The Devil's Excrement

From today’s Tal Cual quoting the Chavista Governor of Carabobo state, burping General Acosta Carles:

“Those that will be part of the executive staff (of his Administration)
are people who do not belong to any political party, the indispensable
prerequisite is that they have to be Chavistas”

Oh! I see!

Chavez’ Censorship in today’s Washington Post by Jackson Diehl

This story begins at a scientific meeting on Nutrition sponsored by the Bengoa Foundation which took place on March 14^th. and 15^th. in Caracas. In it, Dr. Maria Nieves Garcia from the Medicine Department of the Venezuelan Institute for Scientific Research (IVIC) presented data from a study which showed extremely high levels of anemia in the northern states of the plains (llanos) of Venezuela, which reached alarming levels of over 70% in populations of children under two years old, with overall levels of 32% in children between the ages of 2 and 15.

As background, anemia has been a long storied problem in Venezuela, which has been attacked successfully by adding iron to the corn flour used to make such preparations as arepas, empanadas and other local dishes. This was the result of the work of the founder of Dr. Nieves’ laboratory at IVIC, Dr. Miguel Layrisse who worked in close collaboration with Fundacredesa a center that studies the Venezuelan population and which was founded by Dr. Mendez Castellanos. Dr. Nieves did mention in her talk that some of the corn flour being sold by Mercal, the Government’s food distribution network does not contain iron, a reversal of a method that had been extremely successful in limiting anemia in Venezuela for the last forty years.

The reaction by the irrational revolution was violent and virulent. In the next two days both Fundacredesa and the Ministry of Science published paid ads in major Venezuelan newspapers, questioning the validity of the data (see the text in the Fundacredesa webpage as long as it remains there), questioning the ethics of the author and calling the study “descriptive” and “non-probabilistic (??)”, saying that it did not allow “inferences”.

Clearly, the study irked the authorities by concluding something that goes against the image of the Government, despite the fact that the researcher was simply noting that these levels were a source of concern and that when importing corn flour to sell in the Government’s markets someone had forgotten the experience with local corn flour as a weapon against anemia. Little did it matter whether the story was right or wrong, it simply had to be discredited for the sake of the reputation of the revolution even if they had to damage the reputation of a researcher. These ads in the local press were expensive and obviously the researcher had few weapons to counter it with. In fact, according to a reporter in today’s newspaper the researcher is now “on medical leave” and unavailable.

But even if Dr. Nieves is suddenly “unavailable” for answering questions, she did terminate her collaboration with Fundacredesa in a letter in which she not only defends her conclusions, but explains in detail their meaning. Here are some highlights of that letter:

“The data and analysis provided by IVIC to Fundacredesa are not the property of that institution, nor does my laboratory receive funding to do them. The data mentioned is final and does not require subsequent analysis or changes, (the bold is in the letter), least of all after five months after completing the study and handing in the results to your institution.”

“As to the statement made in the ad in the newspapers: “the conclusions obtained in this study, can only refer to the group sampled and does not represent the population of the northern axis of the Llano and least of all of Venezuela”, based on the nature of the experimental design this must be something that will shake the foundation of Fundacredesa, given that both the design, as well as the recollection of samples is, like it has always been the responsibility of that institution. I should remind you that previous publications by Fundacredesa have been based on studies with similar designs…one of which clearly states that the information obtained can not be taken in a strict statistical sense as representative of the universe, but it does generate a good reference framework. Thus, I ask, when is it convenient that the information be a good reference? Similarly, why does Fundacredesa design costly population analysis and studies that do not allow any inferences?”

“The statement that the study is non-probabilistic because “not all kids under two years had the opportunity to be included in the sample” appears to be the recognition that access for healthy kids (the selection criteria in the study) to health centers is limited, which may be true, but does this mean that as long as this is true we will not be able to determine if there is an anemia problem in the country? Is there any reason to think that kids under two, of the same social strata as that evaluated, but could not be evaluated because they have no access to health centers, is in better shape that those that do?”

“It is a pity that the ads make no reference to the importance of the results and that the numbers obtained are not abstract, THEY REFER TO HUMAN BEINGS. Even if we suppose that that the prevalence of anemia is only representative of the group studied, I remind you that in three states of this country there “lives” a group of children under two years of age that when 137 of them were evaluated, 97 of them were found to have anemia. What is being done about this?”

“On Sunday March 20^th. the Ministry of Science published another ad, where it says that according to data provided by you, my result can not only not be generalized, but the prevalence of anemia reported DOES NOT EXIST. I hope this statement is the result of a study of a sample that is representative of reality. Such data should be made public together with the sources that allow them to reach such conclusions.”

“I close by hoping that more resources and knowledge will be devoted to improve the situation of Venezuelans, more than in statistical manipualtion that do not allow us to see reality”

“Since the studies designed by that Institution do not allow to reach conclusions that will translate into action to improve the quality of life of Venezuelans, since the analysis that are made in my laboratory requires a financial effort, time and work and knowledge and because of the way in which you have attempted to discredit both my data and my professionalism, I terminate the collaboration with your Institution which leaves me with the sad impression that the least important thing in this situation is the health of Venezuelans”

Once again, the revolution is more important than the truth and the truth can be discredited, attacked and wiped out given the resources of the Government. As for science, we already know the Government could care less about it, it already destroyed the premier center for the understanding of Venezuela’s most important natural resource: heavy oil. The difference this time, is that the science refers to actual real and live human beings. “El pueblo”, as our illustrious autocrat would say.

Last week
I was once again in Spain,
a country dear to my heart, because I spent five years of my youth living
there. It is indeed a very special country. Forty years ago Spain and Venezuela found each other in exactly
the opposite positions they find themselves in today. Venezuela was
then a rich country, just out of a dictatorship, trying to make sense of how a
democracy worked. The country had a strong economy, a strong currency and the
private sector was thriving. Spain
on the other hand was a fairly poor country, under the Franco Dictatorship
which dictated how things should be done. Tourism was the main industry in Spain, as the
state tried to push into various areas, ovreregulating the private sector.

Today, the
two countries have taken very different paths and the results are diametrically
the opposite. Spain
is prosperous, the private sector is thriving and they enjoy unprecedented
levels of freedom and democracy. Venezuela on the other hand has
become a relatively poor country, as the standard of living has gone down
significantly in the last twenty five years.

Obviously,
there were complex cultural and educational variables involved in the different
paths taken by the two countries. But in the end, the difference boils down to
one country (Spain) choosing the private sector as its main driver, while the
other one (Venezuela) has been bogged down for forty years in the belief that
this weird form of state capitalism is the solution, even if our current
President claims now to be a socialist.

Chavez is
right when he says that the forty years of democracy were a failure. But the
path he is following is precisely the one that led to the errors of the last
forty years. He has magnified and emphasized the mistakes of the past, taking
the country in the same path that so obviously failed in the 70’s and 80’s. There
is simply one difference: During the forty years of democracy that preceded
Chavez, there were checks and balances that showed the mistakes that were being
made. Currently Chavez controls everything and any criticism or challenge to
his authority leads nowhere.

In the 60’s
Spain
had no oil companies, a state telecom company, little science and an overly
regulated banking system. Venezuela
on the other hand had oil concessions and a Government owned Oil Company, a
state telecom company, a small but world class scientific community and a
banking system that was overly regulated.

By the
time the seventies came around, the two countries took very different directions.
Venezuela
nationalized the whole oil industry, imposed further regulations on the banking
system and did not let go of the telecom company until 1991. Oil prices went up
and the Government created myriads of new Government enterprise,s thinking that
was the way to grow the economy.

Spain followed a different road.
Telefonica was completely privatized and the Government did not get too
involved in running new enterprises. After Franco’s death in 1975 the “socialists”
took over and actually gave the private sector even more of a free hand, the
economy grew, Spain joined the European community and the rest is simply
history.

Venezuela on the other hand was late in
privatizing. Late in closing most of these money losing Government enterprises
and has continues to this day to overregulated the private sector, including
three separate episodes of exchange and export controls in the last twenty
years.

While I am
obviously oversimplifying, let’s look at a few economic areas and what has been
different between these two countries:

Agriculture: Spain was strong in certain areas
of agriculture, particularly orchards, olives, olive oil and wines. Not much has
changed in the last forty years except the emphasis on these same areas of
strength and not self-sufficiency. Yesterday’s olive and wine cooperatives have
led to luxury brands run by the kids of the members of the cooperatives and
mechanization has increased yields. Fewer people live in rural areas, but
production is up.

By
contrast, Venezuela
has been repeatedly pushed into a dream of self-sufficiency which is no more than
a chimera. Meanwhile areas like cocoa and coffee were overregulated,
deregulated and subsequently regulated again for too long and the country has
failed to develop its strengths. Only in some areas of tropical fruits have
there been improvements. Fewer people also live in rural areas, but production
is way down.

Oil: Spain had no oil and no oil
companies in the 60’s and has become somewhat of an oil powerhouse. Repsol and
Cepsa, to name just a couple, have expanded and grown by simply looking
outwards in Africa and America.
A few years after the Argentinean Government privatized YPF, Repsol took over
YPF, while PDVSA stood idly on the sidelines.

Venezuela meanwhile has continued to lose
production capabilities. When Carlos Andres Perez nationalized the oil industry
in 1974, the country produced over a million barrels of oil a day, today OPEC
and the AEI say the country produces only 2.6 million barrels a day, while
PDVSA claims it is producing 3.1 million. PDVSA did expand internationally for strategic
reasons, a policy that was widely opposed by many of today’s Government and
opposition figures. They all claimed the money should be spent in Venezuela and
not abroad. Spain
would have nothing with thinking like that, but our current Government is
actually proposing to sell assets abroad. Go figure!

Telecom: Venezuela’s telecom company is
majority owned by US’ Verizon which inherited it from GTE. It is also the second
largest mobile carrier. The largest is Telcel, majority owned by none other
than Telefonica of Spain, which bought all of Bellsouth’s cell phone concessions
in Latin America last year and owns operating companies in Peru, Chile,
Argentina and Brazil (And 5% of CANTV!)

Banking: In the 70’s the Venezuelan
Government limited the percentage that foreign banks could own in local banks,
essentially creating a strong local financial system. However, lack of adequate
regulation created a financial crisis in the mid-90’s and laws were changed to
allow foreign banks back in. Today foreign banks own over 60% of the local
banks, with two Spanish owned banks in the top four in size. Spanish banks have
become so aggressive that they have expanded all over Europe.
Only last week BBVA announced a takeover of Italy’s number 6 bank Banca
Nazioanle del Lavoro.

Joining
the European community created a scientific system in Spain in the last
twenty years. Twenty years ago, Venezuela’s
science was of higher quality and productivity than Spanish science. This is no
longer the case. Twenty years ago, good Spanish scientists went abroad,
Venezuelans came home. Today, it is exactly the opposite.

These
examples may give an oversimplified view of what has happened in the two
countries, but I believe that we took one path dominated by a mindset of
ideology and a lack of economic culture on the part of our politicians. Spain, on the
other hand, was blessed by the ascension to power of a strong academic and professional
class, which had been relegated to the sidelines during Franco’s Dictatorship. These
capable men became politicians and helped created what it is to me certainly an
economic and development miracle.

Meanwhile,
here in Venezuela
we continue to follow on the same path of errors and improvisation. Venezuela
Inc. is back, PDVSA is being reduced to its minimal expression and the private sector
is overregulated with exchange, financial and export controls. Ideology
continues to dominate action and ignorance rules. Only yesterday a pro-Chavez
Deputy said in reference to an economic concept “the fact that such a concept
does not exist, does not mean that we can not invent it”. It is ignorance and
ideology like that that has taken these two countries, Spain and Venezuela, in such diverging paths
in the last forty years. Nothing in the horizon indicates there is any change
in the near or medium term future.

(Don’t miss the pictures from the World Orchid Show I posted today)

Last week
I was once again in Spain,
a country dear to my heart, because I spent five years of my youth living
there. It is indeed a very special country. Forty years ago Spain and Venezuela found each other in exactly
the opposite positions they find themselves in today. Venezuela was
then a rich country, just out of a dictatorship, trying to make sense of how a
democracy worked. The country had a strong economy, a strong currency and the
private sector was thriving. Spain
on the other hand was a fairly poor country, under the Franco Dictatorship
which dictated how things should be done. Tourism was the main industry in Spain, as the
state tried to push into various areas, ovreregulating the private sector.

Today, the
two countries have taken very different paths and the results are diametrically
the opposite. Spain
is prosperous, the private sector is thriving and they enjoy unprecedented
levels of freedom and democracy. Venezuela on the other hand has
become a relatively poor country, as the standard of living has gone down
significantly in the last twenty five years.

Obviously,
there were complex cultural and educational variables involved in the different
paths taken by the two countries. But in the end, the difference boils down to
one country (Spain) choosing the private sector as its main driver, while the
other one (Venezuela) has been bogged down for forty years in the belief that
this weird form of state capitalism is the solution, even if our current
President claims now to be a socialist.

Chavez is
right when he says that the forty years of democracy were a failure. But the
path he is following is precisely the one that led to the errors of the last
forty years. He has magnified and emphasized the mistakes of the past, taking
the country in the same path that so obviously failed in the 70’s and 80’s. There
is simply one difference: During the forty years of democracy that preceded
Chavez, there were checks and balances that showed the mistakes that were being
made. Currently Chavez controls everything and any criticism or challenge to
his authority leads nowhere.

In the 60’s
Spain
had no oil companies, a state telecom company, little science and an overly
regulated banking system. Venezuela
on the other hand had oil concessions and a Government owned Oil Company, a
state telecom company, a small but world class scientific community and a
banking system that was overly regulated.

By the
time the seventies came around, the two countries took very different directions.
Venezuela
nationalized the whole oil industry, imposed further regulations on the banking
system and did not let go of the telecom company until 1991. Oil prices went up
and the Government created myriads of new Government enterprise,s thinking that
was the way to grow the economy.

Spain followed a different road.
Telefonica was completely privatized and the Government did not get too
involved in running new enterprises. After Franco’s death in 1975 the “socialists”
took over and actually gave the private sector even more of a free hand, the
economy grew, Spain joined the European community and the rest is simply
history.

Venezuela on the other hand was late in
privatizing. Late in closing most of these money losing Government enterprises
and has continues to this day to overregulated the private sector, including
three separate episodes of exchange and export controls in the last twenty
years.

While I am
obviously oversimplifying, let’s look at a few economic areas and what has been
different between these two countries:

Agriculture: Spain was strong in certain areas
of agriculture, particularly orchards, olives, olive oil and wines. Not much has
changed in the last forty years except the emphasis on these same areas of
strength and not self-sufficiency. Yesterday’s olive and wine cooperatives have
led to luxury brands run by the kids of the members of the cooperatives and
mechanization has increased yields. Fewer people live in rural areas, but
production is up.

By
contrast, Venezuela
has been repeatedly pushed into a dream of self-sufficiency which is no more than
a chimera. Meanwhile areas like cocoa and coffee were overregulated,
deregulated and subsequently regulated again for too long and the country has
failed to develop its strengths. Only in some areas of tropical fruits have
there been improvements. Fewer people also live in rural areas, but production
is way down.

Oil: Spain had no oil and no oil
companies in the 60’s and has become somewhat of an oil powerhouse. Repsol and
Cepsa, to name just a couple, have expanded and grown by simply looking
outwards in Africa and America.
A few years after the Argentinean Government privatized YPF, Repsol took over
YPF, while PDVSA stood idly on the sidelines.

Venezuela meanwhile has continued to lose
production capabilities. When Carlos Andres Perez nationalized the oil industry
in 1974, the country produced over a million barrels of oil a day, today OPEC
and the AEI say the country produces only 2.6 million barrels a day, while
PDVSA claims it is producing 3.1 million. PDVSA did expand internationally for strategic
reasons, a policy that was widely opposed by many of today’s Government and
opposition figures. They all claimed the money should be spent in Venezuela and
not abroad. Spain
would have nothing with thinking like that, but our current Government is
actually proposing to sell assets abroad. Go figure!

Telecom: Venezuela’s telecom company is
majority owned by US’ Verizon which inherited it from GTE. It is also the second
largest mobile carrier. The largest is Telcel, majority owned by none other
than Telefonica of Spain, which bought all of Bellsouth’s cell phone concessions
in Latin America last year and owns operating companies in Peru, Chile,
Argentina and Brazil (And 5% of CANTV!)

Banking: In the 70’s the Venezuelan
Government limited the percentage that foreign banks could own in local banks,
essentially creating a strong local financial system. However, lack of adequate
regulation created a financial crisis in the mid-90’s and laws were changed to
allow foreign banks back in. Today foreign banks own over 60% of the local
banks, with two Spanish owned banks in the top four in size. Spanish banks have
become so aggressive that they have expanded all over Europe.
Only last week BBVA announced a takeover of Italy’s number 6 bank Banca
Nazioanle del Lavoro.

Joining
the European community created a scientific system in Spain in the last
twenty years. Twenty years ago, Venezuela’s
science was of higher quality and productivity than Spanish science. This is no
longer the case. Twenty years ago, good Spanish scientists went abroad,
Venezuelans came home. Today, it is exactly the opposite.

These
examples may give an oversimplified view of what has happened in the two
countries, but I believe that we took one path dominated by a mindset of
ideology and a lack of economic culture on the part of our politicians. Spain, on the
other hand, was blessed by the ascension to power of a strong academic and professional
class, which had been relegated to the sidelines during Franco’s Dictatorship. These
capable men became politicians and helped created what it is to me certainly an
economic and development miracle.

Meanwhile,
here in Venezuela
we continue to follow on the same path of errors and improvisation. Venezuela
Inc. is back, PDVSA is being reduced to its minimal expression and the private sector
is overregulated with exchange, financial and export controls. Ideology
continues to dominate action and ignorance rules. Only yesterday a pro-Chavez
Deputy said in reference to an economic concept “the fact that such a concept
does not exist, does not mean that we can not invent it”. It is ignorance and
ideology like that that has taken these two countries, Spain and Venezuela, in such diverging paths
in the last forty years. Nothing in the horizon indicates there is any change
in the near or medium term future.

(Don’t miss the pictures from the World Orchid Show I posted today)

While I
was away the Government finally took over the two largest farms it had
threatened to expropriate ever since the land grab began in December. This
culminates a process that began in November 2001 when the Chávez administration
passed the land bill under the enabling bill which Chavez used to approve 45
different bills at that time.

Problem
was, the original and bill called for some form of efficiency on the part of
the authorities and the Supreme Court declared a couple of articles
unconstitutional, which simply delayed the implementation of Chavez’ original
land grab dream. Essentially, the original land bill mandated a national land
inventory before the Land institute could begin evaluating the expropriation of
land. Three years went by and despite the resources and time spent, the
inventory was far from being completed and Chavez was getting impatient.

At the
November meeting the President told his followers to act immediately and they
did. Rather than follow the orderly process mandated by the Land bill,
Governors, led by the Governor of Cojedes state began “intervening” large land
states or latifundia, which forced the Land Institute to act. As it has become
customary with the revolution, it was all made “legal” within the illegality of
the whole process. Besides sidestepping the requirement of completing the
inventory or proving the large farm states were not productive, two farms,
British owned El Charcote and Venezuelan owned Hato Piñero were finally expropriated while I was away in
the last two weeks. (There are others, but these two are good examples)

It was not
easy to find the justification for taking the farms over. They were both
productive and the owners had land titles going back as far as 1850. Thus, the
legal justification became that neither could prove ownership as far back as
1840. Using this excuse, not only does the Government take over the land, but
rather than expropriate it simply confiscates it. You see, if they never
“legally” owned it, the Government does not need to pay for either the land or
any facilities on it.

Why 1840?
You might as well have said 1491. Basically, few people can prove ownership of
land going that far back in Venezuela.
Ownership of land in Venezuela
is certified via registrars. Each time land ownership is transferred you have
to go to the registry where land is transferred via hand written documents that
refer to the previous owners. Moreover, reference points for boundaries can be
as clear as “twenty paces to the East of the large mango tree”.

But the
larger problem was that from 1858 to 1862, Venezuela had the Federation war,
during which most land records were destroyed. In fact, this has been such a
long standing problem in the history of Venezuela, that the law says that
if you occupy land for twenty years without anyone challenging you, you are the
rightful owner.

All of
these details have been ignored by the Chavez administration, giving as usual
an image of legality while acting in blatant violation of Venezuelan law. And
it seems to play real well in Paris and Peoria.

The
problem besides the illegalities involved for those living here, is that the
same rules applied to most of the city of Caracas
would simply say that the land where my building stands is also owned by the
Government. It is simply a matter of waiting for the right time, much like it
has been done with these farms and many other of the Chavez ideas that have
been shelved in the past waiting for a more appropriate time to implement them.

In
the
end, the sad thing is that the Government will likely destroy the
properties it has confiscated. After all, the Government is the biggest
landowner in the country
and does little with it. Mercal imports rather than promote local
production.
This Government has done very little to protect the environment. But it
does
not matter, the end justifies the means and the end is the
“revolution”, cattle
production is down significantly already at Hato El Charcote, it will
go down
to zero in a few years. Environmental projects at Hato Piñero will be
forgotten,
the species that have been protected by private efforts will suffer,
but the
Government will not care. The question is: will anyone remember?

The news is out that Jimmy Carter has just resigned
from leading the Carter Center, giving out many excuses about helping
the transition for when he and his wife are no longer active in the Center’s
activities. I guess we may never know exactly why he and his wife quit,
but I sure hope it had something to do with the bad job done by the
Center in Venezuela. It certainly sounds strange for both Carter and
his wife to quit at the same time their respective positions at the
Board of Trustees of the Center. I am sure this was forced by other
trustees. Ever since Carter won the Nobel Peace prize the Center’s image has been damaged by its actions.

My feeling is that this is neither good nor bad for the Center itself. It was
Carter’s presence that supposedly gave it its prestige, so I don’t see
how his departure helps. But at the same time, Carter’s leadership in
the eyes of Venezuelans like me left a lot to be desired and the Center
made superficial decisions on Venezuela and the whole process that led
to the recall vote, which hurt the Center’s image. They would have to
find an extermely powerful leader to make up for both these problems.

In the 1970’s, with the first wave of oil price
increases, another leftist populist Carlos Andres Perez, was President of
Venezuela. Perez nationalized the oil and iron ore industries and with the money
from the oil windfall, created the Venezuelan Investment Fund and the Venezuelan
Corporation for Guayana (CVG). Hundreds of companies ended up under these two
umbrellas, with few of them ever showing a profit or even producing anything. Venezuela Inc. was a
gigantic failure, as most enterprises had no business plan, were inefficiently
run and corruption was rampant. Few of them had anything going for them other than desire
or wishful thinking by some Government official that the state should participate in those particular areas.

Venezuela Inc. is back, and much like the first time
around, the decisions are being made at the top, without any serious studies and
most will once again become huge sinkholes for public funds. So far, President
Chavez and his Cabinet have had the state become newly involved in:

-The expropriation of the assets of bankrupt paper company
Venepal. It could not survive with private management; can anyone expect it to
survive under the Government’s supervision? US$ 7 million have been invested in it already.

-Government airline Conviasa, which so far has one
plane and will try to get the Government in what Warren Buffet considers the
most difficult business to be in.

-Venezuelan-Iranian joint tractor venture Veneiran. In
only ten days in existence the company has already faced its first general
strike, when management tried to fire Venezuelan workers because they did not
meet their standards. The most curious aspect is that the Iranian management wants
workers to be under thirty, but all of them are above fifty. Truly a fundamentalist
company.

-Mercal, the food import company which has quickly
become the largest importer of foodstuffs in Venezuela.
So much for endogenous developments!

-Farmal is the pharmaceutical distribution company the
Government is now setting up to imitate the Mercal model in this area.

-CVG Telecom is the Government’s new entry into the
telecom field, after the country’s telephone company was privatized in 1991 and
few invested in Venezuela
after the 2001 Chavez “telecom opening” bill. It will compete with companies managed
by Spain’s
Telefonica and Verizon.

-Yesterday the Government created four new
enterprises: CVA Azucar, CVA Cereales y Oleaginosas, CVA Lacteos and CVA
Empresa Comercializadora de Insumos y Servicios Agricolas. These companies will
be in charge of sugar production, processing and commercialization, corn flour,
pasta, rice and oil, milk and agricultural supplies and services respectively.

The
more things change, the more they stay the same, but “revolutionary”
management will not change the final outcome this time around either.

Many
people tend to minimize Chavez’ ability to think and plan long term. Politically, Chavez
has always stuck to his long term plans and continues to do so. Thus, one needs
to analyze all of the following events in its proper context:

-PDVSA
buys back its debt last summer in an operation that had no financial
justification: It left the company with practically no debt and the price paid
was too high. The only possible explanation was that it was being done to
protect the company’s Board from prosecution, since it had been unable to file
its financials (Is it impossible?) under US
law.

-CITGO
also repurchased its debt. The possibility of this being done to protect its
Board was not feasible, as the company has filed and continues to file
financials due to the partnerships it has.

-Chavez
announces that the country will sell CITGO because the company makes little or no money. This
despite the fact that the company is making record profits and according to one
of its partners, Lyondell, receiving up to US$ 5 per barrel of oil above
market price, under the terms of its contract.

-Chavez
threatens to not export more oil to the US. This could only happen if CITGO
is sold, as the Venezuelan oil company PDVSA, has long terms agreements with
CITGO.

None of
the above events makes sense, unless the plan is to have the country eventually default on
its foreign debt, the moment oil prices drop. The excuse? Easy: The revolution needs
the funds. With no debt in the US,
no property in the US and no
exports to the US, the
effect on Venezuela
will be minimal.

If not,
look at Argentina.
It not only defaulted, but restructured its debt under terms extremely negative
for debt holders who had no recourse but accept. If Argentina
can do it, why can’t revolutionary Venezuela do it too?

Investor
beware.