Friday, March 17, 2006

“I want to thank God for giving us a president as good as you” 

An interesting "Chavez in a nutshell" article from the Daily Journal:

Hugo Chávez’ magnetic, fiery personality drives a revolution in Venezuela

His portraits hang in homes across Venezuela. Loyal “Chavistas” cheer him on during folksy speeches that last up to seven hours and end up in print for sale on street corners.

Admirers often say he embodies the spirit of Simon Bolivar, South America’s 19th century independence hero.
Venezuelan President Hugo Chávez has become so firmly enshrined in the national psyche, so adored by followers who see him as their savior, that his personality has become the predominant issue of his re-election campaign. Love him or hate him, Venezuelans agree that his crusading, magnetic persona is at the heart of what Chávez calls his socialist revolution.
“He gives the impression that he truly cares for the poor, that he would do anything to help us,” says Anita López, 32, a single mother who carries a photograph of “El Comandante” in her wallet.
Such loyalty among Venezuela’s poor frustrates Chávez opponents, who have yet to come up with any force capable of countering him.
Chávez takes to the airwaves almost daily to address the nation, delivering rebellious tirades against the rich, the media, international capitalism and the U.S. government.
And masses of Venezuelans respond in Chávez fashion. Many turn out for rallies wearing red, the color that represents his movement.
His running skirmishes with the Bush White House have increased tension, with America alleging he is trying, Fidel Castro-style, to export his revolution to the rest of Latin America, and Chávez claiming Washington is out to overthrow him. His friendly ties to Saddam Hussein before the Iraq war, and his current honeymoon with Iran, further heighten Washington’s disquiet.
The Chávez phenomenon illustrates a uniquely Latin American attraction to charismatic “caudillo” figures, says Bruce Bagley, a professor of international studies at the University of Miami. Whether on the right or the left, these are strong-armed leaders who appeal to a cultural hunger for a “powerful-but-kind patron” to solve the people’s woes, Bagley says.
With deep pockets from high oil prices – last year alone, Venezuela made $48 billion from oil exports – Chávez has signed generous oil deals with a host of friendly governments and has become a leading benefactor for Latin America’s increasingly popular left, and beyond. This winter he supplied millions of gallons of heating oil at a 40 percent discount to poor Americans in the Northeast. At home, he offers social programs from state-subsidized markets to free government-run universities.
While Chávez hates to be called “populist,” his critics complain that he’s a master of handout politics. Many Venezuelans go straight to Chávez seeking solutions for problems such as a failing school or crumbling shantytown.
Aides at the presidential palace shuffle through more than 10,000 letters and handwritten notes to Chávez every year, said Mildred Zambrano, who reviews the pleas of people seeking surgery or specialized health care.
The idolization of Chávez carries echoes of like-minded figures, from Cuba’s Castro to Argentina’s Juan Peron and his famous first lady, Eva. Just as “Peronistas” decades ago displayed framed portraits of “Evita” in their homes, today’s Chavistas often put up posters of him on their walls.
This heartfelt glorification contrasts sharply with the fearful attention once commanded by right-wing dictators like Gen. Rafael Trujillo of the Dominican Republic or Gen. Augusto Pinochet of Chile.
Chávez’ government bears no resemblance to the right-wing dictatorships in Chile and Argentina in the 1970s, with their mass killings and disappearances of dissidents. Chávez is an elected leader whose opponents generally feel free to call him a menace to democracy who props up his government with heavy spending on propaganda.
Even the bags of sugar, pasta and beans sold at the discount government-run groceries he pioneered carry presidential slogans, and billboards bearing his image stare down at motorists on highways.
“The regime has developed a mythology and an exaggerated cult of personality through government publicity,” complains opposition leader Cesar Perez.
The president’s followers say they genuinely believe Chávez is finally using Venezuela’s vast oil deposits – the largest proven reserves outside the Middle East – to help the poor, rather than just the elite few favored by past leaders. Chávez says he hopes to eventually help do away with poverty, and he cites government statistics showing poverty has decreased from 48 percent in 1997 to about 37 percent today. Opponents dispute those numbers, insisting poverty has not significantly declined.
“In the past, presidents came from the higher classes, the oligarchy, and didn’t know anything about us, the poor. Chávez is different,” López said.
He has been in office seven years, and nine months before he runs for re-election, he has become a larger-than-life figure with no comparable challenger.
Chávez developed his popular touch while hawking tropical fruit and homemade candies as a child to help his family make ends meet in Sabaneta, a small town in the sunbaked plains of southwestern Venezuela.
He became an army paratrooper, and led a 1992 coup that failed to oust President Carlos Andres Perez, a populist-turned-fiscal conservative. More than 80 civilians and 17 soldiers were killed.
Released after two years in prison and discharged from the army, Chávez traveled the country promising to wipe out corruption and usher in prosperity. Many saw him as a fresh alternative to leaders from the two entrenched political parties that had shared power since the fall of Marcos Perez Jimenez, Venezuela’s last dictator, in 1958. He won the 1998 election with 56 percent of the vote.
Briefly ousted in a coup in April 2002, he bounced back after just two days accusing the United States of engineering the plot. His opponents later mounted a recall campaign, forcing Chávez to put the matter to a referendum in 2004. He won it.
Chávez often warns of assassination plots. His bodyguards keep close watch while he greets supporters, planting kisses on women’s cheeks and greeting “hermanos” with firm hugs and handshakes.
“I want to thank God for giving us a president as good as you,” a crying woman told Chávez recently during his weekly TV program as she appeared on-camera to receive a government housing loan.
“Don’t thank me,” Chávez replied. “Thank God. He’s the boss.”


Are you better off now than you were four years ago? 

Ronald Reagan used that exact question to devestating effect in a debate against Jimmy Carter in their 1980 debate. Most Americans hear that question, answered no, and proceded to vote Carter out of office.

So how would most Venezuelans answer that question today about Chavez's seven years in office? Thanks to a Sejias poll published in Ultimas Noticias today we can have a good idea.

According to the poll 65.9% of Venezuelans think the country has improved during Chavez's tenure while 34.1% think things have gotten worse. But the key is their personal situation. And on that score 64.4% say their own personal situation has improved while 37.7% say it has gotten worst (hopefully the polling firm is better at polling than it is at arithmatic).

So during the upcoming elections all Chavez has to do is plant the simple question "are you better off now than you were seven years ago" and almost certainly he'll be re-elected.


Thursday, March 16, 2006

Look who's credible now 

The Venezuelan opposition has been jumping up and down now about the Venezuelan electoral authorities ( the national electoral council or C.N.E.) not being credible and most Venezuelans not believing in them. This was their stated reason for boycotting the legistlative elections and they complain about it to anyone who will listen. Personally, I think the charge has no merit but that is a topic for another post.

What is interesing though is that some new polling information came out today in Ultimas Noticias that shows that the C.N.E. is actually more credible than the opposition itself. The numbers come from Consultores 21 which is an established, and anti-Chavez, polling firm. According to them in September 2005 45% of the population had confidence in the C.N.E. and 25% said they didn't have confidence in it. By January 2006 the number who had confidence in the C.N.E. increased to 53% and the number saying they didn't have confidence in it decreased to 14%. This inspite of an unrelenting effort by the opposition, their mass media, their political leaders, and even their web-based loonies to discredit that institution. Obviously they failed. In fact, it seems like the more the opposition attacks someone or something the more that person or organization's credibility increases (we'll see why that is in a moment).

On the legislative elections from last December that the opposition boycotted 64% said they thought the vote was transparent, 20% had doubts, and 16% said they had no confidence in its transparency. Again, the assertions put forth by the opposition impugning the elections have clearly been rejected by most Venezuelans.

Lastly, Consultores 21 polled on the confidence people had in various instutions. Who was number one? None other than the C.N.E. with 53%, followed by the Church leadership with 52%. The National Assembly got 50% saying they had confidence in it while the Supreme Court got 47%. Not bad.

Then things get interesting. The State media (pro-Chavez) get a confidence rating of 45% while those of the private media (generally anti-Chavez) only had a 30% level of confidence. I guess 7 years of propogandizing hasn't done much for their credibility. And given how little faith people have in the veracity of their information that probably explains why the more they attack the C.N.E. the more that entities rating goes up!!!

Lastly the opposition has spent a lot of time criticizing the automated voting system that Venezuela uses (never mind that THEY actually wrote the law in 1998 requiring the use of automated voting!). Yet when asked, 50% of Venezuelans think they should continue to use the automated system versus only 32% who think the vote should be manual. If majority rules (I say if because their are opposition readers here and many of them do not accept the concept of majority rule), the computers stay.

I think the general conclusion to be drawn from these numbers is not only that the opposition only represents a minority of Venezuelan society, we already knew that, but that their hysteronics and mendacity have only served to discredit them and actually boost the government they so strongly oppose. In other words, they are digging themselves deeper and deeper into a hole. And as one of the opposition bloggers likes to say; the first thing to do when you are in a whole is stop digging! (Health advisory - please don't anyone hold their breath waiting for the digging to stop)


Buddy can you spare a dime (or Bolivar)? 

To those who know what they are looking at this image is just stupifying:

This is a couple people from "Gente del Petroleo" (Oil People) collecting donations for their organization at a recent opposition rally. For those who don't know, Gente del Petroleo was the organization that was set up by the old PDVSA management to defend their interests within the oil company and resist Chavez's efforts to control oil policy. It is precisely this organization that led the oil strike of December 2002 which cost the country $13 billion in lost revenues.

I have actually run across these people before collecting money in the wealthy Altamira section of Caracas. When they asked me for a donation (I declined) they said it was to help the striking oil workers who had lost their jobs and now had no other source of income.

This is practically surreal. First off, many of these people were extremely well paid. Juan Fernandez, the leader of this organization, earned hundreds of thousands of dollars a year as an executive in PDVSA. On average, most of the people that belong to this organiztion probably earned around $30,000 or $40,000 per year which is quite high by Venezuelan standards. What did they do with all their money that they now have to be begging in the street? Maybe they did the escualido thing and blew it all shopping in Miami.

Worse is the straight out gall of this. These people intentionaly cost the country billions of dollars of damages and now they want others to give THEM money?!?!? They cheered as others suffered for lack of gasoline or cooking gas yet now they expect pity?!?!?!? And then they gleefully predicted the demise of Venezuela's economy while insisting on getting their jobs back!! The word "sinverguenza" (shameless) was invented for people such as these.


Wednesday, March 15, 2006

If he keeps this up... 

If Saddam keeps giving saying things like this one wonders how long it will be before he turns up dead in his cell just like has been happening in the Hague recently:

"Let the people unite and resist the invaders and their backers. Don't fight among yourselves," he said, praising the insurgency. "In your resistance to the invasion by the Americans and Zionists and their allies, you were great. You were great in my eyes and you remain so. ... It's only a matter of time until the sun rises and you'll be victorious"

Apparently the judge through the media out so they couldn't hear the rest of Saddams speach where he defended himself against charges of mass murder. None of what he later said could be released to the public, not even by his own attorneys.

I guess we have to add real courts and real trials to WMD and a free press on the list of things not to be found in Iraq.


Venezuelan economic notes 

Venezuela is considering upping the taxes paid by the foreign firms operatin in the Faja del Orinoco from 34% to 50%. It is considering a similiar tax increase for firms exploiting natural gas. The companies effected would be Total of France, Statoil of Norway, British Petroleum, and Chevron, ConocoPhilips, and Exxon Mobil, all of the U.S.

Seperately Total has agree to pay back taxes of up to $107 million this week. Venezuela threatened to close their operations if the back taxes were not paid this week.

All this is occuring after the government had already assessed higher taxes and royalties on oil companies operating in Venezuela. Further, it forced to 32 oil companies to change their operating arrangements in such a way that more of their profits would accrue to Venezuela. So Venezuelas oil revenues will continue to climb not just as oil prices themselves climb but also from the Venezuelan government getting a larger share of revenues those sales generate. So 2006 seems almost certain to see Venezuela get billions of dollars more in oil revenue than it got in 2005


Ememployment fell in February 2.2% from January. Year over year (comparing February 2006 to February 2005) it fell 3.4%. Of the 5,836,466 people who are considered "employed" 54.7% work in the formal sector while 45.3% are in the informal sector.


The government declared a housing "emergency". Venezuela has a housing "deficit" of almost 2 million units and the deficit has been going up as not enough new housing has been built to keep up with population increase. The emergency decree is meant to bring more funds into the housing sector and expadite construction which has been very slow under the current government.

The government is dedicating a billion dollars for housing construction in the Caracas area alone. Presumabely they are going to build 17,000 units in areas such as Montalban, La Urbina, El Conde, and Las Acacias. Doing some arithetic this comes to a cost of $58,000 per unit. That seems very expensive, especially when compared to these houses that only cost a little of $20,000. Further, some of these areas, like Las Acacias, have no open space. So I have no idea where the new housing will be built.

Additionally, the government will be pumping about $500 million into housing credits that can be used to subsidize purchases in the private housing market.


Monday, March 13, 2006

A slow tanker to China 

Over the past year there has been talk of Venezuela attempting to sell more of its oil to China. While this may have seemed to be idle talk or hollow threats aimed at the United States it now seems that there is an actual plan to shift Venezuelan oil sales to China.

The first indicator was the news recently that Venezuela plans to purchase 40 new oil tankers from Brazil with options for another 46 ships later on. Some of the tankers will be among the largest in the world capable of carrying 2 million barrels of oil each. The purchase of these ships will cost billions of dollars. That kind of money would not be spent unless a serious need for it was seen for it. And what is the potential need? Shifting a significant portion of Venezuela’s oil sales from the United States to China. As the journey around South America and across the Pacific to China is many times the distance across the Caribbean to the United States Venezuela would need many more tankers to keep up the flow of oil. So signing contracts to purchase those tankers indicates the shift to China is more than just talk.

Today we received yet more confirmation of that this is moving beyond the talking stage when PDVSA’s head of Commercialization, Asdrubal Chavez, told Panorama newspaper that Venezuela would almost double oil sales to China this year from 160,000 barrels daily to about 300,000 barrels. He further indicated that if Venezuela is successful in securing a pipeline across either Panama or Colombia to shorten the trip to China oil shipments to China would increase significantly. Clearly this is a plan that is now being executed.

What are the repercussions of this shift in oil sales? Probably not what most people think. First, as oil is a fungible commodity both China and the United States will still get the oil they need, neither will be left high and dry. If the U.S. gets less oil from Venezuela it will simply purchase the oil other exporters were selling to China but is now displaced by Venezuelan oil. So from the point of view of oil consumers not much of anything would change.

For Venezuela however there would be significant changes. First and foremost shipping costs would increase due to the increased distance the oil would have to be shipped. I don’t have firm figures on how much but the estimates I’ve seen are around $1 per barrel. Because oil is a fungible commodity this cost isn’t borne by the consumer, it is borne by the seller, in this case Venezuela. The reason for this is that the end product of this oil that Chinese consumer would buy, say gasoline, has to be priced the same as all gasoline in that market. Chinese consumers aren’t going to pay more for Venezuelan gasoline than they would for gasoline from Saudi Arabia or anywhere else. So for that end product price to be the same in spite of Venezuelan gasoline having higher shipping costs the Venezuelans themselves have to eat the higher shipping cost.

How much would that cost Venezuela? It depends on how oil much it sends to China. At the current rate of 160,000 barrels per day it would be:

160,000 barrels x $1/barrel x 365 days = $58.4 million.

That $58.4 million is how much money Venezuela is losing yearly by selling the current 160,000 barrels of oil to China. If they double their oil sales to China this year that loss will double to $116 million. Obviously in the context of the $48 billion worth of oil Venezuela sold last year these losses are not that significant, but they are real and they can add up. For example, say Venezuela were to shift all the approximate 1.5 million barrels it sells daily to the U.S. to China. The additional shipping costs for that would come to:

1,500,000 barrels x $1 x 365 days = $547 million dollars.

Clearly depending on how far this switch to China goes the cost to Venezuela can start to become significant.

So is it completely off the wall for Venezuela to do this? Not necessarily. There are a couple reasons why Venezuela might see this as a necessary step. First, while oil is fungible interchanging oil sellers and buyers isn’t necessarily pain free in the short term. Different oils have different refining requirements and so not all potential buyers can use all potential types of oil for sale. This could result in market imbalances and leave Venezuela’s hard to refine oil on the outside looking in at least for the short term (it wouldn’t literally go unsold, it would just have to be sold at a lower price). The potential for this type of problem may push Venezuela to want to diversify its sales so as to not have all its eggs in one basket.

The second reason is diversifying away from the U.S. market will make it easier do something the Venezuelan government has wanted to do for some time – sell its U.S. subsidiary, Citgo. With refining profit margins currently very high in the United States Venezuela could probably get a very good price for Citgo. I have heard up to $12 billion although with profits running about $500 million per year they would probably get between $8 and $10 billion. Still that would be a very good chunk of change that could be used to invest in Venezuela or pay down debt.

However, the fact that Venezuela would be losing hundreds of millions of dollars in additional shipping costs makes it unlikely that the motivation for moving away from oil sales to the U.S. and divesting itself of Citgo is financial. Rather it is likely that the true motive is removing its exposure to actions being taken against it by the U.S. government. As things stand now there is a kind of economic Mutually Assured Destruction between Venezuela and the United States. Both have so many assets and commercial ties to each other that no matter how heated the rhetoric neither side can afford to really do anything. If the U.S. were to move against Citgo for example Venezuela could retaliate against U.S. oil companies operating in Venezuela. Conversely, Venezuela has to be very careful not to cross any U.S. multinational operating in Venezuela as it has a multi billion dollar investment (Citgo) at risk in the U.S. If Venezuelan authorities were to seize a U.S. pharmaceutical plant in Venezuela the U.S. could very easily retaliate.

However, if Venezuela divests itself of Citgo and no longer sells much of its oil to the United States it really has no exposure to economic attacks by the United States, short of things like quarantines which are an act of war. The Venezuelan would then have a free hand to act as it pleased against even U.S. interests within Venezuela without little fear of U.S. retaliation.

So what then is the significance of the recent indications that Venezuela will indeed begin shifting its oil sales to China? Given that it is clearly at some level an economic loss for Venezuela what it really represents is a hedge against significant deterioration in the relations between the U.S. and Venezuela. Clearly the Venezuelan government thinks there is a good chance things are going to get quite bad between the two countries and that it must take this expensive precaution to protect itself and ensure itself freedom of action.


You mean its not all done just on Chavez's whim? 

About a month ago the complaint of the week of the opposition was that Chavez was proposing to build a large natural gas pipeline through South America to deliver Venezuelan natural gas to points south. It was claimed that this project was being foisted on everyone by Chavez with no thought as to its consequences nor any professional review of it.

Lo and behold, the opposition gets its story wrong yet again as today it was announced that a $9 million engineering and environmental impact study will be done by the countries involved:

RIO DE JANEIRO, Brazil — Brazil, Argentina and Venezuela plan to spend more than US$9 million (euro7.5 million) on environmental and engineering studies for the construction of a continent-spanning natural gas pipeline, Brazil's Mines and Energy Ministry said Friday.

The studies are part of a work schedule for the projected pipeline agreed upon at a meeting in Caracas last week by ministers of Brazil, Venezuela and Argentina. The schedule still needs to be presented to the presidents of the three South American countries.

The countries in December had said they would present a first technical proposal for the 9,000-kilometer-long (5,600-mile-long) pipeline that would link Venezuela's vast natural gas reserves through Brazil to Argentina, with branches extending to Bolivia, Paraguay and Uruguay.

The countries plan to present a final project by July.

Venezuela's state-oil company Petroleos de Venezuela SA, or PDVSA, will be in charge of finding international consortia through a tender process to carry out engineering studies for the pipeline, Brazil's mining ministry said.

Brazil will coordinate environmental impact studies for the project, taking the laws of each country into consideration.

The pipeline project will likely meet opposition from environmental groups that fear increased damage to the Brazilian Amazon and that the project would attract loggers and settlers to the rain forest. Much smaller pipeline projects in Brazil's Amazon have been halted in courts for years.

So yet again the truth lags behind the lies and spin of the Venezuelan opposition. But, as always, it eventually catches up and asserts itself.


Power to the People 

With seven years under its belt and the forces of reaction defeated (at least for now) the Venezuelan government is now finally starting to implement some key components of its "revolution". One component of the revolution finally about to get off the ground are the Community Councils.

Popular participation in government and decision-making is codified in the Venezuelan Constitution. To date that participation has not gone beyond being a theoretical construct. But later this week it will take a big step towards reality with the National Assembly passing the Special Law on Community Councils (Lecc). These councils are meant to be community-based organizations that operate along side local governments with their own elections, leadership, and budgets. Councils will be organized throughout the country with one per 400 families in Urban area and on per 20 families in rural areas. For a Council to actually be constituted at least 20% of the local populace must participate in it. The Councils have a Citizens Assembly, a Work Committee and a Fiscal Oversight Committee. There are already about 8,500 in existence and by 2007 there are to be about 50,000.

This is not the fist attempt at creating local councils. In 2002 the National Assembly passed the Law of Local Councils for Public Planning (Lclpp). Those committees were to be set up in all localities and were to correspond, on a one to one basis, with local elected governments and where to work in collaboration with mayors and town councils to oversee public projects. In practice they didn't work as independent local bodies as most of them were taken over by the localities mayors. The various attempts to unseat Chavez by the opposition also put these councils on the back burner.

Under the new law the Community Councils will be independent of local government. This will hopefully allow them to be genuinely participatory bodies rather than the instrument of politicians. They will have their own budgets of about $14,000 each for 2006 with which to carry out projects that the council members deem important for the community. For 2006 the government has budgeted about $500 million dollars for their work. There is also a special presidential commission that is to work collaboratively with the councils and give them technical assistance.

Watching these organizations get up and running should be one of the interesting developments over the next couple of years.


Sunday, March 12, 2006

How infantile can you get 

In case you missed, and I can't blame you if you did, Venezuela just changed its flag. The most significant change is that whereas the flag previously had an arc of 7 stars now it will have 8 stars. The justification is that Simon Bolivar had presumably requested that the 8th star, representing Guyana (part of which Venezuela still has claims on), be added to the flag. Now the government has ordered just that and henceforth all Venezuela flags will have 8 stars. Also, the sheild which appears in the corner of the flag is being changed so that the horse now runs to the left instead of the right. As far as I am concerned this is all a big yawn. Its hard to believe the government has time to waste on this non-sense and that the opposition can find nothing better to get all in a lather about than something so inconsequential.

To top this all off their are actually opposing marches on all this today. One by government supporters celebrating the changes and one by the opposition protesting them (I guess with the economy continueing to do well and even the highway to the beaches being fixed they ran out of other things to protest). And what would these protests be without a good fight and some violence? Not much, and so the two sides obliged by actually getting in a fight over the new flag. While marching through eastern Caracas some Chavistas held up a new flag with 8 stars. This pissed off the opposition supporters who grabbed it away and threw it to the ground. Only the intervention of the police stopped the fight. Really, don't these people have anything better to do, like go to the beach?

Hate to say it but Venezuelans are definitely picking up some bad habits from the U.S. First off, taking symbols like flags so seriously, as people in the US do, is not good. Such phoney patriotism is easy to see through. Worse still, this silliness then leads to things like flag burning laws in the U.S. or argueing over how many stars should be on a flag. If this non-sense is allowed to continue things might get really out of hand and Chavez might start ending his speaches with "Que Dios bendiga a Venezuela". Lets all hope that doesn't happen.


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