The Devil's Excrement

Guadalupe sends this invitation to a concert

The Democratic Coordinator and tthe glorious people of Venezuela  present: Fugue in “Si” minor by Hugo Chavez and his corrupt combo. August 15th. Price of admittance: A resounding “Si”

And speaking of true colors, I was totally flabbergasted by the news that the President of the Consejo Nacional Electoral, Francisco Carrasquero, was either proposed or has proposed himself for Justice of the Supreme Court to fill the twelve new positions in that Court. He is President of an Electoral Board that will be making critical decisions in the next few weeks which will require his independence and impartiality. Thus, there seems to be a big conflict of interest to allow his nomiantion when one side in the electoral dispute holds the majority required to name him to that Court. Will this influence his decisions? Nobody knows, but it certainly places him unnecessarily in a position where there is the possibility of strong conflicts of interest. At best, Mr. Carrasquero has shown, once again, to lack the common sense and balance required for the position he holds. I believe he should resign from his current post if his name will be considered during the periods in which he will be make decisions that may affect the outcome of the recall referendum and a possible Presidential election. That is the only honorable thing for him to do.

I was extremely critical of the superficial positions taken by Human Rights Watch on the Chavez Governemnt in 2002, but I guess by now they have seen the true colors of this revolution as witnessed by the translation below of the Letter from Jose Miguel Vivanco of Human Rights watch to Hugo Chavez:

Your Excellency
Hugo Rafael Chávez Frías
Presidente de la República
República Bolivariana de Venezuela
Palacio de Miraflores
Caracas – VENEZUELA

De mi mayor consideración,

I have the honor of addressing your Excellency to express my profound concern by the reply of your Government to a report by Human Rights match about the threats against the independence of the judicial power in Venezuela that we presented a few days ago in Caracas. Instead of responding to the contents of that report, high Government officials resorted to a series of charges without foundation and absurd accusations against my person and the organization that I represent.

Our report entitled “Manipulating the rule of law: The independence of the judicial power threatened in Venezuela”, examines the serious risks that affect the independence of the judicial power in Venezuela and its consequences on the rule of law. Specifically, it describes our concerns over the new law of the Supreme Court which was enacted last month. This law allows for a simple majority of the National Assembly to pack it with its supporters as well as purging the Court, undermining in this way the independence of the judicial system by jeans that violate fundamental principles of the Venezuelan Constitution and international human rights law. The report emphasizes that the political occupation of the Supreme Court will aggravate even more the lack of independence of judges, most of which do not enjoy any stability in their positions. 

On the other hand, the report expresses that Venezuela is still on time to save the independence of the judicial system and with that end it recommends urgent measures that your Excellency and your supporters in the National Assembly should adopt to avoid a grave and irreparable harm to one of the powers of the state. Concretely, we believe that it is fundamental that the implementation of the new bill be postponed and that those articles that allow for the political control of the highest court of justice in Venezuela be voided.

We offered the opportunity to discuss our conclusions and recommendations directly to your Excellency and your main Ministers and listen to your points of view about this important matter. Because of this, before traveling to Venezuela we requested meetings with the Vice-President of Venezuela Jose Vicente Rangel, the Minister of the Interior and Justice, Lucas Rincon Romero, the Foreign Minister, Jesús Arnaldo Perez and your Excellency. Unfortunately, only the Foreign Minister accepted to meet with us, but cancelled the meeting hours before the time set for it.

The Foreign Minister, on top of that, pointed out that we had not traveled to Venezuela to “have a dialogue, but to make groundless accusations”. Nevertheless, it was him that cancelled the meeting that we had established to discuss our report. In the mean time, Vice President Rangel, who also abstained himself from establishing a dialog with Human Rights Watch, and even without knowing the contents of our report, responded with insults and qualifications such as “mercenaries at the service of imperial powers” and “spokesmen for the Government of George Bush” even reaching the point of inventing connections with the intelligence services of Pinochet.

The groundless charges by the Vice President against human Rights Watch and I, in the sense that we represent the interest of the Government of the United States have to amaze anyone with elementary information about developments at the international level. For more than 20 years Human Rights Watch has been one of the most rigorous critics of US policies that affect the protection of human rights. Since George Bush became President we have produced 27 reports which document human rights violations, compared with two reports on Venezuela that have been published in the same period of time. These reports about the US, among other matters, criticize the current Government for the treatment to the prisoners of war and presumed terrorists detained in Guantanamo and other part of the world. At the time, also we criticized the statements by the Bush administration when he made your Excellency responsible for the coup in April 2002.

The most recent accusations of your Vice President against me, about the supposed links with the police of general Pinochet, are equally infamous. For more than 20 years I have actively participated in initiatives to take to Justice Mr. Pinochet and members of his security services for the atrocities committed during the military dictatorship. Mi compromise in the defense e of human rights in Chile and the hemisphere is a matter in the public domain.

The offenses of the Vice-President not only reflect, in the best of cases, a profound ignorant on his part, but gravely affect the credibility of your own Government in front of the international community. I hope your Excellency Hill publicly repudiate these statements and recommend to him that he abstain from making similar accusations in the future.

We trust that your Excellency and the more reasonable members of your Government opt for taking care in a responsible and effective manner our grave charges that we have made in our report and that you adopt measures in the short term to avoid the political control over the judicial power.  In that respect, I would like to reiterate our disposition to establish a respectful and constructive dialogue with the authorities of your Excellency’s Government.

Respectfully,

José Miguel Vivanco

HRW

While Hugo Chávez received as part of his Presidential campaign over a million dollars from the Spanish bank BBVA, which was absolutely illegal because he never reported it and nobody knows where the money went to and nothing ever happened, today Leonardo Carvajal was indicted for conspiracy for receiving funds for his NGO whose purpose is to promote private education. Carvajal received contributions of less than 30,000 dollars for his NGO. The illegal contributions to Chavez’ campaign were proven by Judge Sebastian Garzon in Spain (the same one who became famous for indicting Chilean Dictator Pinochet for his crimes), but the same shameless Attorney General who allows this conspiracy charge to go forward stopped the accusation against Chavez. The double standard of the pretty revolution!!

We have seen many bizarre tales in the last few years of the Bolivarian revolution. In the end, never had politics ruled above everything else in Venezuela like during the Chavez administration. Never have there been so many cases of obvious use of information for profit like in the last few years. But when we think we have heard enough, a new case appears to opaque the old ones and give new meaning to the words bizarre and Byzantine. Such is the case of the PDVSA bond buyback announced today.

But let’s step back a couple of weeks: PDVSA has had about US$ 2.7 billion outstanding in bonds denominated in foreign currency. Not that long ago, these bonds were yielding more than the country’s sovereign bonds, which was somewhat non-sensical since the fortunes of Venezuela are tied so strongly to the fortunes of PDVSA, the country’s oil exploration and production company. PDVSA’s bonds trade thinly in the international markets, that is, if a foreign fund wants to build a significant position in one of them, it has to do so slowly, so as not to prices higher. The company has bonds mostly in US currency, from maturity dates from 2006 until 2028.

Two weeks ago, something strange began happening to the company’s bonds. Demand began increasing and prices followed, with some international brokers looking for fairly large amounts. Within days, most issues were up significantly with those with longer maturity increasing the most. But what made the increase strange was not only the price increase, but that the daily volume being traded rose dramatically. So dramatic, that it simply made no sense. According to investment bank UBS on June 15^th. alone, more than US$ 300 million were traded in PDVSA bonds, an incredible 12% of the total amount outstanding. At the time, the explanation was that the company itself was taking advantage of the high oil prices to buy back the company’s bonds, particularly those that had the sharpest discounts. Within days the rumor became that the company was ready to announce a buyback of some of its bonds.

Last Friday, the Financial Times was even more precise, saying the company would announce today the buyback of as much as US$ 1 billion in the bonds, even naming the underwriters for the buyback. If true, the early rise in prices would indicate a leak of information that someone took advantage of in style, given that the price of some bonds had risen by as much as 9% during the ten day period.

Well, today PDVSA announced the buyback plan not of US$ 1 billion, but of all of its outstanding debt. Moreover, the premiums paid are such that anyone purchasing the bonds in mid-June could have made profits of as much as 20% in the bonds with the longest maturity. Clearly, somebody profited from the information and the amounts and margins were simply huge and obscene. Another case for the annals of this “pretty” revolution. Will we ever know who profited from it? I doubt it, but I also doubt they are part of the opposition.

But the largest question is why would PDVSA do this? From a financial point of view, there seems to be very little rationale for buying back these bonds at such prices. PDVSA would have a difficult time placing new bonds in the international markets at such low interest rates. Additionally, at this point in time, PDVSA needs financing for its future projects and despite the high oil prices, it can not go at it only with its own resources. Margins in the oil business are such that it will always be advantageous for a properly run oil company to borrow at current interest rates to invest in new projects. If not, witness Exxon/Mobil, a US$ 290 billion company, with US$ 80 billion in debt.

Thus, it would seem to make little sense for the company to do this buyback, except that the company has been having problems completing its financial statements. Since most of these bonds are registered abroad the company has to submit its financials to the SEC. The deadline for such a submission is June 30^th. with an extension being possible. The June 30^th deadline seems almost impossible to meet since the company has not even held its shareholders meeting to approve its financials. But if the PDVSA Board asked for an extension and then bought back all of the bonds, then the requirement that it submit its financial statements to the SEC would simply disappear. Ingenious and bizarre: eliminate all of the foreign currency denominated debt so as to avoid possible violations of the law abroad. They could care less about Venezuelan laws or the health of PDVSA; after all, according to local regulations the financial statements should have been presented by March 30^th. which did  not happen, but this has no relevance in a country without laws.

Obviously, none of this makes any sense from a financial point of view. PDVSA should be increasing its debt so as to embark in the type of investment programs that it needs to maintain the country’s oil production. It needs to invest as much as US 40 billion in the next five years, which would make no sense to have it financed from its own resources, more so when production has declined significantly in the last year and a half. But in the Bolivarian revolution politics is above rationality, long term planning and sensible management. It is more important to save the rear ends of the irresponsible heads of the oil industry that have been running the industry like a greasy diner for the last year and half.

Of course, there may be an even more bizarre explanation: The Government will turn around and issue the same amount in dollar denominated PDVSA bonds to local investors to be paid in local currency. In this manner, the coupons may be even lower than those that are currently outstanding and if issued under Reg. “S” will require no registration and filings in the US. Furthermore, issuing such a bond would push the parallel dollar exchange rate dramatically lower.  Thus, the law would be skirted and PDVSA would have its cake and would have eaten it too.

No matter which of the two option takes place, in the end one thing is clear: Transparency will simply disappear from the company’s operations. Once there is no requirement for filing, Venezuelans will simply not be able to see or know what is going on within the industry that represents the lifeblood of the country. This from a Government that got to power asking for more transparency from PDVSA and complaining about the lack of decision power by the citizens in their most important industry. Bizarre indeed!

We have seen many bizarre tales in the last few years of the Bolivarian revolution. In the end, never had politics ruled above everything else in Venezuela like during the Chavez administration. Never have there been so many cases of obvious use of information for profit like in the last few years. But when we think we have heard enough, a new case appears to opaque the old ones and give new meaning to the words bizarre and Byzantine. Such is the case of the PDVSA bond buyback announced today.

But let’s step back a couple of weeks: PDVSA has had about US$ 2.7 billion outstanding in bonds denominated in foreign currency. Not that long ago, these bonds were yielding more than the country’s sovereign bonds, which was somewhat non-sensical since the fortunes of Venezuela are tied so strongly to the fortunes of PDVSA, the country’s oil exploration and production company. PDVSA’s bonds trade thinly in the international markets, that is, if a foreign fund wants to build a significant position in one of them, it has to do so slowly, so as not to prices higher. The company has bonds mostly in US currency, from maturity dates from 2006 until 2028.

Two weeks ago, something strange began happening to the company’s bonds. Demand began increasing and prices followed, with some international brokers looking for fairly large amounts. Within days, most issues were up significantly with those with longer maturity increasing the most. But what made the increase strange was not only the price increase, but that the daily volume being traded rose dramatically. So dramatic, that it simply made no sense. According to investment bank UBS on June 15^th. alone, more than US$ 300 million were traded in PDVSA bonds, an incredible 12% of the total amount outstanding. At the time, the explanation was that the company itself was taking advantage of the high oil prices to buy back the company’s bonds, particularly those that had the sharpest discounts. Within days the rumor became that the company was ready to announce a buyback of some of its bonds.

Last Friday, the Financial Times was even more precise, saying the company would announce today the buyback of as much as US$ 1 billion in the bonds, even naming the underwriters for the buyback. If true, the early rise in prices would indicate a leak of information that someone took advantage of in style, given that the price of some bonds had risen by as much as 9% during the ten day period.

Well, today PDVSA announced the buyback plan not of US$ 1 billion, but of all of its outstanding debt. Moreover, the premiums paid are such that anyone purchasing the bonds in mid-June could have made profits of as much as 20% in the bonds with the longest maturity. Clearly, somebody profited from the information and the amounts and margins were simply huge and obscene. Another case for the annals of this “pretty” revolution. Will we ever know who profited from it? I doubt it, but I also doubt they are part of the opposition.

But the largest question is why would PDVSA do this? From a financial point of view, there seems to be very little rationale for buying back these bonds at such prices. PDVSA would have a difficult time placing new bonds in the international markets at such low interest rates. Additionally, at this point in time, PDVSA needs financing for its future projects and despite the high oil prices, it can not go at it only with its own resources. Margins in the oil business are such that it will always be advantageous for a properly run oil company to borrow at current interest rates to invest in new projects. If not, witness Exxon/Mobil, a US$ 290 billion company, with US$ 80 billion in debt.

Thus, it would seem to make little sense for the company to do this buyback, except that the company has been having problems completing its financial statements. Since most of these bonds are registered abroad the company has to submit its financials to the SEC. The deadline for such a submission is June 30^th. with an extension being possible. The June 30^th deadline seems almost impossible to meet since the company has not even held its shareholders meeting to approve its financials. But if the PDVSA Board asked for an extension and then bought back all of the bonds, then the requirement that it submit its financial statements to the SEC would simply disappear. Ingenious and bizarre: eliminate all of the foreign currency denominated debt so as to avoid possible violations of the law abroad. They could care less about Venezuelan laws or the health of PDVSA; after all, according to local regulations the financial statements should have been presented by March 30^th. which did  not happen, but this has no relevance in a country without laws.

Obviously, none of this makes any sense from a financial point of view. PDVSA should be increasing its debt so as to embark in the type of investment programs that it needs to maintain the country’s oil production. It needs to invest as much as US 40 billion in the next five years, which would make no sense to have it financed from its own resources, more so when production has declined significantly in the last year and a half. But in the Bolivarian revolution politics is above rationality, long term planning and sensible management. It is more important to save the rear ends of the irresponsible heads of the oil industry that have been running the industry like a greasy diner for the last year and half.

Of course, there may be an even more bizarre explanation: The Government will turn around and issue the same amount in dollar denominated PDVSA bonds to local investors to be paid in local currency. In this manner, the coupons may be even lower than those that are currently outstanding and if issued under Reg. “S” will require no registration and filings in the US. Furthermore, issuing such a bond would push the parallel dollar exchange rate dramatically lower.  Thus, the law would be skirted and PDVSA would have its cake and would have eaten it too.

No matter which of the two option takes place, in the end one thing is clear: Transparency will simply disappear from the company’s operations. Once there is no requirement for filing, Venezuelans will simply not be able to see or know what is going on within the industry that represents the lifeblood of the country. This from a Government that got to power asking for more transparency from PDVSA and complaining about the lack of decision power by the citizens in their most important industry. Bizarre indeed!

Usually, if Daniel or Caracas Chronicles has an article that I was planning to post, I don’t since I am aware that our readerships overlap strongly. However, I was planning to post this article from the Wall Street Journal on Friday, which was also posted today in Caracas Chronicles. The article is too popwerful to pass up and it has to be part of the record of ths miserable administration:

A Caracas Mayor Pays
Dearly for Opposing Chavez

By ROBERT A. SIRICO
June 25, 2004; Page A11

Caracas

Pastoral work has taken me to many prisons over the years. But none has left an impression quite like the one I visited here on June 13.

Residents call it the Helicoide, or the Helix in English, because of its twisting, maze-like structure. It looks like New York‘s Guggenheim Museum but more brittle and fractured. Filled with criminals and political prisoners, and serving as the headquarters of the secret police, it is located in the center of the capital, in the Libertador district of Caracas, an urban jungle with five mayors for its 5 million residents.

One of those mayors, Henrique Capriles, is currently serving time here for “public intimidation,” “abuse of power,” and other such trumped up political accusations following a protest in front of the Cuban Embassy in 2002. He has not been charged with a crime, and has been denied bail. A kept court upheld his detention last month.

Everyone here, however, understands that Mr. Capriles is being jailed for political reasons. He is a well-known opponent of President Hugo Chavez and his regime, which is notorious throughout the region for its dangerous blend of political populism, domestic socialism, and protectionist and nationalist foreign relations. To defend it all Mr. Chavez has militarized the civilian government.

Because I was here to address a conference on globalization, and Mr. Capriles’ case interests me, I was hopeful of visiting him. In a Catholic country where the Church is still held in high esteem, in part for its heroic resistance to the Chavez regime, it may have been my Roman collar that gained me entrance. Deep within the Helicoide, I found a pleasant, intelligent and affable young man who emanates a sense of inner strength.

These days Mr. Capriles sports a beard, which symbolizes his protest of the detention. He is the youngest man ever to be elected to Venezuela‘s Congress, and his political experience, including a stint as speaker of the House, predates the present regime of Castro-wannabe Chavez. Mr. Capriles was active in the formation of a new party, Primero Justicia (Justice First), which is trying to form a new political consensus here. He describes himself as a moderate and jokes that his friends say that he is sometimes too progressive.

Neither Mr. Capriles, who holds two law degrees, nor his lawyers fully understand the detention order against him. The authorities claim that he was involved in a conspiracy to assassinate Fidel Castro. The incident at the root of this claim is caught on film. It shows the mayor calming an agitated crowd that had surrounded the Cuban Embassy, located in his district, to protest against Cuba‘s influence in Venezuela. At the time, the Cuban ambassador thanked Mr. Capriles on television for his efforts. Nevertheless, the videotape showing the protest is the main evidence against him.

Sitting in a small visiting room on a ripped car seat that serves as a couch, one of my companions examines the walls and furnishings and Mr. Capriles gives a wide grin and says, yes, there are microphones everywhere. This should come as no surprise in a building built in the 1950s by dictator Marcos Perez Jimenez and now home to the secret police.

Mr. Chavez paints Mr. Capriles as a radical oligarch who “works for the empire.” Such rhetoric is in style these days. Returning from the prison, we listened to Mr. Chavez booming on the radio. Like his idol Castro, he is given to marathon speech making. Attacking the upcoming referendum on his rule, he asserts that the battle is not against the “white oligarchy” of Venezuela. Instead it is against one enemy alone: George W. Bush! Thunderous applause follows.

If Mr. Chavez thought Mr. Capriles would retreat, he was mistaken; the prisoner remains optimistic both for his case and for his country. When I ask what sustains him, Mr. Capriles, whose grandmother was Jewish, fingers the rosary he wears around his neck and says, “You know, I am a third generation immigrant. My grandmother spent 26 months in the Warsaw ghetto under the Nazis. I have only been here 33 days. By comparison, this is nothing.”

The real issue, he says, is judicial power. Without a strong and independent judiciary, there can be no freedom or stable democracy. Indeed, Human Rights Watch recently issued a 24-page report highlighting recent attempts to stack Venezuela‘s Supreme Court in anticipation of a referendum loss by the government.

This is my third visit to Venezuela, the first under Mr. Chavez. The change is notable. The streets are more violent and the entire atmosphere is politically charged — with neighborhoods maintaining their own independent police forces. The government news channel broadcasts Cuban cartoons telling stories about what happens to those who betray the Revolution. As in Nicaragua, the literacy programs organized by Cuban “advisers” are thoroughly politicized.

In my conversations with a wide variety of Venezuelans — priests and porters, blue-collar workers and journalists — it appears that everyone’s focus is on the Aug. 15 recall referendum. There is a general sense that Mr. Chavez will try anything to remain in power, including imposing martial law to prevent the referendum. Another concern is the vulnerability of voting machines to tampering. (The company that has the service contract for them is partly owned by the Chavez government.)

A venerable former government minister, the oldest living member of Venezuela‘s first democratic government, told me that fraud is the main concern. Unless international organizations are watchful, it is likely Mr. Chavez will steal the referendum votes, and there is already talk from Chavistas of banning international observers.

In many ways, the case of Henrique Capriles symbolizes both the sadness and the hope that is Venezuela‘s. The sadness is that the best and brightest people in this nation should find themselves in this situation. The hope is that even people like Henrique Capriles are optimistic for the future of their country.

Father Sirico is president of the Acton Institute in Grand Rapids, Mich.

Usually, if Daniel or Caracas Chronicles has an article that I was planning to post, I don’t since I am aware that our readerships overlap strongly. However, I was planning to post this article from the Wall Street Journal on Friday, which was also posted today in Caracas Chronicles. The article is too popwerful to pass up and it has to be part of the record of ths miserable administration:

A Caracas Mayor Pays
Dearly for Opposing Chavez

By ROBERT A. SIRICO
June 25, 2004; Page A11

Caracas

Pastoral work has taken me to many prisons over the years. But none has left an impression quite like the one I visited here on June 13.

Residents call it the Helicoide, or the Helix in English, because of its twisting, maze-like structure. It looks like New York‘s Guggenheim Museum but more brittle and fractured. Filled with criminals and political prisoners, and serving as the headquarters of the secret police, it is located in the center of the capital, in the Libertador district of Caracas, an urban jungle with five mayors for its 5 million residents.

One of those mayors, Henrique Capriles, is currently serving time here for “public intimidation,” “abuse of power,” and other such trumped up political accusations following a protest in front of the Cuban Embassy in 2002. He has not been charged with a crime, and has been denied bail. A kept court upheld his detention last month.

Everyone here, however, understands that Mr. Capriles is being jailed for political reasons. He is a well-known opponent of President Hugo Chavez and his regime, which is notorious throughout the region for its dangerous blend of political populism, domestic socialism, and protectionist and nationalist foreign relations. To defend it all Mr. Chavez has militarized the civilian government.

Because I was here to address a conference on globalization, and Mr. Capriles’ case interests me, I was hopeful of visiting him. In a Catholic country where the Church is still held in high esteem, in part for its heroic resistance to the Chavez regime, it may have been my Roman collar that gained me entrance. Deep within the Helicoide, I found a pleasant, intelligent and affable young man who emanates a sense of inner strength.

These days Mr. Capriles sports a beard, which symbolizes his protest of the detention. He is the youngest man ever to be elected to Venezuela‘s Congress, and his political experience, including a stint as speaker of the House, predates the present regime of Castro-wannabe Chavez. Mr. Capriles was active in the formation of a new party, Primero Justicia (Justice First), which is trying to form a new political consensus here. He describes himself as a moderate and jokes that his friends say that he is sometimes too progressive.

Neither Mr. Capriles, who holds two law degrees, nor his lawyers fully understand the detention order against him. The authorities claim that he was involved in a conspiracy to assassinate Fidel Castro. The incident at the root of this claim is caught on film. It shows the mayor calming an agitated crowd that had surrounded the Cuban Embassy, located in his district, to protest against Cuba‘s influence in Venezuela. At the time, the Cuban ambassador thanked Mr. Capriles on television for his efforts. Nevertheless, the videotape showing the protest is the main evidence against him.

Sitting in a small visiting room on a ripped car seat that serves as a couch, one of my companions examines the walls and furnishings and Mr. Capriles gives a wide grin and says, yes, there are microphones everywhere. This should come as no surprise in a building built in the 1950s by dictator Marcos Perez Jimenez and now home to the secret police.

Mr. Chavez paints Mr. Capriles as a radical oligarch who “works for the empire.” Such rhetoric is in style these days. Returning from the prison, we listened to Mr. Chavez booming on the radio. Like his idol Castro, he is given to marathon speech making. Attacking the upcoming referendum on his rule, he asserts that the battle is not against the “white oligarchy” of Venezuela. Instead it is against one enemy alone: George W. Bush! Thunderous applause follows.

If Mr. Chavez thought Mr. Capriles would retreat, he was mistaken; the prisoner remains optimistic both for his case and for his country. When I ask what sustains him, Mr. Capriles, whose grandmother was Jewish, fingers the rosary he wears around his neck and says, “You know, I am a third generation immigrant. My grandmother spent 26 months in the Warsaw ghetto under the Nazis. I have only been here 33 days. By comparison, this is nothing.”

The real issue, he says, is judicial power. Without a strong and independent judiciary, there can be no freedom or stable democracy. Indeed, Human Rights Watch recently issued a 24-page report highlighting recent attempts to stack Venezuela‘s Supreme Court in anticipation of a referendum loss by the government.

This is my third visit to Venezuela, the first under Mr. Chavez. The change is notable. The streets are more violent and the entire atmosphere is politically charged — with neighborhoods maintaining their own independent police forces. The government news channel broadcasts Cuban cartoons telling stories about what happens to those who betray the Revolution. As in Nicaragua, the literacy programs organized by Cuban “advisers” are thoroughly politicized.

In my conversations with a wide variety of Venezuelans — priests and porters, blue-collar workers and journalists — it appears that everyone’s focus is on the Aug. 15 recall referendum. There is a general sense that Mr. Chavez will try anything to remain in power, including imposing martial law to prevent the referendum. Another concern is the vulnerability of voting machines to tampering. (The company that has the service contract for them is partly owned by the Chavez government.)

A venerable former government minister, the oldest living member of Venezuela‘s first democratic government, told me that fraud is the main concern. Unless international organizations are watchful, it is likely Mr. Chavez will steal the referendum votes, and there is already talk from Chavistas of banning international observers.

In many ways, the case of Henrique Capriles symbolizes both the sadness and the hope that is Venezuela‘s. The sadness is that the best and brightest people in this nation should find themselves in this situation. The hope is that even people like Henrique Capriles are optimistic for the future of their country.

Father Sirico is president of the Acton Institute in Grand Rapids, Mich.