The Devil's Excrement

A week ago, the Minister of the Interior and Justice, in the occasion of receiving the Metropolitan Police from the Mayor, called on the police “to be Bolivarian, revolutionary, insurgents and subversive…he called on them to insurge …against the capitalist structure within the institutions and models” as you can see and hear in the video below in another example of the empty ideology and confusing potpourri of ideas in the minds of Chavista leaders, who don’t seem to change their revolutionary BS when they are in positions of Government.

Well, the Minister got his wish, but probably not how he expected when on Sunday a man died trying to plant a bomb at the Headquarters of the Federation of Chambers of Commerce, certainly a temple of the type of capitalist ideology and models that the Minister was calling on the police to rise and be subversive against.

Well, it turns out the man had an ID identifying him as an Inspector of the same Metropolitan Police, Minister Rodriguez Chacin asked to be subversive last week, not a cop, an Inspector, a much higher rank. He was also a former member of the intelligence police. But now we are told that he had was an “honorary” ID, given to a member of an anarchist group from the 23 de Enero area of Caracas, that supports the revolution.

By now, we are being told by a National Assembly Deputy that he knew the guy and he was a member of one of the “social intelligence networks” created by the Government. Meanwhile, the Mayor of the Metropolitan Area of Caracas, who last week transferred the police to the Ministry, said the man worked for a different Deputy of the National Assembly and that he was part of the police until October 2007 and was part of the “Socialist Volunteers”. He was supposedly working for a Deputy elected under the backing of the “Tupamaro” group, a radical and armed group allowed by the Government to roam Caracas with weapons.

Funny how when opposition groups hung paper skeletons around the city in a peaceful protest, they were called “terrorists” and coup plotters, but when a pro-Chavez group, according to the Minister, is caught red handed planting a bomb at the Headquarters of a legal an important institution, which represents all of the private sector, the word “anarchist” is used, but they fail to note that this is simply terrorism against innocent Venezuelans, who just happen to stand for ideas different than the ones of the Government.

Of course, this Minister is the same one that told members of the guerilla group FARC to “hang in there, we support you” when the guerillas turned over some of the hostages to the Venezuelan Government.

An outlaw Government if I ever saw one!

And in the latest of economic innovation, just when the Government has started waving the “Certificate of Internal Insufficiency” as a prerequisite for allowing something to be imported in order to reduce shortages, today the geniuses at the Feeding and Finance Ministry created its “anti-particle” certificate and now if you want to export you will have to provide a “Certificate of Internal Sufficiency” for all food exports.

The certificate will apply to a long list of articles, but what caught my attention is that cocoa is in the list. You see, during the last ten years Venezuelan cocoa has established itself abroad as the top quality cocoa in the world, in spite of the Government’s policies. Now, cocoa producers will have to get this permit before they can export. I certainly hope the rules are not as silly as when you want to import something, whereby every time you import an item you have to get the permit for insufficient production, which makes the whole thing a real hassle.

Of course, think about the profit possibilities for Government officials. For a small fee, I may grant you a permit to export that special coffee or sorry buddy, you can’t export that great bull (Venezuela needs all the bull it can get) and sell it abroad, unless…

You get the picture…

I had heard about Francisco Rodriguez’ article in Foreign Affairs entitled “An Empty Revolution The Unfulfilled Promises of Hugo Chavez “, but had not managed to get a copy until today. It is not only a very clear exposition of the failures of the revolution, but it also blasts the cheerleaders of the revolution for blindly supporting it.

Rodriguez is an Economist with a Ph.D. from Harvard University who abandoned academia to become Head of the Economic Office of the Congress, later National Assembly, where he found lots of resistance to his criticism of the revolution and little revolution going on. He was not only fired, the office was shutdown.

While I am tempted to copy the whole article here, I don’t think it will be fair to either Rodriguez, whom I don’t know, or “Foreign Affairs” where it will be published for me to steal their thunder. I do find it uniquely ironic that in the last two days I have agreed with essentially 100% with two economists, Domingo Maza Zavala in La Vanguardia, and now with Rodriguez. Ironic, because while I stand ideologically in a very different place from both of them, we all agree and what this country needs and where the huge errors are. Below, I simply quote what I think are some of the highlights of Rodriguez’ article in my mind:

On whether Chavez has benefited the poor:

“Neither official statistics nor independent estimates show any evidence that Chavez has reoriented state priorities to benefit the poor. Most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated wor­ryingly, and official estimates indicate that income inequality has increased.”

On the revolution or lack thereof:

“But in fact, there is remarkably little data supporting the claim that the Chavez administration has acted any differently from previous Venezuelan governments’ or, for that matter, from those of other developing and Latin American nations—in redistribut­ing the gains from economic growth to the poor.”

On whether the revolution has or not changed inequality in Venezuela:

“But according to the Venezuelan Central Bank, inequality has actually increased during the Chavez administration, with the Gini coefficient (a measure of economic inequality, with zero indicating perfect equality and one indicating per­fect inequality) increasing from 0.44 to 0.48 between 2000 and 2005”

On how the revolution has improved the lot of the average Venezuelan, including health care:

“But again, official statistics show no signs of a substantial improvement in the well-being of ordinary Venezuelans, and in many cases there have been worrying deteriorations. The percentage of underweight babies, for example, increased from 8.4 percent to 9.1 percent between 1999 and 2006. During the same period, the percentage of households without access to running water rose from 7.2 percent to 9.4 percent, and the percentage of families living in dwellings with earthen floors multi­plied almost threefold, from 2.5 percent to 6.8 percent.”

On the priority given to “social spending” under the revolution:

“given Chavez’ rhetoric and reputation, official figures show no significant change in the priority given to social spending during his administration. The average share of the budget devoted to health, education, and housing under Chavez in his first eight years in office was 25.12 percent, essentially identical to the average share (25.08 percent) in the previous eight years. And it is lower today than it was in 1992, the last year in office of the “neoliberal”� administration of Carlos Andres Perez”

On the illiteracy campaign (Alek and Syndey have proven this over and over before in the blogosphere):

“In contrast to the government’s claim, we found that there were more than one million illiterate Venezuelans by the end of 2005, barely down from the 1.1 million illiterate persons recorded in the first half of 2003, before the start of the Robinson program”

And this one has been my favorite, even if some did not pay attention, the economic crisis began way before the political crisis, but the latter was blamed:

“Chavez deftly used the mistakes of the opposition (calling for a national strike and attempting a coup) to deflect blame for the recession. But in fact, real GDP contracted by 4.4 percent and the currency had lost more than 40 percent of its value in the first quarter of 2002, before the start of the first PDVSA strike on April 9. As early as January of that year, the Central Bank had already lost more than $7 billion in a futile attempt to defend the currency. In other words, the economic crisis had started well before the political crisis, a fact that would be forgotten in the aftermath of the political tumult that followed.”

And finally, here is where I agree with Francisco Rodriguez and not because of our common, if disparate origin in the GSAS:

“It is the tenacity of these realists rather than the audacity of the idealists that holds the greatest promise for alleviating the plight of Latin America’s poor”

Kudos to Rodriguez for blasting the cheerleaders of the Empty (or fake) revolution.

I wanted to write about the CNE claiming that it had completed reporting the results from the December referendum, but Quico covered very well the most salient points. The most important point, is the bunch of BS coming out of the mouth of the President of the CNE Tibisay Lucena. Lucena lied and told the worng numbers with a straight face, lying about the numbers. The truth is that the CNE has not told us what happened on Dec. 2nd. beyond telling us the No won.

But we have yet to find out what the true margin of victory was, let alone its geographical distribution. This may seem like we are being picky, but it’s not. It is extremely important to know these results, because in November there will be regional elections to elect Governors and Mayors. We have not trusted results in the past and the fact that we have yet to eb told exactly how the NO won in December gives us little confidence going forward. And we need it.

We need it because Chavze can not afford a big loss in November, so that he will be pulling all of the stops, numerical, electronic and whatever he may need to make it look like his victory.

And that is why knowing the December results in detail is so important. We still don’t know what happened in 6% of the polls. In a referendum that 6% may seem irrelevant, but in a regional election it may be five times the margin of victory in a particular state.

But for those of us that live here, por ahora, the problem with the electoral results is symptomatic of what we have to put up with day after day. There is simply nobody to appeal to to force the CNE to publish the final results, the same way there is nobody to appeal to when Rafael Ramirez lies about the country’s oil production or Diosdado Cabello says Luis Tascon helped a banker with drug connections. In any reasonably organized country with rule of law, a Governor of the largest state in the country and identified with the Government saying such a thing would become a scandal, mobilize the judicial branch and immediately force Prosecutors to act.

In Venezuela, nothing happens, the same way nothing happens because the Electoral Board does not comply with its mandate or even what the law states.

Because in the end there is no justification for it. Each vote should have been counted in December. Each person that went to vote deserves the respect of having its vote not only counted, but also reported. But the person in charge of the voting process dismisses them without care, disregarding their rights.

A country has to be very sick when this is happening. But i just so happens that those in charge of the system are precisely the ones allowing this to happen.

This is not being picky, it’s the defense of the basic rights of the Venezuelan people and the need to have the essential building blocks of a society work, if Venezuela is to survive as a Republic.

And so it begins. After shortages arising from price controls and the Government’s inefficient intervention into the food distribution chain, the new PDVSA owned PDVAL markets will have what effectively represents the introduction of rationing cards in Venezuela.

One can only ask the obvious: Where or what next?

Asdrubal Chavez, Vice-President of PDVSA and the President’s cousin (of course), announced that in the planned network of large (PDVAL) and smaller markets (PDVALitos) run by the PDVSA subsidiary, they will keep a register of all purchases, limiting purchases to once a day. Moreover, they have done the studies of how much food a family may need and purchases will be limited to those amounts. They will have a “file card” (read rationing card) to register purchases so as to avoid repeats and people exceeding the limits.

There are 26 PDVALs and 20 PDVALitos, but the Government plans to have about 180 and 2,000 of each by the end of the year. The PDVAL network will be separate from the existing Mercal network.

You have to love the creativity of the revolution as they reinvent failed concepts and as they fail, improve on them to emphasize their failed aspects. Ayn Rand would have been so proud of them, as they fit her descriptions so well!

President Hugo Chavez threw a huge temper tantrum today, showing that he is on the edge and frustrated over the failure of his Government, as there are daily protests, road blocks and in the latests turn, looting of Government owned markets, including one in the town of Sabaneta where Hugo Cahvez was born and where one of his brothers is the current Mayor.

Chavez’ tantrum took the form of one of his nationwide obligatory TV addresses which lasted for quite a while, at least one hour, and which he devoted to blasting the media for their coverage of the problems, claiming they were simply an exaggeration and accusing them of carrying out a media war against him and his Government.

What is most interesting is that most of the tantrum appeared to be due to this headline in Ultimas Noticias, a newspaper which is considered to be pro-Chavez and whose Editor, Eleazar Diaz Rangel, has vigorously sided with the Chavez Government on most issues:

Headline: Health care in coma due to the lack of funds
Sub title: Hospitals in Caracas in a functional coma according to Luisana Melo

Chavez said that it was not true that the country’s health system was in a coma and using his classic hyperbole, “if it were not for the revolution, people would be dying of hunger”. Chavez seems to not be informed of the state of the public health system and for the first time in the country’s recent history, there are chronic shortages of the most basic staples from milk, to bread, to coffee, to meat.

The article in pro-Chavez paper Ultimas Noticias on health care actually interviews the Secretary for Public Health of the Metropolitan Mayors office, who says: “The health care system in Caracas finds itself currently in a situation of functional collapse…this is a reality we have to assume…we continue to have unacceptable health indexes…there are no professional (doctors) as the number being educated has gone down…91% of the budget is spent on salaries, we don’t have money even to buy a stethoscope”

Another pro-Chavez paper, El Mundo, was heavily criticized, together with El Unversal, which is considered to be opposition.

The Vice-President of the Venezuelan Medical Federation said after the President’s speech that Chavez knew that the health care system collapse and it is in coma “because President Chavez was not properly advised” when it created a parallel health care system (Barrio Adentro) and the primary care system is indeed collapsed and Chavez should visit hospitals and see how the facilities are not working and the system is indeed in a “coma”.

Chavez also invited singer Alejandro Sanz and Fito Paez to come and do a duet with him, saying it was false that he had not allowed Sanz to sing in Venezuela. Paez said Chavez was a Dictator for this and said even when Pinochet was in power in Chile he was allowed to sing there. Of course, it was not Chavez, but his underlings, that canceled twice Sanz’s concerts or did not rent out the Poliedro to allow him to hold a concert of the size required to make it profitable. Sanz has been very critical of Chavez in his concerts.

Clearly, the Venezuelan President is extremely sensitive to the constant criticism and protests and keeps acting as if he had recently assumed the Presidency, while the population is simply fed up with shortages and inflation and the fact that the revolution has been in power for nine years and has yet to deliver much to the population.

And another one that surprises nobody:

“The company with Venezuelan and Iranian capital Veniran Tractor could be forced to closed down due to financial problems, according to charges by Deputy Juan Linares, a member of the Legislative Council of Bolivar State. The Board of Directors has disappeared for two months and the payroll system changed from bank accounts to handing over cash, explained Linares to newspaper Correo del Caroni. On top of that in January only four tractors were assembled and so far in February only maintenance activities have been performed. The regional Deputy says that the shutdowwn of the factory should be prevented because of its incidence on the economy of the region.”

I mean, Iranian manufacturing technology, sporadic Venezuelan Government financing, non-profit socialist system, ideal cultural affinity between partners, modern Iranian and Chavista management techniques, what could have possibly have failed in this project?

Things are such in the revolution, that I don’t need to write much about the things said or happening in Venezuela, like Chavez’ reaction to Fidel Castro’s resignation:

“this is a lesson to those that accuse men like Fidel of desperately clinging to power”

What was Chavez thinking about when he said that?

a) He wasn’t, he seldom does…
b) 41 more years!
c) I am clinging on…
d) “men like Fidel”=”Dictators, like us”
e) All of the above

You have all heard in the last ten days the cries in defense of sovereignty coming from the leaders of the revolution from top man Hugo Chavez, to Rafael Ramirez, to any bit size National Assembly Deputy trying to get his image on TV to get his or her opinions on the matter:

Treason! -Cried most of them.

Nobody was defending sovereignty in the IVth. Republic! – Cried all of them.

Let’s jail them for allowing foreign Courts to rule on contracts that should only have a Venezuelan jurisdiction – Cried some.

Nobody protects the Fatherland like the revolution! – Dared to say a few.

But as with so many other things in the revolution, they are simply following Maddona’s suggestion and simply striking a pose for the revolution, either cynically saying what they know is not true, or following the words of the “leaders” or simply speaking out of their customary ignorance.

The problem for the revolution is that it tries to blame the past for all of our problems, but the revolution is simply becoming the past. Nine years of incompetence, futility and inefficiency can no longer be hidden so easily. And if there is a fault in the way the Government has handled the ExxonMobil contract, the truth is that they have never, yes, never done anything to defend sovereignty in the way they claim and in the end, as I suggested two days ago, they are the true traitors, the ones that are leading Venezuela and PDVSA into oblivion through their stupidity and ignorance.

You see, a friend took the trouble of going through the Prospectuses of most of the Sovereign bonds issued by Chavez’ Government over the last few years, to understand how the revolution “protected” the country’s sovereignty and was kind enough to send me a compilation of the relevant sections of each of them.

What these documents show is that the revolution is as incapable and inefficient when it lies, as when it tries to solve the country’s problems.

Let’s take, for example, and in no particular order, the Global 25 bond issued by the Republic in April 2005 to the tune of US$ 1.6 billion and a coupon of 7.65%.

Right off the bat, the prospectus says:

“Venezuela is a foreign state. As a result, you may not be able to effect service of process within the United States against Venezuela or enforce against Venezuela judgments in the courts of the United States predicated on the civil liability provisions of the federal or state securities laws of the United States. Venezuela has agreed to submit to the jurisdiction of United States federal and New York state courts located in the Borough of Manhattan, New York, New York, the courts of England located in London and the courts of Venezuela located in Caracas, and has waived some immunities and defenses in actions that might be brought against Venezuela with respect to the bonds. Under Venezuelan law, neither Venezuela nor any of Venezuela’s property have any immunity from the jurisdiction of any court or from set-off or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution or otherwise), except that Venezuela, as well as Venezuela’s properties located in Venezuela, have immunity from set-off, attachment prior to judgment, attachment in aid of execution of judgment and execution of a judgment in actions and proceedings in Venezuela.”

Where I have placed in bold the most important part which indicates that not only can the Courts of the US express judgment against the country, but Venezuela has explicitly agreed to submit to the jurisdictions of not one, but two foreign Courts: those located in the Borough of Manhattan and those of London.

Recall this bond was issued less than two years ago and seven years into the “revolution” and under the Presidency of Hugo Chavez.

Later in the same Prospectus, we come up with the following description of what laws will govern the bonds:

“The Fiscal Agency Agreement and the bonds are governed by, and shall be construed in accordance with, the laws of the State of New York.

The Republic agrees that any suit, action or proceeding against it or its properties, assets or revenue with respect to the bonds (a “Related Proceeding”) shall be brought exclusively in the courts of England that sit in London; in the Supreme Court of the State of New York, County of New York; in the United States District Court for the Southern District of New York; or in the courts of the Republic that sit in Caracas, as the person bringing such Related Proceeding may elect in its sole discretion,…The Republic also agrees that any judgment obtained in any of the Specified Courts arising out of any Related Proceeding may be enforced or executed in any Specified Court … by means of a suit on the judgment or in any other manner provided by law. The Republic hereby irrevocably submits to the exclusive jurisdiction of each of the Specified Courts for the purpose of any Related Proceeding and, solely for the purpose of enforcing or executing any judgment referred to in the preceding sentence (a “Related Judgment”), of each Specified Court and each Other Court….

The Republic agrees that service of all writs, process and summonses in any Related Proceeding or any suit, action or proceeding to enforce or execute any Related Judgment brought against it in England may be made upon the officer in charge of the department of consular affairs at the Embassy of the Republic, presently located at One Cromwell Road, London SW7 2HW, England (the “London Process Agent”) and service of all writs, process and summonses in any Related Proceeding or any suit, action or proceeding to enforce or execute any Related Judgment brought against it in the State of New York may be made upon the Consul General of the Republic or, in his or her absence or incapacity, any official of the Consulate of the Republic, presently located at 7 East 51st Street, New York, New York 10022, U.S.A. (the “New York Process Agent” ….

The Republic irrevocably consents to and waives any objection which it may now or hereafter have to the laying of venue of any Related Proceeding brought in any of the Specified Courts …

.. the Republic irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted by the laws of such jurisdiction (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States) and consents generally for the purposes of the State Immunity Act of 1978 of the United Kingdom to the giving of any relief or the issue of any process in connection with any Related Proceeding or Related Judgment,…”

Here I have removed a lot of the legalese just emphasize the main two points:

1) The Republic (under Chavez and the revolution!) irrevocably submits to two foreign Courts and even establishes the procedures for summons and notifications (including addresses!)

2
) The Republic (under the revolution and Chavez!) irrevocably waives any immunity which as a sovereign State some countries may give it and even specifies that it waives its rights to relief and immunity that it may receive under specific laws of the United States and the United Kingdom.

Amazingly enough, you can find similar paragraphs in the bonds issued by the Bolivarian Republic of Venezuela, under Chavez, under the “revolution” for the bond maturing in 2010, 2011, 2013, 2014, 2015, 2018 and 2034, many of which were only issued as a way of absorbing the excess monetary liquidity injected into the Venezuelan economy by political purposes and in irresponsible fashion by the revolution and its incompetent leaders. I will not bore you with showing you bond after bond since the same terms are applied to all of them.

So much for the revolution’s defense of Sovereign rights, which they are complaining and demanding from those that preceded them.

But it is interesting, given that all of these issues have to do with oil and PDVSA and the fight between ExxonMobil and PDVSA, to look at what the prospectus for the PDVSA bonds issued less than a year ago by the Chavez Government said, given the recent accusations and charges against the leaders of PDVSA and Venezuela before Chavez came to power, in the case of ExxonMobil’s injunctions against PDVSA.

In late March 2007, PDVSA issued a Prospectus and it contains such jewels as:

“The Indenture will provide that the Notes will be governed by, and construed in accordance with, the laws of the State of New York.”

or
Consent to Jurisdiction and Service of Process; Sovereign Immunity

“The Issuer has consented to the non-exclusive jurisdiction of any court of the State of New York or any United States federal court sitting in the Borough of Manhattan, New York City, New York, United States, and any appellate court from any thereof, and has waived any immunity from the jurisdiction of such courts over any suit.”.

or

“the Issuer will waive such immunity and will agree not to assert, by way of motion, as a defense or otherwise, in any suit, action or proceeding the defense of sovereign immunity or any claim that it is not personally subject to the jurisdiction of the above-named courts by reason of sovereign immunity or otherwise, or that it is immune from any legal process…or from attachment either prior to judgment or in aid of execution by reason of sovereign immunity.”

This one is truly remarkable. First or all, it basically repeats the same Courts as those used for the Sovereign bonds and waiving from immunity that any Sovereign protection Venezuela may have (PDVSA is not Venezuela by the way). But what is truly most remarkable and cynical is that the same revolutionary Board of Directors that repurchased PDVSA’s bonds in 2004 at an outrageous premium, which had no financial justification other than to protect the Board members as individuals from US legislation under the Sarbanes-Oaxley Act, is capable of not only issuing bonds under foreign jurisdiction, but going as far as waiving any possible immunity that Venezuela may have as a Sovereign Nation under the laws of the countries where these jurisdictions are.

But then, these same people, these fake and paper revolutionaries, come on TV, accuse the Governments of the past of being traitors and giving up Sovereignty, when they have given up the remnants of Sovereign rights the country may have had, even waiving the Sovereign rights of Venezuela and what is worse, destroying and, using a word they seem to love, irrevocably mismanaging the country’s premier industry into oblivion.

This did not happen last Century, under Caldera and the IVth. Republic, this happened ten months ago, under Chavez and his so called revolution.

It is time for these cynical and incompetent liars to stop destroying what is left of PDVSA and Venezuela.

On Hoarding:

Samuel Ruh, President of the Consumer Protection Agency: “Anyone holding inventory of more than three days, is hoarding”

Ramon Carrizalez, Vice-President of Venezuela: “It is false that if inventories are more than 4 days it will be considered hoarding”

Plans for an oil boycott of the US:

Hugo Chavez #1, President of Venezuela: “I will stop sending oil to the US if Venezuelan assets are frozen”

Hugo Chavez #2, President of Venezuela a week later: “We don’t have plans to stop sending oil to the US”

On the unanimous expulsion of Deputy Tascon from Chavez’ party PSUV:

Jorge Rodriguez, former Vice-President of Venezuela: “Deputy Luis Tascon was expelled from PSUV in a unanimous decision”

Carlos Escarra, Deputy of the National Assembly: “There is still no decision to expel Tascon from the party, what there was, was a proposal to expel him”

Iris Varela, Deputy of the National Assembly: “How can yo expel someone from a party that has yet to be formed?”

On hoarding by the Polar Group of companies:

Hugo Chavez (#1 or #2, you choose): The Polar Group of companies has been surprised hoarding a few times”

Polar Group of companies::”We have been the subject of 70 inspections in the last four months all over the country, and in each case we have demonstrated the normalcy of the operations of the company”

All very clear, no?