Archive for December, 2012

Let The Abuse Of Power Take Over In Venezuela’s Electoral Process

December 16, 2012


(Thanks DA for the panoramic of your almost empty voting center)

As projections indicate that abstention will be between 45 and 50%, if voters flows continue at current rates, the abuse of power on the part of the Chavista Government has begun in earnest. First, Vice President and fingered successor Nicolas Maduro held a press conference, promoting the votes of Chavista voters and, of course, suggesting that all Chavez wants is for his supporters to go out and vote. The Electoral Board said nothing of this, except for Electoral Board member Vicente Diaz who during the press conference called for its suspension as it was in clear violation of the Electoral Laws. The broadcast of the press conference was interrupted as Vicente Diaz spoke on TV. Reportedly, Chavez’ son in law (And Minister of Science an Technology. Nepotism? Nahh!!! Revolution!!!) was ready to repeat a broadcast like the one yesterday, which was also in violation of the law, but was suspended.

At this time, the question is whether there will be an acceleration of Chavista voters as the polls close, like what happened in October, or if the general apathy will prevail. If apathy prevails, look for the opposition and Chavismo to win in their natural strongholds. There would likely be no surprises and Chavismo will be concerned about how Maduro would perform head to head against Capriles, if he were to win easily in Miranda. If Chavismo manages to drive out the vote in the last hour, the opposition could be reduce below six Governorships.

At this time nobody is placing any bets and the mood is cautious in both camps.


Abstention Seems To Be The Story So Far In Venezuela’s Gubernatorial Elections

December 16, 2012


So I went this morning to take pictures of voting centers and the best I could come up with was a lousy picture of my ink-stained finger. Essentially, there are few lines for voting, I could not find a single center with a line outside to take a picture of. This election is different, a large fraction of Caracas simply does not vote, so I could not take my usual tour of the more pro-Chavez Western part of Caracas, they choose no Governor, and instead had to go East, to Petare, where the lines seemed to be for shopping, rather than for voting.

And the few data points I have from around the country suggests that it is the same all over. In two very pro-Chavista parishes in a Southeastern state of Venezuela, where Chavez won in October by 38% and abstention was 20.3% and 17.2% respectively, abstention at 10 AM was simply huge. In one center, which has about 270 voters, not one person had voted after the polls had been opened almost an hour.

Once again, in elections without Chavez, even Chavistas don’t seem to care much. He is definitely the electoral phenomenon.

What this means is that we are in uncharted territory. Low abstention, like in October, was good for Chavismo. Abstention between 25% and 35%, favors the opposition, but above that level, where we seem to be at this point of the day, is no mans land. More likely even a poor Chavista machinery will be enough to win in many states, but this is likely not be uniform across the country.  This may be good for the States where the opposition has Governors in danger of losing, like Carabobo and Nueva Esparta, but reduces the likelihood of a surprise by the opposition in States like Aragua and Anzoategui. Maybe we get an almost repeat of 2008.

I will update throughout the day, if there is something to upgrade about, I hope there is.

Trying (Not) To Look At Venezuela’s Sunday’s Gubernatorial Elections

December 14, 2012

20121214_TALC1_21_1_F1And so we come to Sunday’s gubernatorial elections, which now may turn out to be more important than most people believed a month ago. One may argue about how many Governorships the opposition will win for hours (And I will) but in the end other things become more important, such as:

-The overall total vote by each side

-How Capriles performs on Sunday.

The first one, because it will determine how Chavismo plans its strategy going forward. Chavez won by 10.76% in the Presidential race in October, but Chavez is Chavez, and by now it is clear that when he is involved, the results are much different than when he is not. But Chavismo did manage to mobilize people like never before in October and thus will be watching what happens on Sunday with great care.

If Chavismo does not manage to get a huge advantage over the opposition (defined as more than 6% difference in the total vote) then Maduro could be in trouble in a one to one race and Chavismo has to regroup and redesign strategy. But if Chavismo gets more than 6% points over the opposition in the overall vote nationwide, then Chavismo will feel confident that Maduro can beat Capriles (or anyone) and the sooner the election takes place the better. And this is likely to be the result, as sympathy for Chavez’ illness and the mobilization of Chavismo will likely give Chavismo a bigger victory than it would have scored a few weeks ago. So look for Chavismo to seek a Presidential election sooner than you expect (How does February 11th. sound to you?)

The second will influence the first one. Capriles decided to run and now he must be worried. If he loses, he is toast. Forever!. If he wins by little, he is in trouble. If he wins big, he has survived one of the worst mistakes of his life.

But, how does it look?

Unfortunately, not clear. As in the Presidential election, abstention will be key. When Capriles beat Diosdado Cabello in 2008, he did it by 7% points, but abstention in this range favors the opposition and it was around 36% then, a huge number. And yes, some things favor Capriles over 2008: He is better known, he has been Governor since 2008 and has done a reasonable job and most of all, his opponent is as bad as they get.

But on the other hand, Chavismo is going to go all out to bury Capriles. Jaua may not be very likeable, but his image seems to be covering every single square centimeter of paper in the State of Miranda, save for toilet paper. And the number of refrigerators and stoves given away in the name of the revolution in Miranda since Jaua began running is staggering. Pollsters do not want to be too clear, they are cagy, saying their error is large in these regional elections. I have seen three polls and two give a large lead to Capriles and one says Jaua by a little, so I will have to go with a Capriles win.

Beyond that, it is hard to be specific. Analysts feel that Amazonas, Lara and Zulia are in the bag, but I am nervous about the last one. Beyond that, it gets dicey. It seems Carabobo and Nueva Esparta, sure things two months ago, are now questionable but doable. Merida is likely going for the oppo, Tachira will be a tough fight with Vielma Mora there and Anzoategui should be in the bag. Maybe Aragua will fall our way. Sucre is a long shot.

And that´s it

So, The opposition will be happy with four or five, elated with six or seven and, dream on, more than eight Governorships would be a true rush.

But I doubt we will come on the high end of things. The emotional turn out is likely to tip it the other way.

But in the end, it is abstention that will give you the number. In the 2008 elections for Governor, the States in which the opposition won, had abstention ranging from 31% to 40%. Any similar numbers and we get six to eight States. Bring it down to 25% abstention and we will be happy with four or five. Any higher and it gets scary. As in susto!

So, that´s my take. Hope I am wrong!

But as you can imagine, I will be there, would not miss this vote for anything. I am a democratic addict!

What The Venezuelan Constitution Says About Replacing An Absent President

December 12, 2012


There have been many discussions in the comments about what Article 233 of the Venezuela Constitution says about how to replace the President of the country.

Let’s look at the article in Spanish:

Artículo 233. Serán faltas absolutas del Presidente o Presidenta de la República: la muerte, su renuncia, la destitución decretada por sentencia del Tribunal Supremo de Justicia, la incapacidad física o mental permanente certificada por una junta médica designada por el Tribunal Supremo de Justicia y con aprobación de la Asamblea Nacional, el abandono del cargo, declarado éste por la Asamblea Nacional, así como la revocatoria popular de su mandato.

Cuando se produzca la falta absoluta del Presidente electo o Presidenta electa antes de tomar posesión, se procederá a una nueva elección universal, directa y secreto dentro de los treinta días consecutivos siguientes. Mientras se elige y toma posesión el nuevo Presidente o Presidenta, se encargará de la Presidencia de la República el Presidente o Presidenta de la Asamblea Nacional.

Cuando se produzca la falta absoluta del Presidente o Presidenta de la República durante los primeros cuatro años del período constitucional, se procederá a una nueva elección universal y directa dentro de los treinta días consecutivos siguientes. Mientras se elige y toma posesión el nuevo Presidente o Presidenta, se encargará de la Presidencia de la República el Vicepresidente Ejecutivo o Vicepresidenta Ejecutiva.

En los casos anteriores, el nuevo Presidente o Presidenta completará el período constitucional correspondiente.

Si la falta absoluta se produce durante los últimos dos años del período constitucional, el Vicepresidente Ejecutivo o Vicepresidenta Ejecutiva asumirá la Presidencia de la República hasta completar el mismo.

The first part defines what an absence is. And then it says “When the absolute absence of the President elect occurs before he takes power, there will be a new universal election within thirty days immediately following. While the President is elected and the new President takes office, the President of the National Assembly will take office.

The next paragraph is what happens in the first four years of the Presidency.

And then it says: “In the cases before, the new President will complete the corresponding Constitutional period”. That is, if the President elect is incapacitated and there is time for an election and if the same happens to the elected President in the first four years of the term.

Finally it says: “If the absence occurs during the last two years of the Constitutional period, the Vice-President will assume the Presidency until it completes the term”

Some lawyers believe the last part trumps all, if the President dies the Vice-President takes over.

What is confusing is what it says about the new President completing the the Constitutional term. But this refers to the elected President only. That is, if the President elect dies with sufficient time to hold a new election and have a new President, before the term ends, the newly elected President would complete the term

But this is no longer the case. There is no time to elect a new President before the Constitutional period ends. There are less than thirty days until the inauguration. Thus, it is impossible for the “new President” to complete the term and the President-elect is not holding office, thus, he can not be replaced in office.

The only possibility left, is what the last part says that the Vice-President completes the term and the President of the National Assembly takes over on Jan. 10th. once the “Constitutional term” is completed.

Which makes you wonder about the timing of the operation. It was performed precisely on the day in which there were no longer thirty days left and there was no room for any other interpretation.

A simple example in which the President and the President-elect are different may clarify this:

Suppose Capriles had been elected and something happened to him. If this event happened with more than thirty days left for his inauguration, the President of the National Assembly would take over, elections would be scheduled and held and the newly elected President would complete the Constitutional term.

But if this happened within thirty days to the inauguration, only the Vice-President is empowered by the Constitution to complete the term. Nowhere does it say that the President of the National Assembly completes the term.

That is what lawyer say…

(The Minister of Information just said that Chavez may not be back for his new term)

Possible Scenarios For Venezuela Going Forward

December 11, 2012


The further out in time, the more difficult it becomes to predict what will happen in Venezuelan politics. But for now, Chavismo has the upper hand on the opposition with Chavez’ decision to anoint Nicolas Maduro as his successor. As long as Chavez is alive, this decision will likely be respected by all important factions of Chavismo and this is probably the main reason why the choice was made: To placate the many forces that are likely jockeying for position and allow Chavez to be present during a Presidential campaign. While today’s operation is quite dangerous, recall the first procedure in the same area sent the Venezuelan President into intensive care, naming Maduro was likely done in the knowledge that Chavez’ prognosis is bad in the medium term.

The opposition on the other hand has nowfallen behind. Had Capriles stayed out of the Miranda race, he would be the obvious leader of the opposition. Now this designation is in danger depending on the outcome of Sunday’s election. Capriles should win easily, but needs to win by a landslide. Chavismo’s candidate Elias Jaua is not as well known and has little charisma, even if the State of Miranda has been covered with his face. When I was in Venezuela a couple of weeks ago, it seemed as if his face was on all walls of the city, as Chavismo tried to kill Capriles as a future possibility. With Chavez absent to back Jaua, it seems difficult for this to happen, as most pollsters suggest Capriles will win, but a small margin of victory will weaken Capriles and bring other candidates into the fray, with no time for primaries.

By Sunday we will know how well Capriles is placed for a possible second Presidential run, which will likely be his last, if he fails to win the Presidency.

Between now and Jan. 10th., if something were happen to Chavez, Chavismo’s plan to have Maduro be the heir apparent will be briefly interrupted, as it will be the President of the National Assembly who would become President on Jan. 10th. There could be a quirky moment on Jan. 5th. if Diosdado Cabello were to be removed in a “just in case” move, but I doubt it will happen for only five days insurance, as it would affect the unity of Chavismo. If they do decide to replace him, a losing Elias Jaua would likely be the man.

All efforts are likely to be centered on having Hugo Chavez show up on Jan. 10th. to be sworn in. If he does, he can appoint Maduro to be his Vice-President and Chavez can resign after that.

While many analysts suggest that Chavismo will take its time (months, most believe) in calling for an election to replace Chavez, I strongly disagree. The move to designate Maduro as the successor was likely made in the belief that Maduro can win (Yes, he can!) easier with Chavez alive and promoting him, rather than in his absence, which would additionally release the power demons  in the various factions of Chavismo. Additionally, since Chavismo will win a large fraction of the Governorships on Sunday, this should also discourage the opposition on a Presidential election to replace Chavez. Thus, Chavismo will benefit from an election as soon as possible.

But even more importantly, if Chavez takes over on Jan. 10th. and designates Maduro immediately as his replacement, who calls for elections in thirty days, the opposition will be way behind, caught flat footed, having no candidate and/or organization. In contrast, Chavismo will still have PSUV ready to help and coordinate the vote drive and its funding is simply unlimited.

Essentially, time is against Maduro and Chavismo, if the Presidential health is deteriorating fast, as it seems to be given the recent developments.

In the scenario of a Maduro victory in a Presidential election, things get fuzzy. A new President Maduro is likely to make few changes as long as Chavez is around. Whether Maduro changes or not Ministers is harder to predict. Given that he is expected to be more pragmatic, he may switch personalities around in order not to ruffle the boat, such as moving Merentes to Finance and separating the two Ministries (Wishful thinking?). Given Maduro’s statement that the exchange controls can be improved, it is clear that he has some strong thoughts on the matter. But Chavez will likely be watching over him.

Once Chavez is too ill to interfere, all bets will be off. Maduro will start trying to consolidate power, moving his pieces in and pushing his enemies out. The only  puzzle at this time is who are Maduro’s friends within the military. The military has too many different factions and Maduro has never been identified with any of them.

And the military is likely the biggest wild card of all. Absent Chavez, it is difficult to predict how they will react to a Maduro Presidency.

Eventually, Maduro is more likely to go his own way and impose his own style and agenda. And while he is believed to be more pro Cuban than many civilians, he is likely to go the opposite way. His weakness is that he lacks popularity, he knows that he will have to fix the economy to stay in power and only focusing all of  the resources in Venezuela, will he truly be able to do that. Beyond that, it will be his economic advisers, once he decides to fly solo, that will determine the course of his economic policies. Talk about the picture being fuzzy!

Of course, Capriles may yet win. He needs the landslide on Sunday and then to forget about taking a vacation for Christmas. Unfortunately, most of the opposition leaders are likely to go away and it is unlikely that the MUD will have a plan in place by the beginning of January to counteract Chavez’ strategy in time.

It may be all for the better. Let Chavismo be in charge of the economic adjustment to correct the distortions they created. It will unfortunately leave voters with the image that Chavez was invincible and he is sorely missed, but it will also open the way, in the end, for  a different kind of Government and different type of plans for the country.

Chavez’ Health Will Delay (Again!) Much Needed Economic Decisions

December 10, 2012

During 2012 the Chavez administration spent like there was no tomorrow and avoided making any corrections to the numerous distortions present in the Venezuelan economy. Spending went down in October after the Presidential election, but most economic decisions were still on hold.

In fact, even the expected issuance of a new Pdvsa bonds to supply SITME was delayed until after a possibke devaluation in January, as it made little sense to issue now with a devaluation so close in time.

Most expected announcements after the Gubernatorial elections and a devaluation seemed assured even before the end of the year.

No more.

Chavez’ renewed absence and the very likely possibility of a Presidential election in the first quarter of 2013, places all economic decisions on hold, including devaluation, gas price increase, foreign exchange system, Sitme, bond issuance and the like.

It is likely that no economic decisions will be seen until April and that spending will once again be irresponsibly placed on steriods in order to promote the need for a Maduro Presidency. The feeling of prosperity has to stay in place once again, as Venezuela will go into electoral mode for the emoteen time in fourteen years.

This will only make economic adjustments tougher and the new President, whether Chavista or not, will be blamed for them. Meanwhile the holy image of Hugo Chavez will be preserved in history asthePresident that brought prosperity and could do no wrong
even if all of the adjustments will be due to his idiotic and irresponsible management of the economy.

And Giordani’s role in creating this mess will likely be forgotten.

Thoughts On A Possible Transition In Venezuela

December 9, 2012

And thus, in a complete change of strategy, Hugo Chavez defends the Constitution and picks the person he wants to be his successor. To me, this is a recommendation from the old man in Havana and his buddies and it may signify that either Chavez is very, very sick and the end is close, or it may mean that infighting got so bad, and it is known Chavez will only live a few months, that a decision had to be made on a succesor. Moreover, Maduro campaigning with Chavez alive, regularly speaking out for him, may be the way to insure the continuity of the revolution. Thus, if Chavez were to say that he is in no shape to assume the Presidency after Jan. 10th. , the campaign will begin and Chavez will be there to lead President Maduro to a win.

The easiest path, if the second scenario was correct, is to wait and have Chavez resign after he names Maduro VP on Jan. 10th. If he is in danger of dying soon, then the President of the Assembly would assume power, if Chavez did not manage to be sworn in on Jan. 10th. This second option is likely filled with more uncertainty for Chavismo.

It is hard to know which of the two scenarios is right. In this so called XXI st. century revolution, we have yet to hear a medical Doctor explain what ails Chavez. Such is the disregard for the people, knowledge and the truth by the revolution.

And I still think Capriles blew it when he took the low risk, low reward strategy of running for Governor of Miranda. Now he needs to win there big, very big, or he will look weak to be the Presidential candidate. He should have stayed above the fray, gluing together the opposition, campaigning all over the country and for everyone. Had he done that, he would be the no discussion, unanimous choice to be the opposition candidate. Now there has to be lots of discussions, while Chavismo already has its candidate.

Beyond that, it is anybody’s guess. With Chavez alive, Maduro is likely to stay the course of the revolution and the different factions are unlikely to show their differences in public. But once Chavez is gone, Maduro may decide to be his own man in order to survive and he could go either way. He could ally himself with the anti-cuban faction to have the support of the hard core military and slow down the revolution or he could side with the pro-cubans in the belief that this guarantees his ability to survive.

With so many institutions under total Chavez control, it is unclear which ones will side with whom. Clearly the military is the most important one, with the Supreme Court close behind.

Chavez was and is the glue that holds Chavismo together. Once he is gone, the two sides will be equally splintered and what happens then is truly hard to discern with clarity at this time.

A Somber Hugo Chavez Says He Needs Operation, Designates Maduro As His Succesor

December 8, 2012

A  somber Hugo Chavez appeared on nationwide TV tonight and confirmed what most people had suspected: His cancer is back, he needs to return to Cuba tomorrow and he has been under a lot of pain and discomfort.

But perhaps the mos dramatic element of his speech, was that he essentially said VicePresident (and Foreign Minister) Nicolas Maduro will be his succesor, not only as far as the Constitution says, but he also designated Maduro as his succesor should there be the need for an election for President. He also said people should vote for Maduro if this election Were to take place.

While Chavez tried to explain that this was all a surprise, the timeline of events suggests this was not the case, as his dissapearance from public view clearly implied he left because the cancer was giving him discomfort.

Since we still dont know the nature of the cancer and the operation, it is unclear if it is a dangerous procedure. The key event will be whether Chavez can or not be present on Jan. 10th and be sworn in as President. If he can, we will have to wait until his health deteriorates again, which it wil,l as a cancer recurring like this is a very bad sign. If he does not, Maduro will assume the Presidency, name his Vice-president and will have to call elections before February 10th. There is also the outside chance that the operation will not go well. This case is more complicated because independent of Chavez’ desires, The President of the National Assembly will take over after Jan 10.  if Chavez were unable to complete his term. Maduro can not hold both positions.

The country still does not know the full truth of what is going on. Unfortunately, Chavez’ absence is likely to delay important decisions on the economy. The impact on the upcoming Gubernatorial elections is much harder to determine at this time. Chavez has always been the big draw in elections, but the short time of a week, makes it difficult for the opposition to gain on the news.

Breaking News: Hugo Chavez Is Apparently Not Well

December 6, 2012


Wow! I was shocked to read the international press today. Apparently, Hugo Chavez is not well. Something to do with his health. Look up Hugo Chávez in Google and the fact that Chávez is not going to Brazil, apparently induced some people to believe that this creates “speculation” and “fears” about his health.

Where have all these guys been?

Let’s see: The most outspoken, unstoppable, self-centered, ego-centric. ego-maniac. media-oriented, superficial, blabber mouth, show-off politician ever to hit Venezuela, all of a sudden:

Disappears from the media. As a matter of fact, his last “live”, “live” appearance was only 59 day ago when he held a press conference with real people present after being reelected. There have been some less “live” appearances since then. The last one was exactly 21 days ago. Except in all of them, he was seen only seated at the Cabinet table, with no outsiders present and even in his lengthiest broadcast, he spoke for less than a third or fourth of the average time of his usual ramblings.

And then, he just fails to make any of these “live”, controlled appearances since November 15th. and on November 27th. he surprisingly says he needs permission to be absent from the country “indefinitely”, in order to go to Cuba to get some sort of mumbo jumbo-hyperbaric-Cuban-tried-and-tested treatment for whatever ails him.

And all of this happens in the middle of a very significant political campaign for Governors, where his presence is essential, because he selected some people like these cone heads below, with his own mind and finger, to be Governors:


and somehow their campaigns are faltering because they are not from, nor do they live in the states that they are running for Governor (and the two on the right are sooo stiff!) and silly Venezuelans seem a little unhappy about that.

So, what makes these reporters think something is wrong with this guy’s health? How do they do their reporting? They call Miraflores and ask Maduro how Hugo is doing? Or do they call Raul in La Habana and ask (He probably knows more)?

Because the only basis these guys had for imagining that all was sort of ok with Hugo in the last few weeks, was the fact that some press guy in Itamarati, Brazil’s Foreign Office, said that Chavez had confirmed he would be present at Venezuela’s first ever Mercosur Summit as a full member, which starts tomorrow. What they failed to note, was that the “confirmation” was received twenty days ago, before Chávez had stopped his “live” appearances and two weeks before his now infamous request for an indefinitely leave for medical treatment in Cuba.

So, today, because he is a no show in Brazil, the international press seems to have deducted Chavez “may be” or is “feared” sick.

Way to go international press! (Except for my buddies at Bloomberg, who seem to be on top of things)

Meanwhile “markets” and “investors” seem to be more on top of it. Below, I show the “benchmark” Global 2027 bond and what it has done ever since Chavez took his “leave”. (Other bonds have done even better) This is the same one that Quico said he would not buy and he is not too dumb a fellow, but he could have made a bundle of yen with it, had he not unbookmarked the Devil on his Japanese sojourn:


As you can see, the price of the Venezuelan Global 2027 bond  was just plodding along, drifting up and then right around Nov. 27th. (Funny, the day before Chavez’ announcement, actually!) the price of this bond starts moving up like crazy and goes up more than 10% since then, closing at 100% today for the first time since 2008.

Bonds usually don’t do this on rumors, only on facts!

So, these market guys seem to be on to something. Yes, they go up because Venezuela should yield sort of like the Ukraine, which would shoot the price of the bond up another 20 points or so. Except that things are not that linear in Venezuela. The road will be bumpy one.

To start with, the bet is that nobody can be as bad a Minister of Finance than Giordani. If Chavez leaves, a “real” economist will come in and will never do as bad as the current Minister of Finance.

Wanna bet?

Until Chávez named Jose Rojas Minister of Finance in 2000 or 2001 (and he was an economic statistician), the number of “real” economists that had held the position was less than the number of engineers, sociologists and mathematicians combined that have held the position in the last twenty years. Economists are considered to be like Astronomers (Or is it astrologists?) in Venezuelan political circles.

But I digress. Because even more dangerous, is the fact that the path, if Chavez is a no-show on Jan. 10th., is filled with uncertainties and possibilities. Just about everyone could be President on Jan. 10th. if Chavez no-shows (not me!), because the new President of the National Assembly will be selected on Jan. 5th. and Chavez and PSUV can truly name anyone they want to the position.

Think absurd: Even the Fosforito.

And yes, the Constitution is clear, elections have to be called within thirty days. But that’s all it says. Really. So, imagine new President Chavez (Adan)/Maduro/Jaua/Rodriguez/Cabello (Did I leave your name out?) on February 10th. calling for elections on say, December 10th. 2013 or 2014. Why not? I am sure the Chavista Supreme Court would go along with it, even if the opposition and all of its mud rejects it.

And BTW, dear international press, now Maduro is the pro-Cuba choice? Have you met or talked to Adan?

So, the road to riches, even if you are smarter than reporters from major international newspapers, is also filled with potholes going forward. The “easy money” will end the day we know the truth about the autocrat’s health, whether good or bad (which depends on which side you are on)

After that, it will be a rocky, stony, bumpy, potholy, spiny, filled with nails, path of uncertainty and the end is almost impossible to guess. My guess is Hugo is not well at this time. They may be trying to prop him up one more time so he can be sworn in on Jan. 10th. and the charade can continue. Or he may be close to done by now. I dont know. But I hope they don’t succeed.

Venezuela deserves better. And I will not miss him.

And now he reappears, talking poetry, calling himself Fidel’s flame (no comment) in a carefully controlled video. His arrival was not shown live, but he is back. The mystery deepens. Something was clearly not well, something happened. Now we have to watch how much he participates in the campaign

Venezuela’s Conviasa Planes Forbidden From Flying To Europe

December 6, 2012


A few years ago, when Chavez announced that he would start a national airline again, I wrote a post criticizing the move as another waste of money in a country with limited resources and a lot of more important problems than having a flagship Government airline. My reasons were many, but it included the fact that the airline business is well known to be a very difficult one, as recurrently even the best run airlines in the world go bankrupt or close to it, when conditions are adverse. Add to that the history of Venezuelan airlines, both private and Government run, together with a bunch of inefficient military officers in charge and I could see this was a boondoggle Venezuela did not need. Many of the more pro-Chavez readers jumped on me, saying the country should have an airline and flying in it was more reasonably priced than private airlines.

But in time, Conviasa has shown to be an even bigger failure than I ever dreamed of. I never thought we would see so many accidents. Seven serious accidents in such a short life is unheard of in the world of airlines, no matter where they come from. This shows how this Government is so indifferent to the value of the life of its citizens. Then there is the fact that Conviasa bought a bunch of Brazilian Embraer planes for US$ 90 million, which somehow the Chinese buy for half as much according to Gustavo in the same link as above.  And to top it all off, last April Venezuela was put on the no fly list by the European Community, a ban that was reiterated this week.

But rather than find out about how to get off the list, the Government blasts the European Union and criticizes more the fact that the ban is called a “black list” and thus racist, than the actual reasons for the ban. Even worse, in this Bolivarian revolution world, where profits don’t matter, Conviasa has been using airplanes from Santa Barbara Airlines (A Venezuelan private commercial airline) and ¡Fin de mundo! a US airline called Vision Airlines, in order to continue flying to countries in the European Union. If Conviasa was losing money before, imagine doing it having to pay someone else to do the job!

Economics is about optimizing scarce resources. In a relatively poor country like Venezuela, that optimization is even more important. The worst part, is that Conviasa is still flying, money is still being wasted, without any rationale for it. At least other Chavez boondoggles like Venirauto, stopped being much of a sinkhole. While supposedly the company is still functioning, here is a picture of some vehicles waiting to have the natural gas system installed before the cars are sold:


Not pretty, no? At least nobody died…