Thursday, June 30, 2005

More on Chavez's PetroCaribe fiasco

Well, it is now confirmed that Trinidad and Tobago with Barbados did not sign the final "summit" agreement in Puerto La Cruz. Really not much more to add than what I already wrote in the previous two posts, except for a survey on how this is hitting the news.

First, El Universal has two articles already translated in English. The first one is a dispassionate analysis on how Venezuela should lead its foreign and oil policy, with a minimum of business sense.
In addition to the Venezuelan commitment to the Caribbean that dates back to the fourth republic and will continue for sure after President Chavez, hemispheric energy integration should reflect in the best national interest. Foreign policy should not be an ideology. Needless to say oil policy. There is need to be pragmatic. It is time to establish a well-reasoned foreign policy with the recipients of the Petrocaribe project.

The next article reports how fast problems started arising during the meeting, revealing how amateurish was the organization where probably Chavez announcements and personal fantasies would be enough to carry the day. Words of Manning, T&T prime minister were quoted (or was that translated?):
This entails that Venezuelan byproducts will have competitive advantage as compared to my nation's products. I think you forgot about our supply, and we would like to analyze further this proposal. This is troublesome, as some facilities are owned by multinational corporations, and they are not state property.
Yes Mr. Manning, you got that right. I am pretty sure that nobody in the Chavez administration paid attention to what the needs of Trinidad and Tobago were. Not to mention that Chavez probably assumes that any leader should manage the oil business as his very own personal property. So, what are you waiting for to nationalize your oil industry Mr. Manning?

In the longer Spanish version of this article we can read that actually some foreign representative was heard saying in the hall ways:
The problem is that this proposal was not negotiated and discussed by all, but was presented by Venezuela, without receiving observations from the other parties.
Right again. Except that the emissary still thinks that Venezuela has anything to do with that document. No, this is a project that was pulled out by Chavez just like that, without any serious consulting or research, except perhaps Castro.

The coercion of Chavez did not work on Barbados which is the wealthiest of the area and who can afford to buy oil wherever it wants and thus ignore Chavez whims. It did not work either on Trinidad and Tobago who is dispatching all what it can to the US and does not feel compelled to make the price adjustments that Chavez wants to impose in the Caribbean oil market, not because on some sound economical study, but just because him and Fidel said so. T&T have other ways to help their kindred sister islands without having to resort to oil discount.

Actually T&T by balking out has helped its sister islands, allowing them to sign up while still seeing Chavez trumped in his clumsy attempt at grabbing the region’s control. They did have to sign even if a few were about to refuse at first and had to be cornered to do so. They probably feel better about signing now that T&T did the job to trash the summit. And thus go back home with a good financing agreement without having had to say NO to Chavez.

Finally the news is picked up at its just measure by some financial papers. Investors Business Daily seems to have beaten the Wall Street Journal on that matter with a fast editorial. (here if the link expires). Bloomberg also produced two updates on the matter.

The only question left is which heads are going to roll in Caracas. The heads to roll are trying really hard to put the blame on a letter from the State Department that was sent earlier to the Caribbean governments. However it is clear from the emerging stories that Trinidad and Tobago and Barbados had perfect reasons on their own and that all is due more to the inefficiency of the Venezuelan Foreign Service than any supposed US pressure. After all, all but 2 signed...

A Chavez foreign policy set back?

I have the pleasure to quote myself from my previous post:

But Chavez will ultimately fail because his foreign policy is a blackmail one. He might not suffer himself its consequences, but Venezuela will as one day these islands will get revenge from the humiliations that Chavez impose on them, forcing them even to receive Castro as their leader with Chavez.

Remember, you read it here first.

Tonight I read the following news from El Universal: a few Caribbean countries are balking at signing the chart of PetroCaribe....

Now, that would be quite a setback!

El Universal suggests that it might be Trinidad and Tobago. Imagine that! Its excuse would be "previous energetic commitments". Rumors from Venezuelan officials would be that "they are subject to international pressure" (probably the US, no?)

Let's look at that for a brief second. Trinidad and Tobago are self sufficient in oil and could actually provide for a few other islands. Trinidad and Tobago also has a GNP per capita that might soon double the one of Venezuela. Why would Trinidad and Tobago, probably near summoned by Chavez to Puerto La Cruz to pay allegiance to Castro, favor Chavez just like that?

No, the explanation lies elsewhere, and is quite simple. No need for the US intervention even, though of course it cannot be discarded. No. Chavez wanted a summit to shine and came up fast with that not too great idea and summoned all to come and applaud. Successful summits require months of careful preparation and in fact the final agreement is 99% ready before the first summiteers land. In their usual chavista messy and incompetent ways, all was rushed up (after all, what can you expect from a foreign ministry where diplomatic personnel is formed in 3 weeks courses and whose only required credentials are willingness to serve and propagate the bolivarian involution?)

The Trinidad officials came, saw the mess, saw that it was just another vehicle of a money crazed caudillo and said "no, thanks". They did exactly what Leonel Fernandez of Dominican Republic is doing: he signed because it serves its people interests, Trinidad did not sign because it does not serve its people interest. Both serve their people first. And Chavez remains clueless.

Clueless and publicly humiliated by his own controlled state TV. This one suspended suddenly the lavish coverage of the summit as soon as Chavez read a note that was given to him announcing that some countries were not playing anymore. That suspension is tonight even bigger news than the Trinidad default....

Now, how could that possibly happen? Where were the foreign ministry officials to prevent such a public slap? Where were they to tell VTV to suspend discretely live coverage before the bad news was announced, so as to give time to build some spin? But no, they are just too incompetent and Izarra is piling errors more and more. How long is he going to last in office?

No wonder foreign conspiracy is again invoked by chavismo, but it probably will be greeted with amused smiles even by Leonel Fernandez. The irony that ignorant chavistas might fail to notice is that Leonel, whose economy depends much more on the US than Trinidad, is actually the one who is willing to sign...... Pressure? Where? Ignorance? Everywhere!

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Ps: Ali, if you want to hire me as a consultant I might accept it. I am just too embarrassed by your constant setbacks because your people do not even seem to know their basic geography. I will help for the sake of the country, willing to put my antichavismo aside to avoid this constant "pena ajena".

Wednesday, June 29, 2005

Castro In Venezuela, free oil shipping to the Caribbean

Well, the senile dictator of Cuba did make it to Venezuela after a long, long absence.

The reason is that Chavez is hosting a Caribbean summit on the resort area of Puerto La Cruz. In need of some glorified exposure after the set backs of Carabobo day and the failure to hold a three head summit in Venezuela with Lula and Kirchner, Chavez turned all his energy to make the Puerto La Cruz summit the biggest thing he could. And of course, having Venezuela oil bordering the 50 USD and a bevy of Caribbean islands strapped for cash willing to do anything for an oil bill discount, it was not too difficult to have them come and smile and take pictures with Chavez.

But in fact, close analysis of today's events show that this summit is not a real victory and might even end up as yet another diplomatic defeat for Venezuela. Let's see.

The symbolism

First of course, the joy of Chavez at receiving Castro home finally could not be hidden. I do not know about you, but I find this image highly offensive. Besides seeing how prosperous the starved soldier has become in 6 years, his silly ingratiating smile, gawky happiness at the old tyrant that he is subsidizing to levels that have reached obscenity, makes me feel sick at heart. I must remind the readers that Chavez is constantly screaming against people like me as betrayers to the father land, and this one of the tamest insults hurled at on bolivarian Sunday School. But in fact the biggest betrayal to Venezuela is the one of Chavez, selling short our democracy, as it was, to serve the alien project of Castro, the anachronistic stalinist cum caudillo who is now the longest serving tyrant of Latin America, already reach in dictators for life.

But there is a funny part to it: the snafu about the announcement of Castro arrival. After the cancellation for the military parade (security reasons claimed), Chavez said Sunday that Castro was not coming. When rumor of Castro coming revealed too hard to contain (the security of preparations of Puerto La Cruz could not be hidden anymore) Izarra, the communication minister, became angry at the press this morning. Only to have to emit an apology this afternoon (after all, he had violated some of the clauses fo the "gag law" by promoting false information!)

But other symbols were quite telling of the evolution of the regimes minds.

First, in spite of Chavez glee, there was hard work at trying to pass the Castro visit as a last minute working visit. The ABN official page did not make a big fuss about it and Castro does not even appear in "today's pictures" section!!! Perhaps the guy in charge had already left for the day? But I doubt it as the arrival was duly reported as a piece of news.

Second, and more interesting, were the preparations. Chavez chose the wealthy and touristy enclave of Puerto La Cruz. He forced off boats from the marina, while invading it. The caravans of dignitaries and the security snarled traffic all day long. The treatment of the locals was, well, not too nice as probably not even Bush would create such disruptions... That is, when Chavez has a whim, all must suffer. Not seen since the times of Gomez! Of course I suppose that Castro and Chavez, always under threat of pseudo assassinations, must play that political show to the hilt, trash people's lives while basically blaming them from being trashed.

But this blogger doubts that this visit will improve Chavez image, even at home...

Buying good will with free shipping of oil

So, to justify the "summit" Chavez created PDVSA-Caribe. Will it be run from Havana too? Ramirez, the silly PDVSA head who cannot balance its check book, explained to us what was great with this initiative. Well, great at least for the small Caribbean islands who apparently will not have to pay anymore for shipping and thus save up to 4 USD per barrel. Is shipping cheaper through Havana or direct from Venezuela? Nobody seems to have asked that question.

Thus came them all, with their best smile to get the nice discount. But will this be good for Venezuela?


I must start by saying that I have always thought that Venezuela should have taken a leadership role in the Caribbean. It is, after all, our mare nostrum as we are the country with the largest extension of Caribbean coast. Even Colombia should not be a rival as it is divided by its attraction to the Pacific and the Atlantic. The Caribbean is not much more "culturally African" than us but much more than Colombia. The Caribbean is also our natural playground for tourism. And if you look at the map, well, Venezuela is closer from all the islands than any other country except the US to Cuba. It is a no brainer why Venezuela should be at the very least only second to the US in trade, business, investments, in the Caribbean.

I am not going to go into why previous Venezuelan governments never managed to play the Caribbean card well enough. Chavez has been more than willing to play it and has basically secured the OAS from outright hostility to him just because the Caribbean countries vote will at least abstain in time of crisis as they are too afraid of what Chavez would to them if they cross him: ask the Dominican Republic.

But Chavez will ultimately fail because his foreign policy is a blackmail one. He might not suffer himself its consequences, but Venezuela will as one day these islands will get revenge from the humiliations that Chavez impose on them, forcing them even to receive Castro as their leader with Chavez.

Remember, you read it here first.

And if you doubt me, I can already provide evidence. Leonel Fernandez, Dominican Republic president, has mended fences with Chavez. He actually got 4 pictures in ABN "today's pictures" section. But that has not stopped him to pursue the CAFTA agreement with the US. No ALBA for him for the time being, though cheaper oil is always worth a few smiles and a short flight to Puerto La Cruz. So Ramirez can fill up his mouth with ALBA words, he is not any closer from having the Dominican Republic drop its US ties and jump in the castro- chavista nincompoop agreement. After all, amazingly, the Dominican Republic has a higher GNP per capita than Venezuela! And without oil at 50 bucks a barrel... So, does anyone think that Fernandez smiles are genuine? No, he is doing his job, which is making sure that his fellow country men get the best deal everywhere.

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24 hours later: A reader wrote in the comment section that the Castro-Chavez picture that I got from Union Radio is actually not from the arrival of Castro Tuesday, but probably from a previous trip of Chavez to Cuba. Thank you GWEH for showing us that there is added mystery to this visit as no good picture is found in any of the official media except for the one in the foreign ministry site that you linked to. Of course, the question if why did Union Radio dared show an old a picture when other media prudently avoided the trap. This is what is good about blogging. We find people that do catch up interesting info and pass it along to bloggers that do not hesitate to correct themselves. I would advice Union Radio to be more serious, 'cause if I fell for it, I do have sharp eyed readers ;-) But I do have another thought. Maybe Union Radio had that disgusting picture for a while, not daring to show it. But upset that Castro was so hidden from sight, published it to get back at Izarra's incompetence.

At any rate, the "real pic" is almost as good as it shows and even more decrepit Castro, someone that you have retired long ago to some Varadero beach house.

Tuesday, June 28, 2005

A forced break

I thought that being back home this long weekend would have allowed me to catch up on some blog matters, but an unexpected death in the family brought me back to Caracas this Sunday. All is settled now and I will be back home soon, hopefully able to write again on the many things that happened recently. Stay tuned, that is all I can say for now. And I did not even had time to read Petkoff's book! Or comment on the many articles that have appeared on the matter. Luckily there is another long week end ahead and hopefully a way back to routine.

Saturday, June 25, 2005

Dos Izquierdas: Two lefts; Petkoff hits the Venezuelan book stands

I attended Wednesday evening the baptism of Teodoro Petkoff new book, "Dos Izquierdas". It is a slim volume, a few assays where he compares the two varieties of the left which is now the dominant force in Latin America, as it stands to get the last big prize, Mexico for Lopez Obrador.

Brisk sales of Dos Izquierdas, with, on the cover, the archaic hammer and sickle and the modern rose in left fist.

Teodoro Petkoff is the editor of Tal Cual, a newspaper with the distinction of being almost as disliked by the right as it is nearly hated by the chavista left. Yet Mr. Petkoff leftist's credentials are impeccable: ex-guerilla, ex-political prisoner, ex-leftist presidential candidate. Until he came to his senses and realized that leftist ideals were not incompatible with pragmatism and general prosperity. However, the right never forgave him his guerilla years while the left, one of them anyway, cannot forgive him to have opposed Chavez even before his election in 1998, to have preferred then principles over madcap adventure.

But Petkoff ideas mutation started in 1968 when the Prague Spring was ruthlessly crushed. From then on the road was difficult but linear. As he said during his speech to greet the attendance, he realized that capitalism was unrivaled to generate richness, the wealth that must be created before any redistribution can take place. That he thinks the left is the best way to address Latin American glaring disparities does not stop him from being convinced to use capital to develop a country instead of the dead certainties that rule us today. Some of his words, from memory "Capitalism has demonstrated to be unique in its ability to generate plenty".

Teodoro Petkoff at the microphone

His speech almost sounded like the one of a candidate for office, and certainly he exposed some of the themes that could be used by any serious candidate wishing to square off with Chavez in 2006. It is actually quite simple, a no-brainer for any one from the democratic left. His thesis is that the Latin American left time has arrived but that it must chose between two versions. One is an anachronism, even reactionary in its ways, the left which holds power in Havana and which is slowly but surely tightening its senile grip on Venezuela while it tries to get its next prize in Bolivia. The other left is a democratic left, without inhibitions, which has reached great success in Chile and seems to be on the way to success in Brazil, apparently in Argentina and likely in Uruguay.

The message is only starting to reach Venezuela, after years of extremist posturing from chavismo and opposition. Petkoff visitors were a selected few, but very high in quality, from the intellectual elite of Venezuela to the remains of its democratic left, many who followed Chavez earlier until they realized that they had made a Faustian bargain in 1998. Many of these last ones were there, minority deputies in the National Assembly now, some who would have expelled Petkoff from the MAS in 1998 if he had not resigned first. But there was also Pompeyo Marquez who ran into trouble with the MAS in 1998 and who became the voice of conscience when Chavez repression started in February 27 2004, another guy with impeccable leftist credentials.

I did not see people from the traditional parties, that is AD or Copei, nor from Primero Justicia or other new franchises. But the democratic and social conscious right was represented, the economists who claim for social programs but a balanced budget, many of the important OpEd writers, those who do not espouse all of the opposition tenets, in particular its hope of a solution from within the army or form outside of Venezuela. That Petkoff is the editor of a paper where many would like to write on occasion was not enough to explain their attendance. Petkoff has become over the last few years a prominent leader of the opposition even though he probably did not intend it, and one that got no help on the way from any quarter. His pen in Tal Cual more and more sets the tone of the debate within the diverse opposition. Incidentally, Chavez has not attacked Tal Cual the way he has excoriated El Universal or El Nacional. Perhaps he knows that Petkoff sees right through him, as he sees right through his henchmen, in particular Jose Vicente Rangel. Not to mention that Petkoff can find the right words to expose them, such as his felicitous "izquierda borbonica" (1).

The atmosphere was relaxed and congenial. Everyone there, even if holding a seat at the National Assembly, is now far removed from the hallways of power with not much hope to get in for quite a while. Maybe why a blogger like yours truly could mix and mingle and take the pictures above. Unfortunately it was so packed in the rather small bookstore that I could not really capture in images the feel of the moment. Not to mention that it was my first foray with my new cel phone camera. Still, I did get the pics above, and my book signed, even telling Tedoro that I am one of his translators as the English language internet in Venezuela has long shared many of his views. All the major media came, but not the governmental one. All the people that could fit in the book store, perhaps up to two hundred, listened to every word in rapt contemplation. And the large crowd overflowing in the mall did not leave even though they could not hear the speech.

Thus Petkoff started becoming prophet in his own land.

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(1)The Bourbons, the French royal dynasty overthrown in 1792 and returned in 1815, did not learn much from its long exile. Charles X, on his return and before he became king is told to have said that he had "learned nothing nor forgotten anything". The Venezuelan left now in office is the one that failed miserably in the 60 to take over violently and whose discourse was made useless by the successes of the first three democratic governments that ruled until 1973. Even when the political system started failing, it was unable to make any serious headway until finally Chavez took them out of the oblivion from which they could never escape on their own. And obviously they never realized during their own internal self created marginalization that the Berlin wall had fallen nor that the Castro regime had become a neo-fascist system.

Carabobo day: Venezuela as a military regime

Today we commemorated our decisive battle in our independence war. Just as many were protesting our loss of independence in front of the embassy of the senile dictator of Cuba. Indeed, even though the mayor of Baruta refused to give the permit for the rally, some opposition NGO, and some not so NGO, did manage a respectable protest march to the Cuban embassy. With protests on the planned education law, it seems that timidly the opposition is renewing with street demonstrations.

Meanwhile a president scared of his own shadow scorned the traditional Carabobo field of glory to lock himself up in Fuerte Tiuna military installation where he did try to put up a show. Of course, probably stung by the strong criticism of his intention to have Castro shamelessly be given the sponsorship of a graduating military class, he used the opportunity to criticize again the US and Bush of all the evils that beset the world, with of course no self criticism for his own inability to control Venezuelan corruption for example, or his incompetence not to be able to control Carabobo access (or was that he was afraid that few people would show up, not even would be assassins?)

But we are getting used to the same constantly regurgitated mash of his discourse. What we were not ready to learn was that now non military citizens are second class citizens in Venezuela. Chavez announced during the parade speech that he was increasing the paychecks of army personnel by up to 60%!!!!!! Now this is outrageous!

First, in May of this year Chavez "granted" a 26% increase on minimal wage. The "official" inflation is "only" less than 20% expected for the year. Why do the army get 50 to 60% increase? What are the real inflation numbers? Why do the poor get screwed once again?

Second, the army is part of many business deals in Venezuela. It also gets plenty of privileges (see for example the extensive housing constructions on military bases!). Not to mention its participation in social programs such as food distribution schemes which obviously benefit also the soldiers handing out the food stuff.

How can we explain such a gross inequality between the treatment to civilians and the favors to an army that has nothing left of an army, and army that could not resist an invasion because instead of controlling guerilla at our borders it has learned to invade our lives and our pockets?

Well, there are two explanations I can think of.

Chavez is really scared of the army. The rumors we heard are true. He is not managing to get the control of it he seeks. So he is trying to buy them off.

Or we are officially under a military regime and today's announcement is just the "official" announcement. As the ruling caste, the army decides how much of a paycheck it gets and how often it gets it. No need to go to the National Assembly to get the necessary credits, the budget office will have to manage. Tough luck for civilians. We can only congratulate the Venezuelan army from having reached highest power without having had to make a coup, and without even having to be responsible of running the country as the presiding fake civil administration will take all the blame of the failed policies.

The reader may chose. Or come up with a better explanation if possible.

Thursday, June 23, 2005

The Central Bank Reserves takeover

One of the benefits of beeing a blogger is to meet through comments many interesting people. And some time you atually get to use them shamelessly. As I am very busy these days and as the Central Bank reserves are been taken over by the government, robbery style, I asked AIO to write a note to explain what is going on with the reserves move. Money Grab? Priming of the inflation machine? Grand robbery? The reader at least will get some info from AIO to make up his/her own mind while this blogger is out playing.

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Daniel asked me to write a summary of one of the biggest economic themes of the week: the proposed new Central Bank law. I’ll start with a brief autobiography, and continue with some recent Central Bank history, then talk about what the new law would mean.

I am a U.S. citizen, living in Venezuela, working as an economist. A large part of my job is studying and understanding the economy, and trying to figure out whether the changes are good or bad, for Venezuela and for others. My own opinion plays a role, but I try to talk to as many people as possible about things: private businesspeople, bankers, consultants, even Venezuelan government officials, though it’s often hard to get time with the last group.

As for the history, I’ll start in late 2002. During the general strike, the Venezuelan Central Bank (the BCV) was expending reserves in an attempt to keep the value of the bolivar from falling. Despite their efforts (reserves – counting the Emergency Macroeconomic Stabilization Fund – dropped from $15.8 billion on December 1, 2002, to $13.7 billion on January 23, 2003) the floating exchange rate went from 1323 bolivars to the dollar to 1853 in the same period.

On January 22, 2003, the BCV suspended all foreign currency trading. This was not an unreasonable action at the time, in order to stabilize things. The Ministry of Finance promised new rules to govern foreign exchange by January 29, though they were not announced until February 18, with the creation of the Foreign Exchange Administration Commission (CADIVI). Foreign exchange was again obtainable, though in limited amounts. (See this VenAmCham study,
especially page 4, for amounts of forex CADIVI has approved.)

As a result of the exchange controls, international reserves have grown tremendously. Still including the emergency fund (which now has $2.64 billion less than in December 2002, but that’s another story), the reserves stand at $28.3 billion as of June 20, more than doubling since exchange controls were imposed. Despite indications that the controls would be temporary (and consultants I’ve seen recommending that they be done away with now, while in a position of strength, rather than waiting until problems arise, as famously occurred in Argentina), there is reason to believe that such controls are permanent, or at least will remain as long as Chavez is President.

However, with all that money in the reserves, and government spending growing rapidly, Chavez began to pressure the BCV to turn over some of the reserves for spending. Beginning on November 9, 2003, Chavez repeatedly requested a billion dollars (“un millardito”) from the reserves, usually stating that they would be spent on agricultural development. The BCV leadership refused, citing the BCV law. (Then-Finance Minister Nobrega agreed.)

In late January, 2004, an alternative plan was found. The BCV law allows PDVSA to maintain funds outside of Venezuela in foreign currency for “operating expenses.” The BCV agreed to let PDVSA divert a total of $2 billion to an offshore account, supposedly to finance development projects. This agreement was not made public until June, a month after reserves began dropping, which made no sense while oil prices – the main source of reserves – were rising rapidly. PDVSA officials have admitted that they have continued to divert funds in 2005 while BCV officials state that the agreement was a one-time deal, and such diversions are not authorized.

Which brings us to the present. Reserves continue to grow, thanks to record oil prices, and President Chavez is dissatisfied that such quantities of money can belong to the country, yet be out of reach. Although they are already circumventing the agreement reached last year, $2 billion a year appears to simply not be enough funds. The new law would immediately put $5 billion of the reserves into a special fund, which will be at the discretion of the “Ejecutivo Nacional” to spend. Not only that, but the new law will require an estimate of “the adequate level of international reserves.” It’s not clear whose authority will be final in that regard; in one section, it is assigned jointly to the BCV and the Executive, while in another, the BCV has only an advisory role.

So what will the effects of this change be? I won’t talk about how the money will be spent, partly because it hasn’t been announced, and partly because it’s not clear if that would be the answer anyway. No accounting has ever been given for the $2 billion from 2004, any of the funds for 2005, including evidence that no more than those amounts were even transferred to the funds. Additionally, many of the projects announced as being funded with the money already had financing from other sources, e.g. metro extension financed by the CAF, Tocoma dam financed by the IDB.

The first potential effect of the transfer would be inflation. This would depend largely on how the money is spent – domestically or not. There is some talk of using the money to pay down external debt, though it doesn’t seem likely that will be more than a token amount, and is contradictory while issuing new debt anyway. If the money were to be spent domestically, the government would have to sell the funds back to the BCV to obtain local currency. This was already done once, as is true for all of the Venezuelan international reserves, so to sell it back would mean that twice as many bolivars were put into circulation as should have been for that dollar. It would be the same as printing new money (increasing the money supply), which economists consider the primary cause of inflation. (See this, as well as Venezuelan economic history and present.) $5 billion would increase the money supply by over 20%. Inflation would likely not jump quite as much (money supply has increased nearly 50% in the last year, while inflation was only about 17%), but the economy may be maxed out on its ability to absorb more liquidity, so the impact should be proportionally greater.

The second effect would be felt internationally, but with long-term effects for Venezuela. One of the purposes for reserves is emergencies. The money is available for purchasing essential products for imports, intervention in the exchange market, or other unexpected circumstances. This could be necessary in case of a large drop in oil prices, for example. (This isn’t likely in the near future, but is it responsible to bet the nation’s insurance policy on that speculation?) With fewer reserves, Venezuela would be less able to face up to an emergency, and would be more likely to someday have to choose between importing essential products and paying its debts. That choice is obvious, but since it becomes more likely, then lending to Venezuela will become more risky. Venezuela will be forced to pay higher interest rates when borrowing, costing more money in debt service, and perhaps find it harder to find lenders at all.

It’s impossible to say if this is a good idea overall for Venezuela without knowing exactly what the benefits will be. However, the costs will not be small. In the short term, there will be inflation, and in the long term, greater finance costs (as well as the lasting effects of inflation). Not only that, but with the volatility of the Venezuelan economy, there is a very real chance that any reserves taken away and spent will be needed some day in a crisis, perhaps for spending or simply to provide assurance during a crisis. Taking them away places Venezuela’s future in jeopardy.

An Interested Observer (aka AIO)

Wednesday, June 22, 2005

Not missing in action

This blogger has been rather silent this past week. I am in Caracas attending some family and business matters that are actually taking more time than I thought. I am also having many interesting meetings that I hope will give enough material for a post this week end. That sense of playing journalist is increased because I have changed my cel phone for one that has a camera. Hopefully I will be able to document some of the constant governmental misdeeds that I keep writing about. I am sure that chavismo cannot be happy with the proliferation of relatively cheap visual devices that can only document their sheer incompetence when ruling the country.

Many news, but nothing that I have not reported before almost to the dot. That is, the government keeps passing more and more restrictive laws, and finding ways to loot the country more and more. I could use the same posts just changing a few key words and recycle. In particular the disgusting spectacle at the national assembly yesterday where all rules and proceedings were ignored so that chair, Maduro, could pass a law he promised to Chavez a couple of days ago. The servility of the parliament, and the lackadaisical temper of its leadership are now of the same caliber of the Cuban one.

More as soon as I can.

Monday, June 20, 2005

Polls and where Chavez really is

Poll wars are of course a frequent occurrence, with whichever side is on the losing end trying to find excuses. Venezuela is certainly no exception. In 2002 and 2003 when polls gave Chavez a meager 30 to 40 % vote intention, his partisans dismissed them with all sorts of weird reasons. This ignorance of polls is in part responsible for the stubbornness of chavismo early 2002 with the results we all know. When polls improved for Chavez in mid 2004 then the opposition started to disregard them, obtaining the disaster it reached in August.

These days some polls give Chavez 70% and some of his supporters do actually believe he will reach 80 or more, perhaps 100%, a la Castro or Saddam. Far from me the desire to discuss such polls these days. I think that the situation is very delicate, that polling is rather difficult as many folks prefer to say what they are supposed to say to avoid trouble. After all, that is only one of the sequels of the Tascon list, fear to be marked as an opponent to Chavez and find yourself barred from many services that a citizen has the right to expect.

It does not help that the weakness of the opposition allied with a bevy of social programs from chavismo make a rather amorphous mass support a system which is giving them straight handouts while no other option is offered.

In other words, any serious opinion poll these days is a futile exercise. That does not stop Datanalisis to step in blithely. Its CEO, Luis Vicente Leon has been polling a lot since the referendum whereas his colleagues have been more circumspect, as far as I can tell. But I do have my personal misgivings with Datanalisis since last year. I have had some problems with its methodology as I read it on the newspapers, and I also find that its owner seems to have a hard time to hide his desire to follow a political career. Simply put, he is too often on TV. When pollsters lead politicians, or worse, become politicians, you know that nothing good can come of that.

Thus the research that appears today in El Universal is not the type of news that this blogger monitors. However, as I looked more at the data shown, I realized that this study was more interesting for what it did not say than for what it actually says. What I see is that the hard core of chavismo is the same today as it was 2 years ago. Well, maybe more, but certainly not as big as what a 70% approval would suggest. Note: unfortunately the numbers published in th erpint edition do not appear on the Link. Thus all the numbers reproted below are reproted as seen on the printed edition of El Universal today.

The first interesting result is that 60.4% see the country in a positive outlook situation. Soon a year after the recall election the figure is basically the same as that electoral result. The article states that this is only product of the misiones and a few shows such as the land seizures which have had apparently a lot of psychological impact though no discernible benefit. There will be no benefit for quite a while anyway, as it takes a while to plant and harvest but that has not stopped a few to applaud the naked land grab.

This 60.4%, by the way, comes to shore up my problems with Datanalisis. In two subsidiary questions, the economic outlook is seen as positive by 55.9% and the political situation positive by 53.5%. Huh? How can the global number be 60.4% positive while the two main index that comprise it are 5% below? But let's not get distracted as the good part comes next.

The first interesting part is that for all of Chavez propaganda efforts and Leon fancy interpretations, the people are quite clear which are the main problems of Venezuela. 68.4% are dissatisfied with the fight against corruption, 84.1% with the job creation and 87.6% with personal security. In other words, chavistas and anti chavistas coincide more than what Chavez might feel comfortable with!!!! The only two "good" areas where they coincide, though to a lesser degree, is with a 71.5% satisfaction with education (nobody discusses anymore Mision Robinson) and 63.1% on health (apparently Mision Barrio Adentro dos bring dividends).

These numbers gave me the idea that somewhere inside was the hard core of chavismo support. Indeed, how come that 26.5% of the people still think that Chavez is fighting corruption when corruption is experienced by anyone who must deal with public administration; or that 31.3% think that social security is doing great when all reports point out at how difficult it is to obtain that the government starts paying your retirement, or when people observe the 6 years delay in its promise to offer a new comprehensive system for unemployment and retirement.

More hints for what I was looking for came from a third part of the survey: the approval rating of people and institutions. In a stunning result, the approval rating of institutions held by chavismo varies from 20.6 to 30.2%!!!!!!!!!! That is, not even 1 in three Venezuelans trust the folks put into office by Chavez, not even the governors elected in the pseudo-landslide of October 31 2004: 28.6%. How can we explain that? In particular when Chavez himself is at 52.3% (a contradiction by the way with the 60.4% reported above). Curiously the media is at 59.1%, the commerce and private industry are at 55.3% and 48.3% respectively. And the most despised Catholic Church, in semi-permanent battle with chavismo, holds the highest approval ratings of all, 68.4%!

Thus the magic number: 32%. The same number that his blogger reported a year ago for the hard core Chavez support, the hardcore that would not be swayed by nothing from his love and devotion to El Surpremo (1). This is the big problem of Chavez lately. Half of what is supposedly supporting him (the difference with the 60 to 70% approval to that 32 % irreducible one) are voters that are literally bought by the handouts of the Misiones. Any slackening in the handouts and soon that 70% can shrink to very uncomfortable 50%, or lower. The Revolution is probably very far from being ingrained in a majority of Venezuelans as these are doing what they have done all through history, vote for whomever gives them free handouts. The numbers are clear, the majority support of Chavez does not blind folks to his two major failures: job stagnation and incredible personal insecurity with a crime wave that seems not to have an end in sight.

Well, perhaps that Datanalisis study is not very good, but at least it carries a great lesson for the opposition if it cares to look at it: the weakness of Chavez are clear to all except that 32%. Forget about them and go and build up a real counter campaign for those who still retain a healthy observation skill.

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1) In a rather long article with a table rather difficult to understand today, I did write that I estimated that Chavez core support, hard core that is, was 30%. Today's article reiterates my observation then as still valid today. Sorry, I could not help but pat myself :-)

Friday, June 17, 2005

Dirceu is out, Chavez loses strong ally

I must confess that I am quite happy. Jose Dirceu has been forced to resign about a growing Brazilian scandal on payoff to representatives to secure votes for Lula.

Well, I am not going to go into the intricacies of the scandal that involves the second in command after Lula, hoping that this will not drag down Brazil into trouble. At least it is worthy to observe that such a scandal is nearly impossible in Venezuela where justice and public officers individual responsibility are something of a far distant past.

However I would like to point out that Dirceu is/was close to Castro and had very unfortunate words to support Chavez, and more than once. He is the probable artisan of keeping Brazil and Venezuela working together in spite of the growing impatience of Lula with Chavez. If he is kicked out for corruption, one can always hope that some dirty laundry about Venezuela will surface. Let's root for Brazilian investigators and may Dirceu land in jail. Or at least be dumped out of Brazilian congress.

On another matter. The Venezuelan Vice President Jose Vicente Rangel declared again today that "sectors of the opposition" wanted to kill Chavez. So, Jose, what about some names for a change? Until when are we going to listen to unfounded accusations that never reach any result? Why can't we accuse your side freely without having all sorts of prosecutions thrown at us at the state expense? Names, we want names! Enough of this eternal charade!!!

I was going to write that Rangel is the Dirceu of Chavez. Once upon a time Rangel was an emeritus journalist and a fighter for human rights. But few people have degraded themselves as much as Rangel has done in Venezuela. I thought better of it. It is unfair to compare Dirceu to Rangel, Dirceu at least had the dignity to resign. Rangel is much worse in his abjection than Dirceu. Much, much worse.

Thursday, June 16, 2005

Another Cadena

Three days in a row. The same reworked cadena at the glory of Barrio Adentro 2. We get close up of equipments made in Cuba (are they any better, cheaper than what can be found elsewhere?). We get "it is the same quality as in private centers" (based on what criteria since the speaker tells us that these people could not have access to private clinics). We get "and it is all free" (for the patient, but who pays? Did no one told them that there is no such thing as free lunch?). We got "the middle class can come here instead of going to private clinics" (Thanks you very much but I will hold to my health insurance for a tad longer and to the doctors I am used to see; I'll visit a BA2 in one year and see how it holds up before trusting my health there). We get "I am a Venezuelan doctor collaborating with my Cuban colleagues. Please, newly graduated Venezuela doctors, show some solidarity and come over to work with us" (should I read that as an admission that the paychecks suck?)

We do not get "will there be enough money to have free health care for all of the population considering that the our per capita is not even comparable to, say, Canada which is struggling to keep its system afloat?" Until when empty promises? What is wrong with making Barrio Adentro EVERYWHERE before moving one to II, III, IV and so on?

Who are you trying to fool? Not me.

But we know that the idea here is to shore up your bases as corruption is suddenly showing its ugly teeth everywhere in an unexpectedly sudden onslaught. So let's talk, and talk, and talk about the only thing that right now works in your circus. At least your core vote will stick with you in the coming days as you deal with corruption, rebellious soldiers, drug kingpin running away, international disrespect, etc, etc... Have fun, we'll watch! Every single Barrio Adentro cadena you throw at us, because we know that the more you force it on us, the more in trouble you are.

Wednesday, June 15, 2005

The plot thickens: the Venezuelan military stew (and side dishes)

The political day started with Chavez expanding on the assassination attempts against his persona. Apparently it is from outside, without involvement of Venezuela's military (probably too busy ransacking gold diggers in the Amazon?). Unfortunately, when he added the following, critical minds raised an eyebrow:

In the Parque Central building were found evidences. There was a group of Colombians, on broad daylight, say the neighbors, checking out the place, going in and out, looking for the best angle to shoot from.
I have that vision of one of the most crowded buildings of Caracas, where elevators do not work well enough for the all essential escape route, with a bunch of Colombians discussing the operation with the neighbors, asking to borrow their balcony for a few minutes, janitors complaining about the left bullets on the floor after the practice shots of the assassins, etc... With paid killers like this, Chavez can sleep at ease!

But assassination is less and less the reason why parades are suspended, no matter how hard Chavez tries tries to push the argument. Miguel reports that rumors are growing fast as to what is happening inside army barracks.

This breakfast was accompanied by the midmorning snacks of Accion Democratica announcing its stern opposition at YET ANOTHER modification of the penal code. It seems that the chavista administration has opted once and for all the rule "set the penalties of the game as you go" system. That is, the recent controversial legislation apparently was not restrictive enough, more "crimes" must be added to muzzle once and for all of these nasty people. For example those questioning PDVSA accounts?

And to add insult to injury, Spain unfortunate foreign minister, Moratinos, the one who has worked to ease Europe stand on Cuba, to befriend Venezuela, probably tired of all of his failures and troubles brought upon him, has grudgingly accepted under questioning that Venezuela is evolving towards populism. Welcome to the real world Moratinos!!!! We have known that for years! What took you so long? This is not good news for Chavez who in spite of having the most favorable Spanish administration he could hope for, assorted with the most possible friendly leftist ambassador he could receive from Spain, still manages to receive veiled criticism from Spain!!!!

You cannot fool all the people all the time.....

A Cadena, the universal Chavez remedy

In the spirit of yesterday's post, we got tonight another signal that things are a tad confused in the Chavez administration: we got the same cadena as last night. That is right, all networks around 9 PM (prime time news for Globovision) had to show again in mandatory simultaneous broadcast a 15 minutes show on Barrio Adentro II. I do not think it was the same as last night. The pro Cuban tone did not seem as marked (maybe I am starting to get used to it?). But all the key words were there: socialism (XXI century variant), neo-liberal policies of the adeco-copeyano governments (when was there a real neo-liberal policy in Venezuela? I must have missed it!), media wars, etc, etc...

So, why the revamping of the same cadena? Again we are left to look for subtle signs of what it really means. Here, a few ideas.

Chavez is mad at the media

Well, that would assume that the media did not report adequately on this new great opus of Chavez, as seen on Alo Presidente on Sunday. But, then again, when did the media ever reported to Chavez liking? As long as they do not spend all their newshour praising El Supremo he will not be happy, anyway.... And we know that if Chavez really wanted to punish us, he would have made a cadena himself of a couple of hours. No, the explanation of this unusual repeat performance is elsewhere.

Things to hide

That is more likely. Having a lot of dirty laundry revealed lately, Chavez decides to push on the forced feeding of the only program that could be qualified, arguably, as a success: the Barrio Adentro thing (after all, the Robinson Mision for illiteracy cannot be advertised anymore since supposedly it has eliminated illiteracy.....)

A short list will show why distracting methods are needed.

Some sectors of the Army are in uprising, not to defend Chavez, not to attack the opposition coupmongers. No, they seem to be settling accounts among themselves. Corruption? Ranking? Pro or anti Castro? But apparently not for the glory of Chavez. Petkoff has a great editorial today as to the latest troubles in Bolivar state where the Nazional Guard seems to have exacted undue payments from the gold diggers/garimpeiros (who by the way are ruining the environment, but why should chavismo care about the natural resources of Guyana when it is ruining preserves such as hato Piñero (heard that Green Peace?)

In the PDVSA ongoing saga of decrepitude and corruption, it was the turn of Citgo auditor to say that Citgo had a few black boxes of its own. About 700 million USD in 2002 went nobody knows where. Maybe the IRS could give a hand?

Jesse James Chacon, the Interior (Homeland)minister has admitted that the Colombian drug kingpin that escaped from the highest security jail in Caracas, did so thanks to internal complicity. Imagine that!!!! Apparently he also had a nice life while in jail.

Vice Foreign minister Izarra, father of Communication minister Izarrita (who apparently has his dad as the most quoted opinion maker in the ministry web site, according to Tal Cual statistics published today: 10 ope-ed pieces out of not even 100 published in the site) has declared that in 48 hours the extradition petition of Posada Carriles will be given to the US. What? Weeks of pig squealing about the US "protecting" Posada and the formal papers are not in yet?!?!?!?!?!?!

The protection of Governor Manuitt Human Rights violations from a parliamentarian inquiry who found enough evidence to call prosecutors is raising a heck as the gross interference of the chair, Maduro,overruling his colleagues demonstrated how far from bipartisan inquiry and debate we are now.

OK, I'll stop now. This list is enough for Chavez to want to distract us with another cadena while he comes up with something else. Apparently more assassination rumors for which Izarra has promised us arrests, as heard on TV. I kid you not, the communication minister realizing that eventually they are going to have to arrest someone for all of these assassination attempts for which no one has been arrested!

Tuesday, June 14, 2005

Mystery and Intrigue: Army and Castro gossip

Eastern Block Communist countries were among the most secretive regimes that existed. Observers were left to rely on indirect ways to try to understand what was really going behind the stage. Who was in the second line of a military parade. Who was not seen for a few weeks. What allusion had the general secretary in mind. What the heck "one hundred flowers" meant.

Well, we are already reaching that stage in Venezuela.

First we had the strange report of a frontier garrison revolting against their Nazional Guard commanding officer. Apparently it was an account settlement between pro Chavez factions about cashing in "revenues" of doubtful legality. The government tried first to pass this as "media wars", their general excuse for everything, but El Nacional persisted. Which now makes the incident graver than what it might really be.

Then the traditional military parade of June 24 was suspended. Assassination attempt in the air. Let's look at this with more detail. Carabobo is our Yorktown, our Trafalgar, our Austerlitz. Every year the National Monument is the site for a major parade. One year even Chavez considered reenacting the battle but was dissuaded not to do it when the difficulty and costs revealed to be more than expected. So, why suspend the parade now that Chavez is supposedly on the peak of his power, when 70% of the population loves him (according to chavista poll interpretation)?

I have been to Carabobo and I can assure that an area which can be sealed by thousand of soldiers is not the best place to try an assassination attempt. Unless.... Where to look for that "unless"?

Sunday we were told that indeed Castro will be the godparent/sponsor of the new officer graduating class. Teodoro Petkoff of Tal Cual has an excellent editorial on how much debate could have been taken place before the kids decided to bestow such an "honor". None.

It seems that the cheap Chavez provocation to force the army to grant high honors to Castro is having some side effect and that could be the "unless". Probably Chavez is afraid (justifiedly?) of a hit from inside. Could that explain tonight mini "cadena"?

We have been spared cadenas for quite a while, but tonight we got a short one on the inauguration of Barrio Adentro II. This prolongation of Barrio Adentro I consists in providing poor neighborhoods with more than Cuban doctors. That is to set up simple clinics where some services such as X-rays might or might not be offered. Nothing to argue there.

However there was a few problems with that "cadena". First, according to Tal Cual, Barrio Adentro II has already been running for a while. In fact the one chosen for Sunday Alo Presidente was spruced up in a rush as they learned that Chavez had selected that one to go (according to Tal Cual "Por mi Madre"). Was it already showing signs of wear and strain?

But the "cadena" subtext was an outright praise of Cuban help. All sorts of people were interviewed on that subject that one could only wonder! Even if indeed there were reasons to thank Cuba for its help, this was propaganda, pure and simple. Could that be a clumsy (or prepared?) was to counter attack the faction in the Army unhappy with the Cuban growing presence (rumored to even give orders in some military areas)? It seems that criticism to Cuba excessive role in Venezuela is gathering enough momentum that chavismo decided to activate its propaganda machine.

The words of El Supremo were of course to the praise of XXI century socialism without which nothing of this would be possible. To the collaboration that it allows between the people. We were always told that the Eastern block was very collaborative until it fell and we all learned that "collaboration" was directed by the USSR. Who will direct the next "collaboration"?

Many symbols, many illusions, many allusions. Little direct truth. The script is evolving as expected in this type of regimes...

And to close this post. Barrio Adentro III was announced in that "cadena" as finally building hospitals for the poor. For those naive souls that might believe in that, I have the news that there is indeed already plenty of hospitals in Venezuela. Probably not enough but certainly quite a few. And many in dismal state. I would suggest that before building new hospitals it would be a good idea to refurbish the ones in need. But of course, El Supremo is already seeing himself inaugurating the first socialist hospital of the XXI century.

PS: Do not miss the red uniforms of the nurses. Talk about a soothing environment!!! Or is it to hide better blood stains to come? Well, maybe it is not an nurse uniform, maybe it is something else, but I do not recall the Soviet Union lavishing so much red on its militant uniforms.....

Note added during breakfast. The vice minister of health, bless his heart, has announced that hospitals will be recovered by Barrio Adentro 3 (before building new ones? He did not dare to go that far). He adds that they have been neglected since the 70 ies. If the compliant pro government journalists that were interviewing him would have dared ask a real question, they could have wondered aloud why did we have to wait 6 years for the government to start announcing hospital refurbishing through a Mision. Really.........

Monday, June 13, 2005

The Bolivarian foreign policy of Venezuela

It is greatly amusing to observe how Venezuela is attempting to forge a Foreign Policy for the glorious revolution. Not that its aim is unclear: the goals of the foreign service are now to promote the glory of the revolutionary leader, and plant wherever possible the seeds for future bolivarian movements: "bolivarian circles" are sponsored wherever they can find a few souls willing to deal with the hodgepodge of chavismo ideas whose only common denominator is "death to the US", more or less virulently expressed. These circles are incredibly useful to make up quickly a claque whenever a stupendous bolivarian leader is in town. And, if needed, the embassy or consulate personnel is required to go fast make bulk. Oh yes! There is talk of social justice, redistribution, "democracia participativa and protagonica" which at this hour nobody is really quite sure how this work except that so far we see only a few participate and only one protagonist. But I digress.

A few days ago we were treated to a El Nacional article describing us how a training program at the foreign ministry was supposed to prepare new diplomatic leaders in three weeks. I kid you not. Interestingly this program was lead by Izarra senior, the father of Izarra the communication minister, who after a love in, love out relationship with Chavez has found a way back on the payroll by becoming the ideological lead of the foreign ministry: vice minister for the areas of the world where Venezuela has the least business to do. This seems to leave him with plenty of time on his hands which he uses to create and promote the new image of the foreign service personnel whose main attribute must be devotion to El Supremo. We assume that they will still require them to be able to write at least in Spanish.

But the foreign ministry is going further. A new law is going to pass soon to allow the bolivarian leadership to bypass the career vocation of the foreign service which normally should be removed from the political fray, at the service of Venezuela only. The days where Venezuela interests were first are gone. The problem is that they cannot fire career public servants who do their job just because at a personal level they do not think El Supremo is hot stuff. So, in the purest populist and demagogic manner, it seems that the numbers of public servants will be increased as much as needed. The older ones? Well, they can shuffle papers waiting for their retirement as their experience cannot be trusted even to translate information to the new ones coming in who in some cases barely can put two sentences together. Meritocracy? Not!

For the reader that thinks this blogger has lost it, a quote from declarations of Delcy Rodriguez, vice minister for Europe (and interestingly the sister of infamous Rodriguez of the CNE)
"This is a foreign office that is going to grow and it will do so proportionately with its restructuring. If we have 5 vice ministers, well, I suppose that we will grow fivefold"
Just like her big brother growing chavismo votes? The cynicism of some chavistas is quite something to behold!

Now, the reader might wonder whether Venezuela is getting something out of a naked attempt at close political control of the foreign service when the rule of civilized countries is to make it bipartisan. The reader might even want to know if El Supremo is getting something, really. Well, so far it does not seem so.

Slap at the OAS

The last OAS meeting was overall a defeat for Venezuela. It avoided the worst which was a clumsy attempt by the US to modify the OAS charter to "monitor" democracy. Venezuela's communication minister Izarra claims this to be a great success for Venezuela's diplomacy when in fact this initiative failed more by the error of the US, its ill timing (1) and the desire of grown up countries like Brazil not to be exposed to such type of observation. Venezuela in fact had nothing to do with that US failure and should not take credit for it(2); in fact, Venezuela should realize that it is doing Brazil (and other) dirty work.

Actually, one could say that the only country to lose as much or even more than the US in Fort Lauderdale was Venezuela who failed to satisfy its real obsession, to stop NGO like SUMATE from attending the meeting and expose Venezuelan civil rights problems. In fact, the foreign ministry probably helped set up ad hoc NGO out of nothing to send them and counter SUMATE arguments. Seasoned politicians certainly saw through that decoy, in particular when they heard the envoys to Fort Lauderdale use in the same paragraph "democracia participativa y protagonica" twice, as seen on TV. And all of them using that slogan whenever possible, as seen on TV too. This is not obscure diplomatese, this is just garbage, and an insulting one to the intelligence of attendees. Will these "NGOers" get an appointment at the Foreign Office once the new law passes?

Insult in Ecuador

A surprising hit came from Ecuador new government. Herreria, the government secretary declared:
The Bolivarian project of Hugo Chavez is a horrible project which comes lose from Venezuela, goes through Colombia, through Ecuador where it destabilized the country's institutions,[...], reaches Peru and peaks in Bolivia which can be the fuse to set on fire the region
Quite clear, isn't it? Venezuela was not amused and protested irately (and not very diplomatically, by the way). But what would Caracas expect? Alberto Garrido had yesterday an extremely comprehensive review of Venezuela, or rather Chavez foreign policy goals. And reading it, for those who can read Spanish, cannot be good news for anyone holding office in Latin America these days, not even Lula. And forget about Foggy Bottom smiling on that!

Bolivian accusations

So, trying to counter attack himself, perhaps considering the failures of the foreign ministry to prop his world leader status up, Chavez decided yesterday to blame all of Bolivia's trouble on the US, the BBC dutifully reporting it. Even this fearless blogger acknowledges that the complexity of Bolivia should bring anyone to discuss this topic with the outmost care. But Chavez forges ahead, irresponsibly. After all Bolivia is in the news so Chavez gets to shine some and distract from problems at home such as PDVSA corruption or OAS failures.

There is no pretending that Evo Morales does not get support from Venezuela: he has traveled too often to Havana and Caracas; he has been vaunted publicly too often; it is commonly assumed that financial help has been sent to his movement. However, what is a fatal flaw of Chavez there is to put all of his eggs with Morales, apparently even asking him to accept the recent truce. Evo Morales is far from being the one and only leader in Bolivia indigenous movements. Felipe Quispe has not been invited too often to Caracas. This is a very dangerous leader who is on record as not been afraid to enter civil war in Bolivia, who despises Morales even as he must make common front with him and grants interviews under a Chavez portrait. This is a petard that can blow on Chavez face real bad. Bolivia is not a one leader country like Venezuela, and a good foreign service could point out that to El Supremo, if this one were inclined to listen, of course......

It is a complex world and Chavez needs a professional foreign office. But he is building a militant one that will only ensure more and more trouble and less and less efficiency on the international front. But after all, the only thing that Chavez wants is for people to talk of him all the time. He has learned long ago that there is no such thing as bad publicity in show business.

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1) this rather worthy initiative by the US to make adherence to democracy more than lip service to elections should have been undertaken as a long term project and not as an obvious anti Chavez measure. In the best of times it would have required at least a couple of years to work its way through the intricacies of relationships within the Americas. But the State Department is suffering of years of neglect as to Latin America and Secretary Rice cannot be expected to change all of this in a few months. As chavismo is becoming more of a concern, some at State thought that trying to rush such an initiative would put pressure on Chavez. It did, but perhaps at the cost of delaying discussion of the initiative for a while. It is quite possible that Secretary Rice, whose own role at the OAS meeting was more stellar than her employees in spite of her "I must return to the United States", might use their blunders there to look for more qualified personnel for Latin America affairs. Which of course could be further bad news for Chavez.

2) some examples of the silly spin that Venezuela is trying to put on the OAS meeting, with cartoon, and with the Foreign minister declarations, very unbecoming if his goal is to improve US Venezuela relations. And this from the magazine that pretends to offer impartial analysis from the chavista side, Temas. And then some complain of bloggers...

Saturday, June 11, 2005

Moments for reflection in Venezuela

There were a few unrelated events in Venezuela this past week that should make us take a pause and think about where it is that we are going. The answer is nowhere fast, but I aim to be a little bit more subtle, as the way we go there is important, and understanding how we go is our only chance to stop the train wreckage that is surely going to wait for us somewhere.

The Bolivian train wreck

I cannot help but think of Bolivia as our distant dark mirror. Certainly Bolivia and Venezuela's histories are so different that building a parallel is simply stupid. But when I look at Bolivia I look at the type of social unrest that could well happen when Chavez runs out of money for his handout programs.

The best little kept secret in Venezuela is that public spending keeps increasing faster than the oil price. In other words, this means that no matter what happens to oil price, the Chavez administration will run out of money. Chavismo Misiones are closer to work programs than to any jobless solution. Certainly some Misiones are positive and do bring improvements to the lot of the poorer as reflected in recent polls. But if subsidized food (Mercal) or basic to simple health care access (Barrio Adentro) make sense, hidden job programs do not (Vuelvan Caras, Sucre, bloating of public service rolls, the Military Reserve). There is no positive example of such programs in history and the reader needs only to look at the archetype of modern National Workshops, the French Ateliers Nationaux of February 1848 which ended in perhaps the most horrifying repression in French history, the June 1848 riots.

I suspect that chavismo knows the long term unsustainability of these programs and that might be the reason in part behind some of the recent moves of the government. But they cannot bring themselves to take the only measures that will really allow for some sustainable recovery of the private economic sector: predictable rules of the game guaranteed by an independent judiciary. Because let's not be fooled, the only sector that can bring down unemployment, and the obscene underemployment, of Venezuela is the private sector. Right now, only oil related foreign companies are the only ones setting up shop. Venezuelans invest as little as possible and the only sectors that do show some "expansion" are public works, large banks, already established concerns such as in telecommunications, and such. These sectors create few or temporary jobs, and the only reason why they keep investing is that because the government needs them too much. Unfortunately there is no sign of the judicial regularization that could attract other type of investors more willing to take chances and start the job machine creation.

What will happen when chavismo will run out of money to sustain its job programs? Will we see workers take to the streets Bolivia style? Even with Chavez still in office?

The judicial system in check even by the parliament that created it

The National Assembly last year violated the Venezuelan constitution with the acquiescence of the previous High Court to pack this one with chavismo faithful. This death of justice left for the common man the National Assembly as the only legal way out some day. If anyone was fool enough to hope for redress there, this week Maduro highjacking of a criminal report investigation by the assembly put any doubts aside as to really runs the country.

Simply put, a bipartisan (!!) commission found that the governor of Guarico State Manuitt was associated with Human Rights violations. What did the president of the National Assembly Maduro do? On his own (?) he named yet another commission to revise the work of his peers. Thus even within the National assembly there is no respect for precedent AMONG chavistas themselves. The only thing that counts is the word from Miraflores who for some reason decided that it was not convenient to investigate a political ally that Chavez had backed in 2004 when already evidence of mafia practices in Guarico existed. Of course the beloved leader cannot be seen supporting criminals.

Legitimacy in Venezuela

These and more events such as the surrendering of Venezuela at the foot of Castro are bringing to the forefront the question on how much democracy, how much legitimacy is left in Venezuela. Not much according to Gustavo Coronel.

His premise is quite simple: democracy cannot be based anymore on just elections, no matter how clean these ones might be. What this blogger has resumed in the past as "protection" of minorities as the yardstick to establish a government commitment to democracy, is more elaborated by a United Nations Commission of Human Rights in 1999, which includes:

* Freedom of opinion, of expression and of association
* The rule of law, equal for all citizens
* Universal and equal suffrage
* Political participation, with equal opportunity for all
* Transparent and accountable government institutions
* Equal access to public services.

On all accounts Venezuela is already failing on 2, 4, 5, and 6, and in great danger in 1 and 3. Gustavo Coronel explains this quite well and this blogger wishes to thank him from saving me the trouble to write a similar series of articles that I was planning.

Thus we can say that at the very least the legitimacy of chavismo is questionable today.

Through a glass darkly

These days we see that Chavez has not only failed to pacify the opposition he has encountered for years, but he is probably exacerbating it again. Worse, we also see him planting the seeds of a new opposition, the one that will demand more programs, more handouts, that he will not be able to fulfill as he might not even be able to sustain those he is already giving out. Populism, in particular its more virulent form Peronism, has an inner forward momentum that cannot be stopped: too many aspirations must be raised to maintain support and the thin thread will snap. What will happen to Venezuela then, when old opposition and new one will meet?

13:12 For now we see through a glass, darkly; but then face to face:
now I know in part; but then shall I know even as also I am known.

First Corinthians

When an agnostic starts quoting the New Testament, you know that pessimism is in order.

Friday, June 10, 2005

The fear factory (Castro in Venezuela)

The latest scandal brewing is the coming visit of Fidel Castro to Venezuela. That would not be the first time, but now it has a totally different feel to it.

Castro stopped coming after April 2002 when his presence was definitely a minus for Chavez. Though Chavez recovery after April 2002 is certainly due at him finally following marching orders dictaded at the very least in large part from Havana. Rumor has that even the referendum maneuvers to pad the results were thought off among Cuban intelligence stationed in Caracas. They do not have free elections for nothing in Cuba.

Now, almost a year after the referendum, as Venezuelan money is holding together Cuba, the prospect of Castro coming to visit his newly acquired colony is taunting us. This would be bad enough already, but to add insult to injury, Chavez, because such an intiative can only be promoted from himself, wants Castro to be made the god parent of the latest military school graduation, during the Carabobo ceremonies of June 24. If this comes ot pass, the symbolism cannot be missed by any one. Castro, the killer of Venezuelan soldiers, will be the honored guest of the Venezuelan army.

I could go on a long article to express the disgust at seeing Chavez as a "vende patria", the ultimate betrayer of the country. But Milagros Socorro came to the rescue with yet another brilliant article (where, by the way, she mends fences with SUMATE). And as I was very busy today, Guillermo also helped tremendously by translating it specially for this site. Readers of this blog are great. Original version here. And also a bonus article from Manuel Felipe Sierra on the subject, not to be missed. There are things that are just indefensible and true spirits always rise to the occasion.

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The Fear Factory
Milagros Socorro
El Nacional, June 09, 2005

A great despair drags down Venezuela's heart.

An anxiety that equally chokes all the political sectors of the nation. Including government sympathizers, because after six years of rhetoric and abuse of the dossier of confrontation, they don't see a true recovery for the country, they can't manage to catch a glimpse of the beginning of a peaceful road, of work, of perspectives favorable to the development of a better life, with opportunities for exercising the right to freedom and personal safety, to study, to develop a career, to have an existence in tune with modernity's promises of well-being (promises we see fulfilled in foreign TV shows, in movies and in the letters we receive from our expatriate relatives). And including the various branches of the opposition, because almost all of them have lost the faith that things might change: we have been humiliated so frequently, cruelly and mercilessly, that even the mildest spirits have begun to give in to disenchantment.

Besides, democratic methods have proven to be more fragile than we thought, and many have failed in the attempt to detour the authoritarian manner in which our country is moving.

As though these weren't enough, some segments of the opposition have let themselves fall under the illusion of methods they thought were faster and which turned out to be swamps where their aspirations were shipwrecked. I'm thinking of that period when some in the opposition thought that if they made a lot of noise in the public spaces where they discovered the presence of a government official, this would help to mine their morale and make them desist from their bureaucratic tasks. Thus there were those who believed that Juan Barreto, to give one example, the man who ordered an anonymous pamphlet be published, in which he insulted various journalists (among whom I had the honor of being included), that this man was going to soften because they banged pots at him.

And I'm thinking of that other period when one sector of the opposition wagered that the salvation of the Republic could be found with the dissident officers of Plaza Altamira. I keep the insults I received at that time in a sealed envelope, insults received when I reacted, a few hours after the maneuvers around the obelisk, pointing out their uselessness and theatrically pathetic quality. (The style of these letters is condensed in a message that read: "Bitch, whore from Maracaibo." Which, by the way, quite imprecise since, in fact, I come from the region of Perija.) As can be seen, that fraction of the opposition was convinced the dissident officers would defeat Chavez's government and a new era would open up for the country. How can that blunder be explained? Because at the time, this state of despair, which today is evident with utmost clarity throughout the entire, absolutely the entire country, was already beginning to be forged.

Other terrible periods would arrive. The times, for example, of what has been called, very appropriately, "the continued fraud," which was so meticulously documented by The SUMATE Report: the "Truth About the Reafirmazo", one of the most horrifying books, because of its rigorous technical tone and the irrefutability of its arguments, its documentation of torture, which in this case was practiced whole scale and not just against one single detained person in a military base (a book, it seems, that few of us have read and respected, since no one cites it when the time comes to mention the great merits of SUMATE, which surpass their graceful physical attributes, themselves undeniable and worthy of notice).

That series of traps, of mockery of citizens and of shameless abuse of power, would conclude with the August 15th referendum, whose results still elicit doubts; if not regarding the support president Chavez counted on and counts on today (which is supported by the polls from that time and now), then definitely because of the antecedents of a gross prohibition of political rights for a very large part of the population.

August 15th would strangle our hope even further. And I allow myself to assure that this means everyone's hope, not only for those us who voted for the option of revoking the presidential mandate, but rather the hope of all Venezuelans. Because that date would mark the flooding of Chavez's authoritarianism (whose greatest coagulation is the Tascon list), his nefarious alliance with Fidel Castro, the handing over of Venezuela's resources to the Cuban dictatorship, the entry of the Cuban G-2 agents, which was already occurring, of course, since the beginning of this government but which became massive at that point and clearly visible to citizens. And that date would also mark, above all, the widening of administrative corruption in all levels of the Government. No one was victorious on August 15th, only Chavez and his clique. And Fidel Castro, who was evidently the prime beneficiary.

After that date, the government would commit itself to a strategy of intimidation elaborated to reach all Venezuelans. It would reach its acolytes, in order to guarantee militancy, loyalty…and complicity, in many cases. And it would reach its adversaries, in order to demolish, in their minds, in the center of their souls, the rebelliousness, the critical spirit, the oppositional clarity. Fear and desperation are the best stimuli for falling into mistakes, for making people lurch, for setting one's principles aside because painful impatience can push one to attack without making important discernments.

And that is where we now find ourselves.

I wish my writing had the necessary efficiency and vigor to express the dismay I feel when I see the president of the Cuban National Assembly, Ricardo Alarcon, standing on the dais of our own National Assembly. In my pilgrimage through the Spanish language I haven't yet learned the exact words to account for the tornado that it unleashed in my chest, the mortifying lava that quickly spreads up to my throat and sweeps through my arms. The Cubans have tattooed me with humiliation.

The presence of Cuba's ambassador in our Parliament, in our political life, in the scenarios belonging to Venezuela and to Venezuelans, has permeated me with the greatest shame I have ever felt.

But if I don't have the words to name the dishonor in which I live since Fidel Castro and his thugs are masters of my country, creators of our destiny, I would at least hope to have them to help dismantle the plot prepared to maintain us in fear and silence.

It is with the objective of paralyzing us with fear that Cuba's dictator, the last invader of Venezuela and the executioner of our soldiers (during the 1960s), has been chosen to be the godfather of the upcoming graduation for officers of the Armed Forces. It is for the sake of transforming us into collaborators of this authoritarian project that the commanding general of the Armed Forces, general Raul Baduel, sends a bulletin to the media to announce "the incorporation of the Reserves into the military exercises being realized in the town of El Pao, in the state of Cojedes." This is not a mere gesture of keeping us informed. The esoteric officer concretizes for us, with abstruse slang, the perversity of informing that the Armed Forces are being concentrated in order to become an asymmetrical warrior. In other words, an instant repressor of any subversive initiatives (the asymmetry is not between the United States and Venezuela, in which case we would speak of a sidereal dissimilitude of military options, but rather between the people and the Government).

This, what the sycophants call "military thought" in order to ascribe a philosophical capacity to Chavez, is all conceived to terrorize, confuse and place obstacles against the formidable task of liberation we now face.

All of us Venezuelans.

Wednesday, June 08, 2005

Nazional-communism in Venezuela

I feel an unwished for satisfaction today.

Readers of this blog might have noticed on occasion that I equate freely Communism and Nazism in that they are totalitarian systems that equally trample Human Rights and commit all sorts of abuses which cannot really be differentiated or justified no matter what ideology is used to lighten the facts.

Readers might also remember that if I do not consider Venezuela a totalitarian state, not even a real authoritarian state, yet, I am quite clear that we are on the way to authoritarianism. And that I think that the logic of the system can only lead us in the future to some form of totalitarian state if its leaders can get away with it. Even some of my colleagues in the opposition do not share this view, at least not the "until totalitarian do us join". I will agree that to set a totalitarian state you need efficiency which is so far the anti-hallmark of the regime. Thus there is still some hope that we might not go past a muddling into some form of authoritarianism, helped along by the opposition own incompetence.

But today, even if semi jokingly, Simon Boccanegra of Tal Cual is starting to report on such a drift. I will remind the skeptic reader that the Cuban "revolution" looked quite romantic in 1959, quite a show with generous long haired beat generation types. We all know how this ended...

At any rate, I decided to go ahead and translate this item, as a fair warning, just in case. And with the apropriate notes as needed.

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Socialism for the XXI Century?

The school for International Studies of the Central University of Venezuela can start closing its doors. Until recently most of its graduates ended up, logically, at the foreign ministry. It has been quite a few years already that entry to the diplomatic corps was obtained through credential contests whose "competitors" were graduates of said school. This is all over. The Yellow House (1) has just announced that the contest will survive but "only for those who are engaged in the revolution". In other words, you do not enter the foreign office to serve the country but to serve a precise political process - this unpalatable hodgepodge that its sabre yeilding defensors call revolution. Fermin Toro, for example, present ambassador to the UN, nobody has ever questioned his fossilized communist thinking at the foreign office, where he seems to have resided from almost the times of his illustrious namesake (2).

Today, he and others like him, in the application of the totalitarian model of tropical totalitarianism, where clear Nazi-Communist undertow cannot be hidden, work to make the Foreign Ministry one and the same thing of Party and State. This was asked from the public servants of Hitler Germany and in the Soviet Union: fidelity to the party (and of course its chief) and not to the country. Is this the way of "XXI century socialism"?


1) Casa Amarilla (Yellow House) is an historical house on Caracas Bolivar Square who even served as a jail until it became the official seat of the Foreign Office and thus one of the most known addresses in Caracas.

2) Fermin Toro: Famous and illustrious politican and writer of XIX century Venezuelan. Many high schools named after him.

Tuesday, June 07, 2005

Mesa in Bolivia, Rice in Florida and the hand of Chavez everywhere

For a change tonight let's visit foreign news.

Mesa resigns in Bolivia

This will of course be the most important news of the day even if it happens almost at day's end. The resignation of Bolivia's president (still reversible?) will open the door for chaos in Bolivia if people do not watch out. All the stirrings of Chavez from Venezuela might start a major civil war in Bolivia (as if he cared, anyway). Because indeed, Chavez does hold some responsibility in the coming tragedy of Bolivia, from his subsidies to Morales to his uncalled speeches on the Bolivia Chile centennial grudge.

Discussing Bolivia is extremely complex. Suffice to say for now that the Bolivian "altiplano" long suffering and long exploited natives want now to benefit from the oil and gas of the Santa Cruz province, the newcomer and the booming area of Bolivia. There was a time where Bolivia fought for the Chaco in a bloody XX century war. Paraguay won but no oil was found in the Chaco. Had Bolivia been more patient it would have realized that the oil was already at home. Meanwhile Santa Cruz grew in the recent decades to become the granary of Bolivia and the pole of industrialization.

The locals do not want to take orders come from La Paz for which there is not even a real good road to connect with. Santa Cruz looks to Brazil and Mercosur. La Paz looks at its navel. Santa Cruz thinks local initiative (even if only for the local oligarchy), decentralization. La Paz is afraid to fall into the hands of radical leaders that exploit the justified resentment of their followers. Whoever wins in La Paz will only try to control Santa Cruz and get as much money as possible from there to buy off peace from El Alto.

The conditions are nearly ideal for a civil war and a break up of the country. But of course that has never stopped our own fearless EL Supremo from probably secretly wondering whether he could run in Bolivian elections, the only country wearing the name of his idol.

A day at the beach with the OAS

Well, I am sure that some of the attendees of the OAS meeting in Fort Lauderdale will be going for a quick dip at the local beaches.

But while some go to the beaches some are doing hard work. From the Chavez side, still stung by the smiles of President Bush at Maria Corina Machado, it was damage control time. Indeed the first priority of Ali Rodriguez was to block the approval of the establishment of a democracy watch structure at the OAS. Indeed, the proposal had a last name: Chavez. The allusion was so direct that the OAS members, too many of them enjoying a slice of oil business, could not have the stomach to approve it this time. But that it was discussed and postponed for further meetings as a permanent agenda item of sorts is certainly not a victory for Chavez and could come back anytime at the top of the agenda. There was an item that was even more face losing for Chavez: his proposal to equate social justice with democracy was relegated to the very end of the agenda. Obviously people know better: silly cooked up schemes such as this one which equates democrat with populist are not helping Chavez overcome his growing isolation. All in all not a very good summit for Venezuela who gets any help it can get from countries who themselves have probably a few skeletons in their own democracy closets.

On the other side of the street, namely at the hotel where Secretary Rice is staying, Maria Corina Machado is getting a friendly 20 minutes meeting.

This time it is Ms. Rice who is showing some leg

Let's not doubt that this was a strong follow up of Bush recent reception. As a policy of state, the US has decided to encourage pro democracy groups of the civil society, no matter what a few might scream. The message is clear for both sides: "We will support only democratic ways in Venezuela. You, Chavez, better behave and let your opponents breathe and do their job. We know that your electoral system is bogus and you better clean up your act. You, opponents, get your act together and we will back you as far as we can in a legal and democratic way. Only people who work hard like Maria will be considered".

But Secretary Rice did hear from Venezuela from more than the Sumate leader. The Human Rights Watch also included the Venezuelan deterioration of Human Rights in its report over the general troubles in Latin America. Now there is no doubt at all, Ms. Rice publicly knows of Venezuela's problems. The irony is that now probably Ali Rodriguez dreads a meeting with Ms. Rice where he will have a lot of explaining to do before he can present his case.

I will like to express my personal satisfaction at the OAS receiving now many ONG to state their case. I think it will increase their effectiveness and demonstrates best which are the ones that have things to hide. Venezuela, curiously no?, was very vocally opposed at receiving any ONG. Talk about "democracia participativa y protagonica". Where else better to participate and hold front stage than at the OAS? Perhaps that explains how some pro Chavez ONG showed up in South Florida after all...

Some other OAS meeting footnotes

To conclude in no particular order.

Bush message to the OAS had Venezuela written all over. The US proposals, as Oppenheimer points out, might have been good but suffered from being proposed by the US which suffers from congenital mistrust in Latin America (not surprisingly, unfortunately).

For those not attending the Venezuela business meetings, Carlos Alberto Montaner gave them a very sobering and even pessimistic reading of the future of Venezuela in their morning local Miami newspaper. Unfortunately I cannot argue much with him as I am only too aware of the destructive rift that Chavez has inflicted on Venezuela (Bolivianizing it?). A quote deserves to be posted:
The disappearance of Chavez's government, if it occurs as a consequence of the disaster ahead, will not be the end of the problem, however. His stay at Miraflores palace will leave a ruinous aftermath that will haunt Venezuelans for at least three generations. The destruction of the economic sector won't be repaired for a long time. But the most dangerous damage will be felt in the field of human relations.

Well, three generations might be an exaggeration, but we will have lost one generation for sure, to add with the one lost since Luis Herrera.

Jackson Diehl is fast becoming a close Washington Venezuela watcher. He clearly was enthused with Maria Corina Machado in Washington DC, without stopping him from seeing what is going on really around Latin America.

But even the governments that secretly share Bush's anxieties [on Chavez] resist standing up on their own -- partly out of deference to the region's tradition of nonintervention, partly because of their disgruntlement with Bush's first-term policies and partly because they covet a slice of Chavez's growing pile of petrodollars.

He is another one that "gets it" on Venezuela. They are adding up and I cannot remember when was the last time that Chavez, milions and all, got a major newspaper columnist on his side.

To leave with a different note. Many have complained about the picture of MCM with Bush and will complain about her picture with secretary Rice. So I will leave the thoughtfull reader with a picture taken in Cuba a few days ago when the Venezuelan Vice president was visiting. Which of all of the pictures posted in this blog recently is the biggest affront to Human Rights and Dignity? Opinions might vary, but I will advise people to think about it before they blurt out their opinion.

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PS: Added later. Miguel debunks really well the words of Venezuela's foreign minister in Fort Lauderdale. Bless his heart, he has more patience than I do with dealing with the bolibananarian nonsense.