Oil Wars

For the latest on the U.S.’s hypocrisy when it comes to the war on terror take a look at the contrast between what President Bush said in 2001 and what the U.S. Ambassador to Venezuela, William Brownfield said yesterday.

Here is part of a speech by U.S. President George Bush on September 20, 2001 before a joint session of Congress:

And tonight, the United States of America makes the following demands on the Taliban: Deliver to United States authorities all the leaders of al Qaeda who hide in your land. Release all foreign nationals, including American citizens, you have unjustly imprisoned. Protect foreign journalists, diplomats and aid workers in your country. Close immediately and permanently every terrorist training camp in Afghanistan, and hand over every terrorist, and every person in their support structure, to appropriate authorities. Give the United States full access to terrorist training camps, so we can make sure they are no longer operating.

These demands are not open to negotiation or discussion. The Taliban must act, and act immediately. They will hand over the terrorists, or they will share in their fate.

By way of contrast this is what the U.S. Ambassodor to Venezuela said Friday regarding the Luis Posada case in an interview with Panorama:

Q: Can the case of Luis Posada Carriles undermine any method that both sides find to resolve their differences:

A: I hope not. The case, and more concretely, the extradition of Luis Posada Carriles is a legal question.

The truth is that Venezuela and the United States have a bi-lateral extradition treaty and the treaty is very clear in terms of the rights and obligations of the two, and also the process that one has to follow to obtain an extradition. The procedure is established there.

At this time the United States accepts its international obligations outlined in the treaty, but at the same time, we insist, as we have the soviergn right to insist, that this is done in accordance with the laws, regulations, and judicial procedures of the United States.

This is not the first time that Venezuela and the United States have had an extradition case, and neither of the two goverments are going to change the rules for this one. The case of Luis Posada Carriles isn’t political, its legal.

Q: And do you think that when Venezuela complies with all the established requirements in the treaty the extradition will happen?

A: The first step, of course, is that Venezuela makes an extradition request, and when I say that I am referring to a formal request. We are not talking about public declarations, we are not talking about resolutions, we are talking about a formal request that has to be certified by this humble public servant as the U.S. Ambassador to Venezuela.

Once that requirement is met, then the legal process, in terms of establishing the identity of the person, which is this case is already well established. Second, the crimes that serve as the basis of the request; third the evidence presented along with the petitions and, finally, what defense the accused offers before a U.S. court.

That is the process and, irrespective of the number of declarations, protests, and insults, we are going to follow it.

Q: But does the United States consider Luis Posada Carriles a terrorst?

A: I will say that the government of the United States believes that Posada Carriles, like any other of its 280 million inhabitants, is presumed inoccent until the opposite is proven in a formal trial. Therefore, the U.S. government doesn’t take a position and if we recieve an extradition request we are going to process it according to our international obligations and our laws.

Not much to say about this other than the double standards of the U.S. government couldn’t be more clear.
|

Hi, I’m not OW. That left wing liberal/commy took a break. So I hacked into his blogger program and decided to make myself a ghostblogger until he gets back.

Just a little background on who I am. I’m a patriotic, red blooded American who loves hot dogs, apple pie, baseball, and cheap gasoline. I have a Ford Expedition that gets about 2 miles to the gallon and I LOVE to drive – except when those little piss ant fuel efficient cars get in my way. Anyway, I’m sure a lot of you know there is some really, really bad stuff going down in the world. In fact things look like they are really getting out of hand. Just now I saw the scariest thing yet in today’s Wall Street Journal and wanted to share it with you before OW gets back and starts his commy propaganda again. Check this out:

Kazakh Honeymoon Is Over – by Guy Chazan

The tribulations of a small Canadian oil company in Kazakhstan show how a country that was once the darling of Western oil majors now is increasingly hazardous territory for investors.

Petrokazakhstan Inc., of Calgary, has cut output by a third to comply with new environmental rules. The Kazakh government has taken it to court over a fuel-pricing dispute. In April, criminal charges were filed against two of its expatriate executives.

The campaign symbolizes a new frostiness toward foreign oil investors in Kazakhstan. During the 1990s, the former Soviet republic relied heavily on Western money and expertise to develop its oil industry – and didn’t worry too much about the terms. “If you’re in the desert dying of thirst, you don’t ask how much a glass of water costs,” says Kazakh Energy Minister Vladimir Shkolnik in an interview.

These days, many in government feel foreigners took advantage of Kazakhstan’s inexperience to snap up its crown jewels for a song. Now the state is reasserting itself, expanding its role in the oil sector and dictating conditions that could deter new investment.

“Every country is obliged to derive the maximum benefit from the exploitation of its natural resources,” Mr. Shkolnik says.

It is a pattern evident elsewhere. With the price of crude nearly doubling since 2001, countries sitting on big reserves are demanding a bigger cut of windfall profits. Western oil companies, eager for new sources of hydrocarbons, are having to swallow more-stringent terms to stay in the game.

This is scary - these people are getting really uppity. Challenging the “Western oil majors”!! Who do they think they are? When I read about “the state reasserting itself” my heart sank. But when I read “Every country is obliged to derive the maximum benefit from the exploitation of its natural resources” my blood practically froze in my veins. This sounds just like something that prick down in Venezuela, Chavez, would say. I really started to suspect that bastard Chavez must be involved in this somehow. Maybe he really wasn’t in Barquisimeto last weekend. Maybe he flew over to Kazakhstan and started putting ideas in people’s heads. Then I read the next sentence and my worst fears were confirmed:

In Venezuela, President Hugo Chavez retroactively raised the country’s take from existing contracts with Western operators.

You see!!!!!!! I knew that commie bastard was involved. Not only has he screwed up all of Latin America but now he’s screwing up the rest of the world too – right under our noses. And you know what – I think I know how he does it. There is this stupid television station called Venezolana de Television and he has a Sunday morning program called Alo President. And you know what he does – he sits there all Sunday morning and screws over good, honest oil companies. I’m not kidding. He’ll actually sits there and says stuff like “these oil companies are getting away with murder paying 1% royalties – effective immediately its 16%” or “from now on all foreign oil companies have to give us a majority stake”, or “if the oil companies don’t pay their back taxes they owe us we’re shutting them down”.

And do you think its only Venezuelans that listen to this commy BS? No. This political pornography gets transmitted over the internet!! So there are probably impressionable oil ministers in places like Russia, Kazakhstan, Indonesia, Nigeria, Saudi Arabia listening to all this commy garbage and getting ideas. I don’t like to use profanity but that little mestizo motherfucker has balls. And he is fucking us, BIG TIME. I’m telling you, THIS HAS TO BE STOPPED. I don’t care if we have to cut every fiber optic cable and telephone line coming out of Venezuela we just can’t sit back and let this commy crap infect every single country in the world that has oil.

And where is Bush while all this happening. Well, the other day I saw him actually hanging out with some Venezuelan chick, uh, what’s her name? Umm, I can’t think of her name right now but you know who I’m talking about - the anorexic looking one. So when I heard Bush was meeting with her I thought, good, maybe he’s finally doing something about this.

But then I saw the video and I realized he wasn’t. For Christ’s sake the whole time he was just staring at her legs drooling, probably thinking he was going to get lucky that night (you know Clinton would have).

Jesus, this guy needs to wake up. HELLO, EARTH TO BUSH; EARTH TO BUSH. I realize you may not know it because you just ride around in the back of a limo and never have to pump gas yourself but the price of gas is over $2 and heading North. Something needs to be done about Chavez – like NOW.

Ok, enough of my rant. I need to get out of here before OW shows up again. But please people, if there are any Americans out there (and no, fucking South Americans don’t count as Americans, that’s more crap that Chavez is infecting people with) please write your congress people about this. Nothing fancy. Just keep it simple. Something like “Hi, I’m an American and I’m sick of high gas prices. Bomb Venezuela.”

Bye everyone. Oh, I almost forgot, God Bless America, God Bless SUVs, and God Bless Cheap Gasoline.
|

Here is some interesting data from economy.com via today's Wall Street Journal. It is the GDP growth for the most recent quarter for the major Latin American countries. I will give the data by country and list the political leanings of the respective presidents. Apoligies in advance for not knowing how to do tables in HTML:

Country/President/Pol Leaning/GDP Growth

Argentina/Kirchner/Left/9.1%

Venezuela/Chavez/Left/7.9%

Peru/Toledo/Center/6.8%

Brazil/De Silva/Left/6.2%

Chile/Lagos/Center-Left/5.7%

Colombia/Uribe/Center-Right/4.3%

Mexico/Fox/Right/2.4%

Hmmm. the further to the right the lower the rate of growth? Interesting
|

Yesterday it was speculated that Maria Machado went to meet Bush to pick up a check for her organization Sumate. Irrespective of when the actual checks get handed out today we have confirmation that indeed the U.S. government intends to give Sumate even more money.

Yesterday a number of U.S. congress people were visiting with their counterparts at the Venezuelan National Assembly. The ostensible purpose of the meeting was to discuss drugs. However, Frank Wolf, a Republican from Virginia, instead took the opportunity to say that he thought that freedoms were threatened in Venezuela, that he didn’t understand why Maria Machado was being prosecuted , and that the U.S. government planned to give Sumate even more money than they already have. So Machado hit the trifecta, she got a visa to go to the U.S. (something not easy to get if you support Chavez, Chavez himself was denied one), she got to meet with Bush (ok, so that is nothing to brag about but she got to see the inside of the White House), and she gets a check.

And what are U.S. taxpayers getting for their money? They get the services of someone who thinks its fine just to abolish any government you happen not to like ( see below ), that clearly fabricated electoral information ( exit polls, data analysis , etc), but that will sit on Bush’s lap and say bad things about people he and the U.S. government don’t like.

Another note on this subject. Some have speculated that Bush inviting her to the White House may have been a signal that the U.S. wanted to see her as the opposition’s unity candidate to run against Chavez in 2006 similar to the U.S. getting the Nicaraguan opposition to line up behind Violetta Chamorra in early 90s. While possible, I think this is unlikely. The U.S. State Department is still does have some grip on reality (ok, when you look at Iraq its hard to believe that but I think its true) and realizes that the elections of 2006 are all but a forgone conclusion. The price of oil is high, the Venezuelan economy is booming, and Chavez is going through the roof in the polls. Anyone who runs against him is likely to wind up a sacrificial lamb.

Further, Machado is very much identified with the eastern Caracas elite and that would not help her or the opposition in any election. It would be hard for her to campaign in the poorer areas as her fine clothes and jewelry would clash with the squalor.

Another irony if this were the case is that the opposition , and in particular Machado and Sumate, has been crying that there aren’t fair elections in Venezuela. So if the elections aren’t fair why would you be a candidate in them. Quite a conundrum. Actually, the whole opposition has been caught in this pickle as they don’t want to give up the few positions they can win so they have to participate in the elections meaning that in spite of their claims of fraud they go ahead an participate anyways. Up to this point I thought a likely strategy that the U.S. would push is to have the opposition not participate in elections at all claiming they were rigged and try to delegitimize Chavez in that way. And I still think that strategy is more likely than trying to run a sure loser like Machado.

Lastly, if they intended for her to be some sort of unity candidate they are a little late as Primero Justicia already jumped into the game. Other opposition parties such as A.D. also seem inclined to field their own candidate. So if a unity candidate was their intent I’m afraid the horse is already out of the barn.

Truthfully, I don’t think this represents anything more than the U.S. government trying to be a thorn in the side of the Venezuelan government (which is all they can do at this point), continue their propaganda offensive against Chavez, and push some peoples buttons (which they succeeded in). And as far as Machado goes I hope she enjoyed the trip and the check made it worthwhile as she likely has tough days ahead. After all, it is not who is smiling today who counts but who is smiling the day after the elections.
|

Interesting article in the New York Times today showing Chavez's popularity:

When President Hugo Chávez of Venezuela arrived at the World Social Forum in Brazil in January, he was greeted with thunderous cries of "Here comes the boss!"

At ceremonies in March surrounding the inauguration of Uruguay's president, Tabaré Vázquez, the latest left-of-center leader elected in Latin America, throngs roared their approval as Mr. Chávez gave one of his characteristically rambling talks, full of warnings about American imperialism.

And in Buenos Aires, crowds mobbed Mr. Chávez when he showed up to inaugurate Venezuela's first state-owned gas station in the Argentine capital, part of a food-for-oil deal popular with Argentines.

You can read the rest here.

Quite an interesting contrast between the genuine popularity of President Chavez and self-appointed nobodies of the opposition
|

Gee, look who got invited to the White House yesterday. None other than Maria Corina Machado, the head of opposition NGO SUMATE.

"We dicussed our vision of the future and assured him that we Venezuelans want to live in democracy and liberty. We were invited by Bush because he is interested in hearing civil society's perspective on democracy" , said Machado.

Well, if Bush just wanted to know what Machado thinks about democracy he didn't have to go to all the trouble of bringing her to the White House. He could have just checked out her signature the document supporting the overthrow of the President and the abolition of the Assembly, Supreme Court, Electoral Council, etc, etc. in April 2002. I think that gives as clear an indication as anything how little use Machado and her ilk have for democracy.




UPDATE

Some have asked for additional information on Machado's signing.
Here is a Quinta Dia article giving all the names of those who signed the "acta de proclamacion" and if you go down the list about a third of the way you will find Ms. Machado's name. Here is another site where the list is easier to read - she is number 144.

Of course the request, after the Carmona Decree was read, for people to sign it was amply video taped as was Ms. Machado standing on line and signing. Channel 8 has shown it many times and if you stay tuned to that channel (which you should be anyways) I'm sure you will see it before to long.
|

The previous post created a segway to talking about the first candidate to test the presidential election waters. Last week, Julio Borges of the party Primero Justicia announced that he will be running for President in the 2006 presidential elections. Given that the elections are still 18 months away his announcement took most people by surprise. Further, it had been widely assumed that the opposition would come together and carefully pick a consensus candidate to run on a unity platform against Chavez. Even with only one candidate the opposition’s chances are minimal. With multiple candidates they will be increasing the size of their probable rout by Chavez.

Mr. Borges gave an interview in Panorama today but before getting into that I would like to give some background on the Primera Justicia party. It is a relatively new political party formed in the early 1990’s. It has a reputation as being the party of Venezuelan yuppies as most of its supporters are relatively young and from the prosperous sections of Caracas. It has never held power on a nation wide basis in Venezuela. For almost 5 decades Venezuela was dominated by two parties, Accion Democratica and COPEI. These mainline parties were really just corrupt political machines. For those more familiar with Mexico than Venezuela just think of the PRI times two. Those parties really are the spitting image of the Mexican PRI save that as there were two of them they alternated in power and agreed to split the spoils.

By the late 1980s, early 1990s, those parties were rapidly losing credibility and Primera Justicia is one of the parties created to try to fill the rapidly forming political vacuum. It didn’t really differ from the old corrupt parties in any appreciable way but it was new and something that is new often seems different and better even if it isn’t. For instance, the old parties were top down organizations were everything was decided by political bosses and business magnates. To the extent that any of these parties had any rank and file they had no input and were generally people worked for the party in exchange for jobs or other favors. Along those lines please note that no one selectedBorges to run as President – there were no primaries, no competition, no debates. He simply selected himself to run. The more things change the more they stay the same I guess.

Now lets take a look at some of Borges's interview from Panorama

Q:You said when you announced your campaign that you would continue with the Missions, do you really believe they help people are they simply things to use in a campaign?

A:To meet the immediate needs of the people, in theory, they are good. But as we see it they should go beyond that, we can’t offer only Missions, we have to give jobs.

I just came from the 7th of January neighborhood and I asked people what they did, if they wanted to work … and it broke my heart.

In Maracaibo and other areas of Zulia it is amazing to see how much unemployment has increased. I saw two little children who were malnourished as if they were in Africa. There has to be something beyond the Missions. But if society doesn’t create opportunities for something beyond the Missions, for jobs, we are going to remain stuck. I feel that the Missions are the first step, even though many times they have been used to exclude people politically which should not happen.

Q: What was the situation with the sectors of the opposition which immediately came out to criticize your campaign announcement?

A: What we are trying to accomplish, and what motivated us to launch our campaign so early, is the sense of unity that the country wants, all of Venezuela should be united, and I, rather than consult with people in hotels in Caracas, go from house to house and that is valuable and means the problems of the people are known by the leadership.

Q: Will it be necessary to create a united front to compete with Chavez?

A: One must begin early to gather strength as we know this is a system that doesn’t guarantee anything. The Supreme Court is politicized, the electoral council biased, we know the reality of Venezuela.

I think a united front is necessary, the country wants it, but the people will decide.

Q: Do you feel that you are the face of the opposition, including the political leader that face judicial proceedings such as Carlos Ortega, and the fugitive Carlos Fernandez among others?

A: Primero Justicia represents a new generation and only those people can unite the country again and stop the fights of the past that no one has won. If I am identified with the opposition leaders who are being persecuted it is because their it is unjust to politicize the judicial system.

Q: Would you sign the extradition request for Luis Posada Carriles?

A: Yes, if I were president I would treat him just the same, but I would not extradite him to Cuba, but rather try him here. But I would never make something like this the main item on the national agenda instead of the problems of the people like employment, hunger, and poverty. That they give so much importance to Posada Carriles is as if they don’t care about society. To sign the extradition papers is in a way a commitment to fight against terrorism.

Starting with last things first – at least the man is on the right side of the Posada issue. Lets give him credit for that. Unfortunately for him everything is down hill from there.

Lets take his comments on the Missions which are the large social programs started by President Chavez. Borges says he is in favor of keeping at least some of them. A couple problems here: First, the opposition, Borges included, spent a good deal of time fighting against and trying to stop the Missions. For example, one Mission , Barrio Adentro, sent Cuban doctors into poor areas to provide medical care. The opposition fought tooth and nail against this program. They even went to court to have it declared illegal due to the Cuban doctors not being licensed to practice medicine in Venezuela. Only shortly before the Presidential Referendum when they finally did enough to focus groups to realice that these programs were wildly popular did they change their position 180 degrees and support them. Secondly, even if you say you support these programs, given that they are Chavez’s programs aren’t you in effect saying you support what he is doing – and if that is the case why not keep him. This is the oppositions Catch-22. They can’t campeign against Chavez’s programs because they are popular. But if they say that these popular programs are good then they are just reinforcing why people should vote for Chavez. So clearly talking about the Missions is not going to be a winning formula for Borges.

Then he goes on to talk about employment. Not to beat a dead horse as this was discussed in the last post but a) employment IS increasing now as the economy recovers from the opposition sabatoge of 02/03 and b) it is the opposition that did everything it could to increase unemployment by trashing the economy. Given this, if jobs are the issue who do you think most Venezuelan’s are going to vote for? It’s not hard to figure out.

Then when discussing wether the opposition should have a united front against Chavez he says “the people will decide”. Really? How will they do that? Given that no-one in the opposition seems to be talking about primaries its hard to envision how the “people” will have any say in what any of these opposition parties do. If you want a say in how things are done you have to join the MVR (Chavez’s party) as they are the only ones who have primaries and let the party membership choose candidates.

Lastly he goes on to defend Carlos Ortega and Carlos Fernandez, two leaders of the opposition involved in the coup attempt of April 1, 2002 and the “strike” of 02/03 which devestated the country’s economy. Somehow Borges believes that these people who did everything they could to overthrow a democratically elected government are victims of political persecution. Don’t think he is going to win brownie points with most Venezuelan’s that way.

So here we have it – the first contender for the presidency. He comes from a party with a very narrow political base and not a very positive image among most Venezuelans. That's alrady two strikes against him. And if this interview is any indication he doesn’t seem to be doing anything to help himself.

Personally I can’t see how they are going to be able to put lipstick on this pig. But is should be fun watching them try.
|

It seems like just the other day we were discussing that one of the opposition's problems is its being in denial and not recognizing its status as a small minority within Venezuelan society. Further it was pointed out that their strategies seemed to be predicated on them being a majority when in fact they are definitely not a majority. Little did I realize that someone else was thinking the same thing. The following is a translation of what Gerardo Blyde, a Assembly member from the Primero Justicia party, wrote the other day:

The promoters of the idea of electoral abstention, who aren’t lacking in motivation to try it, should think about some things that made me change my mind. The first was a thorough analysis of the opinion polls of all the country’s leading polling firms. They show that two years ago the popularity of president Chavez had fallen and was between 40% and 45% but that situation changed and after the implementation of the Missions [Missions are large scale social program – ow] (especially Mercal and Barrio Adentro) today it is between 55 and 60 percent. The first thing that we have to recognize, in order to come up with successful strategies, is that those who oppose Chavez at this time are a minority, not by such a large margin, but a minority. As long as we keep thinking that we are a majority we will be starting from a false premise, and everything that we come up with will be bound to fail. Accepting this is very difficult, but this does not mean we are resigned to it. On the contrary, it simply signifies a change in paradigms that will have us change how we act as an opposition, as the route of extremist and urgent solutions has led us to become smaller rather than larger.

The second thing we have to analyze are the causes of our decrease that has led Chavez to again have a majority. Analyzing the same opinion polls and focus groups we see the most important causes: the message. While the government goes into poor areas (which decide electoral outcomes by virtue of being the majority) with messages of hope, with medical care, with inexpensive food, and gives the impression of concrete improvements in peoples lives with offers of future housing and jobs, the opposition does not go into the poor areas or if it does goes in to talk about a lack of institutionality and democracy. This message may go down well with the upper classes but it does not find acceptance among the poor who have been for many years excluded from access to institutions. To sum up, the message, to grow instead of only keep speaking to ourselves, should change from criticizing every mistake by the government to being positive and offering hope. None of this excludes defending political prisoner, or those denied the right to work such as the fired oil workers, or denouncing the limitations on freedom of expression, but in addition to that we should try to offer a positive and credible alternative.

The third point to help ourselves increase is to have clear ideas of what the government’s strengths and weaknesses are. Among its strengths are obviously the communication skills of the president and the huge quantity of economic resources that it has to get its message across, meet some needs of people, and create hopes in a large segment of the population and buy consciences of others. Among the weaknesses is the terrible performance of Chavez’s governing team (which still hasn’t rubbed off on the President) and the many unfulfilled promises that have started to dampen the illusion of a better future among some supporters of the government. The immense corruption is another obvious weakness. But the most important weakness is the very high level of unemployment. This has become the principal problem of Venezuelans of all social classes, the need to find employment that isn’t a temporary subsistence level job. We have to show direct relations between the actions of the government and the increase in unemployment. For example, people understand very well that if Chavez fights with the United States that reduces foreign investment and employment opportunities; the relations with Cuba, even when it isn’t particularly harmful, doesn’t generate employment. That is how we have to make the case.

The extreme solution of electoral abstention only is effective when those who try it are a majority. If the reverse is true, those who participate are a majority, they process is legitimized. Remember, the Constitution, for example, was approved with 80% abstention and, nevertheless, it didn’t lose its legitimacy. First you have to become a majority before you can de-legitimize.

All the reasons for not voting are valid if we remain in the past lamenting our situation, but if we see elections as opportunities to grow and organize politically, if we change our message and offer a new hope, this work will bear fruit in the medium term even if we lose the elections that are coming so that we can strengthen ourselves for the elections that are coming in 18 months [the Presidential elections – ow].

The first thing to say is it is interesting and quite a surprise to see at least some segments of the opposition try to come to terms with reality. Of course he does try to sugar coat things a little by playing down the level of support Chavez has (the polls I’ve seen were in the 70% range) but maybe that is a calculated change on his part to make these hard truths a little more palatable to the hard core opposition members. But for the most part the essay is brutally honest and frank. In particular it was perceptive of him to note that the opposition crying about the lack of legality and institutionality isn't going anywhere when the reality is the great majority of the population never had any recourse to the law or institutions.

Quite frankly, the opposition could do a lot worse than to listen to what this guy is saying. But if history is prologue, they won’t.

One more quibble. I don’t know that his focus on unemployment will work. As has been mentioned before unemployment skyrocketed due to the 02/03 “strike” by the opposition and has since come down significantly. So to try to pin something on Chavez that the Venezuelan electorate knows was the doing of the opposition is not a likely formula for success. People simply don’t forget, much less forgive, that quickly.
|

Last week appeared the first installment of “The Good Old Days”, or what Venezuela was like back when the opposition was running things. Today comes the second installment showing what it was like when the Venezuelan business class had its own little multi-billion dollar piggy bank called Recadi.

Wanted In Caracas
Many Executives Fee Venezuela in Scandal Over Dollar Reserves
Even Multinational Officials Who Aren’t Implicated Fear Jail and Slow Justice
Illegal High Jinks at Recadi

By Jose De Cordoba
Staff Reporter of The Wall Street Journal

Caracas, Venezuela – When the head of new products for Ford Motor Co.’s unit here wants to talk strategy with his boss, he hops on the company plane for a 55-minute flight to Curacao. That is where the unit’s president is holed up to avoid a warrant for his arrest in Venezuela.

When the personnel chief of a Fortune 500 pharmaceutical company’s Venezuelan operation needs to discuss budgets, he jets to Miami, where his unit’s president is avoiding the possibility of arrest in Caracas. “What used to take half a day to do now takes three days,” laments the personnel manager.

This is a tedious way to do business, but for many international companies here, it has become the only way. About 100 top executives from blue-chip multinationals have decamped Venezuela in the wake of a huge foreign-exchange scandal. The exodus isn’t an admission of guilt, the businessman, insist; it’s there only choice.

For in Venezuela, if a company is charged with doing wrong with the nations money, that company’s top executives can sit in prison – denied bail – while the case lumbers through an unwieldy legal system. And in the sometimes-bizarre inquiry triggered by this scandal, scores of multinational companies, along with domestic businesses and former top government officials, are being investigated.

Few Arrests

Authorities have issued 47 arrest warrants so far and imposed travel restrictions on more than 60 other individuals, according to the principal judge in the affair. About 15 arrests have been made, he said. The only executive of a multinational unit to be arrested so far is Livio Pernetz, the Venezuelan –born director of Caleb Brett Venezuela, an import-verification unit of Britian’s Inchcape PCL.

The rest of those being sought apparently have left the country. The mad rush to get out of Venezuela also includes many executives whom authorities haven’t singled out but who aren’t taking any chances. Prominent among those who have fled are executives of car-assembly, flour-milling and pharmaceuticals companies, which have been among the first targets of investigators. The investigation generally focuses on a few top executives from each company.

Investigators believe that out of $40 billion authorized for payment by a now-defunct government agency over the past six years, as much as $8 billion may have been illegally skimmed. The agency, known by the acronym Recadi, was in charge of administering Venezuela’s complex foreign-exchange control system. It was supposed to conserve the country’s dollar reserves by limiting their distribution to key importers, and to subsidize these importers by allocating the dollars at bargain rates. The subsidies were meant to ensure that a continued flow of vital imports would keep Venezuelan industry rolling, prevent product shortages and keep inflation at bay.

Instead, with the price of dollars on the free market as much as three times the subsidized rate, corruption was rampant at Recadi, investigators say. In some cases, Recadi officials allegedly demanded commissions for authorizing dollar distributions. In others, importers are suspected of having bribed Recadi officials to approve inflated import invoices so they could collect extra dollars.

Soap-Opera Overtones

By 1987, the system was open to all 26,000 Venezuelan importers. It was discontinued earlier this year as part of an economic-reform package. About half of those importers are suspect, investigators say. In hindsight, no one is surprised.

“It was a piñata,” declares Judge Luis Guillermo La Riva, the jurist leading the charge against the multinationals. John Werver, President of H.J. Heinz Co,’s Venezuelan unit, one of many food companies being investigated, says: “You could have set up that system in Iowa and I guarantee there would have been a lot of corruption.” Mr. Werner, who hasn’t been personally implicated or had his travel restricted, denies any wrongdoing by Heinz.

The scandal sometimes reads like a tropical soap opera. The inquiry picked up steam when Hector-Meneses, a former development minister and Recadi director, tried to kill himself but failed. Mr. Meneses reportedly left a suicide note, later published in the local press, implicating other top government officials. Disgusted by tales of corruption emerging from the congress and courts, Arturo Uslar Pietri, the country’s leading intellectual, has sarcastically proposed a new medal, “The Order of the Fool”, to be bestowed on honest citizens. Thousands of people marched in a “Parade of Fools” to protest government corruption.

Economically and politically, this affair couldn’t come at a worse time for Venezuela. Making life difficult for multinational companies can’t help government efforts to open Venezuela’s long protected economy to foreign investment and competition. A deep economic slump already had prompted many multinationals to rethink their plans for additional investment. Evidence of widespread government corruption, meanwhile, adds fuel to public discontent that erupted in February anti-austerity riots that left about 300 dead and 1,900 injured.

For foreign businessmen, the Recadi investigation has been a crash course on the Venezuelan legal system. Judges wield enormous power, combining the roles of prosecuting attorney, grand jury and criminal court judge. Defendants accused of crimes against the “national patrimony,” such as alleged in the Recadi case, can’t post bail.

Thus, Judge Le Riva, outgoing and folksy, has become the scourge of Venezuela’s corporate elite.

Businessmen accuse him of “judicial terrorism” and hint at legal extortion. The judge denies the allegations, labeling them part of a smear campaign by “the Caracas oligarchy.” He maintains he has nothing against businessmen – many, he says, are honest. But it was businessmen who took the most advantage of Recadi, he says.

“The sacked Venezuela,” he declares. “For every dollar that a public official was bribed, the businessman received $10,000.”

Businessmen also complain of a lack of professionalism. The investigation does seem haphazard and ill-equipped to deal with the mountains of records companies are being asked to provide. Aside from a dozen or so young law students and lawyers who help take depositions, the judge has only five economists and accountants provided by Congress and the police to help with technical details.

“In most cases I know about, travel restrictions were ordered before there was an investigation,” complains Alberto Mestre, the president of Kraft Inc.’s Venezuela unit, one of the companies being investigated by the judge. Mr. Mestre himself hasn’t been implicated and his travel hasn’t been restricted. He says Kraft’s accounts are in order.

Judge Isn’t Flustered

Judge La Riva provoked an embarrassing incident by issuing an arrest warrant for Nestor Rapenelli, an Argentine who had been an executive at a flour-milling company here. The warrant went unnoticed until Mr. Rapanelli was named Argentina’s Economics Minister in July. “If Rapanelli goes through Venezuela and is arrested, that would be a problem for Argentina,” shrugs an Argentine Economics Ministry spokesman. “The thing to do is not to go through Venezuela.”

In May, Judge La Riva blundered as he began investigating Venezuela’s car-assembly companies, the biggest private-sector users of Recadi dollars. He issued orders prohibiting executives from five auto-assembly companies from leaving the country. But the judge took names from out-of-date incorporation papers, which meant that some of the executives of the General Motors Cor., Ford and Fiat, S.p.A units that he prohibited from leaving Venezuela had been gone for years.

The judge remains unconcerned. He has charged Ford’s Venezuelan unit with “fraudulent use of public funds” and issued arrest warrants for four present and former Ford officials. (Judge La Riva says he is prohibited from elaborating on any case under investigation.) Ford insists its accounts are in order and is appealing the judge’s decision to levy charges.

“I was going to get” General Motors de Venezuela, Judge La Riva says unabashedly, running his index finger across his throat in a head-cutting motion. “But they took the case away from me.” Another judge is handling the investigation of the GM unit, which hasn’t been charged with any wrongdoing. (A spokesman for General Motors de Venezuela, 51% locally owned, says “all our accounts are clear and we don’t fear an investigation.”) The judge dismissed charges against Fiat’s Venezuelan unit.

Odd Arrangements

Some executives who remain in Venezuela despite investigations of their companies acknowledge that they may be taking a calculated chance. But in some cases an impending arrest warrant is signaled by the imposition of travel restrictions, and executives have found ways to evade that barrier.

Some businessmen have left the country by hiring commercial fisherman to take them to the nearby island of Trinidad. One man got out by bribing an immigration official $500 at a small regional airport. Another executive hid out in the hills around Caracas while his company bargained with a pilot, who wanted $100,000 to fly him out. After a week of jawboning, two pilots, one flying a decoy route, smuggled him out of the country from a remote airstrip. The price: $50,000.

Another executive received a telephone call from Judge La Riva asking if he was the president of his company, which was being investigated. The executive said yes. The judge then asked him how to spell his name. “I decided it was time to leave,” says the executive, who did so the next day. No warrant or travel restrictions have been issued for him. (Most executives decline to be quoted by name in hopes of avoiding the judges attention.)

Not all of Judge La Riva’s targets have been foreigners. One warrant went out for Nicomedes Zuluaga, a member of Venezuela’s aristocratic elite known as the Lords of the Valley. Mr. Zuluaga, chairman of a flour milling company, Grandes Molinos de Venezuela, was accused of paying too much for wheat. But to everyone’s surprise, Mr. Zuluaga didn’t flee. Protesting his innocence, he went to prison instead.

Gilded Cage

Well, sort of. At the prison, Mr. Zuluaga occupies the warden’s office and bedroom, turned over to him so that Mr. Zuluaga has an appropriate place to receive visitors. He has his own visitors guestbook, his chauffeur brings breakfast and with the help of a personal computer, Mr. Zuluaga traces his family tree to the 16th century. He uses a facsimile machine to send instructions to his companies and occasionally commiserates on his cellular phone with Venezuelan President Carlos Andres Perez.

In his gilded cage, Mr. Zuluaga has become a symbol to Venezuelan businessmen who feel Judge La Riva is trying to divert public attention from official corruption and plunging living standards worsened by stringent economic reforms. Prices rose 62% in the first seven months of this year, and one economist predicts domestic economic output will fall 10% this year. “If there is no bread, then circuses,” mutters Mr. Zuluaga, a commanding presence still even behind the warden’s big desk.

Multinational executives draw another message from Mr. Zuluaga’s fate: leave. “If Nicomedes Zuluaga with all his power has been in prison for months, who is going to cry for you?” asks Vincenzo D’Elia general manager of SmithKline Beckman Corp. Venezuela unit, who hasn’t been implicated.


Recently, to the general relief of businessmen, Judge La Riva has parceled out most of the cases he has launched to nine newly named jurists. Nevertheless, two weeks ago he announced 30 new investigations of food-processing companies, many subsidiaries of U.S. companies. He promises to decide them all by Christmas.

Inappropriate Garb

Meanwhile, many fugitive executives will continue working from vacation destinations in the Caribbean.

Ford Motor de Venezuela has three top executives on the lam in Curacao. In the resort hotel where they live, the Ford men strike a visually odd note. They – and visiting Ford brass – are the only people around in buttoned-up long-sleeved shirts and ties. One recent day, half a dozen executives sit under a stuffed marlin in the outdoor cafeteria, sweating through a marketing strategy meeting in full corporate dress. Just a stone’s-throw away, scantily clad tourists sunbathe and frolic in the ocean.

Ford chose Curacao because from there executives can watch Venezuelan television and buy Venezuelan newspapers. And a company plane hops back and forth daily. Still, in a telephone interview from an undisclosed location, Cornelius Koreman, president of Ford de Venezuela, says he doesn’t know how long this method of operation can go on. Despite facsimile machines, phones and constant meetings in Curacao, “Sooner or later you start loosing the sense of the environment in which one operates,” he says.

Both in Caracas and outside, executives are hoping the worst is over. Publicity surrounding the case has shifted toward the investigation of Blanca Ibanez, private secretary and mistress of former President Jaime Lusinchi. She has left the country and reportedly is in Miami with Mr. Lusinchi. In addition, the vocal criticism of Judge La Riva by the business community appears to have slowed his drive somewhat.

Some executives are even returning to Venezuela, quietly. But most keep up their guard. “I have two plane tickets with open dates,” says Mr. Werner, the Heinz executive, who never left.

|

“There are some who, uh, feel like that, you know, the conditions are such that they can attack us there. My answer is: Bring ‘em on." – George W. Bush, July 2, 2003

Today we remember the latest victims of Mr. Bush’s hubris:




For more look at this.

Of course, the victims of other nationalities are innumerable and anonymous.
|

I was going to write about this yesterday but fortunately I didn’t get the chance to and therefore had more time to calm down. And clearly, there is a lot to calm down from.

Over the past couple of days there was some confusion as to what Venezuela had submitted in terms of extradition requests for Posada and what the U.S. had done with the request. Conflicting rumors had Venezuela not having submitted any formal paperwork to the U.S. and while others had the U.S rejecting an extradition request outright. An article on the New York Times clarified matters:

The Justice Department on Friday rejected Venezuela's request for the arrest of a Cuban exile wanted for an airplane bombing as a preliminary to his extradition, saying it had not provided proper supporting evidence.

A State Department official said the Venezuelans were told that their request, which called for the arrest of Luis Posada Carriles to prevent his escape as a first step to extradition, did not contain sufficient information regarding the facts and circumstances of his involvement in the 1976 bombing. The midair explosion of a Cuban airliner off the coast of Barbados killed 73 people, including several Venezuelans.

"The provisional arrest request as submitted by the government was clearly inadequate," the official said. The ruling does not preclude a formal extradition request.

So what really happened is clear, if stunning. Venezuela has not yet submitted a complete extradition request but they did submit a formal request for Posada’s detention pending extradition. Sounds perfectly reasonable. After all the man is clearly a flight risk and the last thing the world needs is another terrorist on the loose.

And the U.S. government, in its wisdom, rejected this request saying there wasn’t sufficient evidence. This is such complete BS considering that it is employees of U.S. law enforcement and intelligence agencies that have provided most of the evidence against him. To have enough evidence to get this guy off the stree the U.S. doesn’t need anything from Venezuela – they just need to read what their own newspapers, like the L.A. Times and New York Times, have written on the subject – for ease of use some salient points are here and here.

So think about the significance of this. Posada is currently in a I.N.S. cell in El Paso for nothing more than not having a visa to enter the U.S. So what the U.S. government is saying is that if Posada had his immigration paperwork in order he would be free to do as he pleased! This is simply unbelievable. Based on the evidence in the public domain there is no doubt that if this had been a terrorist attack against the U.S. he would certainly have been charged with acts of terrorism and indicted. But given U.S. double standards the he is not currently charged with any such thing.

It gets worse:

American officials have not said whether they would extradite Mr. Posada, saying that the question was a legal matter. But they have indicated they would not willingly send him to Venezuela. The fear is that Mr. Posada would wind up in Cuba, where he would be executed for a range of crimes, including an assassination attempt on Mr. Castro.

So American officials don’t want to see a terrorist brought to justice. Screwing political adverseries trumps the “war on terror”. Well, at least this episode has clarified that.
|

At the height of the opposition’s strength in 2002 and 2003 they did have a significant following. They may well have had the support of the majority of the population and they were able to mount large demonstrations. Some of there demonstrations may even have had 100,000 or 200,000 people.

But now times have changed and the opposition has fallen out of favor. Hence the few supporters they have at this point are left with little but fond memories of what they once were.

Witness this from yesterdays poorly attended opposition demonstration. Where once they had huge crowds now they are reduced to carrying placards with pictures of huge crowds. That is the interesting thing about us humans, no matter what, we can always hang on to our memories


|