The Devil's Excrement

While many think that Chavez was mostly mad at Lina Ron yesterday for upstaging him over the release of the FARC hostages, the truth is that the release of the hostages , while welcomed and celebrated by everyone, is not generating much goodwill for the FARC and indirectly for Chavez and the Venezuelan Government.

First of all, it is only a trickle, as one of the hostages released revealed, the FARC may have as many as 3,500 hostages and obviously their release four at a time every few weeks will become a tiring display of helicopters and goodwill. Second, the hostage that Chavez truly wanted to show off in front of international opinion, Ingrid Betancourt as not been released and according to the FARC there will be no releases unless conditions change.

But the final reason is simply that each release of the hostages is accompanied by horrific and terrorific dramatic statements by the hostages about the conditions of captivity they have found themselves in and the inhumane treatment they received by the FARC. Thus, by the time hostages are released and make their statements, people have conflicts reconciling the fact that Chavez sympathizes with the FARC and they have shown to be a brutal terrorist group on the treatment of the hostages under their hands.

Because there is little sympathy to begin with, as we are told that these innocent civilians have been kidnapped for half a dozen years and some, like the Deputy released yesterday, lost some of their closest relatives during this time. But then we hear how honroable and decent people are treated and there is simply no sympathy for the lack of humanity and decency this terrorist group has shown.

Senator Luis Eladio Perez, released yesterday after six years of captivity, revealed that Ingrd Betancourt was chained to a tree and forced to walk in the jungle barefoot after she attempted to escape with him and managed to stay free for five days. The Senator also revealed that the former Presidential candidate has liver problems but receives no medical attention.

He also revealed that the three US hostages are facing a difficult situation and that the letters they were carrying for the US President and tehir relatives were confiscated by the FARC before they wee handed over.

Senator Perez said he last saw Betancourt at the beginning of February and that she was defeated at the time both physically and morally and had told him to enjoy his freedom.

It was not Lina Ron, but the explicit inhumanity of the FARC in treating the innocent hostages that took the moment of victory away from Hugo Chavez.

The Government has once again begun under the new members of the economic Cabinet to sell structured notes into the swap market in order to pressure that exchange rate into going down. So far, in three weeks the Government has sold about US$ 450 million into this market, going back to the non-transparent days of Nelson Merentes.

As I reported then, basically Fonden sells these dollar denominated notes to “friendly” banks at the officials rate of exchange and these financial institutions tun around and sell the notes in the international market at a lower price than they purchased it for, but they are then able to sell the dollars at a much higher rate in the local swap market, using other securities, making a juicy profit.

The effort has been successful, the swap rate has gone down, but once again the issues of transparency, efficiency and corruption are being raised. What is most interesting is that the media is being a little more aggressive this time, questioning more openly the sale of these structured notes to only a selected few who make a lot of money from it.

In the previous batch of sales of these notes, few media outlets questioned them, I can only recall Tal Cual (who called it XXIst Century Robbery) and Ultimas Noticias doing it, but two different newspapers sharply attacked them yesterday.

You see, in the first batch of notes sold in this round, the swap market was at a value in local currency about 25% to 30% higher than the price at which the Government was selling these notes to the friendly financial institutions. Thus, if the Government sold you a certain amount of notes, say US$ 20 million, your profit could be as high as US$ 6 million. Except it isn’t because you only get them because you are willing to pay back some of those same profits to the intermediary that brought you the deal. It is my understanding that the profit is split 40%/60%, with the financial institutions getting the 40% side…

So, you can calculate what profits have been like so far if the Government has sold US$ 450 million in these notes. The notes are not sold at 100%, because the underlying securities make them worth something like 60% on the low end ones. Thus, this says that they have obtained at least US$ 270 million and if profits are 25%, then the juicy deal has given both sides as much as US 67.5 million. Only in the robolution can people make so much money so fast without doing anything.

Two newspapers were sufficiently annoyed this time around to say something yesterday. First, there was Reporte Diario de la Economia which came out with a very aggressive headline “Financial mafia continues to operate structured notes in the country”. This is a translation of part of what they wrote:

“A group of individuals fully identified …has been showing up at local financial institutions and supposedly in the name and representation of high Government representatives, they negotiate a percentage for being assigned structured notes and those not in agreement with the “toll” will not have a right to be assigned any…some bankers used to accept this, but have decided to confront this financial operator with initials M.V…Now they are not only charged 40% , but now they are charged 15% for M.V.“

Separately, Economist Orlando Ochoa in page 6 of the “Strategy” section of El Nacional gives an interview, which was given the headline: “There is corruption in the assigning of structured notes”. I commend Ochoa for his statements and El Nacional for daring to publish it in this rarified atmosphere under Chavez’ Government. Among his charges:

“This means that the resources that y Law have to be used for social development are being destined to foreign exchange gain transactions”

“It is like giving away a margin of 20 to 30% profit to those that receive them, the Minister and the Treasurer decided who gets them”

“One has to ask whether Chavez knows about these operations…”

“The gains are shared between the Government, the bankers and the intermediaries (comissionists). The assigning of structured notes is the biggest corruption case of our history…and this takes place under a Government that calls itself revolutionary and socialist…”

“they are giving a privilege to those that have access to the dollars and they enrich themselves with it”

“Instead of financing equipment for hospitals, build schools, they invest in structured notes”

I understand Ochoa gave names to El Nacional too, but the paper decided not to print them

Some of these things you have read before in this blog (here, here, here), but I can only be happy that more and more people are actually saying it publicly and hope others will join the chorus and stop what is truly the biggest corruption scam in Venezuela’s history by any Government.

And to those that claim there is still freedom of the press in Venezuela, Petkoff’s tells us what the reality is, referring to Chavez’ attack on the Editor of Ultimas Noticias, a position Petkoff held until the Government forced the owners of that paper to fire him:

The Muzzle by Teodoro Petkoff in Tal Cual

The most impressive thing about the scolding that I,the Supreme gave Diaz Rangel, Director of newspaper Ultimas Noticias and of the inconsiderate references to the Capriles family, has been the silence of some prominent figures of officialdom-that in other times would charge with lance in their hands against the dragons of censorship-not to mention the silence of the offended person himself. It is particularly surprising the silence of Jose Vicente Rangel, a columnist of the same paper, and a close friend of the Director. We waited until Monday to see if in his column in the paper directed by his friend, Rangel would feel obligated to say something. It was useless. He was silent. Perhaps he does not want to ruin things with his pathetic complaint, so that he may be called again to the Government.

But much like this man that likes to show off, there are others that prefer not to risk their source of funds. Their silence is explained mostly on the basis of fear. That is the part that foreign correspondents that come to Venezuela or the “revolutionary tourists” like for example Jack Lang or Naomi Campbell don’t see. There is freedom of expression, certainly, but those of us that exercise it do not fear I, the Supreme, nor his temper tantrums. Paradoxically, freedom of expression seems to be over for the supporters of the Government. From those, Chacumbele, expects unconditionality, that is, silence. Chavez said it himself when he whispered it to Diaz Rangel: “I do not care” about the opinion of my adversaries, implying clearly that he does mind that of “his people”, as long as they don’t criticize him. If they do it, they know that the same destiny of Diaz Rangel awaits them, up to now, the pampered reporter of the regimen. The remainder of the intellectuals and politicians of officialdom have a very clear picture: if that was done to a heavyweight like Diaz Rangel, what can people in lower divisions expect? That is why their tongue remains stuck where the sun does not shine.

We extend a hand of solidarity to our friend Diaz Rangel and the owners of Ultimas Noticias, but we can’t fail to mention that we no longer recognize Diaz Rangel. The man we used to call the “Czar” in our political party MAS, for his frontal and uncompromising character, who his pupils respected for his severity in the face of the improvisation of others, the same one that wrote books against abuse of power and that now responds timidly, explaining only the origin of the headline of Ultimas Noticias that caused his disgrace, omitting all allusions to the ridiculous lesson in “ethics” that I, the Supreme attempted to give him, of that guy, we wonder where he went, whatever happened to him. Even more, after the unacceptable and rude aggression that was made by that other guy who is just taking care of himself, attempting to show himself as being more Chavista than Chavez, Diosdado Cabello, who accused Diaz Rangel of being nothing more than somebody that infiltrated Chavismo on behalf of the IVth. Republic.

There was no response to that either. Fear is the worst instrument of repression.

Today, a group of Chavez’ supporters took over the Archbishop’s Palace where Cardinal Urosa lives and other than having notoriety, it is unclear why they picked that target, as the group spoke mostly about defending socialism and the revolution, explaining that this was a “peaceful” takeover.

Of course, once again we see the discrimination between opposition and pro-Government groups as the police was nowhere to be seen. Recall in November how the police and the National Guard repressed the truly peaceful student march to the Electoral Board, when they tried to chain themselves to the stairs. The cops and guards, used tear gas and hit students violently, while today the Chavista groups were allowed to roam freely and even were able to kick the workers of the Archbishop’s Palace out of it, while the invaders held court for the media.

And then, staunch Chavez supporter Lina Ron showed up and you can see the video with her words here:

If you don’t understand Spanish, Ron is saying that they only accept Chavez as the leader of Venezuela and she repeatedly threatened TV station Globovision, telling it to shut up and lower its profile or they would take whatever action they deemed necessary. They demanded from the Minister of the Interior and Justice that he stop raiding the areas where the group that placed the bomb at Fedecamaras lives and instead he go and raid the areas where the oligarchs live. She even accused some parts of the Government to jointly organizing the raids, calling on the telecom and media regulator Conatel to act against the media outlet.

She called the man that died trying to plant the bomb on Sunday a “martyr” of the Chavez revolution, comparing him to assassinated prosecutor Danilo Anderson. Ron said that bombing Globovision would be a personal decision for any revolutionary. Curiously, there were organized protests tonight in front of there Globovision headquarters.

It is not clear what the precise objective of these actions is. While it would seem to be an attempt to gain support for the Government shutting down Globovision, these anarchist (and yes terrorist!) acts would not seem to benefit the Government much at this point in time, when the people are blaming Chavez for the everyday problems they are facing. It would seem as if the Government has allowed all these groups to be armed and roam around the city at will and now it can’t reign them in. As crime and shortages are hitting the people daily, these type of unnerving and confrontational actions by pro-Chavez groups, would seem to be the last thing the Government needs at this time.

A week ago, the Minister of the Interior and Justice, in the occasion of receiving the Metropolitan Police from the Mayor, called on the police “to be Bolivarian, revolutionary, insurgents and subversive…he called on them to insurge …against the capitalist structure within the institutions and models” as you can see and hear in the video below in another example of the empty ideology and confusing potpourri of ideas in the minds of Chavista leaders, who don’t seem to change their revolutionary BS when they are in positions of Government.

Well, the Minister got his wish, but probably not how he expected when on Sunday a man died trying to plant a bomb at the Headquarters of the Federation of Chambers of Commerce, certainly a temple of the type of capitalist ideology and models that the Minister was calling on the police to rise and be subversive against.

Well, it turns out the man had an ID identifying him as an Inspector of the same Metropolitan Police, Minister Rodriguez Chacin asked to be subversive last week, not a cop, an Inspector, a much higher rank. He was also a former member of the intelligence police. But now we are told that he had was an “honorary” ID, given to a member of an anarchist group from the 23 de Enero area of Caracas, that supports the revolution.

By now, we are being told by a National Assembly Deputy that he knew the guy and he was a member of one of the “social intelligence networks” created by the Government. Meanwhile, the Mayor of the Metropolitan Area of Caracas, who last week transferred the police to the Ministry, said the man worked for a different Deputy of the National Assembly and that he was part of the police until October 2007 and was part of the “Socialist Volunteers”. He was supposedly working for a Deputy elected under the backing of the “Tupamaro” group, a radical and armed group allowed by the Government to roam Caracas with weapons.

Funny how when opposition groups hung paper skeletons around the city in a peaceful protest, they were called “terrorists” and coup plotters, but when a pro-Chavez group, according to the Minister, is caught red handed planting a bomb at the Headquarters of a legal an important institution, which represents all of the private sector, the word “anarchist” is used, but they fail to note that this is simply terrorism against innocent Venezuelans, who just happen to stand for ideas different than the ones of the Government.

Of course, this Minister is the same one that told members of the guerilla group FARC to “hang in there, we support you” when the guerillas turned over some of the hostages to the Venezuelan Government.

An outlaw Government if I ever saw one!

And in the latest of economic innovation, just when the Government has started waving the “Certificate of Internal Insufficiency” as a prerequisite for allowing something to be imported in order to reduce shortages, today the geniuses at the Feeding and Finance Ministry created its “anti-particle” certificate and now if you want to export you will have to provide a “Certificate of Internal Sufficiency” for all food exports.

The certificate will apply to a long list of articles, but what caught my attention is that cocoa is in the list. You see, during the last ten years Venezuelan cocoa has established itself abroad as the top quality cocoa in the world, in spite of the Government’s policies. Now, cocoa producers will have to get this permit before they can export. I certainly hope the rules are not as silly as when you want to import something, whereby every time you import an item you have to get the permit for insufficient production, which makes the whole thing a real hassle.

Of course, think about the profit possibilities for Government officials. For a small fee, I may grant you a permit to export that special coffee or sorry buddy, you can’t export that great bull (Venezuela needs all the bull it can get) and sell it abroad, unless…

You get the picture…

I had heard about Francisco Rodriguez’ article in Foreign Affairs entitled “An Empty Revolution The Unfulfilled Promises of Hugo Chavez “, but had not managed to get a copy until today. It is not only a very clear exposition of the failures of the revolution, but it also blasts the cheerleaders of the revolution for blindly supporting it.

Rodriguez is an Economist with a Ph.D. from Harvard University who abandoned academia to become Head of the Economic Office of the Congress, later National Assembly, where he found lots of resistance to his criticism of the revolution and little revolution going on. He was not only fired, the office was shutdown.

While I am tempted to copy the whole article here, I don’t think it will be fair to either Rodriguez, whom I don’t know, or “Foreign Affairs” where it will be published for me to steal their thunder. I do find it uniquely ironic that in the last two days I have agreed with essentially 100% with two economists, Domingo Maza Zavala in La Vanguardia, and now with Rodriguez. Ironic, because while I stand ideologically in a very different place from both of them, we all agree and what this country needs and where the huge errors are. Below, I simply quote what I think are some of the highlights of Rodriguez’ article in my mind:

On whether Chavez has benefited the poor:

“Neither official statistics nor independent estimates show any evidence that Chavez has reoriented state priorities to benefit the poor. Most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated wor­ryingly, and official estimates indicate that income inequality has increased.”

On the revolution or lack thereof:

“But in fact, there is remarkably little data supporting the claim that the Chavez administration has acted any differently from previous Venezuelan governments’ or, for that matter, from those of other developing and Latin American nations—in redistribut­ing the gains from economic growth to the poor.”

On whether the revolution has or not changed inequality in Venezuela:

“But according to the Venezuelan Central Bank, inequality has actually increased during the Chavez administration, with the Gini coefficient (a measure of economic inequality, with zero indicating perfect equality and one indicating per­fect inequality) increasing from 0.44 to 0.48 between 2000 and 2005”

On how the revolution has improved the lot of the average Venezuelan, including health care:

“But again, official statistics show no signs of a substantial improvement in the well-being of ordinary Venezuelans, and in many cases there have been worrying deteriorations. The percentage of underweight babies, for example, increased from 8.4 percent to 9.1 percent between 1999 and 2006. During the same period, the percentage of households without access to running water rose from 7.2 percent to 9.4 percent, and the percentage of families living in dwellings with earthen floors multi­plied almost threefold, from 2.5 percent to 6.8 percent.”

On the priority given to “social spending” under the revolution:

“given Chavez’ rhetoric and reputation, official figures show no significant change in the priority given to social spending during his administration. The average share of the budget devoted to health, education, and housing under Chavez in his first eight years in office was 25.12 percent, essentially identical to the average share (25.08 percent) in the previous eight years. And it is lower today than it was in 1992, the last year in office of the “neoliberal”� administration of Carlos Andres Perez”

On the illiteracy campaign (Alek and Syndey have proven this over and over before in the blogosphere):

“In contrast to the government’s claim, we found that there were more than one million illiterate Venezuelans by the end of 2005, barely down from the 1.1 million illiterate persons recorded in the first half of 2003, before the start of the Robinson program”

And this one has been my favorite, even if some did not pay attention, the economic crisis began way before the political crisis, but the latter was blamed:

“Chavez deftly used the mistakes of the opposition (calling for a national strike and attempting a coup) to deflect blame for the recession. But in fact, real GDP contracted by 4.4 percent and the currency had lost more than 40 percent of its value in the first quarter of 2002, before the start of the first PDVSA strike on April 9. As early as January of that year, the Central Bank had already lost more than $7 billion in a futile attempt to defend the currency. In other words, the economic crisis had started well before the political crisis, a fact that would be forgotten in the aftermath of the political tumult that followed.”

And finally, here is where I agree with Francisco Rodriguez and not because of our common, if disparate origin in the GSAS:

“It is the tenacity of these realists rather than the audacity of the idealists that holds the greatest promise for alleviating the plight of Latin America’s poor”

Kudos to Rodriguez for blasting the cheerleaders of the Empty (or fake) revolution.

I wanted to write about the CNE claiming that it had completed reporting the results from the December referendum, but Quico covered very well the most salient points. The most important point, is the bunch of BS coming out of the mouth of the President of the CNE Tibisay Lucena. Lucena lied and told the worng numbers with a straight face, lying about the numbers. The truth is that the CNE has not told us what happened on Dec. 2nd. beyond telling us the No won.

But we have yet to find out what the true margin of victory was, let alone its geographical distribution. This may seem like we are being picky, but it’s not. It is extremely important to know these results, because in November there will be regional elections to elect Governors and Mayors. We have not trusted results in the past and the fact that we have yet to eb told exactly how the NO won in December gives us little confidence going forward. And we need it.

We need it because Chavze can not afford a big loss in November, so that he will be pulling all of the stops, numerical, electronic and whatever he may need to make it look like his victory.

And that is why knowing the December results in detail is so important. We still don’t know what happened in 6% of the polls. In a referendum that 6% may seem irrelevant, but in a regional election it may be five times the margin of victory in a particular state.

But for those of us that live here, por ahora, the problem with the electoral results is symptomatic of what we have to put up with day after day. There is simply nobody to appeal to to force the CNE to publish the final results, the same way there is nobody to appeal to when Rafael Ramirez lies about the country’s oil production or Diosdado Cabello says Luis Tascon helped a banker with drug connections. In any reasonably organized country with rule of law, a Governor of the largest state in the country and identified with the Government saying such a thing would become a scandal, mobilize the judicial branch and immediately force Prosecutors to act.

In Venezuela, nothing happens, the same way nothing happens because the Electoral Board does not comply with its mandate or even what the law states.

Because in the end there is no justification for it. Each vote should have been counted in December. Each person that went to vote deserves the respect of having its vote not only counted, but also reported. But the person in charge of the voting process dismisses them without care, disregarding their rights.

A country has to be very sick when this is happening. But i just so happens that those in charge of the system are precisely the ones allowing this to happen.

This is not being picky, it’s the defense of the basic rights of the Venezuelan people and the need to have the essential building blocks of a society work, if Venezuela is to survive as a Republic.