It was not a great week in Venezuela. While it is true that if you were a bondholder of Venezuela 2016 you were very happy to get paid on Friday, the average Venezuelan felt pretty lousy all week.
Monday was a day of darkness and protests. Darkness because during the day, the East of Caracas had a very serious black out which had lingering effects for days and that same evening, the West of Caracas suffered the same fate, including the Miraflores Presidential Palace. Someone sent me a picture (mostly black) claiming that was the darkened palace, which left me wondering whatever happened to the emergency power plant and if Maduro was actually there during the blackout. But I have not seen it anywhere else, except the news that the area was dark.
That evening, people took to the streets in Catia (West), Petare (East) and there was pot banging in Chacao (Middle). In the West and the East riots were over food lines and insecurity, but the Government made sure the “Pueblo” could not express itself by sending out the National Guard in Robocop suits to repress the protests.
The next day, the full Cabinet and the Vice-President went to the National Assembly to present the President’s Annual Report, called “Memoria y Cuenta” (Memory and Accounts) which is the subject of numerous jokes about No memory and tales (Cuentos)).
And that was indeed the way it was.
Vice-President Aristobulo Isturiz showed up in his best suit (Whatever happened to his red shirts?) to tell a tale of progress, democracy and prosperity in Venezuela. There were the usual mentions of “Economic War” causing the few problems the country has like inflation, but the Vice-President even stated that the country was “solvent” in 2015 despite the 20% of GDP deficit.
And he said nothing about food lines, health care and crime…
As Aristobulo told his tales, electricity workers were still trying to turn on the lights in the East of Caracas and as the session drew into a close, night was falling and Caracas was shutting down for the day. With Shopping Centers forced to close early (and open late), the people have no excuse to be out in the streets early. The only excuses they used to have, a little shopping, some last minute supermarket visit, are no longer valid. The recessionary effect of this measure will make the economy tank even more if rains do not begin early this spring.
Meanwhile, President Maduro continued turning on his Fourteen Engines of Production, holding daily Court on nationwide TV to turn on the “Fishing Engine”, the “Medicine Engine” or whatever. But wishing it will not make it so, as all of those invited to be part of each engine always complained about the lack of raw materials, dollars and parts to get the engine going.
But Maduro’s promise is that in 100 days the engines will be producing, forgetting that all “100-day” promises during seventeen years of Chavismo have failed miserably.
Meanwhile at the National Assembly, Chavista supporters got unruly, Ramos Allup got mad and tried to move them out, which they refused, which caused the session to be suspended. Such is the state of democracy in Venezuela. As if this was not enough, Maduro congratulated them for their victory, which stopped the discussion on a Bill called “Law for National Production” a strange legal instrument which some opposition Deputies think will somehow promote national production of goods and widgets.
Never have so many been so lost and confused…
The Bill is truly obnoxious, admitting, recognizing and accepting that there are exchange controls, price controls and even stating that there will be no privatizations in some areas of the economy.
Such is the mind set of opposition leaders after seventeen years of populism.
Then on Thursday the Government published a Memorandum of Understanding in which it settled with a tiny Canadian company called Gold Reserves which had been awarded US$ 740 million over the nationalization of the Las Cristinas gold concession. According to this fantastic (imaginative?) piece of paper, the tiny company (US$ 15 million in assets, US$ 45 million in debt and US$ 11 million in losses in the first nine months of 2015) will invest US$ 5 billion in Venezuela and lend US$ 2 billion to the country. Implied in the MOU is that this new gold company is payment in lieu of an actual cash payment to the company. At least there was no 100 day promise involved.
On Thursday, a protest on the healthcare crisis tried to reach the Ombudsman’s office, but in the distorted and bizarro world of Chavismo Democracy, this is not allowed. Thus, the Constitution allows protests, but the National Police and the National Guard don’t allow it. The Constitution has an instance for people to address their complaints, but this instance is not available if you try.
Then on Friday, the anti-climatic payment of the 2016 Venezuela bond took place. Good for the bondholders, bad for people needing everything, as the debate starts anew on what will happen in October when PDVSA will have to make payments of over US$ 3.05 billion. So far, the Government has understood the political and financial implications of default, the question is at which point the political consequences of continuing to pay become more significant as unrest balloons out of control.