The Devil's Excrement

Yesterday, Miranda Governor and former opposition candidate Henrique Capriles gave a press conference in which he articulated very well some important positions about what is happening in Venezuela, among them:

-Nobody voted for Nicolas Maduro to be President. Nobody named Nicolas Maduro Vice-President for this term

-He asked Nicolas: “Do you need abuse of power and the power of the State to go to elections?…What are you afraid of?

-The Supreme Court is not the “people” and they took advantage of Chavez’ funeral yesterday to release their decision that Maduro can be interim President and run for President at the same time, contradicting their 2006 sentence in which they basically said the opposite.

-He noted that the opposition asked to go to Chavez’ funeral and was told in no uncertain terms “You better not”

-He called Maduro a liar, referring to the lies about Chavez’ health, something which should be noted in the campaign, as many Chavistas do feel that they were lied to.

-And in a very significant remark, he stated: “The Cuban Government will not rule in Venezuela”

Unfortunately, in the so called “democratic” Venezuela, this press conference was covered by only one TV station in Venezuela (And dozens abroad), as private stations were told not to cover it.

Now, if Capriles’ intent was to re-energize his candidacy and campaign, this was a great press conference, emotional, clear, in your face and making the important points. I think he only forgot to mention directly the intervention of Venezuela’s military in the campaign.

But if this was just a preamble to his withdrawal from the upcoming campaign, it was a terrible appearance.

I say this for a very simple reason: It was clear that this was going to happen. Chavismo has spent the last two months trying to find a way for Maduro to become the President as a way of having him be candidate and President at the same time. Even bringing Chávez back from Cuba was done only to try to find a way to have him be sworn in, so that Maduro could be ratified as Vice-President. And if this failed, it was clear that the Supreme Court would use its silly putty justice to make it so.

Nothing is a surprise. And there is no question that Maduro is the likely winner, but this is no excuse for the opposition to hand over the country to Chavismo. And Capriles would be doing that, because the person that could mount the best campaign against Nicolas Maduro at this time is Henrique Capriles. In some sense, he has been running for President all these months ever since Chávez went to Cuba. If he thought there were scenarios under which he would think of quitting, he should have done so and let someone else get the spotlight.

And yes, Maduro as Candidate and President is a formidable contender only because of Chávez’ legacy. It is unlikely that Capriles can beat him and I hope he does not, because Chavismo should deal with the economic mess they created.

However, let me start by noting that Nicolas Maduro, sympathy and endorsement included, ain’t Hugo Chávez. Far form it. Maduro has proven to be more light weight than I thought. He does not articulate well, he mispronounces, he loses track of ideas, he rambles on, he has no sense of humor, no charisma and he does not have the fervor of the people that Chávez had.

And yes, I think Maduro will win at this time. But you have to remember that Chávez’ passing means that politics is back in Venezuela. For the first time in fourteen years, one man will not dominate political discussion like Chávez did. This is a new political game and Maduro has to prove that he is good at it.

The first thing he needs, is to achieve a strong victory that will give him a mandate over other Chavistas, by saying I am almost as popular as Hugo

And that I don’t think he will get.

Chavismo wants to use all the stops, all the abuses, all of the Government’s power for the simple reason that they know Maduro is not adored (for that matter he is not even known) as much as Chávez was. Chavismo also understands that it is next to impossible to achieve the levels of low abstention seen on October 7th. Even with the effect of Chávez recent passing, it will be difficult to spend as much as last year and be as effective as last year. Shift abstention by a few percent and Maduro can score a narrow victory that would make his Presidency weak to start with.

Of course, Capriles has to re-energize his supporters. And that is why I say if that was the objective, that as a very good start.

Chavismo has a tough road ahead. They lost a charismatic leader who avoided at all costs allowing anyone to compete with him. They have an economy that is so distorted that it requires tough policies to improve things. And they have politicians not used to playing the game of politics among themselves.

Let’s not help them overcome this, but not being there to occupy the space that almost half of Venezuela rightfully occupies today.

An thus the post-Chávez era begins. It is ironic than the man on your left, is a middle (upper?) class caraqueño, who joined the Liga Socialista and from there jumped to union leader of Caracas’s subway. On the right, is a lower middle class military technocrat, who was with Chavez in his conspiracies, but only ranked a minor technocratic job when Chavez´first term began. Maduro was ideologically trained, Diosdado was his own man. In time, both rose fast in the Chavista meritocracy, Diosdado became Minister and then VP, later Governor, Maduro went from President of the Assembly, to Foreign Minister and from that position, given his loyalty and less independent thinking, he ended up on top, Chavez’ designated heir apparent.

It could have been Rafael Ramirez ( also middle class), Vielma Mora, Arias Cardenas, but somehow, this middle class failed student topped all of them by being loyal and ideologically correct, even if he never wore a military uniform.

Others were simply left behind, like Chávez compadre Raul Baduel. He saved Chavez’ butt in 2002, but later he was too outspoken, removed as Minister of Defense and later jailed on corruption charges for his anti-referendum stance in 2007.

Which leaves us with Maduro.

And it is clear that over the last few months, Diosdado has been loyal. He has never said he should be acting President, even if the Constitution says he should. After fourteen years of not visiting Cuba, he went there three or four times in the last three months. And he has been quiet in the last few days. In fact, he was the one to announce that Maduro’s swearing in ceremony will be tomorrow at the Military Academy in an apparent sign of unity.

Maduro on the other hand, had said little since announcing Chávez’ death, up to today, when he announced that Chávez body will be held for seven days so everyone could see it and pay its respects. He went even further announcing that Chavez’ body would be embalmed and held at the Revolutionary Museum, ironically the site of Chávez biggest defeat in February 1992,

It is all part of the campaign. Maduro even suggested ” I am Chávez”, a clear sign of the level of insecurity of the inheritors of the revolution.

Unfortunately, Maduro does not have Chavez’ presence, while he faces tough decisions going forward in particular on the economy. He probably knows he does not have the good will, but think he can inherit it. Unfortunately, other Chavistas think they have more going for them than Maduro and that bodes badly for the stability of the country long term.

But for now, the show must go on (Chávez dixit) and Maduro will be Chavismo’s leader for a while. Unfortunately for Nicolas, the effort to win the election in October, together with the distortions in the economy, make the medium term economic future very difficult. Maduro likely understands this, He will likely be confrontational politically, but likely more pragmatic on the economy. It is no coincidence the US is sending former Representative William Delahunt who under the “Group of Boston” monicker, led meetings in Cape Cod between US and Venezuelan lawmakers when Maduro was President of the Assembly.

Unfortunately,  what Maduro needs is even more profound in terms of the economy and we don’t think Maduro will take that step of trying to minimize controls and adjust the economy all at once. Which will likely come back to bite him in time.

At that time, it is unclear who may conspire or come out on top, but any scenario is just as likely as possible. I do not dare predict.

Indeed, the post Chavez era has begun.

Caracas and the country were peaceful and tranquil, with few reports of violence, as expected. The whole country was absorbing the news as the opposition was respectful of the sad moment for Chávez’ supporters and admirers. Even those that opposed Chávez were cognizant of the fact that the moment was historical and that things going forward could be complex for the country. It was more a moment for reflection than for expression. There were some celebrations reported abroad, but they seemed to be more in tune with the naive belief that there will be some abrupt change in Venezuela now.

While there was no formal announcement or swearing in ceremony, Maduro signed the decree declaring seven days of mourning as acting President, confirming Foreign Minister’s Jaua statement that he would fill in for Chávez while a new election is held. This clearly sidesteps the Constitution, but it does not appear as Cabello will make an issue of it and the opposition should also ignore the point, even if it is in clear violation of the Venezuelan Constitution. After all, it appears as if this is what Chavismo was trying to avoid, that Maduro’s interim Presidency could be questioned. Only a single voice from Chavismo, that of former President of the National Assembly Soto Rojas, ever the rebel, has been heard suggesting Cabello should take office. Chávez would have been proud of him.

The opposition will likely be more interested in when the new Presidential election will be held. The Constitution specifies that the election should take place within thirty days of Chavez’ absolute absence, which is quite problematic given that the last week of those thirty days falls within Easter week which is a long holiday in Venezuela. This suggests that April 7th. or 14th. are more likely dates, which should be fine with the opposition, as long as it is technically feasible. There are no signs up to now that Chavismo wants to extend this date further into the future. Any delay would favor what little chance the opposition has, but I don’t believe the opposition should be complacent about holding the election too far into the future. A little leeway should be accepted, but the law and the Constitution should be followed

The discordant note was provided today, once again, by the Minister of Defense, who openly invited all Venezuelans to vote for Maduro in order to “give a blow to those fascists where it hurts”. Absolutely unnecessary, although the burial itself was clearly being staged as part of the campaign.

Going forward, as I said before, I do not believe that Capriles has much of a chance against Maduro in the face of the sympathy and the grief about Chavez’ death. Maduro is likely to be as radical as Chávez politically, but much more pragmatic on the economy. He should realize that he does not have nor will he ever have, Chávez goodwill. His survival depends on his management of the economy. And his enemies are more likely to be within PSUV, than in the opposition, as the weight of allowing for indefinite reelection of the President and internal differences, will likely create huge strains within PSUV and Chavismo in the future.

It is my interpretation that the first Maduro speech was the result of not having reached a decision as to how to proceed forward once Chavez’ death ocurred. You don’t have a gathering of the Cabinet, twenty Governors, the military high command and the high ranking members of Chavez’ PSUV party, to discuss spelling some US Air Force attache to Venezuela or talk about discipline in this tough moment. We may never know the truth, but I suspect that the meeting at 11 AM was to discuss how to proceed and there was not a unanimous agreement.

While one can be concerned about Diosdado Cabello’s absence, it is also true that his mother died on Sunday and was buried yesterday. However, under the Constitution it should be him that assumes the Presidency until the election is held within the next thirty days, which I think will likely be stretched until April 7th. or 14th.  because clearly, there could be logistic problems and within thirty days involves holding elections on Easter Sunday, when most of Venezuela is likely returning from vacation.

But the two key decisions are precisely that, that Diosdado Cabello assumes the Presidency until the elections and the announcement that, at least, there will be quick elections. In this manner the Constitutional order will be preserved, which still matters.

Any other path, will signify a bad start for the post-Chavez era, which will likely irreversibly mark the future of Venezuela.

While it was offensive for the military high command to use the word comrade and socialism and political slogans, I found two positives in their words: First, they said the Constitution will be enforced by them and then they sent a message of support for Nicolas Maduro and Diosdado Cabello. Given Maduro’s leading role in all this, the second part had to contain a message to all. I do hope that I am not reading too much into this, but  that is my interpretation.

Because in the end, I think all of the secrecy and moves of the last two months have been motivated by the desire to have Chavez be sworn in so that Maduro could be President and candidate at the same time. Things did not work out Maduro’s way, let us then hope the Constitution is followed and the post-Chavez era begins on the right foot for Venezuela.

It has just been announced that Venezuelan President Hugo Chávez, seen above in his last public speech, has died today at 4:25 PM from complications arising from his surgery in Cuba on Dec. 12th. The announcement was made by Vice-President Nicolas Maduro on nationwide TV.

Vice-President-in-impostor Nicolas Maduro has just announced that Chavez’ cancer was likely induced by the enemies of Venezuela in rambling speech.

US attache kicked out for conspiring.

Bad attempt to imitate Chavez.

Calls Chavez the new Libertador

Rambles on ethics, Fatherland, oligarchy, the people…

Repeats that Chavez is receiving “complementary chemio treatment”

Did Maduro announce repression is coming when he said “Nobody has immunity?

Recently, there was a lot of noise made about the new Venezuelan (Chavista?) digital TV standard, presented by President-in-impostor Maduro, together with Chávez’ son in law and Minister of Technology and Science Jorge Arreaza, who has lately been capturing a lot of the headlines, as spokesman for the soon to be Chávez Royal family.

According to Arreaza, the digital TV project is Chávez pet project, and it does not surprise me: The project does nothing to develop our own technology, it overpays for technology so that it can be purchased from his buddies and it has a fascist streak inside it.

Sounds like Hugo all right.

The focus so far on the digital TV  project has been either on the fact that Globovision was excluded, as covered by CC, or Daniel´s recent post on the related SIBCI system created by the Chavernment. But while in Caracas a couple of weeks ago (side note: I was actually on my way to meet the great Juan Nagel, of CC fame), I was listening to the radio and this guy (I don’t know who it was) was blasting the whole project from the technological to the corruption angle. You see, censorship under Chavismo has some very peculiar features: You can say what you want, as long as you don’t become a target. If you become a target, watch out! Anything can happen, from concession suspension, to jail, to having your boss be pressured to remove you.

But if you are an analyst at 8 PM on an elitist radio station, you are as much of a target as, say, an English language blogger. Bloggers seem to annoy or irk the friends of the Chavernment, not the Chavernment itself.

In any case, after listening to the story on the radio, I decided to look into it. And the whole thing is as bizarre as most of the last fourteen years. And by the way, I still find it very hard to understand how people who claim to be so nationalistic and to defend sovereignty, can not only ignore our own technical capabilities, but sell their ideals in exchange for money or simple admiration (or infatuation) for others.

The story actually starts when Venezuela decided to develop digital television before any other Latin American country had announced to do so. The origin is obscure, but it seems to originate in Socorro Hernandez, then President of CANTV, today a CNE Director, who chose a Chinese standard DTMB (and technology) for the project. Rumor has it that actually the Chinese chose her, as the Chinese standard, barely existed there at the time and even today, only exists there. And you have to give credit to none other than Jesse Chacón, credit where it is due, that realizing Socorro’s folly, stopped it and went for the Japanese/Brazilian standard.

The Japanese jumped at the chance, even suggesting they could finance a pilot project of turning VTV’s (the Government’s TV station) signal into digital. But after a couple of hundred million dollars (Chavistas know how to add and use foreign currency!) not much happened, the Japanese and Brazilians gave up in disgust and that is when the sneaky Argentineans stepped into the project.

And we are not talking about just any Argentinean, we are talking about the De Vido brothers, in charge of Planning and Science. Julio, the one in Planning is the big shot, he is none other than the one that was in the famous flight where Antonini got caught with the US$ 800,000 briefcase, known as Maletagate.

Meanwhile at Cendit,the National Center for Research and Development in Telecommunications, whose logo is “Building Sovereignty in Telecommunications”, some well meaning guys actually developed all of the technology for building the decoders in Venezuela. Despite this, the “labia” of the Argentineans had more power and Venezuela contracted for thirteen transmission systems and 300,000 decoders with them, reportedly the decoders were overpriced by a factor of three. (Which could be justified to have them developed in Venezuela, but not in Argentina)

But you see, the big selling point of the Argentineans was the fascist angle. In contrast with digital TV projects elsewhere, where access to the spectrum and the signals is just a standard provided by the State, in Argentina the idea is for the Government to offer “free” digital TV controlled by the State to compete with subscription based satellite and cable systems, which dominate in that country.

The problem is that in Venezuela, the digital TV signal will not eliminate the analog one until seven years from now. By then, the face of television, whether by Internet, or cable, satellite or whatever, will have changed forever, making the whole project and the noise, much ado about nothing. Except that the Japanese, the Brazilians, the Argentineans and the Chinese have sold us new trinkets on our way to digital “sovereignty”.

Not much has changed since Columbus. We are still dazzled shiny trinkets

Which would be funny, if the intent was not so fascist in the end.

Today Chavismo held a rally to remember the “Caracazo” as a “Patriotic Rebellion”. Even Chavez’ daughter Rosa Virginia took part of the strange festivity. They were the usual cries against the right and the oligarchy by the Government that after 14 years has not compensated the victims from that and the following days. The curious thing is that most of those that led the repression that day, are an intrinsic part of the Government today, while the only organization that has persistently defended the rights of those that died that day, Cofavic, is not even recognized and even despised by the Chávez Government.It is another perverse and macabre twist of history by Chavismo, their plot to upstage democracy and take over power absorbs history at its convenience, manipulating, making it its own and part of some fake feat that never took place. It is all as empty and vacuus as fourteen years of this weird revolution, whether you call it Chavismo, XXIst. Century Socialism or Bolivarianism. It’s a manipulative shell of cribbed ideas, none solid.None original. All empty.

The Government wants to turn that day into some sort of pre-revolutionary epic, but the truth and the reality say otherwise. Perhaps nobody like José Ignacio Cabrujas to tell us about it:

The Government claims that the “adjustment”, the euphemism it uses for the devaluation was due to the “speculative “attack by the oligarchy” on the Venezuelan currency. (Maduro dixit) This is actually a good line to sell to the “people”, who are unlikely to understand that in the presence of exchange controls like those present in Venezuela, it is a bit difficult to mount any sort of attack on a currency that is fixed in price and illegal to trade otherwise.

Many people ask me whether the value of the unmentionable dollar is right, will go up, will go down, etc. Given that it is illegal to mention what its value is, the discussion is not easy, as I do not want to temp the powers that be. But I can talk about monetary matters, without mentioning “that dollar” to try to give you an indication whether things are out of line or not.

The Venezuelan Central Bank long ago stopped managing the amount of money in circulation, the so called M2. In the end, if you increase M2 without control, there is inflation and you distort the economy if monetary liquidity increases faster than the availability of goods (How fast the money moves around or changes hands is also important). And in the end, that is why the Government has had to devalue repeatedly, because it has increased monetary liquidity at an average pace of 44% per year.

One way to measure this effect, is to compare M2, the total number of Bolivars in circulation, to international reserves. This is the so called implicit exchange rate, which tells you at what value you would have to convert all Bolivars into dollars, if you decided to dollarize the economy.

When Chavez got to power M2 was Bs. 10 billion and there were more than US$ 10 billion in international reserves. Today, M2 stands at Bs. 700 billion. That is, there is seventy times more Bolivars in circulation than there were in February 1999. But Venezuela does not produce 70 times more stuff, nor does it have 70 times more international reserves. That is why there has been so much inflation. Nor have international reserves increases much. In fact, they have barely doubled, despite the biggest oil windfall in the country’s history.

Let’s first look at M2, the raw number of Bolivars in circulation and how they have increased since 2005:

That is money printing at its best, an almost of factor of 15 increase in seven years . To be precise, monetary liquidity has increased by 1400%(By comparison, since the 2008 financial crisis M2in the US has gone up by 23%, which is a lot too). During the same period, Venezuelan international reserves have barely changed, the economy has grown by 32% and the price of the Venezuelan oil basket has increased by 236% (I also placed an arrow on when the Government stopped the swap market in 2010, M2 has increased by a factor of 3.4 since then)

Obviously, something has to give. You create so many Bolivars, you don’t produce more goods, you import more and you are in distortionville: High inflation, devaluation and shortages. Note the comparison between the increase of the price of oil (236%) and that of the economy (32%). This guys have done little in terms of sowing the oil.

Now let’s look at M2/Reserves in the same period. You have more Bolivars, reserves should increase at least in some proportion.

Except they did not. The implicit rate has gone from being less than Bs. 2 per US$ in reserves to being Bs. 25 per US$ in reserves. Note the arrow when the Government stopped the swap market in 2010. At the time M2/reserves was near Bs. 8, around the last value traded in the swap market.

Finally, another way to look at this, is to look at the implicit rate divided by the official rate of exchange as a way of comparison:

The dashed vertical lines are the four devaluations since January 2005. The arrow, is when the swap market was shut down. As you can see, in the 2010 and 2011 devaluations, the ratio of the Implicit/Official was pushing 4 when it was adjusted down. This time, when the Government devalued to Bs. 6.3 per US$, the ratio went down only to this value, an indication that the official rate is still overvalued compared to this indicator of the implicit rate. Thus, at Bs. 6.3 it is still cheap to buy anything imported at that rate.

With respect to the question that people always ask, the second graph should give you  a guide. Think about what the rate was when it was legal and what the implicit value was then and think about where it is today. With SITME eliminated, more buyers will have to go to the unmentionable market, so there will be even more pressure now.

What this all shows is that speculation has nothing to do with the devaluations and the shortages. It is simple an idiotic and ignorant policy by Giordani et al., which does not appear will be changed in the short or medium term.

But he is still smiling…

The truth is that it is really hard to figure out what is going on. If there was one thing Chavismo was very good at, was at using the same script, everyone saying the same thing, even if it was an outright lie. But somehow the message with Chavez’ health has been anything but uniform in the last few days.

After Chávez return, which reportedly was engineered and orchestrated by none other than Diosdado Cabello, the message was that Chávez was well enough to travel and there were celebrations indicating that he was getting better not only from his respiratory problems, but also from the underlying ailment. The “people” celebrated” and the message remained uniform until mid week, when Minister of Information Villegas said in no uncertain terms that Chavez’ respiratory problem was getting worse, not better.

And reading today’s newspapers, you can take your pick at a story with a different opinion. First is Minister of Foreign Relations Jaua, who from Equatorial Guinea, where he went in the Presidential plane, tells us that Chavez’ respiratory deficiency has increased, but the cancer is getting better.

Meanwhile, Minister for Feeding Osorio says that Chávez is recovering in order to take back control of the country. And in the most positive note of all, purported Vice President Maduro, says that Chávez spent five hours meeting with his very selective team of coworkers, during which he communicated by writing.

But a five hour meeting sounds strenuous for someone that we were told required mechanically assisted breathing a week ago for a respiratory insufficiency which has only gotten worse, not better. Someone we have not seen in over seventy days. Someone that was reportedly brought back almost six days ago, but has been unable to take the oath of office that would give legality to a large number of things going on in the country. Chavez’ swearing would have appeared to be Maduro’s first priority (But Diosdado’s last?) to give legality to the tenuous one he has as Vice-President. To allow him to be temporary President if the respiratory insufficiency got even worse in the future.

And Chávez was well enough to hold a five hour meeting with his collaborators, but was unable to see his buddy Evo Moarles even for five minutes on Tuesday, Evo’s second trip to try to see Chávez in the last month and a half. He definitely needs something from Hugo, it must be money that Maduro apparently does not want to release.

And today to top it all off, Dilma Roussfe gets into the game saying Chávez illness is not worrisome and everything is “under control”.

You could have fooled me. Maybe she should try to visit him too.

As for myself, I have no clue what is going on. On Monday, I thought that Chávez would be sworn in speedily to straighten out the possible legal mess of the last 43 days. I had no doubt this would happen before the end of the week. And it is already Saturday and nothing has happened.

Curious, puzzling and surprising, but most of all, the message is as confusing as it has been in the last 74 days, since Chávez first went to Cuba to be operated on.

And a mixed message is the worst thing for the Chavismo faithful, who cling to the hope and the word of their leaders that Chávez will get better yet.