The Devil's Excrement

<A href="http://online.wsj.com/article/0,,SB104863555461196300-search,00.html?collection=wsjie/30day&vql_string=venezuela(article-body)”>Interesting article by The Wall Street Journal on guerillas cutting accross the border to Venezuela. (I believe it needs subscription to read it). Among the highlights:

“Colombian guerrillas operate at least two training camps in Venezuela and use the country as a launching pad for cross-border attacks”

“The documents offer no evidence that Venezuelan President Hugo Chavez himself ….In June 2000, Jesus Urdaneta, a former comrade-in-arms who had broken with Mr. Chavez, said that when he, Mr. Urdaneta, headed the Venezuelan state security force, Mr. Chavez had suggested backing the Colombian guerrillas with weapons”

“Venezuela’s foreign minister, Roy Chadderton, dismisses the drumbeat of accusations that have accompanied Mr. Chavez’s tenure as just so much speculation in the media. “We don’t see proof or evidence,” he says. He adds that “malicious” accusations are the work of Mr. Chavez’s political foes”

“Victor (also not his real name), who was a bodyguard for a top FARC commander until their December capture, says he was present when his boss worked out a deal with a local Venezuelan National Guard lieutenant allowing guerrillas to travel unmolested on the Venezuelan side of the Arauca River”

“It was the carnage of the Cucuta bomb that caused Colombia’s frustration with Venezuela to boil into the open. “We know [the guerrillas] have fooled the people and government of Venezuela ,” said Colombia’s president, Alvaro Uribe, after the blast. “They disguise themselves as good citizens”

For those that believe that Governments can do the job, the Exchange Control Office, CADIVI, finally handed out yesterday the first dollars under the new control regime. The grand amount of US$ 30,000 was handed out yesterday to students and “special cases”  only 67 days after the country stopped foreign exchange transactions. Of course, this is my biased view of the Governmnt’s icompetence, the Head of the Foreign Exchange Office explained that the delay was due to the fact that they are using “very novel technology”. Oh! that explains it.

Tyromaniac on the brilliance of our Minsiter of Interior and Justice, also known as “the big Liar”:

Today on radio I heard General Lucas Rincon, he was the highest ranking general in the army and the guy who announced Chávez resignation last April, which was either a lie or something more sinister. Currently he is the Minister of Security and National Affairs. While talking about Colombian guerillas moving freely in venezuelan territory, he said: “Venezuela has more than 2000 kilometers of borders, it is impossible to watch every inch, and that is what the venezuelan military has been doing for years”. Doing the impossible year after year, How is that for a motto? Eat that marines!… What an asshole!

Very good article by Francisco Toro about a seminar he went to where everyone grasped the basics of the country’s wealth and corruption…..except the anti-corruption Head of the National Assembly. For some reason I can’t link to the story itself, I get the previous one. I love its main point, that excellence has no power in Venezuela. In fact, from day one I mistrusted Chavez precisely because of the fact that he was surrounded by anything but excellence in every field.

Venezuelan sovereign debt markets were rattled today by a speech by Hugo Chavez in which he suggested that the country’s debt needed to be restructured. Arguing that Venezuela has made all debt payments in the last four years and will continue to do so, Chavez indicated that the debt load is too heavy and needs to be restructured. Blaming the strike for all of the Government’s woes, Chavez said that the Government had to scrape bottom in order to be able to pay salaries and that some institutions are still owed funds for salaries.

            While the statements were typical Chavez, financial markets initially took them as a sign that Venezuela was ready to suspend payment, causing sharp losses in the prices of Venezuela’s debt prices. The Ministry of Finance had to “interpret” the President’s statements saying that the country had no plans at this time to stop external debt payments and the President’s remarks were simply a statement of fact that the country has steep payments to make in 2003 and 2004. The truth of this whole matter is that Venezuela has been trying in the last two years to either restructure its debt or issue new debt in foreign currency, but has been unable to do it, is because of the steep premium it would have to pay for issuing any new instrument. Thus, Chavez’ words probably simply reflect a recurrent discussion at the Cabinet level which simply reflects the “Chavez premium” present in international markets at this time. The truth is that Venezuela can not afford at this time to stop debt payments due to the fact that it ahs significant property in the US, through PDVSA America, which owns Citgo and a number of refineries in the US. Moreover, confidence in Venezuela as a stable supplier of oil has been severely impacted by the events of the last few months, thus declaring any form of moratorium on the country’s debt would simply hurt the country’s image further. Thus, the Government is essentially trapped by any announcement of the possibility of delaying debt payments in its own contradictions.