The Devil's Excrement

Timidus se vocat
cautum, parcum sordidus (The coward calls himself cautious, the miser thrifty)
(Roman saying)

I have been dismayed by the reaction by the banking system
to President Chavez’ threat that he would nationalize the whole private
financial system if they did not obey a decree that he has not even published.
Dismayed, because it shows a basic fear to respond to Chavez’ threat, as if
like an ostrich with its head in a hole, replying t the autocrat in a nice way
would somehow protect them for the whims of the dictator. They are stupid or
foolish enough to believe that by not saying much, they will not suffer the
fate that clearly awaits the whole private financial sector in the medium term.
Even worse, with one very honorable exception, they not only remain silent in
the face of the threat, but also respond that they do not feel threatened and
they will collaborate in the growth and development of Venezuela, as
if there was not a very explicit threat to do away with them altogether.

Thus, they appear to have given up without a fight, they do
not defend their property, but even worse, they fear defending their
principles, which may be the reason why we are where we are today. The threat
to nationalize the banking system by a State which is incapable of running the
banks it currently owns, under incredibly favorable conditions for the banking
system, represents another crazy idea by the autocrat, who still believes that
his Government can actually run anything efficiently, when the opposite is
precisely the truth. Banco Industrial de Venezuela, Banco del Tesoro,
Banfoandes, Banco de la Mujer and Banco del Pueblo show why the Government
should stay out of banking altogether. These institutions credit portfolios are
amazingly enough smaller, percentage wise, than those of the private banking
system, but their bad loans clearly top those of the private system, their
profits lag and corruption rules and service is absolutely the pits. But in this
upside down world of the Chavez revolution, all of this represents an
opportunity to make things worse or destroy, which, is what the revolution
seems to love.

Venezuela
already lived partially through this during the financial crisis of the
mid-90’s. The Government took over some of the best banking franchises in the
country, many of which were shut down, and others simply deteriorated in time
but were fortunately sold to private investors. This was actually good for the
surviving banks, many of which grew fast during those years at the expense of
the Government banks. It was only when some of the Government banks were
privatized that more competition came into the system.

But competition has never applied to the state banking
sector. Despite having the advantage of being able to direct Government
deposits to their coffers, they have always been mired in corruption, cronyism
and incompetence. Seldom have Governments appointed anyone with real banking
experience to run these banks and in some cases, like Banco Industrial de
Venezuela, the Government has had to capitalize the bank at least twice that I
can recall, probably more and the financial indices are so shameful that
sometime months can go by without any financial statements from them being
published.

Thus, there is no rational reason to propose the
nationalization of the banking system, other than the goal of controlling and
obtaining even more power. In fact, the banking system has been nationalized
already in the sense that financial institutions are overtly dependant on the
State, with over five times their equity invested in Government paper that
could one day become worthless.

But when the “Banking Association” is incapable of fighting
for itself or their property, after four years of obscene profits. When they
are silent in the face of threats against their own living and beliefs, maybe
they deserve what is coming to them. If they do not believe in their own
institutions and activities sufficiently to defend them, fight for them and
tell the country the consequences of the Government taking the whole system
under its wings, then good riddance, maybe they don’t even deserve the
privilege of running or owning their institutions.

Perhaps that is the reason why we have reached the level of
absurdity and Government control we have reached in Venezuela, there are too many
cowards among us. Yes, I understand why there is fear, self-censorship and
silence in the face of a powerful autocrat and Government that not only
controls everything but also can squash you at will. But in the end, if there
were nobody left to stand, to speak out in defense of our rights, we will end
up not having rights at all anyway. 

Nothing says this autocratic Government in the end will not
squash us anyway, but at least we should be able to say we put up a fight with
dignity and honor, which is exactly what we are not seeing today. 

What a shame!

I know the revolution likes to take short cuts and use Photohop a lot, as we saw with the fake crowds and the logo of the Caracas municipality, but it is getting a little ridiculous as the logos of Chavez´new political party Partido Unico Socialista de Venezuela (below on your left) is a photoshop version of that of the Cuban Communist Party (below on your right). I know some of you are going to see some sort of ominous sign in this, I think is laziness.

President
Chávez is razing to the ground anything that seems to him to have the slightest
whiff of capitalism, free market or private enterprise. This Thursday, the
President’s nationalization maelstrom threatened Siderúrgica del Orinoco
(SIDOR) and the private banks if they fail to act in accordance with the
socialism (read communism) that, to satisfy a whim of the President, prevails
in Venezuela.

It could be that some still think that, in the 21st century, it will not be
possible for the government to make good these threats, particularly in the
case of the banks. But it is worth remembering that, unfortunately, the vast
majority of Chávez’ threats of yesterday are today faits accomplis.

A few years ago, for example, he said he was going after rural land. Today,
more than 1,500,000 hectares that formerly belonged to private farms and
ranches and were under full production have been confiscated or expropriated.
Now this land is in the hands of the government, most of it abandoned and not
producing anything. Back then, many continued to believe that nothing was
happening.

Then he went after private companies, such as Constructora Venezolana de
Válvulas and Venepal, both of which generated employment and investment. Today,
the co-managed Inveval and Invepal are being eaten away by politicization and
inexperience. At that time, most Venezuelans couldn’t have cared less about
these confiscations.

After that he went after PDVSA’s service contractors, who were forced to become
mixed enterprises with the State as the majority shareholder. And as though
that were not enough, the government mounted an attack on the crude upgraders
in the Orinoco Oil Belt, so scaring off foreign investment and condemning PDVSA
to becoming even more mired in inefficiency and corruption. Many Venezuelans
believe that this will not affect them.

The telephone company CANTV and the electricity company La Electricidad de
Caracas also fell into the clutches of the government. Once again, very few
were concerned over this turn of events and many, believing in the government’s
promise, expect to pay less for these services.

Chávez is also threatening to pass private clinics and schools and the food
marketing chain over to public ownership, and the sword of expropriation is
even hanging over a large number of housing units and plots of land in urban
areas, not to mention the media, which are faced with the choice of either
toeing the government’s line in matters of communication or run the risk of
having their concession confiscated, as is happening to RCTV.

The cherry on the cake of this disaster that is Venezuela today is the threat to
pass the private banks over to state ownership. When this happens, the fate of
the entire banking system will be the same as that of the state-owned banks,
such as Banco Industrial, Banco del Pueblo, Banco de la Mujer or Bandes, in
other words, inefficiency, unaccountability and lack of transparency.

The consequence of a barbarity of this magnitude is that the government will
take control of the savings of all Venezuelans to finance “social” projects of
any kind, on the one hand, and on the other, the banks will fast run out of
capital and the source of financing for productive investment will collapse.
But, what does that matter? After all, as far as the President is concerned,
obtaining a profit, which in turn makes the economic growth of the country
possible, is simply one of the sins of capitalism.

Today it was the turn for the banks and steel company Sidor
to be threatened and you know when Chávez threatens, he will do what he wants,
whether you comply or not. Remember the threats against CANTV? Chávez would
threaten that if the company did not pay the pension liabilities, he would
nationalize it. The company was never behind in the payments, paid every penny
the Court ordered, but… Chavez wanted to do it anyway. Now he is screwing the
company’s workers buying their shares from them at a half of what they paid and
the workers claim the Government is not paying them all that was owed now.

Steel company Sidor used to be protected because Argentinean
President Kirchner asked Chávez to protect his buddies from Techint, but
apparently the recent corruption scandal involving that company has changed the
rules of the game, as the Government of Argentina is now against current
management. Thus, Chavez’ threat seems now very real and he claimed he had
asked for a report and within 24 hours will know what the situation at Sidor
really is, as he is accusing the Argentinean owners of exporting all
production.

Clearly we now have steel, cement and banks in line as
Chavez thinks he is Daddy Warbucks and has funds to buyout the whole country. Private
property rights are slowly withering in the autocracy and no matter what are of
the private sector people are, they are finally worried. Wait for the new
Constitution and they will panick!

But he doesn’t. In fact, the Government continues to
misunderstand the implications of the withdrawal from the IMF for its debt.
Today the Government ratified that it would withdraw from the IMF because it
was sure “that bondholders would not exercise the default”. Well, last time I
checked, the funds that invest in Venezuelan debt are not into it out of
solidarity or altruism, but they are there to make a buck. And the can make a
few million bucks by asking for the Government to accelerate payment. You see,
there are three bonds issued by the Venezuelan Government (all under Chavez!)
which are under 100 in price and which 25% of the bondholders could call for
acceleration in payment. That would amount to US$ 4.5 billion, a nice piece of
change on a day that international reserves dropped to US$ 26.3 billion and
next week we should see another drop as the Government pays for CANTV and
Electricidad de Caracas to the tune of US$ 2.6 billion, some part of it will
come from Fonden, but reserves will take another hit.

The problem for the Government is that a technical default
will lead to a downgrade and to higher expenses if it tries to issue new bonds.
In any case, if it allows the technical default to occur, interest will also
drop in buying the country’s debt. Today one Wall St.bank held a conference very concerned about the situation and essentially telling investors to sell the country´s Sovereign debt. In the end this is all the result of
mismanagement as the Government has slowly been putting itself a corner with
its economic bad policies as noted here as far back as October.

What this means is that devaluation looms large at this
time, as the budget continues to expand. Just the salary increase decreed last
Tuesday would cost another US$ 3 billion to the Government, adding to the
growing 2007 deficit, despite high oil prices. Add a bit of nervousness to the
parallel market, increasing liquidity as the Government spends more than it has
and what you have is a recipe for disaster. It is just a matter of time.

Weil captures well the meaning of the RCTV case to the broadcast media in Venezuela

It has been a rough couple of days for the Venezuelan
Government as the sloppiness of its actions and the improvisation of chief
Treasurer Chavez have cost the country quite a bit in the last two days.

On Monday, the holders of the Cerro Negro bonds, one of the
Orinoco oil belt partnerships, served notice on the Government that its actions
from the production cuts to the forced changed in ownerships constituted a
prospective default which could lead bondholders to accelerate the payment of
the bonds. This will not only be costly in terms of use of cash, but also
expensive, because there is a penalty in that case. A PDVSA Director tried
appeasing bondholders on Tuesday by saying that PDVSA is ready to buyback the
bonds of both Cerro Negro and Petrozuata. This only drove the bond prices
higher as the expectation of the buyback caught the interest of investors who
know that a forced buyback would imply much higher prices than those available
on Monday.

Then, S&P said yesterday that it had placed Venezuela on negative watch because the country
was acquiring larger stakes in the Orinoco,
which would require higher resources from PDVSA and would continue to make the
country more dependent on oil. Negative watch means that it will be more costly
for Venezuela
to issue debt in the future and the Government certainly has plans to issue
more debt in the next few months.

But things really got worse today, when a Wall Street firm
cut its recommendation on Venezuela’s
debt based on the fact that Chief Treasurer Chavez had decided to have Venezuela
withdraw its membership from the IMF. You see, much of the country’s bonds,
including those issued by Chavez as recently as a year and half ago, include a
clause or a covenant which says that the country leaving the IMF would
constitute a default event. Of course, Chavez knows it all, but apparently
could not remember this detail, which led to the bonds dropping today. To make
matters eve worse, the Minister of Finance, said Venezuela had no plans to default
on its debt, demonstrating his ignorance about what default means. He repeated
later in the day that Venezuela
had no plans to default, referring to no plans of stopping paying the debt, but
clearly failed to understand that a technical default would mean that
bondholders could ask for accelerated payment, lowers ratings, more cost and
even worse, the inability of the country to issue new debt while the condition
exists.

All of this would be fine and dandy for the revolution which
on the one hand talks about sovereignty, leaving the IMF, World Bank and the
like, but on the other has become highly dependent on foreign investors, who
happen to be the biggest capitalists and speculators in the planet) buying the
country’s bonds in order to finance the deficit and as a tool to lower the
parallel exchange rate. Unfortunately the runaway spending by the Government is
making this fight harder and harder and the Government is getting increasingly
frustrated after the issuing of US$ 7.5 billion in debt did not have the effect
that Minister of Finance Cabezas had promised Chief Treasurer Chavez it would
have.

Unfortunately, the parallel rate has a strong influence on
inflation since last year estimates are 25% of imports were made at the
parallel rate. While this year it may be less, since the Government’s exchange
control office CADIVI ahs been giving large amounts of foreign currency (US$
9.8 billion in the first three months of the year). However, CADIVI’s outflow
goes according to CADIVI’s desires and Government priorities, which sometimes
are not in synch with what the local markets want, which in turn feeds the
parallel market yet again. In fact, CADIVI has even stopped authorizing
preferential dollars for ALADI, a Latin American Integration Association, which
means all products that came that way now have to be purchased at the parallel
rate of exchange.

Thus, the 1.4% inflation rate increase in April  is no fluke and it
will only go downhill from here, as the effect of the value added tax cut has
worn off, salaries were increased, the parallel rate is back up and liquidity
has yet to drop significantly. Even worse, food inflation, the most sensitive
politically was 2% in April, with the twelve month rate topping 30%.

Certainly not a pretty picture, without mentioning that
reserves continue to go down and if its is true that the concept of private
property will be removed in the secret 
and so undemocratic proposal to reform he Constitution and replaced with
that of “individual” property, you can bet that the parallel rate may have no
limit in the next few months.

For the first time since Venezuela’s last Dictator was
overthrown in 1958, the May Day march by the Confederation of Workers was not given a permit to
march. Symbolic no?. What is most intriguing is that the ostensibe reason
for not allowing it is that the endpoint of the march, the same one for the
last 49 years, was Plaza O’Leary on downtown Caracas, which according to the Mayor of the Libertador
district of Caracas is “within the security zone of the Miraflores Palace”.

What is most intriguing abut this very strict statement by the
obviously pro-Chavez Bernal, is the fact that you may recall these two pictures
taken last September at a Chavez rally:

which took place in , you guessed it,
the same Plaza O’Leary, where the pro-Chávez rally not only entered into the security
zone of the Presidential Palace, but the rally itself took place at that
square, with the autocrat himself presiding over the events. Curiously that rally was
authorized and not even the drunks were kept off the newly restored statues of
the fountains of Plaza O’Leary, in one of the few worthy aschievements of the revolution in the last eight years.

But that is Venezuela
nowadays, there are two classes of people, those with Chavez and those not with
him or against him and the pro-Chavez group certainly receives preferential
treatment. Those not with him or against him are discriminated against,
ignored, persecuted and treated differently as this case shows.

Meanwhile, there will be a second march (the CTV march is
going ahead as planned as of this afternoon) of the pro-Chavez unions, a
concept that may seem oxymoronic given the fact that the Chávez autocracy has
refused to sign any collective bargaining agreement with any union in the last
four years. I guess the Chavista workers will be celebrating how the Government
is buying from them their CANTV shares, for which they paid over four dollars
in the early nineties, and which they will seel back to the Government for US$ 2.12, thus reversing a true case of collective
ownership when workers were given 12% of that company when it was first
privatized.

And then tomorrow Chavez will fly to Orinoco Oil Belt to
complete what he calls the “nationalization” of the oil industry, in what is
nothing but a very capitalistic private equity buyout of the partners. Of
course, he will pay dearly for that equity that he wants to add in each of
these projects, which would have never been built without the foreign partners
due to the technology required. And don’t be surprised if to sweeten the deal,
PDVSA throws in an increase in production for these projects, giving foreign partenrs a larger share of Venezuela’s oil production.

In fact, a few months ago Chavez was saying he wanted to
have 100% of these projects, until someone pointed out to him that it would not
only be very expensive, but a company that can barely handle fifty year old
technology could not possibly handle the technology of the heavy oil projects.

But it is good for international propaganda, you acquire an
additional 20% on the average of these projects, but then you need PDVSA to
sell bonds to the capitalistic hedge funds and investors in order to pay the
foreign partners. And it is the existence of these same bonds which binds you
to the rules of capitalism, because you know you may need them again in the
future. In fact today the bondholders of one of these projects, Cerro Negro,
delivered to that company a notice of “Prospective Default”, which simply warns
the Government that whatever it does, since this is a forced change in
ownership as well as violation of covenants, it will have to buy back all of
the outstanding bonds and debt of these projects. And it will not be cheap. In
the end, PDVSA will likely pay the partners with the buyout of the debt, making
the deal sweeter for the foreign partners in all four projects.

So, it is May Day in this workers non-paradise. Workers get
an extra 20% pay raise, which covers inflation and is hailed as the highest
minimum salary Latin America, which is, of
course, calculated at the official rate of exchange, for which most Venezuelans
have little access and which has remained fixed for the last three years.

Maybe they will also hold a ceremony to celebrate that from
now on, workers will pay their own health insurance too.

You’ve got to love the revolution!

Some tragedies lurked around on what should have otherwise
been a wonderful family day today, but one tries to put on the best face
possible, even when important people were missing from our family celebration.

Health care took the top of the headlines today in El
Nacional, as we learned that the Government pays more than 50% of what the
Ministry of Health spends overall on paying private health insurance for its
workers. This has reached these proportions after Government hospitals have
deteriorated in the last few years. The new Health care Bill will effectively
bar this for Government workers, making them pay for it and will force private
workers to pay 20% of their healthcare, while employers pay 80%.

Then, in El Universal, there
is an interview with Marino Gonzalez, whom I have translated here often.
Marino points out how the Chavez Government seems to be going towards a model
in which workers pay for their own healthcare, exactly the opposite of the
trends elsewhere, which he finds ironic, given the social claims of the
Government. Essentially, Gonzalez points out that if you make the workers pay
for their own healthcare policies for surgery, hospitalization and maternity,
then they will ask for private healthcare which essentially formalizes the
privatization of healthcare that has been going on in the last few years under
Chavismo.

Gonzalez also blasts the centralization of healthcare that
Chavez is promoting and then proceeds to give incredible bad numbers about the
state of health care in Venezuela. Besides the case of measles that we posted
on earlier, he notes that malaria and dengue fever have increased by 30% in the
last year, how maternal mortality has increased by 20% since 1998 and how 20
kids per day die due to either diarrhea or birth problems. Mind you, these are
officials numbers if anyone wants to question their reality and Gonzalez is a
medical doctor with a Ph.D. in public policy.

Separately, that same issue of El Universal notes
that while the Government wants to regulate the price of private health care,
the cost of having a bed at a Government hospital is three times that of
private hospitals, demonstrating how inefficient Government spending can be.
Meanwhile, Barrio Adentro IV, for which Cuba received last year US$ 1.3
billion, has yet to be launched and construction
in many states of new modules is not moving rapidly. Moreover, the School
of Medical Doctors claims that 49% of the Barrio Adentro Modules are not
functioning nationwide.

The solution is not to centralize healthcare and least of
all to eliminate insurance in the public sector. The solution is to start
strengthening the network of hospitals and clinics the Government has, which
have been totally neglected since Chavez took over as he gave priority to the
emergency care of Barrio Adentro. Any regulation of private healthcare will
simply reduce the availability of the current system, much like price controls
have made certain goods scarce in the country’s supermarkets.

When I first read the paper by Corrales and Penfold, which I posted yesterday and which
appeared in the Journal of Democracy, 18,
99 (2007), I thought I would highlight a few paragraphs in a post and leave it at that.
But then I realized that there was little, if any, material that should not be
there and the piece should be read as a whole. It not only provides an
excellent reference to most of the political events of the last eight years,
but it does so in very clear fashion, without wasting time on the details as
much of what is said can be readily be found in many places, including this and
other English speaking blogs. Perhaps the only point not mentioned that should have been in the paper is the bridge between the Constituent Assembly and the new
Constitutional order which was the infamous “Congresillo” which without any
legal or Constitutional basis, ran the country for months and appointed many of the so
called “independent” powers that we still have today.

But there are a few points that need to be emphasized that
are brought up in the paper that I think are relevant to both newcomers to
Venezuela’s Chavista history, as well as those that have followed it from the
beginning, because we either sometimes have a short memory, or because they
reveal  the levels of improvisation and and how for Chavismo politics is the goal in itself :

—The paper correctly reminds us of one of the most
surprising aspects of Chavismo for its first four or five years: Its
inattention to social programs. Chávez not only cancelled most of the social
programs his Government inherited, but the only new effort created up to 2003
was the Bolivar 2000 program, an infrastructure program led by the military
which was mired in corruption and left very few tangible accomplishments. It
was only the low popularity enjoyed by the President that led to the “Misiones”
in late 2003.

This is important not only as a historical fact, but also as
a reminder that Chavismo has spent eight years improvising and changing
directions. Even today, XXIst. Century Socialism is an ill defined concept and
many of the “battles” of the last two years, represent exactly the opposite of
what Chavez was pushing for in 2001-2002. A good case in point is the heavy
crude partnerships of the Orinoco Oil Belt, where one can still remember Chavez
telling French representatives that he wanted to expand these partnerships with
them, only to be taking them away from them today by force. Moreover, Chavez
offers tracts of the Orinoco Oil belt to other nations state oil companies, while at the same time it is
kicking out the national oil companies of Norway and France.

—The importance of clientislism in Chavez’ strategy is
another one of the salient points of the paper by Corrales and Penfold. The
proof of this is in how the resources of the misiones have little to do with
the needs of the people being helped. It is much more than improvisation in
this case, it is simply political. Resources are not allocated by the social
needs of the poor, but rather by the political needs of Chávez and his MVR
party. This obviously becomes very inefficient in terms of the goals of
fighting poverty or attacking health problems, which explains in part the lack
of results despite the huge resources spent.

—The paper talks about something which I have never
addressed in the blog, which is how Chavismo did away with campaign financing
in the 2000 Constitution which became a trap for the opposition, as the
mechanisms of intimidation have made it more difficult for other political
parties to obtain funding, while the line of division between Chavez’ MVR and
the Government is almost non-existent and state funds and institutions are used
without any scruples in political propaganda for Chavez. This has created a hug
asymmetry, in the words of Corrales and Penfold, which certainly is detrimental
to democracy. When Government campaign financing was eliminated in 2000, I
recall thinking it could not be good to do that, but at the time I was still
not conscious of the lack of scruples of Chavismo and how this would be used in
the future to nullify the opposition or outspend it, like in the December
Presidential election by a huge factor, without any possibility of a recourse
with any instance.

—Finally, there is corruption. There has always been
corruption in Venezuela, but the levels and the obscenity we have seen in the
last few years are simply hard to describe. The effect goes from the simple
signs of newly found wealth, symbolized by the Hummers that Chavismo seems to
enjoy driving, to the meteoric rise of relatives of the leaders of Chavismo as
multimillionaires, owners of banks, milk producing companies, farms and the
like. We are not talking people becoming wealthy; we are talking about people who
now own hundred million dollar enterprises, where no wealth at all existed in
1998 when Chavez came to power. And then, of course, are the friends of the
revolution, those that have piggybacked on Chavismo, or quietly “opposed”
Chavismo while becoming ten times wealthier than they were before. This
corruption actually flows from the corruption at the political level: These
people have had no qualms about enriching Government officials in order to
enrich themselves and this symbiotic relation has turned those on both sides
immensely rich. In eight short years, Chavismo has created a new oligarchy
through corruption that easily outnumbers the old one in both wealth and the
number of individuals who are now multimillionaires in US dollars. It is so
blatant, that he new oligarchy owns jets, where the old one had propeller
planes, and they can safely land in the La Carlota airport of Caracas, where
Chavez decreed three years ago that only helicopters could land. Those not as well connected, use
Aeropuerto Caracas, where jet planes have gone in these short eight years from
being 10% of the plane population  to roughly 40%. Of course, the difference in
their prices is at least factor of ten.

All, in the name of the revolution!

This is a
very long article with a good synthesis of the last eight years from a political
point of view. It summarizes quite well what has happened and is happening
today in Venezuela.
I could not find a link to it, so I decided to post the whole text. It appeared in
the Journal of Democarcy

Venezuela:
Crowding out the opposition by Javier Corrales and Michael Penfold

For the past few
years, Venezuela’s
President Hugo Chávez Frías has enjoyed a favorable political situation at home.
Economic growth, fuel­ed by rising oil prices, has been spectacular since 2003.
Chávez and his allies have won four decisive electoral victories since 2004,
the most recent being his sweeping 63
percent walk to a fresh six-year term in the December 2006 presidential
race. And since 2005, the opposition has become increasingly tame, while street
turmoil is on the decline and seldom results in violence. In addition, Chávez
has achieved complete control of all check-and-balance institutions, including the
unicameral National Assembly, which after the opposition boycott of the
December 2005 elections now contains not a single opposition legislator. These
political advantages would be the envy of any world leader. And yet, Chávez has
been governing as if Venezuela
faces some kind of emer­gency. He has been busily concentrating more authority,
even receiv­ing a grant from the National Assembly of “enabling powers” to rule
by presidential decree for eighteen months starting in February 2007.

How did a
movement that began in 1998 as a grassroots effort to bring democracy back to
the masses turn into a drive to empower the executive branch at the expense of
every other actor? The acceleration of authoritarianism in Venezuela
cannot be explained by recourse to functional theories. These theories, which
draw on Guillermo O’Donnell’s famous explanation of the origins of bureaucratic
authori­tarianism in 1960s Latin America,
posit that authoritarianism grows out of chronic governability crises which
prompt actors—whether in office or opposition—to seize and
centralize power in order to cope with dire circumstances.¹ Prior to
2004, one could argue that Venezuela was suf­fering from a governability
crisis—albeit one that was likely at least partly fabricated—and that this
crisis might justify some of Chávez’s increasing concentration of powers. Since
2004, however, Chávez has had almost no reason to feel politically threatened
or encumbered yet has notoriously leaped in the direction of authoritarianism.

the rest is here