Tuesday, November 29, 2022

A force fed agreement in Mexico

The Venezuelan opposition delegates met the chavista's ones in Mexico, in a supposed restart of negotiations interrupted months ago. A curious thing was that they went all the way to Mexico city to sign a document already negotiated behind closed doors in Caracas. So Mexico was an expensive show, they could have stayed in Caracas.....

This agreement started a storm in Venezuela even though people do not have access to all the information, even though it was already announced as a restart of negotiation, something far, very far from being a done thing.  The Venezuelan public is at the same time so polarized and so divided (schizo?) that little else could be expected. Chavistas wondered how come the opposition delegation was not in jail, the Venezuelan opposition reaction was worse. For them if the delegation does not include who they support and does not address their favorite cause then it is worthless, traitorous even.  That the good folks in tweeter let their ire run free is one thing but it is frightening when a leader of the opposition like Maria Corina Machado partakes in that lynching mood. 

There she says that those in Mexico are going to split the monies negotiated, and that even the UN will get its take. I'll stop .....

In front of such histeria it is important to go back to the plain facts. First, the content of the agreement. 3 billion dollars of frozen assets (mostly in the US?) will be given PROGRESSIVELY to the UN that will use them to try to alleviate the suffering of the Venezuelan people. The US oil giant Chevron will be allowed to operate in Venezuela on very limited objectives, namely to restart some of its production capacity and sell its oil only in the US without giving much to Venezuela. The oil to be produced by Chevron will be considered as repaying the debt Venezuela has toward them. That will last up to 6 months if the Venezuelan regime keeps its promises AND continues to negotiate AND advances toward free and fair elections in 2024.

That is all. No need to go berserk.

To understand better it is necessary to recap some of the current political and geopolitical situation. The Ukraine war has changed everything. In addition of trying to help the Chevron lobby, Biden is trying to find new sources of oil. Venezuela, on paper, could multiply by 4 its current production and place at least 2 million barrels on the market. That also explains why France's Macron sat in Paris the two sides and obtained from them to go back to Mexico to sign on what they had already agreed upon. 

The Maduro regime is in trouble. Its Russian ally and now its Iranian and Chinese ones are teetering and certainly in no mood to have Venezuela demand further attention. Cuba is flat broke and in much trouble of its own. And Maduro desperately needs money to grease his repression machinery. Nevermind that the "bodegonomics" miracle of partial dollarization of the country has reached its limits (1). Finally it downed in them that it may well be the last chance to negotiate before something collapses nastily. 

The Venezuelan opposition is cool. It has played the sanction card rather well (note: sanctions are taken by the US and Europe, NOT by the Venezuelan opposition whose role is advisory at most). Thus the promise of alleviating some of the sanctions in agreement with the US is a nice carrot for the regime. It is testimony of the obtuseness and corruption of the regime that they held so late before agreeing on something, a something rather insignificant if you ask me.

Yet, even though the agreement is small and should not be hard to abide by all the parts, there are many dark clouds on it.  First, the fast restart of oil production is a mirage. In the current situation of the country Chevron cannot hope to increase by much more than 30% its output for 2023. Significant increases will have to wait for the war in Ukraine may well be long over by the time Venezuela replaces part of Russian oil.

Second, organizing the humanitarian help will take time. This help was certainly pressed on by the US to try to stem the flow of immigration that apparently is now reaching 7 million Venezuelans! But the UN needs to decide on what to do, then set it up, and then get the providers, and more important establish adequate controls to protect that help from being stolen by the regime as was the case in previous attempts.

Do not expect any visible improvement in Venezuela until 2024 if all goes well. In fact already the divisions of chavismo are playing as Diosdado Cabello who has nothing to gain from any settlement, stated that it was going to be the regime that decides how the help will be shared. Within the regime many are scared at the idea of Cabello deciding on such things. 

At any rate the opposition is ready to bail out of this agreement as soon as the regime makes a move to undercut it. After all this time around it is the regime which has more to lose. 


1) More than two years ago the regime with a damning hyperinflation decided to allow limited use of US dollars for import of goods that should be resold in Venezuela in dollars. This resulted in some economic improvement, made visible by the apparition of bodegones, stores specialized in selling outside of any price control and in US dollars. But the amount of dollars available for imports has not increased since the rest of the economic policies of the regime remain and these aim at controlling any free enterprise still in existence. Consequently for the past few months we start observing a stagnation of sorts that could only be avoided by increased production. Which I do not see happening in the near future.

Wednesday, November 09, 2022

Maduro charmed at Sharm El-Sheikh

The big discussion today at least for those interested in Venezuela is the handshake and hallway chit chat that Maduro had with France's Macron yesterday at the COP 27 being held in Egypt.  Besides the nauseous images, at least for yours truly, it is necessary to try to figure out what is really going on.

First, what the hell was Maduro doing at Sharm El-Sheikh? He could go there because he did not risk to be detained. Hopefully his two airbus will not be forced to land in a country where there is no dictator like Egypt's Al Sisi. And yes, Maduro went with two big CO2 producing airplanes to Egypt whereas normal head of states go there in a single small plane or, god forbid, fly commercial. The COP 27 is set to deal with climate change and environment. Maduro blamed capitalism in his speech conveniently forgetting to mention that Venezuela has been a major producer of oil for capitalism, under Chavez in particular. He also forgot to mention the considerable environmental damage that the wrecked state oil company PDVSA has done under his tenure, in particular. And never mind the destruction of Venezuela's share of Amazonia due to savage gold prospection, directed by the Venezuelan army in particular.

But I digress, back to the handshake. It seems that there was a part of improvisation and part of manipulation in that fortuitous (?) encounter. From one of the videos I saw it seemed clear that the president of Guinea Bissau was sort of directing Macron towards Maduro. Guinea Bissau is one of the stopping points for drug trafficking between Venezuela and Europe. Just saying. So they met and talked for about one minute. Not to be accused of cheap anti Maduro I will give you the pro regime feed of Telesur:

Now the question is why Macron was so "friendly". Before I go on let me reassure everyone reading this, mostly if there is by happenstance a chavista: the profound distaste of Macron (or almost any western leader) towards Maduro has not changed. In fact it is probably worse than ever now that Maduro is trying to gain leverage with the little bit of oil Venezuela could produce soon.  Blackmail by any other name. Thus what we witnessed there is real politik at its worst, just like Biden visiting the journalist slayer meat processer Mohammed ben Salman (little good it did him but well...)

The Ukraine war happened; energy transition cannot be done in a day; Russia is to be punished; oil and gas must be found somewhere. Even though Venezuela is no condition to double its meager oil output in a year, it is still necessary to ingratiate yourself with the Venezuelan regime since the boycott of Russia will go on for as long as Putin will hold. And lo and behold, the French surely must know about the maneuvering of Chevron to recoup its lost investment, all this supported by the Biden administration willing to trade prisoners with Maduro.  Macron had to run before France's oil giant Total is locked out of a possible reopening of Venezuela. By the way, Total has also a lot of investment to recoup in Venezuela.

So that explains why Macron allowed himself or was forced to be seen with Maduro. I will also remind folks that the Maduro regime was very abusive a year ago with the French embassy in Caracas, cutting off for weeks water and electricity. But that humiliation seems to have been forgotten. Now, about the consequences.

Macron has started getting flack from French press, after years of saying that Maduro is a criminal (Maduro is still a criminal, a hand shake cannot cure this, it just dirties the other hand).  Of course, ever the chavista hard core supporter Jean Luc Melenchon went with his own gleeful tweet saying that oil made people [Macron] polite.  Macron just trashed one of the main political points against the extreme left Melenchon which was his inability to condemn human rights abuse in Venezuela.

But the bad press of Macron really does not register much in France. After all it did not make it in the nightly news that I eagerly awaited yesterday. Only today some comments, not favorable, started appearing though l'Opinion thinks that it was a trap set for Macron who dealt with the best it could.. No, the worse of the whole fiasco is that Maduro got for almost free what he so craved for: recognition, some form of legitimation. That the French president shakes hands with a criminal undoes years of work of US presidents, British prime ministers, German chancellors, etc.

The fact of the matter is that Russian invasion of Ukraine has changed everything causing among other things a panic rush for oil survival [rather than telling the truth to the people about why we must suffer a cold winter at home this year: 1940 heroism is not fashionable anymore]. The big game is barely getting started and for all that we know if given cover we might even see Maduro abandon Putin! Chavismo is venal enough for that if the price is right. Then again Maduro and Putin may be laughing their heads off at Biden and Maduro. 

To end this distasteful moment in a sourer note, there is another reason besides oil why Biden and Macron and soon others, are to talk with Maduro. This one has apparently won his fight with the Venezuelan opposition which is more divided than ever.  They all coalesced to support Guaido against Maduro 3 years ago. From the start the regime through corruption and violence has managed to divide the opposition to the point that now it offers a sickening panorama to observers. Not only many spend more time attacking Guaido than Maduro, but the opposition looks unable to prepare for upcoming presidential elections that on paper it should win. It is simply dumbfounding seen from DC or Paris.  

There may be a vote in a year and yet the opposition is unable to come up with a primary system to pick a unity candidate. We even have the sorry sight of more and more once upon a time believed strong opposition figures meekly calling for the end of sanctions against the higher ups in the regime.  And Biden, Macron et al. should get cold this winter to help such a bunch of incompetents?  I cannot bring myself to blame them.


added later, further hunting trophies for Maduro

The Portuguese Prime minister with Maduro telling him to visit "'cause we have a lot of Portuguese in Venezuela". Classy....

And next with John Kerry who apparently forgot that his country has a 15million$ reward for bringing in Maduro. Though admittedly Kerry does not seem as cheerful as Macron or Costa seemed to have been.

PS/ gets better, State announced that Maduro crashed a meeting where Kerry was participating. It seems more like in line for Maduro: the only people that agree to meet with him are those receiving a stipend in oil from Venezuela.

Monday, November 07, 2022

Why Venezuela cannot be fixed

 I was planning this second post long ago, following my crude description of why Venezuela remains messed up in spite of all the regime propaganda. But on occasion procrastination pays and I can start with recent items telling us what type of wondercrap Venezuela is.

First the new economic zones (ZEE). This is the latest at attracting foreign investors offering them all sorts of fiscal favors, and other favors that better remain nameless for the time being, but surely one would be by exempting those investors with having to follow labor laws. The delirium goes as far as including in these zones the Tortuga Island that will be transformed in an international tourists pole with airport and all.  I happen to know La Tortuga. It is small, barren, waterless, no natural harbour worthy mentioning, etc, etc. Yes, it is beautifully wild with scuba diving offerings. But if you imagine Tortuga with ten resorts and golf courses, well, there go the corals. Nothing will remain, the island is too fragile for even a single resort. The idea behind that cockamamie plan is for laundering money away from scrutiny, creating at best a secluded retreat so that regime higher ups can go partying among themselves.

The other item was to give Iran gazillions acres of land so they can produce food to bring home. That the country side is devastated, that the Venezuelan agricultural worker has lost long ago its punch and skill, that we lack food enough that giving land to Iran, that is just crazy. Again, there is something else at play there. There is ALWAYS something else at play when chavismo announces big undoable plans. A secret base for Iran comes to mind.

And of course, we are now in November and no one is speaking about this anymore. 

From this items you get already the gist of this blog entry: there are no conditions in Venezuela today to discuss any rebuilding plan.  Assuming of course that within the regime here are people able to draw a realistic reconstruction plan. This is a short list of the main obstacles you will face to develop almost anything productive in Venezuela.

  1. The general infrastructure is obsolete and in severe disrepair. Be it roads or electrical distribution, it does not work and the regime seems unable to fix it except in some points of utmost necessity for them, not for the populace. To build and run something is a major effort requiring that you bring in your own electricity generating system, for example.
  2. The sanitary situation is simply nasty for foreigners. From run down and resource poor hospitals to the increasing scarcity of decent tap water, life is difficult. Very difficult.
  3. The legal system is a joke. If you invest you never know when some government agency will knock at your door trying to see what they can extort from you. Or you can yourself get a single protector to whom you'll pay a regular stipend. The law is not your friend, it is your foe.
  4. Which brings us to the security of the people working for you. As bad as ever. Your top management will need armored cars and perhaps even body guards.
  5. So you say lets work with locals, they are used to it. What locals? 6 millions and counting have fled the country, including a cohort of skilled professionals.  You are going to have trouble hiring competent mid management.  As for lower ranks in your business hires, do not be too optimist. 20 years of chavismo have created a despondent worker, that thinks only about rights and that the bosses are tyrants. Then again enough are starving and desperate that you may manage to have them do all sorts of nasty jobs. Note: I am not saying that Venezuelan workers are bad, just saying that building a decent team is not going to be easy.
  6. And of course considerations such as the environment, protection from messy neighbors and the like you can dream on.
I'll stop there, enough said for to make my point: Venezuela cannot be fixed as long as chavismo remains in office. There is no means, no skill, no will for that. The country is drifting from an improvisation to another with the sole objective to control population and allow the caste of "revolutionaries" to live the high life in Caracas since too many of them would be arrested were they to leave the country.  Oh yes, there are a thing or two you can do with that caste, a.k.a. boliburgueses, but you better be sure that you will have a very high return on your investment and no moral compass least you get taken for a ride and pockets emptied.