The Devil's Excrement

As The Minister of Transport was asking people not to use Caracas’ subway because it is overloaded, Chavez’ 500 MW nuclear plant plan was suddenly escalated into a 4,000 MW plan that would be accomplished in ten years, as announced by once-considered-serious Minister of Electricity Ali Rodriguez.

I guess that after working for the  revolution for eleven years you lose sight of reality or join your boss into using the same BS. After all, it was Rodriguez that fired PDVSA’s 20,000 workers, including its research and development center, in another irresponsible act of ignorance and cockiness, that the Nation is still paying for.

But one thing Chavez, Rodriguez and their combo have learned is that nobody follows up on promises, kids go hungry in the streets after ten years, crime and corruption are rampant and have tripled and grown by orders of magnitude respectively, eight employment plans have been forgotten, five housing plans have been ignored and why not, even Rodriguez’ electric plans announced in April of this year have been forgotten. After all, the revolution/robolution has done nothing concrete but managed to stay in power. So why bother?

Going nuclear in Venezuela is best represented by the cartoon above: How do Ali and Hugo plan to build these things if they can’t even keep the subway and the electricity running? You need people, trained people at that, not reinvented sargents with no abilities like most Ministers.

But the word “nuclear” has always made the Venezuelan military’s eyes tinkle with the thought that they could somehow rise above their own mediocrity. In 1956 Venezuela bought its first and only reactor, a 3 MW research unit made by General Electric. The reactor went critical for the first time near 1960, but except for generating some neutrons for some now forgotten and irrelevant physics experiments and backing the little expertise that there exists in radioactive protection, it was an expensive toy which never had the right human resources to take advantage of it.

Not that the Government did not try. Many were financed to study abroad, some came back, gave up or emigrated, but in the end the whole thing was scrapped in 1994. Expertise is now much more limited than it was then. There is no training program in place or understanding that you need it, as exemplified by Rodriguez’ firing of the whole oil research center. You need qualified people to do something like that. Yes, even a subway, a railroad and even a nuclear reactor need experts to get things done.

So, unless they import some 10,000 Russians to build the reactor and a few hundred to run it or them, don’t expect much to be built. It is all smoke and mirrors now on steroids by the the bombastic and silly announcement by Ali Rodriguez.  Just think, a Government that has not been able to complete a few hundred Kilometers of railroad in ten years, now plans to build eight Nuclear power pants in the same time.

But ask yourself: With what money?

Because PDVSA and the Government are simply short of cash, have been trying to raise money and you would think that PDVSA’s expansion projects are more significant than going nuclear. Because a 1,000 MW plant costs around US$ 2 billion ad takes 7-12 years to build in countries with expertise. So we are talking some US$ 8 billion (sans commissions and graft) and a country with a broken down…management capability.

As we say in Spanish: Cuentame una de vaqueros (Tell me a story about cowboys now)

Unless Chavez sells out the country and pays Russians or Chinese to build and run these plants, it will never get done.

Never.

These are not F-16, that you can learn to fly and crash in a Microsoft simulator. These are complex and expensive toys that require hundreds of highly trained people. We just don’t have them…nor the money.

So, store your Geiger counters. forget about irradiating your mangoes to kill the bugs and/or irradiating your food to preserve it.

Not one nano watt of nuclear power will be in place in Venezuela in ten years, unless someone discovers simple  cold fusion with tap water and an ipod charger. Please, don’t make it more complicated than that, the revolution could not handle it.

But Chavez and the revolution still dream of going nuclear, but they can’t even build 12,000 imported prefabricated houses.

Really, cuentame una de vaqueros.

I know, I know, I have been derelict in my duties here, as the PDVSA bond was announced and not a sound from me. Yes, I was traveling for work reasons and really did not want to take the time to read about the PDVSA exchange and bonds.

But here I go: Last Tuesday, PDVSA said that would would offer an exchange for its Petrobonos 2011 (issued under Venezuelan Law) and that on Monday it would announce the terms for a new bond (under International Law) maturing in 2017 that it would sell to Venezuelans in exchange of local currency (called Bolivars to those who are just arriving here) but all denominated in US dollars.

The Exchange: In July 2009, a.k.a just last year, PDVSA issued a Petrobono 2011 zero coupon bond, i.e. a bond that paid no interest, under Venezuelan Law and in the amount of US$ 3 billion. Venezuelan law, because there was some sovereignty to protect, so we revolutionaries were not about to issue it under some capitalistic and imperialistic rules. After all, as the red tank above says: We all own PDVSA now. Sure!

Anyway, things have not been great for PDVSA since, revenues were up 47%, but earnings dropped 14%, so, it is time to think about how PDVSA will pay for the bond next July. Instead, PDVSA hired some smart bankers that gave the company the standard capitalistic solution: Don’t pay, as long as you are allowed to postpone payment forever, ask Ecuador about this!

Instead, offer bond owners something so juicy that few will refuse your offer. In this case, we will exchange to anyone willing his/hers (how Bolivarian of me, no?) Venezuelan Law Petrobono 2011, for a PDVSA 2013, issued under international law, with a coupon of 8% and at an exchange ratio of 112.5%. That is for each 100% of Petrobono 2011 you have, you get 112.5% of the longer dated PDVSA 2013 which pays interest.

Worth it?

Well, yes and no. Yes, because today the Petrobono 2011 was trading around 94% where it is worth exchanging. No, because when the announcement was made it traded as high as 97% where it was not worth it.

Why?

Because you are being paid with a bond that matures in 2013 and investors want such a bond to trade such that if you hold on to 2013 (after the Presidential elections!) you get a yield to maturity of around 12%. Since the coupon is 8%, the new bond has to trade at a discount, i.e. below its face value of 100%, which is compensated partially by the 112.5% they give you of the new bond.

So, as I write this, yes, do the exchange, you will have more money that way if you sell the 13’s after the exchange. Moreover, after the exchange is completed (There are two dates, but I will not bore you with details) I suspect that the 2011 will drop. That may be the best trade there is, buy the 2011 after it drops when the exchange is completed. You will be buying a nine month issue with a yield to maturity around 11-13% and little risk of default.

Nothing like this is available in the world today!

Why international law for the 2013? Well, it is a long story. We all own PDVSA now and we defend sovereignty, but you know, it is cheaper if it is international law, so we will ignore Venezuelan law, the revolution and sovereignty and hold our noses while we issue it this way.

So, concluding: For the exchange, do it, it looks profitable. If you have neither, just monitor the price of the Petrobono 2011 after the exchange ends and if it goes near 91-92% buy it.

The 2017 bond: Separately, PDVSA will issue another bond (also international law, who said sovereignty out there?), a worrisome addiction, which matures in 2017, but will pay one third in 2015, one third in 2016 and the remaining third in 2017.

This dollar bond will pay a coupon of 8.5% and will be sold in exchange for Bolivars to all locals at 100% of its face value: i.e. you pay Bs. 4.3 per US$ of the face value of the new bond. Since this bond has to trade near the other PDVSA 2017, which is around 15%, then it also has to trade at a discount.

Is it worth it?

Well, banks were giving today a repurchase price of 65% for that bond. If you pay for $3,000 Bs. 4.3 per dollar or Bs. 12,900, if you sell at 65% of face value you get US$ 1,950 or Bs. 6.8 per US$ which is quite good, but in any case, if you wait a few days, the bond should  go to 69% or 70%, where your dollars cost you around Bs. 6.57. In either case is quite good, the “implicit rate” of M2 over reserves is now near Bs. 9 by now.

If you want a bond in dollars and just get paid the yield, the issuing of the bond will give you a few possible good chances:

-First, if the Government decides to issuemore than US$ 3 billion, i.e. US$ 4 or 4.5 billion, the offer will be large and too much bond will hit the street and it may become cheap to buy the new 2017 at around 65% (nobody sells at that price in NY today). Good deal.

-Second, people have been selling the PDVSA 2014 (local law), because the 2103 becomes more attractive and because PDVSA issued another US$ 1,5 billion of it without announcing it officially. At the close today this bond was the highest yielding of all Venezuela and PDVSA bonds at near 19% yield to maturity. Once again, you can’t get that anywhere!

-Finally, the whole selling of these bonds is rattling the Venezuela yield curve, changing prices of all bonds by the hour, as investors shift from one to the other and sell one to favor the other. The Venezuela 2022, for example, was today back down to near 85% after hitting 90% last week. At these levels and with a 12.75% coupon it becomes very interesting, as it is above the yield curve of bonds issued by the Republic. If it drops more, it will be extremely interesting.

So, better late than never, this is my take on the exchange and the new bonds. Meanwhile, the international offering consists of a 300 page plus document with lots of info on PDVSA. I may or not revisit that in the future, I need lots of time to look at it which I may not have, but I love the risk part of the document talking about PDVSA not owning the oil fields and the Republic may take them away from it. It gives a new meaning to the conceptual difference between PDVSA versus sovereign risk!

I am away for a few days, but I have been going around something I read right before I left Caracas that left me simply speechless, and I quote a translation from Spanish as precise, as I can do one (Pardon the length, but all words should be included, bold is mine):

“The boligarchy is nothing more that the singular or collective grouping of those who throughout this process have devoted themselves to amassing immense fortunes in the name of the revolution or simply of the ongoing revolutionary process…Many of them show off their wealth which they did not have before the arrival of the Government in December 1998″

“These people are professional thieves, white collar and gray collar, with shirts which are roja, rojita in the best style of of those who have disguised themselves of a symbol, have managed to take advantage of the honey pot of power for their own personal benefit…behind a well protected facade, what these criminals that act in the name of the Bolivarian revolution have done is to enrich themselves with the money from the State”

“These people should be denounced, separated from the socialist process led by President Chavez, all privileges obtained from their political connections should be removed from them and they should be tried as common criminals…The tragedy that the Bolivarian process carries on its back is the impunity that exists in practice and the lack of sentencing to those that can be shown in convincing manner of proven acts”

This text could have come from, for example, this blog during the last few years, or From Daniel’s, or Caracas Chronicles, or Alek Boyd’s, or so many others.

This is what we have been saying in English and for which we have been accused of being paid by foreign Governments or something ludicrous like that. We have also been insulted, called liars and so many other things for saying pretty much the same thing over and over during the last few years.

PSF’s and other pro-Chavez specimens regularly come here and comment on accusation of  corruptions by us, saying we hate Hugo, invent things and it is all lies.

Who said this? Who wrote this? Who is the author?

Well, this was quoted by El Nacional on Wednesday, section V, page 7 (by subscription) in an article written by Andres Rojas, quoting a book (which I have not seen) written by none other than Jorge Giordani, entitled “Everyday Impressions”, which was written during the last year and a half.

Yes, the same man that has been Minister of Chavez’ Cabinet for nine out of the last eleven years, that not once, never, has denounced any act of corruption and has been a staunch defender of Chavez, his policies and his revolution, makes the same accusations we did, but he had the power to make this formally, he had the contacts to do what nobody in the Chavez Government has done and try to clean up the robolution.

But he never did it!

Because he is such a fanatic, so irresponsible, so unethical and so immoral, that he never once said anything. He has allowed these “thieves” these people with “rojo, rojita” shirts, to “amass immense fortunes”, yes, to steal from the same Venezuelans who trusted Chavez and his robolution.

And in some sense he is also stealing from us, because the same article says Giordani has written and published three books during the last year and a half. He is paid to be Minister full time. He has been Minister of Planning form 1998-2002 and from 2004 to 2009 and now he is jointly Minister of Planning and Finance. With the way the country is going, the economic disaster, the crumbing infrastructure, 30% inflation and the robolutionaries stealing us blind, Mr. Giordani somehow thought he had the time to relax, and while we paid him his salary and perks as Ministers, he devoted his spare (!!) time to write three books.

We are always told that Giordani is “honest”. Well, he is not. Honest people would not have allowed any of what he writes about to take place in silence. Anyone honest should have either resigned long ago, denouncing what he is saying in his books or stayed in Government to fight. Instead, he has done nothing. He even comes and publishes these books quietly and to date, he has made nor formal accusations. He seems to know exactly who he is talking about.

Like the boligarchs he criticizes, Mr. Giordani is as dishonest and irresponsible as them and he too has been robbing us blind for the last eleven years!

There is no question that Hugo Chavez is a great communicator. Except that he tends to focus on the “new”, the “promise”, the empty future that has never arrived in the last eleven years. Never on accomplishments, management, real things.

Since his party lost the Parliamentary election, Chavez has undertaken a double strategy of pushing forward his revolution and promising grandiose projects or plans for the future.

The first is easy to do, take over Venoco, owned by the Bolibourgeois clan that facilitated Hugo sending suitcases full of cash to help Cristina Kirchner’s campaign. Or Fertinitro or many others, taking over is easy, you send the Army, the military and a hundred employees from Ministry X dressed with red shirts, you occupy the property and claim you have the people to run the company, facility or whatever.

Reality sinks in later, from PDVSA, to cattle ranches, to Arria’s Las Carolinas, things deteriorate, go downhill, are abandoned, become just another failure. Somehow the few things that run, sometimes, are those managed by imported Cubans.

But Hugo presses on. Despite his inability to build, manage or accomplish much, he does not seem to know what to offer. So, he has been recycling himself and his failed past:

-The first promise was a housing program. If there has been a gigantic failure of the robolution, it is housing. The Chavez administration has been unable to beat a single year of the Caldera administration, despite a factor of eight difference in oil prices. A parade of Chavez’ military buddies has walked through the Ministry of Housing and, year after a year, the goals are not only not met, but come not even close from being achieved. This week, Chavez announced another effort in housing. What is it, Plan #5 or #6? It does not matter, the number is large, The plan will supposedly get US$ 1.5 billion from PDVSA, except that PDVSA does not have the money and needs all it has for its own projects. Hard to believe it will come to anything.

-And all of a sudden Chavez revives his now forgotten Bolivarian Circles. Like so many Chavez projects, one day funding ceased and that was the end of that. But now Chavez revives them, except he wants to focus on brainwashing five year olds. Cool, if the adults don’t stick around when the money disappears, try the kids! Yeah, sure, ask any parent in Venezuela who sent his kids to Catholic schools. Best way to make an atheist out of you!

-And whenever Chavez feels his popularity dropping, he revives nuclear energy and all related buzz words, “peaceful uses”, “thermonuclear” a word he clearly does not understand, Venezuela will jump directly into fusion, imagine that! Never mind we have no Nuclear Physicists, never mind we can’t even build simple houses, never mind we can’t even provide electricity with relaibility, we are going into fusion directly. What an ignorant fool!

-And from Brazil comes reality check, Venezuela is being excluded from the Pernambuco refinery. Venezuela was going to contribute with money when oil was at $100, no money, no Venezuela. Because Venezuela had nothing to contribute technically, as its own refineries are really in trouble and a mess.

So, Hugo goes to Russia, Bielorussia, he is going to export coffee, never mind that Venezuela does not produce sufficient coffee now to satisfy ts own needs. And he is going to buy military equipment. And he will start a bank, he must think banks print money. Oh! They do, but only in here Venezuela! And he will defend the Fatherland. And talk, talk, talk…blah, blah blah…

That’s all it is…eleven years running….

I usually try to limit my posts to Venezuelan affairs. Sometimes I break the rule if there is a connection to Venezuela or there is a non-political angle like Vargas Llosa’s Nobel Prize, a joy to anyone who has ever read his work and a tribute to Spanish Literature. My reasoning behind this is simple: I don’t want the affairs of other nations to take over the discussions here, there are blogs about those foreign affairs all over and should be the place to discuss such topics.

Thus, although I was extremely happy to hear about the Nobel peace Prize for Chinese dissident Liu Xiobo, I had no plans to talk about it…

Until Hugo Chavez sharply criticized the opposition’s communique asking the Chinese Government to release the Nobel Prize winner. Chavez’ attacks are gratuitous, the MUD simply asks that someone be freed, much like others in the world asked that Mandela be freed at one time, because Chavez reveals his own autocratic spirit when he says that Liu Xiobo is a “dissident counterrevolutionary…who probably violated Chinese laws”.

Except in a democracy, being a dissident or a counterrevolutionary should be perfectly legal and under international law, there should not be laws that penalize it. And the Chinese attempt to make the matter a Government to Government conflict, when they know that the Nobel Committee is independent of the Norwegian Government. Moreover, the Chinese Government attempted to interfere with the Committee by threatening them even before the award had been announced when Liu Xiobo was known to be a front runner.

But autocrats will be always autocrats and no sooner had Chavez spoken when the Chinese Government announced the house arrest of Liu Xiobo’s wife Liu Xia. The same day, bloggers, academics and lawyers had also been arrested even if some were released afterwards.

Of course, Liu Xia’s only crime is to be married to Liu Xiaobo, thus for Chavez, who loves to bunch and lump people in groups, it must be ok to have a law that says you should not be married to a jailed dissident. Because Liu Xia’s only crime is to express her husband’s thoughts and to be loyal to him.

Liu Xiaobo’s only crime was to be part of the Chapter 8 movement which  demanded political reforms on the 60th Anniversary of the Declaration of Human Rights. The cynical attitude of the Chinese Government was revealed when Xiabo was harassed up to the Olympic Games but jailed only afterwards. Of course, Liu Xiaobo’s fight for human rights began decades earlier, always in defense of human rights, even before Tiananmen Square in 1989.

As for China being an ally of Venezuela, such an alliance only exists in Chavez’ mind, because he gets financing from the Chinese at the expense of Venezuela’s future. One day, Chavez may have to face trial for this and the Chinese may find that Venezuela’s priorities become the future of all Venezuelans and not of a particular political leader or movement.

As my colleague Gioconda San Blas said so eloquently today in Tal Cual, Liu Xiaobo is an example and “These universal figures serve us as guiding lights to value the dimension of the sacrifice that in our country is made with supreme dignity by those who are committed from jails to a similar defense of human rights”

The autocrats of the world may unite in their own defense, but much like in the Mandela case, the people one day will rebel and the ugly truth will be revealed about their abuses and violations of human rights by the autocrats.

And the freedom of our guiding lights will also be our own…

Added: Just to prove our point, another autocrat joins the fray: Evo Morales says that because he is an anti-imperialist he will never get the Peace Prize (Why should he? He is no pacifist or democrat). He also questions the prizes to Liu Xiaobo and to Mario Vargas Llosa. He will never get the Literature Prize either, that’s for sure.

Crime statistics are mostly treated like that: just numbers. Only today the Head of the new National Police began using Twitter to argue whether crime had gone down by one number or another. What we do know is that in the eleven years of Chavez’ Presidency, homicides have triples, give or take 10%. Crime and murder have simply gotten out of hand for the Government and arguing about ten percent more or less is not only frivolous, but simply offensive.

As crime has increased, not only does it get closer to you, but your self-imposed curfew grows and gets earlier. Your paranoia increases.

In the last four weeks, two people in my office have had attempts to kidnap them. The first one a month ago, four armed gunmen blocked his path forced them off the road and tried to take them away. Somehow, he managed to get the car out and escape in it.

This weekend it happened again, except that before the whole thing was over, one of my dearest people had been shot a few times, whether it was three bullets or five, it is unclear and it is simply another irrelevant statistic. What is relevant is that it is getting closer, it had to happen, it is not only the increased crime but it’s the profile, as I showed on August 29th. , it is either the poor or the the well to do that have the highest probability of being victims.

Somehow, three or five bullets missed critical areas, there was loss of blood, fingers were shattered, but everything else is fine. He came that close.

So did we. We came that close to the unimaginable. To the unexplainable. To the unthinkable.  To that which hits our basic humanity and makes you feel like wrapping yourself in a cocoon and not come out for days.

But instead you celebrate, you celebrate life, you celebrate survival. You celebrate that we all, somehow, beat the odds once again.

But those responsible for it are still in charge, untouched  and careless about the true human tragedy that touches thousands of Venezuelans every week.

In any other country, today’s interview in El Nacional (reprinted here) with accused drug dealer Walid Makled, would have raised all sorts of alarms about corruption and graft, but in Venezuela we have become so accustomed to it that not much happens. Neither Government officials, nor opposition members have said much. Particularly disturbing is that those in charge of investigating have said little about the scandalous denunciations and accusations of Makled.

Because Makled makes may accusations, some general, some very specific, but claims to have proofs of payments to important Government officials and their relatives both in Venezuela and abroad.

Makled, who is in jail in Colombia, waiting to be extradited to the US, denies being a drug dealer, but among other pearls he says the following:

-Through then Governor Acosta Carles of Carabobo State, he gave US$2 million to the pro-Chavez side in the 2004 recall referendum.

-He purchased from the Governorship the concession for the Pto. Cabello port storage for BsF. 12 million, he says he gave Acosta five checks for Bs. 1 million and was invited to a public meeting in which Acosta Carles called the money “a donation”

-He accuses Generals Orlando Rodriguez and Cliver Alcala of planting the drugs in his farm.

-He claims to have vouchers, account numbers of Government officials and their relatives, including Ministers, Generals. Admirals, Colonels and five Deputies of the National Assembly. He also denounces General Nestor Reverol, who he says has run his companies since they were taken over by the Government, during which they have generated US$ 140 million which should have been deposited in an escrow account at a Court but haven’t.

-He is asked about the credential from the Venezuelan Supreme Court which he carried, but says that he will talk about that at a future date. Here is what the reporter is referring to, a credential identifying Walid Makled as a “Comissar” of Venezuela’s Supreme Court:

-Makled claims that he has proof of paying off 15 Generals of the Venezuelan Armed Forces, but there are and additional 25 “friendly” Generals that he also helped out “on the side”. When asked who they are, he says: “How can General Nestor Reverol live in a US$ 3-4 million home or that his family lives in Cabimas in a US$ 2 million home?”

-In closing Makled claims that each week he would ship 10 large containers of mattresses, refrigerators, washing machines, stoves, as a “favor” to the military and that the stiff was shipped out to Cuba, without any customs control.

True? False? In between? Who knows. But Makled gives names, facts and to start with, the Venezuelan Supreme Court has to clarify how Mr. Makled had the credential above in his possession and the General Prosecutor will have to investigate where those specific Generals live.

Whats is clear to me is how high drug money is getting in Venezuela. these accusations have become routine. The US has said Generals at the highest levels in the Venezuelan military are involved, but nothing is ever investigated.

Are we going the way of Mexico, but run by the military and foreigners?

Last May, President Hugo Chavez ordered that the Hacienda Las Carolinas owned by Diego Arria be taken over, because it was “unproductive”. The farm, seen above was  a model of production and had the best Jersey cattle in Venezuela.

and ts facilities were world class, with hygiene and technology at the forefront of the farm which gave work to dozens of loyal and hard working Venezuelans:

Yes, the cattle was pampered, happy cows give lots of milk and it does get hot in the area:

Yes, the cattle had fans, why not. Las Carolinas was a model of a farm, with a store that everyone coming from Barquisimeto stopped at, to get their regional products. You could tell workers were proud and happy to be and work there. As happy and proud as Mr. Arria’s daughter in the picture below

But as with most things, this has been destroyed by the relentless destructive path of the robolution, Las Carolinas lies abandoned today, the cattle stolen, the facilities destroyed and now truly not in use, because of the order from Dictator Hugo Chavez:

Dirty and unkept, a symbol and tribute to the hate and destruction of Chavez and his XXIst. Century revolution, Las Carolinas lies abandoned, a sad shadow of its former past. The people that used to work for Mr. Arria are now unemployed, trying to make ends meet.Victims of Chavez’ vindictiveness.

Wherever Mr. Arria may be, I wish him a great day, even if his property, his pride and his work has been violated and trampled by Chavez.

He will one day have his day in Court.

For years, Chavez’ Government has been protecting members of Basque Spanish separatist group ETA. In reality, this is a long tradition by which Venezuela allowed some ETA members to come to Venezuela, the difference is that under Chavez these people have been hired by the Government and used in many activities, some legal, others not so legal.

Over the years, there have been many accusations, but the Chavez Government had a written party line for it: Just because a renegade terrorists says so it is not necessarily so.

Except that in most cases denounced in Spain, one name appears over and over: Arturo Cubillas. Cubillas was deported in the late eighties to Venezuela, married a Venezuelan of Basque origins. But rather than lead a quiet life, he continued his ETA activities, linking up with the FARC, according to Reyes’ computer files. Cubillas also managed to get himself hired as an aide to the then Minister of Agriculture Elias Jaua, now the Vice-President of Venezuela.

But through it all, Zapatero’s sympathies for Chavez and his socialist pseud-revolution, held off the cries of the Spanish opposition for a formal complaint.

Until now.

Hot from having a Spanish Deputy formally kicked out as an electoral observer, even if the decision was turned over, and scandalized with the manipulation of the Sept. 26th. election, Spain’s Partido Popular came back home after the election ready to establish a zero tolerance policy for Hugo.

And no sooner had they said September 26th. on the way back, when a Spanish Judge  revealed that two ETA terrorists arrested last week had testified that they were given weapons training in Venezuela and specifically with Arturo Cubillas in Venezuela during the summer of 2008. This was not the first time a JUdge asked Venezuela for information on Cubillas’ activities, except that it was almost met with either silence or denial.

And Chavez appealed to the textbook explanation: “It’s a broken record…it’s a conspiracy…it’s a farce” easily dismissing the news and the request from the Judge.

Except the Spanish National Audience sent a formal request against and vouched for the “total credibility” of the witnesses, at the same time that a TV station showed video of the training taking place in Venezuela. And to make matters even worse, Venezuela’s Ambassador to Spain, former Prosecutor Isaias Rodriguez, held a press conference not only denying any link with ETA, but suggesting that the two ETA players were tortured in Spain to say this and saying he had serious doubts about their statements. Rodriguez, the same guy who once “knew a false witness was telling the truth because he looked him in the eye” and made a farce of Justice in Venezuela while being the General Prosecutor, also dismissed the fact that Cubillas was a “seventh or eighth” category official within the Venezuelan Government.

This truly irked the the Partido Popular who requested the Spanish Government elevate a formal protest to the Venezuelan Government. They were particularly irked by Rodriguez’ suggestion and undiplomatic statements about Spain and the Spanish Government.

That’s what happens when you have bumbling fools as diplomats to reward them for their loyalty. Unfortunately, that’s the story of Chavez’ Government, incompetent fools everywhere.

And today, the Spanish Government put the screws on Venezuela, asking Rodriguez and Foreign Minister Maduro to please look into the matter. And the charges and the pissed-off Spaniards forced the Venezuelan Government to investigate.

What changed?

Easy. These charges are very serious. This is not linking up to FARC, this a middle level Government official training terrorists in Venezuela, now, as recent as 2008. But more importantly, ideology and business have always been Zapatero’s justification for cozying up to Hugo Chavez.

But now there are hints that Chavez’ hold on power may end in 2012 and Chavez is nationalizing a Spanish concern Agroisleña, which I am sure has Zapatero up in arms, but he is likely trying to learn as much as possible about the expropriation before he launches his next formal complaint.

For Chavez, backing down is novel vis a vis the Spaniards. There is a Venezuelan saying: “Chivo que se devuelve se esnuca” (A goat that turns around breaks its neck off), which loosely translated means “What is done is done”.

But this is a new reality for Hugo. Some see the possibility of his reign ending and that changes the rules of the game. He nationalized Agroisleña, but that has an impact on the Spaniards. He denies the ETA connection, but Cubillas is right there at a middle level (not seventh category, more like third or fourth) position in his VP”s former Ministry.

It stinks to high heaven…but Chavez has always thought he could do things and have nobody notice. But it is beginning to back fire.

What will he do? Extradite Cubillas? Revert Agroisleña’s nationalization?

Chivo que se devuelve se esnuca…

The opposition is a majority. The opposition is a majority. Of course, that would only be important if I were a Democrat. True?

Some people were remarkably surprised by Chavez’ announcements this weekend to nationalize Agroisleña, arm his militia, take over land in Caracas and allowing workers to blackmail Polar’s ice cream company EFE, despite the fact that a new collective bargaining agreement was signed a couple of months ago.

I wasn’t. This is precisely what I expected.

This is Chavez’ history, he has used the ballot box only to justify being President, but he is no democrat. He showed it in February 1992 and November 1992, where he plotted and connived to overthrow and kill people. He repeated it in 2003, when he ordered armed confrontation with a peaceful march which resulted in many death. He came back contrite, but as he did, he was plotting how to erase any trace of his acts, the Truth Commission was stone walled and the “coup” tale was successfully spinned.

Then came the Constitutional referendum, which he lost, but proceeded to pass laws that approved precisely what the population had rejected, thanks to an Enabling Law that gave him legislative powers for months. The only thing he could not legislate was his own indefinite reelection, so he held an unconstitutional referendum that allowed him to run again. Finally, facing a Mayor of the Capital District that he did not like, he created a regional authority over him, removed responsibilities and funding and basically castrated the newly elected Mayor of the Metropolitan District.

None of the above are the actions of a democrat.

And neither are those taken this weekend. Chavez lost his mandate a week ago, but he only uses the ballot box at his convenience. This time around it is not convenient to accept defeat, over half of Venezuelans said they want something else, Chavez was deaf to this call.

Unfortunately, Chavez does not learn either from all of the myriad of mistakes he has made. He has tried over and over again to create parallel structures, all of which became largely unsuccessful. People don’t even remember he threw money at a Government-sponsored baseball league to compete with the professional one. That league played all of one game, which started two hours late waiting for Hugo to throw the first pitch.

Chavez also started Mercal to distribute food and once it became inefficient, he nationalized Exito and Cada in the belief that if he can’t start something that works from scratch, then taking it over from those that run a working structure can do it.

But PDVSA says otherwise, as seven years of Rojo Rojito Incredibly Incompentent Management have destroyed the company and its structure, driving the people who knew how to run it to the competition in Canada and Colombia, both of which have either strengthened their heavy oil industry or, as in the case of Colombia, come out of nowhere to become an important player thanks to Venezuelan brain power and know how. Meanwhile PDVSA languishes in its own problems, including Pudreval, falling exports and no new projexts.

It is the reverse Midas effect, anything Chavez touches turns into you know what. And he continues.

And I will not delve into the details of Agroisleña, Daniel knows orders of magnitude more than me about it, but it is the same story. The Government tried to compete with Agroisleña and it failed. Failed for many reasons, the first one being that the Government’s expropriations and take overs of land had reduced Agroisleña’s business to start with. But more importantly, Agroisleña’s success comes from its gigantic network of stores, its decades of working with people advising them technically, financing them, buying crop from them and having the good credit abroad to import seeds, pesticides and general supplies.

Imagine what will happen now when some retired sargents and colonels are mixed in with improvised graduates of Chavez’ universities and told to manage Agroisleña.

The result is terrifying, but is exactly what has happened with every institution that has had a brush with the reverse Midas effect of Hugo Chavez. Remember Sidor? Iranauto? Conviasa? Venalum? The Cement industry? The Sugar industry with Cuban processing plants? The Rice miracle? The first housing plan? The fourth housing plan? The first employment plan? The ninth employment plan?

You get the picture.

Chavez goes relentlessly forward destroying value and scaring the talent, people and values that he does not understand are necessary for the prosperity of the country. All for nothing, except for the promotion of Hugo Chavez.

And this will continue for two more years. The value destroyed will be immense, the time lost will be invaluable. But get ready for it, because that is what is in store for us for the next 27 months. Chavez has not learned anything about management or how things work in the last 11 years, he is not about to start now…