The Devil's Excrement

Intuitively the decision by the Consejo Nacional Electoral (CNE) yesterday makes me very nervous. While the decision was expected, I got the feeling that it went beyond where it should have, left many question marks in the air and used language to justify the reasons which to me are simply subjective and have no legal basis. This makes me nervous, because while I favored the path of gathering the signatures again to shield them from questioning, I can’t help but feel that there is a trap somewhere in our future and we are just walking innocently into it.

The Electoral Board cited three main reasons for rejecting the signatures:

-The gathering of the signatures was untimely. To reach this conclusion, the Board used two reasons. One, a decision by the Venezuelan Supreme Court issued last year in July which said that the signatures had to be gathered. Two, that the person elected had to be given sufficient time to develop his/her program. On the first one, I do not understand why the February decision by the Constitutional Hall, which said the signatures can be gathered before the date set by the Constitution was not even mentioned. How can the CNE selectively use one decision and not the other? Even more, how can the earlier decision be more important than the other one? On the second reason of giving Chávez sufficient time: How come the CNE did not take into account that Chavez’ term is actually longer than the three years mid-point set by the Constitution. By reasons of the Constituent Assembly, his period was rest and he has been in power for four and a half years in a country which has a Constitution that sets the Presidential term is six years. Thus, the argument seems to be spurious and irrelevant.

-The question asked in the petition is a proclamation and not a request of the CNE to organize the referendum. First of all, given that there were no rules or regulations for calling for a referendum and given that the Venezuelan Constitution says that power resides in the people, why can’t it be a proclamation. And even if the form is wrong, what is more important the will of close to three million people that signed the petition or the formality defined after the fact? In fact, when the referendum to ask for a Constituent Assembly was held, the question was changed after the petition had been introduced to the CNE. Why the difference.

-The third reason was that Sumate, the volunteer organization which coordinated the gathering of the signatures is not “a political organization or registered in the CNE”. Now, this part I found absolutely out of the question. This is saying that anyone gathering signatures for any petition for whatever purpose has to be a political party and that a group of concerned citizens can not act independently to gather signatures for whatever cause. This one bothers me both from the fundamental point of view, the decision seems very undemocratic, but it also bugs me because the Chávez administration hates Sumate because of the efficiency with which it ahs managed to gather signatures for two referenda (both now denied), exceeding expectations and at a fraction of the cost of any Government promoted activity., The Chavez administration has been trying to disqualify Sumate both morally and legally, but ahs been unable to do so. With this, it is relegated to a secondary role, which it does not deserve and which may impact the result of gathering the signatures anew.

The decision was taken by a three of the five members of the CNE, with the other two abstaining (Not like Juan Forero of the New York Times who reported that it was by a 3-0 vote and only clarifying later in the paragraph that two abstained, making it sound in his usual sneaky way like it was a unanimous decision). The votes were clear, the two pro-Chavez members voted in favor, the two opposition members voted against and the President who is considered to be Chavista-light, voted in favor. (In related news, one of the four members of the Advisory Board for the CNE created by the Supreme Court resigned, supposedly for unrelated reasons, he was considered to be pro-Chavez but fairly independent)

On the positive side, the CNE will issue regulations by Wednesday on how to request a referendum which will make it very clear for the opposition how to do it in such a way that it will not be blocked once again. Another intriguing, if not positive, note was the fact that the President of the CNE made reference three times in his decision to the agreement signed last May by the Government on the opposition in which both sides agreed to back the idea of the referendum.

From a legal point of view, resubmitting the signatures according to the regulations to be issued by the CNE has the advantage that it would be much more difficult to question them from a legal point of view. Had the signatures been approved, pro-Chavez forces could have gone to the pro-Chavez Electoral Hall of the Supreme Court and challenged them, which would be much more difficult next time. At the same time, any attempt to block them when they are resubmitted, could be challenged in the Constitutional Hall as a denial of the basic right to vote.

The opposition will gather the signatures again on Oct. 5th. and hand them in soon after that. It seems quite difficult for the referendum to be held this year, but if there are really no traps or tricks on the way, it should take place in January. Somehow though, yesterday’s decision makes me very uneasy, making me think that this is all very well planned and staged and a surprise against it is waiting for us around the corner.

The Venezuelan Electoral Board decided today to reject the signatures submitted by the opposition to request a recall referendum for President Hugo Chavez. The expected decision was based on a number of technicalities, which will certainly be challenged by someone in the opposition. Prominently among them, the CNE cited that the request for a referendum has to be addressed to the Electoral body, which was not done in the petition submitted by the opposition. Additionally, the CNE ruled that the gathering of the petition was untimely, colliding with the time frame established by the Constitution for requesting a recall referendum. Finally, the CNE said the data contained in the petition itself was insufficient.

 Rumors of the negative decision by the CNE were widespread all week, as the recommendation by the legal department of the electoral body had leaked to the press. Súmate and the Democratic Coordinator have already drawn plans to gather the signatures anew, an event which is now planned for September 28^th., as long as the CNE issues the regulations before that date, which it ahs promised to do.

The decision falls within the Government’s strategy of delaying the recall referendum using legal maneuvers. In this case, the law limited the length of the possible delay by the fact that the CNE had to reply to the request for the referendum within thirty days.

From the point of view of the opposition the decision might actually be quite positive, despite the delay it implies. By gathering the signatures again, the opposition will adjust the petition to the CNE’s requirements, making it more difficult for the Chavistas to question it legally later, and in effect shielding the petition from legal questioning. Similarly, by holding a new “Firmazo”, where the signatures will be massively gathered on a single day, that public display will become in itself a judgment on the Government. In February, the opposition gathered over 3 million signatures of which Súmate certified 2.8 million in its audit; this is 20% more signatures than required to validly request a referendum. Given the increased dissatisfaction and frustration with the Government and the continued deterioration of the economy, the opposition might gather more signatures this time than the votes necessary to recall Chavez’ mandate. Under the Bolivarian Constitution more voters have to vote for the recall than the number of votes received by the officer when he was elected.

I will comment more on the decision tomorrow when I have the full text. I am concerned about some of the reasons given, it seems to me that technicalities not previously defined by the law have been considered more important than the will and rights of close to three million people.

Sorry for not posting much this week, I have had a  mild cold that has nevertheless drained a lot of energy and limited my time and capacity to contribute, but beware, I am back!

Article by Marc Lifsher in the Wall Street Journal about the increasing dependence of Venezuela on foreign oil firms in contrast with Chavez’ claim that he was making PDVSA The people’ company” Since it is by subscription here is the full article:

CARACAS, Venezuela — This country’s leftist president, Hugo Chavez, likes to talk about turning the state oil monopoly into a “people’s company.” But in reality, Venezuela is becoming increasingly dependent on foreign companies to boost lagging production.

An anti-Chavez strike at the state oil company in December and January led to the dismissal of 18,000 workers. Critics charge that it also stripped Petroleos de Venezuela SA, or PdVSA, of the expertise and financial wherewithal to maintain natural-gas and oil fields and explore new ones. Venezuela‘s oil output, which was about 3.2 million barrels a day before the strike, is now 3.3 million barrels, PdVSA officials claim. But international oil experts peg output much lower, at 2.5 million to 2.8 million barrels a day.

Meanwhile, they figure crude-oil production by foreign companies has soared to between 800,000 and one million barrels a day compared with 360,000 barrels when Mr. Chavez became president in 1999. Although PdVSA’s petroleum activity contracted year-on-year 7% in this year’s second quarter, private-sector activity jumped 46%, according to Venezuela‘s central bank.

“PdVSA has been weakened to such a level now that it has to rely on the private sector to maintain or increase production,” says David Voght, a Caracas-based consultant with IPD Latin America. Officials at the Ministry of Mining and Energy, which speaks for PdVSA on policy issues, didn’t respond to repeated requests for comment.

Venezuela nationalized its oil industry in 1976, effectively closing it to foreign companies. However, in the mid-1990s, Caracas began allowing limited foreign investment for revitalizing older fields and developing new technology to tap deposits of tar-like heavy oil. While Mr. Chavez honored those contracts, he signed legislation in 2001 that was seen as a disincentive to investment because it greatly increased royalties on crude oil. At the same time, he approved a bill that opened natural-gas business to foreigners.

While interest in new crude-oil ventures has been tempered by the higher royalties, an increasing number of foreign firms are testing the waters as Venezuela opens a second round of competition for offshore natural-gas leases. Thirteen companies, including such distant actors as Russia‘s OAO Lukoil, bought data packages.

ConocoPhillips has been particularly aggressive in Venezuela. The Houston-based firm is operating two heavy-oil projects, developing a large oil-and-gas field near Trinidad and exploring for natural gas, along with ChevronTexaco Corp., near the mouth of the Orinoco River. Exxon Mobil Corp. and Royal Dutch/Shell Group are also active.

In the wake of the strike, Mr. Chavez vowed to create a “patriotic” PdVSA that “belongs to the Venezuelan people.” But the president’s bluster is tempered with practicality; he needs outside help to keep exports flowing out and dollars flowing in. In fact, his trip to the United Nations this month will include a stop in Houston to meet with U.S. oil executives.

Oil revenue is more important than ever for Mr. Chavez. After surviving a coup attempt in April 2002 and the strike eight months later, he is relying on government spending to boost his popularity and defeat a possible recall election. The ranks of Chavez opponents, who label him an authoritarian, have swelled as the economy has contracted. Polls indicate that two-thirds of eligible Venezuelans would vote to oust Mr. Chavez in a constitutionally sanctioned recall vote that could come as early as December.

“His prime interest is remaining in power, and that leads to a very pragmatic form of nationalism,” says David Hobbs, the London-based director of exploration and production strategy for Cambridge Energy Research Associates.

Venezuela wants to attract more foreign investment, especially in the exploration and development of offshore natural gas, but only on its own terms, says Fadi Kabboul, energy counselor at the Venezuelan Embassy in Washington. “There’s no question that we’re looking for someone to help, but Venezuela is not desperate,” he says. “These are strategic decisions.”

 My comment on this and what I have been reporting on the country’s reduced oil production: Separately the IEA (International Energy Agency) reported this week that Venezuela was producing 2.25 million barrels of oil a day, close to one million barrels of oil a day less than what the Government has been claiming and consistent with what has been reported here. The discrepancy is quite clear if one compares the Central bank’s report for the second quarter 2003 with the second quarter 2002. In 2Q 2003, the average oil price for the Venezuelan basket was close to US$ 26 compared to US$22 in the same quarter. But in the same quarter 2003 Government oil exports in US$ were down 25% for the same period, but the Government claims it is exporting an equal amount of oil! Similarly, OPEC’s web site says that in July Venezuela produced 2.5 million barrels of oil a day……

Sorry for not posting much this week, I have had a  mild cold that has nevertheless drained a lot of energy and limited my time and capacity to contribute, but beware, I am back!

Article by Marc Lifsher in the Wall Street Journal about the increasing dependence of Venezuela on foreign oil firms in contrast with Chavez’ claim that he was making PDVSA The people’ company” Since it is by subscription here is the full article:

CARACAS, Venezuela — This country’s leftist president, Hugo Chavez, likes to talk about turning the state oil monopoly into a “people’s company.” But in reality, Venezuela is becoming increasingly dependent on foreign companies to boost lagging production.

An anti-Chavez strike at the state oil company in December and January led to the dismissal of 18,000 workers. Critics charge that it also stripped Petroleos de Venezuela SA, or PdVSA, of the expertise and financial wherewithal to maintain natural-gas and oil fields and explore new ones. Venezuela‘s oil output, which was about 3.2 million barrels a day before the strike, is now 3.3 million barrels, PdVSA officials claim. But international oil experts peg output much lower, at 2.5 million to 2.8 million barrels a day.

Meanwhile, they figure crude-oil production by foreign companies has soared to between 800,000 and one million barrels a day compared with 360,000 barrels when Mr. Chavez became president in 1999. Although PdVSA’s petroleum activity contracted year-on-year 7% in this year’s second quarter, private-sector activity jumped 46%, according to Venezuela‘s central bank.

“PdVSA has been weakened to such a level now that it has to rely on the private sector to maintain or increase production,” says David Voght, a Caracas-based consultant with IPD Latin America. Officials at the Ministry of Mining and Energy, which speaks for PdVSA on policy issues, didn’t respond to repeated requests for comment.

Venezuela nationalized its oil industry in 1976, effectively closing it to foreign companies. However, in the mid-1990s, Caracas began allowing limited foreign investment for revitalizing older fields and developing new technology to tap deposits of tar-like heavy oil. While Mr. Chavez honored those contracts, he signed legislation in 2001 that was seen as a disincentive to investment because it greatly increased royalties on crude oil. At the same time, he approved a bill that opened natural-gas business to foreigners.

While interest in new crude-oil ventures has been tempered by the higher royalties, an increasing number of foreign firms are testing the waters as Venezuela opens a second round of competition for offshore natural-gas leases. Thirteen companies, including such distant actors as Russia‘s OAO Lukoil, bought data packages.

ConocoPhillips has been particularly aggressive in Venezuela. The Houston-based firm is operating two heavy-oil projects, developing a large oil-and-gas field near Trinidad and exploring for natural gas, along with ChevronTexaco Corp., near the mouth of the Orinoco River. Exxon Mobil Corp. and Royal Dutch/Shell Group are also active.

In the wake of the strike, Mr. Chavez vowed to create a “patriotic” PdVSA that “belongs to the Venezuelan people.” But the president’s bluster is tempered with practicality; he needs outside help to keep exports flowing out and dollars flowing in. In fact, his trip to the United Nations this month will include a stop in Houston to meet with U.S. oil executives.

Oil revenue is more important than ever for Mr. Chavez. After surviving a coup attempt in April 2002 and the strike eight months later, he is relying on government spending to boost his popularity and defeat a possible recall election. The ranks of Chavez opponents, who label him an authoritarian, have swelled as the economy has contracted. Polls indicate that two-thirds of eligible Venezuelans would vote to oust Mr. Chavez in a constitutionally sanctioned recall vote that could come as early as December.

“His prime interest is remaining in power, and that leads to a very pragmatic form of nationalism,” says David Hobbs, the London-based director of exploration and production strategy for Cambridge Energy Research Associates.

Venezuela wants to attract more foreign investment, especially in the exploration and development of offshore natural gas, but only on its own terms, says Fadi Kabboul, energy counselor at the Venezuelan Embassy in Washington. “There’s no question that we’re looking for someone to help, but Venezuela is not desperate,” he says. “These are strategic decisions.”

 My comment on this and what I have been reporting on the country’s reduced oil production: Separately the IEA (International Energy Agency) reported this week that Venezuela was producing 2.25 million barrels of oil a day, close to one million barrels of oil a day less than what the Government has been claiming and consistent with what has been reported here. The discrepancy is quite clear if one compares the Central bank’s report for the second quarter 2003 with the second quarter 2002. In 2Q 2003, the average oil price for the Venezuelan basket was close to US$ 26 compared to US$22 in the same quarter. But in the same quarter 2003 Government oil exports in US$ were down 25% for the same period, but the Government claims it is exporting an equal amount of oil! Similarly, OPEC’s web site says that in July Venezuela produced 2.5 million barrels of oil a day……

Good article in the Miami Herald (sent by Russell) on how the Chavez Government discriminates against those that oppose the Government, most of the stories are not new and they are truly sad, when a Government discriminates against its won people on the basis of political beliefs. Even more remarkable is the bit about the People’s Ombudsman firing those that are not pro-Chavez. What really irked me in the story was MVR Deputy Luis Tascon saying that discrimination is insignificant; he knows that PDVSA has sent letters to all its contractors and providers telling them they can not hire any of the 18,000 people fired by PDVSA. Now, imagine that, 18,000 people can not work for any oil or oil service company in a country where the Government controls that industry. What else can they do? Somewhere in this blog is the link to a copy of the letter sent by PDVSA Western Manager to all service companies telling they could not hire any fired workers. I know that people with Ph.D.’s who worked in PDVSA can not find jobs at Government research institutes because they are branded as traitors. Thus this Government acts like all those fascists Governments one reads about in history books but thinks it can not happen again as issues as basic and human rights are better ingrained in the world. Well, let me tell you they are not, the same people that claim a few signatures in the recall petition are bad ignore thousands of Venezuelans and their families that are being discriminated against. Moreover, many of these same people are choosing to leave the country to be able to support their families. Many of them have advanced degrees that cost the country a lot of money to obtain. Even worse, they have experience in fields which are not only critical to the country’s oil industry, but in which it is quite difficult to find qualified people. But as it has been usually the case with anything that has to do with knowledge, ability and competence, those are values despised by this perverse Government.

 I still can’t believe that the Government and PDVSA have decided to do away with the Orimulsion project. For those that don’t know, Orimulsion was a fuel oil substitute developed in Venezuela using heavy crudes (70%) suspended in water (30%) in the form of an emulsion. For years PDVSA and its research and development center worked on this project until they made it into a real commercial project. Power pants in the US, China, Korea the UK, Italy and other countries began importing this cheaper product to generate electricity. For Venezuela Orimulsion had a number of advantages, first, it allowed the country to export the cheaper heavy crudes, the process is fairly economical and the product is not covered by the country’s OPEC quotas. PDVSA even created a company called Bitor to commercialize the product which had been quiet successful despite charges that it was quite dirty as a burning fuel. In fact, I consider Orimulsion to be the most important contribution by Venezuelan Science and Technology to the economy.

Given this preamble, I was quite shocked to learn that the Chavez administration had decided to ditch the Orimulsion project reportedly because it is intensive in knowledge and technical expertise and those that have that are part of the people fired from PDVSA. While some reports say that only new projects will be cancelled, the Italian Ambassador to Venezuela visited the Vice-President today to express his dismay on his country not receiving any more Orimulsion. Thus, once again, the Chavze administration puts politics above everything else, simply canceling a project that would add to economic activity and would bring foreign reserves to the country and profits to PDVSA. According to former PDVSA executives, just the fact that Canada’s New Brunswick Power will not initiate its Orimulsion project will cost the Republic US$ 750 million in 2004 alone. Reportedly PDVSA will replace Orimulsion by fuel oil. Orimulsion was designed to compete in costs with coal not with fuel oil and its margins are more attractive. As usual, there was confusion on the issue, while the Italian Ambassador expressed his concerns to the Vice-President, PDVSA’ General Manger told Globovision that the current contracts would be fulfilled. Venezuela is the only country in the world which produces Orimulsion.

 If ever there was a government where there is no separation between political party and the Government it has to be this one. Chavez’ MVR does whatever he says and even party affairs are broadcast live forcing TV broadcasters to transmit these events for free. But then, the same tow-faced Government wants to walk a very fine line, when the Minister of Foreign Relations says that he will not hold a meeting with the Ambassador or denounce it internationally. But at the same time Chavez’ MVR plans to denounce at the OAS the “intromission” by the US Ambassador in Venezuelan Internal Affairs. The truth is that what the Government is preparing itself for, is for the possibility that if the recall referendum is held other countries might want to send international observers. The only way that Chavez may obtain a victory in a recall referendum is if his Bolivarian Circles take to the streets and intimidate people into not voting, then according to the Constitution, Chavez may not be recalled if the number of people voting to recall him is less than the number of those that voted for Chavez in his last election. Much like in Peru’s Fujimori election, the presence of foreign observers may represent the only obstacle for Chavez to make the world believe that he was not recalled.

In the same note, the Minister of Foreign relations says that Venezuela’s democracy is “normal”. Weird concept the Minister has of normalcy in a country where electoral processes have been on hold since January 23d. This has stopped Venezuelans from carrying out the most basic right of a democracy, the right to vote.

Smoke was the only bad thing coming out of the CNE today, as the new Board was sending positive signals. Perhaps the best one was the strong statement y the CNE President on Chavez’ comments on the CNE from Havana. He said (page A-2 of El Nacional by subscription only): “The electoral power is independent and will not be below any other power or influenced by opinions even if they come from the President of the Republic. The decision we will make in the next few hours particularly on referenda, including the recall referenda for the President will be made in autonomous fashion.” Speaking directly to the President Carrasquero added: “Nobody has the power to morally condemn the CNE” in clear reference to Chavez saying in Havana that if the CNE approved the signatures in the current petition, it would be morally disqualified to organize any election.

Meanwhile, the CNE approved today, in unanimous fashion, the new internal regulations. This was a necessary step for the Electoral Board to make any decisions and the fact that it was unanimous was an excellent sign.

Meanwhile, President Hugo Chavez continued demonstrating that he does not understand democratic concepts, when he said in his Sunday address that he had called the President of the CNE to complain about the visit by the US Ambassador to Venezuela to that institution. Clearly, under the separation of powers, Chavez had no right to call the President of the CNE. Chavez called the visit a violation of Venezuela’s sovereignty and asked that the US Government cease its” interventionistic obsession”. Today Robert Noriega, the Subsecretary for the Western hemisphere defended the visit by the US Ambassador saying that” The US refuses to interfere with the internal affairs of Venezuela, but we are not disinterested spectators. Noriega added that Venezuela’s democracy is threatened.

Smoke was the only bad thing coming out of the CNE today, as the new Board was sending positive signals. Perhaps the best one was the strong statement y the CNE President on Chavez’ comments on the CNE from Havana. He said (page A-2 of El Nacional by subscription only): “The electoral power is independent and will not be below any other power or influenced by opinions even if they come from the President of the Republic. The decision we will make in the next few hours particularly on referenda, including the recall referenda for the President will be made in autonomous fashion.” Speaking directly to the President Carrasquero added: “Nobody has the power to morally condemn the CNE” in clear reference to Chavez saying in Havana that if the CNE approved the signatures in the current petition, it would be morally disqualified to organize any election.

Meanwhile, the CNE approved today, in unanimous fashion, the new internal regulations. This was a necessary step for the Electoral Board to make any decisions and the fact that it was unanimous was an excellent sign.

Meanwhile, President Hugo Chavez continued demonstrating that he does not understand democratic concepts, when he said in his Sunday address that he had called the President of the CNE to complain about the visit by the US Ambassador to Venezuela to that institution. Clearly, under the separation of powers, Chavez had no right to call the President of the CNE. Chavez called the visit a violation of Venezuela’s sovereignty and asked that the US Government cease its” interventionistic obsession”. Today Robert Noriega, the Subsecretary for the Western hemisphere defended the visit by the US Ambassador saying that” The US refuses to interfere with the internal affairs of Venezuela, but we are not disinterested spectators. Noriega added that Venezuela’s democracy is threatened.

Two articles with good, if depressing, content on the Venezuelan economy in local newspaper El Universal. First, in its front page editorial entitled “Special Interests” it says:

-In the last four years something very grave was added: the demential growth in internal public debt from 2.3 trillion bolivars in 1998 to 18.4 trillion bolivars today. This cocktail produces an amazing paradox: an economy that collapses by 18.9% in the first quarter, decimating thousands of companies and hundreds of thousands of jobs and families, a drop in the lending portfolio of 35% in real terms, a growth in its expenses and late payments and an exchange control which serves as a financial “corral” and forcefully induces the growth in deposits. However, banks pays less for deposits, increases its public debt portfolio to 11.2 trillion bolivars against only 7.7 trillion in loans, but its earnings jump up 41% to 805 billion bolivars in the first half of the year while paying only 27 billion bolivars in taxes, and continues acquiring Government paper feeding the destructive machinery of a regime which will end in a maxi devaluation.

The numbers and concepts are reinforced inside in an interview with the vocal president of Banco Venezolano de Credito, Oscar Garcia Mendoza, who with his usual sharpness and humor says things like:

-To tell you the truth this is a Government that is a Robin Hood backwards, it takes from the poor to pay interest to the bankers and the rich, but it feels the brazenness need to say that it is a regimen for the needy”

-According to the Ministry of Finance last year interest payments on internal debt were 3.1 trillion bolivars, while expenditures in social security and health only reached 1.5 trillion bolivars.

-A perverse effect ahs been created, there ahs been complicity, camaraderie between the banking system and the Government to place internal debt in these amounts. The terrible thing is that the state does not invest those resources in recovering hospitals, new roads or improve the quality of life, it simply covers current expenditures, generates more corruption and initiates a demagogue policy to stay in power at any price”

-This Government is condemned to not pay or devalue.

-We visited the western part of the country and we verified that the pumps are idle; of thirteen ships six or seven are not working, the companies in the Orinoco belt says PDVSA is not providing them with sufficient chemicals for the mix and transport of the extra heavy crudes, wells are overproducing, and a member of the Central Bank Board says that income is not yet up moth normal levels.