Archive for April 20th, 2004

The path to autocracy continues to be built

April 20, 2004

As we await for the CNE to approve the procedures for the ratification process of the signatures, the Government continues the process to control everything:

-The National Assembly continues to push for the approval of the new Supreme Court Bill, which would add 10 or 12 Justices to the Court with a simple majority of the assembly. Thus, as if the Court were not already controlled, the Chavismo would have ironclad control.


-Meanwhile the Chavistas continue attempting to change the rules of order in the assembly so that next time they need a law approved expeditiously (A new Central Bank law?), it will happen in a very short time.


-And there are rumors (This is the only country where three Justices can’t keep a decision secret) that the Constitutional Hall will declare that there is no conflict between its activities and those of the Electoral Hall, and that the decision by that Hall is illegal.  As we say in Spanish the Constitutional Hall is paying itself and making change for itself at the same time.


Essentially, we all have lost our ability to be amazed or surprised by anything. Whether it is human rights violations, disrespect for the law or abuse of power, we have essentially seen everything as we wait to be abused once again.


Two interesting interviews on the economy in today’s papers

April 20, 2004

Two interesting articles on the economy today, both interviews with well known left-wing economists. One with Central Bank Director Domingo Maza Zavala in el Universal (free) and the other in Tal Cual, page 8,  (by subscription) with the former Head of the Economic Office of the National Assembly Francisco Rodriguez. Both are highly critical of the Government’s economic policies.

Maza Zavala is quite drastic saying “we live in the worst of all possible worlds”. First, he says that what is happening is an economic recovery but not growth, because he says we are coming from two years of string contraction, we would need much more. He calls the productive system “stagnant”, saying that construction is still stalled at a time that lending rates are negative. Despite this, there is no credit demand.


Maza Zavala says CADIVI; the exchange control office is still not efficient enough with US$ 5 trillion in approvals that have yet to reach to materialize due to procedures. He says this induces people to go to the parallel market, which influences in 40% the CPI. Maza says “the most expensive item is that which you can’t buy”.


He calls the worst of all possible worlds because there is high inflation, unemployment and insufficient purchasing power on the part of the population.


Maza calls public expenditures unproductive, saying that devaluation and bureaucratization are reducing the effectiveness of public expenditures. He says “More social expenditures do not lead necessarily to better attention. Most of those expenditures are lost or wasted”


Francisco Rodriguez’ interview may actually be more interesting. Rodriguez says he was very sympathetic to Chavez’ Government, thinking that he thought the Government would emphasize social policies. However, he found a radical Government which he believes may turn into a dictatorship with little respect for human rights. This created huge conflicts in him.


To my surprise he says his conflicts began as early as one month into his job at the economic office, when pro-Chavez forces had expected his reports to be totally favorable to the Government.  He points to his analysis of the 2000 budget as one case where his criticism gained him enemies and conflicts.


He calls macroeconomic management so deficient that it leads to a fiscal crisis in 2002. At that point social expenditures had to be reduced to increase debt servicing.


Rodriguez calls the “Misiones” a parallel state that is very ineffective because it attempts to solve problems in isolated fashion. He calls this an alternative structure of state. He says these are going to be difficult to remove because they represent a power structure that Chavismo will like to maintain. He says we are having a colossal economic crisis with real salaries dropping to a quarter of what they used to be. In on of his most interesting comments he says that Chavez has retained support because in some sense economic management has always been so bad that people are used to it being deficient and the economic issue is not prominent in politics. He also suggests that Chavez has managed to convince his supporters that the Government is not responsible for economic performance and the opposition is. Rodriguez says that while the strike in 2002 had an impact on the economy, economic policy has made matters much worse than they had to be.


Rodriguez says jokingly that if he woke up and found himself in Charge of the Government’s policy, the first thing he would do is resign. He believes that with adequate expansive fiscal and monetary policies and multilateral financing one could achieve 8% economic growth for two or three years. He would eliminate exchange controls gradually by officializing the parallel market and would reduce the deficit to 1-2% of GDP. 


Rodriguez resigned from his academic position at the University of Maryland to come back and join the Government, he will now go back to academic life but locally.