Saturday, October 22, 2005

Move over Dell 

Courtesy of the Lubrio blog we see that the new inexpensive computers that Venezuela will be manufacturing were unveiled:

The models shown were made in China and have Microsoft Windows (what kind of #$!%*# is that!). Not to worry, the computers made in Venezuela will use Linux as their operating system. The laptops will cost between $735 and $850. The desktops will cost between $350 and $427. While these prices are certainly less than a standard computer costs they are still beyond the reach of many Venezuelans. I would expect that many of them will be purchased by schools and government offices. Some may be purchased by the ubiquitous cyber cafes but I doubt many will be as those tend to double as gaming machines and these computers would not be up to that task.

In any event, this is a good industrial collaboration between China and Venezuela. Undoubtedly, the reason for China to be involved in this is to curry favor with Venezuela in the hopes of getting access to Venezuelan oil and other natural resources. As the benefits to Venezuela from these types of collaborations are undeniable hopefully Venezuela will keep leveraging its energy resources in this way. More jobs, more technology, and less expensive products are something you just can’t get enough of.


You just can’t trust those darn Iraqis 

The U.S. leadership and military (not to mention the chickenhawks who are all over the internet) keep assuring everyone that the U.S. and its puppet regime in Iraq are winning the war. They point to the supposed success of their bogus elections as proof of Iraqi’s supporting the current regime there.

However, there was something in the news that I think was much more telling about how much support that regime really has. There was a report on the Univision network (and an abbreviated report here on their website ) about Peruvians being recruited to perform guard work in Iraq:

The Peruvian government is investigating a foreign company that is contracting Peruvians to go to Irak to work as security guards for the Iraqi government, said Jorge Lazarte, secretary of Peruvian Communities Abroad.

The company, 3D Global Solutions, through its affiliate in Lima, Gesegur SAC, is in charge of contracting the personnel.

In advertisements in Lima’s dailies they offer work in Iraq with salaries of $1,000 per month, life insurance, and food. Those interested need to have experience in security work, be former members of the military or have been police.

In the television report it was shown that a number of Peruvians have already gone to Iraq. Others were shipping out to the consternation of relatives who feared for their safety.

Now what does this tell us about Iraq? One very important point – that the Iraqi government doesn’t trust its own people. One thousand dollar a month security jobs would be highly coveted by Iraqis given that unemployment is very high there and what jobs there are generally pay less than $100 per month. So why doesn’t the Iraqi government kill two birds with one stone – ie employ locals to do this work thereby getting the security they need and at the same time help the local employment situation? Because it doesn’t trust Iraqis to be on its side. It knows that if it hired people locally many of them would be insurgents or at least supporters of the insurgency. Hence they wouldn’t work out very well as government security guards.

And this is the same reason the U.S. military imports U.S. citizens to Iraq to drive trucks and run cafeterias. They know if they hired Iraqis to do those jobs the supply trucks would likely be driven off and handed over to the insurgents and any food cooked by Iraqi kitchen workers for U.S. troops could well be poisoned. They know they can’t trust the local population. Hence the need to bring in the foreign mercenaries who they know are interested in nothing more than making a buck.

This has been a tactic used by invaders and occupiers over and over throughout history. When the British and Dutch colonized southern Africa they imported South Asians do keep the local population at bay and be a reliable source of labor. When the Europeans colonized the North American continent they found the Native American population wasn’t docile enough to be enslaved so they brought slaves from Africa. And even in Venezuela the ruling classes never felt they could trust the local population so under Perez-Jimenez they tried to bring to Venezuela as many Europeans as possible.

The end result of all this is the cheerleaders for the war can talk all they want about their support but facts like this which clearly demonstrate the Iraqi government doesn’t even trust their own population give lie to the propaganda.


"the economy has done extremely well" 

Although President Chavez has been talking about Socialism quite a bit recently it has to be kept in mind that Venezuela is still very much a capitalistic economy, albiet with state ownership of some industrys. And in fact, as the Caracas based Daily Journal points out, the capitalists are doing pretty good:

Venezuela’s banks and financial institutions saw a rise in profits in the July-September quarter thanks to higher loan activity despite continued government intervention, an industry report said

Profits in the quarter ending September reached Bs.704.9 billion ($327.9 million; euro 274.2 million), up 33.6 percent from the same three-month period last year, as banks continued to invest in tax-free public debt and stepped up automobile loans, according to a monthly report by Softline Consultores C.A., a banking sector research firm. “Bank profits are up mostly due to higher loan demand, especially loans with no artificially low interest rates dictated by the government, such as car loans,’’ said José Grass, head of Softline.

Under President Hugo Chávez, the government has ordered banks to devote at least 10 percent of their portfolios to the agriculture industry and 3 percent to small businesses at preferential interest rates.
The Venezuelan Central Bank also set fixed interest-rate levels in late April.
Loans outstanding at Vene-zuela’s 49 banks and financial institutions rose 5.6 percent in September to Bs.29.7 trillion ($13.8 billion), from Bs.28.1 trillion in August, the banking consultant said.

Loans to small businesses rose 6.2 percent in September, while farm loans expanded 3.4 percent, Softline said.
“Given the fact that the economy has done extremely well, it would be surprising if lending wouldn’t be expanding now,” Ricardo Amorím, head of Latin American research at WestLB AG, said in an interview.
“The risk of default goes down as economic activity goes up.” Lending has risen as the economy grew and restrictions on foreign currency trading boosted the money supply. Lending rose 77 percent in the 12 months through September.
The economy grew 18 percent last year and 11.1 percent in the second quarter.

Of course, it isn't only interesting to see that they economy has done "extremely well" and that people are requesting, and the banks are giving, long term loans for durable goods which shows faith in the future of the economy. Its also interesting to see that these profits are coming in spite of the financial transaction tax which was imposed by the Chavez government and many in the banking sector have slammed as harmful to their business. Well guess what, the tax is implemented, the government gets the money it needs to function, and the banks still make a handsome profit after all.

Yet another example of Venezuela doing well when Chavez just ignores all the naysayers.


Wednesday, October 19, 2005

Pre-election Update 

Readers will recall that a few days ago I pointed out that there was some confusion regarding the number of ballot boxes that would be audited during the upcoming elections to the National Assembly. I thought that the President of the Electoral Authority (CNE) misspoke when he seemed to indicate that one ballot box at each voting site would be audited and that that constituted 1% of the ballot boxes.

Today there was clarification and indeed that was wrong. There are 9,265 voting centers each with about 3 electronic voting machines each of which has a corresponding ballot box. Rodriguez made it clear that there will be a random selection at each voting center to chose one box to open and manually count all of the ballots. So the total percentage of ballots examined will be about 33% - obviously a lot more than the 1% mentioned previously.

Rodriguez also made it clear that the workers stationed at the polling centers, representatives from all political parties and as many ordinary citizens as will fit in the rooms will participate in the audits.

On a final note Rodriguez said the CNE hopes to hear soon from the European Union as to whether or not they will be sending election observers .


Of epidemic proportions 

They must be in complete meltdown at Foggy Bottom – aka the U.S. State Department. For a few years now they’ve been working day and night to try to “contain” Chavez. First they hoped to keep his model of populism/socialism bottled up in Venezuela. That didn’t work to well with it spreading, to various degrees, to places like Brazil, Argentina, and Uruguay. Then they hoped to at least keep it from getting out of the South American continent. Up until recently they’ve had some success with that although Obrador in Mexico has been giving them ulcers. But now Chavismo seems to be spreading faster than the avian flu. Witness these comments from Italy where Chavez was visiting [taken from today’s Ultimas Noticias]:

Also the trade unions showed their support for Chavez. Paolo Grassi, a leader of the Nidil Cgil, the largest Italian union, said that “we are watching very closely the awakening labor movement in Venezuela and also the process of worker control that they are implementing through “cogestion”, as with Inveval and Invepal. This is the model that we in Italy need to follow”

And the worst part from Foggy Bottom’s point of view – there isn’t any vaccine for this yet.


This is how you fix an election: 

I wonder what the U.S. government would say if this kind of stuff happened in Venezuela?:

BAGHDAD, Iraq, Oct. 17 - Iraqi election officials said Monday that they were investigating "unusually high" vote totals in 12 Shiite and Kurdish provinces, where as many as 99 percent of the voters were reported to have cast ballots in favor of Iraq's new constitution. The investigation raised the possibility that the results of the referendum could be called into question.

In a statement on Monday evening, the Independent Election Commission of Iraq said the results of the referendum on Saturday would have to be delayed "a few days" because the apparently high number of "yes" votes required election workers to "recheck, compare and audit" the results.


According to the statement, the election commission intended to re-examine many aspects of the balloting, including "examining random samples from ballot boxes," the statement said. Such a process could drag out for days, raising the possibility that the election for a full-term Parliament, planned for Dec. 15, would have to be delayed.

Some Sunni leaders said the lopsided votes suggested fraud. Mishaan al-Jubouri, a National Assembly member and Sunni leader, said he favored a thorough investigation.

The Shiite and Kurdish political parties in power "were filling out forms and stuffing them into boxes," he said in an interview. "They were also voting in the names of those who hadn't come to vote."

Mr. Jubouri said that monitors in several southern provinces, for example, reported modest voter turnout in their polling centers, but that after the polls closed, officials released overall turnout figures there that appeared to be extraordinarily high. They included results from the predominantly Shiite provinces of Najaf, Karbala and Wasit, he said.

Some centers did not even have 20 or 30 percent voter turnout, he said.

"This gives an impression that the process wasn't transparent," he added.


To guard against the possibility of fraud and intimidation, the commission deployed 57,000 election observers, drawn from local aid groups, and 120 representatives of political parties.

Mahmood Othaman, a Kurdish member of the National Assembly, said the monitors were largely partisans themselves, leaving very few objective safeguards in place.

In the Kurdish areas, the makeup of the teams effectively put the two main Kurdish parties in charge. "I expected these things," Dr. Othaman said. "I said it all along. If there is no census, and no outside observers, you can expect this.

"The people who were observing were the same as the candidates. The U.N. sits in Amman and says it's all good, it's free and fair, because they don't want to come here."

99% of the vote!!! Jeepers, Saddam would be proud. I guess when the U.S. overthrew the government they left the same electoral authorities in place (actually, maybe this is why it took so long to put Saddam on trial - they first needed him to give techincal advice on how to carry out the elections).

Lets see; no independent or outside observers (except some very outside observers hanging out in Jordan), no transparency, no controls to detect cheating, and no audit by external groups – really nothing that you need to run clean elections. Clearly, what is happening in Iraq is nothing but a big farce. I have no idea whether or not there was any fraud in this process – but then again neither does anyone else. And that’s the whole point. If not for the fact that it was a favored puppet regime of the U.S. this wouldn’t be accepted by U.S. government for one second.

Yet another example of the do as we say, not as we do, mentality of the U.S.


Monday, October 17, 2005

Lies, damn lies, and oil production statistics: 

Last week the Venezuelan state oil company, Petroleos de Venezuela, or PDVSA, submitted its audited financial statements to the U.S. Securities and Exchange commission for 2003. The full 150 page document is here and can be read by anyone who wants to review PDVSA’s performance.

Now, financial statements of a state oil company may sound like something very dry and boring and indeed it can be. But there are a couple of important points that need to be made with respect to PDVSA’s SEC filing. These points shed light not only on the status of the oil industry in Venezuela but also on the nature of the Venezuelan opposition. Please be warned though, the post is heavy with numbers and is somewhat technical. But hopefully the reader can bear with me as the points gleaned from this analysis are important.

First it has been asserted quite frequently by the opposition that this financial statement would never be filed. The Chavistas running PDVSA were too incompetent to do it. Or there were so many irregularities in PDVSA that no outside auditing firm would sign off on it. And PDVSA was paying off all its debt issued in the U.S. so it wouldn’t have to file its SEC statement. These and many other assertions were made by the Venezuelan opposition. Well, now we can see, if there was really ever any doubt in the first place, what complete non-sense all of that was. PDVSA has met its commitments and shown is finances to be in order – and all signed off on by an affiliate of the big U.S. auditing firm KPMG.

Now, it is certainly true that this financial statement, which is from 2003, is quite late. Over a year late in fact. However, there were very extenuating circumstances (to say the least) that explain this. Lets remember that when 2003 began there was a strike involving PDVSA management wherein most of PDVSA’s managers and executives, including virtually its entire finance department. Worse still, the previous PDVSA management had outsourced the data and accounting functions to a company called INTESA which joined the strike and refused to turn over any finance records or computer systems even when ordered to by Venezuelan courts! Given this the extensive delays are understandable. However, PDVSA is catching up and claims that its 2004 financial statement s will be done by December of this year.

This brings us to the second, and very contentious, point – how much oil has Venezuela been producing. The Venezuelan government claims that they were able to rapidly recover after the strike and were able to resume produce at pre-strike levels of over 3 million barrels per day. The opposition has gone to great lengths to dispute this. They claim that Venezuela’s production has been limited to about 2.6 million barrels per day. This not seem like an large difference but given the high price of oil 400,000 barrels per day represents billions of dollars over the course of the year. Further, after the strike failed and 18,000 opposition supporters found themselves out on the street without there highly paid jobs, they quickly reversed course and started clamoring to get their jobs back! Lastly, the production numbers were seen as a way to score anti-Chavez points – if the production was indeed 2.6 million barrels per day then the opposition could claim the Chavistas were too incompetent to restore production and that, morover, the government was lying about the true output of oil. For typical examples of this opposition propoganda the interested reader can check here and here , and for some very recent lying on this check this.

This dispute on production numbers has been raging for over two years now with no way for outside observers to resolve it – until now. Looking at the audited numbers from PDVSA’s SEC filing we can see what Venezuela’s production numbers were. Here is how it goes:

First on the top of page 21 of the audit they give PDVSA’s own average annual output: “In 2003, our crude oil production averaged 2,451,000 (including 122,000 attributable to our participation in the Orinoco Belt projects) with API gravity between 16 and 32 API.”

Now, 2.451 million barrels may look close to the 2.6 million barrels per day output number that the opposition has been throwing around. But remember, 2.451 milllion is NOT the total amount of Venezuela’s output – it is only PDVSA’s portion of it. There is oil produced by other companies in Venezuela, namely the extra heavy crude of the Orinoco Belt which is processed and turned into synthetic crude oil. In the main the oil produced in the Orinoco Belt is done by foreign companies who produce and sell the oil on their own. Accordingly, most of that production, 455,000 barrels per day , is not counted in the PDVSA production numbers. So how much of the Orinoco Production needs to be added to PDVSA’s production to get the total national production? Simple. Its 455,000 minus the 122,000 already counted in PDVSA’s numbers as indicated in the above quoted sentence from page 21 of the SEC filing. That gives 333,000 in non-PDVSA Orinoco Production that needs to be counted to come up with Venzuela’s total production. So here is the total average daily Venezuelan production for 2003:

2,451,000 barrels per day from PDVSA plus 333,000 barrels per day of oil from the Orinoco Belt not already counted in PDVSA’s numbers gives a total average daily Venezuelan production of 2,784,000 barrels. So right there we already see Venezuelan production was higher than the opposition said.

But there is another significant factor that needs to be taken account of. Remember, that the numbers given above are averages for all of 2003. But production was anything but consistent throughout the year. For the first three months production was significantly lower than during the remainder of the year due to the oil strike and its aftermath. How much lower? Well here is a graph from the Venezuelan planning ministry that shows the daily oil production numbers:

As can be seen the numbers are low during January, February, and March before normalizing in April. Looking at the graph Venezuelan production appears to be 1,000,000 barrels a day for January, 1,750,000 for February, and 2,750,000 for March. So if those are the numbers for the first part of the year, and note they are way below the yearly average, what would the average production have to be for the rest of the year to give the 2,784,000 barrels listed in the financial statement? To come up with that I played with the numbers in a spreadsheet and this is what I got:

1,000,000 for January
1,750,000 for February
2,750,000 for March
3,100,000 for April
3,100,000 for May
3,100,000 for June
3,100,000 for July
3,100,000 for August
3,100,000 for September
3,100,000 for October
3,100,000 for November
3,100,000 for December

Add all that up and dividing by twelve gives an average production for the whole year of 2,783,000 barrels per day. But to get that average of 2,783,000 we had to assume that daily production was 3,100,000 from April on. So this means that for the latter part of 2003 was 3,100,000 barrels per day – which is precisely what the government said it was. In fact, look at the above graph again and you’ll see that is the production shown for those months by the graph again.

So there we have it. A close analysis of an AUDITED financial statement sent to the U.S. Securities and Exchange Commission confirms that the Venezuelan government has consistently been telling the truth about this and it is the Venezuelan opposition that has been consistently lying. Wouldn’t it be nice to see some acknowledgement from the opposition blowhards on the internet who have consistently peddling the opposition’s bogus numbers? Francisco Toro, Gustavo Coronel, Miguel Octavio – apologies will be accepted. But given their track record of indifference to the truth I won’t hold my breath waiting.


A couple of other notes on this subject. First, I have almost exclusively discussed Venezuela’s production statistics. For those interested in the financial numbers presented in PDVSA’s report I highly recommend the article by Oliver Campbell which covers that subject well. You will also observe in that article that he notes Venezuela’s oil production is clearly over 3 million barrels per day.

Lastly, one problem with this highly informative financial report is that has only been published in English. It has to be written in English given that it is filed in the United States. Nevertheless, this is information that should be widely available to the owners of PDVSA – that is the 26 million citizens of Venezuela. To accomplish that this report needs to be made available in Spanish. That is something PDVSA should not delay in doing.


Sunday, October 16, 2005

Nothing left but to grasp at straws 

Today there was an interview by ROBERTO GIUSTI, one of the main anti-Chavez journalists in Venezuela, with Luis Vicente León, the president of one of Venezuela’s principal anti-Chavez polling firms, Datanalisis, and also stridently anti-Chavez. In this article they were salivating over the idea of Chavez supposedly losing support and being vulnerable electoraly. And they were basing their giddiness on...what? Lets see.

The first real bit of information certainly can’t be making them very happy. And that is the response of Venezuelans to the question “How do evaluate the President’s tenure for the welfare of the country?” This has elicited a positive response for Chavez of 70% all year but now it has fallen to... 69.8%. I’m not kidding it fell all of .2%! Certainly they can’t take much comfort in Chavez’s approval rating having essentially held steady at 70% for all of the past year.

So what is their cause for hope? The response to the following two questions. The first one is “How much confidence do you place in President Chavez?” The response to this has fallen from 58.7% in July to 51.7% in September. But I certainly wouldn’t put much stock in this. After all exactly what having “confidence” in Chavez is going to mean is different for different people. And in any event it’s still over 50%.

The second question is “Who would you vote for if the elections were this Sunday”. In response to this 48.5% said they would vote for Chavez. Giusti and Leon are salivating that this number is less than 50%. To which I have to say they are just grasping at straws. For example, isn’t it interesting that they didn’t give the percentages for any other potential candidates get, such as Julio Borges of Primero Justicia? Could it be that they are all polling single digits so to save them the embarrassment Datanalisis just doesn’t publish their numbers? And could it be that in a country with high levels of abstention lots of people just said they didn’t plan on voting? The answer to those questions is very likely yes.

The bottom line, no matter what the spin, is that Chavez has an approval rating of 70% and none of his potential opponents are even remotely close to him in the polls. So Leon better get used to asking people what they think of President Chavez’s performance in office. He’s likely to be asking that question for a long time to come.


Save the paper 

Apparently Venezuelan President Hugo Chavez is thinking out loud about requesting the extradition of Pat Robertson, the U.S. minister who hasn't made any secret about wanting Chavez assasinated.

Now I suppose requesting the extradition could generate some publicity, but it has a snowballs chance in hell of being honored by the U.S. Heck, those pricks won't even extradite a terrorist who apparently helped blow up a airliner with more than 70 passengers. So if the U.S. wants to harbor people like Pat Robertson and Jorge Posada Venezuela probably can't do anything about it. Then again, maybe exposing U.S. double standards would justify what is otherwise just a big waste of paper.


You sure shouldn't let THAT slip out. 

You sure shouldn’t let THAT slip out.

The U.S. puppeteers are already claiming victory for their Constitution in Iraq. But I think Ms. Rice has been hanging around Bush a little too long as she is starting to make some dumb mistakes:

BAGHDAD, Iraq (CNN) -- As election workers in Iraq counted millions of paper ballots cast in the constitutional referendum, U.S. Secretary of State Condoleezza Rice said Sunday the measure "had probably passed" but cautioned she didn't know the final outcome.

Rice told reporters traveling with her in London that she had spoken Sunday with U.S. Ambassador to Iraq Zalmay Khalilzad and her comments were based on "the assessment of people on the ground."

"There is a belief that it has probably passed," Rice said.

But minutes after Rice made the comments, a State Department spokesman said Rice also wanted to emphasize that "we don't know" how the referendum will turn out.

Spokesman Sean McCormack said Rice had talked to Khalilzad after the press briefing, and her later clarification that the final outcome was unknown was not backtracking from her earlier assessment.

So lets see if I have the sequence right. Rice says the Constitution passed. She then gets a call from the U.S. Ambassador in Iraq, Khaliilzad, saying something along the lines of “listen you dumb fuck, you can’t tell people we already know the outcome of the vote”, and Rice then had her press secretary clarify that they supposedly don’t know the outcome!!

Sure Condi, we believe you. But be a little more careful next time – we wouldn’t want anything inappropriate to slip out. Or heaven forbid, for people to think the fix was in.


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