained anything was the extreme polarization of the country. Third party candidates fared particularly bad. You were for Maduro or you were not. And let's not forget that a significant portion of the Maduro vote was out of fear. Had elections be free we may be talking today of a National Assembly Mauritius style. Yet, this uncertainty about how much of its gains are real should give pause to the MUD as it must find ways to retain enough of this angry vote to retain a parliamentary majority in the future. The upcoming CNE will probably eliminate the gerrymandering of the currently chavista controlled CNE and future 2/3 majorities cannot be counted upon again.

Another lesson should be taken away from these elections: the electoral fraud of chavismo may be everywhere but at vote counting time it only works if turnout is rather low. From all information we can listen to, if there are possible local vote padding, those were ineffective. True, the electoral fraud actually takes place BEFORE the vote by making it impossible for the opposition to campaign effectively. But we hope that from today on the campaign in pro of abstention will be finally silenced and redirected to fight pre-election fraud.

In the end the strategy of the opposition to do nothing and wait for the elections worked ONLY because the economy got worse than anyone expected. Thus at this point trying to figure out the effect of Leopoldo Lopez protest of 2014 and subsequent martyrdom cannot be evaluated out of the vote itself. Yet I propose that the spectacular sweep of Caracas by the opposition owes something to Leopoldo (and Maria Corina and Ledezma). His Caracas protest and the locally felt regime's overboard reactions have energized the opposition there even though people like Capriles poo-pooed it.

We thus got a 2/3 majority which contrary to the pessimist crowd I think should hold long enough to pass key decisions that will affect future electoral contests. One is the renewal of the electoral board CNE. Another one is to remove part of the censorship that affects election campaigns. With this the material advantage of the regime at election time will be lowered considerably. If we can get at least that much next year, and I trust we will, then this election would have been worth it just for that, for allowing the return of a real political debate that may avoid a civil war.

Finally, when we look at the results in some details there is no way to hide the unmitigated disaster the vote was for the regime even if it tries to disguise the disaster by, well, ignoring it. Even though the PSUV held "primaries", even though it did manage to spread a few goodies at the last minute, two years of long lines under the sun and rain have done the regime a permanent damage. And it seems that all hell is about to break lose inside chavismo. Let's not forget that when such a mass movement finds itself so degraded is when it can become more dangerous and bring more harm than ever. Or peter out fast. Let's hope for the alter.


  1. I'm curious if MUD will try to reform the oil industry in Venezuela. Right now, with the low oil prices, Venezuela's oil revenues are at a very low level. But this won't persist forever.

    In the past, Venezuela made deals with major multi-national oil companies. After Chavez came to power, he threw out those contracts and forced companies to sign new deals. Some companies did this and others fought Venezuela in court. Generally those who fought Venezuela in court have won. About a year after the few companies that re-signed with Venezuela did so, Chavez changed the tax structure with respect to oil. This was the last straw for some companies and since then, they have invested the minimum in Venezuela. As oil prices went even higher, Chavez again changed the tax structure for oil companies a couple more times. This meant that no company trusted Venezuela and since then, foreign investment in oil production in Venezuela other than from China has been very low.

    Venezuela has also not paid money owed to oil drilling companies, oil product suppliers (pipelines, part, various materials). Venezuela has even not paid some foreign partners their percent of oil sales.

    Now of course, Venezuela does not have the money to pay all those people it owes money to.

    Venezuela also needs foreign expertise to modernize and expand oil production and do small things like fix leaky pipelines and infrastructure that is polluting lakes and streams in Venezuela. The problem for Venezuela is that after an oil workers strike, Chavez fired many of the professional oil workers and prevented them from working in the oil industry in Venezuela. As a consequence, those workers who had salable expertise are now working in other countries.

    Given the lack of cash from the government of Venezuela, the thing that the government can do is fix the tax laws on oil such that should oil prices recover, the oil companies will feel confident of making a profit. They can also from this point forward pay money that is due to foreign partners against oil sales. The reason to do that is because it prevents companies with foreign partners from investing. How can they invest if they don't get paid their part of oil sales? If Venezuela does this while oil prices are low, by the time they increase, there will be much more confidence that Venezuela will continue to pay which could bring new investment and new technology. Next, Venezuela needs to pay all the subcontractors on time for their work going forward and work to slowly pay past due receipts. If they start this while oil prices are low, contractors will have more confidence in the future and this will bring in more investment. Currently, most foreign contractors have left Venezuela due to not getting paid for one or more years and had their equipment and business confiscated by the government for doing so. The government should privatize such businesses and allow companies to have their equipment back if they want it and to remove or bring equipment to Venezuela.

    In short, Venezuela should look closely at what constitutes "fair" business practices with respect to oil and other industries. They need to publish long term regulation and tax plans for these industries that won't be changed materially in the future. They need to pay receipts due to contractors and subcontractors from oil revenues prior to sending the rest to the government. Paying for the contractors and subcontractors is the cost of doing any business. If Venezuela does this, they will be rewarded by having a healthier oil industry with increasing production as oil prices increase in the future.

    1. The oil industry does need serious restructuring, I assume the AN will eventually ask Camarada Eulogio Del Pino to provide an auditable history of what happened to the oil industry since 1999, copies of all agreements and contracts involving hydrocarbon sales or deliveries abroad, payment with oil and products, etc.

  2. IslandCanuck1:16 PM

    "But this won't persist forever."

    According to news reports today the low oil prices will continue for the foreseeable future. Iran is set to come back on line with up to 1.5 mbd through 2016 and reserves are at all time high levels.

    I would suggest that Venezuela needs to do it's planning, in the medium term, based on US$25 per barrel oil.

    1. Too low. A good 2016 planning price for 2016 by quarter: $35, $43, $50, $57 WTI. The timing I show is derived from the production forecast by EIA. I simply look at the price needed to turn the ongoing collapse around.

  3. Don't believe the news reports. They expected high oil prices to continue for the foreseeable future when prices were high. In fact, it was an almost universal opinion. Now with low oil prices, they think oil prices will remain low for the foreseeable future ...

    It has always been this way with the media.

  4. Anonymous5:59 PM

    Predictions are not to inform bit to persuade. In 2008 al gore predicted the poles would disappear in seven years unless we acted right then and there to destroy capitalism.
    ABC news predicted in 2006, in a prime time documentary narrated by Chris Cuomo, that by 2015 Manhattan would be under water and a gallon of oil would cost $9, unless we acted then and there to destroy capitalism.
    Politicians and people with agendas will always predict catastrophes unless we do right now, this very minute, whatever it is they want to accomplish.
    Now they are predicting the ultimate, the 'survival of the planet' unless we do what they want us to do.
    What could they predict next?

  5. If they get Maduro out and take over what do they do with the massive amount of money they owe to the legitemit debt like to drug companies and all the companies that sold good and never got paid, air lines etc? What they do with the oil deals with Russia and China that will be very bad for Venezuela's future?


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