The Devil's Excrement

I have been doing many things and lots of things have been happening, but I did not have the energy to write on them or it was not worth it. So here are the loose ends I might have written about if things were not so discouraging or if the stories were clearer but you should know about them:

1)      PDVSA tried to give “new” numbers on how much it has handed out to the Central Bank. They are different from earlier ones, simply introduce additional confusion and represent a confession that the law is being violated. But the law seems to be irrelevant by now.

2)      The judge that had issued an injunction and reversed herself two days later was removed by the Judiciary Inspector. Every time a judge rules differently than what the Government ones, they are removed. In this case, I still don’t see what got the Government mad if a new law was coming into effect at anytime that would have removed the effects of the injunction. To keep appearances, she was removed for a different case.

3)      Chavez wants to use Iranian solar technology. Does he know anything about all of the work done in Venezuela in the field? Does he know the landing lights in Margarita airport have solar panels since the 80’s?

4)      We were promised PDVSA’s audited 2003 financials again, this time for June. Should we believe it?

5)      Chavez called former Spanish Premier Jose Maria Aznar a fascist. The President of Aznar’s party called Chavez dumb and “disiquilibrated”.

6)      Interesting interview with a pro-Chavez Professor who was fired recently after being in the Government for six years as Head of the higher education sector. Best quotes: “You can not give a degree to compensate a social deficiency…If there is something elitists and exclusive it is Cuban universities, that is why they are advanced in areas like health…There is a sector that believes that quality (in education) is a bourgeois concept…None of those programs has started”

7)      The Interamerican Human Rights Commission says Venezuela does not comply with Human Rights treaties alleging sovereignty.

8)      While the land grab by the Government continues in Venezuela with expropriations and no land ownership will ever (by law!) be given to individuals, Chacao Mayor Leopoldo Lopez presented in Chicago his project that gave land, so far, to the inhabitants of two large barrios in that municipality of Caracas.

9)      Through conversations I learn that while the Government is pushing cooperatives, workers in a cooperative can not form a union and get none of the labor benefits under Venezuela’s tough Labor laws.

10)  Lots of noise asking the Government to say something on the murder of Prosecutor Danilo Anderson or calls for the removal of the Prosecutors.

I have been surprised by how little has been said about the fact that the new Penal Code maintains the discrimination against women when it comes t adultery, the new Code was rewritten, but should have been written to comply with all aspects of the new Constitution.

The new Venezuelan Constitution guarantees equality to men and women in its Article 21 which says: “All persons are equal under the law”. Not content with that, it continues in part 1 and 2 of that article:

1. Discriminations based on race, sex, creed or social conditions will not be allowed…
   
2. The law guarantees the legal and administrative conditions so that this equality under the law is real and effective…

Sounds pretty strong, no? Well, the recently approved penal Code keeps treating women and men quite differently and seems to reflect the machista society we live in. For example:

Article 394. The woman that commits adultery will be punished with prison of six months to three years. The same penalty will be applied to the coauthor of the adultery.

Notice that it does not say “and vice versa” at the end. It really says this is the punishment for women who commit adultery and if a woman commits it, the man she did it with will be subject to punishment. But it does not say it is a crime for a man to commit adultery.

That this is the case actually becomes quite clear in the next article of the law:

Article 395. The husband that maintains a concubine in the conjugal home, out of it, if the fact is well known, will be punished with prison of three to eighteen months. The punishment will produce de facto the loss of marital power. The concubine will be punished with prison of three months to a year.

So, these two articles together say. A married woman who commits adultery will be punished and so will her partner in committing the crime. For a man to commit a crime, the woman has to live in then home of the man or she has to maintain her in notorious fashion. Outrageous discrimination, no? Where are women and feminist groups? Where was the Attorney General? Where was the Cabinet’s lawyer (Who is woman)?

That this was the intent of the legislator is clearly expressed in Article 398, where it says that these crimes will be exempt from punishment when:

1. In the case of the accusation by the husband, when the woman can prove that the husband had committed the crime specified in Art. 395, or had forced or exposed his wife to prostitution or incited or favored corruption.
   
2. In the case of the accusation by the woman, when the husband proves that she too committed the crime described in Article 394.

To top it all off, if the accusing partner dies during the process or during prison, the punishment ends, possibly inducing all sorts of interesting criminal intrigues.

So my friends, if you are a married woman there is not much you can do. If you are a man, single or married, beware of married woman. And if you are a married man, don’t have a notorious concubine, or be very discreet. But single women or one night stands are really OK.

Women groups should take notice, no?

As pointed out by Roglaf in the satellite picture I posted below, those pictures come from a NASA program you can download here:

http://worldwind.arc.nasa.gov/

I juts spent about three hours using it, it is easy to use once you get the hang of it. It is keyboard driven, so make sure to print the keyboard with the commands if you are going to use it. Here are two more pictures of Caracas without any processing, obviously the image I posted last week had some processing. I think the white can be either clouds in the mountains or areas with no vegetation.

Caracas from the South mountains are in front    From the north, you can see Vargas, the airport and behind the mountains Caracas

For a Government that is so inefficient in carrying out Justice, the Venezuelan Government has been amazingly diligent in the case of Cuban exile Luis Posada Carries. Posada Carriles, who is 77, is accused of plotting to blow up a plane from Cubana de Aviacion in 1976 while in Venezuela. In fact, Posada was jailed, tried twice and acquitted by both a Venezuelan military and a civilian Court, but the case was appealed at that time and Posada was jailed again. He escaped disguised as a priest.

Cuba also wants Posada Capriles for bombings in that country, but Venezuelan authorities had requested the extradition of Posada, using the reciprocal extradition treaty with the US, even before he had officially resurfaced in the US, which would take precedence over any Cuban request. Castro held a rally asking the US to jail Posada, which the US did the minute he resurfaced, but has not asked that he be sent to Cuba. The US, of course, would never turn Posada over to Cuban authorities, where he might not get a fair trail and would be jailed or sentenced to death, by a fairly bad system of Justice.

The question is why is Venezuela so intent in extraditing him? You see, Venezuelan law is very quirky. For reasons that I have never been able to understand in Venezuela, if you are over 75, you can not be jailed. I imagine there is some intent of being merciful there, but it still boggles my mind that such a law exists in our penal code.

Thus, if Posada Carriles, who is 77, were to be sent here, he would be seen by a judge the first day and then he could have his lawyers request that the Court substitute whatever location or place he pleases as a substitute to jail time. Given that Posada Capriles has no home in Venezuela, he could choose a Hotel, for example, and the Court would have to grant it automatically, it would have no choice, as long as he does not step out of its boundaries .The latter is definitely an important cost to the Nation.

Thus, you have to really wonder when the Vice-President says that Venezuela will not turn Posada over to Cuba, whether he really means it. The other option is to have Posada solve a few of his personal problems at once: He would have a country to live in, a comfortable place to stay and the assurance that he can not be extradited anywhere. Moreover, he has lived in Venezuela before. Given his current status as a man with no country, that certainly seems like an extremely nice choice. At the same time, Venezuela would look really silly after fighting to get him with such intensity, to have him half-free and holding Court in front of the press daily.

The only thing there is no chance of, is that he will be found innocent for a third time.

Note added: The Penal Code actually says this applies for people above 70, not 75 and that house arrest will last up to four years.

A piece of revenge by Teodoro Petkoff in today’s Tal Cual

Venezuela has the peculiarity, that what does not happen in Caracas is almost as if it never happened. Sometimes, things happen in the province, quite horrible things such as the action of police extermination groups that it is only when they bounce back to Caracas, as in the case of Guarico for example, through the parliamentary investigation about Governor Manuitt that they resonate nationally.

This sort of opacity that coats the province allows the officialdom to commit abuses, run over people or act arbitrarily, and which rarely are national news, which insures the impunity of the authors.

What is happening with Orlando Fernandez Medina in Lara state is truly scandalous and it is necessary to shed light about all of it. Orlando was the Governor of that state and is a social fighter, well known in all of the Central-Western part of Venezuela, and even in Caracas, as he was a Deputy in the National Congress.

Fiery, tough and so daring that it borders on temerity, Orlando not only garnered the backing and even devotion of thousands of poor larenses, but he was also the nemesis of the corrupt, sleazy and bandits of all kinds, some of which were tried based on his  accusations, which were always well documented. With the regional political group that he leads, “OFM”, he backed the beginning of the Chávez Government, but very quickly he became disenchanted and since them he has acted as an intransigent critic of the Reyes Reyes administration (the current Governor), maintaining himself as the consequent defender of all popular causes.

In the recent elections he was the axis of an opposition group and came in second place in the race for the Governorship.

The harassment that he has been the subject of recently, reaches almost grotesque levels, as we reveal today here(page 3). His daughter, a worker for the last sixteen years in the Educational Zone of the state and a union leader, was fired, “for signing” as well as for not paying attention to the unusual request to “untie” herself politically from her father. An injunction that protects her from being fired was not recognized with audacity, because in that Educational Zone “that has no value”. There was also an attempt to revoke the election of the two regional deputies of “OFM” proclaimed and functioning since months ago, through a strange agreement with the CNE, aborted up to now given the absurdity and illegality of the attempt, but still pending of a definitive decision by the CNE. Threatened with being kidnapped, the judicial measure ordered by the Attorney General of protecting his home has not been executed. But the final cherry on the top is the attempt to reopen against Orlando an old homicide case, which his then enemies accused him of at the time, with the result that the then Supreme Court (not composed precisely by political friends of the larenese leader) dropped the charges and declared his innocence. Well, a few days ago, someone named Gaston Silva, a former convict and jailed for fraud and now buddy of Luis Velasquez (a Supreme Court Justice) in the judicial “cleansing” in Lara, announced publicly the reopening of that old case, which on top of that has already been tried. All of the scoundrels of Lara that Orlando fought for years are dancing on one foot. They think that this is the hour of revenge.  The ironic and sad thing is that the “revolution” has placed itself at the service of that revenge.

Daniel has more on the provinces’ plight here

A friend sent me this 3D visualization of the satellatite images of Caracas which is pretty neat, so I thought I would share it. For those that have never been here, on the right you have the valley of Caracas, 1000 meters (3,000 feet) above sea level. In between you have the majetic Avila mountain of the Cordillera de la Costa and then you have the coastal area, you can even see the international airport on the left by the sea.

PDVSA has been in the limelight for the last few weeks. While the Government wants to claim that there is some sort of conspiracy against it surrounding PDVSA, the truth is that it was Chavez himself who really set the whole thing in motion by admitting a while back that production was below the OPEC quota, something that analysts have been charging for quite a while. To confuse the issue more, the all-powerful Minister of Oil and President of PDVSA immediately charged that this was not true contradicting the President who a few days later went back to the old position that production was barely down and above the OPEC quota.

The second act surrounding this, involved the “firing” of as many as 12,000 PDVSA workers in the Western part of Venezuela who were under contract, to be replaced by only a contingent of 3,000 to 4,000 workers likely to be chosen from the same group. The Government has denied this emphatically, saying they were not being fired, their contracts were simply expiring. This raised the question of why 12,000 workers were needed before and less than a third now. Two explanations were put forth for this: One, that these were all political hires before the recall vote who were let go. Two, that the workers were no longer needed because of the drop in production of in the Western part of the Nation.

The third act was introduced by Economist Domingo Maza Zavala, who is a Central Bank Director; Maza Zavala was interviewed in the El Universal saying that as much as US$ 20 million per day is not being turned over to the Venezuelan Central Bank by PDVSA. By law, PDVSA is supposed to transfer all of the foreign currency it receives to the Central Bank; it can only keep a “rotary” fund of US$ 600 million for its expenses abroad.

There have been other discussions surrounding PDVSA mostly generated by the Government which has been changing the definitions of income tax that apply to the operational agreements, as well as corruption charges, but these have been secondary to the discussion at hand.

The press has jumped on the issue, it not only sells newspapers and makes the Government look bad, but it is a very valid concern to wonder what is going on at PDVSA. Not only does PDVSA generate most of the revenues for the Government, but Chavez’ political platform when he first ran for President was based on how the oil industry was being handled. Chavez charged then that there was no transparency within the company, that foreign companies were being giving too much of the oil production of the country and that foreigners had too much of an influence on how it was being run. Today, there is very little transparency (the 2003 financials have yet to be turned in to the SEC), no public bidding is being done for any gas or oil fields, the percentage of oil produced by foreign companies has increased and two foreigners sit on the Board of PDVSA and only foreign companies are likely to be given new fields. It is indeed a field day for the media.

This weekend, there were many articles on PDVSA and its problems in the national press. El Nacional had an article yesterday which you can read here, where independent analysts claim that PDVSA is producing one million of barrels less a day than what is being claimed by the Government. Gustavo Coronel wrote an open letter to President Chavez. This weekend, there were articles in El Universal, La Razon, Zeta, El Nacional and many others, hammering on the Government and its mishandling of PDVSA. Chavez showed that he is sensitive to the issue, attacking all of these newspapers by actually showing them, only hours after being published and showing his skin is really getting thin, as discussed by Daniel, who points out how carefully Chavez appears to read these “bad” (or should I say “crappy”) opposition papers.

The whole point of this article is to attempt to shed some light into who is right and to what extent. Is Venezuela producing so much less as it is being claimed? If true, this not only would show that this Government lacks any scruples, it would say the prospects for Venezuela are very bleak. Bleak, because the country depends so much on oil. Bleak, because even if the Chavez administration were to leave tomorrow, the recovery of PDVSA would be extremely difficult, it at all possible. Difficult, because the company has now become completely politicized, which would be really difficult to eradicate, almost impossible, because PDVSA did have talent, most of which is now spread around the world, or doing other things and would be very skeptical of dropping everything to go back to PDVSA. Moreover, it may take decades to educate the type of people needed to run a world class corporation like PDVSA.

Oil Production:

The two positions are best described by the following graph from El Nacional yesterday:

What it has is the Official numbers (light blue) for oil production, compared to the “unofficial” numbers (dark blue) that are being given out by analysts who are mostly ex-PDVSA workers or independent geologists.

The numbers agree for both the “Operating Agreements” (Convenios) in which marginal fields were sold to foreign companies in the 90’s and the “partnerships”, the heavy crude projects (Faja) in which PDVSA has retained a 42.5% stake of each project but the whole plant was built and is being run by foreign companies. Thus, there is no disagreement there; Venezuela produces 532,000 barrels of oil via the agreements and 624,000 barrels of synthetic crude made from heavy oil.

The big discrepancy is in how much the Western (Occidente) part of the nation is producing and how much the Eastern (Oriente) part is producing. Obviously, Occidente seems to be in the limelight, since the discrepancy is over 700 thousand barrels per day.

Obviously, we can’t possibly check what is being produced. But there are official numbers that are released by either the Government or PDVSA that will tell us more. However, it is important to note that

–The 2005 budget was based on total production of 3.6 million barrels of oil a day that is clearly not being fulfilled.

–The 625,000 barrels a day from the Faja are new, in the sense that in 2002 none of these projects (Hamaca, Cerro Negro, Petrozuata and Sincor) was producing any oil, thus this is “new” production, which was not in existence before the strike, when PDVSA was said to be producing 2.8 million barrels of oil a day.

—Venezuela consumes about 400,000 barrels of oil a day, 360,000 of which is gasoline and 40,000 in other products. I could not get a more precise number from any source. Thus, if the Government is right, Venezuela is exporting 2.765 million barrels of oil day, while if the analysts are right; Venezuela is exporting some 2 million barrels of oil a day.

Price of Oil: The price of Venezuelan oil is different than that of West Texas or Brent. Venezuela produces a basket of oils that goes from very light crude, which you could probably use in your gas tank right off the well, to very gooey stuff that is found in the tar sands. PDVSA publishes every Friday afternoon the average price of the Venezuelan oil basket of exported oil for the previous week. This “basket” is supposed to have the same mixture as the exports. PDVSA used to say what this mixture was in the old days, but there is no information about this anymore. I will assume they keep adjusting this to that profile. This historical data can be obtained from Bloomberg and can be seen below, where I plot that weekly price since June 2004:

In theory, if you multiply the weekly production of oil by this number you should get the amount of sales PDVSA did abroad. Now, from the data on that graph we can get the average price of an exported barrel of oil in 2005, it comes out to US$ 39.202 per barrel for the first three months of 2005.

Dollars handed over to BCV: The Venezuelan Central Bank (BCV) does not release details of the amount handed over by PDVSA day by day to the monetary authority. But according to this article in El Universal, both the President of PDVSA Ramirez and Central Bank Director Maza Zavala agree that the oil company turned over US$ 6.433 billion in the first quarter of 2005, to fulfill the law. Now, the law does say that PDVSA can subtract from this any expense in foreign currency to keep in a fund that should never exceed US$ 600. Thus, the 6.433 billion seems to be an official number, if we believe El Universal.

From this, we can derive some initial numbers:

–At US$ 39.202 per barrel, if PDVSA has handed over US$ 6 433 billion in the quarter, it means that PDVSA exported some 1.823 million of barrels of oil a day at the average price of the Venezuelan oil basket during the 90 days of the quarter. This is 9% (183,000 barrels a day) above the “unofficial” estimates but 34% (942,000 barrels a day) below the official production numbers given by the Government, after subtracting the 400,000 barrels a day for local consumption in both cases.

The problem is that PDVSA does not have to hand over all of the foreign currency; it can keep whatever it needs to pay for foreign expenses. One can estimate if the difference comes from this:

Case 1: The analysts are right. This means PDVSA keeps every day, US$ 7.17 million for its foreign expenses or US$ 2.6 billion a year.

Case 2: The Government is telling the truth and PDVSA keep everyday US$ 36.92 million per day or US$ 13.475 billion dollars a year.

Given the amount of money spent by PDVSA locally, the lack of investment in exploration which requires foreign technology, the fact that PDVSA has no debt and most of its expenses are local, it seems as if the second numbers is simply absurd and the real numbers is closer to Case 1 than Case 2, by quite a bit. Thus, the numbers, as derived from official figures, appear to clearly indicate the country’s oil production is way below what the Government says or the PDVSA is keeping part of the foreign currency it is supposed to turn over to the Central Bank, in clear violation of the law.

This suggests all of the screaming is just a smoke screen to hide the reality of the tragedy at PDVSA

Last Wednesday afternoon, a judge sent her decision to the Venezuelan Comision Nacional de Valores (the equivalent of the US’s SEC) ordering brokers and all those regulated by the Capital Markets Law (CNV), to cease operations like the conversion of local shares of publicly traded companies into ADR’s and any other operation using instruments that “may lead to obtaining foreign currency at a price different than the official one”.

There were many peculiar things about this decision:

–It has never been clear why the judge issued the order, in the original decision the judge says some lawyer requested it, but it never revealed why or in what context.

–It prohibited things that are not explicitly prohibited in the decree that established currency controls in 2003. That decree explicitly mentions gold and prohibits the trading of Venezuelan Sovereign bonds in local currency. In fact, that decree recognizes the ADR programs already registered. But the judge was saying only what was allowed in that decree was valid, which is contrary to our legal system

–It focused on the conversion of local shares to ADR’s or vice versa, a mechanism by which you buy, for example, seven CANTV shares in the Caracas exchange and convert them to one ADR of CANTV which trades in the NYSE and later sell it and obtain foreign currency. This mechanism is a marginal mechanism as its trading represents an average of US$ 300 thousand per day, all of it not necessarily related to changing currency.

–It ordered brokers to stop doing this, but an order by a Court like that is not the law, it applies only to those that are notified, it did not apply to banks, for example, and it certainly did not apply to Government bonds which are explicitly exempt for the Capital Markets Law.

–The decision by the Court went against the last draft of the bill the Government is promoting to penalize foreign exchange illegalities. That bill explicitly exempts instruments such as stocks and bonds, otherwise the Government could not issue dollar denominated bonds in local currency like it has been doing and wants to do in the future. The decision clearly took the Government by surprise.

All the decision did was cause some confusion on Thursday, which drove the “parallel market” up Bs. 50 (2%), the local shares of CANTV down 5% and gave us a parade of “experts” on TV all day Thursday making superficial and inaccurate statements on TV. I particularly loved one that spoke for ten minutes and at the end was asked a question and said he had not read the judge’s decision.

But on Friday morning the same judge did one of Venezuela’s fastest judicial flip-flops when it reversed all of her decision as if by magic. She did this after lawyers from the CNV and those representing a local broker told the judge that “this could cause a grave financial crisis for the country” (huh?). Curiously, one of the lawyers representing the broker was none other than Esther Bigott de Loaiza, who has defended none other than Hugo Chavez in a number of cases brought against him and is known as the “President’s lawyer”. These arguments is simply silly, the suspension of the conversion of ADR’s was nothing but a temporary nuisance irrelevant to the finances of the country. Temporary because once the new bill is approved in the next couple of weeks, this decision would have been moot; a nuisance because stopping what is already a cumbersome and almost irrelevant exchange mechanism does not impact the finances of this country.

The question left hanging in the air is still why the judge made her original ruling. What prompted it? What was the objective? El Universal seems to suggest someone wanted the parallel rate to go up, but the measure barely made it budge. Who intervened? Why the efficiency? Definitely too many questions in the air to answer, but clearly Government officials intervened to have the flip flop and all of you should know exactly why…In Spanish we say:”Piensa mal y acertaras”, Think badly and you will be right, well, think about last nights article about Father Gazo.