Choses vues at the Hunger Games

This one is almost everyday to enter Caracas "EXITO"
near Plaza Venezuela. I have driven past it three times
and seen a variation of it with my own eyes. Once
probably worse than this picture.

I have not written much about the massive food and home supplies shortages that we have experienced this January. To begin with it has been years that I have been commenting about food shortages (1). This is not new, it is just a step closer to some paroxysm in the making. But there is also that fact of life that the first two weeks of January there are occasional shortages of this or that because of the bad habits of Venezuelans to shut down the country as early as the first week of December. Ill calculated inventories in X or Y stores can create a local shortage.

But this year it has become calamitous and bad planning in December cannot by any means account for the current disaster. What is happening now is strictly a direct consequences of the regime's disastrous policies as local producers could not even plan for bad inventories: they simply did what they could and hoped for the best. Now long lines at food stores are headlines world wide, even editorials.

SADA, SICA and more ways to rob a hard working corporation: Cargill and Polar the latest victims

Yesterday the Chavez government stole 120 tons of food stuff from Polar (in English here).  Today it stole 173,000 liters of cooking oil from Cargill.  Both robberies were perpetrated by the same Nazional Guard General, Bohorquez, who lamely says that the seized items will be sold in Barquisimeto through the recently nationalized EXITO hypermarkets, and of course the Mercal/PDVAL system.  That these unjustified seizures will benefit the Barquisimeto people while bringing food shortages to those living around who depend on the Barquisimeto warehouses for their supply does not seem to perturb Bohorquez.  He simply says:

"Presumo que hay acaparamiento, que hay boicot a fin de evitar que éstos productos llegue a la familia venezolana" [I] presume that there is hoarding, that there is boycott to prevent these products items to reach the Venezuelan table.  [that guy does not even know the difference between boycott and hoarding, another example of chavismo general willful ignorance of word meaning]

Then again this is a country where the Caracas people are spared the electricity shortages which mean more severe shortages of light outside of Caracas than what they should be called for; but i digress.

How was this possible and why?

A month and a half to play it out in Venezuela

For some, the local elections of December 8 are the last horizon. Crossing it successfully will mean the end of chavismo, at least as we have known it. For others all will be played as soon as the Enabling Law is published. Some think that a popular uprising is around the corner. Some think that it is all over. All are wrong, on these and other suppositions. That does not make me right because, well, I actually have no position. So, instead of trying to figure out a way out of this mess I should limit myself to try to evaluate the current situation. May the reader think whatever s/he pleases.

The almost daily morning line at Makro San Felipe. It is under the sun, people now carry umbrellas rain or shine.
This a short one. Sometimes it is 4X longer, reaching the main avenue downhill.
It is not the only line in San Felipe, but it is probably the most recurrent because Makro always get some item.

Whatever one thinks, one thing is certain, the next couple of months are decisive. Even if you think all has been played out, the coming weeks will decide the extent of the economic crisis and the extent of the repression we must suffer through 2014.

Another day, another scandal. Or is it all planned provocation?

Chavismo seems to delight in provoking an almost daily new scandal this year. Today we learned that the decree to name Jaua foreign minister was signed by Chavez on January 15 in Caracas. Since we all know he is in Havana, it is clearly a fraud. Or a "deliberate" mistake to provoke us. After all, we know that no Venezuelan court will take upon itself to validate/invalidate the signature of Chavez on an obvious forgery. Forgery but how political....

Thus we are left with what is becoming an obvious question. Considering all the actions of the new regime today, from baseless accusations of food hoarding to rigging nomination decrees, what are the real intention of the regime? Is the regime seeking a confrontation to excuse some state of exception and avoid elections altogether  Or at least jail leading opposition candidates?

The situation is going to boil over real soon. Food shortages  whether planned by the regime or a result of its incompetence are not only rising but as far as I can tell (and I am in the food business) the regime is not doing anything to remedy that except confiscating precarious inventory, exhausted in a few days and that of course no business will bother replenishing least the regime comes calling again to steal your stuff. The 3% inflation of December coupled with food shortages and failure to offer dollars to allow business to remediate the situation with a chavista base crisped by the health of its not so living god and you have the basic ingredients to provoke something that you can blame on the opposition. As a specialist pointed out again today in Globovision, nearly half of the country has no access to independent source of information. The only news they have access to, if they have no internet or smart phone, is state media, pro Chavez  or eunuchial printed paper. Manipulation is easy, and it can only be done by the regime. AGAIN: Globovision only reaches in open broadcast Valencia and Caracas and in many areas there is not a single radio station where you can get a view different from the one of the regime.

Maria Anastasia O'Grady on Venezuela food shortages

As I have said often enough, Ms. O'grady is the foreign journalists that "gets" Venezuela and chavismo the best. On occasion she might miss some critical piece of data, or exaggerate some, but I will forgive her almost anything because she GETS IT, she gets what is really going on in Venezuela. Her recent article (subscriber only, but readers send me such stuff, thanks Al.Ma.) posted below in full, will explain better than anyone has done why is it that at my Central Maderiense I cannot find some of the regular food items that I took for granted a year ago.

But before you read the whole piece, I want to highlight this particular sentence, something that warms my heart to read from a foreign correspondent, something that Miguel or me have been saying for a long time but which was ignored as perhaps too unbelievable (maybe O'Grady reads certain blogs?).

Venezuelan policy makers can't be this dumb. The intention is not to feed the country but to destroy the private sector and any political power it might still have. In this environment survival independent of good relations with Mr. Chavez is nearly impossible.

¡Mas claro no canta un gallo!

(Spanish translation here, hat tip Klaus; full original below after you click)

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A Circus But No Bread
By MARY ANASTASIA O'GRADY
May 21, 2007;


"The characteristic feature of the market price is that it tends to equalize supply and demand."

--Ludwig von Mises, "Human Action," 1949

The Venezuelan government will seize control of Radio Caracas Television on Sunday, finally making good on a threat to silence one of the country's most important independent news sources. It is no coincidence that this is happening at a time when Venezuelans are suffering a shortage of key foodstuffs.

Free-speech protections in Venezuela have been steadily eroding for the past eight years, and most other television stations already practice self-censorship. With the expropriation of RCTV, there is only one other independent voice -- Globovision -- left standing. This assault on free speech has even provoked criticism by the Organization of American States, which has been silent about President Hugo Chávez's many other offenses against democracy.

Having built his claim to legitimacy on the spurious assertion that he presides over a democracy, you can bet that Mr. Chavez would not have gone after RCTV unless he deemed control of TV news vital to his survival. It may indeed be. The reason is because the economy has been so mismanaged that a crisis now appears unavoidable. How it will end, in rationing and hunger or hyperinflationary madness, is hard to say. But when the whole thing comes a cropper, the last thing the president will want is TV images of popular protests that could be contagious.

From the earliest days of his presidency, Mr. Chavez made it clear that he intended to vastly expand the state's economic power. In 2000 he started politicizing the state-owned oil company PdVSA and hollowing out its professional engineering and marketing staffs. Shortly thereafter he took to expropriating farms, factories and apartments. When Venezuelan money began to flee, he slapped on capital controls. More recently, he has forced international oil companies to hand over Venezuelan operations and surrender majority control. He has nationalized the largest telephone company and the most important electricity utility. He is now threatening to take over the banks.

As government takings always do, these assaults on property rights have badly damaged output and investment. Yet the harm has been greatly compounded by three other pernicious policies: price controls, profligate government spending and inflation of the national currency, the bolivar.

Here's how Chavez economics "works." As petro-dollars pour into state coffers, the government takes them to the central bank to get new bolivars printed, which are then pumped into the economy through government spending. Mr. Chavez has also been regularly increasing wages. The result is a consumption boom. Under free prices, too many bolivars chasing too few goods would produce inflation that would show up at the supermarket checkout counter. But price controls make that impossible. Instead, serious shortages are emerging.

Free prices are to an economy what microchips are to a computer. They carry information. As Austrian economist Ludwig von Mises explained in his legendary treatise 60 years ago, it is free prices that ensure that supply will meet demand. When Mr. Chávez imposed price controls, he destroyed the price mechanism.

And so it is that the Venezuelan egg is now a delicacy, the chicken an endangered species, toilet paper a luxury and meat an extravagance. White cheese, milk, tuna, sardines, sugar, corn oil, sunflower oil, carbonated drinks, beans, flour and rice are also in short supply.

The reason is simple: Producers have no incentive to bring goods to market if they are forced to sell them at unprofitable prices. Ranchers hold back their animals from slaughter, fisherman don't cast their nets, food processors don't invest in equipment and farmers don't plant. Those who do produce find it makes more sense to take their goods across the border to Colombia or to seek out unregulated (black) markets.

Importers also have little incentive to work these days even though the country needs food from abroad. Some things like wheat are not grown in Venezuela. Other products like milk, sugar and potatoes are imported to supplement local supplies. But the Chávez government has made it difficult to buy a dollar at the official exchange rate of 2,150 bolivars and if an importer has to buy dollars at the market rate of 4,000 bolivars it is impossible to make a profit under price controls. Even imports not subject to price controls can be difficult to find since import permits and licenses, as well as dollars, are hard to come by.

This is putting a crimp in more than just the food supply. According to local press reports, some 40% of the country's air fleet has been affected by delays in getting spare parts and the automotive industry's supply chain is hampered by a lack of access to dollars. Earlier this year hospitals began complaining that the servicing of medical equipment has been delayed because spare parts are not available. Hospitals are also reporting shortages of medicines for diabetics, antibiotics and hypertension drugs. Price controls on construction materials have damaged the reliability of supply.

To stock the state-owned grocery stores called Mercal, the Chavez government goes shopping abroad with dollar reserves. Of course, Mercal shelves are often bare as well. Moreover, some enterprising government employees seemed to have learned something about market economics: The Venezuelan media is reporting that Mercal supplies are turning up for sale just across the Colombian border, where market prices prevail.

Venezuelan policy makers can't be this dumb. The intention is not to feed the country but to destroy the private sector and any political power it might still have. In this environment survival independent of good relations with Mr. Chavez is nearly impossible. In the revolutionary handbook, capitalist producers and importers who buy things from the imperialists will be replaced by socialists living on cooperatives that will feed the country. The only trouble is that that effort is not going well, as Jose de Cordoba reported on the Journal's front page on Thursday. Lack of knowledge, equipment, incentives and organization have left the co-ops "mostly a bust so far."

To end the shortages all Mr. Chavez would have to do is lift the price controls. But with inflation already running above 20%, he no doubt fears the price jump that would follow. Much safer to seize RCTV and accelerate the consolidation of the military dictatorship. When the crisis comes, the chavistas will be ready.


-The end-

El Supremo Jets Off To Porto Alegre - and Juan Forero Follows

So El Supremo, according to this Alabama newspaper, the only one I see running the item, is off to Porto Alegre, Brasil for the 'reverse Davos' known as the World Social Forum, or, The Mother Of All Sandalista Festivals.

A friend told me last week he'd be there for only one day, at last plans, and he'd be talking about land reform. Given Supremo's reported propensity to trash hotel rooms, it's probably more than figurative damage control.

It will be an awkward place anyway. Porto Alegre's voters got a good look at these annual visiting political tourists, and all the garbage, graffiti and bad manners they bring, and voted to throw out the leftwing government that had the bright idea to host these creeps. In elections last October, they voted in some rightwingers who will be less accomodating to political tourists. The Brasilians' newfound lack of love for such meddlers gives some scope to the depth of citizens' loathing of sandalistas wherever they descend the globe. It's a different world now.

Land reform. Hugo Chavez isn't talking about property rights, the way cutting-edge economist Hernando de Soto does - and its primacy as a medium for establishing rule of law. Chavez is advocating Zimbabwe-style confiscations of working farms.

This trip coincides with a tightly-timed Chavez propaganda blitz in the U.S. media. Chavez's chief apologist, Juan Forero of the New York Times, was right on the job, timing his hideous 'land-reform' story exactly to the day his master in Caracas will advance his 'land-reform' agenda at Porto Alegre. He's Chavez's advance-man.

Forero's desinformatsiya is weeks late from when the actual news was being reported by reputable news organizations, but timed just right for Chavez's day at the podium. Forero dusts off old arguments we've not heard since the 1980s, claiming that land reform is the criticial issue of our day, and thousands of farmers everywhere are just waiting for the government to redistribute land from the efficient users of it. As if effienciency just kind of 'happens' and has nothing to do with efficient people.

To read this kind of Forero talk, you'd think the only solution would be to give land to anyone who's poor, regardless of whom you take it from. As if backbreaking labor, collectivization and tiny subsistence farms - care to cut Cuban sugar cane, anyone? - is the big aspiration of the world's destitute.

In Forero's out-of-it worldview, there is no such thing as urbanization, the great move to the cities seen from Lima to Port-au-Prince to Mexico City to Bogota (plus Africa's and Asia's megacities) which - yes, Hernando de Soto again - documented in his brilliant book 'The Other Path.'

In Chavez's own country, 90% of the population is now urban. And the government owns 60% of the land. For the 10% who need land, it's quite solvable. Government land is right there.

But that's not what this is about. This is about Chavez targetting private farms, the kind that have put in running water and roads to markets, and declaring them 'idle.' Juan Forero follows this party line exactly, conveniently omitting to mention that these working farms' operations have been disrupted by chavista squatters.

The Forero argument about 'land reform' also ignores ten years' of economic discovery. Why are there fewer farms now? Globalization and what economists call 'competitive advantage' have driven inefficient subsistence farms out of business and enabled large operations (that can afford GPS systems, expensive tilling equipment, automatic harvesting, high-tech storage, effective fertilizers and insecticides, and fast access to world markets) to survive. Forero makes the specious argument that too few people own the land but in the U.S., it's a lot less than 1% of the population that owns the farmland - only 3% of our population is rural.

This rationalization of agriculture has driven down the cost of food for consumers worldwide and made food more readily available in places where food was scarce. That's food for poor people, I might add.

In the hyperefficient U.S. we grow so much food we burn it for auto fuel! In Castro's collectivized Cuba, people have so little food they freeze water into ice so that what they consume 'feels' more like a meal.

Tech advances in agriculture of course displace small farmers (and I have relatives in the U.S. who've been affected!), who must move to the cities where life is comparatively better, but that's why it must be discussed seriously is an URBAN issue, not a 'land-reform' issue!

Chavez's Zimbabwe approach is the only known guarantee of coming food shortages. Forero slyly brings up Zimbabwe in his propaganda piece, in an attempt to distance Chavez from it. He's lying, of course. It sounds like something Cuban propaganda specialists might suggest to him to do.

Forero also boldly advocates the chavista line that if Chavez could just forcibly redistribute land and end all private property rights, all would be prosperous in Venezuela. He quotes some chavista squatters as his 'authorities,' and attempts to sway us through emotion since his retro arguments about the worldwide need for 'land reform' at the top of the piece are so bad.

Now Chavez can happily cite the New York Times article and you can bet you'll see it appear on his chief propagandists' Web sites - Venezuela Information Office and Global Exchange soon as 'educationals.' Chavez can use this Forero propaganda at his speeches in Porto Alegre and hope he will not be dismissed as 'irrelevant' or 'a Froot Loop' as an earlier item I wrote put it.

This is Chavez's bid to re-frame the terms of debate on his own outdated 1980s arguments and not be a laughingstock. Juan Forero is more than a little happy to accomodate him, just when Chavez needs him.

It's propaganda, the real thing.

Massive pot bangging in Venezuela

I am pleased to report that Capriles petition of doing a long cacerolazo at 8 PM has been a major success. In San Felipe we started at 8 sharp and after half an hour we got tired and went home. And in the silence of our block we could hear the rumor from all around us!!!!!!  Even now, diner quickly dispatched and opening for a quick note, I can still hear stuff!!!!!  It has also been taken up by CNNE and NTN24 from Colombia who are showing it live in their screens.

Chavismo corruption and incompetence in a single number

Tal Cual offers us today an article about the chicken production in Venezuela and the forecast if prices are not increased from their fixed value. It also says that chicken is pretty much sold everywhere above 50% its fixed value and no one cares, only too happy that they are finding chicken when so many other things are missing. Still, unless government does not allows a realistic price, within 6 months chicken will join the growing list of chronic food shortages.


But I digress, the real number of this article that will interest the readers of this blog is the freight cost of a ton of goods that goes through Puerto Cabello, the main harbor of the country, the one through which more than half of the imports of the country come through. Well, the cost for importers to go through Puerto Cabello is 150 USD, whereas the Colombian importer that goes through Cartagena pays only 40 USD. That is right, it costs you three times more to import through Puerto Cabello than to import though a Colombian harbor, geographically equivalent to Venezuelan harbors.

Why?

Very simple and I can vouch personally for that: corruption and inefficiency.

There are so many lame permits required, so many controls to verify CADIVI so as to pay the bills later, so many opportunities to get a fast buck by so many corrupt officials that getting your stuff out of Puerto Cabello is an ordeal. And Tal Cual does not quantify the direct cost of corruption; the numbers reported are those who come from unnecessary permits and the delays that dramatically increase the storage costs that you have to pay. If you add corruption costs (usually included in the bill of your custom agent who handles discretely these delicate matters, it is all a big mafia) the costs per metric ton could easily double the already high 150 USD. Of that I can vouch personally. I cannot tell you how often we had merchandise stuck in Puerto Cabello for months, with all permits in hand, when in normal times it took no more than two weeks to clear customs. The excuses range from “the inspector did not come this week” meaning a nice present might make him hurry up, to “I want to see all the originals” which means that if your business is, say, 4 hours form Puerto Cabello you have to waste at least one to two days of your time to carry all the originals whose permits appear anyway in official computer pages.

Now, if you are importing a ton of flat screen TV, you can easily absorb the cost. But when you import a ton of corn for animal feed?

So, guess what? Who pays the final costs? The silly chavista (and anti Chavez) consumer who either must buy above the price or face an empty shelf. There is no mystery on why there are food shortages in Venezuela. And there is no mystery on why the situation will become worse and worse unless chavismo polices in favor of corruption and against private business do not change dramatically. No fat chance of this happening any time soon.

Thus you have it here, in a single number an accurate representation of the cost of incompetence and corruption. And I am not even talking about these costs once your merchandise has left Puerto Cabello.


-The end-

Remembering the Revolutionary Tourist

I am pleased to welcome back for what I hope will be a few posts Alex Beech who once upon a time was arguably the best English language blogger on Venezuela, until she decided to take her writing skills elsewhere. Too long ago she did write a few posts until time and New York absorbed her. But she has never been far from her people and I asked her to let us know what does it feel to watch with the impotence that comes with the afar what goes on here.

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“There was a whiff of Ozymandias to it all, but foreign supporters applauded the fantasy. Oliver Stone, visiting Caracas to make a documentary, looked blank when I asked about the distortions and corruption haemorrhaging the economy. Shrewder observers – writers and academics – would visit and confide over rum that, yes, it all seemed a bit chaotic, then return home and publicly laud the revolution's progress.” - Rory Carroll, The Guardian

Had foreigners who profited from the revolution not ignored signs that Venezuela was in free fall, had they lived and worked there, enduring horrific violence, food shortages, and the sheer exhaustion of listening to a government spew hatred, perhaps their consciences wouldn't have allowed them to make films and write books that confused the world to this day.

Maduro is looking for food.... A primer on food crisis in Venezuela

I am not making this up: Maduro, the pseudo-president of Venezuela has justified his trip to Uruguay with this excuse among others:

“Parte clave de la gira que yo arranco mañana (...) es para garantizar fortalecer nuevamente la reserva alimentaria de productos básicos de nuestro país a tres meses"
A key part of the tour I am starting tomorrow (...) is to guarantee to strengthen [sic] again the food reserve of basic products of our country for three months. (I am sorry, I cannot translate it any better, the guy cannot speak properly).

So many things wrong already there, not to mention that he also accused the private agricultural sector of hoarding and sabotaging the transition to socialism. Thus I suppose that I need to write a primer on food shortages in Venezuela as the one I did a few days ago for media.

The 2008 election gambles: part 1, Chavez’s angst

May first brought once again to the forefront the divided country that Venezuela has become. There were two “workers” marches convoked. One to praise Chavez, with dozens and dozens of buses coming from all around at tax payer expense, all passengers adequately uniformed in red, brandishing whatever slogan du jour. The other one was a more heteroclite affair made of actual workers, mostly from Caracas. But there was a difference this time: the opposition workers march was barred from its final outcome by an extraordinary display of police and soldiers that betrayed only one thing: chavismo is running scared.

It is clear to all that the December 2 referendum has changed the political course of the country. With Chavez aura of invincibility gone, not only his followers are less likely to put up with all of his antics, but a new type of opposition, now emboldened by its success believes that the end of the regime is not a farfetched hypothesis anymore. What the opposition is doing these days is the subject of a following post.

The pressing events of the past few months, from the pro FARC debacle, through the new wave of nationalization and to the difficulty in locking up the PSUV configuration give a clear picture of what Chavez problems are and how he would try to win the regional elections next November. But before getting into this once again the reader must be reminded what are the real objectives of Chavez and what does he disposes to reach them.

What Chavez wants

It is very simple: Chavez wants to remain in office for life. For the time being his aim is thwarted by the December 2 2007 defeat but he still has more than 4 years to find a way around this obstacle. This need is exacerbated with the debacle of the Anderson Case where, after the financial corruption, the moral corruption of the regime is for all to see: once Chavez is not anymore in office, once the judicial power is freed of his control, a boatload of chavistas, including Chavez, are going to find their sorry asses in court, on the accused benches for a welcome change. In other words, the only way that a few hundred of folks can keep enjoying their loot is for Chavez to remain in office ad perpetuum, including the Chavez family who have carved a nice little fiefdom in Barinas. Not understanding this makes it impossible to understand anything else that is going on in Venezuela these days.

What Chavez has

He has two things: the oil check book and the people that are still with him. The oil check book is something nice and handy and with a lot of reach, in particular these days where a decreased Venezuelan oil production is nicely compensated with an oil barrel flirting with 130 USD. In fact some economist think that the misiones and his foreign actions are financed directly by oil, bypassing normal budgetary procedures (and staling funds that should go to the individual states). Day to day state functions are financed by a large portion of the oil income and by the SENIAT who every day is taxing more and more as the state expenses increase more and more. The taxation burden in Venezuela is reaching unbearable proportions, not from the amount of money taxed but because the tax payers are getting less and less in return. More than ever taxing is robbing the rich to give to the crooks, and, accessorily, the poor. In democracy the rich (read, anyone paying taxes in Venezuela) do not mind that much that their taxes are used to buy social peace, but they also want pothole free roads and to be able to sleep tight at night.

But there is also another problem that chavismo is starting to feel: the stipends that they used to give to the huddled masses are not enough. When someone is used to get a certain amount of freebees after a while this amount does not seem so great anymore, the more so when the annual inflation is somewhere high above the 20% mark. That is, if instead of teaching to fish you give free food, well, people get fat and hungrier. In short, if Chavez does not hurry up to secure his permanent hold on the country, soon there will be not enough money to buy such control, no matter how high oil prices are. Social programs can reach only so far.

Of course that Chavez is surrounded by crooks able now to steal quickly millions of dollars through semi legal ways does not help him much. Corruption under Chavez has rotten the state faster and deeper than the corruption during the full 40 pre Chavez years. And yet Chavez has to work with such people: he is the one that turned a blind eye to corruption in the hope to secure a devoted base, if anything to blackmail this new caste if needed- Unfortunately, even if devoted to Chavez (often through necessity and inner chavismo scare tactics), such a base is incompetent.

The drama of Chavez is that he cannot attract good managers, or charitably put, not enough good managers. Competent people, people with good administrative skills have enough self worth that they do not need to work for Chavez, and are certainly not willing to put up with his lengthy cadenas where they must spend hours nodding so as not to fall asleep, where they cannot even get a glass of water nor a bathroom break, while hoping that they will not publicly be insulted by Chavez. To subject yourself to such public humiliation you are either a nobody that has no choice in life or you are a crook. A few years ago one could still give the benefit of the doubt to the Chavez entourage: today such benefit is not allowed anymore.

Thus Chavez is paying the price for surrounding himself with mediocrities, whose only value for him is an alleged blind loyalty. All the problems that are now associated with the regime, from potholes in the streets to crumbling hospitals, from food shortages to extraordinary import levels are due to the people in charge who are all, without exception after the departure of Vielma Mora, crooks or incompetents, or usually both.

Clearly, with that motley crew Chavez will not solve the problems of the country and yet he must rely on them to spread the oil manna. And win elections.

The problems at hand

Moral corruption. After the Isaias Rodriguez fiasco with the Anderson case, as the cover up cannot be hidden anymore, you have to be a really hard core chavista to pretend that everything is fine. True, there are plenty of those around left, but not enough to win a large election without cheating.

Financial corruption. That one cannot be hidden anymore. Paradoxically it is not too much of a problem for chavismo since too many people just want to plug in and see what they can get. Besides, the primitive political culture of too many Venezuelans lead them to think such silly things as “well, it is our side who is stealing, so what is the problem?”. Yet, the problem is slowly but surely eroding chavismo more moderate base. That Chavez is not really hanging anyone for corruption will eventually accelerate the demise of the regime, just as it sped up the demise of the pre Chavez years. There is only so much that people can put up with and that these days Venezuelans are particularly lax in morals do not mean that they have no moral.

Food and other shortages. The coupling of increased purchasing power of the masses with the failure of production to increase from the late 90ies levels have resulted in a catastrophic chronic food shortage in Venezuela that can only be palliated through massive, and increasingly expensive, imports. That is, the oil money is spent on food and eventually find its way to the sewers, instead of, say, new roads or new jobs. Regrettably for Chavez with the incompetents that surround him, it does not matter how much he will increase imports, he will not be able to solve the problem on even a medium term prospect. Once upon a time the solution would have simply been to allow the private sector to work without much harassment, but now even that would not enough. For ten years there has been a major neglect in the upkeep of the Venezuelan infrastructure and this now is reaching dramatic proportions. The increased volume of cars and trucks, and motor traffic, courtesy of oil at 100 USD is just overwhelming the road system. Now any truck carrying food spends twice as much time as it used to do 3 years ago to reach its destination. The railroad system is years form been completed and collapsing roads are ensuring that the problem of efficient food distribution is going to get worse before it gets better. Amen of any increase in food production which depends in large part on the circulation of crops and their needed supplies.

Insecurity. The crime wave is not abating no matter how much the government twists statistics. The back pages of the newspapers tell a tale: Iraq risks being favorably compared to Venezuela. The only solution to this problem is short term repression and long term plans and prosperity and real job creation. The government has demonstrated that it can only repress opposition and is devoid of any long term plans. These anyway probably would be useless since the ministry revolving doors make any new appointee come up with his own plan superseding any previous effort. Expect an upward trend in the murder rate. Besides, high crime is a way for the government to control the opposition. After all the big wigs of chavismo have several body guards paid at tax payer expense. Why should they worry about their own security? How can the relate with the masses? Why should they care? The more crime there is, the more scared the populace is and the less it will think about protesting Chavez policies.

Real jobs are not coming. Real jobs are only created when there is a real economic growth in production ventures. Imports, distribution and banking redistribution of populist supplies do not ensure a permanent growth in economic output. In other words as long as Chavez economic policies do not allow the private sector to grow, there will be no creation of real jobs and only the public sector and some services will be the ones creating a few jobs, with the fragility that this implies. Yet the problem is dramatic for the state. The first promotions of the new chavista universities (UBV, for example) are coming to graduation and the work training plans are churning out “graduates” by the thousands. They all have pretty much useless skills and too much political baggage for the private sector to hire any of them, assuming it were hiring. Legions of chronic jobless are starting to hit the streets of Venezuela, and they have been promised jobs. How will Chavez deliver?

The enemy within. The newly formed PSUV is already having all sorts of problems. The delay in its formation was apparently due to the near impossibility to put up a veneer of democratic hues over the need for Chavez to have a transmission vehicle totally reliable, military style. Starting for the claimed 5 million plus sing up in 2006 we ended up one year later to about 20% of the original claimed number voting in the PSUV internal “elections”. Of course, that was in part a consequence of an indirect tiered voting procedure which was designed to have Chavez favorites to win. Still, many did not, delaying further the final installation of the PSUV. As the candidates are been selected for November, the PSUV is showing considerable strain due to this deficient birthing.

And there are many more problems that could be listed, something normal for any regime that has already run for ten years and who is now devoid of ideas and who never was very creative to begin with. The question is what Chavez will make of this and how will he run a campaign which is crucial for his future. Any result where the opposition carries 8 or more states will be considered as a major defeat and cannot be spun as a democratic face-lift for the regime. Any result where the opposition gets 10 or more states will even question the chances for Chavez to reach the end of his term. Such a defeat will almost automatically trigger a recall election on the National Assembly and the loss of the chavista majority there. There is one thing I can vouch for: Chavez knows this very, very well.


-The end-

Why there are food shortages in Venezuela

This blog has reported often on the erratic supplies that one can find at any Venezuelan grocery store for now two years. The reasons are of course bad agricultural policies that result in a dearth of investments in the country side. The situation IS NOT created by an increase of purchasing power of the population through the Misiones handouts. These exacerbate the problem, they do not create it, I repeat.

Today there are a few recent articles worth noting in El Universal. The first one tells us that the very own government numbers speak of a 0.2% growth in the agricultural PIB for 2005-2006. This at a time where the economy was growing by a 10%, courtesy of the import boom due to high oil prices. That is, as it has been pointed out often enough in this page, the economy grew because imports grew and had to be distributed around the country, NOT because production grew. Currently most industries are working at full capacity but very few new industries are being built. While the population keeps growing.... That article also cites the following number: in 2003 Venezuela imported 1.5 billion USD in food; the number for 2007 is 5.5 billion... That is, all the increase in food consumption has been done on food import, not food production. We are eating the oil we produce and export instead of investing it for our future. You do not need to be a rocket scientist to imagine the long term consequences of these numbers.

Amazingly, in 2005-2006, the loans for agricultural production from banks have increased and yet production has gone down! In 2006 Bs 2.54 billions were loaned by the banks (by law Venezuelan banks are obliged to loan a certain percentage of their loans to agricultural activities). The 2005 number was Bs. 1,53 billions. Yet that 66% increase in financing translated into a 6.1% reduction in agricultural production volume.

Why is the production failing to grow? Some of the causes are seen in the other recent articles.

Producers are harassed and threatened all the time. Why should they invest and risk their own money when the state after any stupid utterance from Chavez could seize your business? This week, Polar the main giant feeding Venezuela was once again threatened as it was accused of hoarding. Polar quickly pointed out that it is not in the business of producing sugar, nor milk, meat or poultry, not even coffee or eggs which are all the most notorious missing products whereas the supply of Polar made products is more regular. But see, chavismo needs a scapegoat for its incompetence and even if Polar does not produce a single gallon of milk, let's accuse them anyway. I let you imagine the morale of the Polar personnel after such attacks, and the plans of expansion that will be duly shelved.

That governmental inefficiency is, by the way, aggravated by corruption. Mercal, the government distributing system reports 397 cases of corruption under study. Obviously when you must import so much food in such a hurry, you create a prime field for corruption to bloom. Besides, when it is so easy to import why should Mercal directors visit hot sunny production facilities to promote local goods production where they will sweat profusely when they can order a container of beans from the comfort of their AC office?

I could find many more articles and many more ways to explain the government failure in promoting production, but El Universal this Sunday nailed the coffin reporting on El Charcote abandon. Long time readers of this blog might remember a long study I made in 2005 where I discussed the policies of land seizure in Venezuela, including the famous productive cattle ranch of El Charcote (many other articles on this subject appear if you use Charcote as a search word for this blog). I could say again that I was sort of prophetic as all the land seizures of 2004 and 2005 only resulted in a drop of agricultural production. El Charcote stands now mostly idle, the farmers brought to cultivate the seized land having left or limited themselves to put up a shack where to live and hold their assigned land in case they can sell it someday.

I can assure you of one thing because it is my line of work: some agricultural sectors have prospered under chavismo, and they are all the ones linked to some agribusiness ventures in the hands of private investors. Such is Polar working full time or other sectors such as the poultry industry, in spite of price controls or such as corn growing associated with these agribusiness and that the government has not dared to touch yet. The global meager result is due to those policies of land seizure who have destroyed cattle ranching, meat and milk production, and sugar cane fields (among others). But do not hold your breath expecting Chavez to recognize his grievous mistakes, a true betrayal to the country of even worse consequences than the one he is perpetrating with PDVSA: soon we will not have enough oil to but all the food that we will need to import.


-The end-

The art of transforming oil in human waste: Venezuelan diplomacy

Ah! One good thing about chavismo is that there is never a dull moment and even 10 years into office we can still be astounded by the latest "barbaridad".

It all started this week end through a few articles form El Nacional (subscription only). In one article we learned that out of 97 Venezuelan embassies only 15 are served by professional diplomats, that is, trained staff with a career record which justifies them to become ambassador at some point. In other words 84% of Venezuelan embassies are directed by a political appointee of some chargé d'affaires that might or might not be a political employee. Now, let's not be more Catholic than the Pope here: an embassy is always a nice reward for a big political benefactor and the US is certainly a country used to such type of rewards. However no matter what political appointee is sent to the Court of St. James's, the second in command is always a career diplomat.

So, what is a career diplomat? A legal spy, something invented long ago to allow countries to do reasonable spying on each other. Overtime embassies and diplomacy became also an extension of the local chamber of commerce wanting to buy or place goods. Thus the training is easy to guess: languages, table manners, ability to mimic native customs, a certain ability to do market surveys, demonstrated capacity to write complete reports, and many more, but one above all: professional discretion. This last one is not learned quickly and that is why there is such a thing as career diplomats: they are the ones that can pass out drunk if needed for the sake of their country without spilling a single bean.

OK, I did exaggerate some for effect but I trust the point is clear: someone fresh out from some ministry post or some army barrack IS NOT a born diplomat. Which is exactly what is happening in Venezuela today. You are a Chavez minister and your failure was particularly galling? no problem, you are dismissed during an Alo Presidente and a few weeks after your name is proposed for the embassy at Podunkonia. There your only real obligation will be to promote the glories of the Bolivarian revolution, create a groupie association to welcome Chavez were he ever to visit Podunkonia, identify possible recipients of payments to ensure votes at the UN that favor Chavez and such activities. Not for you of course to hold boring meetings where trade is promoted: this is done directly in Caracas with the local embassies, once juicy commissions are decided though discrete intermediaries.

In short, since you are not put there to defend Venezuela interests but to defend Chavez interests alone, you need no stinking diploma to justify your entry into the diplomatic career. Chavismo through the voice of Ali Rodriguez was not embarrassed to confirm this (1). From that interview published in EL Nacional last Monday we can read the following pearls:

- The wanna-be diplomats are sent to Cuba to study what they need for their career. [since when is Castro's Cuba a reference to make diplomats?]

- "Diplomacy has to be politics" "To diplomacy to project internal politics". [Quite clear, no? Venezuelan diplomats role is to promote the image of Chaevz since all that is done inside Venezuela is to promote the image of Chavez]

- "A college degree does not make a diplomat" [we know, we know, devotion to Chavez is the ONLY credential required if you want to get a state job in Venezuela]

- "The need for academics and of career diplomats is a silly prejudice" [Well, I suppose that we should thank him for his frankness]

- "[Cuba] has more embassies in Africa than Europe" [a new meaning for 'mine is bigger than yours']

Of course the results of such a diplomatic corps eventually become a disaster for the country who holds such values. We have two examples kindly provided as soon as these El Nacional articles were published.

Angela Merkel, German chancellor, a victim of the Stasi, had the misfortune to state an elemental truth: Chavez was not the voice, the spokesperson of South America. Of course, Yo, El Supremo was deeply offended in his silly pride and could not resist himself to insult Merkel publicly in the most outrageous terms we can think of. If Chavez had someone like me working for him he would have received the following memo:

Dear Comandante Presidente

The words of the Merkel woman must be countered. We suggest that you stress her links with the devil president of the US. You should suggest that she is too close from Bush to have any valid opinion as to whom is a leader anywhere in the world.

Under no circumstances mention her name in the same sentence as the words Nazi, Hitler, or fascism: this would only result in Germans rallying behind her and a possible reaction of support from the European Union.

Patria, Socialismo O Muerte.

Obviously either no one was able to write such a memorandum or worse, was unwilling to mail it to Chavez. Thus sure enough Merkel benefited from a supportive opinion at home and the president of the EU went one further deploring all forms of populism in particular the leftist brand now seen in Latin America. (2)

That the president of the EU is right now held by a Portuguese, Jose Barroso, is a delicious coincidence as I present the second evidence as to why such organization of foreign policy can only result in trouble and public humiliation for Venezuela. With great fanfare the government has announced a deal to buy lots of food from tiny Portugal in exchange for oil. For this, the prime minister of Portugal, Socrates, made an official visit to sign for the juicy contracts. In all of this charade nobody in the diplomatic corps of Venezuela seems to have noticed how humiliating was the show.

See, first we should explain how come that after 10 years of glorious bolibanana revolution we need to knock Portugal's door to buy its agricultural surplus. And I am not talking olive oil or canned fish here, we are talking pasta! soy oil! powdered milk! Things that we would never associate a priori as great Portuguese exports!!!!!

Second we would like to know how come Venezuela is spending its oil money in food that, after a brief transit, will end up in the sewers instead of buying development high technology items such as trains from Germany. With those imports Portugal will get more money to finance its agro-industrial complex (since it has one and apparently Venezuela as a lesser one than Portugal) while Venezuela will get food which will last, well, you know, a few hours. With these exports, bought to private capitalistic companies in Portugal, that country might be able to produce even more food while in Venezuela private food producers will face yet a new unfair, subsidized competitor and thus lose money, and thus invest even less in Venezuelan agricultural production and thus eventually force the government to import yet more food.

Hard working, business savvy Portuguese will be laughing all the way to the bank... But in Venezuela the government is clueless about its admission of failed agricultural policies when a small country, half the people of Venezuela, a fraction of Venezuela area, is able to rescue it form some of its food shortages! I suppose that among the chavista hardcore some will find the news wonderful, but I am pretty sure that among the very few remaining chavista with some sort of a brain there must be a realization that we used to depend on the local Portuguese grocer for our food and now we must ALSO depend on the country itself....... that has got to be sobering for a few folks.

But I suppose that I should not be so hard on the present Venezuelan diplomacy: after all they did manage the deal with Portugal. Just as they are scouring all around the globe for the food not produced at home. Why Socrates allowed himself to be convinced to go to Caracas to sign is puzzling as many other countries sell food to Chavez without accepting to have their picture taken next to Chavez. So score one for the cheap political acts turned diplomats through a Cuban crash course.

And score all sorts of minuses for them in helping Chavez turning oil into human waste.


--- --- --- --- --- --- --- ---

1) Ali Rodriguez is a former guerilla who never lost his extreme leftist views, even though he projected moderation through his speech ways. He got them fulfilled under Chavez. After serving in many critical positions (read: those where money circulated) he ended up as ambassador to Cuba where he was also treated for diverse ills. Considering that the Havana job is today the main foreign post for Venezuela, where Chaevz dispatched his own brother for years, you know that Ali Rodriguez knows of all subventions, legal or illegal, all stolen monies, all secret accounts, etc... Ali Rodriguez is someone who will end up in jail if Chavez eventually leaves office, even if he never stole a coin for himself.

2) Mirjam Gehrke at DW of Germany even writes "To compare Angela Merkel to Adolf Hitler was disrespectful and ignorant. The reference was so stupid in fact, that the chancellor herself wouldn't respond to it." Yeah well, they are all finding out eventually how ignorant Chavez is. They could have saved lots of time had they be reading this blog :)


-The end-

The splendors of well aged chavismo

Thus we are in the middle of a social, economic and, thus, political crisis of major proportions. The regime assuredly thinks about what to do to counter an opposition that has been setting up the agenda for quite a while now. After a massive brain storm they come up with a minimum wage increase of 40% . I think, I cannot even be bothered to check whether it is 40 or X: it makes no difference.

Food shortages in Venezuela

Before the reader gets exited about the title and the prospective post let me start by the conclusion: there is food in Venezuela, we are far from being starved (I hope, anyway!). What is lacking is choice and variety; and on some cases there are actual shortages of some very basic staples. Short explanation as to the reasons at the end of the post. Click on images to enlarge.

This morning EL Nacional had in its front pages the following title: "Meats, eggs, sugar and milk scarce". So, never one to miss a shot at easy on the ground reporting, I took my digital camera and hit my local Central Madeirense around lunch time. I took the following picture with the adequate captions and comments. You will be able to see how this "scarcity" is lived through in San Felipe. Before you start, Central Madeirense is in San Felipe the "upscale" grocery store, that is the store where people that do not count their pennies go and thus where you find expensive items not found elsewhere in town. The lack of product you observe is thus not due to management not replenishing shelves because the products are "too expensive" and people are not buying.
As you will observe in this first slide, the basic problem is that brand choice has been becoming more and more difficult in Venezuela. Mayonnaise in Venezuelan diet is a basic staple, abundantly used to spread on bread, dress up fish or salads and what not. The two leading brands are Kraft and Mavesa plus an assortment of other brands in general cheaper, of a grayer color and lesser taste. Most of them are missing except for a little bit of Mavesa on one of the "popular" sub-brands, not even in large amounts! And there of course is the perfect illustration on how Central Madeirense tries to hide its "shortages" least customers are tempted to try their lick elsewhere. The gaping hole is filled up by what customers do not buy much: Mexican tortillas...After the mayonnaise rack it is suitable to move on to the oil rack. There is no cooking oil available. None. No peanut oil or corn oil or sunflower oil or canola. The gaping hole was filled up by olive oil (too expensive for the average Venezuela, the amount of oil in the picture is probably the usual stock held back in the storage rooms of the store). but since olive oil was not enough, well, some flavored water was also added. I suppose it is a heath warning that Venezuela should shift from fired foods to boiled ones? By the way, I have NEVER seen so much olive oil in a Venezuelan grocery store!!!


This next slide is very simple: the bread racks. It is rather empty and even more so considering that some of the holes are filled up by crackers that are not stored there usually. Not only the store brand is missing but even the fancier whole grain varieties of bread are also missing.

The meat section was pathetic. On the large meat stand where cuts are made to order, there were only turkey and some low cuts of red meat and pork. Not appetizing at all. The turkey was in good shape although it was only composed of drumsticks and wings offerings, not breast meat. No picture because the plexyglass front reflected the flash. However the pre-packed aisle is shown on the picture above. No meat choice. Thus we can say that unless you love meat stews, there was no open air grill this week end in San Felipe.
White sugar has been missing for months now. At least the supply of brown sugar has regularized some and usually you can get it. Beans have not been missing as much lately but today there were only two types of beans and not much of them anyway.

And we come to the milk problem. In the fresh produce section you can observe by yourself how little milk is left. No whole milk at all, only some 1 % milk Mi Vaca, and not for long (luckily for me this is my favorite brand so I was in luck, but quite often on week ends I have to come back home with the other brands that have a weird taste). Yogurt is also becoming very scarce although "suero" a by product of cheese making popular in Venezuela is not as affected.


And when you go tot he powder milk section, well, you only get one brand, and an unknown one at that. All powder milk is now imported in Venezuela as we do not produce enough for our cheese and fresh milk needs. In fact, some of the cheese we eat is made from powder milk!!! Even the UHT long duration milk is becoming scarce. In the picture you can see only one brand on the left, Zulimilk, and a few boxes from other brands which are not the best ones.

WHY?

The reasons are very complex but of a very simple origin: the price control policies and the currency exchange regulation. These have been greatly aggravated by an increased purchasing power from the lower classes. Note that of course I am delighted to know that through diverse grants and public pseudo jobs many have access to enough food, but the problem is that not only production has not followed but in many areas it has dropped as consumption increased!!!! Such as the milk and meat sectors for example.

The case of meat and milk is particularly clear: price controls and land invasions without adequate compensation while the new "owners" lack the skills and resources to take over the seized land has created a diminution of the number of cow heads in Venezuela. Thus less meat and milk as nobody wants to invest in farms whose security is threatened, from where you can be abducted for ransom, to produce things over which you might not be able to make any money, when you are lucky enough to actually not lose your shirt. Is there a mystery why producers are not investing, not expanding their flocks, letting it dwindle slowly?

The currency exchange control shows in the lack of other items such as Mayonnaise or cooking oil. Some of the additives cannot be imported because CADIVI, the control agency is not emitting on time foreign exchange requests. Delays in importing additives and supplies and grains are so long that this scarcity is an artificial creation for the governmental incapacity. Or is it? Well, the foreign reserves are dropping precipitously these past months. As Chavez is embarking on a totally unnecessary shopping spree of private concerns that are working very well, thank you, for political reasons Chavez must pay his bills first and too bad if the hoi polloi is out of cooking oil. Because of course, the increased resources of the lower sectors are not enough for them to buy olive oil, which they do not know how to use or are not used to anyway since olive oil is not for frying "empanadas". Otherwise there would not be olive oil either.

Sugar scarcity is a pure product of the land seizure policies: many of those, such in Yaracuy, were taken out of sugar cane production to produce who knows what. With ethanol production increase, well, you know, sugar is so expensive that even Mercal subsidies balk at buying it. Because see, white sugar is also under price control whereas brown sugar is not. So why refine the little bit of sugar produce here when you get a better profit by selling it semi raw?

I could go on, after all I do work in the agribusiness sector. Or I could go and look for numbers, and statistics and what not. But see, the pictures of this Saturday morning shopping are there. If you can figure out better reasons for the scarcity, please, do share them in the comment section.

However there is one sobering thought: when you go to a grocery store and there is no more choice, then the supply of your food items becomes very endangered. What if the only brand around has a problem? What about if there workers go on strike? Or their provider are tired to wait for CADIVI dollars? Today there is only one brand of powder milk. Will it still be there next week? And will Central Madeirense have enough stuff to keep filling up the gaping holes?

Until when for rationing cards and empty food shelves?

-The end-

Chávez Decaffeinates Venezuela

This is no joke, Maria Anastasia O'Grady tells us how XXI century socialism (a.k.a. as recycled plain ole commie stuff) is destroying the economy. Do not miss it!

For those that have no access to this WSJ article I have reprinted it below, courtesy of Miguel who fetched it for me. Thus it is kind of a joint post until he comes back and resumes regular posting.

NOT fooling all the people all of the time: Chavez retreats

There was today a lovely article by Simon Romero of the New York Times. As the paper correspondent based in Caracas it seems that he is having problems to find some food items too. This sympathetic article is perfectly in tune with the mood of the times, that fin de règne atmosphere that is slowly covering all of us since December 2. A must read, an article that in addition confirms exactly all that this blogger has been writing over the last few months. Thus either he is on the NYT payroll or perhaps Mr. Romero in Caracas is experiencing the same thing that we folks experience all across the country.

And do not miss the scandalous picture for the cover: it was taken in Tachira a few days ago when the army had to control large mobs eager to find food, any food. See, the Colombian border is the most affected by food shortages since Venezuela all but broke relations with Colombia. Curiously, such throngs of people seeking food are not seen on the Colombian side. Gee, I wonder why.....

-The end-

To sanction, or not

So the talk is on sanctions again since the US/Trump have announced that they are considering strong sanctions if Maduro insists on electing a constitutional assembly next Sunday.

What I am dismayed for is to read that some people that should know better do not want sanctions. One example is Moises Naím who is usually so right on things but who is not quite this time around (1). The argument advanced by those who oppose sanctions are that 1) they do not work 2) they hurt the population more than the regime and 3) they can boost the regime if this one can wrap itself in the flag of nationalism.

Yes and no, and the more so in the case of Venezuela.  Let's try to clarify ideas as I did for the electoral fraud of next Sunday.

Tourism in Venezuela: at your own risk

So I was away for a few days of beach, sand and surf. Not quite.

Take out the water and it is pretty much like this

Understanding the political moment

I have been back for two weeks now and events are just unfolding too fast for me to write about them, considering the depression that arises from coming back to what has become a hell hole. Let's just order our thoughts together, shall we?

L'air du temps:
Borges getting his nose broken

One way is to look at the main hard data and its effects. The reader on its own will be able to draw the general picture after the fact.


Jail for you

The driving force in this mega crisis is that under the concept of world justice and transparency a few dozens of the higher up in the regime know they will never be able to find peace and solace once out of office. Their fate for them is jail, tomorrow, in a decade, it does not matter. If they do not die first they will end up in jail. They know that.