Oil Wars

Of late I've taken some heat for criticizing the consumption binge that the Venezuelan government is promoting. In particular, my suggestion that Venezuela should possibly take the South Korean route of banning imports of certain luxury items - such as private automobiles - raised the ire of more than a few commentators.

And my opinions aside, Venezuelans are buying LOTS of cars.

But there is a larger question here that is raised by this picture of a typical Venezuelan intersection:



Given that the overwhelming majority of Venezuelan motorists (opposition and Chavista alike) haven't a clue how to drive is it really safe to be putting automobiles in their hands?

In Venezuela , go to the bank, get a loan, sign up on a list, and next thing you know you have a car. Actually knowing how to drive doesn't figure into that equation.

Maybe Venezuelans are ripe for some mandated driver education classes?

Nothing super sophisticated mind you. Just the basics like learning which side of the road they should be driving on, what those things hanging over intersections with green, yellow and red lights mean, and that it isn't good manners to actually accelerate when you see a pedestrian trying to cross the street.

And no, even though your country is named after Venice, you should NOT try to drive like Italians.
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In their constant efforts to tar the Venezuelan government with any possible misdeed imaginable the Venezuelan opposition and their U.S. backers have come up with some zingers. My personal favorite is the one where Chavez was having his military make secret shipments of money to Bin-Laden in Afghanistan. A close second would by the accusation that Margarita Island had become a major "terrorist" training ground (as if with the Bolivar so overvalued any terrorist could actually afford to train there!).

Over the past year or two one constant accusation that has been peddled by the U.S. government and then seized upon by the opposition is that Venezuela has become heavily involved in drug trafficking. This is rather rich considering that the U.S. is extremely close to and supportive of the two countries that are far and away the major source of drugs - Colombia and Mexico. Oops, make that three countries. I almost forgot how well the poppy crop in Afghanistan is doing under the U.S. puppet regime there.

Anyways, in press release after press release from the U.S. government we are told how badly Venezuela is doing in the "war on drugs".

What is interesting though, is that when reporters for a major newspaper do an investigative article detailing the booming cocaine trade and the huge money laundering business that it in turn spawns Venezuela never comes up - not a single time.

The article in question is from today's Wall Street Journal and is titled "Cocaine Boom in Europe Fuels New Laundering Tactics". To see who IS behind this scourge, lets take a look at some excerpts:

A cocaine boom in Europe and the continent's strong currency have combined to fuel a thriving industry: euro laundering.

With the euro approaching $1.50 and soaring demand for cocaine in countries like Spain and Italy, Europe has become a far more lucrative place to do business for Latin American drug cartels than in previous years.

To obscure the origins of the funds, and escape government scrutiny in the process, the cartels use a complex system to launder their proceeds -- much of which is landing on U.S. shores.

In late March, U.S. authorities arrested a man carrying a leather duffel bag who had just landed at Los Angeles International Airport on a flight from Santiago, Chile. Inside the bag was more than $1.9 million in cash, mostly in bundles of €500 and €200 notes.

U.S. and Chilean law enforcement officials believe the man was at the end of a money-laundering trail that begins in Europe. Over a period of four and a half years, he and his associates flew to the U.S. from Latin America some 280 times, openly toting more than $244 million worth of euros into the country, according to documents in a case brought by federal authorities in U.S. District Court in New York.

It later turns out that all that money and hundreds of millions more was being laundered through Chile. No, that is not a typo, "through Chile". Yes the supposed poster child of law and order, transparency, incorruptability and free markets is making a very pretty penny off of laundering drug money. Who'd have thunk?

And what is even more ironic is the money being laundered is coming from Spain and ultimately being sent on to the United States. So why go so far out of your way to Chile when other countries, such as Venezuela, would be so much closer? Oh I forgot, those pain in the ass Cadivi folks must make money laundering a bitch.

Consumption of the drug has soared in much of Western Europe, according to a report released last year by the U.N. Office on Drugs and Crime. In Italy, use of the drug rose to 2.1% of the general population in 2005 from 1.1% just four years earlier. In France, it tripled from 2000 to 2005, from 0.2% to 0.6% of the adult population. Cocaine use in England doubled from 1998 to 2006, according to Britain's National Health Service, to 2.4% among adults.

Drug consumption is booming in Europe. Well, I guess economic success does have its rewards. Funny how in crying about the "drug problem" these countries don't ever seem to pin much blame on themselves. Well, come to think of it, this is another reason why it is handy having plenty of poor third world countries around. Not only can you get cheap labor from them and export your toxic garbage to them but you can even blame your own problems on them. I mean, c'mon, if it weren't for those F@#*ing Colombians no-one in New York, or London, or Rome or Paris, would ever snort cocaine!

By the way, later in the article it was pointed out that Spain has now surpassed the U.S. in the percentage of its citizens who use cocaine and become number one in the world. Funny, a couple of weeks ago there was much handwringing in the U.S. that Toyota had passed General Motors to become the largest automobile company in the world. Personally, I think that the Europeans can now afford to snort more cocaine than we can is much more embarrassing.

The purpose of money-laundering is to disguise the criminal origins of ill-gotten gains so the funds appear legitimate. In most cases, laundering also helps criminals escape the notice of tax collectors and law-enforcement officials, boosting the value of their illegal proceeds.

Particularly since 9/11, tightened antilaundering regulations, known by banks as "know your customer" rules, have forced drug cartels to use more circuitous routes to circulate their funds around the globe.

For starters, the drug cartels do not themselves bring their narco-euros to the U.S. Instead, they usually sell their euros to South American black-market currency brokers or to foreign-exchange houses, known in Spanish as casas de cambio. The casas' business as currency-exchange houses gives them a natural cover for moving large amounts of cash.

But in South America, there are few if any legitimate buyers for the huge sums of euros that the casas obtain -- directly or indirectly -- from the traffickers. So the casas funnel most of the narco-euros, sometimes via middlemen, through a chain of exchange houses in countries like Colombia, Peru, Brazil and Chile, says the DEA's Mr. Semesky.

Well, it looks like when it comes to money laundering Venezuela must be an also-ran. They obviously aren't up there with the big boys like Colombia, Peru, Brazil and Chile.

To reporters covering the drug trade Venezuela may not rate even a mention. But rest assured, the D.E.A. and State Department are probably at this very moment concacting reports telling us just how in the middle of all this Venezuela really is.

After all Chavez isn't fooling anyone by pretending to spend his time working on roads in Venezuela. Europeans are busy snorting themselves to death and some way, some how, that rascal Chavez must be in the middle of it. Of course we know it can't be the fault of Uribe, Calderon, or Karzia. And it sure as hell can't be the fault of Europeans themselves. So who else could it be?

Shame on these reporters for the Wall Street Journal that they didn't figure this all out with simple deductive logic.
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In what has got to be the most astonishing short term result I have ever seen, Crime was almost cut in half in the capital after the implementation of the security plan of 2008, after just one week. and 66% where police presence was present. While admitedly a rather small sample to make a trend this proves two things to the govt,

A) Proactivity is more important than theorizing about crime ALWAYS.
B) You do not need to fill up prisons to stop crime (The Uribe doctrine).
C) El Universal is pretty freaking blatant on its bias.

I heard the newsconference yesterday about this and saw the Ultimas Noticias article today, but given the fact that I need to look for a link here I fired up El Universal on the net, what was front page news under any standard was buried inside the Caracas City subsection of the newspaper and even then the tittle and body was increadibly misleading.

Most blatant was this statement.

"Authorities informed also that in Petare there only two crimes, when there used to be twelve homicides every weekend."

Notice how they mix crime with homicides, done deliberately because there where ZERO murders in Petare (a very iconic poor area in far east Caracas).

Link

Evidently this is not even starting yet to get too excited about, criminals will try to circumvent the police deployments, and even these are expensive and one wonders if the govt will sustain them forever and ever (hopefully soon they will not be needed) but the key point is that it shows the govt that crime is fixable with short term results and with a small price to pay (in Rio small scale wars break out whenever heavy police presence arrives), they just have to govern, and obviously govern well.
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There once was a senator from the state of New York who was famous for paying close attention to constituent complaints. For his efforts, he became known as "Senator Pothole".

In the wake of his recent electoral defeat Chavez seems to be doing his best to mimick that senator's actions. Just watch these videos and you'll see "President Pothole" in all his splendor.



The thing that I found interesting about these videos is that at the same time they show the best of Chavez, and the worst. That is after watching this it is easy to understand why he is loved by millions. But it is also easy to see why entire project is likely to end in failure.

First, what is good. He we see Chavez freely taking questions from the public (yes, a pro-Chavez public but the public nonetheless). He freely listened to all sorts of complaints, mainly about the poor state of the local roads. Personally, I can't think of an instance of the governor of the state I live in ever taking these sorts of questions from the public.

Second, Chavez acknowledges some problems that definitely needed acknowledging. For example, that neither the mayors, nor governors, nor the president himself have the resources needed to solve all of Venezuela's problems. Well, it is about time someone took note of the obvious. Further, he noted that government officials need to spend time getting a first hand view of what is really going on in the field and not spend all their time cloistered in offices in Caracas relying on filtered and possibly erroneous information. That too is certainly good advice.

Unfortunately though, in between the snippets of sage advise we see the real reason Venezuela's resources are being poorly managed - Chavez himself.

For example, he tells the president of PDVSA, the Venezuelan state oil company, that he needs to go out and inspect first hand the roads being built by PDVSA. Now there is an obvious question of why an oil company is being assigned the task of building roads, but lets leave that aside. The real question is how much time does he expect the president of PDVSA to spend inspecting roads? How many projects are being carried out by PDVSA? Probably alot. And would the president of that company have time to inspect them all. I would think not, especially if he actually tries to run the oil company too.

In reality, if contractors are hired to carry out projects, or state companies are assigned to carry them out, and they aren't don't then it says there is a flaw in the contracting process and a flaw in the oversite process. That is what should be fixed - the notion that a handful of ministers are going to run around the country attending to every little problem is amatuerish - to say the least. Yet Chavez seems to think things can be run like this. They can't of course, and the fact that Chavez is trying to run them in this fashion is a big part of the problem.

But things get worse. Next he hears a complaint about tolls on the local roads. A women complains, the audience chimes in, the road in question is in bad shape in spite of the tolls and what does Chavez do? Simple, he eliminates the tolls. And not just that one toll - but the vast majority of tolls throughout the country!! And the hapless governor, who could barely get a word in edgewise, was simply told to do it or the national government would send in the army to knock down the toll booths.

Now, maybe some of these tolls should be eliminated. If the funds are not being used to effectively maintain the roads then certainly that should be looked into as well. And when he finally did get a chance to speak the governor stated the tolls weren't even enough to cover the cost of operating the toll booths (then indeed why have them!).

Still, even if Chavez was right in saying the tolls should be removed, and I am not taking a position one way or another, this is certainly no way to make such a decision. Technically, it is the states and localities that run these things. Yet shows once again that he, El Presidente, trumps everyone and everything. So much for decentralization and democracy and rule of law.

Further, like any decision there are costs and benefits to both sides. Was anyone wieghing the costs and benefits of this decision - that is, how much money do the tolls bring in? how is that money used to maintain the roads? if the tolls are eliminated where will the money come from to maintain the roads? how do the tolls effect the people using the road?

But none of that was asked about much less looked at. A crowd wanted the tolls eliminated and Chavez decided on the spot to please them by doing just that.

Does this sound like a sound decision making process and one that will lead to better and effective government?

I certainly don't think so.

Then Chavez takes note of the horrible fact that Venezuela exports asphalt at the same time that its roads are in bad shape. So what does he do? He banns the export of asphalt - as if that will fix even a single Venezuelan road.

Of course it SOUNDS nice. It SOUNDS like he is doing something, rather than ignoring the problem. And that is probably what he wanted.

BUT IT DOESN'T FIX THE PROBLEM.

Chavez rhetorically asks "how can we be exporting asphalt to the United States when our own roads have holes in them". Unfortunately, no one in the audience thought (or dared) to shout out the obvious answer - "Because you aren't spending enough money to fix them or you (or better said, your government) aren't making sure the money is well spent."

And in point of fact, stopping the export of asphalt won't do anything to address either of those issues. For example, if money is the problem will stopping the export of asphalt really help much?

Not necessarily because of a minor little detail Chavez completely omitted in his talk - Venezuela gets money from exporting asphalt and now by it not exporting asphalt that revenue will be lost (very tellingly he didn't even bother to ask the president of PDVSA how much money they earn from those exports). And that lost revenue may be the money Venezuela needs not just to fix the roads, but the schools, hospitals, and any number of other things that need fixing. 
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