Thursday, February 09, 2006

Oil and the example Chavez sets 

It has been interesting to watch over the past couple of years how it has again become fashionable to discuss that black gooey substance called oil. A couple of years ago anti-war protesters in the U.S faced ridicule when they suggested the invasion of Iraq was largely a desire to control oil. No, that’s ridiculous – we were told – we’re are stopping the spread of WMD, fighting terror, or spreading democracy we were told. In no way would the U.S. be so cynical as to spill blood for oil.

It’s amazing how the price of gasoline going over $2.50 quickly changes that mindset. Now there are so many web-sites, newspaper articles, editorials, and even blogs on oil no-one can possibly keep track of them all. Moreover, not only is it largely accepted a major foreign policy goal of the United States to secure inexpensive oil for itself many advocate the use of military force to do it. Where once mentioning oil as a driving source of U.S. policy was scoffed at now even top U.S. officials admit it is front and center:

Rising global oil prices are bolstering the power of America's enemies around the world, strengthening the regimes in Iran, Syria, Sudan and Venezuela and increasing Russia's assertiveness in eastern Europe, US intelligence agencies said on Thursday.

Two days after President George W. Bush called for the US to end its "addiction to oil", John Negroponte, the Director of National Intelligence, said the combination of rising demand for energy and instability in oil-producing regions "is increasing the geopolitical leverage of key producing states".


The Director said that world energy markets seem certain to remain tight for the foreseeable future. Robust global economic expansion is pushing strong energy demand growth and—combined with instability in several oil producing regions—is increasing the geopolitical leverage of key energy producer states such as Iran, Saudi Arabia, Russia, and Venezuela. At the same time, the pursuit of secure energy supplies has become a much more significant driver of foreign policy in countries where energy demand growth is surging—particularly China and India.

Negroponte said that the changing global oil and gas market has encouraged Russia’s assertiveness with Ukraine and Georgia, Iran’s nuclear brinksmanship, and the populist “petro-diplomacy” of Venezuela’s Hugo Chavez. Russia’s recent but short-lived curtailment of natural gas deliveries to Ukraine temporarily reduced gas supplies to much of Europe and is an example of how energy can be used as both a political and economic tool. The gas disruption alarmed Europeans—reminding them of their dependence on Russian gas—and refocused debate on alternative energy sources.

Foreign policy frictions, driven by energy security concerns, are likely to be fed by continued global efforts of Chinese and Indian firms to ink new oilfield development deals and to purchase stakes in foreign oil and gas properties. Although some of these moves may incrementally increase oil sector investment and global supplies, others may bolster countries such as Iran, Syria, and Sudan that pose significant US national security risks or foreign policy challenges. For example, in Venezuela, Chavez is attempting to diversify oil exports away from the US.

Now, given that these comments were given by the U.S. intelligence director they tended to de-emphasize one thing – how vulnerable the U.S. is to high oil prices and the damage they can, and likely will, inflict on the U.S. But for that perspective we can turn to Martin Feldstein, one of the most prominent economists in the U.S. who is a professor at Harvard and President of the US National Bureau of Economic Research [from the Financial Times, Feb 3, 2006]:

The price of imported oil in the US doubled between the summer of 2003 and the summer of 2005, reducing consumers’ purchasing power by more than 1 per cent of gross domestic product. Nevertheless, the economic slowdown that was widely expected never occurred. Consumers kept spending kept spending and businesses kept investing. The growth rate of GDP rose and unemployment fell to 4.9 percent.

The continued strong growth contrasts sharply with the economic weakness that occurred after almost every previous significant rise in the oil price. How do we explain this remarkable difference? And what are the implications for the likely response to a future rise in the oil prices?

The key to the economy’s strength in 2004 and 2005 was that household saving declined dramatically while the price of oil rose. Household saving fell from 2.5 per cent of after-tax income in the third quarter of 2003 to a remarkable minus 1.8 per cent two years later. This 4.3 per cent shift of after-tax income was equal to a rise in consumer spending equal to 3 per cent of GDP.

In dollar terms, saving fell from a $205bn annual rate in the third quarter of 2003 to a dissaving at a rate of $159bn two years later. This shift of $364bn in the annual rate of saving far outstripped the fall in income caused by the higher cost of oil. This fall in saving allowed households to raise consumption spending on non-oil goods and services while paying for the higher cost of imported oil.

The primary cause of this dramatic shift was the fall in interest rates and the resulting rise in mortgage refinancing. Homeowners who refinanced their mortgages took out cash and reduced their monthly payments at the same time. Much of the cash obtained by refinancing was spent on consumable durables.... The lower monthly payments permitted a higher level of sustained spending on all non-durable categories.


The faster increase in consumer spending caused businesses to invest more and raised the growth rate of GDP. Faster GDP growth caused an accelerated rise in employment and a fall in the rate of unemployment.


Mortgage interest rates were falling because the Federal Reserve’s fear of deflation had caused it to lower the short-term federal funds rate at which banks lend to each other to the extremely low level of 1 per cent in 2003 and to leave it there in the first half of 2004 before beginning a very gradual process of rate increases.


The powerful effect of mortgage refinancing on consumer spending was a very happy coincidence for the American economy at a time when oil prices were depressing consumers’ real incomes. If oil prices were to rise again in 2006 or 2007, the adverse effect on consumers’ real incomes would not be offset by increased mortgage refinancing. Mortgage refinancing has now peaked and is declining. The Federal Reserve is raising interest rates again to counter the inflationary pressures that remain from the rise in energy costs. And individuals no longer have the large amounts of household equity against which to borrow.

A rise in the oil price could happen again at any time. There is little spare capacity in global oil production and oil demand is rising rapidly in China and other Asian countries. A shock that reduced the production or shipping of oil could drive its price sharply higher. Speculative forces could compound this problem. The US was lucky after 2003 to escape the contractionary effect of an oil price rise even without an explicit change in monetary or fiscal policy. It would not be so lucky if a big oil price happened again now.

So the U.S. dodged the oil bullet once. But as is made clear, it is unlikely to be so lucky again. This means getting control over oil resources and bringing prices down is an imperative for the United States. Further, unlike the past, the U.S. now has major competitors for oil which further complicates matters. This will drive their strategic relationship with Russia, the Middle East, and even Venezuela.

Why Venezuela you ask, when they are so much smaller in terms of oil production than the Middle East and Russia. Two words, Hugo Chavez. The influence of Chavez over the world oil market extends far beyond Venezuela’s own oil reserves, as large as they may be. Whereas Venezuela had been a key country in the undermining of OPEC he almost single handedly revitalized the cartel. Even today, Venezuela and Iran are the two price hawks within the organization consistently pushing for production cutbacks to keep prices high.

What is more, Venezuela has served as a role model for other countries wishing to maximize the value of their oil resources. Example number one would be Russia were Vladimir Putin has re-exerted state control over much of its oil industry and restrained production further helping boost world wide oil prices. A much smaller example closer to home is Bolivia where Evo Morales has made it clear there will be no giveaways of Bolivia’s hydrocarbon resources.

Yet as bad as all that is for the U.S. their biggest nightmare is the Middle East lurching further out of their control. Certainly Iraq is refusing to submit to their occupation and Iran is newly assertive. If this radicalism spreads to more Middle Eastern countries, and in particular the oil rich states of the Gulf, the U.S. would face a disaster. And Hugo Chavez, simply by being a role model for change, can help this nightmare scenario be realized if people in the Middle East start to take note of what he is doing in Venezuela. And they are as this Muslim scholar shows [consider reading the whole article linked to as it is excellent]:

In summary, Chavez from the very outset of assuming power has been opposing American interests tooth and nail. With America reeling from the wars in Afghanistan and Iraq, its preoccupation with the war on terror, the failure to remove Chavez from power has become a source of consternation amongst US politicians. No doubt America will try to over throw him but he has so far proved extremely resilient and has survived a number of coups attempts. This in itself suggests that Chavez's grip on power is strong and extensive.

Chavez's escapades against the most powerful nation on earth contain important lessons for the Muslim world. Muslims countries, especially those that have abundance of oil and gas reserves should start using these resources as weapons

If a single country like Venezuela can have a huge impact on American foreign policy then a collection of Muslim countries pooling their resources together are likely to have devastating affect on America's standing in the world.

Indeed it is this very reality that the Bush administration is clambering to prevent. Warnings about the re-establishment of the Caliphate are now part of the official parlance of the American government. So much so that dealing with Chavez's resistance to US policy in Latin America has become a low priority for the Bush administration. Could it be that America is on the verge of loosing both the Muslim world, as well as Latin America? No one would have entertained such a notion five years ago, but now such a prospect seems more and more feasible.

Indeed, if you want to understand why the U.S. is obsessed with Chavez and removing him from power remember oil and then this: “If a single country like Venezuela can have a huge impact on American foreign policy then a collection of Muslim countries pooling their resources together are likely to have devastating affect on America's standing in the world.” It’s not Chavez alone that gives them fits. Its the example he sets and the possible ramnifications for the U.S. of that example being followed by others. So while there are always multiple drivers in international politics it really is now largely about oil which in turn makes it largely about Chavez.


Petro Euros 

This was a very interesting article I ran accross today. It may be written by a right wing crank for a right wing rag but I must say its economic analysis is very astute and, as the Brits would say, spot on:

Iran and Venezuela have joined forces in an effort to undermine the U.S. dollar. In October 2005, Venezuelan President Hugo Chavez announced that Venezuela was ready to move the country's foreign-exchange holdings out of the dollar and into the euro. He also called for the creation of a South American central bank designed to hold in euros all the foreign-exchange holdings of the participating countries.

Beginning in 2003, Iran began demanding oil payment in euros, not dollars, although the oil itself was still priced in dollars. Iran has announced the intention of opening an Iranian Oil Bourse in March to challenge NYMEX (the New York Mercantile Exchange) and IPE (London's International Petroleum Exchange).

Saddam Hussein may well have signed his death warrant in 2000 when he began the process of convincing the United Nations that Iraq could sell Iraqi oil for euros, not dollars. Saddam ultimately received U.N. permission to convert Iraq's $10 billion oil-for-food foreign reserves from dollars to euros.

The risk to the United States does not involve how oil is priced – oil could conceivably be priced in any liquid currency, since pricing is a largely technical issue needed to establish transaction values. The real issue is foreign-currency reserves.

The United States relies on approximately 70 percent of all foreign-exchange currency to be held in dollars because we sell Treasury debt into that foreign-exchange market. Should Venezuela and Iran succeed in creating a worldwide flight of foreign-exchange reserves away from the dollar and into the euro, the move could depress the value of the dollar.

Dwindling foreign exchange dollar holdings could end up pushing the Treasury to sell debt into a smaller international supply of dollars, with the dollar not being as strong as it is today. Increasing the cost of our "twin deficits" – the budget deficit and the trade deficit – would have detrimental effects on the U.S. economy and on a Bush administration which seems to have lost traditional Republican budgetary discipline.

As the world's foreign-exchange currency market expands, we should probably expect some reduction in the dollar holdings of central banks. A move to hold more euros may simply represent a decision by a central bank to diversify their foreign-currency holdings, thereby hedging their risk from fluctuations in the dollar. Venezuela and Iran have in mind a politically motivated decision to move out of foreign-exchange currency holdings in the dollar as a conscious decision to wage economic war against America.

In 2004, the Switzerland-based Bank for International Settlement reported that the U.S. dollar-denominated deposits of OPEC countries fell from 75 percent of their total deposits in the third quarter of 2001 to 61.5 percent by the end of 2003. In the same period, the share of euro-denominated deposits of OPEC countries rose from 12 percent to 20 percent. OPEC member euro-denominated deposits reached 44 billion in June 2004, nearly double the 23.4 billion euros these countries held in the third quarter of 2001. In the same period of time, the dollar holdings of the OPEC member countries decreased from $145.3 billion to $132.1 billion.

In 2005, China negotiated major oil and natural-gas rights from Iran. Now under pressure of being referred to the Security Council over their nuclear program, Iran is counting on China to veto any strong move by the United States to have Iran sanctioned.

After Japan, China has the world's second-largest cache of foreign-exchange currency – some $800 billion today – an amount that is expected to grow to $1 trillion this year. In January 2006, China announced an intention to reduce 75 percent of its foreign-exchange reserves currently held in the dollar. Economists widely expect China's move will put downward pressure on the dollar, depending on how much diversification China decides to make into other world currencies. As Iran struggles to fight off world pressure over the defiant path it has chosen to take in pursuing nuclear technologies, Iran might well seek to convince China to hold significantly fewer dollars in their foreign-exchange reserves.

Venezuela and Iran have much in common – both countries are radically anti-America, both have extensive oil reserves, both are resolved to use oil as an economic weapon against the United States. The three countries voting against the IAEA resolution on Feb. 4 were Cuba, Syria and Venezuela. Iranian President Mahmoud Ahmadinejad has just accepted an invitation from Fidel Castro to visit Havana to attend the Sept. 11-16 Non-Aligned Summit and most likely to address the Cuban National Assembly.

A Tehran-Caracas Axis clearly extends also to Havana and Damascus. Whether we realize it or not, we are already involved in an economic war that could easily turn into a shooting war, starting with Iran.

As followers of Venezuelan affairs will recall, Venezuela moved all its foreign reserves out of US treasury bonds and into Euro backed bonds. At the time the opposition went into a hissy fit claiming this was bad for Venezuela. Of course, the Euro has appreciated against the dollar since then earning Venezuela a nice return and proving the opposition, as usual, wrong.

However, as this article points out Venezuela is not alone in doing this and this change is of no small consequence for the U.S. Sooner or later the dollar will take a tumble and Americans will be poorer for it (Ipods will get alot more expensive, for one). So the author is right to be concerned about countries switching the currencies their reserves are held in - the switching is hastening the dollars weakening.

However, he is most definitely wrong to say this is economic warfare. It is not. It is called looking out for your own interests. The dollar clearly is overvalued as the US keeps running huge trade deficits. So a strong dollar is a dead currency walking. When it will decline we don't know, that it will eventually decline sharply we know for certain. And so does Chavez. Hence, he did what was best for Venezuela which is to get out of dollar holding before they lose value. If Venezuela had $30 billion in dollar bonds sitting around and the dollar tanked you can be sure the opposition pundits would be the first to blame him for the debacle.

So what Chavez (and Iran, and China) did wasn't economic warfare. Its simply doing what he was elected to do. But it is no surprise that some in the US (including the Bush administration) would percieve it as economic warfare. They don't look favourably upon anyone who doens't bow to the empire but rather acts in their own self-interest. Such is the "you are eitehr with us, or against us" mentality that prevails in Washington. What we have here is but one more piece in the puzzle of why the U.S. is so intent on brining down the Chavez government.


Wednesday, February 08, 2006

Some numbers on Venezuela 

Today the newspaper Ultimas Noticias had articles that gave some rather interesting statistics.

The first is that 70% of people below the poverty line in Venezuela are women - or as the paper put it, poverty is feminized. This shows the effects of historic discrimination, a large number of families headed by women, and the need for Venezuelas anti-poverty programs to specifically target women. Fortunately as we saw recently with the Social Security payments to homemakers the government is doing just that.

Maternal mortality was 66 per 100,000 births in 2002 and it was reduced to 54.7 in 2004. Of course, it will be interesting to look up what it was in, say, 1998 before Chavez came to power. I'll try to find that.

In 1998 only 25% of the population has access to pre-natal medical care. In 2005 that increased to 70% thanks to the Barrio Adentro program. Thats a great accomplishment although its amazing that 30% still don't have it.

In 2005 the Barrio Adentro program provided care to 17 million people (Venezuela's population is 25 million).

Then the Datos polling firm gave some economic statistics.

Venezuelans are now buying 16% more consumer products than in 1998. In other words as measured by consumption peoples standard of living is clearly higher under Chavez.

The total monthly income accruing to strata "E" (the poorest 58% of the population) increased from 286 billion Bolivares in 2003 to $576 billion in 2005. It didn't say so I assume those numbers are NOT indexed for inflation. That means instead of class "E" peoples income doubling during that time period, when inflation is taken into account it probably increased by about 60%. A very, very impressive accomplishment and a nice follow on to what we already knew about the rising income of the poor in Venezuela.


Tuesday, February 07, 2006

Our man in Caracas 

The Wall Street Journal was back on one of their favorite topics today – Chavez. Lets see what they had to say.

Their Man in Caracas

“Hitler would be like a suckling baby next to George W. Bush.” No, it wasn’t a Massachusetts Democrat who said that on Saturday. But it was one of the Bay State Congressional delegation’s best friends – Venezuelan strongman Hugo Chavez.

We criticized Congressman William Delahunt and Ed Markey late last year for accepting an enormous petro lagniappe from Mr. Chavez in the form of 12 million gallons of cut-price home heating oil. “To the people of Venezuela, our debt,” said Mr. Delahunt, playing along with this blatant attempt to buy opposition to U.S. foreign policy.

Leave aside the fact that the “people of Venezuela” probably have better uses for their prime national resource than the subsidizing American’s second richest state. Few leaders also work harder than Mr. Chavez to undermine bi-partisan U.S. interests around the world. For example: siding with Fidel Castro to support a resurgence of radical left wing politics throughout Latin America; or trying to thwart our efforts to stop Iran from acquiring a nuclear bomb. Only Cuba and Syria joined Venezuela in voting against the IAEA’s referral this past weekend of the Iranian nuclear dossier to the U.N. Security Council.

Mr. Chavez has been picking other fights too, recently expelling a U.S. military attache on charges of spying and telling Venezuelans to gear up for a U.S. invasion. We don’t see a compelling reason for the latter anytime soon. But it seems inarguable that Mr. Chavez ranks among the worst national leaders in the world today. If Massachusetts Democrats are having second thoughts about their friend in Caracas, we haven’t heard them.

Now, as has been said elsewhere, Chavez’s remarks were very irresponsible and over the top. I would certainly agree that in a world with justice there would probably be some people from the Bush government in court on war crimes charges. But that in itself does not make him at all comparable to the person responsible for the deaths of tens of millions in one of the worlds largest conflagrations. That said, though, it would have been nice if the Journal had pointed out that one of Mr. Bush’s cabinet members had compared Chavez to Hitler the day before Chavez’s remarks. That’s not an excuse but a paper with the pretensions of the Journal should at least mention relevant facts.

What’s more I really wish they would spare us the crocodile tears over “lost” Venezuelan revenue. After all, if the safeguarding of Venezuela’s financial interests was so close to their heart then Chavez should be THEIR man in Caracas. After all, it was the Chavez administration that successfully got rid of the sweetheart deals that robbed Venezuela of billions of dollars.

To take but one example, Chavez increased the royalty payments that the Big Oil companies in Venezuela’s Strategic Association pay from 1% to 16%. Lets do some quick calculations and see how much this recovers for Venezuela.

The S.A.’s produce 600,000 barrels of oil per day but only about half of that belongs to the foreign oil companies or 300,000. Lets assume the price of oil is $40 per barrel. So the increased royalty per barrel is 15% (61% - 1%) or $6 per barrel. $6 per barrel multiplied by 300,000 barrels gives $1.8 million per day, or $657 million per year in increased revenue [this number is not exact as there are other factors but it is a close approximation]. Another way to look at that number is that is how much money Venezuela would be losing every year if the opposition were still in power and left the royalty at 1%. And that money would be going straight into the pocket of the major oil companies. Lets also keep in mind this is only ONE example of the giveaways of Venezuelan oil negotiated by the Venezuelan opposition when they ran things.

So lets see, when Chavez gives away a few million or maybe a few tens of millions to poor people that is cause for outrage. But when hundreds of millions of dollars are given away to big, rich oil companies nothing is said – either by the Wall Street Journal or by the Venezuelan opposition. I wonder why, if they’re are genuinely concerned about Venezuela’s financial welfare? Then again we already know for a fact the Venezuelan opposition doesn’t care about Venezuela’s finances – they led a strike that cost Venezuela at least $13 billion in lost revenue and spent months doing everything they could to destroy its economy. And somehow I suspect the Wall Street Journal is a little less than sincere in its professed concern too. So to the Journal’s editorial writers: Thank you very much for your concern but I think the majority of Venezuelans know their national patrimony is finally in safe hands with the current government and are happy to keep it that way.


Thinking of those Bush has forgotten 

Yesterday the U.S. president, George Bush, released his budget fat with hundreds of billions of dollars in military spending, not even counting the wars in Iraq and Afghanistan. While defense constractors are like kids in a candy store people wanting the basics, like being able to heat their homes, get nothing. In fact, check this out, his budget actually cuts back on funding for home insulation!!!!! And didn't this moron say something last week about weaning the U.S. off of its oil dependance. His follow up to that is to cut back on home insulation. Really, the guy is even dumber than I thought.

Fortunately, someone has stepped in to at least partially fill the breach. Since I last wrote about it the discounted oil program of Venezuela owned Citgo has greatly expanded. Oringinally limited to Chicago, New York, and Boston it has now expanded throughout the north east. Its good to see that while people in Washington consistantly choose bombs over people there are still those who do care and do act on their believes. Now, if we could only get Exxon-Mobil to pitch in with some of its record profits. In the meantime, we just have to watch as Citgo sets the example:

Venezuela's Oil Giveaway
Hugo Chavez is helping the U.S. poor with discounted heating oil – while irritating his foes in Washington
Vignette StoryServer 5.0 Tue Feb 07 13:21:40 2006 When you’re a U.S. Congressman and 25,000 constituent families can’t find affordable heating oil this winter, you tend not to care where help comes from. That’s at least how U.S. Representative Chaka Fattah of Philadelphia felt last week when Citgo — the U.S.-based company owned by the government of Venezuela’s left-wing President Hugo Chavez — delivered 5 million gallons of heating oil at a 40% discount to low-income Philadelphia residents. Fattah says he doesn’t understand the objections of many congressional conservatives who feel U.S. cities should not be helping improve the image of Chavez, one of President Bush’s most strident critics. "The U.S. buys 1.5 million barrels of oil from Venezuela each day at full price," says Fattah, "so why would anyone complain about getting some at almost half price?"

That’s a question the Bush Administration — whose feelings for Chavez are certainly mutual — has struggled to answer ever since Venezuela initiated the Citgo program last November. While the heating oil gesture has certainly allowed Chavez to tweak Bush’s nose, it is also being recognized inside and outside of Washington as a public relations coup for Chavez’s Bolivarian Revolution (named for South America’s 19th — century independence hero, Simon Bolivar).

As a result, it’s growing well beyond its original scope: Philadelphia, Boston, the Bronx and cities in Maine, Vermont and Rhode Island have received a total of 45 million gallons of the subsidized Citgo fuel, and other cities are slated for another 5 million soon. That’s a small percentage of the heating oil Venezuela exports to the U.S. each year, but Citgo says it has set aside about 10% of its refined petroleum products for the program. Says Larry Birns, director of the Council on Hemispheric Affairs in Washington, D.C., "Unfortunately for the Bush Administration, Chavez is proving to be a more inventive thinker in terms of hemispheric politics."

It’s also good business thinking, says Venezuela’s Ambassador to the U.S., Bernardo Alvarez, one of the program’s architects. When 13 U.S. Senators sent a letter to major U.S. oil companies last fall seeking heating fuel aid for lower-income residents in northern states, Citgo — a subsidiary of the state-owned Petroleos de Venezuela (PDVSA) — was the only one to step forward. "The U.S. is our biggest (oil export) customer," says Alvarez. "PDVSA is simply responding to that client the way any company should."

Critics suggest Chavez’s oil diplomacy is simply a ploy to take consumers’ minds off of record high oil prices, which are partly a result of his efforts to rebuild the power of OPEC, of which Venezuela is a founding member. Alvarez insists crude prices in the 1990s were "unfairly low" for producers like Venezuela — but says the Citgo program does give Chavez a chance to showcase "one of our revolution’s most important principles: the redistribution of oil revenues, especially for the poor." He adds it also reflects "the kind of cooperation mechanism we’re using with our neighbor countries in Latin America." Many of them — especially Cuba, whose communist leader Fidel Castro is one of Chavez’s closest allies — get cheaper access to Venezuelan crude as part of Chavez’s campaign to forge greater Latin American integration and less economic reliance on the U.S. Last Friday, in a move that further irritated the U.S., Chavez was awarded the United Nations' Jose Marti prize for promoting Latin American unity.

But the heating oil project’s biggest diplomatic coup, Alvarez concedes, may be the good will it generates among Americans at a time of deteriorating U.S.-Venezuela relations — strained ever since the Bush Administration was widely accused of backing a failed 2002 coup against Chavez (a charge it denies). Chavez, who has been democratically elected twice and is almost certain to win re-election this year, is convinced the U.S. is out to assassinate him or invade Venezuela for its oil; the White House, concerned about a growing wave of leftist victories in Latin American presidential elections, insists Chavez is a would-be dictator sowing instability in the region. Last week, as U.S. Secretary of Defense Donald Rumsfeld even likened Chavez’s rise to Hitler’s in the 1930s, Venezuela accused a U.S. naval attaché of spying and expelled him from the country; a few days later the U.S. expelled Alvarez’s chief of staff.

Amidst those tensions, says Alvarez, the Citgo program is proof that Chavez’s revolution is still fond of Americans, if not their government. (Citgo, Chavez aides point out, is also a NASCAR sponsor.) "We’ll continue to support a people whose government is hostile to us," says Alvarez. "We have nothing against this country." Venezuelans and Americans might feel that way, but for the moment it seems that no amount of heating oil, no matter how deeply discounted, could thaw the enmity between their two governments.


Monday, February 06, 2006

Their true colors 

For those who just have a tough time envisioning the lunacy of the opposition here is a video that should help (Its video #2 "The Opposition to Chavez").

In it you get to hear them profess their love for Bush, request a U.S. invasion, and not bat an eyelid while freely protesting what they call a Castroite dictatorship. And even their good old fashion racism rears its head again. As the saying goes, one video clip is worth a thousand posts, so go have a look.

A big hat tip to regular commentor, Ann


Sunday, February 05, 2006

The red hordes 

On Saturday Febuary 4th, there was a huge pro-Chavez march in Caracas to commemerate the anniversary of Chavez's coup attempt back on that date in 1992. Now, I may not be a big fan of celebrating coup attemps but from can be seen the march was largely celebratory of the accomplishments of the past seven years of Chavez. Here are a couple photos from Aporrea:

The definitive account of the march is by Luigino Bracci Roa over at his blog “El Espacio de Lubrio”. It has lots of very good pictures (so do check it out) and according to him it was easily the largest pro-Chavez demonstration ever. The huge march would be filing past the same point for 5 or 6 hours. Apparently the whole city was red (which even some opposition sites couldn’t help but notice) with people wearing Chavista T-shirts.

Now, a march is just a march. Politically people are taken account of by their votes at the ballot box. So not too much should be made of a march like this. Still, having been at previous ones, they are festive and good fun. Would have been nice to be there.


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