The Devil's Excrement

We interrupt the Devil’s vacation for a short note on the Big Lie that Venezuela’s oil production represents. While I have not been keeping track of the news in much detail, I am after all on vacation, I do read my mail and the comments you make on the blog. One reader, call him VJ, sent me this incredibly revealing document above of a request by Minister Ramirez for Chavez to approve that PDVSA withdraw money from the Chinese funds to pay royalties and taxes as well as paying for the production of the oil that goes to pay for the Chinese loans.

When I return, I will analyze this document further, but for now, this document confirms clearly in page 3, the Big Lie that Venezuela’s official oil production represents.

According to the recently published financials of PDVSA, the country produced 2.95 million barrels of oil a day. These financials are audited, but using standard accounting rules, only financial aspects are audited, oil production is simply not part of the audit.

However, this document on page 3 contradicts this official number, as reader VJ notes. If 430,000 barrels of oil a day is sent to China to pay for the loans, as is clearly stated in the document, then Venezuela’s real oil production is 2.687 million barrels of oil a day, some 262,500 barrel a day less than the official numbers in PDVSA’s 2010 financials.

This number is higher than IEA or OPEC’s by a couple of hundred thousand of barrels of oil a day, but when one considers that in 2008 PDVSA said it was producing 3.3 million barrels a day, but this was reduced to comply with OPEC production cuts, you know the lie was even much bigger than it is today.

Not that one has any reason to believe this number either, after all: Would Ramirez tell the President the whole truth about his incompetence and the lies he has been telling since 2003? I doubt it, so take this number with a grain of salt. Do remember however, that PDVSA’s and CITGO’s US registered debt was repurchased in 2004 so that the members of the PDVSA Board could not be held liable in the US for lying. In Venezuela, they can lie all they want, there is no punishment for it.

But let’s assume for a moment the 2.687 million barrels a day is the truth.

Subtract Venezuela’s daily consumption of around 700,000 barrels

Subtract 430,000 barrels of oil a day to pay the Chinese loans

Subtract some 85,000 to Cuba, 20,000 to Argentina and 120,000 to Petrocaribe.

That’s some 1.355 million barrels of oil a day that do not generate any cash flow for the country in foreign currency (Except of Petrocaribe which we are told generates 50%). Subtract that from 2.6875 and you get 1.352 millions of barrel a days that generate foreign currency, according to official numbers. At US$ 100 per barrel that is less than US$ 50 billion a year, US$ 49.3 billion to be exact, a number smaller than CADIVI exports.

So, the Big Lie says that the Government is betting the farm on Chavez getting reelected. To Hell with the future, the future is NOW, borrow everywhere, issue bonds, borrow from China and hope for the best, unless the hand of God intervenes…

But the Big Lie is right there and it should be punishable by law at least as deception or misleading, at most as treason. But unless there is change, it will simply not matter. Ramirez can lie, deceive and manipulate all he wants as he allows PDVSA to be destroyed for the sake of Hugo’s reelection.

This one is easy. Fascinating country, past and present and more like Venezuela that you could ever imagine.

Cross a second one off my Bucket List, not easy to do that in one year, but then again, I missed crossing one off in 2010.

More on this place later…

As I leave Caracas, I must say I am a little more optimistic than last time. Ignoring Hugo’s illness, it is clear that twelve years of bad Government, Chavez’ limited ability to appear in public and a field of fresh new faces on the side of the opposition is increasing the likelyhood of an opposition victory, even if President Chavez fully recovers.

Numbers in polls are better than they were a few months ago. While Chavez still has a high approval rating, the same rating for the top three opposition candidates is higher than that of the President’s. In fact, Capriles’ approval rating tops 50%, while Chavez is 5 percentage points behind. In one poll, 56% of the voters don’t believe that the country they want is the same one Chavez wants

Individually, October polls indicate that Capriles holds a very strong lead that may be hard to erode by both Pablo Perez and Leopoldo Lopez. Lopez is new to the race, but the latest numbers don’t show him gaining ground after the favorable decision in his case by the CIDH. If voters don’t see him gaining ground, it is likely that they will migrate mostly to Capriles.

For Pablo Perez to have a a chance he has to get closer than he is right now in polls. Even the AD and COPEI machinery will not be able to make up the 15% difference that separates him from Henrique Capriles.

Primaries are having an impact on the overall race, candidates are in the news permanently and the faces are not only new, but the message of unity and non-confrontation seems to be having an important impact on people. Similarly, the Government’s coordination seems diminished, Government official no longer seem to have a coherent attack on the opposition, which I ascribe to Chavez’ limited ability to meet, plan strategy and appear in public.

A remote and virtual Chavez will not be the formidable opponent he once was. PSUV still has a machinery, but Chavismo without Chavez does not exist. If he does not recover sufficiently to campaign fully, this will help the opposition even more. I have learned little of his illness while here, but heard nothing to indicate he is better or out of danger.

I am less optimistic about the “day after”. While we may talk about macroeconomic, devaluation, increasing the price of gasoline and the like, those are the “easy” solutions to implement. The tough part will be how to deal with a State now in the hands of Chavista unions, most without collective agreement and demanding huge salary increases. This State now includes hundreds of state enterprises, most of  them shut down or receiving huge subsidies and run by corrupt mafias who are there just earning salaries or making deals for themselves personally. I talked to at least three people in such organizations that see no way out of the conflict and problems of trying to get anything moving in these companies, where there are no bosses, no hierarchy and no clear goal of what their purpose is.

Thus, I leave optimistic on the political future, not so much on the ability of the new Government to get a large part of the Government moving. Sure there will be improvements and efficiencies, but conflicts will be the rule of the day and if the opposition were to win Chavismo will be waiting at every corner to boycott the new Government’s actions with cheap politics.

Long time readers of this blog know that every three years I go wherever the World Orchid Conference may be. This year it is in Singapore, so I am off to that part of the world for a couple of weeks. I will try not to post, not to read much about Venezuela, but you never know. If I have internet, maybe I should imitate Daniel’s posts with pictures of where I am, to see if people can guess the location.

Back in two weeks!

With the decision today by Caracas’ Metropolitan Mayor Antonio Ledezma to withdraw from the race, the number of viable opposition candidates has been reduced to a very manageable and desirable number. Not that I found Ledezma competitive, but had AD backed him, he would have had a potential number of votes come February that gave him a chance of not being last. The rest, Eduardo Fernandez and the former Supreme Court Justice that I never want to remember her name don’t count in my book.

I have nothing against many people running, but I think that some of the candidates were a little unrealistic in their prospects, you can’t withdraw from Venezuelan politics for twenty years, particularly these twenty years and expect to have a chance. Others may be in the race because they think maybe next time they have a chance, like Maria Corina Machado. Or they want to make a point like Diego Arria. But in my mind, there are only three and a half candidates left, whereby I am giving Ms. Machado a half, only because I think that that Pablo Perez’ candidacy may flounder with AD’s backing and she may get quite close to him.

Without further ado, here are the significant candidates left in the race, in the order of my current perception of where they stand:

Henrique Capriles Radonski: HCR has become the clear front runner. So far he has timed his movements well, picked his spots and used a fairly non-confrontational strategy of setting his own agenda to become the clear front runner according to most polls. Up to very recently, HCR would not even mention Chavez by name, he has changed that strategy recently. HCR has not been too specific other than preaching unity, a Government for all and hard work. He has attracted very important backings from Causa R, PPT and some unions, becoming a de facto candidate of the left wing of the opposition, save for Bandera Roja. As most candidates he has been short on specifics, which is all right with me, except that he was very specific about currency controls, a subject that I feel very strongly about. HCR has a strong management background, he was a Deputy of the National Assembly in 1998, Mayor of the complex municipality of Baruta and now Governor of the most complex state in Venezuela: Miranda.

I like his organization, his soft message so far, his veiled messages to Chavismo telling them he will not be partisan and how he has managed to position himself ahead so far, despite not being the terribly charismatic (He should smile more often)

I worry that he may have peaked too early and he may not generate the passion that a race against a recovered (if it happens) Chavez would require. But right now it is his race to lose.

Leopoldo Lopez: His campaign has been delayed by the uncertainty as to whether he should run or not, by the former mayor of Chacao got a green light and that should change his position in the polls as well as in his ability to raise funds for the primary. LL is a terrific campaigner and very charismatic, which should help in a National race. As with the other candidates his message has been one of a better Venezuela with some specifics, particularly on oil (He wants to increase production). He has built a very impressive national network and has been going around Venezuela thinking long term. He probably has the largest national organization at the grassroots levels.

I like his long term thinking and how he stuck to the CIDH suit to be allowed to be a candidate. He is a great campaigner and generates passion (either way). He is a good listener and seeks out opinions (Disclaimer: he is the only candidate to have contacted  the Devil for opinions up to now. And more than once). I think he has what it takes to win and the smarts to run a good Government.

Some people perceive him as being too individualistic and too much of a caudillo in a country of caudillos. Chacao is a small municipality with lots of resources, but it was well run. The fact that he is still formally banned from taking office may hold off many voters, but if he wins, I have not doubt he will be able to be sworn in.

Pablo Perez: The Governor of Zulia is young, articulate and managed to get the endorsement of AD that I think may work against him at this stage, as people are wary of the old political parties. He also promotes unity, his track record as Governor and hard work. He comes across well, but like HCR is not charismatic, may even be boring. I don’t think the historical fact that a maracucho has never been President matters. What matters is that  he is not as well know nationally as Capriles or Lopez and the winner is going to have to get lots of votes outside the large states, where PP is not well known.

Perez has the advantage of being the only major candidate that has popular roots, can not be accused of being an oligarch. He comes across well and has support and some organization to project nationally.

He lacks charisma, not a great speaker and in the end his experience is limited. His adeco past and new endorsement may come to haunt him

Maria Corina Machado: I was going to leave MCM out of my post, but her persistence and my feeling that PP could melt, convinced me that it would be unfair. MCM has little managerial experience but has been quite an eloquent and articulate speaker as a Deputy of the National Assembly. While I don’t particularly like her “Capitalismo Popular” slogan, I understand such labels can be quite useful and I like what they stand for.

She has stuck to her guns so far, despite her imperceptible ratings in the polls. She has a political posture, which is unique and more than can be said about most candidates.

Her drawback is that she has no political structure, she is too oligarchic, not well know nationally and I dont think she is electable. Venezuelans clearly want “someone like you” and she ain’t it.

My preference at this time is for LL, I think he is electable and will seek out a good team. However, I also think HCR will be hard to unseat from the lead. The race is his to lose.

I will vote for the winner of the primary on October 7th. 2012 in any case.

No rationing card…yet, but some enterprising supermarkets in San Tome, Edo. Anzoategui, have started putting ink on client’s fingers in order to “mark them” as clients that already purchased the difficult to find powdered milk.(Source: Correo del Caroni).

Milk Shortages? Nahhhh, it is all opposition BS….

Oh, the revolution…