The Devil's Excrement

One of the hallmarks of the Chavista revolution has been its ability to destroy institutions, traditions and methods in Venezuela, without implanting an alternative. Chavez may talk about revolution, third way, XXIst. Century socialism but in the end they are empty words as seven years after his election he still ahs not defined any of them as he switches from one to another in his apparent need to promise something new all the time. Even the Bolivarian Constitution which was specific, is overrun, bypassed, mutilated and spindled daily by its creators. As someone said, the Constitution was written with the frame of mind of being in the opposition, but they happen to be Government.

Case in point is the mural by Venezuelan kinetic artist Carlos Cruz Diez which surrounds the port of La Guaira near Caracas. Cruz Diez, one of the top Venezuelan artists of all times, designed in 1991 a mural which is 2 Km. in length to decorate the wall surrounding the port. He donated his time and supervised its implementation. While I could not find a picture of the original mural, below are three outdoor works by Cruz Diez from the same period and similar in design and spirit than the “Muro de Induccion Cromatica” in La Guaira:

With time the mural, below left, suffered the lack of maintenance by administration after administration as well as its use by most political parties to cover it with advertising. It would have been a simple matter to maintain and repair, the key was in the design, Cruz Diez did not actually paint all of it. It would have been an easy matter to fix it. Instead it is being torn down as shown in the picture below in the right. He has actually been quite gracious about the destruction of his work of art, saying it was a gift and as such people may or may not accept it.

The reasons? A multitude of them from the fact that it block the horrible view of the docks to what lies behind the whole idea as expressed by the President of the Cultural Foundation of Vargas state: “(It) does not identify itself with the idiosyncracy of those that live in Vargas state”. Of course, he makes no definition of what those idiosyncracies are and makes no alternative proposal, as the mural is being replaced by a wire fence. Such is the ways of the revolution

This is simply a barbaric act of ideological revenge and stupidity, where we are seeing wholesale destruction of everything as a way of simply erasing the past. Fixing it would have been rather simple, I am sure art students from all over the Central region of the country would have been delighted to donate their time to fix it. Relocating it with the same dimensions would have been rather easy in Vargas state, which continues to suffer from the devastation of the 1999 floods, as reconstruction has been limited and vast empty spaces with destroyed houses and building remain there for everyone to see as a tribute to the Government’s incompetence. But the easy and symbolic destruction of the mural fits the character and spirit of this soulless revolution. Destroy, destroy and destroy, maybe one day they will realize there is nothing left.

Hugo “Daddy Warbucks” Chavez went to Mar del Plata to preside over the anti-summit, bury ALCA the free trade agreement of the Americas and become leader of the Third World.
With another one of his magnanimous offers, Hugo Warbucks offered a
“modest” US$ 10 billion of our money to promote the anti-Alca, a sort
of trade agreement, not-for profit and without the US.

But
while Chavez relished his triumph in presiding over the marchers, the
fact was that there was little of Summit at the anti-Summit with Chavez
being the only one of the Presidents that participated in it, sitting
next to former soccer star and more recent drug addict Diego Maradona
(below left) and many of the usual suspects,

The
question was where were the rest, the Ortega’s and all of the other
leftwing leaders and aspiring leaders of the Continent? In hiding? What
where they afraid of? Argentina’s
President Kirchner failed to show up, Fidel was not invited and sent
eternal leftwing music icon Silvio Rodriguez to represent him and Lula
Da Silva knows better than risk the well being of his people.

But
Chavez could care less, shouting “Homeland or death”, praising Che
Guevara, using swear words generously and trying to charm the 38,000
present with his enfant terrible attitude. Simultaneously, they staged their own march in Caracas, using the same signs exported to Argentina,
as the dummy below has the same sign as the dummy above did.
Today the local Chavista paper called Vea noted the march and called
Alca “dead” as shown below:

Unfortunately, Chavez may pay the price for all of this. The world was actually watching this time around (Venezuelans were forced to watch as all radio and TV stations were forced to show the whole event) as CNN showed the end of the event and the subsequent riots,
US flag burnings and violent confrontations by over a thousand
protesters, leaving the implied image that Chavez was the leader that
brought them there to riot. This, together with Chavez’ insults towards
the US president clearly did not sit well with the same Western press
that Chavez and his media consultants and spinners have been carefully
cultivating and manipulating for the last few years. Even his “friend”
Jimmy Carter expressed his dismay
at Chavez’ actions, saying it was “completely unjustified” for Chavez
to do this and saying he knew that Chavez was a difficult person from
his own experience. (Spanish version here)

The Chavez bashing had actually started a day earlier
when Ted Koppel in Nightline decided to set the record straight and
said that Chavez had used his program as a launch pad for the
propagation of lies. Two months ago Chavez made the charges that the US had a plan called “Balboa” to invade Venezuela in Koppel’s program and promised to send partial proof of the documents that Venezuela had “discovered” on the issue. Koppel concluded “After many requests over the last two months, we have received nothing”. Koppel also clarified that there was a “Balboa” in military war games between the US and Spain.

And
it continued last night as one TV station after another referred to the
Venezuelan President in negative terms. In fact, none of them was even
careful enough to note that Chavez only participated in the peaceful
part of the protest rally, but blurred over the distinction. It went
even further today when a group of Republican Congressmen called Chavez a clown, leaving aside the usual respect that US Congressmen and Senators have shown for our President.

The
question is whether this sequence of events from Koppel, through Carter
to the US Congressmen was spontaneous or not. We are sure it wasn’t, we
think this was all carefully orchestrated by the US spin doctors to begin putting Chavez in a bad light. And I think they won this round.

And then there is ALCA, the free trade treaty that the US is proposing for the Americas
to compete with the European Union. ALCA was a non-issue for the
Argentinean summit, because its success depends on the success of the
upcoming WTO talks, as pointed out by the Brazilian Foreign Minister
even before the Summit began and reiterated by the OAS Secretary
Insulza, who kept giving interviews saying progress would be difficult
without the WTO talks first.

Chavez and his advisers knew this and Vice-President Rangel called ALCA a corpse in an advanced state of decomposition. Meanwhile Chavez kept saying
he had to come to bury ALCA and promote ALBA for which he offered US$
10 billion as Venezuela’s contribution, money that could certainly be
used to reduce poverty in his own land, but Chavez is certainly too
busy giving it away elsewhere, spending it in foolish state ventures
and wasting it subsidies where corruption takes big chinks of the
money. He no longer seems to relish the role of leader of Venezuela he wants something bigger and he appears to want it now.

Reaction was swift by the US and its partners (part of the same strategy?) as Mexican President Fox quickly went on the offensive and called for the members of Mercosur (Brazil, Argentina, Uruguay, Paraguay and Venezuela)
to stop blocking the free trade agreement and threatening to leave them
out of the pact if they continued their strategy. In fact, Fox called
for a resolution on the issue before the end of the summit and that
ALCA be included in the declaration, basically creating a standoff in the declaration being completed. The President of El Salvador also defended
ALCA saying they had not come to bury it and he was sure 80% of it
would be functioning within two years.  In the end 29 countries
signed for Alca and the Mercosur and Venezuela said  the
conditions are not there for it. But they will be. As the other 29
countries press for it, the mercosur countries will join the fray.

And while Chavez tried to spin it
as a victory, the truth is that ALCA may not be in the form that even
Chavez’s partners in Mercosur want it, but they all want it and want to
be part of it. Few countries have the luxury of Venezuela
which sells mostly basic commodities and few finished products. Most of
those countries want to diversify exports and need better access to the
US market and that is why they will join ALCA eventually no matter what Chávez says or wants. If Venezuela does not, it will be another step for our country to be closer to being Africa than America.

Thus,
there was no burial of the free trade agreement, but we did see the
beginning of a definite media offensive against the Venezuelan
President led by the US.
Bush did not expect much from the Mar de Plata meeting, but Chavez
thought he would score a victory, but he didn’t. Chavez belived the
final declaration will not have the word ALCA in it, but the it did
with the majority of the countries favoring it. By making it an issue,
he may have lost the battle and
lost part of the large effort he has made in making the international
media love him.

Next year the WTO meeting will take place and that will lead to ALCA being joined by most Latin American countries.

Where Venezuela will be in all of this, is anybody’s guess.

With the excuse that they were looking for reporter Patricia Poleo, 50 members of the intelligence police (DISIP) raided a local hotel where a political act by opposition groups that are calling for people to invoke Art. 350 of the Venzuelan Constitution
was taking place. Art. 350 calls for the people not to recognize any
regime which goes agaisnt the country’s values, democratic rights or
violates human rights. This was simply harrasment, you can find the
pictures in Noticiero Digital. Below two of them, one with a view of
the room as the intelligence police rushed in the room when Antonio
Ledezma was speaking, the other a close-up of the jacket of one of the
cops where someone had stuck a “350” sticker. Way to go!

When he was leaving the Cathedral this morning, the Attorney General Prosecutor Isaias Rodriguez said that
the person being investigated whose inmuminity will need to be removed
is an active General, Gral. Jaime Escanlante the Head of CORE I.
Escalante has been quite visible in large drug busts in the area near
the border with Colombia. Rodriguez also said there were three more
people involved, one from the financial sector, another military and a
third one that “will not surprise anyone.

Rodriguez added that this is the result of a five month investaigation.
Hold it! Did’t he say last Decemeber that the case was “almost solved”.
How about other deatils like Danilos Anderosn’s wealth on a salary of
US$ 1,100 a month? Or the money found in his apartment (US$ 500,000),
his two apartments and ski jets? How about the blocking of streets
prior to the explosion near the site where it took place by the
intelligence police? Or the presence of high ranking authorities like
the Vice-President minutes after the explosion despite the risk implied?

He also said that the explosive device was not made in Venezuela and
that the CIA did not particiapte neither in the explosion, nor in the
activation of the device, only in helping those responsible escape teh
country (But they are here?). There were three meetings, one in
Maracaibo with eight people present, one in Panama with 11 and another
in Miami, no number specified. He closed by saying that the cosnpiracy
was to destabilize and the original goal was Chavez or him, but they
settled on Anderson. This last part is the least plausible and credible
of all the things he said.

The Prosecutor’s Office charged
four people with the murder of Prosecutor Danilo Anderson today. The four are:

-Reporter Patricia Poleo, a well known Chavez critic whose home was raided January by
cops looking for her sources of information. Poleo had said publicly recently
that the Prosecutor will charge her with it and he went as far as holding a
press conference denying
that this was the case, while Poleo insisted that Prosecutor Isaias
Rodriguez ahd told her father, Editor Rafael Poleo about it. Poleo had already
gotten a six month sentence, which she was appealing for defaming the Minister
of Justice Jesse Chacon.

-Banker Nelson Mezerhane, the CEO and majority owner of Banco Federal, which
was mentioned as one of the largest creditors of Refco recently. Mezerhane is
not well known for being involved in politics and has been seen recently at the
Presidential Palace at meetings with Chavez and/r the Vice-President. His name
was mentioned as a possible home to be raided in the days soon after the murder
of Anderson
which was then
denied by the Minister of Justice. He was mentioned in connection with
lawyer Antonio Lopez who was killed days
after the death of Anderson
by local police.

-General Eugenio
A�ez, one of
the Generals of Plaza Altamira who was a General in the National Guard.

-Salvador Romani, who is of Cuban origin and has been accused of being a CIA
agent by the Cuban Government.

Note Added: Poleo says
she will not hide, she had nothing to do with it, she knows “of”
Mezerhane but could not identify him if he was in fornt of her and was
not in Panama at the meeting whrere reportedly this was planned. She
says she has never visited that country and was not at a wedding in the
Dominican Republic where this was also planned.

More: Prosecutor says there are more people involved and
one of them will need his/her inmunity to be removed (Active military
and Deputies have inmunity here, Courts have to remove it with evidence
in order for them to be tried)

I was going to write about this,
but Petkoff did it before me and it is hard to improve on what he wrote. I would
only add, that this is done daily by Venezuelan Government officials and in the
case of our current Minister of Finance, he �claimed�  (The money was never found) that he did the
same diversion of public funds to pay salaries that Chacao�s Mayor is being accused
for, except the minister was talking abut US$ 3 billion and not a few million
as in the Mayor�s case. The second curious item, is that Leopoldo  Lopez is not only successful as Mayor, but if
my memory serves me right, he received the highest number of votes, percentage-wise,
than any Mayoral candidate in Venezuelalast
year.  Clearly the Government fears Primero Justicia, first it was
the skeletons, then this story and now today the President of the
Assembly accuses it, without presenting any evidence of receiving support from the US Embassy. Here is Teodoro on Leopolod Lopez.

Clodo
draws the sword by Teodoro Petkoff in Tal Cual

This small reporter asks himself if Clodosbaldo Russian, when he looks
at himself in the mirror, is capable of looking at himself without looking
down. This guy, that has played dumb in the face of tons of cases of
corruption, that has seen hundreds of payment orders for works never built,
that can not ignore the scandalous proportions that administrative corruption
has reached, that when the Bolivar Plan was investigated, after he killed the
tiger he s� in his pants when he faced the skin and left it at that, without ever
producing a �second report�; this grotesque personality of the oficialist
troupe, found, at last, a �corrupt one� to punish. Yesterday he announced
triumphally, that he had caught Leopoldo Lopez, Mayor of Chacao, in an administrative
crime. I do not know the details of the case but it makes me suspicious given
Russians record that the only corrupt person that he has found happens to be an
opposition Mayor. What a coincidence! And it is also a coincidence that he
banned him politically staring in 2008 (when his terms ends), when young Lopez,
obviously, could aspire to other public positions. Well, the truth is that
after the sentence about the morochas, in the officialist circus, even the hens
are beginning to crow like cocks.

Bandes is the Development Bank of the Government. It owns companies, it manages
money such as the social fund for PDVSA, and it owns bonds, invests and
performs financial operations that are required for the promotion of
development. Ever since it was created as the Venezuelan Investment Fund (Fondo
de Inversiones), it has played an important role in buying and selling the
country’s sovereign debt.

And this makes a lot of sense, a treasury rich, Venezuelan Government
institution should play those markets since the risk is its owner and those
sovereign bonds have some of the highest yields in the world’s emerging
markets. More importantly, the Bandes funds can be used in the Government’s own
strategy to repurchase its own debt, support it and why not, even
manipulate it. After all, who else has such deep pockets and the interest in Venezuela’s
sovereign bonds being strong? Truly nobody. No fund or institution other than
Bandes and maybe now the new Treasury Fund, Foden, has such deep pockets that
can be invested in the Venezuela�s
securities.

Unfortunately, the creativity of corruption knows no bounds and can sidestep
the logic and even the appearance of propriety as in the case and others. As in
the case I reported
last year in which Bandes sold to private groups its portfolio of bonds,
only to have the Republic announce soon after that, the repurchase of
coincidentally the same bonds that had been sold by Bandes a couple of months
earlier. Some of these groups the bonds were sold to, would qualify as what is coarsely
qualified in Venezuela as “Con que culo se sienta la cucaracha” or
“On what ass does that cockroach sit” in terms of the size of the
financial transaction, but everything was structured in such a way that it
could be done by them, without transparency and, of course, no investigation
was ever called on the matter. (And the size of the ass of the cockroach
increased significantly as profits in that transaction alone were in the dozens
of millions of dollars)

Which brings us to today. For quite a while the market has been hearing that
mysterious purchasers had bought structured notes on Venezuelan sovereign bonds
in big sizes from various Wall Street firms. We are talking US$ 100 million at
a time, too big a size for regular investors. But let me explain what this
structured notes entail. Suppose that you are not willing to buy Venezuela’s
2027 bond because it is too risky in terms of maturing in 22 years. But the
yield is attractive. So, you ask a Wall Street firm to issue a structured note
for let’s say three years, in which the Wall Street firm guarantees that you
will receive a certain fixed interest rate lower than the one those bonds offer
over 22 years but still attractive, as long as the country does not default.
Thus, you sacrifice some of the yield for security in the short term. You know
exactly how much you will be paid and at the end of the three years of this
example, you get your capital back.

Now, it does not make sense for Bandes to ask for someone to structure notes.
First of all, with the notes you add another risk to the Venezuela risk,
the risk of the “issuer”, the financial firm that issues the
structured note. There is also the custody risk, as in the recent and fresh
case of Refco, which will show up again at the end of this story. (Actually
Refco could also issue the notes up to recently so the risk is quite real)

Issuing these notes is great business for the issuer, who charges hefty commissions
to the buyer, as well as making money in the trading of the underlying
securities. A few months ago, an acquaintance told me that he had gotten huge
orders for these notes from “unusual” countries, where he did not
think there were investors who woke up in the morning with a strong desire to purchase
say US$ 100 million in Venezuelan sovereign bonds structured notes. He thought
there was something “fishy” about these and his suggestion was some
intermediary or Government official was making a lot of money on these deals
and the end client had to be the Government.

Then, as if to complicate matters, last Saturday the President of Bandes acknowledged
that his institution had sold US$ 662 million of the US$ 1.6 billion in such
notes Bandes owned to none other than the Ministry of Finance. Thus, the mystery of the notes
was unveiled and indeed they were purchased by the Venezuelan Development Bank
and the amount was huge for those markets: US$ 1.6 billion!
Moreover think about it, US$ 1.6 billion in structured notes, where commissions
are of the order of let’s say a couple of percent (US$ 32 million!), versus
buying the bonds outright, where commissions could be as low as 1/16 of a
percent. (Only US$ 1 million). If you are an intermediary there is a huge
difference!

But it actually gets even worse. The Ministry of Finance turned around and sold
those notes (denominated in US$) to “four local banks” at the
official exchange rate in a process that lacked any transparency. Imagine,
just for being one of the “chosen” four banks you were able to
purchase, in bolivars and at the official exchange rate, these notes, which you could then
turn around and sell in US$, get dollars and bring the funds back at a rate
much higher ( 27.9% to be precise!) than that! Nice deal! And then the VP says that local businessmen lack
competitiveness! Why be competitive when life can be so easy? And who
promotes it? None other than the Government itslef!

The case smells so bad, that there
are suggestions that the statements last Friday by the President of Bandes
were simply a way of saying:� I had nothing to do with the placement of the
notes in local currency�. However, the reporter apparently was not knowledgeable
enough to ask why Bandes used these structured notes rather than buying the
bonds outright. Descifrado suggests
today (Subscription area) that the Government may have gotten wind of this
too and the President of Bandes may not last long in his position. But I have
to wonder given the next post, where is Comptroller Russian in all this?

Finally, where does Refco come in all this, you may wonder?
Well, reportedly some of the money and securities that got stuck in the
bankrupt company from Venezuela
is in the form of these same structured notes. And there may be another new story
in that part in the future, as this country never ceases to amaze everyone!

Extermination in Falcon by Teodoro
Petkoff in Tal Cual

Once again the country is shaken up by the brutal news of the murder
of young people, apparently in the hands of the police. In Falcon state the sinister figure of
�extermination� groups has reappeared. Five boys were massacred by bullies
encrusted in the police corps. Once again an investigation is announced �to the
utmost consequences� and �no matter who falls�. We have heard this song so many
times! The ineffable �utmost consequences� are always the impunity of those
accused. Whatever happened to the investigation about the crimes committed by
the Guarico police? Lots of noise and few nuts (sic). Whatever happened to the
trial of the cops of the first �Extermination� group detected in Portuguesa
state? It also ended in the freedom of those accused.

Whatever happened to the investigation opened in Anzoategui State?
Nothing ever came out of it. How many cops are in prison in Aragua state, the
state with perhaps the worst registry in police assassinations? None. The assassins
act with their faces uncovered, there are witnesses of the crimes and
nevertheless, there is never a sentence condemning the accused. Absolute
impunity protects these state criminals.

State Criminals? Yes. The actions by these �extermination � groups, which
is not recent but that during the last years has acquired the character of an
epidemic, is associated with an unwritten conception and only commented in low
voices among the police headquarters, that the fight against criminals passes
by the execution of supposed and true criminals. The State and the Government
play dumb in the face of these actions and only when the scandal overflows all
borders, as in the Kennedy barrio case, do they pay attention. The rest of the
time, they let it be. Because the assassins have carte blanche and are at the same time judges and executioners and
decide on their own and by their will who should face the weapons, the result
has been an orgy of blood in which presumed criminals and other people have
fallen, young in general, which have nothing to do with crime. More than five
thousand assassinations of this type have occurred in the last five years.
Official tolerance in the face of these �extermination� groups drives
inexorably to the decomposition of police corps, to the putrefaction of the ethical
and moral values that one would think they should be imbued as public servants
and transforms them into criminal groups which are much worse and pernicious
than the common criminal gangs.

A police unit that acts on the side of the law, violating codes and
ordinances, is a danger to society. And it turns even more dangerous when the
Government�s failure in decreasing the social crisis derived from unemployment
and informal subemployemnt, with the consequent expansion in personal insecurity,
leads a portion of the people to assume with indifference, if not with
approval, the episodes of extermination. The conclusion is unavoidable: there
is no true policy for public safety. This Government does not know what to do
to guarantee the safety of Venezuelans. The police, the courts and the prisons
are a disaster. How can we be surprised that our criminality indices are among
the highest in the world.

In the so called Venezuelan democracy these days you are not even allowed to use any form of protest that may have a chance of being successful. As reported here earlier, a group called “Cambio” plastered Caracas a few weeks ago with paper skeletons, which the Government tried to say were poisonous, as a way of classifying the protesters as some form of terrorists. Alexandra Belandia Ruiz Pineda at some point was the spokesperson for the group, which cost her some harassment by the investigative police which called her to testify about this protest. (By the way, there is an interview with her in yesterday’s El Universal)

Then on Sunday Hugo Chavez bothered to talk against the celebration of Halloween as not part of our heritage. Some laughed at this, but I didn’t it was simply a way of attempting to disqualify this form of protest, by turning it into something anti-Venezuelan. Well, this reached the ridiculous level that the intelligence police detained seven young activists of the Primero Justicia party for “promoting hate”, using “illegal campaign material” and the Vice-Minister of Justice says these activist “may be connected” to that other placement of skeletons, as if that was a crime.

And then the Prosecutor’s office, the same one that can not figure out hundreds of murders and injuries says that these charges should go in the same case file as that of the previous skeletons, which so far nobody has managed to tell us what is the crime that that is being investigated unless it is Government stupidity.

But of course it isn’t. A Government that has all of the resources at its services, where the separation between party and state is no longer visible, uses the intelligence police to intimidate and stop a clever way of raising doubts about the Government and its abilities. This is typical autocratic behavior; stop the opposition form even attempting to gain any on you and if it does, simply squash it. We saw it two years ago when pot banging became such a popular and powerful way of protesting against the Government that it was criminalized and since has disappeared as a form of protest.

Of course, the skeletons may backfire if they become too common. This is what the Primero Justicia activists had in mind when they began using them as a form of pretest and in some sense their protest went beyond their plans. But will others dare use the same form of protest?

Of course, this does not even include asking questions such as whether the role of the political police or the Prosecutor’s office in defining what is legal or illegal campaign material. Thus, adding to the overwhelming advantages of financing and power that the Government has, we now have to add the fact that they can use any police body to block, spin and mutilate any form of electoral campaign or protest, while the Electoral Board fails to stop the President for making use of his beloved “cadenas” to unfairly campaign for his party�s candidates.

Of course, Chavez will later boast of Venezuelan being a full democracy, where everyone can do and say whatever they want and where races are decided on the ballot box. Of course, we know they are decided in the Electoral Registry, the voting machines, the redistricting, the intimidation of the opposition and the absurd rulings of a servile Supreme Court, the balot boxes being almost incidental to the process.

For myself, I am ordering a gross of paper skeletons by mail, which I plan to shamelessly flaunt at electoral events, in front of the police and the National Guard. I am still not sure if I will use the Primero Justicia model below on your left or the one with the two scary figures below on the right. And I am not talking about the kids in the picture