Archive for December, 2010

Happy New Year to everyone!

December 31, 2010

Well, I am certainly glad 2010 is going away. It was truly a bad year for me personally, a story that remains to be told one day. So, I am happy 2011 is coming and hope there is some change both in Venezuela and around me. Writing is in part an escape, an opportunity to verbalize feelings, organize thoughts. I do benefit from your input as it allows me to keep the important things in focus. So, many, many thanks from me to you.

And drinking a nice wine, celebrating with family is the way to wait for the new year. For the third or fourth year in a row, I will be going to Plaza Altamira to wait for the New Year. There is something very warm and cozy about saying Happy New Year with thousands of people around you. This year, I will go with more family including my 85 year old mother, which should make it even warmer.

To everyone of you, that your most important wishes become true in 2011 and that the new year brings you health, love and peace of mind, the three most important things there are and the ones that truly matter.

As we say here: !Un abrazo!

Venezuelan Minister of Finance announces sharp devaluation of currency

December 30, 2010

Jorge Giordani, Venezuela’s Minister of Finance announced the devaluation of the “lower” official exchange rate of Bs. 2.6 per US$ to unify it with the Bs. 4.3 rate, essentially devaluing the exchange rate for all essential items by 65%. This decision affects the whole structure of subsidies (except energy) created by the Chavez Government in the last seven years, which was based on direct imports of food and pharmaceuticals at the lower rate, which was kept at Bs. 2.15 per US$ since 2005, increased to Bs. 2.6 per US$ in January 2010 and now increased again to Bs. 4.3 per US$.

The move is, in my opinion, a political one, it is a brutal devaluation which will have a huge inflationary impact in 2011, but whose effects will dissipate in 2012 and by making it so large now, removes the need for an additional devaluation before the 2012 elections. It removes partially the distortion that the multiple exchange rates cause, but it only goes half way and does not include additional measures.

The move does nothing for exports, all exports (except PDVSA changing its foreign currency, part of it had to be exchanged at Bs. 2.6) had been receiving Bs. 4.3 per US$ since January of 2010.

In terms of inflation, this will certainly contract demand and the Government is likely to postpone price increases until shortages appear, but the overall impact in the next few months is certainly going to be quite dramatic, particularly for the poor.

The announcement does signal that Minister Giordani is in charge, despite the terrible performance of the economy under his guidance. Perhaps nothing exemplifies his ability for deceit as saying that “this measure is adopted to place the citizens at the center of economic decisions”.

What he did not say is that he is aiming at them with a fully loaded inflationary gun.

Can Venezuela be run in a rational way?

December 28, 2010

Somehow two items in the news have suggested to me in the last few days that anyone trying to run Venezuela in a rational way would have a hard time doing it. It seems that even rational decisions receive irrational responses in this country:

1) Corpoelec has proposed an electric rate increase after eight years of freeze. The most common reaction has been to say that if Corpoelec gives such bad service, how can it possibly aspire to a rate increase. This argument is simply garbage. It is precisely the fact that rates have been frozen for eight years that has led to the crappy service given by Corpoelec. Just think, since 2002, when rates were last increased, inflation has gone up by 890%, so that in real terms, rates are lower dramatically, and people expect good service! Sure! Of course, the service is bad in part because Corpoelec is not run efficiently, but the Government simply can’t give everything away. This is no way to run a country.

How cheap is electricity in Venezuela? Well, my bill last month was about 1.6 US dollars cents per Kwh, about a quarter of the typical value in Latin America or a tenth of what it costs in developed countries. What is Corpoelec proposing? A 30% increase! Imagine that, the nerve!


2) And people have laughed at Evo Morales for increasing the price of gas. Morales took the decision to increase gasoline prices by 83% and diesel prices by 73%, keeping natural gas prices for the home frozen. Prices had not been increased in six years (inflation has averaged about 9% per annum in those six years there). Gasoline prices are now expensive in Bolivia, relatively speaking. One liter of gas will now be 6.47 Bolivianos which is about US$ 0.9. Thus, Morales is simply selling it at international prices.

I can not disagree with that. If energy is expensive there is no reason to subsidize it massively like is happening in Venezuela or was happening in Bolivia. These subsidies always end up being asymmetric and rarely favor those who need it most. So, rather than criticize Evo Morales, we should praise him for trying to rationalize his economy, even if other things are not as rational. It is a first step. We should use it as an example of what Hugo should do, not the other way around.

So, good riddance if Chavez ever leaves. You will be demonized no matter what you do or try to do, however rational it may be. People really want to have their cake and eat it too.

And the cake better be free!

Carlos Andres Perez dead at 88

December 26, 2010

Carlos Andres Perez, twice Venezuela’s President in 1974 and 1989 died yesterday at 88. A controversial figure, CAP, as he was known, was twice in exile as a young Adeco activist in 1948 and the 1950’s and was in charge of the fight against guerrillas during Romulo Betancourt’s presidency from 1959 to 1964, first as a Director General of the Ministry of Interior and Justice and later as Minister. He developed an image of being tough during this time. When the 1973 Presidential campaign arrived, Romulo Betancourt quickly said he would not be a candidate, leaving the field open for CAP. It was the first multimedia electoral campaign in Venezuela’s history with CAP projecting an energetic image (he was a tireless worker), visiting all corners of the country and defeating Lorenzo Fernandez of the incumbent COPEI party.

Once elected, CAP was dramatic the first few months of his presidency, nationalizing oil and iron his first day in power, benefiting from the sharp rise in oil prices. But CAP, like most Venezuelan Presidents, had no economic knowledge and his Government was a hodge podge of Cepal-like recipes and the conception that the Government could do it all. But he dazzled the population, in the first month in power, he cleaned up Caracas, froze the prize of arepas (which made areperas disappear in short order) and decreed that all elevators had to have an operator, as a way of creating employment (Pleno empleo, full employment, was his motto).

The economy boomed, thanks to the oil windfall, but the same windfall hid all of the problems as CAP developed his vision of the “Gran Venezuela”. Money was thrown at steel, aluminum and technology projects in which the Government was the owner or provided the financing, but there was little control and/or know how to make it successful. He did try to protect some of the windfall, creating the Fondo de Inversiones de Venezuela, reduced oil production because so much money was not needed and maintained the structure of the oil industry before it was nationalized, creating PDVSA and naming General Ravard to preside it.

The boom was so huge that everyone benefited, poverty reached the lowest levels in Venezuela’s history, he created the Mariscal de Ayacucho program that sent 10,000 Venezuelans abroad for mostly graduate degrees, protected wild areas in National Parks, he created the oil research institute INTEVEP, he built important hydroelectric projects.

He was a democrat and he was a populist, a bit of megalomaniac, worried about his image and his legacy. He gave a boat to Bolivia which has no ports, as a symbol of its fight to have access to the sea. He reached out to Fidel Castro, while shunning the Dictators from the South, while making it attractive and facilitating for thousands of highly educated people from the latter countries to move to Venezuela to help in his push to increase the number of university students.

But his economic policies had as their central theme the intervention by the State. He removed the independence of the Venezuelan Central Bank, while increasing salaries periodically, which debased the currency leading to inflation. Venezuela was not ready for the huge inflows and there were lots of corrupt people ready to make a lot of money off the Government. By the end of his term, corruption charges, including the infamous Sierra Nevada refrigerated boat scandal, tarnished his image. He was brought to trial because of that case, curiously, it was Jose Vicente Rangel who cast the deciding vote to exonerate CAP. That was CAP, he was capable of talking to everyone and anyone, even his staunchest enemies felt that he was someone he could talk to.

His last year in power, oil prices dropped, forcing CAP to lower the budget by 10%, Venezuelans had the feeling that things were worse for the first time in many years (little did they know!) and his party lost.

CAP spent the ten years required by law between terms, traveling around the world, involving himself with the South commission and talking to world leaders. This changed his ideas, but still, he had little economic knowledge and as he ran for President in 1988, he promised  to return to the hey day years of his first term.

But it was not be. CAP reached out to a group of well educated non-adecos, including those that were involved in studies on how to change the state. It was not until they began talking to the people of the Lusinchi Government, after CAP was elected. that they realized how dire the situation was. International reserves were less than US$400 million. After a lavish “crowning” with all of the pomposity that was simply out of place, the CAP Government realized that they needed help form the IMF and imposed an adjustment program, a “shock” program that included increasing gasoline prices by 100%, interest rate increases, the increase of public tariffs, freeing of prices that had been frozen for years, eliminating tariffs and allow the currency to float.

One month after taking power, having won with 56% of the popular vote, riots started the “Caracazo” four days of rioting and protests against the gasoline price increase that cast a shadow over CAP’s Presidency. He believed people had the right to protest, doing little the first two days and the protests and the looting go out of hand. In the end an estimated 276 people died and the looting was in the millions. His Government was a lame duck Government even before he started.

But he pressed on. His intuition was right, that he was very good at. He implemented or began to implement many of the reforms suggested by the Commission for the Reform of the State, including the election of Governors, tax reform and the general decentralization of the Government. He was changing things very fast.

But his own party AD felt it had been replaced by these “technocrats” and he had opposition from within. His cabinet was composed of very knowledgable, very well prepared people, most of which had no political experience. CAP was supposed to take care of the politics, but he did not, it was an ego thing and that was what doomed him. Policies were working, the economy grew by over 9% in 1991 after all the adjustments, CAP thought he had no worries.

A group of people the self called “Notables”, mostly intellectuals, who had always opposed CAP and envied his popularity, began calling for his removal. Chavez followed this with his coup in February 1992 (which had been in the works for a decade!), weakening the Government further. When it was discovered that CAP had used funds from the secret slush fund to provide security to Violate Chamorro in Nicaragua and exchanged it at a preferential rate when the Government was ready to devalue, he was accused and impeached. He was later sentenced to 28 months in prison and charged with other crimes. He was elected Senator in 1998, which gave him immunity, but the 2000 Constitution eliminated the Senate and this rule, removing the protection he had. He never returned to Venezuela.

He was in the end, a true democrat, too ignorant on economic matters to have a coherent plan, but smart enough to follow his instincts with his collaborators, he allowed corruption to flourish around him, there was so much money to be made. But he did many positive things, implementing changes in his second Government that were very important. Some of them even took power away from him! He was willing to change, but sadly he did not sell the change the same way he sold himself. On a relative scale, he was not that bad, better than Caldera, who would never change, better than Luis Herrera, who had no program on how to change the country, better than Lusinchi, who had no clue. Betancourt was better, because he understood economics, oil and what the country needed, he had a program. Leoni simply followed Betancourt’s plans with honesty and surrounded by many of the same people.

And of course, he was much better than Hugo, who is not a democrat and has failed at all of his economic initiatives, allowing the largest corruption levels in Venezuela’s history and failing to leverage the biggest oil boom in the country;s history for the benefit of the people.

May Carlos Andres Perez rest in peace!

Some nice desserts for Christmas, diet starts next week

December 25, 2010

Merry Chistmas to all and Thanks for Reading the Devil

December 24, 2010

Even the Devil celebrates Christmas. Soon my family will arrive, we will have some nice drinks and then we will dig into our hallacas and pernil like most Venezuelans do. The group is getting smaller, as not only people leave for Christmas, but they also leave the country all together. We even know who will be next. At this rate, Christmas will soon be celebrated elsewhere.

But it will be a fine night, we will exchange presents, we will talk, laugh and we will try to ignore our surroundings for a few hours, we will stay up late, watch the impromptu fireworks and go to bed late for no other reason that we are happy to be together and we are all healthy.

And to you all, I wish that you have as much fun as I plan to have and get all your wishes tonight or tomorrow whichever you celebrate in your family.

Thanks for reading!

Hugo Chavez is building up his Dictatorship one step at a time

December 24, 2010

(Thanks @inti for sending the cartoon and Rodrigo @sin_mordaza for making it)

Slowly Hugo Chavez is building up his Dictatorship. He has been planning ahead all the time.

Lost the Constitutional referendum? He quickly had himself an Enabling Law that allowed him to legislate in 2008 everything but his own reelection by decree, thus voiding what the “people” had voted for.  He dealt with his reelection by holding an illegal referendum that would allow him to run in 2012 and forever if necessary, he had the Supreme Court ready to approve it in an another subtle but illegal decision that denies the very essence of our Constitution and democracy.

Then, in the face of the 2007 referendum defeat, he rearranged electoral districts so that he could win the National Assembly even in defeat. It almost worked, except that he did not cheat enough and lost more popularity than he imagined he would in the intervening two years. In the end, he did not manage to obtain the super majority that would have allowed him to have the Assembly approve him any Bill he wanted.

Thus, he made a three step maneuver, one for the present, one for the immediate future and one for a year and a half from now.

For the present, he had the lame duck National Assembly approve a succession of Bills that change the social landscape in a dramatic fashion, from the Banking Bill, to the Science and Technology Bill, to the Telecom Bill, to the Media Bill, to the University Bill, Chavez legislated precisely what the majority that voted against him did not want. It was undemocratic, unfair and much of it illegal.

Then, to take care of the immediate future, he had the same National Assembly approve him an Enabling Bill that it is not only undemocratic, the old Assembly was legislating beyond its own mandate and violating the mandate of the new one, but gave Chavez essentially Dictatorial powers, just when the people voted clearly to limit or stop his powers. It was, and is, a legislative coup d’etat that makes Hugo Chavez Dictator for eighteen months and castrates not only the newly voted Deputies, but the voters that asked for Chavez to be stopped. And these voters were a majority in the September Parliamentary election.

And as if this was not enough, that same Assembly approved a Bill for Political Parties that prohibits anyone elected under the slate of a political party, to vote differently than that party in the National Assembly. Talk about totalitarian control. Deputies have no conscience, no independence, no criteria, they have to vote in the manner in which the party and its hierarchy says.

So much for Chavez’ “participatory Democracy! What a farce!

The question is at this time, why was this approved? What card is Chavez playing long term, that he wants to make sure that not a single one of the Deputies elected under his party and that of the PCV (Communist Party) can turn against him?

Since he does not have a super majority (two thirds of the Assembly), that can’t be it. He does not need them to convoke another Constituent Assembly, he can do that on his own. He does need them to approve another Enabling Bill, but what use is that instrument six months before a Presidential election?

It does insure him a majority in the Assembly, but once again, what use is that? If Chavez is facing a sure defeat in 2012, not having a amjority will almost be an irrelevant question. But the eighteen month timing has to have a key ingredient in it. Simply control rebellion within his own ranks?

In the face of the 2012 elections, Chavez has to deal two possible scenarios: That he could win or that he will go down in defeat. If he can win, he will go forward with the election. He will risk it all to obtain even a marginal victory that would give him the appearance of democracy, the same way he has claimed to be a democrat in the last few years. And if all fails, he will just not hand over power and end the travesty once and for all. Dictator for life!

Fidel’s heir indeed!

In the same manner, if the election looks tough, he will call for a Constituent Assembly that will stop the upcoming Presidential election and allow him to rule until the whole process is completed. He will use the redistricting to have a majority in the Constituent Assembly. He will legislate at will and play it by ear to make sure he can be the first President under the new, more controlling and more limiting Constitution.

Either way, Hugo Chavez would have built himself his Dictatorship one step at a time under the watchful eye of all of those fake organizations that have looked the other way as he trampled over the Venezuelan Constitution and its people over the last few years.

All done one step at a time and under the banner of democracy.

Reporters can be scary to Chavez’ National Guard Opressors

December 23, 2010

As Students Protest in Caracas, Repression Is Ready For Them

December 23, 2010

As students gathered at Central University, the Government went from words to deeds and had its repression forces ready. The students had talked about going to the National Assembly to protest the new Law of Universities, but decided instead to just go to Plaza Venezuela since they had no permits (This is a 500 mts. distance) . But the order to repress no matter what had been given and as I write this the National Guard and the Police are all over in the areas near the University, ready to repress.

Nothing is normal in Venezuela when this is happening on Dec. 23d.. The Government thought Christmas would obscure its rush to control the country, but both the students and the Zulia farmers decided that their rights were more important than Christmas.

As the protests were taking place, Chavez forced all TV stations to show his broadcast, barring them from showing the protests.

More pics here

As the Government tries to spin him away, Mr. Melean refuses to dissapear.

December 22, 2010

Once the Government realized that it had a serious resistance problem in Santa Barbara del Zulia after Chavez announced the expropriation of 47 farms in that area, it began trying to spin it all away. Chavez’ threat to use “guns against guns” were just that, a threat. He did not even trust or want Minister Loyos, gun in his holster, to talk to Melean. Instead he sent Vice-President Jaua, the great spinner. Jaua must have learned something about talking and spinning in the 22 years he spent as an undergraduate.That appears to be the only thing he is competent at.

Jaua bowed down and went to the El Peonio farm and met with its owners and later said that the Government would not back down. But that is exactly what it is doing. In some of the other farms, people left, packed up after the authorities showed up. Mr, Melean and the inhabitants of El Peonio are still there.

The farmers in the area have seen expropriation after expropriation. The Government takes over a farm, it does not compensate, invaders come in, invaders leave after the cattle and crops have been eaten. From day one. Chucho Melean was clear: “If they pay, I will leave”. Jaua may say what he wants, but it is not true that the Government has valued and compensated hundreds of properties.

Ask Franklin Brito, ask the Spanish farmers, all of whom have not been paid despite the pressure by their Government, ask the Portuguese farmers. And so on.

And the spin was, Mr. Melean lost, he was not ready to fight, this is a tough Government.

But Mr. Melean comes back today and says again: “If they pay me what it costs, I leave, if not, I stay”. There is no deadline. He stays, the Government will have to evaluate how much to pay, come back with an offer.It better be good.

In the end, it is a defeat for the Government. The timing was meant to be  like that the slew of Bills passed by the National Assembly, to take care of the Sur del Lago farms near Christmas, so that people would not notice as they shot fireworks and opened Christmas presents. Now, the problem does not go away. It will either be forgotten or the whole issue will ignite in a few months at a more inconvenient time.

And Chucho Melean may be on TV again, despite all of the spinning.