Saturday, April 03, 2004

Venezuelan tax authorities getting more aggressive 

Yesterday I mentioned how tax collections in Venezuela were at an all time high. Today a clear example of how the tax authorities, SENIAT, have managed to collect so much tax occurred.

As part of a crack down on tax evasion by retail stores SENIAT ordered the shutting down for three days of two upscale clothing chains, Zara and Bershka. Additionally, they will have to pay a hefty fine of 1.5 million bolivares for each store branch.

The reason for these actions is that the stores were not keeping proper records to allow auditors to verify if they were paying the proper amount of Value Added Tax.

The Venezuelan business class is used to never paying taxes or grossly under paying. During the 40 years prior to Chavez coming to power tax evasion was rampant. The Chavez administration has made a concerted and sustained effort to make sure all taxes are paid. This is another reason for the extreme hostility of the Venezuelan business class towards President Chavez.


Interesting poll of Caracas residents 

In today's edition of Ultimas Noticias (subscription required) a very interesting poll of Caracas residents was published. The poll was carried out by Instituto de Analisis de Datos. Here are the results.

Regarding what issues most concern Caracas residents the primary responses were:

Crime 55.6%

Unemployment 16.6%

lack of trash collection 6.2%

the state of the economy 3.4%

social problems 2.8%

The interesting point to this is that only 20% of the respondents consider the economy to be the primary problem in the country. I think that clearly speaks to how much the economy has recovered since the lockout of last year that so few respondents cite the economy as a primary problem.

It also comes as no surprise that so many residents consider crime to be the biggest problem. Crime is completely out of control throughout Venezuela and no level of government from the national to the local level seems to be doing anything about it.

Asked how their personal situation is the respondents answered as follows:

very good 1.4%

good 19.2%

ok 58.4%

bad 15.2%

very bad 5.8%

These are very interesting numbers. A full 79% of the population had an essentially positive view of their current situation - that is it is either ok, good, or very good. Only 21% said things are either bad or very bad. Now, this is really not all that surprising. But it would be surprising to anyone who listens to the opposition media and politicians who are constantly crying that the nation is rapidly going down the tubes. These poll numbers certainly contradict that.

Regarding their opinions of the performance of Venezuelan President Hugo Chavez they gave the following responses:

Excellent 13.2%

Good 16.0%

Regular/Good 26.8%

Regular/Bad 14.8%

Bad 9.4%

Terrible 19.0%

These are good numbers for Chavez. It shows a clear majority 56%, have a favorable view of his job performance.

Regarding the Revocatory Referendum 48.2% of the respondents said they would vote to have Chavez leave office, 40% would vote for him to stay, and 11.8% didn't give a response.

These are certainly interesting numbers. They would seem to contradict the numbers above that show 56% have a favorable view of Chavez's perfomance. The most likely explanation is that the constant agitation and violence by the opposition has taken a toll and people would just like for that to end, even if it means that a president with whom they have no quarrel leaves office. However, it further bears mentioning that with only 48% of repondents favoring revoking Chavez's mandate it is quite likely any attempt to revoke his mandate would fail.

It bears commenting on polls in Venezuela. Polling in Venezuela is not carried out in the same way that it is in places like the United States or Canada. In the U.S. almost all polls are conducted by calling randomly selected telephone numbers. This helps ensure that the people polled are indeed selected in random way which allows polls in the U.S. to be very precise and accurate.

In Venezuela most people do not have telephones. So the U.S. method of polling is impossible. Instead, polls are conducted face to face either on the street or in people's homes. Of course, there is no way to make such polls truly random. After all which homes in which neighborhoods do you go to? Further, with face to face interviews the respondent may be inclined to give the answers which they think the interviewer wants to hear. This is particularly significant in Venezuela because most major polling firms there are affiliated with the opposition. Taken together these facts have led to most polls being viewed as having an anti-Chavez bias.

However, none of this is to say that polls in Venezuela should be completely ignored. It is just to say they should always be taken with along with a dose of skepticism.


Friday, April 02, 2004

Another indicator of economic recovery in Venezuela 

The Venezuelan opposition to President Hugo Chavez makes much about how he has supposedly destroyed the Venezuelan economy. Of course nothing could be further from the truth. It is the opposition itself which has done enormous damage through its coup attempt and numerous lock-outs.

The two month long lockout in from December 02 through January 03 inflicted billions of dollars of damage and did cause the economy to contract sharply. However, since that time the Venezuelan economy has been growing quite rapidly and has almost completely recovered from the lock out. Basic macro-economic indicators such as an increasing GNP and a declining unemployment rate show this clearly.

However, now there is another piece of data which shows how the Venezuelan economy has recovered. The Venezuelan Tax Authorities, Seniat (Servicio Integrado de Administracion Aduanera y Tributaria) reports that tax collections are at record levels. According to Seniat tax collections in March were two trillion Bolivars whereas the budgeted tax collections were only 1.5 trillion. Tax collections are running ahead of budget for the year to date as well.

Now it is a debatable proposition whether taxes are good or bad. But when tax receipts are high, higher in fact than what was expected. It is a very strong indicator that the economy is doing well. And so it is in Venezuela.

Another reason why tax collections are up, apart from the improving economy, is that the Chavez government has been much more aggressive in clamping down on tax evasion. Chavez last year implemented tough new policies whereby taxed were to be collected from professionals such as doctors and lawyers who had largely been exempt from them in the past. The government has also been mores assertive in collecting taxes from businesses and even judges and politicians. So the next time you hear the people in the opposition crying like some stuck pigs you know what might be causing it.


"Fallujah will be pacified" 

Wednesday certainly witnessed some gruesome events in the Iraqi city of Fallujah. Although truth be told I am not sure that the brutal treatment those four Americans got is any more gruesome the what has happened to countless Iraqis who had bombs dropped on them by U.S. planes.

But predictably, the events in Fallujah have raised a hue and cry. The Wall Street Journal has editorialized that we are not meeting out enough punishment to the Iraqis. A letter published in the NYTimes says "What in the world does it take to get us to view these cheering mobs as the enemy? Why isn't our military taking them out?" "There will be price extracted, there will be a response and it will be obvious to all" says Deputy Secretary of State Richard Armitage. And general Kimmit in Baghdad blusters "we will be back in Fallujah. Fallujah will be pacified."

Isn't pacifying Fallujah and the rest of Iraq been what the US has been trying to do for the past year? Isn't that what the US has been trying to do by putting barbed wire around entire towns and refusing to let men leave? Isn't that what all the house to house raids with doors kicked into and inhabitants blindfolded and handcuffed were supposed to accomplish?

Is it more of a scorched earth policy that they have in mind now? Like carpet bombing the place? Or maybe they can adopt the Israeli tactics of collective punishment. They can just go through the city and start bulldozing all the houses until finally the residents of Fallujah come to their senses and turn these "barbarians" over.

In truth, that probably is where all of this is headed. And it is also true that those brutal tactics will almost certainly fail. They failed in Algeria, they failed in Vietnam, they failed in Afghanistan, they failed in Palestine, and they will fail in Iraq. History is very clear on this point - when a people is determined to be free of a foreign occupying power no amount of brutality will be able to subjugate them.


Don't listen to what people say, watch what they do. 

An article in today's NYTimes made some points than anyone who drives U.S. highways knows full well:

For Americans, Gas Guzzlers Are Kings of the Road

By Danny Hakim
April 2, 2004

Gasoline prices may be at an all-time high, but that is not deterring Amercans from buying gas guzzlers.

Maintaining a trend that dates back more than a decade, American buyers continued to shift from passenger cars to the largest and least fuel-efficient new vehicles that auto manufacturers offer, even as gasoline prices soar, according to the industry's March sales reports.

National average pump prices hit $1.76 a gallon on Monday, the highest on record, according to the Energy Information Administration. But when inflation is taken into account, gasoline remains cheaper than it was in 1981, when prices peaked at just under $3 a gallon in 2004 dollars.

Despite all the hangwringing over "high" oil and gasoline prices by politicians and the media it is evident that prices are not high at all. As this article points out gasoline prices are barely half of what they were a little over two decades ago. So the next time you hear a report of gasoline prices being at an "all time high" keep in mind that in real terms (ie adjusted for inflation) they are not even close. And the next time a gigantic SUV goes flying by you at 80 mph on the highway what that is person is really telling you is how inexpensive gasoline is.

The same is even more true for oil. A barrel of oil currently sells for around $35. But adjusted for inflation a barrel of oil in 1973 sold for $100. So the reality is the price of oil is moderate by historical standards.


Wednesday, March 31, 2004

Some welcomed candor 

It has always been intereting to listen to the war apoligists tie themselves in knots telling us how oil has nothing to with why the U.S. in Iraq. How absurd and cynical that anyone could think that they tell us.

Well here is an interesting exerpt from the WSJ today. In and editorial on high gas prices entitled "Gas Bags" they tell us:

As for OPEC, nothing in history suggests that shouting down that cartel will ease prices (see Nixon). By liberating Iraq, which is already back to its prewar oil flow, Mr. Bush has aguably done more than any other President to influence OPEC....

Maybe there are still believe that oil has nothing to do with this war but the Journal clearly isn't among them.


Thankfully someone in Venezuela "gets" oil. 

For years the executives leading Venezuela's state oil companny, PDVSA, have been arguing that OPEC is an anochronism and that there is nothing that anyone can do to control oil prices.
Two particular former presidents of PDVSA, Sosa Pietri and Luis Guisti, argued that OPEC was a spent force and that the cartel could do nothing to increase oil prices. They both wanted to ignore OPEC quotas and have PDVSA spend billions of dollars to increase its output of oil. Neither of them cared about how much revenue PDVSA brought in to Venezuela - they were single mindedly focused on increasing production.

Of course, a good deal of this emphasis on increasing oil output was self-serving. More oil output meant more jobs for oil workers and higher salaries for executives like them. More importantly they both had direct financial intersests in increasing oil production. For example, Sosa Pietri owns a company called Constructora Nacional de Valvulas, a company which make valves and pumps for oil pipelines and refineries. Obviously, this company stood to gain from PDVSA expansion. Similiarly, Guisti also had direct financial interests in sub-contractors of PDVSA.

Unfortunately, Sosa Peitri and Guisti were succesfull in convincing succesive Venzeuelan presidents to have PDVSA invest heavily in increasing production. With the green light from Venezuela's political leadership PDVSA spent billions and billions of dollars to drill new oil wells and build pipelines. To get this money, PDVSA not only reduced the amount of money it gave to the Venezuelan treasurery but it also borrowed billions of dollars so that today it is a highly indebted company.

And what did PDVSA and Venezuela get for all these billions of dollars? They busted OPEC quotas and ramped up production to almot 3.5 million barrels per day. This greatly increased output, along with high output from some other oil producing nations, sent oil prices plummeting to $10 per barrel. So after investing tens of billions of dollars PDVSA was actually a less profitable company that it had bee to begin with.

Enter Hugo Chavez. Even if the highly educated and highly paid executives of PDVSA didn't understand how oil markets work Chavez, a former army paratrooper, did. He vowed to cut back on production which he claimed would significantly increase prices and give Venezuela the increased oil revenues it desperately needed. And when Chavez became president and cut back on oil production what happened? The price of oil more than doubles just as he had predicted!

For almost five years now Chavez's oil policy of boosting revenues by respecting OPEC quotas has proven spectacularly successful. The monies coming into Venezuela have substantially increased and are funding Chavez's ambitious social programs.

One would think that having seen this the former PDVSA executives would finally be pursuaded of the error of their ways. But no, like a dog with a bone, they cling to their now discreditted ideas. And so too do many of the oppositions propoganda corp on the Internet.

But aside from the dilletantes and charletans there are people who do understand that Chavez's policy of revitazing OPEC has indeed been successful. To the Wall Street Journal the renewed relavency of OPEC is clear. Even right wing journal such as the National Review cannot deny it. And if OPEC was the complete irrelavancy that some claim why would the US White House spend so much time trying to influence its decisions?

Having the right oil policy is central to Venezuela being able to progress. It is just too important not to get it right. So here is a word to the wise in Venezuela - learn from Chavez and get a clue when it comes to oil.


Some people just don't get it. 

"There's a small core element [in Fallujah] that doesn't seem to get it," said Brig. Gen. Mark Kimmitt, an Army spokesman.

Then again maybe General Kimmitt just doesn't get that Iraqi's seem not to like being being under an occupying army with no say in their own governence. Maybe the Iraqi's would actually like to freely elect their own leaders, draft their own constitution and laws, be able to freely publish their own newspapers, and control their own economy and oil.

What do you think it will take for Kimmitt, Bush, Rumsfeld, Friedman, and Wolfkowitz to "get" that?


Advertising Democracy? 

It is reported today that the Coalition Authority in Iraq will be spending millions of dollars on an advertising campaign to promote democracy. According to the article:

The United States-led occupation in Iraq has enlisted a British public relations firm to help promote the establishment of democracy in the country.

Certainly a noble sentiment but couldn't they just let Iraqi's speak freely and hold elections?

The spokesperson for the advertising agency hired to carry out this campaign later said:

"We're trying to keep people informed about the process and persuade them to participate in it," Lord Bell said in a telephone interview.

Well if they want to do that shouldn't they just let people vote in elections, instead of canceling elections all the time?


Now why doesn't the Coalition Provisional Authority shut down the New York Times? 

The NYT finally admits much of the reporting by Judith Miller regarding "proof" of WMD in Iraq was not only bogus but also exceptionally bad reporting. So I am waiting for the Coalition forces to show up on 43rd Street and padlock the doors like they did to an Iraqi paper recently for telling lies and inciting violence.


Look who is Tony's new found friend! 

Here is Tonny Blair's new friend - Col. Muammar el-Qaddafi. We are constantly told what all this is about in the Middle East is promoting democracy and freedom. Really ?!?!? Well when was the last time Qaddafi had an election? I can't recall any since he came to power in in a coup in 1969. And I don't believe he has any scheduled.

If the U.S. and Britain had any interest in promoting democracy in the Middle East they certainly don't lack for opportunities. They could cut off the billions of dollars of aid they give to the repressive regime in Egypt. They could quit supporting military coups in Algeria and Pakistan. They could have not put a monarch back on the throne in Kuwait.

Clearly they are not interested in promoting democracy. They are interested in protecting their interests.


Monday, March 29, 2004

A letter to the Editor 

In todays Wall Street Journal there appeared the following letter to the editor (letter in italics my response in bold):

I would like to thank Mary Anastasia O'grady for her insighteful and well informed columns, especially "Chavez's Nasty Battle Against the Popular Will" (Americas, March 19).

Normally I would stop reading right there. Anyone who praises O'Grady for writing insightfull and well informed columns definitely has some screws missing. But being a masochist I continued ..

Our nightmare includes the massive firings from public office and nonrenewal of passports for anyone who signed the democratic petition for a constitutional recall vote, the grotesque kiddnapping of all the branches of government, the imprisonment, torturing, killing and raping of normal individuals who rightfully protest...

Ok here start the scurilous allegations. These rumors of people getting fired from their jobs or not being able to renew their passports for signing petitions against Chavez have been making the rounds on the Internet and in the Venezuelan press. They are completely false. There have no confirmed cases of anyone being fired for political reasons. First, in Venezuela if a person works in the formal sector (ie they are not a street vendor or don't work off the books) it is virtually impossible to fire them - Venezuelan labor laws are very strict. Secondly, no where in the Venezuelan media have they shown any of the alledged letters terminating people from there jobs. So where is the evidence? Thirdly, no one has even made a formal compaint to the Venezuelan authorities, or any international labor groups for that matter, about these alleged firings. Fourth, I do have some relatives who are anti-Chavez and are government employees, who have signed petitions against him, and even they acknowledge that they have never been threatened with losing their jobs nor do the know of anyone who has. Regarding the passports being denied - that was a rumour that was on some anti-Chavez websites for about half a day before even they realized it was hogwash.

As regards torture, rape, murder, etc., there is abundant evidence that the Venezuelan National Guard did use excessive force in putting down some of the violent street demostrations that erupted last month. So yes there are people who were clubbed, shocked with cattle prods, and shot with buckshot and rubber bullets when they shouldn't have been. In all countries when there are violent demonstrations there tends to be an overreaction by the authorities and Venezuela is no exception to this. At the same time when you go around throwing rocks and molotov cocktails at the police getting clubbed in the head is an occupational hazard. As to rape and murder - the author seems to have had a bit to much to drink. There is no evidence that anyone was raped or murdered in relation to recent political events in Venezuela.

against a government that, thought democratically elected, long ago departed from our constitutional paths and imposed on us its truly dictatorial and communist ways

Well, at least this person got something right. Chavez was indeed democratically elected. Twice. By huge margins. In 1998 he was elected with the highest percentage of the vote of any politician since Venezuela became a democracy. Then in 2000 he ran for office again and was elected by an even larger margen! Further Chavez's initiatives such as changing the Consitution have always been submitted to votes and overwhelmingly approved by the Venezuelan electorate. There is almost certainly no leader in the world who can claim to have a greate mandate than does Chavez.

The accusations of Chavez being dictatorial are laughable on their face. And of being a communist? Well to date Chavez has not nationalized any industries or businesses. The Venezuelan stock market is doing exceedinly well. There are several Venezuelan businessmen who are jet setting billionaires. Venezuelans are completely free to say what they want, do what they want, go where they want, spend their money as they please, or any thing else for that matter. And for God's sake, there have to be more McDonalds fast food outlets in Caracas than anywhere in the world. Some communist.

It is hard to believe even for those of us who are trapped in it everyday, but the nightmare is inexorably plunging us into civil war.

Life is tough when you are part of a small wealthy elite that has traditionally had the country's resources pretty much to yourself and then finds the apple cart being upset by someone who appeals to the those lower class scum who populate shantytowns. Not only is their grip being pried off of control over the country's resources but even their servants are starting to get upity (one time when I was in Los Roques, a Venezuelan beach resort, I was speaking to a wealthy person from Caracas who complained that their servants haven't been as obediant ever since Chavez came to power).

Not only your leaders, but the American people, our traditional friends and allies, should be aware of the atrocities being perpetrated in the name of the "Bolivarian Revolution". This "revolution" is nothing less than an effort of continental proportions to implant a neo-communist regime in the region (destroying everything we believe in and have fought so hard for). And the effort is aided by international terrorist groups and foreign nations and is funded by Venezuela's significant oil revenues. These oil revenues are funding a multimillion-dollar propaganda campaign aimed at confusing the issues and buying "the revolution" the time to stand solidly in the region.

Calling the American people his traditional friends and allies - hmm... I wonder where he is going with that. And regarding this non-sense about Venezuela being involved with terrorist groups - it is a strategy of throw lots of sh*t at the wall and see how much sticks. They have being trying to link Chavez to Osama Bin Laden for years now and have yet to produce a scrap of evidence. Luckily for some of these people libel laws don't exist in Venezuela.

John Kerry's "Statement on Venezuela" published March 19 on his Website, shows a definite, very much appreciated and welcomed preoccupation for our country's democracy. With all respect, I would say to Mr. Kerry that Venezuela's democracy is already an illusion and that the "effort to preserve" it is late in coming. As things stand, the effort should rather be made to repair it. With all that implies and for all our sakes.

Domingo Guzman de Frutos Arismendi
Caracas, Venezuela

John Kerry sure did issue a statement on Venezuela. And it was indeed critical of Chavez although it was replete with factual errors. But getting his facts right probably wasn't what was foremost in Kerry's mind. Winning over the right wing Cuban exile community in the key state of Florida was. In a close election Florida may again be the difference and getting some Cuban exiles on his side would certainly help his prospects in Florida. So if he has to toss them a bone, he has to toss them a bone.

Now I think I finally see where this person was going with all of that "American friends" stuff. They want their democracy "repaired ... with all that implies". What DOES that imply? That because they cannot unseat a highly popular, democratically elected leader they want the U.S. to send in the 82nd Airborne? That they want want the blood of 18 and 19 year old American soldiers to be shed so that they can regain their formerly privaleged position? It that is what is implied all I can say is no thanks.


Update on Iraqi Democracy 

Here is a little more info on the US shutting down a newspaper in Baghdad.

In an article headlined G.I.'s Padlock Baghdad Paper Accused of Lies by Jeffrey Gettleman today's New York Times said: American Soldiers shut down a popular Baghdad newspaper on Sunday and tightened chains across the doors after the occupation authorities accused it of printing lies that incited violence... Thousand of outraged Iraqis protested the closing as an act of American hypocrisy... "No, no, America!" and "Where is democracy now?" screamed protesters...

Where is democracy now indeed.

If these kind of journalistic standards were applied to the U.S. how many papers in the U.S. would be left standing considering how many of them repeated over and over again the lies about Iraq having weapons of mass destruction. I guess the U.S. is just concerned about others who tell "lies" which incite violence. Apparently U.S. papers telling lies which incite wars is just fine.


Sunday, March 28, 2004

The circus is coming to town 

Carlos Ortega claims he will be returning to Venezuela from his comfy "exile" which alternates between Costa Rica and Miami.

In case you are wondering who Carlos Ortega is here is a brief overview. Ortega was the head of Venezuela's largest union confederation, the CTV. The CTV is a notoriously corrupt confederation that makes the Teamsters look saintly by way of comparison. Worse still, it is not really a worker controlled labor federation but rather a pseudo union that is controlled by what was formerly Venezuela's major political parties, Accion Democratica or AD for short. As such, its function was really the traditional function of a union which is to seek higher wages and better working conditions for its members. Rather it served to help the AD electorally, ensure labor tranquility (ie having a strong bosses controlled union to prevent real unions from developing), and as a fountain of easy money for the "labor leaders" who ran it. The corruption of the CTV is notorious and well documented and will be gone over in future posts.

So why is Mr. Ortega in "exile"? Because back in December 2002 he led a "strike" which had as its aim the toppling of Venezuela's democratically elected president, Hugo Chavez. The strike, which was more of an employer lockout than anything else, was a collaborative effort between the so called labor federation CTV, the Venezuelan Chamber of Commerce (Fedecamaras), and the top brass of the state oil company PDVSA. Now, when was the last time the US Chamber of commerce and the AFL-CIO called a strike together?

This "strike" probably never had the support of more than a quarter of Venezuelan workers. Throughout the "strike" most industry, utilities, public transportation, the public education system, and retail shops functioned normally. However, as the "strike" did have the support of a large number of oil workers who not only went on strike but destroyed and damaged many key oil installations before leaving their posts the "strike" was successful at shutting down the Venezuelan oil industry for the better part of two months. Given the importance of the oil industry to Venezuela the economic consequences were severe with losses estimated at about $10 billion.

Approximately two weeks into the strike it was declared illegal by the courts. However, given the leaders determination to overthrow Chavez and their disdain for legal niceties they pressed ahead with the strike. The strike ultimately collapsed for lack of public support. However, the fact that it was pursued illegally lead to a court order for the arrest of Carlos Ortega who promptly left the country.

From abroad he has pretty much lost any relevance to the current situation in Venezuela. And that the strike was such an abject failure certainly did nothing to enhance his popularity or credibility. Should he ever return to Venezuela I am sure he will be dealt with by the Venezuelan judicial system. But I am not holding my breath waiting for his return.


The U.S. is in Iraq to promote freedom and democracy - yeah, right. 

In its unrelenting effort to ensure that Iraq becomes a free country the United States forces today shut down the Iraqi newspaper Al Hawsa. Its offense was appearently to have incited violence against coalition forces. Anyone attempting to publish or distribute the newspaper will recieve up to one year in jail.

Just curious but could the Wall Street Journal, Fox News, The New York Post, and the National Review be shut down for inciting violence against Iraq?


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