The Devil's Excrement

Thi weekend is a long weekend in Venezuela with Monday and Tuesdays being holidays. Thus, I will go away and enjoy seven days of the beach, resting and catching up with my reading. I have no clue about the Internet capabilities where I am going, but I will leave the blog in capable ghost blogger hands and if possible and nedded, I will make a post or two while I am away.

Have a great one wherever you are and watch out for Tuesday of Carnival, the politician’s favorite day for devaluations in Venezuelan history.

Like a true Autocrat/Dictator, President Hugo Chavez threatened to nationalize corner stores, supermarkets and butcher shops if they do not comply with regulations or supplying products even if at a loss. Of course, we no longer see the little blue book being waved in his hand as that book, curiously called the Constitution, which guarantees economic freedom. Of course, it is all the fault of Chavez’ policies which will eventually lead to more shortages and not fewer. Thus, the economic lessons of IVth. Century A.D. (Year 301) have not been learned by XXIst Century Socialism. In fact, Diocletian prices controls did not threaten with expropriation, but with the death penalty. And they failed anyway, so imagine what may happen with a third rate Autocrat/Dictator who when confronted seems to be afraid of his own shadow.

All that this shows is the lack of respect Chavze ahs for his own people. How he does not want to yield in teh face of his own mistakes, always blaming others for his misguided policies and refusing to face the reality of the failure of his policies, set by his Minister of Planning Jorge Giordani, a mediocre planner with little economic experience.

With threats like this, all Chavez faces is more shortages. If he keeps importing at subsidized prices, with no custom duties and in a not-for profit organization like Mercal, local producers will not only refuse to even attempt to compete, ut will withdraw from production in the face of his threats. And that in the end, will lead to even more shortages, the worst form of inflation a country can face.

In the face of threats that Al-Qaeda could attack Venezuelan oil facilities in an effort to disrupt supplies to the West, Venezuelan Minister Pedro Carreño said that “The Venezuelan State has its intelligence organizations ready to move forward investigations to guarantee the supply of strategic supplies”

Now I am really worried…

Exhausting day, but all sorts of humorous things in the news:

Deputy Amoroso: “The country is in its best economic and financial moment”

Enjoy it, while it lasts!

Minister Lara: “Chavez will hold Alo Presidente five times a week. An hour and a half each night”

Yeah sure, Chavez will stop after 90 minutes! That will be hard to enjoy day after day. But who will run the country anyway?

Minister Iglesias” The prices of meat, chicken, eggs and milk have been lowered and this time we will enforce it”

Where have I heard that joke before? Do they want to have even more shortages? She also said this Government had revived industry, an even better joke. She did not specify, which, where and how. We laughed anyway.

Tal Cual censored and fined: And the only thing that I did not find funny started with a humor piece by Laureano Marquez in which a judge sucking up to the autocrat found the writer and newspaper guilty (twice!) of violating the privacy of Chavez daughter and fined them. Justice moves fast against the Government enemies and the article is still banned (read censored) from the Internet. This certainly does not intimidate Petkoff, but is part of the campaign to intimidate and quiet down the media. According to the law, Chavez committed the same crime first and does it every time he brings kids on TV for political purposes.

It was indeed a remarkable sight. Another day in fantasy land. The Minister of Communications of a Government that can’t even keep simple imports flowing in an orderly manner, talking about running Government companies efficiently. Suggesting that the “new”, “old”, CANTV, under Government management will work even better than the current one, while in two years CVG Telecom, the Government’s “competing” (what an euphemism!) telecom company, with US$ 250 million plus in investments, has gone through five Presidents and as far as anyone knows, few phone calls have been completed via its network. Unless you believe in fairy tales and this Government is definitely full of fantasies.

But hold it, isn’t that Minister Jesse Chacon? Wasn’t he the head of the telecom regulator CONATEL, when his boss Diosdado Cabello told us in 2001 the wonderful benefits of opening the telecom sector? Whatever happened to those concepts? Or are we to believe that the telecom opening failed because of the participants? Why wasn’t it the fault of the regulators? Could it be they regulated too much? Or that the road to permits and access to bandwidth and services and the like was too cumbersome and filled with obstacles, if not tollbooths (full of euphemisms tonight, no?)? Or were they simply living a different fantasy or was it a different dimension?

As if this were not enough, then, the new Vice-President told us about how all of the privatizations of the 90’s did not make the people less poor. But he failed to mention that the telecom sector has topped the list as the sector with the largest investments in the country, year, after year, after year, since CANTV was privatized. And that if CANTV had remained in the hands of the Government, these investments would have never taken place or its two wireless competitors, Digitel and Movistar, would have beaten CANTV to the game and most likely they would be announcing their nationalization today instead.

And thus, the Government in their usual confusing style announced an agreement to buy Verizon’s stake in CANTV for a price of US$ 17.85 per ADR. While Chacon and Rodriguez spoke for quite a while, the Verizon representative communicated more in four sentences than they did in half an hour, he actually used words like “tender”, implying the Government will buy everyone that wants to sell, which was never mentioned by the two Government representatives. But they talked, boy, how they talked, about efficiency, social goals, socialism, not for profit and other such fantasies.

And I understand that in the morning they will announce a dividend also to be paid by CANTV (over three bucks!), which will make the final price above that offered by Mexican Carlos Slim and his companies Telmex and America Moviles. Thus, in usual revolutionary fashion, the Government buys “cheap”, but pays a bundle. It sends a message of revolution to the masses and the gallery, while paying upfront to the capitalists, who leave the country and live happily ever after.

But that is not the real question. the real question is how the Government acts with its Daddy Warbucks attitude, with CANTV and EDC being their little orphan Annies, spending some US$ 3 billion in buying well run companies in the interest of sovereignty, while the country’s infrastructure is simply falling apart. If not collapsing.

And falling apart it is. Ask the people who have to drive to El Junquito everyday, or to Los Teques, or those that go to Oriente, a recently built highway with sections that have collapsed or are unfinished. (Will not mention the old viaduct, that is ancient history.) These are no fantasies for them, they are the hard reality of daily life. Somehow I would think that spending these US$ 3 billion locally on much needed infrastructure, would and should be better for the well being of the population that having the Government spend US$ 3 billion that goes abroad and assume the management of these two well run companies, which will become in short term order, the object of desire of politicians, a source of pork barrel politics and giveaways, that in less than five years will make these companies as inefficient as the old CANTV or the current Government national electric company CADAFE.

And if these two examples , CANTV, from the past, and CADAFE, from the present, were not enough, one only needs to see how the main focus of the Government for eight years, the self-proclaimed self sufficiency in agriculture, has been a total failure (if not disaster!). The Land Bill gave the Government the power to take over land, which it did, in order to distribute it to the peasants, which it has not done in a magnitude commensurate to the expropriations. With the end result being that according to the Government’s own statistics, agricultural production went down 9% in 2006. Meanwhile, food inflation was 4% in January and 30% in the last twelve months, as too much money chases the few goods that are produced locally. The Government meanwhile, has not even been able to import efficiently at any price, with billions being spent, while simultaneously aiding the destruction of the same agricultural production they defend with such passion. Or is it fantasy?

But having failed at their main project for the last eight years, is no reason for them to believe that they are on the wrong path. Now Chavez, who can’t find a handful of managers to run the current Government well, will have to spread the few he has even further. The conclusion is that, if the Government survives the next five years without a major financial crisis, in 2012, the same characters (or maybe those running agriculture today) will announce the nationalizations of telecom companies Movistar and Digitel, as the last step in acquiring total sovereignty in telecommunications as the “new”, “old”, CANTV, becomes so inefficient that they have to merge all in one. And that is no fantasy, it is a prediction.

And the usual suspects will be applauding that day in the future, as much as they did today, even if their Internet access becomes intermittent (or restricted!) or part of the “new”, “old”, CANTV, is sold at a bargain price to a friend of the regime or if corruption is so rampant, that the current profitable CANTV, has billion-dollar losses. After all, the revolution does not want profits and apparently cares little about losses. Losses make us all poorer and that is apparently good for preserving a revolution.

And these fanatics could care less, because results are not important for the revolution. Where is the Orinoco-Apure axis? What happened to the US$ 500 million spent in Chavez’ first year on it? Where is all the money spent on agricultural subsidies? Or where are the estates expropriated to benefit the people? How many are owned by active or retired military? By Chavez’ relatives or those that claim to be his relatives? Why is agricultural production down? Why are there food shortages? (Add your own list here…)

I know I ask too much. But in some sense all my questions were answered today by Minister Chacon at the press conference to announce the takeover of Cantv. He actually dared to say that the “new”, old, CANTV, will provide better service to the Orinoco-Apure axis. Thus, he in fact added one fantasy on top of the other one. The power of dreams!

And that is all the revolution seems to be. One fantasy on top of the other, on top of the previous one, until they all believe their stories.

And they actually keep a straight face telling us about it.

And that is all the revolution seems to be about.

On a proposal by then Minister of Finance Guicaipuro Lameda to eradicate poverty, Minister of Planning, then and now, Jorge Giordani replied:

“You have not understood Guicaipuro. The revolution can not survive without the poor”

—Wow! I am for once going to agree with a Government announcement. The Vice-President just announced that the Value Added Tax (VAT) will be removed for a large number of essential foodstuffs, including most meats. How can I possibly disagree with the removal of a tax? Having said that, I would have done it differently. By doing it this way, the Government burns all the bridges at once. Inflation may drop with the measure temporarily, but the underlying forces and distortions that cause it are still out there. The proper thing to do would have been to lower the rate of the VAT for all items. The VAT is not only a tax, but also a control mechanism, since you can follow the chain of payment from the source to the merchant. Thus, you know revenues of the whole chain and you use that knowledge to enforce the payment of all taxes. By dropping all taxes on these items, that’s it, no room for maneuver in the future. But again, good move.

—A more puzzling one is the increase of the money allocation given to travelers or to use on the Internet. The $4,000 dollars a year per person for travel is increased to $5,000 and the Internet allocation is increased from $2,500 to $3,000. I am not sure what the rationale is for this. If they think this will relieve the pressure in the parallel market, it will make no difference. This is simply a larger subsidy to the well off, who are the only ones that can afford over 16 million Bolivars a year in these expenses. Thus, I can not agree with it. Of course, I believe in removing all controls, but dream on!

Moreover, the current difference between the official rate and the parallel rate is so huge (close to 100%) that a whole industry has sprung up around helping people use their allocation or convert it in cash. Just look for example at this website, which not only sells you the stuff but brings it to Venezuela.

—And speaking of puzzles, after the Government paying top dollar for Electricidad de Caracas, logic suggests that it will have to do the same for CANTV, but the stock barely moved on Friday staying around US$ 16 per ADR. From any angle you look at it, in this case the Government will have to go higher. Why? Because Telmex had offered to pay US$ 21 per ADR for the company, thus establishing a reference price. Moreover, the company has accumulated more cash since Telmex first offered that amount in April of last year. In Electricidad there was no such similar reference price and the Government paid more than the stock has been in the local stock market in the last year. CANTV was near $21 quite a few times in the last twelve months. Makes sense, no? The Government could even be sued in the US if it did not at least match that offer.

—Finally, there seem to be too many contradictory announcements by the Government in the last few days. Yesterday we were told that there will be a new luxury tax on cell phones, soft drinks, internet use and other items and today the Minister of Finance says there will be no new taxes for the middle class. One Minister says one day there are shortages, the next day a different one says there are. It happens daily, sometimes both in the same day.

—And how about the mystery of no Alo Presidente today….

The approval of the Enabling Bill has been such a charade, which could be considered almost funny, if it were not such a serious matter. What the process shows is simply the total disregard for the rule of law Chavismo has, as well as the fact the National Assembly Deputies are totally servile to the wishes and desires of the Autocrat/Dictator.

On the way to the approval of the Bill, the following irregularities occurred, which make the whole process absurd and ridiculous and prove the autocratic nature of the regime as well as the willingness of the members of the National Assembly to bypass the democratic process, not only refusing to discuss the content of Bills, even among themselves, but going as far as not revealing their contents until the last minute:

1) The text of the Enabling Bill used in the first discussion was spurious. While the Deputies to the National Assembly were discussing thirteen areas for the Bill, described by single lines, the Procuradoria, the equivalent of the Attorney General, was working on a very detailed text which the Deputies did not know and was leaked to the press that day.

2) The day of the second discussion of the Bill, the text to be approved was not available to the Deputies for discussion and even after the approval no text was available to the press and the public. It was only the next day in Plaza Bolivar, when a ceremony celebrating the approval of this grotesque Bill was held, that the full text was released.

3) The text presented that day in Plaza Bolivar was changed on it’s way to the Official Gazette, where all Bills become law when published in it. This is simply illegal, it is false as indicated by the President of the National Assembly Cilia Flores that the text was changed to improve the text and make it more coherent. This is simply illegal. According to the law, what comes out of Parliament can only be changed within ten days by having the Executive branch request it and having the National assembly discuss the changes. This was never done. Moreover, the changes did violate the spirit and the essence of the enabling Bill, allowing it to legislate in areas that were not originally included.

By approving the Enabling Bill, the National Assembly Deputies have practically delegated the legislative power on the President, a contradiction in itself, given the separation of powers. But there are many more violations of the law. Among them:

—The Enabling Bill allows Chavez to legislate by decree under the current Constitution. The President has said that he will change the Constitution and then approve some of the Bills so that they can be adapted to the new text. This can’t be done, once the Constitution is changed, the Enabling Bill is no longer valid as it was approved under the old text.

—It allows for Chavez to legislate limits or and restrictions to constitutional rights and guarantees, which can only be done by issuing a “Law” and not a decree. What a law is, is clearly defined in Art. 202 of the Constitution, as “an act sanctioned by the National Assembly”. Chavez decreeing on this would also violate the Interamerican Convention on Human Rights.

—The National assembly can’t modify the Constitution by Law. Thus, neither can Chavez by decree and some matters on which Chavez has been enabled cover Constitutional areas, such as how the state is organized or the territorial organization of the State.

—The 2000 Constitution establishes that whenever a new law is being considered, other state institutions, the citizens and organized society need to be consulted (Art. 211). Moreover, State legislatures have to be consulted on matters that affect them (Art. 206). This process applies to both when the Law is being formed, to once the Law has been approved. Neither will be done under the new Enabling Bill according to the document from the Attorney General that even promotes “that as few people as possible and nobody outside the Government” participate.

—The Enabling Bill does not specify which Laws will be approved under it.

—To prove the abuse of power under the Enabling Bill, this week President Chavez passed a decree under it creating a new medal of honor called February 4th. to celebrate “acts of heroism” as if that bloody day was such an act. Chavez used the Enabling Bill to issue this decree, not a single word in the Bill even remotely considers this possibility.

Thus, all that has been enabled is an autocratic charade and a blatant violation of the rule of law in Venezuela.

When I was young, I wanted to be a painter or an architect, so that I became acquainted with lots of artists, from both Venezuela and abroad. Early on, I liked Armando Reveron, an eccentric painter, who lived in the coastal area near Caracas, called Macuto. Whlie I now know a lot about his works, at the time I was fascinated by his beach scenes, particularly those that showed “Uva de Playa” (Beach grape) trees, like this one. At the time, for me art was something to enjoy and like, but I never thought about whether or not Reveron would transcend Venezuela.

This all comes about because Reveron has indeed gone way beyond our borders, and MOMA is having a show of his paintings, which starts on Sunday, which reveals this modern Venezuelan impressionist talent and career. It is satisfying to read a review of the exhibit today in the New York Times and all Venezuelans should be proud of this event. We are a small country, but have been prolific in producing internationally renowned artists like Reveron, Gego who is one of my favorites, Soto, Cruz Diez, Cabre, Gonzalez and many others.

Any of you lucky enough to be near New York, don’t miss it!