The Devil's Excrement

I continue to be amazed at the reaction by most to the naming of the so called “Moral” Powers, the CNE and the Venezuelan Supreme Court. People are surprised at “how far” Chavismo went to twist the Constitution to suit their goals, bending, folding and mutilating the Venezuelan Constitution as desired. Some call it a coup, others express their amazement, with few (Daniel being one exception) calling it what it is: Business as usual.

The Constitution has been silly putty for a long, long time…

Because you may want to argue whether the “coup” to the Constitution began in 2004, 2006 or 2008, but it certainly did not take place last week. Last week was another multiple maneuver by the Assembly and the Venezuelan Supreme Court to manipulate the Constitution and adapt it to its desires, constitutionality, with small caps, be damned.

But I was neither surprised, nor do I think much changed last week. I mean, what do you think happened when Chavez was allowed to hold another referendum in January 2009 so that he could be reelected indefinitely, despite the Constitution being very clear that once a subject is defeated in a Constitutional period, it can not be brought up again. Or the Venezuelan Supreme Court allowing Chavez to legislate via the Enabling Bill on the very same topics (Many of them too!) defeated in the 2007 Constitutional Referendum?

Really, do people not remember that we never even found out what the final vote was in the 2007 referendum? Chavismo accepted defeat, but the last votes and final count were never revealed by the CNE, presided at the time by the same person “wisely” selected President of that board by the Supreme Court.

Or is it that nobody remembers that the 2013 vote in which Maduro was elected President was extremely close, which rushed Chavismo into swearing in Maduro within 24 hours of the election and only under international pressure was  a recount called for and immediately the Supreme Court ruled that a recount was adding the numbers again, not counting the votes again. And that was the end of that.

Or does nobody remember that Maduro was allowed to continue being President/Candidate in 2013 when Chavez was incapacitated and then died? Or that Diosdado, who should have been President, whether you like him or not, was bypassed by a similar “administrative” interpretation of the silly putty Constitution by the Supreme Court?

The Venezuelan Constitution has been treated like silly putty now for years by the same people that created it. There are no surprises to me, they will mold decisions to achieve whatever their goals are. The “coup” or “coups” took place long ago. Expect more of the same: If Chavismo some day needs Maduro out, they will interpret the Constitution conveniently to name as his successor whomever they want. Whether it happens in the first four years of his period or not

But please, don’t be surprised. Chavismo neither has, nor has never had any scruples when it comes down to maintaining its stronghold on power. If you need a convicted murderer on the Highest Court, so be it. After all, they have many in their Government that have participated in similar crimes, they were just never tried or convicted.

The opposition may want to continue playing democracy. So will I. I will vote next year even if I know its rigged. But I will not be surprised by the outcome.

Neither should you.

Thank you all for your loyal reading, comments, I hope I have been at least informative and entertaining and I did not rant too much this year. I do hope you have a wonderful Christmas Eve, which is what is mostly celebrated in Venezuela or a wonderful Christmas day tomorrow  with your family and loved ones. Love, Peace and the best to all of you.

Your Devil

I took my time writing about the historic agreement between the US and Cuba to reestablish diplomatic relations, exchange prisoners and end the embargo of the island, for the simple reason that it is a complex issue with many different edges. No matter how it eventually plays out, it is a historic event that will change the relations between the United States and Latin America. Let me say right off the bat, that I am in total agreement with the decision: The embargo is obsolete, made no sense and in the end, and it was just hurting the people of Cuba the most.

To begin with, the normal state of things is to have diplomatic relations between countries, no matter how unfriendly they may be and how deep the political divisions between the are. Relations are normally broken only when countries threaten each other and it has certainly been a while since this has happened between the US and Cuba beyond the rhetoric of claiming the US is the enemy of Cuba (and vice versa), something that will now simply have to go away.

The blockade of Cuba has certainly not worked, neither has it helped human rights on that island and it has had a negative impact on the people of Cuba, but not so much on the economy of the island. After all, in Venezuela, with no embargo, lots of trade with the US and lots of oil, the Government has tried the imitate the Cuban model and its economy is fast becoming the same failure as the Cuban one.

So, for the US, the policy has not worked at all, why keep it? How do you reason that you will keep it: We decided this 50 years ago, it has done nothing, we screwed up, but let’s just keep it because we are all used to it or is by now programmed into our DNA?

That’s precisely why it needs to end: The embargo was an utter failure!

If the US, or any other country for that matter, broke relations with any country that violated human rights or was run by a Dictator, countries would then  save a lot of money on diplomats, because they would have to reduce their Ambassadors significantly. If this were the criteria, neither Egypt, China, or for that matter Venezuela, would qualify for having diplomatic relationships with the US and European countries that value Human Rights. And while people may support sanctions on Venezuelan individuals, I don’t think an economic embargo would help Venezuela or Venezuelans on Human Rights, but would create the same “blame the US” propaganda tool that has been used in Cuba to blame the failure of the revolution on the US.

I do agree that the agreement reached between Obama and Raul Castro seems so far  fairly one-sided: Cuba appears to have gotten the best part of the deal. But do we really know all the details? I imagine lots of details are still being worked out. But this is not a short term decision, this is in my mind a deal struck thinking long term by both sides. A deal that has been decades in the works, given that Kissinger tried in the 70’s (via Fausta) to end the embargo, and he was part of a Republican administration! Imagine that!

And the US-China rapprochement in the 70’s can be a good comparison. It was started by Kissinger, but relations did not become formal for some eight years. Eight years from now, Raul will be 91 and Fidel 96, if any of them are alive. Clearly, Obama is planning ahead to the demise of the most visible leaders of the Cuban revolution and likely Raul is thinking long term too, no matter how much he claimed that the revolution will not steer away from its course. Obviously, Obama thinks he can convert Cubans to the capitalist mode, while Raul is thinking more of some Cuban-style mixed system, which would benefit the population of Cuba. Just think, US tourism alone could become the main driver of the Cuban economy, while keeping it under the control of the Government. In the end, an open relationship between the USA and Cuba will certainly lead to a more open Cuba. How can I be against that? How can that not help change the Cuban mindset?

But I am sure that Obama’s gambit with US-Cuban relations also has a fairly large electoral component. That is, a component aimed at helping the Democrats retain the White House in the next Presidential election. After all, the Republicans face a shift in demographics that does not help their chances of taking the White House, unless the candidate’s name is Marco Rubio. And Rubio now has to be very careful if he decides to fight the removal of the embargo, because if he fails, he will look like a loser. And he is likely to fail, even if the Republicans control the Senate, simply because it is an issue which no longer has the passion that it may have had in the past. The ineffectiveness of the embargo is the best argument against it. But at the same time, the end of the embargo will remove a very emotional topic from the political table, particularly in ever important Florida.

As to whether Maduro knew or not about what was going on, my feeling is that he clearly was left out in the cold. Just think, not only did Maduro hold on Monday a rally devoted exclusively to the issue of anti-Americanism (When was the last time Chavismo held a rally only against the US?), but Maduro spent the whole week prior to that making sure he made the US the enemy, “thinking whether we should have relations or not”, accusing the local Embassy of conspiring against him and saying that the US was behind the drop in oil prices, only to hurt Venezuela. But the worst part was, that as the details of the US-Cuba agreement were being ironed out, Maduro spent last weekend in Cuba.

And he was clueless and out of the loop.

Nicolas can´t be happy about all this. But maybe he was told it was not his problem anyway.

Nicolas is not Chávez and such a shift in policy (and history!) is likely to confuse him and maybe even make him screw up. It is not an easy change, his idols have decided to talk to the Evil Empire, leaving Venezuela alone in blaming all of its ills on the US.

For now, people are just wondering how the agreement will affect the Cuban cigar industry, Major League Baseball, Tourism, communications and the like. Many US companies are salivating at the possible opportunities. Cubans are also happy, but some are also somewhat bewildered by the agreement. It is not easy to change the party line 180 degrees in a country where all of the media is controlled and the story had a single script up to now.

And who knows what it all means for Venezuela and the Bolivarian revolution. If it creates divisions between Cuba and Venezuela, then it is all for the better. The same is the case if it creates differences among the various Chavista groups vying for power. But for now, there is not enough information. The agreement is historic, but only history will be able to tell us its significance and how it changed (or not) the region.

About ten and even more years ago I met a group of very smart young people who embraced blogging in 2003-2006 and later many of them migrated to Twitter. They seemed very young, bright and energetic to me. Today most of these people have become opinion makers, reporters, professors, broadcasters and most are still very active. Now, rather than seeing them as young, I see them as wise beyond their years, hardened and weathered by the “revolution”. Among them Naky Soto and her husband Luis Carlos Díaz, do a periodic “hangout” in which they do political analysis which should put some experts to shame. Naky also still has a blog, called “El Zaperoco de Naky” (Naky’s Mess?). Yesterday she posted this and I liked her description of Maduro’s Sunday interview, combined with yesterday’s march and the bizarre Maduro oath so much, that I asked if I could translate it and post here. Enjoy!

My father in law complained to me that yesterday I did not do a summary of the economic announcements by Nicolas. I could not do it, because he said nothing. All the sumptuousness of the setting chosen in the Miraflores Palace for the interview conducted by José Vicente Rangel, made the poor performance less comprehensible. Imprecise and erratic as ever, Nicolas made an effort to maintain an idea over the polished floor: he knows and controls everything that happens in the country and just because of that he affirmed that people buy things because they have money (explaining scarcity), that there are errors to correct in Cencoex errors (the same as with CADIVI); and because he had no way of explaining our foreign exchange system exchange system, he opted to assure us that Sicad II will be adjusted.  He added that bureaucracy (as if it was a subject) is the clumsy one in the process, that increasing the price gasoline is not urgent, and to our relief, that we have no debt with China. Of course, with great conviction he said that he will come out victorious in the economic war in 2015. Despite lower oil prices, he repeated that the budget for 2015 has its  resources guaranteed.

Today’s march originally was to celebrate “la bicha” that Constitution approved only by 30% of the voters 15 years ago; in the midst of the  Vargas tragedy. But the announcement by the US Congress on potential sanctions against Venezuelan officials who have violated human rights intervened. The anti-imperialist binder was a gift that he could not fail to open. This crossing of reasons facilitated the “arroz con mango”* of Nicolas’ speech, fiercely shouting for the sovereignty that nobody will threaten as long as he is alive, but happy because of the fifteen years of “la bicha”. The deceased one was frank to call it that, there’s no better motto for a Constitution that is humiliated daily by its editors.

With very tight shots, the official nationwide broadcast tried to conceal the failure of the summons, the vacuum in Avenida Bolívar. Nicolas began with a long story about the history of the deceased, that one we all know. Given the notable boredom of the audience, Nicolas was kindled by mixing it with his enemies: the monster of Ramo Verde (Leopoldo López), the pelucón (long haired) (Lorenzo Mendoza, president of Polar), the one nobody loves (Henrique Capriles), Aznar (who he called a murderer several times), the right, the bureaucracy, etc. This is a very tedious loop.

In response to the Yankee attack, he proposed creating a committee of Human Rights jurists to bring to justice those gringos for their war crimes. He mixed up the Grinch with Gremlins, and supported his ravings with the chants of the cheerleaders event: PSUV’s youth who contributed more slogans than people. He announced without any stupor that he would delegate his presidential responsibilities on Arreaza, Jaua and Hector Rodriguez, to devote himself exclusively to defeat the economic war.

But the closing was the saddest part. Not even Diosdado was able to hide his displeasure, looking at Nicholas as if he was a militant of Primero Justicia. Holding up a replica of the Bolivar’s sword, Nicholas began improvising this disastrous oath:

“I swear by the immortal spirit of the Indians, of Guaicapuro, by the immortal spirit of the indigenous resistance. I swear by the people of African descent, for Andresote, by José Leonardo Chirinos. I swear by Negro Primero. I swear by the  liberators, by José Félix Ribas, Urdaneta , Sucre, Ezequiel Zamora, by the martyrs, by Alberto Lovera, by Jorge Rodríguez, by Robert Serra I swear before the immortal sword of Simon Bolivar, who will not give peace to our souls, nor rest in our struggle to see emerge in Venezuela a homeland of peace. I swear by the example of “comandante eterno” that I will work for the unity of the people, for the military-civic union and that we will achieve with the greatest commitment that this oath is transformed into the great victory of 2015, 2019 . So I swear. “

….
The Constitution states in its Article 29 states: “The State is obliged to investigate and legally punish offenses against human rights committed by its authorities Actions to punish crimes against humanity, serious violations of human rights and war crimes. are barred. The human rights violations and crimes against humanity are investigated and tried by ordinary courts. Such offenses are excluded from the benefits that may result from punishment, including pardons and amnesty. “

There are now 50 dead Uribana. In the 3 years of managing Iris Varela 1463 are dead prisoners. The minister has not faced any investigation.

And they dare claim that they honor the Constitution.

*Arroz con Mango, literally “Rice with mango” means a strange mixture, something that does not go well with each other.

I have been trying to write other posts, but the news are such that I have to set them aside and write more about very current events. One of my biggest complaints about the Maduro Government (and Chávez before him) is that while they carefully plan what they say to the Venezuelan “people”, they don’t apply the same analysis to what they tell (or not!) to foreign investors. Very simple messages, or simply informative messages would go a long way towards improving the outlook of Venezuela’s debt, mor so in the face of the recent drop in oil prices.

When I heard that José Vicente Rangel was going to have Maduro today in his program in Televen, I thought this would be an effort to do just that. Instead, the opposite was done. The interview did exactly the opposite. Clearly, the interview was going to be friendly, on tape (Maduro was not even in Venezuela today, so that this was not live) and a perfect chance to assure invetsors that he was in control. Instead, Maduro sent the wrong message (s). Start with gas prices:

He suggests that most people agree gas should be increased, but he says the time is not right, it would be like adding fuel to the fire and he has to wait until “speculative forces” in the economy subside.  He also states that there is no rush, even with the fall in oil prices, there is no rush to to do it and he has the funds to do things and the price of gas could be increased in 2015 or 2016. He has to wait until inflation is controlled. #FAIL

Maduro also said that he would “modify” the Sicad 2 market, something that would help, but is only a small problem in the scheme of things. He did not say the Bs. 6.3 rate would be modified (he ratified it would remain), nor Sicad 1, only that Sicad 2 would be modified.

Maduro repeated in the interview his phrase from four months ago: “The money form China is not debt, it is financing” (El dinero de China no es endeudamiento, es financiamiento). Oh yeah, how I would love to get financing that is not debt for myself!

He also said that sometimes he feels he should just break relations with the US, as if relations were normal. The two countries do not have Ambassadors, but worse, does Maduro understand what this could imply? Maybe he should look to Nigeria, a country that used to export one million barrels a day to the US in 2010, but now sends not a single barrel to a country with which it has friendly and normal diplomatic relations.

Nor did this sentence, said earlier helped much:

“There is no possibility that Venezuela will declare a default, unless we decided not to keep paying the debt”

Oh, I see. It’s like me saying I promise to  keep writing this blog, unless I decide to stop. I guess the only positive was that he did say that is what Chávez wanted, to keep paying debt. But the first part certainly was not very reassuring.

Just  another day of Maduro sending the wrong messages to markets and investors, let’s hope that oil does not continue hurting bond prices, as it is, they have been slaughtered in the last week and Maduro seems intent on not helping.

Two weeks ago, as I left Caracas on Nov. 22nd. to be precise, I wrote about the cost of a breakfast which I found expensive for Venezuelans, which included cheese arepas. As I returned to Caracas two short weeks later, I went to have a single cheese arepa at the same place. Imagine my surprise when I found that the Bs. 120 cheese arepa of fifteen days ago, now costs Bs. 156.

That is a 30% increase in two weeks. A year ago I would eat two for Bs. 120.

Thus, I will keep reporting on the hyperinflated arepa in the future.

BTW, they are still delicious…

It seems as if President Maduro really believed that OPEC would cut production after he sent Ramirez to visit a few countries, including Russia, who happens not to be a member of OPEC. But as most analysts expected, OPEC did not cut production and scheduled the next meeting for next June, bringing a lot of people back to reality, including Maduro. It was only after Ramirez reportedly left the meeting “red faced”, that it sunk in that maybe Plan A was not going to work. Thus, Maduro switched to Plans B and C. Plan B is to “hope” that oil prices bounce back and plan C was to send Minister of Finance Marco Torres to Beijing to see if he can get some money there. Plan D was to name a commission to cut salaries and luxurious expenses. Yeah, sure!

I have been arguing with a bunch of friends about the probability that Torres will come back with a significant loan, which I peg to be around 0.00001, but they seem to think it is somewhat higher. You see, they actually believe that Venezuela has something to offer the Chinese, like oil or oil fields. But the reality is that Venezuela has little to offer at this time and the Chinese know it, so that Minister Torres is very likely to come back empty handed.

Let’s look at the reasons why I believe this is so:

-What the Chinese are most interested in is oil. Venezuela already sends a few hundred thousand of barrels a day of oil to China, but as we saw earlier, the terms of the Chinese fund had to be changed for the simple reason that Venezuela was not sending the required number of barrels a day to China. Thus, the specific number of barrels to be sent were changed to a number “to be determined by Diplomatic channels” a euphemism for “we will try to work it out so we can collect from the Venezuelans”

Thus, Venezuela can not ship more oil to China, because it needs the cash flow from selling it internationally, let laone pay the Chinese on time. Thus, the possibility of getting a loan for oil is extremely difficult and remote. The Chinese will renew current agreements, but that is it.

-The next option, which is where Venezuelans think there is some value, is that The Government will simply give the Chinese an oil field in exchange for money. This, in fact, has been tried before, except that Chávez, in his minimal wisdom, created new laws that restrict the control of the foreign partners over the joint ventures. Thus, PDVSA has to contribute part of the money to the JV’s, unless the partner lends the money to PDVSA. Except that the Chinese have not been very amenable to this. They want “joint” to mean joint, not I put up all the money and you control. Some companies have accepted this, but not the Chinese, who, in fact did not participate in one of the Carabobo oil fields, precisely because they were told they had to put up all the money.

-The next important problem is the size of the amount of money needed. A US$ 4 billion loam solves very little, when the shortfall, at about US$ 700 million per dollar of oil drop, has now become around US$ 20 billion. Thus, the Chinese would be willing to lend the country US$ 4 billion if it would stabilize the country’s finances, but it would be throwing good money after bad money.

-There is also the problem of who is going to China. Ramirez, with much more experience and, at least an ability to say the right things, could not get a new loan from the Chinese last December or in June, only an extension of currently paid up loans. Marco Torres, a much more limited representative is unlikely to strike the right cord with Chinese authorities. He will get nothing.

-But more importantly, is the history of the Chinese-Venezuela relationship. Most people don’t do their research and ask lots of questions about the Chinese loans, but the papers about them are out there to see, I discovered them and they seem to be rediscovered periodically, the last time by good friend Bodzin. But even I forget about their content, so one should redo the research, as a good friend noted to me today that in one of those documents, the Chinese placed, in 2010, a limit on how much they would lend Venezuela.

Indeed, among all the documents, there is one in particular, that tells the whole story. In it, Asdrubal Chávez, the former President’s cousin, reports on his trip between Februay 2nd and 4d. 2010 to Beijing. The document is remarkable alone, as Chávez’ proposal is that the Chinese lend Venezuela in 2010 all of US$ 40 billion, while asking for the insignificant sum of US$ 116 billion in ten years. How they had planned to pay for this with oil is beyond me, but it is there and very clearly specified.

The Chinese simply did not bite, they very diplomatically said like the Beatles, well, you know, we all want to change the worldd, but we can only lend you US$ 10 billion in dollars and about US$ 10 billion in Yuan (Or Reminbi). Any higher amount, according to the memo would require “very rigorous procedures on the part of the Chinese Council of State”

Which simply says: “I can approve up to this amount on my own, but if you want more, it would take months, lots of discussions, due diligence and involve people, all the way up to the Premier, who may not even know where Venezuela is”

This all happened in 2010, when checks and balances were lighter and before the corruption crusade of Premier Jinping, who wants to personally oversee and check all outflows, loans, etc..making it even more difficult for Venezuela to obtain a loan now that it was in 2010.

All of which leads me to believe that Minister Torres will indeed come back empty handed from China, at which point Maduro will have to implement Plan E: Change the Minister of Finance to someone that knows something about Economics, like he has been told ever since he became President.

Sorry Marco…