The Devil's Excrement

Interesting article in Spain’ newspaper La Vanguardia on Venezuela

Venezuela at the economic abyss by Joaquim Ibarz

 Parallel with the war in Iraq which induces massive protest in the whole world expressing solidarity with an invaded nation, Venezuelans suffer their own war, not because of the attack of an enemy country, but for the violence and the destruction generated by  a president turned autocrat that, in increasing fashion, is assuming dictatorial practices.  Historians coincide that this is the most dangerous moment in the last hundred years for Venezuela, each day that the confrontation from the Miraflores palace continues instigated by President Hugo Chavez, it will become more difficult to reconstruct and reconcile a country in the midst of a paralysis which in accelerated fashion  is on its way to its ruin.

1,500 days have already gone by of a regime that was born in the hope lit by dreams and promises. After wasting and embezzling one hundred and ten billion dollars of oil income, the ship of the “Bolivarian revolution” is sinking.

From the beginning, President Hugo Chávez played the polarization hand. The only thing that he has had success with is in his policy of confrontation, carrying it to an extreme that it loses rationality. It may be that during decades the blame and causes of the current ruin will be discussed. But when you reach such a dangerous point, all sensible Governments open the dialogue, the negotiations and an electoral way out. On the contrary, in Venezuela disqualification is fueled daily, blocking any rational way out. The Presidential finger, with pretensions of divine will, decrees that the opposition is fascist, coupsters, oligarchic and, as such, has no right to exist.

Venezuela is facing the dramatic effects of a war economy without precedent in Latin America, with inflation predictions near 100% and a drop in GDP above 25% this year. The analysts of the great financial institutions of the country pick up this pessimism; Banco Provincial, property of BBVA, predicts in its last report a decline of the economy of 40% in the first quarter of 2003, while Banco de Venezuela, owned by Grupo Santander expects a decline of 42%. Previewing the consequences of the crisis, the Secretary General of the OAS, Cesar Gaviria, said that he has not been able to find “an economic contradiction of this size in any country, note even in a civil war”

Víctor Salmerón writes in the daily “El Universal” that “Venezuela suffers its worst quarter in 53 years”. And he emphasizes that from the beginning of the decade of the fifties, when the Central Bank began to monitor the economy, Venezuelans have not suffered a negative impact of such magnitude: inflation devours salaries, unemployment increases, consumption collapses, earnings at companies drops and the banking sector block credits. Meanwhile, the Government pays any price to maintain the fiscal wheels in motion. The grand scale cooling of the economy began in 2002, when the Executive applied the plan “Proposals for Consensus” (elimination of VAT exemptions, budget cuts, devaluation) while using 38% of the public budget to pay debt, recipe that must be mixed with the disappearance of private investment and the national general strike of 67 days that began on Dec. 2^nd. , which submerged the economy in a recession that has no precedent.

The Central Bank admits a contraction of GDP of 16.7% in the fourth quarter of 2002, with a drop in electricity consumption of 8.5%, a fall in the tax collection of the VAT of 48% and of the debit tax by 31%. Punished by massive capital flight and the accelerated evaporation of the international reserves, the Government implemented exchange controls that left the private sector without dollars.

Influent economic analysts warn: “Venezuela is ready to fall into an economic and social crisis without precedent” which is why they urge the Government to adopt measures that change the course in order to avoid a social explosion. They also warn that the fall in GDP will register record levels in 2003, without precedent in the history of Latina America.

According to estimates by economists, inflation will surpass 70%, unemployment will reach 30%, the informal economy will reach 70%, GDP will experiment the sharpest decline in any Latin American country, because of the exchange controls, the restriction on imports, the collapse of National and international investment, the semi-freezing of the non-oil economy and the effects of the general strike in Petroles de Venezuela, the estate company which, alter the firing of 17,000 workers, is far from having recovered its production levels.

Economist Pedro Palma points out that the Government will have few options to manage the enormous internal debt, which grew from 1.56 billion US$ to 8.13 billion at the end of 2002. According to economist Domingo Fontiveros, inflation could reach 93% this year. According to Carlos Dorado, financial analysts and President of Italcambio, the largest foreign exchange house in Venezuela, hyperinflation may follow, with the black exchange market reaching 4000 bolivars per dollar.

Economists from Universidad Católica Andrés Bello (UCAB) corroborate this dramatic economic picture. According to estimates, per capita income will be cut in half with respect to 2002, below the 2,500 dollars per years. In 1990, the per capita income was 10,000 dollars per year; GDP will fall from  126 billion dollars in 2001 to 65 billion dollars in 2003, a reduction of 50% in two years.

”This is not a war economy, but an economy in civil war. Venezuela is placing all of its resources not to fight the enemy but to fight with itself” is the opinion of Jorge Salazar, Director of the Center for Economic Studies at the Florida International University (FIU).“ The drop in GDP will be the largest in Latin-American history. I have never known anything similar. This will be the record drop”, emphasizes Salazar.

The Venezuelan crisis will surpass even the worst case of economic contraction in the recent history of Latin America; in 1973 the GDP of Allende’s Chile fell 22%. Not even the Sandinista Nicaragua had a drop as large in the eighties during the war against the “contras’.

In the opinion of economist Miguel Rodriguez (Minsiter of Development during the last Presidency of Carlos Andres Perez), to think the Government executes a communist or neoliberal economic policy “is privileging too many errors from a group of inefficient people which have only stumbled under the demagoguery of the leader, Hugo Chávez. Simply, there has been a catastrophic economic policy which threatens to perpetuate itself” said Rodriguez. He adds that in Chavez’ administration there is no plausible element that rescues even the smallest possibility that anything has been planned, except to badly copy the example of Fidel Castro”

The drop in tax collection and the impact of the oil strike forced the Government to announce a drastic budget cut and to make debt swap operation with the banks to attempt to extend the due date of bonds and bills that, without taking into account interest, adds to 4 billion bolivars this year.

To avoid the collapse, the Ministry of Finance canceled its debts with contractors with notes at a rate of 14.5% the highest rate paid by any Government ever and is preparing an external debt swap that, according to analysts, will force to pay a rate of at least 16%. This year, servicing Venezuela’s external debt reaches US$ 5 billion an amount that is equal to 14% of the national budget.

The President of Fedeindustria Miguel Perez Abad, said that more than 25,000 small companies have remained closed in the First semester of 2003. Fedeindustria and Fedecamaras (the most important private group in the country) estimate that in the next few months the already very high number of unemployed will increase by one more million.

 The private sector alone has lost more than 300,000 jobs in the last two months as a consequence of three lethal elements: lack of Government, economic contraction and exchange controls. Each threat by Chávez leaves more people unemployed.

”The situation is critical”, says Carlos Fernandez, president of Fedecamaras. “We are in a war economy. There are 12.000 small shops closed and more than 5.000 companies bankrupt. The Government uses a weapon as powerful as exchange controls to attack the private productive sector of the country” he said. With exchange controls, Venezuela entered a system of distortive and inefficient regulations with a risk of great corruption.

The economy is collapsing while the desperation of the citizens increases. Chavez’ “wear out” policy to neutralize the opposition that groups together the productive sector is a dangerous game. You know how its starts, but don’t know how it ends. The message that the President repeats is that he will allow his arm to be twisted, no matter what the economic effects. That is why, two forces persist in Venezuela without any possibility of approaching each other: the chavistas, which control the Armed Forces and the lowest strata of the population. The opposition has a strong social base; not only numerical, but also it is the productive engine of the country. Neither of them can defeat the other. That is why commentators like Teodoro Petkoff warn that a forced solution (a coup) by either the Government or the opposition will prolong the conflict for many years.

Imagine this: A Lieutenant in the Venezuelan Army punishes some soldiers for disobedience by placing them in a cell. Lt. Sicat sprays thinner into the cell and lights a fire. One soldier dies and two are injured. A military Court tries the Lt., finds him guilty and condenms him to sixteen years in jail. The Supreme Court rules that the crime was a civil one and the trial should be moved to the civil justice system. The Lt. is tried and lo and behold he is found to be innocent by a vote of two to one in a novel experiment in the Venezuelan justice system in which normal citizens hold trials alongside judges. Guess what? The judge found Lt. Sicat to be guilty, while the two citizens found him innocent. So, this man walks free, he had never denied the facts, the military Court found him guilty, the only point was the senrence had to be according to civils laws, instead he is let go. This is the justice system that Chavez says does not work? Yes, but for the wrong reasons!!Impunity is rampant in Venezuela, watch out my friends!!

Last Tuesday there was a conference called “The effects of the war in Iraq in Venezuela“. The panelists were a former President of the Venezuelan oil company PDVSA, Humberto Calderon Berti and oil expert Mazhar Al Shereida. The crowd was mostly pro-Chavez, because pro-Chavez group organized it and there were maybe 300 pro-Chavez people and six that at least did not participate in the events that followed

Calderon Berti exposed his opposition to the Hussein tyranny, trying to summarize the history of the region, taking into account Arab culture. He was booed and heckled so much that the organizer of the event had to pacify the crowd in order to continue. People in the crowd were calling him “traitor”, “couspter” and other epithets.

Al Shereida spoke next and instead of talking about the war and Iraq, he proceeded to attack Calderon Berti, telling him he had learned nothing about Arab culture, that he was responsible for the oil strike and had been part of the conspiracy to overthrow Chavez. The crowd hailed Saddam Hussein, the Iraqi people, Al Shereida and Chavez. The crowd got so violent and insulting that Calderon Berti had to get up and leave. Six others accompanied him as the crowd followed screaming insults at them.

As you can see ignorance and intolerance are by now well-developed in Venezuela. While there is intolerance on both the pro-Chavez side and the opposition, I have yet to hear of similar episodes on the opposition side. God help us!

President Hugo Chávez blasted the Venezuelan Central Bank on Wednesday for allowing “savage” levels of interest rates to prevail. Chavez said: “I demand, with all due respect for the autonomy of the Central Bank …the Central Bank has to listen to the country”. For the second time in a week Chávez said that if the Central Bank does not listen to him, he would go to the Supreme Court to force it to do it. He said the structure of the Bank still was “infiltrated by neoliberal currents which serve those that want a coup”. Finally, in the most irresponsible statement, which simply describes Chavez’ tenure in the Presidency, he reminded the Directors of the Central Bank that sometimes decision have to be more political than technical. Clearly Chavez is fed up with the independence of the Central Bank, much like he has been fed up with every institution that does not follow his whims and wishes at every step. The question is what type of retaliation there will be on the Central Bank if it does not follow the President’s orders. By the way, Venezuela’s Constitution, written by a Chavez dominated Constituent Assembly (96% were from his party) grants the Central Bank independence.

These are the links to the US State Department Report on Human Rights in Venezuela both in Spanish and English. The Venezuelan Foreign Minister said yesterday that human rights are not violated in Venezuela. Obviously the State Department faked the pages  and pages of details, references and data about violations of human rights in my country. Maybe the Minister simply does not know what a Human Right is. From death squads, to free speech, to killings, to impunity, there is simply too much there and very little that can be defended or be proud of.

The families of those that died on April 11th. 2002 will appeal yesterday’s decision by an Appeals Court to free the gunmen from Puente El Llaguno (see story right below). Mohamed Merhi, the father of one of those killed while he participated in the opposition march said today that they will bring the case up to the Constitutional Hall of the Court and if not succesful, he would take it to International Penal Court where there is no impunity. One of the lawyers of another victim pointed out that the simple act of shooting into a crowd merited a different treatment than simply releasing the prisoners and trying them for illegal use of weapons.

Meanwhile the former President of the National Assembly and MVR Deputy Wiliam Lara said “this was an act of justice”. Clearly he must mean the justice of impunity that prevails in this stupid revolution.

The two pictures above were taken last April 11th. You can see the armed people on this overpass called Puente Llaguno, there was a peaceful opposition march going underneath the bridge.  You can see a number of guys shooting at the march, all of them later identified and jailed, most of them employees of the pro-Chavez municipality where the events took place and one of them (Shooting behind the wall in the picture on the right) a city councilman. By the time the shooting was over, there were 19 dead (from both sides) and dozens of injured.

Those seen in the pictures above were the only people jailed for the murders and injuries that day. A judge released them once and the Supreme Court ordered them detained again. Today, a Judge in Aragua State ordered them freed, dismissing all charges, except illegal use of weapons. So, after 355 days, the police, the Government and our criminal justice system do not have a single suspect of who shot these people. This happens on the same day that our Foreign Minsiter rejects a State Department report saying human rights are not violated in Venezuela. I wonder what the 19 dead and those injured think about this cynical statement.

(Pictures bowrrowed from Carlanga.com, who analyzed a sequence of these pictures to demonstrate that these people were not defeneding themselves as they claimed and who re-analyzed the interpretation of them by french newspaper Le Monde Diplomatique). By the way. I have always loved the defense “we were shooting to protect ourselves”. The guy on the bottom left, “just happened” to be walking around downtown Caracas with his rifle in a case and a handgun……just in case?