Sunday, December 20, 2015

The unexpected transition

The arrests of Rincon and Shiera (and maybe more) in Houston and Miami this week end may be more important than what you may think.

Let's first dispatch the news.

Rincon and Shiera have been investigated for a while by the DEA which does more than just drug stuff. Money laundering of all sorts is also looked upon.  Journalist Cesar Batiz has, in Spanish, a long investigation on the rise from rags to riches of Rincon, through conveniently organized supply companies to Venezuela state oil PDVSA, as of 2003 when all controls on procurement were eliminated. Last year Rincon lavishly married a son in what in French we say defrayer la chronique (goes beyond social gossip?).

Rincon came to political notoriety when a plane from his business was the one transporting "el pollo" Carvajal, a Venezuelan army officier accused in the DEA list of drug trafficking who was briefly detained in Aruba as the US failed to extradite him (due to The Netherlands unwillingness to endure insults from the regime, but that is another story). The first question that comes to mind, is what the hell was Rincon still doing in the US? Speaks a lot of the brazenness of these people that think that outside of Venezuela they can go around equally unscathed.

It is important to mention that people like Rincon have been followed closely by noted bloggers whose own investigations may have been of use by authorities, investigations also linked to the contract abuses and overprices around the Derwick. In addition to Cesar Batiz, already named above, there is Alek Boyd who has been personally threatened by the Derwick people (who else?) and whose web page Infodio is blocked in Venezuela.  Steve Bodzin is another one who has covered the oil scandals of Venezuela and who did extensive searches into how the corrupts like Rincon or Derwick bolichicos pay to have their images cleansed through Internet. And there is also a blog in Spanish who looks into actual criminal activities of these people but without stated ownership.

So, what does it all mean?  On the trials to come I do not know but on Venezuela future politics I have a good idea,

The chavista corruption has been reckless, and the more so that it involved drug trafficking. These people are just a street gang that somehow was catapulted into controlling a country through Chavez who needed people to do his dirty job, no questions asked. Chavez was himself of a thug mentality but crossed with messianic idealism and the inability to understand what classic texts actually meant. Thus he let it all happen as long as it increased his chances to be president for life.

Though years of success in Venezuela and the establishment of a system here where they can do as they please, they have come to assume that outside of Venezuela it works the same: pay what it takes to bribe and do almost as much as you do in Venezuela.

Unfortunately it does not work like that. The US and Europe maybe tolerant on corruption to a point: after all, it is investment money coming in and if the country where it comes from is idiotic enough to allow it, well, too bad for them. However when the levels of corruption start affecting the workings in the US things change and there is a crackdown. Rincon if just another chain link, but that chain goes to the billions that went through the HSBC bank, or the accounts in Andorra and what not.

On December 6 the regime lost elections badly because, among other reasons, they were busier looting the country than taking care of the basic necessities of their very own electorate that was willing to pretend to be fooled as long as a regular flow of freebies came down. Trickle down economics, chavista style. Bankrupting the country with so much looting cut down the trickle......

For a few days we were wondering about how the regime would find ways to void the new assembly and how that one would stare down the regime. But the arrest of Rincon (and more to come) is, in my eyes, speeding up the whole scene rearrangement. The list is now long on people that have been caught: if Rincon was the middle man, there are the nephews of the first lady, or ponzi traders like Illaramendi. We can state without fear that at the very least a couple of dozen of high ranking chavistas are next, and cannot leave the country anymore. And they know it. We can cite for example Diosdado Cabello, Rafael Ramirez, a few army officers, a few ministers and CADIVI bureaucrats, just for starters.

The question is how can you negotiate a power sharing system with people that cannot hold their part of the bargain for many reasons, one of them because they cannot travel outside of the country for fear of not being able to return for the duration of their sentence? Add to that a country on the verge of collapse that cannot hold much longer while corrupts and politicians decide what to do.

This is not about sharing of power anymore. I am not sure if a transition is still an option. We are talking here of an outright change of regime, either a military dictatorship or a direct overthrow of the people in charge who are too corrupt and who in any case have no idea on how to take the country into the quagmire they created.

I am nobody here but I would suggest Maduro to name a new vice president and an opposition cabinet to let them do what must be done while he is himself the garant that key social programs will be untouched. A cohabitation French style, for example. Or at the very least name a more technocratic cabinet, where key financial posts are held by people who know that 2+2=4.  This would give a few months for Disodado and his ilk to figure out some deal with the DEA and the like to avoid the worst of their fate. But we all know that this sensible approach will not happen.

The "transition" has suddenly become very unexpected.


  1. Control of the country in the short term will ultimately come down to who the military backs. Correct me if I am wrong but in order for Castro to ensure he controlled the politicians he convinced them in order to ensure the military supports the regime to put high ranking loyal Cuban generals throughout the military. Hence ultimately Castro controls a big portion of the direction of the military. Seems to me he already cut his deal with the USA. He proved through one of his generals at election day where he stands by stopping the regime from fixing the election and told the results to the opposition such that the CNE could not deny them. With all that said I support the argument that this regime is near its end.

    1. Anonymous11:50 PM

      there are divided loyalties in the armed forces. GNB and Navy are sided. Army is against GNB and Air Force is on the fence. Padrino best general they have. Padrino hates Reverol.

  2. Charly6:20 PM

    Aren't we giving here Cuba and the two drooling cretaceous reptiles more credit than they are due?

    1. I have known some idiots in business that simply had no morals, care for others or respect for the law. Throughout their business lives they pretended what wonderful people they were to their employees blaming everyone else for any woes. Not intelligent at all but we're highly profitable and made millions through screwing business partners and disrespecting what the average person seems required to respect in terms of the law. And this is in Canada. Still operating today making money hand over fist in their crooked business ways.

    2. Charly10:57 PM

      So, what is your point Sir?

    3. Just that the Castros and Maduros of the world exist all over the world at many levels and intelligence is not required for power or money.

  3. Charly6:30 PM

    Talking of Rafael Ramirez, Bocarranda is usually a reliable gossiper:

  4. Interesting musings Daniel. I fear that the transition will happen in the first quarter of 2016. The country should reach its breaking point in February, inventories almost in zero, little reserves left, oil at less than $30 (today's deliveries will be paid then), high credit card debt by most Venezuelans and debt payments in March. Would we have a Salida 2? anyway is game over soon

  5. I noticed the absolute lack of controls within PDVSA starting in 2003. What I observed was a gradual deterioration of system controls as Chavista managers took over. But I didn't get a full insight until around 2006, when I sat in on a meeting between PDVSA managers and a shady maletin "drilling company"'s representatives. I was present because a pdvsa friend had asked to borrow a conference room in our company office to meet with these guys. My PDVSA acquaintance, a Chavista lite manager promoted to a position she really couldn't do, had asked me to stick around because the meeting was supposed to be a presentation about these guys' outfit and equipment.

    The meeting went fine for about 15 minutes, at which time the "maletin" representative acknowledged they didn't have any equipment, but they had connections and could get it as soon as they received the contracts.

    I wasn't a pdvsa employee, but i knew many of the pdvsa managers around the table were greenhorns, so I reminded them that any company willing to do business with pdvsa had to submit their technical capabilities before being able to offer equipment in a competitive bid. At that point I was told to shut up because "these guys were invited by pdvsa higher ups and we have to listen to them". So I told them that I felt what they were doing was irregular, that I would walk out of the room and they had sometime to finish, but I couldn't have anything remotely close to what was gong on. I left the room, about 30 minutes later they all left, and I got an extremely cold shoulder from them afterward. It was at that point in time I decided Venezuela was way too murky a place to do business in, and started advising anybody who would listen to me to make plans to exit cleanly, minimizing losses as much as possible.

    1. Boludo Tejano6:34 PM

      I noticed the absolute lack of controls within PDVSA starting in 2003

      Which is when Chavez took control of PDVSA and booted out PDVSA employees who participated in the strike against him. Funny thing about that. :)
      Thanks for the story.

  6. Excellent post. My take on these arrests is that the top Chavistas will become even more vicious next year. They will stop travelling, unless they are beyond stupid or masochistic. They will take better care of their fortunes overseas, they will be paranoiac. I would be.

    That means that they will try to stay in power as long as possible by any means, since they are stuck in Vzla for a long time. Risking arrest, massive Jail time and frozen assets, they will resort to whatever filthy tactic there is to stay in power, stay in Vzla's safe haven.

    That means more violence, more bribes, more extorsion, more intimidation, and the announced "radicalisasion de la rebolusion" bolibanana. They will tighten the screws even more, bribe the military and police even more. And they will make sure they steal the next Presidential elections in 2019, by whatever bloody means necessary. Be careful out there..

  7. My wife returned to Venezuela 3 days ago for a short 4 day stay as is her mom's BDAY. We follow Venezuela news a lot from Canada and no one could hate. Have and Maduro more then my wife. We use to travel there every year for a moment that but stopped about 5 years ago. Makes her terribly sad and she feels awful our 6 year old son and her family are strangers. With all that said she decided to brave all that we have heard and see her family as we were staying in Panama. She has been very surprised as she went to the mall in Valencia and lots of shopping g going great on. Her family (poor) living in Maracay has everything going she thought didn't exist like toilet paper, food extra. Thing are bad but no where near what we had believed. Can someone explain this? Are only parts of the country short supplies. They had a big Lamito supper and all seems well.

    1. Your wife's family must have cash and contacts. As you can imagine, if they have money they can have bachequeros deliver food to their home. If your wife sent over $200 ahead of her trip they could stock up.

      When I lived in Cuba my parents were able to plug in to a black market network. One day we even had a half cow delivered at home. When I lived in Caracas I had my driver set up contacts, he ran into a Chinese guy who had everything, I could pay whatever they charged, and I had everything except fresh milk. My driver was rewarded with a cut of what he got, and I bought the fancy food at Rey David. Simple if you have the money.

    2. They definately do not have much for money however a relative works a butcher shop as I find out hence the meat. I imagine some areas are much worse then others too.

  8. Anonymous2:08 AM

  9. Anonymous1:05 AM

    As of a week ago anything can be obtained for a price. Dried beans cost more than chicken, beef tends to be easier to obtain and costs less than chicken. Vegetables are readily available. Imports must be coming in at a calculated minimum, because even though there is nothing in the grocery stores, everyone seems able to get rice, harina,and coffee, somehow.I'm sure it also depends on the city and geografic area. Travelling around it seemed to me some citys have what others do not. Obviously the true poor are hurting much more than those that have some means.


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