The Devil's Excrement

When Hugo Chavez won the presidency, people were really expecting him
to deliver on his promises. While I never liked him, because I knew too
many of the extremely mediocre people around him, many acquaintances
really believed he would deliver. I wish he had. Among the main
promises were fighting crime, eliminating corruption and reducing
poverty. The first one, he has done very little about. Crime in Caracas
alone has tripled in the last six years, as measured by the number of
people murdered each week. Unfortunately, they are mostly murders in
the poor barrios, where the police barely dares to go in. We all know
about the state of poverty, up significantly in the last six years,
despite all of the claims by the Government to be doing everything to
benefit the poor.

But attacking corruption would have been a smple task, given the
mandate and goodwill with which Chavez arrived in power and his
military background. He could have stopped it cold on its tracks. But
he hasn’t. I really can’t understand why. Beginning with the 42 cases
of corruption that forced Chavez’ buddy, co-conspirator and first Head
of the intelligence police, Jesus Urdaneta to resign from his position,
his friendship and his Government, corruption in Venezuela is rampant
today, reaching levels that would make the corrupt of the IVth.
Republic look almost like innocent babies.

The latest twist in what appeared to be a serious accusation was that
of the Comptroller of the Libertador District Jose Balza, a Chavista,
accusing the Chavista Mayor Bernal of widespread corruption and misuse
of funds. He was actually very specific with the accisations and
presented documents to the press.. This happened last Sunday and given
Chavez’ scolding of Bernal this weekend, made it sound like they were
going after him for corruption. Imagine my surprise when today, the
General Comptroller of tha Nation, the man in charge of fighting
corruption, whose voice has barely been heard in the last four years,
and who many even question whether he exists or not, actually came out,
and fired Comptroller Balza. Politics? Infighting? I don’t know and I
don’t care, all I know is that another chance to slow down corruption
has been wasted.

Phrase of the year:

“We are going to create a construction company because I want to have my own construction company“

Hugo Chavez

From Javier’s blog I learn that
while authorities where happily opening an office of Banco Industrial
de Venezuela in Cuba, the US Federal Reserve was forcing the bank
to sign an agreement that will obligate the bank to essentially impose
the type of controls, compliance and credit risk analysis as required
by the FDIC laws. Banco Industrial de Venezuela is the Government’s largest bank which has been capitalized
twice during the Chavez administration to stop it form going under.
Maybe they should place it under co-management!

In a very strange development that had been rumored for quite a while, El Nacional and Unionradio
are reporting that PDVSA is firing 12,000 workers. According to El
Nacional PDVSA is paying severance to 12,000 workers under contract of
which it may rehire 4,000. According to Unionradio, these are the
pro-Chavez workers hired after the strike in 2002-2003. One report
claims that they are being fired for carrying out a silent slowdown,
while others claim there is simply no work for them due to the drop in
production. A union leader says most of these workers were simply hired
so that they would vote for Chavez in 2004 and their role has been
fuillfilled. All of the workers fired are from the Western region
(PDVSA Occidente) of the
country.

Reporters without borders has just issued its report for Venezuela in 2005. As they say here “para muestra un boton”, here is a sample:

In 2004…

5 journalists were arrested
57 physically attacked
6 threatened
6 summoned
and 13 media premises attacked or ransacked

I was slowly translating the interview with Adriano Gonzalez Leon in yesterday’s El Nacional, but I just discovered that Guillermo had done the translation. Thanks! Obligatory reading from one of the giants.

Still intoxicated from his visit to Cuba Hugo Chavez today hailed “socialism” during his speech at the May Day march organized by his party. In that sense, it was a May Day march in the best Stalinist style, as union workers held a parallel march as the Government organized the one at which Chavez spoke.

The man who has always been careful with words about where he is going, got carried away a few times after assuring the crowd that Venezuela “will not follow the development model of the capitalist north, the industrialized north”

Quoting him verbatim he said:

“I remind you we don’t want to be rich…we are not here to pretend the impossible, to pretend the perversion that some want to copy the development model of the industrialized capitalist north, we are not going in that direction, we are going towards a dignified society that will include all of us, where there will be no misery, where nobody will be excluded and where we all live in dignity. We don’t one want to be rich, it is bad to be rich, people tend to pervert themselves and tend to lose the essential values of the human being”

“I have not returned, nor do I think about returning again, until the people of the United States liberate that nation,” said Chavez, saying that Americans are “oppressed” by their government and U.S. media.

Photo above:Castro and Chavez in business suits in Havana. Is it one of Chavez’ Brioni or a Lanvin? Hard to tell he has over ne hundred of them.

The opening of the office of PDVSA Cuba makes perfect sense. It is clearly one of those management decisions that has been studied and analyzed and the financial models have spoken: We need to open an office in Cuba, it makes perfect sense! Let’s look at the facts:

-Cuba has no oil, it produces no oil, all of the exploration wells that have been drilled in the Guld of Mexico have turned out out dry. Repsol, Petrobras and YPF have even withdrawn from exploration activities in that island, so what better opportunity for a revolution that believes that anything is possible!

-Cuba is the Caribbean island island furthest away from Venezuela, so that from a logistic point of view it makes perfect sense to use the Matanzas storage facilty as a distribution point for all of the Caribbean. That way oil has to travel the furthest in order to send it back to the Caribbean. It is even a better strategic location if you consider that no ship can travel to the US from Matanzas, without touching port in another country first. Thisalso makes perfect sense since the US is Venezuela’s largest export market.

-Venezuela wants to run the Cienfuegos Refinery. Since the CITGO refineries are not profitable and Venezuela has no money to invest in oil facilities in Venezuela, it makes perfect sense to invest in one in Cuba and sell the CITGO ones. Moreover, using the same techniques and experience learned at CITGO will guarantee that the Cienfuegos refinery will never make money so that that facility will be in tune with both the Cuban and Bolivarian revolution.After all, profit is bad, sacrifice is good. The Cienfuegos refinery is of very modern design and was began by the Soviets and abandonded in its first stages of construction when the Soviet Union fell. .

-Banco Industrial de Venezuela. The Government Bank will open an office in Cuba in the PDVSA office to channel the lending to Cuba that the Venezuelan Government wants to funnel to promote more trade with that island. This is very good for Venezuela’s worst run bank, which has been capitalized twice in the last four years and whose main problem is its high expenses. But hey, Venezuelans love subsidies so that this office is in perfect resonance with the country.

-There are other benefits to having an office there. It will make the flow of subsidized and unpaid oil to Cuba more efficient, allowing that country to reexport efficiently that oil which has helped to revalue the Cuban currency while the Venezuelan one has been devalued. That office will keep track of the oil shipped to that island so that there is no record of it in Venezuela and nobody can ever investigate it. Payment by Cuba, if one is ever made, will be directly to that office, guaranteeing that the funds will never reach Venezuela.

All in all, a wonderful step in consolidating the incoherent oil policy of PDVSA and Venezuela of the last two years: It simply makes too much sense!

The President of the National Defense Council, General Lopez Hidalgo has just said
that the military met with the Presidemt of PDVSA and its ready to
“take over” PDVSA where there has been a possible sabotage and a silent
strike. Meanhwile the Minister of Defense says that the Armed Forces
will face the actions of the CIA, saying “we are surrounded by elements
from the CIA” and the Venezuelan Government has “infiltrated” the CIA,
which should be concerned about it. As usual, nothing was proven, no
evidence was given, no details were given as to the sabotage or the
silent strike.

In last night’s post I talked about “experimental economics” in
Venezuela and today the Venezuelan Central Bank launched a new (but
old) experiment by introducing regulations in both savings and lending
rates in Venezuela. Starting next Monday banks will have to pay a
minimum refenced to the so called “absorption” rates of the Central
Bank, which today implies 6.5% on savings accounts and 10% on 30 day
CD’s. Similarly, the lending rate will be referenced to the
“assistance” rate of the Venezuelan Central Bank, which implies that
the maximum lending rate, including credit cards, will be set at 28%.
The new regulations also forbid charging commissions for some services,
requiring minimum balances or asking for any form of collateral on
loans.