VenEconomy: The National Assembly has approved, following its first debate, an amendment to the Tenancy Act in force since 1999, turning it into a new Real Estate Leasing Act. Here are some of the changes introduced by the amendment:
Tenancy and the need for housing is a human right under the parameters of a socialist state.
Housing is a non-mercantile social right. No value will be given to the owner's right to dispose of his property or to exploit it by leasing it. Above that constitutional right is the right of the tenant to have a roof over his head and to not be left on the street.
Tenants may not be evicted from the homes they occupy under any circumstances, regardless of the time they have been living there. In the government's opinion, a person cannot be left on the street after having had a roof over his head, even if it is not his property.
Guaranteeing protection for tenants or leaseholders will be applicable in cases of buildings that are more than 20 years old. Tenants will have right of tenure and be entitled to have the property allocated to them.
An owner who rents a property will not be able to transfer title and possession or encumber said property except in favor of the tenant, who will be the only person entitled to acquire it. And if the tenant does not have the economic means to purchase it, he will be allocated the property to use and enjoy, but will no be granted property rights. The State, if it purchases the property, may also subsequently lease it or grant the tenant a mortgage to purchase it under the Housing Policy Act or other specific loan plans.
The State will set the price of the property, based on a percentage of the family income or wage. The real estate subject to this law will not be sold at market prices.
Part of the rental paid up until a given time will be considered a down payment when defining the sale of old properties. The idea is that the preferential right not be exercised when the owner decides to sell the housing unit, but before.
Real estate will not appreciate in value depending on supply and demand and inflation, but it will depreciate taking account of time of use. In calculating a fair price for the sale of old housing that has been rented, a depreciation of 1.20% a year could be applied, based on the durability of the construction materials and not taking account of inflation.
This law is another attack on private property, where owners and tenants run the risk of being left empty handed, and, what is worse, far from solving the housing problem, it will make it more acute.
Wednesday, June 30, 2010
Monday, June 28, 2010
VenEconomy // Venezuela dominated by, and split up into Ghettos
VenEconomy
The National Assembly has taken another huge leap in changing Venezuela’s present geo-economic, social, and political system for that of a communal state underpinned by a social economy with its fast-track approval, following their first debate, of two bills that allegedly seek to strengthen the communal branch of government, but in fact aim to put in place a system for controlling society.
The bills in question are the Communes Bill and the Bill on the Promotion and Development of the Communal Economic System.
The Communes Bill aims to break with the existing democratic and economic system of institutions in order to create a socialist-style geopolitical space.
The Communes or Communal Towns are a type of local government not provided for in the Constitution where socialism a la Chavez would prevail and would act as an engine of development. These new entities will be a kind of ghetto made up of a group of communities located within a given geographic area that have "a historical memory, the same name, and usage, customs, and cultural features" in common that identify them. The concept of state, municipalities, and parishes will no longer have any value.
Organized in Communal Parliaments, the communes will be the entities in charge of establishing a different way of administering the public policies outline by Castro-communism. The Communal Parliaments will have the power to define what is produced and how much and they will also be empowered to regulate social and community life and maintain public order.
The legal basis of these communes will be the Communal Charters and their Compliance Councils, which, alongside the Constitution and the laws, will be the instruments that will regulate the life of the communes, where the "collective interest" will prevail over private interests. The communes will have their own Communal Bank, where allocated resources and resources generated by the commune will be administered internally. A system of "Communal Justice" will also be set up, which will act as an alternative to the Republic’s existing system of justice.
"Communal property" will be "social property and, according to the bill, ownership of property will only be for the "use and enjoyment" of individuals and families, but they will not be able to freely dispose of said property.
The Bill on the Promotion and Development of the Communal Economic System lays the foundations for the socialist productive model that will prevail in the communes. This model is geared to eliminating the division of work that exists under the capitalist model to replace it with "new forms of generation, appropriation, and social reinvestment of surpluses."
This bill establishes barter as a form trade and subsistence, and communal currencies will be created to be used exclusively by the commune. This will set trade back to colonial times, when the large landowner subjugated his colonists by controlling a currency with restricted value. The idea behind barter is to control the value of work and the value of trade in goods and services. In short, it seeks to monopolize economic power.
These bills continue to weave the legal network of Castro-communism, using "strengthening of popular power," "‘protagonistic’ participation," and alleged citizen access to the means of production as bait.
The National Assembly has taken another huge leap in changing Venezuela’s present geo-economic, social, and political system for that of a communal state underpinned by a social economy with its fast-track approval, following their first debate, of two bills that allegedly seek to strengthen the communal branch of government, but in fact aim to put in place a system for controlling society.
The bills in question are the Communes Bill and the Bill on the Promotion and Development of the Communal Economic System.
The Communes Bill aims to break with the existing democratic and economic system of institutions in order to create a socialist-style geopolitical space.
The Communes or Communal Towns are a type of local government not provided for in the Constitution where socialism a la Chavez would prevail and would act as an engine of development. These new entities will be a kind of ghetto made up of a group of communities located within a given geographic area that have "a historical memory, the same name, and usage, customs, and cultural features" in common that identify them. The concept of state, municipalities, and parishes will no longer have any value.
Organized in Communal Parliaments, the communes will be the entities in charge of establishing a different way of administering the public policies outline by Castro-communism. The Communal Parliaments will have the power to define what is produced and how much and they will also be empowered to regulate social and community life and maintain public order.
The legal basis of these communes will be the Communal Charters and their Compliance Councils, which, alongside the Constitution and the laws, will be the instruments that will regulate the life of the communes, where the "collective interest" will prevail over private interests. The communes will have their own Communal Bank, where allocated resources and resources generated by the commune will be administered internally. A system of "Communal Justice" will also be set up, which will act as an alternative to the Republic’s existing system of justice.
"Communal property" will be "social property and, according to the bill, ownership of property will only be for the "use and enjoyment" of individuals and families, but they will not be able to freely dispose of said property.
The Bill on the Promotion and Development of the Communal Economic System lays the foundations for the socialist productive model that will prevail in the communes. This model is geared to eliminating the division of work that exists under the capitalist model to replace it with "new forms of generation, appropriation, and social reinvestment of surpluses."
This bill establishes barter as a form trade and subsistence, and communal currencies will be created to be used exclusively by the commune. This will set trade back to colonial times, when the large landowner subjugated his colonists by controlling a currency with restricted value. The idea behind barter is to control the value of work and the value of trade in goods and services. In short, it seeks to monopolize economic power.
These bills continue to weave the legal network of Castro-communism, using "strengthening of popular power," "‘protagonistic’ participation," and alleged citizen access to the means of production as bait.
Oliver L Campbell // CITGO PR blunder ... pulling the wool over our eyes?
Former Petroleos de Venezuela (PDVSA) Finance Coordinator Oliver L Campbell writes: When I read that "CITGO Petroleum Corporation announced the successful completion of the refinancing of its $2.1 billion indebtedness which strengthens the financial condition of the company by extending the maturity of its indebtedness and securing liquidity for its operations" I could not help thinking about the role of PR (Public Relations) in a large company ... is it to present the company in the best light possible by massaging the facts, or to be honest with the public while still trying to limit any detrimental impression?
Last month CITGO announced it proposed making a $1.5 billion bond issue. This was to be in the form of Senior Secured Notes due 2017 and 2010, and the funds would be used for refinancing present obligations. The company has just announced it will refinance $2.1 billion with a three year revolving credit facility of $750 million, a five year loan of $350 million, a seven year loan of $700 million ... and a seven year note issue of $300 million paying interest of 11.5%.
It is not surprising the notes have been reduced from $1.5 billion to only $300 million since an interest rate of 11.5%, under current conditions, can only be seen as penal -- interest rates are at the lowest they have been for very many years.
Treasury notes today yield 2. 57% for seven years (3.12% for ten years) and the spread of nearly nine percentage points tells a sorry story -- it can only be due to the perceived risk.
Reuters says there was insufficient demand due to "investor concerns about the issuer's exposure to Venezuela, as well as market volatility."
I rather think it was because CITGO made a net loss of $201 million in 2009 and a proportionately higher loss of $127.7 million in the 1st Quarter of 2010. We are not told what the interest rates on the loans are ... whether they are fixed or vary with LIBOR. However, though they will be lower than 11.5%, they also will reflect the same perceived risk.
The statement made by CITGO'S president, Alejandro Granado, that "This achievement clearly underscores CITGO's strength and the confidence of the international financial markets in the managerial and operational capacity of our company, which is particularly significant in the context of the current global economic instability that has impacted all productive sectors, including the refining industry" is what I consider a PR blunder.
It is clear to all and sundry that to refinance at rates up to 11.5%, when interest rates are a historical low, is hardly a mark of "strength and confidence."
I come back to my original point ... should not the PR policy have been one of more frankness with which we could sympathize, or even commiserate, rather than one which tried to pull the wool over our eyes?
There has indeed been a "successful completion of the refinancing" but at a considerable cost. This could have been explained by stressing in the press release that CITGO is temporarily in a loss-making situation which has meant paying higher interest rates than would otherwise have been the case.
I have been ... and still am ... a great defender of the investment in CITGO as one that was made, not to make a lot of money downstream, but to protect a lot of money upstream by providing an outlet for PDVSA's heavy and problematical heavy crudes.
Even though CITGO is temporarily making losses, I am certain the integrated operation with PDVSA is still making a substantial profit.
Last month CITGO announced it proposed making a $1.5 billion bond issue. This was to be in the form of Senior Secured Notes due 2017 and 2010, and the funds would be used for refinancing present obligations. The company has just announced it will refinance $2.1 billion with a three year revolving credit facility of $750 million, a five year loan of $350 million, a seven year loan of $700 million ... and a seven year note issue of $300 million paying interest of 11.5%.
It is not surprising the notes have been reduced from $1.5 billion to only $300 million since an interest rate of 11.5%, under current conditions, can only be seen as penal -- interest rates are at the lowest they have been for very many years.
Treasury notes today yield 2. 57% for seven years (3.12% for ten years) and the spread of nearly nine percentage points tells a sorry story -- it can only be due to the perceived risk.
Reuters says there was insufficient demand due to "investor concerns about the issuer's exposure to Venezuela, as well as market volatility."
I rather think it was because CITGO made a net loss of $201 million in 2009 and a proportionately higher loss of $127.7 million in the 1st Quarter of 2010. We are not told what the interest rates on the loans are ... whether they are fixed or vary with LIBOR. However, though they will be lower than 11.5%, they also will reflect the same perceived risk.
The statement made by CITGO'S president, Alejandro Granado, that "This achievement clearly underscores CITGO's strength and the confidence of the international financial markets in the managerial and operational capacity of our company, which is particularly significant in the context of the current global economic instability that has impacted all productive sectors, including the refining industry" is what I consider a PR blunder.
It is clear to all and sundry that to refinance at rates up to 11.5%, when interest rates are a historical low, is hardly a mark of "strength and confidence."
I come back to my original point ... should not the PR policy have been one of more frankness with which we could sympathize, or even commiserate, rather than one which tried to pull the wool over our eyes?
There has indeed been a "successful completion of the refinancing" but at a considerable cost. This could have been explained by stressing in the press release that CITGO is temporarily in a loss-making situation which has meant paying higher interest rates than would otherwise have been the case.
I have been ... and still am ... a great defender of the investment in CITGO as one that was made, not to make a lot of money downstream, but to protect a lot of money upstream by providing an outlet for PDVSA's heavy and problematical heavy crudes.
Even though CITGO is temporarily making losses, I am certain the integrated operation with PDVSA is still making a substantial profit.
The Third Depression
By PAUL KRUGMAN
Published by the New York Times: June 27, 2010
Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.
But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.
In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.
As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.
Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.
It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.
So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.
And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.
Published by the New York Times: June 27, 2010
Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.
But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.
In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.
As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.
Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.
It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.
So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.
And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.
Thursday, June 24, 2010
Colombia Spat With Venezuela ‘A Blessing’ for Santos
By Helen Murphy
June 24 (Bloomberg) -- Colombia’s trade spat with Venezuela is “a blessing in disguise” that may help President-elect Juan Manuel Santos achieve his goal of quickening economic growth to 6 percent a year, said David Duarte, an analyst at research company 4Cast Inc.
Colombia’s economy expanded faster than expected in the first quarter, the statistics agency said today. Gross domestic product grew 4.4 percent from a year earlier, beating a 3.6 percent median estimate of 24 economists surveyed by Bloomberg.
Santos, who said he wants to mend ties with President Hugo Chavez after being elected by a landslide on June 20, has pledged to reach the 6 percent annual growth target within two years of taking office in August. He plans to do so while creating 2.4 million jobs and expanding the housing, infrastructure and oil and mining industries.
“The trade break was a blessing in disguise,” said Duarte in a phone interview from New York. “Colombia’s growth is now much more organic and domestically based.”
South America’s fourth-largest economy is emerging slower from the global financial crisis than its regional neighbors. The International Monetary Fund estimates GDP will expand 2.2 percent this year, slower than every country except recession- plagued Venezuela. The government on June 15 raised to 3 percent, from 2.5 percent, its 2010 growth forecast.
The yield on Colombia’s local bonds fell to their lowest level since Dec. 1 after today’s GDP report. The yield on the benchmark 11 percent bonds due in July 2020 fell six basis points to 7.88 percent at 12:59 p.m. New York time. The peso rose 0.19 percent to 1892.05 per U.S. dollar.
The slowdown in bilateral trade with Venezuela reduced demand for consumer goods, limiting inflation and allowing policy makers to stimulate the domestic economy by lowering borrowing costs, Duarte said.
‘Warmonger’
Relations have been strained since March 2008 when Santos, as defense minister, ordered a raid into Ecuador that killed Raul Reyes, the second-in-command of the Revolutionary Armed Forces of Colombia, the country’s largest guerrilla group.
Chavez, who has called Santos a “warmonger” and threat to regional peace, ordered troops to Venezuela’s border with Colombia in response to the attack on his ally. He then cut trade ties after President Alvaro Uribe agreed last year to expand U.S. access to seven military bases.
Exports to Venezuela plunged 69 percent in April from the same month a year ago. Before relations soured, Venezuela was Colombia’s biggest export market after the U.S.
Jumpstarting Diplomacy
The peso fell 0.3 percent to 1,895.68 per dollar yesterday. The peso has risen 7.8 percent against the dollar this year, the best performer among seven Latin American currencies tracked by Bloomberg.
“Diplomacy and respect will be the backbone of our international relations,” Santos, 58, said after winning 69 percent of the vote against 28 percent for former Bogota mayor Antanas Mockus. “In conflicting relations there are always two choices: to look back in anger or to open spaces of cooperation for the future.”
The fall in exports to Venezuela was offset by a 98 percent increase in exports last year to the U.S. and a 172 percent jump in exports to China, spurred by a rise in oil export revenue as crude prices recovered.
Santos is likely to reach his growth target even if he fails to restore trade relations with Venezuela, said Alberto Bernal, a fixed income analyst with Bulltick Capital Markets in Miami.
“If Venezuela starts buying from Colombia again we could add another percentage point to the economy, but it’s not the end of the world for Colombia without it,” Bernal said.
Lagging the Region
Bertrand Delgado, a senior economist at Roubini Global Economics LLC in New York, disagrees.
“Without Venezuela, the economy can’t grow more than 4 percent,” said Delgado, adding that a failure to mend ties will cause Colombia to lag behind regional growth for some time. “Colombia is looking for new export markets, but that takes a while.”
Colombia’s economy, after emerging from recession last year, grew 3.4 percent in the fourth quarter, according to a revised year-on-year estimate today using the base year of 2005 instead of 2000.
Policy makers cut interest rates from a record 10 percent in November 2008 to 3 percent now, helping stimulate bank lending and consumer spending.
Colombia’s retail sales rose 7.9 percent in April from a year earlier, while industrial output grew 7.6 percent.
“What motors the economy is household spending, and that’s increasing,” said Julian Cardenas, chief economist at Bogota- based brokerage Corredores Asociados SA. “The economy will lag behind Chile, Brazil and Peru, but that’s because it’s not as open as theirs.”
New Finance Chief
Santos, who has served as finance and trade minister, also plans to lower corporate taxes to attract investment and bring in extra revenue by expanding the tax base. His choice for finance minister, Juan Carlos Echeverry, has said he aims to eliminate by 2014 the consolidated budget deficit that’s equal to about 3.6 percent of GDP this year.
Echeverry also plans to create a dollar-denominated sovereign wealth fund using royalties from oil and coal sales, dividends from state oil company Ecopetrol SA and tax revenue, he said.
The government forecasts foreign direct investment will rise to $10 billion this year, the bulk in mining and energy projects, from $7.2 billion in 2009.
Santos says his plan to increase spending on roads and ports in a bid to slash to single digits an unemployment rate that in April stood at 12.4 percent, the highest in South America.
June 24 (Bloomberg) -- Colombia’s trade spat with Venezuela is “a blessing in disguise” that may help President-elect Juan Manuel Santos achieve his goal of quickening economic growth to 6 percent a year, said David Duarte, an analyst at research company 4Cast Inc.
Colombia’s economy expanded faster than expected in the first quarter, the statistics agency said today. Gross domestic product grew 4.4 percent from a year earlier, beating a 3.6 percent median estimate of 24 economists surveyed by Bloomberg.
Santos, who said he wants to mend ties with President Hugo Chavez after being elected by a landslide on June 20, has pledged to reach the 6 percent annual growth target within two years of taking office in August. He plans to do so while creating 2.4 million jobs and expanding the housing, infrastructure and oil and mining industries.
“The trade break was a blessing in disguise,” said Duarte in a phone interview from New York. “Colombia’s growth is now much more organic and domestically based.”
South America’s fourth-largest economy is emerging slower from the global financial crisis than its regional neighbors. The International Monetary Fund estimates GDP will expand 2.2 percent this year, slower than every country except recession- plagued Venezuela. The government on June 15 raised to 3 percent, from 2.5 percent, its 2010 growth forecast.
The yield on Colombia’s local bonds fell to their lowest level since Dec. 1 after today’s GDP report. The yield on the benchmark 11 percent bonds due in July 2020 fell six basis points to 7.88 percent at 12:59 p.m. New York time. The peso rose 0.19 percent to 1892.05 per U.S. dollar.
The slowdown in bilateral trade with Venezuela reduced demand for consumer goods, limiting inflation and allowing policy makers to stimulate the domestic economy by lowering borrowing costs, Duarte said.
‘Warmonger’
Relations have been strained since March 2008 when Santos, as defense minister, ordered a raid into Ecuador that killed Raul Reyes, the second-in-command of the Revolutionary Armed Forces of Colombia, the country’s largest guerrilla group.
Chavez, who has called Santos a “warmonger” and threat to regional peace, ordered troops to Venezuela’s border with Colombia in response to the attack on his ally. He then cut trade ties after President Alvaro Uribe agreed last year to expand U.S. access to seven military bases.
Exports to Venezuela plunged 69 percent in April from the same month a year ago. Before relations soured, Venezuela was Colombia’s biggest export market after the U.S.
Jumpstarting Diplomacy
The peso fell 0.3 percent to 1,895.68 per dollar yesterday. The peso has risen 7.8 percent against the dollar this year, the best performer among seven Latin American currencies tracked by Bloomberg.
“Diplomacy and respect will be the backbone of our international relations,” Santos, 58, said after winning 69 percent of the vote against 28 percent for former Bogota mayor Antanas Mockus. “In conflicting relations there are always two choices: to look back in anger or to open spaces of cooperation for the future.”
The fall in exports to Venezuela was offset by a 98 percent increase in exports last year to the U.S. and a 172 percent jump in exports to China, spurred by a rise in oil export revenue as crude prices recovered.
Santos is likely to reach his growth target even if he fails to restore trade relations with Venezuela, said Alberto Bernal, a fixed income analyst with Bulltick Capital Markets in Miami.
“If Venezuela starts buying from Colombia again we could add another percentage point to the economy, but it’s not the end of the world for Colombia without it,” Bernal said.
Lagging the Region
Bertrand Delgado, a senior economist at Roubini Global Economics LLC in New York, disagrees.
“Without Venezuela, the economy can’t grow more than 4 percent,” said Delgado, adding that a failure to mend ties will cause Colombia to lag behind regional growth for some time. “Colombia is looking for new export markets, but that takes a while.”
Colombia’s economy, after emerging from recession last year, grew 3.4 percent in the fourth quarter, according to a revised year-on-year estimate today using the base year of 2005 instead of 2000.
Policy makers cut interest rates from a record 10 percent in November 2008 to 3 percent now, helping stimulate bank lending and consumer spending.
Colombia’s retail sales rose 7.9 percent in April from a year earlier, while industrial output grew 7.6 percent.
“What motors the economy is household spending, and that’s increasing,” said Julian Cardenas, chief economist at Bogota- based brokerage Corredores Asociados SA. “The economy will lag behind Chile, Brazil and Peru, but that’s because it’s not as open as theirs.”
New Finance Chief
Santos, who has served as finance and trade minister, also plans to lower corporate taxes to attract investment and bring in extra revenue by expanding the tax base. His choice for finance minister, Juan Carlos Echeverry, has said he aims to eliminate by 2014 the consolidated budget deficit that’s equal to about 3.6 percent of GDP this year.
Echeverry also plans to create a dollar-denominated sovereign wealth fund using royalties from oil and coal sales, dividends from state oil company Ecopetrol SA and tax revenue, he said.
The government forecasts foreign direct investment will rise to $10 billion this year, the bulk in mining and energy projects, from $7.2 billion in 2009.
Santos says his plan to increase spending on roads and ports in a bid to slash to single digits an unemployment rate that in April stood at 12.4 percent, the highest in South America.
Tuesday, June 22, 2010
Foreign Policy Magazine "Fidel Castro, Hugo Chávez among worst dictators ..
As dictators go, neither Cuba's Raúl Castro nor Venezuelan President Hugo Chávez measure up to Castro's brother Fidel, according to Foreign Policy magazine.
Castro ranked 21st and Chávez 17th in a list of the world's 23 worst tyrants published by the magazine. Fidel ranked 15th in a similar list published in 2007 by Parade magazine.
A separate Foreign Policy article ranked Cuba 76th out of 177 countries based on national stability, sandwiched between Guatemala at 75 and Venezuela at 77.
The magazine described the younger Castro as ``afflicted with intellectual astigmatism'' and ``pitifully unaware that the revolution he leads is obsolete, an abysmal failure, and totally irrelevant to the aspirations of the Cuban people.''
``He blames the failure of the revolution on foreign conspiracies -- which he then uses to justify even more brutal clampdowns,'' added the magazine, based in Washington and published by Washingtonpost.Newsweek Interactive, LLC.
Parade's 2007 list noted that Fidel Castro's ``decades-long refusal to pass on the mantle of leadership has been his way of saying that two generations of Cubans have come and gone without a single person being worthy of leading the country . . . except his own brother.''
The dictators were ranked by George B.N. Ayittey of Ghana, president of the Washington-based Free Africa Foundation, ``based on ignoble qualities of perfidy, cultural betrayal, and economic devastation.''
First was Kim Jong-Il of North Korea, followed by Robert Mugabe of Zimbabwe. Thirteen of the 23 rule African countries, and several others rule nations in Central Asia that once formed part of the Soviet Union. The list also includes the leaders of China, Iran and Myanmar.
In a separate ``Failed States Index,'' based on 12 measurements such as refugee flows, economics, human rights violations and security threats, Cuba ranked 76th out of 177 countries.
Cuba got its worst marks on the measurements of human flight, deligitimization of the state, human rights, security apparatus, factionalized elites and external intervention.
Haiti ranked 12th, Colombia 41st, Bolivia 51st, Nicaragua 66th and Ecuador 69th.
Castro ranked 21st and Chávez 17th in a list of the world's 23 worst tyrants published by the magazine. Fidel ranked 15th in a similar list published in 2007 by Parade magazine.
A separate Foreign Policy article ranked Cuba 76th out of 177 countries based on national stability, sandwiched between Guatemala at 75 and Venezuela at 77.
The magazine described the younger Castro as ``afflicted with intellectual astigmatism'' and ``pitifully unaware that the revolution he leads is obsolete, an abysmal failure, and totally irrelevant to the aspirations of the Cuban people.''
``He blames the failure of the revolution on foreign conspiracies -- which he then uses to justify even more brutal clampdowns,'' added the magazine, based in Washington and published by Washingtonpost.Newsweek Interactive, LLC.
Parade's 2007 list noted that Fidel Castro's ``decades-long refusal to pass on the mantle of leadership has been his way of saying that two generations of Cubans have come and gone without a single person being worthy of leading the country . . . except his own brother.''
The dictators were ranked by George B.N. Ayittey of Ghana, president of the Washington-based Free Africa Foundation, ``based on ignoble qualities of perfidy, cultural betrayal, and economic devastation.''
First was Kim Jong-Il of North Korea, followed by Robert Mugabe of Zimbabwe. Thirteen of the 23 rule African countries, and several others rule nations in Central Asia that once formed part of the Soviet Union. The list also includes the leaders of China, Iran and Myanmar.
In a separate ``Failed States Index,'' based on 12 measurements such as refugee flows, economics, human rights violations and security threats, Cuba ranked 76th out of 177 countries.
Cuba got its worst marks on the measurements of human flight, deligitimization of the state, human rights, security apparatus, factionalized elites and external intervention.
Haiti ranked 12th, Colombia 41st, Bolivia 51st, Nicaragua 66th and Ecuador 69th.
Saturday, June 19, 2010
Putting Limits On Intolerance
By VenEconomy
Published: Friday, June 18, 2010
The growing intolerance of the Hugo Chavez administration and the violations of civil rights seem to have reached the bounds of what is permissible, not only for those at home, but also for the international community.
Indications of this are the declarations by Catalina Botero, the Inter-American Commission on Human Rights’ Special Rapporteur for Freedom of Expression, before the US Congress. Botero stated that, as far as violations of freedom of speech is concerned, Venezuela "is fast reaching intolerable limits." And while she was optimistic in saying that the situation could still be reverted, she also warned that "things could get worse," due to the parliamentary elections to be on September 26.
Even stronger is the position taken in a report approved by the plenary session of the ILO’s 99th International Labor Conference in Geneva.
This report, submitted by the ILO’s Committee on the Application of Standards, bases its comments on the premise that "respect for the rights of workers and employers implies that their organizations have to be capable of performing their activities in a climate free of fear, threats, and violence, and that, ultimately, the responsibility falls to the Government," and states that the situation in Venezuela gives profound cause for concern owing to the "acts of violence against employer and trade union leaders, criminalization of legitimate trade union activities, and other restrictions of civil freedoms necessary for exercising trade union rights." It also rejects the intimidation by the government exercised by means of "the expropriation of their land (sic) and measures against property and against Fedecamaras’s headquarters." Furthermore, it urges the Chavez administration to create "a space for tripartite dialog," to stop interfering in the affairs of worker and employer associations, to not ignore the ILO’s recommendations, and to legislate on labor issues that have been pending these past eleven years.
Meanwhile, in Venezuela, the revolutionary cause continues wreaking havoc in the freedom of speech and in labor and trade union rights: 1) more than 3,500 workers of Banco Federal have had their salaries frozen following the bank’s closure for a government audit, and their jobs are in jeopardy, as are the jobs of the thousands of people employed by the stockbrokerage firms and broker-dealers; 2) two trade union leaders and three workers of CVG will have to put up with having their civil rights restricted until February 2011, when they will be tried for having taken part in a protest over their labor rights; and 3) Globovisión now runs the risk of Nelson Mezerhane’s shareholding in the television station passing into government hands, as the President insinuated this Wednesday in his, now daily, nationwide networked broadcast.
The hope is that Chavez and his emissaries will find it increasingly difficult to hide from the country and the international community the persecution and subjugation to which his administration is submitting large sectors of the population.
Published: Friday, June 18, 2010
The growing intolerance of the Hugo Chavez administration and the violations of civil rights seem to have reached the bounds of what is permissible, not only for those at home, but also for the international community.
Indications of this are the declarations by Catalina Botero, the Inter-American Commission on Human Rights’ Special Rapporteur for Freedom of Expression, before the US Congress. Botero stated that, as far as violations of freedom of speech is concerned, Venezuela "is fast reaching intolerable limits." And while she was optimistic in saying that the situation could still be reverted, she also warned that "things could get worse," due to the parliamentary elections to be on September 26.
Even stronger is the position taken in a report approved by the plenary session of the ILO’s 99th International Labor Conference in Geneva.
This report, submitted by the ILO’s Committee on the Application of Standards, bases its comments on the premise that "respect for the rights of workers and employers implies that their organizations have to be capable of performing their activities in a climate free of fear, threats, and violence, and that, ultimately, the responsibility falls to the Government," and states that the situation in Venezuela gives profound cause for concern owing to the "acts of violence against employer and trade union leaders, criminalization of legitimate trade union activities, and other restrictions of civil freedoms necessary for exercising trade union rights." It also rejects the intimidation by the government exercised by means of "the expropriation of their land (sic) and measures against property and against Fedecamaras’s headquarters." Furthermore, it urges the Chavez administration to create "a space for tripartite dialog," to stop interfering in the affairs of worker and employer associations, to not ignore the ILO’s recommendations, and to legislate on labor issues that have been pending these past eleven years.
Meanwhile, in Venezuela, the revolutionary cause continues wreaking havoc in the freedom of speech and in labor and trade union rights: 1) more than 3,500 workers of Banco Federal have had their salaries frozen following the bank’s closure for a government audit, and their jobs are in jeopardy, as are the jobs of the thousands of people employed by the stockbrokerage firms and broker-dealers; 2) two trade union leaders and three workers of CVG will have to put up with having their civil rights restricted until February 2011, when they will be tried for having taken part in a protest over their labor rights; and 3) Globovisión now runs the risk of Nelson Mezerhane’s shareholding in the television station passing into government hands, as the President insinuated this Wednesday in his, now daily, nationwide networked broadcast.
The hope is that Chavez and his emissaries will find it increasingly difficult to hide from the country and the international community the persecution and subjugation to which his administration is submitting large sectors of the population.
Thursday, June 17, 2010
In Our Opinion...
The Commandant once again said he has “no problem” nationalizing the country’s banking sector and that any private bank that fails to extend development loans will be seized.
In our opinion, the revolution has entered its final stage by which Chavez takes Venezuela down a total authoritarian route, stifling dissent and nationalizing much of whatever is left "private" in the economy.
In the midst of the highest inflation in seven years, Chavez's next step would be to create an export-import corporation to take over middle-class management of all trade and as he will put it " No more dollars to the bourgeoisie"
In our opinion, the revolution has entered its final stage by which Chavez takes Venezuela down a total authoritarian route, stifling dissent and nationalizing much of whatever is left "private" in the economy.
In the midst of the highest inflation in seven years, Chavez's next step would be to create an export-import corporation to take over middle-class management of all trade and as he will put it " No more dollars to the bourgeoisie"
Handing it the land on a silver platter
VenEconomy Thursday June 17, 2010:
Venezuela has become a country of surrealisms and backwardness.
On the one hand, the flies are having a banquet thanks to the tons of food that has been left to rot by the government, PDVSA, and its affiliates that import, distribute, and market basic food products. Just a small example of a much announced disaster!
On the other hand, the property predators, with which the corridors of power are crawling, every day appropriate companies that other people have built up with their work and money. Today, the government has in its possession land suitable for primary production that had been proved to be under production. It also owns coffee roasters and food processing plants of all kinds that had been supplying the domestic market when their owners were private businessmen, not to mention sugar mills, silos, a cold chain, food distribution companies, and food wholesalers and marketing chains that, before passing into the hands of the State, were among the biggest in the country. And that is quite apart from its own networks, such as PDVAL, Mercal, and CASA. The government has no excuse for not guaranteeing the country's food sovereignty. But it is far from doing that; quite the contrary.
Now, this Tuesday, July 15, the redder-than-reds in the National Assembly unanimously passed a Land and Agricultural Development Act that will "govern the functioning of public and private lands with agricultural potential."
Despite the government's proven failure, incompetence, and corruption in managing the supply of basic food products, the National Assembly has taken it into its collective head to give it the power to directly assume "ownership of all primary production, industrialization, distribution, exchange, and marketing activities" within Venezuela's agricultural sector, allegedly "to strengthen the domestic productive apparatus."
There are several points in the new law that give cause for concern. One is the elimination of the latifundio (large estate) and the working of the land by persons other than the owners, as they are considered "systems contrary to justice, the general interest, and peace in the countryside"; and another is that, in recognizing the right to "allocate lands," it establishes that this shall be in accordance with the socialist principle of "the land is for he who works it."
Furthermore the law establishes, in terms that are discretionary and very broad, that private land shall fulfill "the social function of food security of the nation," and to that end, it must be used to meet the food production needs as established by the Venezuelan Government.
Another article that warrants attention is the one that establishes that the registration, transfer, and encumbrance of land with agricultural potential or improvements thereon may not be officially filed, recognized, or authenticated without the due authorization of the National Lands Institute.
In other words, the INTI, known for its predilection for grabbing land and properties, will have full discretionary powers to decide to whom it will allocate or grant property rights over agricultural land and what will be produced there. What a nerve!
Venezuela has become a country of surrealisms and backwardness.
On the one hand, the flies are having a banquet thanks to the tons of food that has been left to rot by the government, PDVSA, and its affiliates that import, distribute, and market basic food products. Just a small example of a much announced disaster!
On the other hand, the property predators, with which the corridors of power are crawling, every day appropriate companies that other people have built up with their work and money. Today, the government has in its possession land suitable for primary production that had been proved to be under production. It also owns coffee roasters and food processing plants of all kinds that had been supplying the domestic market when their owners were private businessmen, not to mention sugar mills, silos, a cold chain, food distribution companies, and food wholesalers and marketing chains that, before passing into the hands of the State, were among the biggest in the country. And that is quite apart from its own networks, such as PDVAL, Mercal, and CASA. The government has no excuse for not guaranteeing the country's food sovereignty. But it is far from doing that; quite the contrary.
Now, this Tuesday, July 15, the redder-than-reds in the National Assembly unanimously passed a Land and Agricultural Development Act that will "govern the functioning of public and private lands with agricultural potential."
Despite the government's proven failure, incompetence, and corruption in managing the supply of basic food products, the National Assembly has taken it into its collective head to give it the power to directly assume "ownership of all primary production, industrialization, distribution, exchange, and marketing activities" within Venezuela's agricultural sector, allegedly "to strengthen the domestic productive apparatus."
There are several points in the new law that give cause for concern. One is the elimination of the latifundio (large estate) and the working of the land by persons other than the owners, as they are considered "systems contrary to justice, the general interest, and peace in the countryside"; and another is that, in recognizing the right to "allocate lands," it establishes that this shall be in accordance with the socialist principle of "the land is for he who works it."
Furthermore the law establishes, in terms that are discretionary and very broad, that private land shall fulfill "the social function of food security of the nation," and to that end, it must be used to meet the food production needs as established by the Venezuelan Government.
Another article that warrants attention is the one that establishes that the registration, transfer, and encumbrance of land with agricultural potential or improvements thereon may not be officially filed, recognized, or authenticated without the due authorization of the National Lands Institute.
In other words, the INTI, known for its predilection for grabbing land and properties, will have full discretionary powers to decide to whom it will allocate or grant property rights over agricultural land and what will be produced there. What a nerve!
Wednesday, June 16, 2010
Chavez' voyage to Stalinism has taken him into the Castro brothers orbit
Vancouver Sun (Jonathan Manthorpe): Watching Hugo Chavez inflate himself into a caricature of a petty despot would be a hugely entertaining spectacle were it not such a threat to the well-being of Venezuela's 28 million people.
Chavez' latest display is, unfortunately, not an empty display of the strutting braggadocio that has signposted his road to dictatorship since he came to power in 1999. His government has taken over nine private banks since the beginning of June.
The latest bank to fall victim to what Chavez insists is a socialist revolution was Banco Federal, the country's eighth largest, which was taken over on Monday. Banco Federal has the misfortune to be run by Nelson Mezerhane, who is also a minority shareholder in Globovision, Venezuela's only remaining television station critical of Chavez.
Last week, Venezuelan authorities rushed to issue arrest warrants for Globovision's owner, Guillermo Zuloaga and his son after Chavez, in one of his weekly four-hour television rants, said he couldn't understand why the two are still free.
In May, charges were filed against Zuloaga for illegally keeping 24 vehicles at his home -- it's alleged he was hoarding the vehicles in anticipation of a market shortage. And in March, Zuloaga was arrested and then released on charges of spreading false news and making remarks that offended Chavez.
Police have yet to find Zuloaga or his son.
Chavez has engaged in a mounting war against private enterprise in Venezuela -- which he calls, with a charmingly archaic touch, "the bourgeoisie" -- since he was briefly ousted in a 2002 coup orchestrated by business leaders and approved by the United States. Since then Chavez has progressively cut ties with Washington, though OPEC-member Venezuela's oil sales to the US remain the only serious part of a collapsing economy.
Chavez has espoused what he calls Bolivarianism, a straightforward brand of authoritarian Marxist socialism named for the 19th-century liberator of northwest South America from Spanish colonial rule, Simon Bolivar.
Chavez' voyage to Stalinism has inevitably taken him into the orbit of the Castro brothers, Fidel and Raul, in Cuba.
Chavez and the Castros have established a mutual support relationship: he keeps Cuba's asphyxiated economy breathing with subsidized oil, and the Castros initiate him in the finer points of running a long-term despotism by sending advisers to ensure the loyalty of Venezuela's military and to teach it about control of the population.
So far Chavez' insistence that it is "the bourgeoisie" that is to blame for all Venezuela's problems still seems to resonate with the voters. He remains popular despite inflation running at over 30%, the economy having shrunk by nearly six per cent in the first quarter of this year, and severe shortages of staples, especially food. Chavez' response has been a frenzy of "forced acquisitions." Recent targets for nationalization include companies that make food containers and several food distribution companies, which Chavez accuses of hoarding food supplies to take advantage of rising prices. This initiative lost some of its potency when it was discovered that 20,000 tonnes of imported food owned by the state-run food agency was rotting in containers at a port.
In the past few years, Chavez has also nationalized a raft of businesses involved in everything from telecommunications to cement manufacturing. But Chavez pushed the limits of acceptability earlier this month when he went after billionaire businessman Lorenzo Mendoza, whom he accuses of trying to destabilize his government.
Chavez threatened to nationalize Mendoza's Empresas Polar, Venezuela's largest food and drinks company and the country's biggest private employer. But Empresas produces the country's most popular beer, Polar. Many Venezuelans are unsure they want their favourite beer nationalized, given the government's management record.
Chavez' intensified outburst of asserting his political and economic control has a clear purpose.
National Assembly elections are scheduled for September and, despite his best efforts, Chavez has not yet achieved unassailable political control. Anything like free and fair elections should see the opposition parties win 40% of assembly seats.
But Chavez has already ended constitutional limits on his terms in office -- he says he needs another 10 years to entrench the socialist revolution. And the Cubans are helping him organize the 300,000-strong militia under his personal command, a useful counterweight to the 82,000-man army.
Chavez' latest display is, unfortunately, not an empty display of the strutting braggadocio that has signposted his road to dictatorship since he came to power in 1999. His government has taken over nine private banks since the beginning of June.
The latest bank to fall victim to what Chavez insists is a socialist revolution was Banco Federal, the country's eighth largest, which was taken over on Monday. Banco Federal has the misfortune to be run by Nelson Mezerhane, who is also a minority shareholder in Globovision, Venezuela's only remaining television station critical of Chavez.
Last week, Venezuelan authorities rushed to issue arrest warrants for Globovision's owner, Guillermo Zuloaga and his son after Chavez, in one of his weekly four-hour television rants, said he couldn't understand why the two are still free.
In May, charges were filed against Zuloaga for illegally keeping 24 vehicles at his home -- it's alleged he was hoarding the vehicles in anticipation of a market shortage. And in March, Zuloaga was arrested and then released on charges of spreading false news and making remarks that offended Chavez.
Police have yet to find Zuloaga or his son.
Chavez has engaged in a mounting war against private enterprise in Venezuela -- which he calls, with a charmingly archaic touch, "the bourgeoisie" -- since he was briefly ousted in a 2002 coup orchestrated by business leaders and approved by the United States. Since then Chavez has progressively cut ties with Washington, though OPEC-member Venezuela's oil sales to the US remain the only serious part of a collapsing economy.
Chavez has espoused what he calls Bolivarianism, a straightforward brand of authoritarian Marxist socialism named for the 19th-century liberator of northwest South America from Spanish colonial rule, Simon Bolivar.
Chavez' voyage to Stalinism has inevitably taken him into the orbit of the Castro brothers, Fidel and Raul, in Cuba.
Chavez and the Castros have established a mutual support relationship: he keeps Cuba's asphyxiated economy breathing with subsidized oil, and the Castros initiate him in the finer points of running a long-term despotism by sending advisers to ensure the loyalty of Venezuela's military and to teach it about control of the population.
So far Chavez' insistence that it is "the bourgeoisie" that is to blame for all Venezuela's problems still seems to resonate with the voters. He remains popular despite inflation running at over 30%, the economy having shrunk by nearly six per cent in the first quarter of this year, and severe shortages of staples, especially food. Chavez' response has been a frenzy of "forced acquisitions." Recent targets for nationalization include companies that make food containers and several food distribution companies, which Chavez accuses of hoarding food supplies to take advantage of rising prices. This initiative lost some of its potency when it was discovered that 20,000 tonnes of imported food owned by the state-run food agency was rotting in containers at a port.
In the past few years, Chavez has also nationalized a raft of businesses involved in everything from telecommunications to cement manufacturing. But Chavez pushed the limits of acceptability earlier this month when he went after billionaire businessman Lorenzo Mendoza, whom he accuses of trying to destabilize his government.
Chavez threatened to nationalize Mendoza's Empresas Polar, Venezuela's largest food and drinks company and the country's biggest private employer. But Empresas produces the country's most popular beer, Polar. Many Venezuelans are unsure they want their favourite beer nationalized, given the government's management record.
Chavez' intensified outburst of asserting his political and economic control has a clear purpose.
National Assembly elections are scheduled for September and, despite his best efforts, Chavez has not yet achieved unassailable political control. Anything like free and fair elections should see the opposition parties win 40% of assembly seats.
But Chavez has already ended constitutional limits on his terms in office -- he says he needs another 10 years to entrench the socialist revolution. And the Cubans are helping him organize the 300,000-strong militia under his personal command, a useful counterweight to the 82,000-man army.
Tuesday, June 15, 2010
Wielding the truncheon and up to its neck in mire
By VenEconomy:
Last week closed with incidents that have further anaesthetized the rule of law and the system of justice in Venezuela.
First came the unprecedented warrant for the arrest of Globovision's president, Guillermo Zuloaga, and his son issued by Control Court 13 in another attack on the freedom of speech and an attempt to silence the voices of dissidence. This warrant for the arrest of the Zuluoagas marks another precedent in Venezuela and reveals even more clearly how the Executive interferes with the Judiciary and the administration of justice. It just so happens that, only a few days earlier, the President of the Republic had said that he was "alarmed" that Zuloaga was still free.
Then there was the case of the Carabobo journalist, Francisco "Pancho" Perez, who was given a prison sentence of three years six months, fined, and barred from holding political office and from exercising his profession for an "offense against a government official and slandering a person holding public office." Perez, who accused Valencia's Chavista Mayor of alleged nepotism and corruption, is today a prisoner for having exercised his right to express his opinion.
The government continues to strike blows with its dictatorial truncheon in an attempt to sow fear and silence so that it can consolidate its dictatorship. But, no matter how much it tries to silence the barbarism of this revolution, it can no longer hide the fact that the regime is up to its neck in the mire of widespread corruption.
A quick look at the press gives an idea of the putrefaction that is eating away at the "revolution."
For example, while the President tries to do a paint job on the collapsed PDVSA with his proposal of including the word "socialist" in its name, details of the murky dealings that led to the sinking of the Aban Peral platform on May 13 are still coming to light. According to an accusation filed before the Public Prosecutor's Office by Gustavo Coronel Garcia, PDVSA allegedly incurred in excessive and unjustifiable overcharging in the hiring of the platform to the tune of some $500 million for the five years of the contract.
This Monday, El Nacional reported that Bariven, the PDVSA affiliate in charge of purchasing food abroad for PDVAL, is facing a lawsuit in Florida, USA, on charges of bribery involving $2 million, at a time when the authorities have still not clarified why PDVAL allowed more than 70,000 tons of basic food products to rot when these same products are conspicuous by their absence from the tables of the Venezuelan population.
Also this Monday, there were reports in the press of Chavismo's corrupt management at CVG, with their accounts in Gazprombank, and at the Ministry of Education, with the case of the Sucre Mission's university centers that have still not been built even though the funds were allocated more than five years ago.
Corruption happens as a result of action, inaction, and omission.
Last week closed with incidents that have further anaesthetized the rule of law and the system of justice in Venezuela.
First came the unprecedented warrant for the arrest of Globovision's president, Guillermo Zuloaga, and his son issued by Control Court 13 in another attack on the freedom of speech and an attempt to silence the voices of dissidence. This warrant for the arrest of the Zuluoagas marks another precedent in Venezuela and reveals even more clearly how the Executive interferes with the Judiciary and the administration of justice. It just so happens that, only a few days earlier, the President of the Republic had said that he was "alarmed" that Zuloaga was still free.
Then there was the case of the Carabobo journalist, Francisco "Pancho" Perez, who was given a prison sentence of three years six months, fined, and barred from holding political office and from exercising his profession for an "offense against a government official and slandering a person holding public office." Perez, who accused Valencia's Chavista Mayor of alleged nepotism and corruption, is today a prisoner for having exercised his right to express his opinion.
The government continues to strike blows with its dictatorial truncheon in an attempt to sow fear and silence so that it can consolidate its dictatorship. But, no matter how much it tries to silence the barbarism of this revolution, it can no longer hide the fact that the regime is up to its neck in the mire of widespread corruption.
A quick look at the press gives an idea of the putrefaction that is eating away at the "revolution."
For example, while the President tries to do a paint job on the collapsed PDVSA with his proposal of including the word "socialist" in its name, details of the murky dealings that led to the sinking of the Aban Peral platform on May 13 are still coming to light. According to an accusation filed before the Public Prosecutor's Office by Gustavo Coronel Garcia, PDVSA allegedly incurred in excessive and unjustifiable overcharging in the hiring of the platform to the tune of some $500 million for the five years of the contract.
This Monday, El Nacional reported that Bariven, the PDVSA affiliate in charge of purchasing food abroad for PDVAL, is facing a lawsuit in Florida, USA, on charges of bribery involving $2 million, at a time when the authorities have still not clarified why PDVAL allowed more than 70,000 tons of basic food products to rot when these same products are conspicuous by their absence from the tables of the Venezuelan population.
Also this Monday, there were reports in the press of Chavismo's corrupt management at CVG, with their accounts in Gazprombank, and at the Ministry of Education, with the case of the Sucre Mission's university centers that have still not been built even though the funds were allocated more than five years ago.
Corruption happens as a result of action, inaction, and omission.
Venezuela shutters bank close to anti-Chavez station
By Frank Jack Daniel
CARACAS, June 14 (Reuters) - Venezuela on Monday took over the mid-sized Banco Federal citing liquidity problems and risk of fraud several months after President Hugo Chavez threatened the bank for links to an anti-government TV station.
Savers flocked to Banco Federal branches in Caracas on Monday to try and withdraw their savings before a freeze on accounts began mid-afternoon.
"We have taken preventative measures to try and avoid operations that could be presumed to be fraudulent," Banking Superintendent Edgar Hernandez said.
The takeover, which could be temporary, follows a spate of nationalizations of small troubled banks at the end of last year [ID:nN07171374]. Banco Federal's president, who is also a director of anti-Chavez TV station Globovision, denied wrongdoing.
Bank president Nelson Mezerhane said the government was taking revenge and had gutted the bank in recent months. The socialist Chavez has often taunted Mezerhane for his role at Globovision.
"This is an abuse," Mezerhane said in a telephone call from overseas to Globovision, adding that Chavez's threats caused a 45 percent drawdown in deposits in a week and a half last year, while major public sector clients also withdrew deposits. "Does the rule of law exist?"
Authorities have an initial 60 days to see if Banco Federal will reopen or be liquidated, the officials said, with another 60 day extension if needed.
The socialist Chavez says he is at war with 'parasitic bourgeoisie,' in the OPEC-member nation as he warms up for legislative elections in September. On Sunday he warned bankers that if he chose to withdraw government deposits many of their businesses would collapse. He said he had no plans to do that.
During 11 in years in power, Chavez has increased the state's hand in the economy through nationalizations, regulation and taxes. See FACTBOX [ID:nN14220522].
His government last year bought a large bank from Spain's Santander and took over 11 others that had been run into the ground by businessmen with links to public officials. Those banks were merged into a state-run bank called Bicentenario.
Banco Federal customers have limited access to their deposits on Monday, after which all operations will be frozen.
"They have had a permanent team inspecting us since October 2009, they haven't let us even lift a pencil," Mezerhane said.
The move against Banco Federal comes just days after the attorney general issued an arrest warrant for another Globovision director, Guillermo Zuloaga. The bank was often named as a possible target for a cleanup in December when the government took-over 11 troubled banks.
Zuloaga has not presented himself for arrest since the warrant was issued on Friday in relation to charges he had hoarded new cars to manipulate the price.
His lawyer Perla Jaimes told Reuters on Monday he was still "evaluating" whether to turn himself in.
"The closure of Banco Federal is related to Globovision," she said. "The crime is a crime of opinion."
Of the bank's 284,000 customers, 96 percent are covered by a 30,000 bolivar ($6,970) savings per person guarantee, Hernandez said, adding that the government had the funds set aside to meet obligations to savers.
The head of the government savings guarantees body said it had still paid only some of the customers affected by the takeovers in December,
Mezerhane said the government could not be trusted to run his bank.
"They are going to destroy it, they are going to rob everything they can."
CARACAS, June 14 (Reuters) - Venezuela on Monday took over the mid-sized Banco Federal citing liquidity problems and risk of fraud several months after President Hugo Chavez threatened the bank for links to an anti-government TV station.
Savers flocked to Banco Federal branches in Caracas on Monday to try and withdraw their savings before a freeze on accounts began mid-afternoon.
"We have taken preventative measures to try and avoid operations that could be presumed to be fraudulent," Banking Superintendent Edgar Hernandez said.
The takeover, which could be temporary, follows a spate of nationalizations of small troubled banks at the end of last year [ID:nN07171374]. Banco Federal's president, who is also a director of anti-Chavez TV station Globovision, denied wrongdoing.
Bank president Nelson Mezerhane said the government was taking revenge and had gutted the bank in recent months. The socialist Chavez has often taunted Mezerhane for his role at Globovision.
"This is an abuse," Mezerhane said in a telephone call from overseas to Globovision, adding that Chavez's threats caused a 45 percent drawdown in deposits in a week and a half last year, while major public sector clients also withdrew deposits. "Does the rule of law exist?"
Authorities have an initial 60 days to see if Banco Federal will reopen or be liquidated, the officials said, with another 60 day extension if needed.
The socialist Chavez says he is at war with 'parasitic bourgeoisie,' in the OPEC-member nation as he warms up for legislative elections in September. On Sunday he warned bankers that if he chose to withdraw government deposits many of their businesses would collapse. He said he had no plans to do that.
During 11 in years in power, Chavez has increased the state's hand in the economy through nationalizations, regulation and taxes. See FACTBOX [ID:nN14220522].
His government last year bought a large bank from Spain's Santander and took over 11 others that had been run into the ground by businessmen with links to public officials. Those banks were merged into a state-run bank called Bicentenario.
Banco Federal customers have limited access to their deposits on Monday, after which all operations will be frozen.
"They have had a permanent team inspecting us since October 2009, they haven't let us even lift a pencil," Mezerhane said.
The move against Banco Federal comes just days after the attorney general issued an arrest warrant for another Globovision director, Guillermo Zuloaga. The bank was often named as a possible target for a cleanup in December when the government took-over 11 troubled banks.
Zuloaga has not presented himself for arrest since the warrant was issued on Friday in relation to charges he had hoarded new cars to manipulate the price.
His lawyer Perla Jaimes told Reuters on Monday he was still "evaluating" whether to turn himself in.
"The closure of Banco Federal is related to Globovision," she said. "The crime is a crime of opinion."
Of the bank's 284,000 customers, 96 percent are covered by a 30,000 bolivar ($6,970) savings per person guarantee, Hernandez said, adding that the government had the funds set aside to meet obligations to savers.
The head of the government savings guarantees body said it had still paid only some of the customers affected by the takeovers in December,
Mezerhane said the government could not be trusted to run his bank.
"They are going to destroy it, they are going to rob everything they can."
Foreign exchange shortage is an indicator of economic imbalance
By El Universal:
Published: Monday, June 14, 2010
In the past five years, a parallel foreign exchange market coexisted with the official exchange rate controlled by the Foreign Exchange Administration Commission (CADIVI). In this unofficial swap market, companies and individuals bought US dollars without any restrictions because the government injected foreign currency into the unofficial market through the issuance of bonds. However, this system came to an end and has exposed Venezuela's economic imbalances.
Hugo Chavez' administration supplied foreign exchange to the swap market after placing $31.24 billion in bonds that companies and individuals bought in Venezuelan bolivars. However, in the process, Venezuela's debt increased from 28.14 billion to $61.62 billion. Therefore, the government was forced to "close the tap."
The Central Bank of Venezuela has taken control of the foreign exchange swap market by restricting the amount of foreign currency that companies and individuals can purchase. Further, authorities are forcing private and public financial institutions to sell bonds that only represent $2.7 billion, while in 2009 the Executive Branch of government and state-run oil company Petroleos de Venezuela provided $9.67 billion.
The Venezuelan economy faces a sharp rise in US dollar demand and restrictions on supply. Companies and individuals seek to protect themselves through the purchase of foreign exchange amid a political climate characterized by uncertainty and a high inflation rates that dilutes the purchasing power of the bolivar and is not offset by the interest rate that banks pay to investors.
At the same time, analysts and reports issued by investment banks such as Morgan Stanley and Goldman Sachs consider that the declining domestic industry encourages imports, while the exchange flow stalls due to the volatility of oil prices, production problems in PDVSA and the fall of non-traditional exports.
Overvaluation
Between 2005 and January 2010, the government's economic cabinet set a fixed exchange rate for the US dollar, even though Venezuela recorded an inflation rate considerably higher than its trading partners. As a result, the Venezuelan currency in highly overvalued, that is, the imported products are much cheaper than domestic products. The government, affected by such imbalance, devalued the Venezuelan currency on January 8, 2010, but the crisis persists.
In a report dated June 11, Barclays Capital said that the new system to sell currencies set by the Central Bank has a very fragile viability because the government of President Hugo Chavez has tried to maintain an exchange rate "significantly overvalued" amid an environment with a large demand of US dollars "due to the instability created by expropriations."
According to the calculation model of the international investment bank Barclays Capital, the Venezuelan bolivar is overvalued by 41.2% and the official exchange rate should be Bs.F 6.1 per US$ to reach a balance.
Published: Monday, June 14, 2010
In the past five years, a parallel foreign exchange market coexisted with the official exchange rate controlled by the Foreign Exchange Administration Commission (CADIVI). In this unofficial swap market, companies and individuals bought US dollars without any restrictions because the government injected foreign currency into the unofficial market through the issuance of bonds. However, this system came to an end and has exposed Venezuela's economic imbalances.
Hugo Chavez' administration supplied foreign exchange to the swap market after placing $31.24 billion in bonds that companies and individuals bought in Venezuelan bolivars. However, in the process, Venezuela's debt increased from 28.14 billion to $61.62 billion. Therefore, the government was forced to "close the tap."
The Central Bank of Venezuela has taken control of the foreign exchange swap market by restricting the amount of foreign currency that companies and individuals can purchase. Further, authorities are forcing private and public financial institutions to sell bonds that only represent $2.7 billion, while in 2009 the Executive Branch of government and state-run oil company Petroleos de Venezuela provided $9.67 billion.
The Venezuelan economy faces a sharp rise in US dollar demand and restrictions on supply. Companies and individuals seek to protect themselves through the purchase of foreign exchange amid a political climate characterized by uncertainty and a high inflation rates that dilutes the purchasing power of the bolivar and is not offset by the interest rate that banks pay to investors.
At the same time, analysts and reports issued by investment banks such as Morgan Stanley and Goldman Sachs consider that the declining domestic industry encourages imports, while the exchange flow stalls due to the volatility of oil prices, production problems in PDVSA and the fall of non-traditional exports.
Overvaluation
Between 2005 and January 2010, the government's economic cabinet set a fixed exchange rate for the US dollar, even though Venezuela recorded an inflation rate considerably higher than its trading partners. As a result, the Venezuelan currency in highly overvalued, that is, the imported products are much cheaper than domestic products. The government, affected by such imbalance, devalued the Venezuelan currency on January 8, 2010, but the crisis persists.
In a report dated June 11, Barclays Capital said that the new system to sell currencies set by the Central Bank has a very fragile viability because the government of President Hugo Chavez has tried to maintain an exchange rate "significantly overvalued" amid an environment with a large demand of US dollars "due to the instability created by expropriations."
According to the calculation model of the international investment bank Barclays Capital, the Venezuelan bolivar is overvalued by 41.2% and the official exchange rate should be Bs.F 6.1 per US$ to reach a balance.
Friday, June 11, 2010
For now ... as long as the Dollars last!
By VenEconomy:
On Wednesday, June 9, saw the start-up of the new Foreign-Currency Securities Transactions System (SITME), through which the Central Bank, complementing CADIVI, is to handle the buying and selling of currency as established in Foreign Exchange Agreement No.18.
After nearly a month with operations on the swap market suspended, trading was slow, slight, and full of improvisations amidst great expectations and rumors given the lack of information and sketchy game rules.
According to Central Bank president Nelson Merentes, the system worked "to perfection" (at 98%) with a supply of $17 million (expected demand was around $80 million). The average exchange rate was Bs.F 5.27 / US$.
The urgency of implementing this new system stems from the government's insistence on establishing a country model based on Castro-communism, which involves dismantling the private productive apparatus and the State taking over everything. And that "everything" includes having sole control over the trading of currency.
From 2003, when a "temporary" exchange control regime was implemented, until today's fierce foreign exchange control system, endless distortions have been generated that will now be extremely difficult to correct. On top of that, the government has been incapable of managing the state-owned companies efficiently and transparently, in particular PDVSA. Today, the country's main source of revenues has dried up and there is little likelihood that it can be revived in the short and medium terms. So, the shortage of foreign currency started to cause havoc in the country's economy.
Now, the government has unfortunately chosen to take the hardest path to try to postpone the inevitable outcome of the tremendous foreign exchange mess it finds itself in.
Instead of opting for Nelson Merentes's proposal, which while it would not cure the patient could bring down its temperature, and continuing with the exchange bonds, issuing PDVSA bonds in the short term, auctioning off the structured notes and handing them over directly to the financial system, and demanding that CADIVI speed up the release of foreign currency, it strangled the stockbrokerage and broker-dealer firms and forbid any swap market operations not supervised by the Central Bank.
The fact of the matter is that the country has run out of foreign currency, the reserves are plummeting, and PDVSA and the private productive apparatus do not have the capacity to generate reserves in sufficient quantities.
Besides, there is no way that the State can borrow permanently to meet the demand for foreign currency in an economy that is dependant on imports. What is even more serious is that it seems highly unlikely that the government will correct its attitude. So the scenario in store is higher inflation and more widespread shortages.
Tomorrow, when the new foreign exchange system collapses, the government, who takes responsibility for nothing, will cast around for new scapegoats.
On Wednesday, June 9, saw the start-up of the new Foreign-Currency Securities Transactions System (SITME), through which the Central Bank, complementing CADIVI, is to handle the buying and selling of currency as established in Foreign Exchange Agreement No.18.
After nearly a month with operations on the swap market suspended, trading was slow, slight, and full of improvisations amidst great expectations and rumors given the lack of information and sketchy game rules.
According to Central Bank president Nelson Merentes, the system worked "to perfection" (at 98%) with a supply of $17 million (expected demand was around $80 million). The average exchange rate was Bs.F 5.27 / US$.
The urgency of implementing this new system stems from the government's insistence on establishing a country model based on Castro-communism, which involves dismantling the private productive apparatus and the State taking over everything. And that "everything" includes having sole control over the trading of currency.
From 2003, when a "temporary" exchange control regime was implemented, until today's fierce foreign exchange control system, endless distortions have been generated that will now be extremely difficult to correct. On top of that, the government has been incapable of managing the state-owned companies efficiently and transparently, in particular PDVSA. Today, the country's main source of revenues has dried up and there is little likelihood that it can be revived in the short and medium terms. So, the shortage of foreign currency started to cause havoc in the country's economy.
Now, the government has unfortunately chosen to take the hardest path to try to postpone the inevitable outcome of the tremendous foreign exchange mess it finds itself in.
Instead of opting for Nelson Merentes's proposal, which while it would not cure the patient could bring down its temperature, and continuing with the exchange bonds, issuing PDVSA bonds in the short term, auctioning off the structured notes and handing them over directly to the financial system, and demanding that CADIVI speed up the release of foreign currency, it strangled the stockbrokerage and broker-dealer firms and forbid any swap market operations not supervised by the Central Bank.
The fact of the matter is that the country has run out of foreign currency, the reserves are plummeting, and PDVSA and the private productive apparatus do not have the capacity to generate reserves in sufficient quantities.
Besides, there is no way that the State can borrow permanently to meet the demand for foreign currency in an economy that is dependant on imports. What is even more serious is that it seems highly unlikely that the government will correct its attitude. So the scenario in store is higher inflation and more widespread shortages.
Tomorrow, when the new foreign exchange system collapses, the government, who takes responsibility for nothing, will cast around for new scapegoats.
Thursday, June 10, 2010
Government celebrates inflation instead of acting against it
By VenEconomy
What a terrible thing brazenness is! And it's even more terrible when it is those in government who act shamelessly, as happens in Venezuela. The Hugo Chavez administration is so shameless that, this Thursday, it celebrated the fact that, in May, inflation was 2.6%, exactly half the inflation for April, claiming this as an "achievement" of the revolution. But as it is facts not words that tell the true state of affairs, it turns out that the government has nothing to crow about.
The fact that inflation dropped to 2.6% in May from 5.2% in April is hardly representative if account is taken of a number of circumstances in Venezuela and in the American Continent. One of those circumstances is that May's inflation is the highest rate of growth in prices in the past 12 months, with the exception of April, when inflation reached its highest level since February 2003 (5.2%).
Another fact is that annualized inflation continues its upward trend, going from 30.4% in April to 31.2% in May, according to the Nationwide Consumer Price Index (NCPI). The government's celebration is even more brazen if inflation in Venezuela is compared to that being experienced by neighboring countries.
Colombia, for example, has a rate of inflation for the year to date of 2.35% versus Venezuela's 14.2%; and in May, Colombia's inflation was merely 0.1% vs. 2.6% in Venezuela. But if we compare Venezuela's inflation with inflation in countries that are allies of the regime, Venezuela does very badly. In Ecuador, inflation so far this year comes to 1.88% and in May it was 0.02%, while in Bolivia cumulative inflation is a mere 0.29% and in May it was -0.02%, in other words prices came down.
Given this situation, what the Chavista government should be showing is a firm commitment to correcting its misguided anti-private-enterprise and anti-private-investment policies. It has been these policies, and nothing else, that have led to the increase in prices that is eroding Venezuelans' wages and salaries.
Instead of boasting about achievements that are no such thing, the government should be planning how to deal with the country's economic crisis at a time when the effects of suspending operations on the swap market for nearly a month are beginning to be felt, as this has put a brake on the imports that are needed to meet domestic demand, and when the 18 plus distribution companies that the government has seized from private businessmen are demonstrating the same level of failure as PDVAL, CEALCO, and Mercal, with the loss of more than 83,000 tonnes of basic food products as a result of managerial incompetence, indolence, and corruption.
After 11 years in office, Hugo Chavez will not be able to lay the blame for his failures anywhere else but at the door of his bad government.
What a terrible thing brazenness is! And it's even more terrible when it is those in government who act shamelessly, as happens in Venezuela. The Hugo Chavez administration is so shameless that, this Thursday, it celebrated the fact that, in May, inflation was 2.6%, exactly half the inflation for April, claiming this as an "achievement" of the revolution. But as it is facts not words that tell the true state of affairs, it turns out that the government has nothing to crow about.
The fact that inflation dropped to 2.6% in May from 5.2% in April is hardly representative if account is taken of a number of circumstances in Venezuela and in the American Continent. One of those circumstances is that May's inflation is the highest rate of growth in prices in the past 12 months, with the exception of April, when inflation reached its highest level since February 2003 (5.2%).
Another fact is that annualized inflation continues its upward trend, going from 30.4% in April to 31.2% in May, according to the Nationwide Consumer Price Index (NCPI). The government's celebration is even more brazen if inflation in Venezuela is compared to that being experienced by neighboring countries.
Colombia, for example, has a rate of inflation for the year to date of 2.35% versus Venezuela's 14.2%; and in May, Colombia's inflation was merely 0.1% vs. 2.6% in Venezuela. But if we compare Venezuela's inflation with inflation in countries that are allies of the regime, Venezuela does very badly. In Ecuador, inflation so far this year comes to 1.88% and in May it was 0.02%, while in Bolivia cumulative inflation is a mere 0.29% and in May it was -0.02%, in other words prices came down.
Given this situation, what the Chavista government should be showing is a firm commitment to correcting its misguided anti-private-enterprise and anti-private-investment policies. It has been these policies, and nothing else, that have led to the increase in prices that is eroding Venezuelans' wages and salaries.
Instead of boasting about achievements that are no such thing, the government should be planning how to deal with the country's economic crisis at a time when the effects of suspending operations on the swap market for nearly a month are beginning to be felt, as this has put a brake on the imports that are needed to meet domestic demand, and when the 18 plus distribution companies that the government has seized from private businessmen are demonstrating the same level of failure as PDVAL, CEALCO, and Mercal, with the loss of more than 83,000 tonnes of basic food products as a result of managerial incompetence, indolence, and corruption.
After 11 years in office, Hugo Chavez will not be able to lay the blame for his failures anywhere else but at the door of his bad government.
In Our Opinion...
The more we hear about the new Venezuelan Central Bank foreign exchange system, the more we are convinced that it is deemed for failure. While government officials were celebrating their apparent success in dropping the exchange rate to 5.20 VEBs per US dollar, the offshore market Dollars were being exchanged at 7.80 to 8.20 VEbsf per Dollar.
In our opinion, Venezuelans are and will remain scared of the Chavez administration Gestapo policies of prosecuting people without due cause. According to the capital market regulators president Tomas Sanchez, "The central bank will share information about individuals and companies bidding to buy dollars with the Finance Ministry and Foreign Exchange Board to prevent abuses..."
An if one is lucky enough to avoid prosecution it's because in Venezuela the only law that operates is the law of corruption, which at the end will determine a much higher price for the acquired dollars.
In our opinion, Venezuelans are and will remain scared of the Chavez administration Gestapo policies of prosecuting people without due cause. According to the capital market regulators president Tomas Sanchez, "The central bank will share information about individuals and companies bidding to buy dollars with the Finance Ministry and Foreign Exchange Board to prevent abuses..."
An if one is lucky enough to avoid prosecution it's because in Venezuela the only law that operates is the law of corruption, which at the end will determine a much higher price for the acquired dollars.
Venezuela Won’t ‘Burn Reserves’ to Supply Market, Sanchez Says
By Corina Rodriguez Pons and Daniel Cancel
June 10 (Bloomberg) -- Venezuela won’t “burn reserves” to supply a new currency market that aims to stem a surge in inflation, securities regulator Tomas Sanchez said.
“The state won’t burn reserves at the beginning with this market like they did earlier this year,” Sanchez said yesterday in an interview in his office in Caracas. “The central bank will be an arbitrator and will establish conditions. When we see someone bidding once, twice, five times, we’ll detect that person because the system has filters.”
The central bank’s foreign reserves plunged 23 percent this year as it sought to shore up the parallel market. President Hugo Chavez dismantled the unregulated currency market on May 18 after the bolivar slid to a record low 8.2 per dollar and consumer prices surged the most in seven years in April. He blamed currency speculators for the pickup in inflation and said brokerages were fueling capital flight, laundering money and setting artificial exchange rates.
The central bank will share information about individuals and companies bidding to buy dollars with the Finance Ministry and Foreign Exchange Board to prevent abuses and verify the origin of funds, Sanchez said. Venezuela will prevent capital flight by setting restrictions for investors seeking to buy dollars while the number of brokerages, banned from operating in the new market, will be reduced to less than 20, he said.
June 10 (Bloomberg) -- Venezuela won’t “burn reserves” to supply a new currency market that aims to stem a surge in inflation, securities regulator Tomas Sanchez said.
“The state won’t burn reserves at the beginning with this market like they did earlier this year,” Sanchez said yesterday in an interview in his office in Caracas. “The central bank will be an arbitrator and will establish conditions. When we see someone bidding once, twice, five times, we’ll detect that person because the system has filters.”
The central bank’s foreign reserves plunged 23 percent this year as it sought to shore up the parallel market. President Hugo Chavez dismantled the unregulated currency market on May 18 after the bolivar slid to a record low 8.2 per dollar and consumer prices surged the most in seven years in April. He blamed currency speculators for the pickup in inflation and said brokerages were fueling capital flight, laundering money and setting artificial exchange rates.
The central bank will share information about individuals and companies bidding to buy dollars with the Finance Ministry and Foreign Exchange Board to prevent abuses and verify the origin of funds, Sanchez said. Venezuela will prevent capital flight by setting restrictions for investors seeking to buy dollars while the number of brokerages, banned from operating in the new market, will be reduced to less than 20, he said.
Wednesday, June 9, 2010
In Our Opinion...
The Central Bank re-launched the bond market widely used for foreign currency trading in Venezuela under new restrictions that include not only a band of permitted prices which will be updated everyday but more importantly a maximum amount of Dollars a Corporation or a person can purchase on a monthly basis. The band was set today between 4.20 and 5.4 Bsf. per US dollar and the monthly maximums at $416.66 per person and $300,000 per corporation.
In our opinion, the shortage of dollars produced with “this new system” will contribute to a further deterioration of the Venezuelan economy which is already running on very low inventories. We expect important shortages of goods and services, and the highest inflation on the planet.
The Financial authorities tried to convince everyone to the success of the new system but time will prove them wrong. As Samuel Johnson once put it “ Men who cannot deceive others are very often successful at deceiving themselves”
In our opinion, the shortage of dollars produced with “this new system” will contribute to a further deterioration of the Venezuelan economy which is already running on very low inventories. We expect important shortages of goods and services, and the highest inflation on the planet.
The Financial authorities tried to convince everyone to the success of the new system but time will prove them wrong. As Samuel Johnson once put it “ Men who cannot deceive others are very often successful at deceiving themselves”
The "Revolution's" investments in Venezuela
By VenEconomy
In these times of revolutionary dictatorship, the powers that be have been brazenly inverting constitutional rules, in particular with a view to restricting people's freedoms and citizen rights or to expanding the arbitrariness and licentiousness of those in government.
One area where these inversions have been happening most persistently is in the right to information, despite the fact that this right is guaranteed under the Constitution and cannot be suppressed, not even if a state of emergency is declared.
The gradual erasure of this right is being achieved via a contradictory system of laws that imposes endless legal obligations on the citizen that erode his privacy far beyond any constitutional duty, while the government is being protected behind a wall of silence and secrets concerning key national issues where transparency and information should prevail.
Today it is practically impossible to know whether an official figure is accurate or has been touched up. All, or practically all, information is filtered, manipulated, delayed, or hidden from the general public; from the real figure of victims who die at the hands of criminals every weekend to the real number of barrels produced or exported by PDVSA. The deterioration in information sources even affects the erstwhile reliable figures issued by the Central Bank of Venezuela and the National Statistics Institute.
In present day Venezuela, it is even a crime to report the exchange rate on the unofficial market.
Now, on top of all those laws, decrees, and regulations that restrict access to information regarding the public sector, they have created the Situational Analysis Center (CESNA) (Presidential Decree 7,454, published in Gaceta Oficial dated June 1, 2010).
Henceforth the CESNA will permanently compile, process, and analyze all the information coming from State institutions and society "on any aspect of national interest." Even more worrying is the fact that this center will be able to declare "reserved, classified or for restricted circulation" any information, fact or circumstance it processes or of which it has knowledge.
There are several aspects of this creation of a center for collecting and filtering official information that put the proper functioning of the State and citizen rights in jeopardy. One is that sifting information that should be freely available to the general public -- so that it can perform its responsibilities as a social watchdog so loudly proclaimed by the government -- will result in greater inefficiency by the State and more corruption and impunity.
Moreover, it further inhibits the free exercising of journalism and the public's right to truthful, timely information.
It just so happens that the creation of this center of censorship was announced right after the breaking of a scandal over containers with food products that had been left to rot, when the true state of public health is starting to come to light, and, above all, because the government is finding it impossible to cover up the financial crisis that is ruining the public coffers.
In these times of revolutionary dictatorship, the powers that be have been brazenly inverting constitutional rules, in particular with a view to restricting people's freedoms and citizen rights or to expanding the arbitrariness and licentiousness of those in government.
One area where these inversions have been happening most persistently is in the right to information, despite the fact that this right is guaranteed under the Constitution and cannot be suppressed, not even if a state of emergency is declared.
The gradual erasure of this right is being achieved via a contradictory system of laws that imposes endless legal obligations on the citizen that erode his privacy far beyond any constitutional duty, while the government is being protected behind a wall of silence and secrets concerning key national issues where transparency and information should prevail.
Today it is practically impossible to know whether an official figure is accurate or has been touched up. All, or practically all, information is filtered, manipulated, delayed, or hidden from the general public; from the real figure of victims who die at the hands of criminals every weekend to the real number of barrels produced or exported by PDVSA. The deterioration in information sources even affects the erstwhile reliable figures issued by the Central Bank of Venezuela and the National Statistics Institute.
In present day Venezuela, it is even a crime to report the exchange rate on the unofficial market.
Now, on top of all those laws, decrees, and regulations that restrict access to information regarding the public sector, they have created the Situational Analysis Center (CESNA) (Presidential Decree 7,454, published in Gaceta Oficial dated June 1, 2010).
Henceforth the CESNA will permanently compile, process, and analyze all the information coming from State institutions and society "on any aspect of national interest." Even more worrying is the fact that this center will be able to declare "reserved, classified or for restricted circulation" any information, fact or circumstance it processes or of which it has knowledge.
There are several aspects of this creation of a center for collecting and filtering official information that put the proper functioning of the State and citizen rights in jeopardy. One is that sifting information that should be freely available to the general public -- so that it can perform its responsibilities as a social watchdog so loudly proclaimed by the government -- will result in greater inefficiency by the State and more corruption and impunity.
Moreover, it further inhibits the free exercising of journalism and the public's right to truthful, timely information.
It just so happens that the creation of this center of censorship was announced right after the breaking of a scandal over containers with food products that had been left to rot, when the true state of public health is starting to come to light, and, above all, because the government is finding it impossible to cover up the financial crisis that is ruining the public coffers.
Tuesday, June 8, 2010
Venezuela GDP May Shrink 6.2%, Morgan Stanley Says
By Daniel Cancel
June 7 (Bloomberg) -- Morgan Stanley slashed its forecasts for Venezuela’s economy, saying it may contract this year and next as higher oil prices fail to stimulate business and a tightening of controls restricts access to foreign currency.
Morgan Stanley now forecasts gross domestic product will shrink 6.2 percent this year and 1.2 percent in 2011, compared with an earlier prediction for 0.3 percent growth this year and 3.5 percent expansion next year.
“While most of Latin America, in line with the globe, has been in recovery mode since last year, Venezuela has seen an intensifying downturn in activity,” Daniel Volberg and Giuliana Pardelli said in a report today. “Our new baseline of at least three years of economic contraction suggests the risks to Venezuela’s ability to honor its international financial commitments may be on the rise.”
Venezuela’s economy contracted 3.3 percent last year as investment dried up following nationalizations and oil revenue plunged on waning output and production cuts in line with OPEC quotas. Morgan Stanley, based in New York, expects investment to plunge 28.1 percent this year while private consumption drops 5.8 percent.
President Hugo Chavez on May 18 closed the unregulated currency market that companies used to buy dollars and ordered the central bank to oversee the trading of dollar-denominated securities that will be used to obtain currency at a government- set exchange rate.
Bolivar Devaluation
Chavez devalued the bolivar as much as 50 percent on Jan. 8 to close a budget deficit and to slow capital flight, creating a multi-tiered exchange system.
The government’s Foreign Exchange Board pared dollar sales at the official rates of 2.6 and 4.3 per dollar last year and during the first three months of 2010, causing imports to plummet 38 percent in the first quarter.
While Venezuela may be successful in slowing capital flight through the new currency market, imports will likely continue to fall, Volberg and Pardelli said.
“Given that imports have been essential in offsetting the multi-year deterioration in domestic supply in Venezuela, the restrictions may prove a significant negative supply shock for the Venezuelan economy,” the analysts said.
June 7 (Bloomberg) -- Morgan Stanley slashed its forecasts for Venezuela’s economy, saying it may contract this year and next as higher oil prices fail to stimulate business and a tightening of controls restricts access to foreign currency.
Morgan Stanley now forecasts gross domestic product will shrink 6.2 percent this year and 1.2 percent in 2011, compared with an earlier prediction for 0.3 percent growth this year and 3.5 percent expansion next year.
“While most of Latin America, in line with the globe, has been in recovery mode since last year, Venezuela has seen an intensifying downturn in activity,” Daniel Volberg and Giuliana Pardelli said in a report today. “Our new baseline of at least three years of economic contraction suggests the risks to Venezuela’s ability to honor its international financial commitments may be on the rise.”
Venezuela’s economy contracted 3.3 percent last year as investment dried up following nationalizations and oil revenue plunged on waning output and production cuts in line with OPEC quotas. Morgan Stanley, based in New York, expects investment to plunge 28.1 percent this year while private consumption drops 5.8 percent.
President Hugo Chavez on May 18 closed the unregulated currency market that companies used to buy dollars and ordered the central bank to oversee the trading of dollar-denominated securities that will be used to obtain currency at a government- set exchange rate.
Bolivar Devaluation
Chavez devalued the bolivar as much as 50 percent on Jan. 8 to close a budget deficit and to slow capital flight, creating a multi-tiered exchange system.
The government’s Foreign Exchange Board pared dollar sales at the official rates of 2.6 and 4.3 per dollar last year and during the first three months of 2010, causing imports to plummet 38 percent in the first quarter.
While Venezuela may be successful in slowing capital flight through the new currency market, imports will likely continue to fall, Volberg and Pardelli said.
“Given that imports have been essential in offsetting the multi-year deterioration in domestic supply in Venezuela, the restrictions may prove a significant negative supply shock for the Venezuelan economy,” the analysts said.
Chavez' 'dead-on-arrival' Bolivar-Dollar regime
VenEconomy: After three weeks of forced suspension of operations in the swap market, this Thursday, President Chavez urged private banks to get rid of all their foreign-currency-denominated bonds or run the risk of being taken over by the State. It is worth noting that the demand for foreign currency that has built up during those three weeks already comes to $1.5 billion.
Besides the arbitrary nature of the order and repeated threats to the banks, during his lecture, Chavez also let slip some information that speak volumes of the country's precarious financial situation. He stated, for example, that the state-owned banks apparently have available only $126 million in foreign-currency-denominated bonds, merely 2.3% of the total registered in the system. The nominal value of those bonds, according to Chavez, is apparently in the order of $5.5 billion and not $40 billion as he mentioned some days ago.
But that figure of $5.5 billion is not quite accurate either, as the market value of those bonds is only around $3.3 billion, barely enough to cover demand for one and a half months in the swap market. So, after that, what?
These risible figures give a glimpse of the true problem: the fact that it was the government itself that was supplying the swap market with foreign currency and that this source has dried up.
Added to that, the international reserves are showing no signs of recovery, even though the average oil price is at $71.29/bbl (25% higher than in 2009). Today, the reserves amount to $27.8 billion, 5.8% less than at the same time last year ($29.4 billion). This shrinkage is due mainly to the fact that PDVSA, besides producing less than last year, is sending oil abroad in payment of money already received for its uncontrolled future sales. Added to the mix are the company's high operating costs, bad administration, and less than transparent handling of its resources.
Now the new system will inflict more damage on the country's deteriorated economy. On the one hand, it will force the banks and anyone who holds a dollar-denominated bond to trade in a controlled market; and on the other, it will make the banks more vulnerable when it comes to responding for or guaranteeing foreign currency operations engaged in abroad.
Moreover, depending on how those bonds are valued and paid, this could put the financial system in difficulties.
Last, but not least, is the position of small savers and investors who believed in the government's proposal. Today, they are between a rock and a hard place: hanging on to the bonds until maturity or selling them to the Central Bank at a price it decides.
It looks as though this new scheme is stillborn. Once the bonds in the possession of the banks and a handful of non-institutional holders have run out, who will offer their foreign currency at a value that is clearly below the true market value?
Besides the arbitrary nature of the order and repeated threats to the banks, during his lecture, Chavez also let slip some information that speak volumes of the country's precarious financial situation. He stated, for example, that the state-owned banks apparently have available only $126 million in foreign-currency-denominated bonds, merely 2.3% of the total registered in the system. The nominal value of those bonds, according to Chavez, is apparently in the order of $5.5 billion and not $40 billion as he mentioned some days ago.
But that figure of $5.5 billion is not quite accurate either, as the market value of those bonds is only around $3.3 billion, barely enough to cover demand for one and a half months in the swap market. So, after that, what?
These risible figures give a glimpse of the true problem: the fact that it was the government itself that was supplying the swap market with foreign currency and that this source has dried up.
Added to that, the international reserves are showing no signs of recovery, even though the average oil price is at $71.29/bbl (25% higher than in 2009). Today, the reserves amount to $27.8 billion, 5.8% less than at the same time last year ($29.4 billion). This shrinkage is due mainly to the fact that PDVSA, besides producing less than last year, is sending oil abroad in payment of money already received for its uncontrolled future sales. Added to the mix are the company's high operating costs, bad administration, and less than transparent handling of its resources.
Now the new system will inflict more damage on the country's deteriorated economy. On the one hand, it will force the banks and anyone who holds a dollar-denominated bond to trade in a controlled market; and on the other, it will make the banks more vulnerable when it comes to responding for or guaranteeing foreign currency operations engaged in abroad.
Moreover, depending on how those bonds are valued and paid, this could put the financial system in difficulties.
Last, but not least, is the position of small savers and investors who believed in the government's proposal. Today, they are between a rock and a hard place: hanging on to the bonds until maturity or selling them to the Central Bank at a price it decides.
It looks as though this new scheme is stillborn. Once the bonds in the possession of the banks and a handful of non-institutional holders have run out, who will offer their foreign currency at a value that is clearly below the true market value?
Friday, June 4, 2010
This is no time for lamentations
ByVenEconomy:
In a dictatorship, the dictator gives the order and the way opens up for everything that is unconstitutional, illegal, arbitrary or in violation of civil, political, and citizen rights. Proof of this permissiveness in allowing the legal and democratic order to be contravened is to be found in Venezuela's election scenario, where the regime uses cunning arguments, sets traps, and takes unfair advantage.
One of the latest traps has to do with the registration of candidates for the election of 165 deputies to the National Assembly on September 26 this year.
The National Electoral Council has allowed barely five days for registering candidates, from June 1 to June 5. That would not be a problem, if this short registration period were not accompanied by an elaborate scheme to torpedo the registration process. It turns out that the General Comptroller's Office is, once again, moving ahead with the "timely" political barring of candidates. It so happens that this mostly affects candidates on the opposition side, although it has also been used to give some members of Chavismo their comeuppance for some political misdemeanor or other.
Among those barred are Police Captains Forero, Simonovis, and Vivas and former Governor Manuel Rosales. The President has expressed himself in pejorative terms about all these candidates, and the political retaliation behind this decision is evident, given that each of them is a stone in the revolutionary process's shoe. Some dissidents from among Chavismo's ranks have also been barred -former Deputy Wilmer Aguaje, former Mayors Ernesto Paraqueima and Numa Rojas, and former Governor Ramon Martinez -- all clear cases of political disqualification being used as a political weapon. But all of that was fairly predictable. What was not expected were the mass disqualifications that are being meted out at the discretion of the Chavez administration.
This perverse use of the law to remove emblematic contenders with strong grassroots support from the game is nothing new for Chavez' Comptroller General's Office. It will be remembered that Comptroller Clodosbaldo Russian used the same stratagem to prevent Enrique Mendoza, Leopoldo Lopez, and others from standing at the 2008 regional elections.
This time the regime is seeking to sabotage and weaken the unity of the opposition that has taken so much hard work to build via consensus and with the participation of the people, reconciling a wide range of political viewpoints and party and personal interests.
It is common knowledge that the electoral route against a contender who does as he pleases with the law is a veritable minefield. For example, it would come as no surprise if the regime were to play the card it has tucked up the Supreme Tribunal of Justice's sleeve to invalidate candidates who have not been chosen by means of elections or even if it were to attempt to postpone the parliamentary elections.
A tough fight lies ahead, and to do battle, the opposition needs to manage the situation by implementing firm, sound strategies, working as a team, taking account of all the factors, and rowing all in the same direction, including those who have been ignominiously removed from the game. This is no time for lamentations.
In a dictatorship, the dictator gives the order and the way opens up for everything that is unconstitutional, illegal, arbitrary or in violation of civil, political, and citizen rights. Proof of this permissiveness in allowing the legal and democratic order to be contravened is to be found in Venezuela's election scenario, where the regime uses cunning arguments, sets traps, and takes unfair advantage.
One of the latest traps has to do with the registration of candidates for the election of 165 deputies to the National Assembly on September 26 this year.
The National Electoral Council has allowed barely five days for registering candidates, from June 1 to June 5. That would not be a problem, if this short registration period were not accompanied by an elaborate scheme to torpedo the registration process. It turns out that the General Comptroller's Office is, once again, moving ahead with the "timely" political barring of candidates. It so happens that this mostly affects candidates on the opposition side, although it has also been used to give some members of Chavismo their comeuppance for some political misdemeanor or other.
Among those barred are Police Captains Forero, Simonovis, and Vivas and former Governor Manuel Rosales. The President has expressed himself in pejorative terms about all these candidates, and the political retaliation behind this decision is evident, given that each of them is a stone in the revolutionary process's shoe. Some dissidents from among Chavismo's ranks have also been barred -former Deputy Wilmer Aguaje, former Mayors Ernesto Paraqueima and Numa Rojas, and former Governor Ramon Martinez -- all clear cases of political disqualification being used as a political weapon. But all of that was fairly predictable. What was not expected were the mass disqualifications that are being meted out at the discretion of the Chavez administration.
This perverse use of the law to remove emblematic contenders with strong grassroots support from the game is nothing new for Chavez' Comptroller General's Office. It will be remembered that Comptroller Clodosbaldo Russian used the same stratagem to prevent Enrique Mendoza, Leopoldo Lopez, and others from standing at the 2008 regional elections.
This time the regime is seeking to sabotage and weaken the unity of the opposition that has taken so much hard work to build via consensus and with the participation of the people, reconciling a wide range of political viewpoints and party and personal interests.
It is common knowledge that the electoral route against a contender who does as he pleases with the law is a veritable minefield. For example, it would come as no surprise if the regime were to play the card it has tucked up the Supreme Tribunal of Justice's sleeve to invalidate candidates who have not been chosen by means of elections or even if it were to attempt to postpone the parliamentary elections.
A tough fight lies ahead, and to do battle, the opposition needs to manage the situation by implementing firm, sound strategies, working as a team, taking account of all the factors, and rowing all in the same direction, including those who have been ignominiously removed from the game. This is no time for lamentations.
Thursday, June 3, 2010
Economic variables point to another devaluation of the Venezuelan bolivar
El Universal: Angel Garcia Banchs, a researcher at the Center for Development Studies (Cendes) and professor at the Central University of Venezuela, considers that the Venezuelan bolivar remains overvalued and therefore a "devaluation is very likely next year."
Between 2005 and January 2010, Hugo Chavez' administration had a fixed rate despite the fact that the country underwent throughout the period an inflation rate well above its trading partners. As a result, the Venezuelan currency is extremely overvalued, that is, imported products were much cheaper than domestic goods.
The Venezuelan government, cornered by the economic imbalance, devalued the currency on January 8, 2010, when the overvaluation, according to Angel Garcia, stood at 86%.
"We had a 60% devaluation that did not fully correct the imbalance. If we add the expected inflation rate in 2010, at the end of the year the Venezuelan bolivar will be overvalued by 57%," estimated Angel Garcia Banchs who participated in a forum hosted by the Venezuelan Federation of Trade and Industry Chambers (Fedecamaras) to assess the domestic economy trends.
From his point of view, the exchange crisis that has led to a closure of the foreign exchange parallel market and put up additional barriers to the purchase of foreign currency is due to the fact that the inflow of US dollars is not enough to offset the outflow of capital transfers, money transfers to the National Development Fund (Fonden) and growing dependence on imports.
After making the necessary adjustments for a proper comparison, the Venezuelan economist said that when the government of former President Luis Herrera Campins decided to devalue the Venezuelan bolivar in 1982 (a day that has been called the Black Friday) there was a capital flight amounting to US$800 per capita; during the days of a popular uprising in February 1989 in Caracas, known as the "Caracazo," capital flight totaled $360 per capita; during the banking crisis in 1995, it was of $200 per capita, and in 2009 the capital outflow stood at $1,200.
Based an analysis of foreign reserves, Angel Garcia said that at this time Venezuela's international reserves are sufficient to cover all the needs of the economy, not only imports, for four months, one month less than when the government devalued the Venezuelan currency in January 2010.
In his opinion, during the period 2004-2008 the price of the Venezuelan oil basket increased at a rate higher than the inflation rate. Therefore, the economic imbalances were not so obvious, but the cycle came to an end.
"We created an economy which is highly dependent on imports, 70% of the demand for tradable goods is supplied by these means, and at the same time we have a heavy capital outflow; there are not enough US dollars. Things have ended in a stalemate," Angel Garcia says.
According to his projections for this year, the Venezuelan economy -- which fell 3.3% in 2009 -- will decline between 6 and 7%.
Between 2005 and January 2010, Hugo Chavez' administration had a fixed rate despite the fact that the country underwent throughout the period an inflation rate well above its trading partners. As a result, the Venezuelan currency is extremely overvalued, that is, imported products were much cheaper than domestic goods.
The Venezuelan government, cornered by the economic imbalance, devalued the currency on January 8, 2010, when the overvaluation, according to Angel Garcia, stood at 86%.
"We had a 60% devaluation that did not fully correct the imbalance. If we add the expected inflation rate in 2010, at the end of the year the Venezuelan bolivar will be overvalued by 57%," estimated Angel Garcia Banchs who participated in a forum hosted by the Venezuelan Federation of Trade and Industry Chambers (Fedecamaras) to assess the domestic economy trends.
From his point of view, the exchange crisis that has led to a closure of the foreign exchange parallel market and put up additional barriers to the purchase of foreign currency is due to the fact that the inflow of US dollars is not enough to offset the outflow of capital transfers, money transfers to the National Development Fund (Fonden) and growing dependence on imports.
After making the necessary adjustments for a proper comparison, the Venezuelan economist said that when the government of former President Luis Herrera Campins decided to devalue the Venezuelan bolivar in 1982 (a day that has been called the Black Friday) there was a capital flight amounting to US$800 per capita; during the days of a popular uprising in February 1989 in Caracas, known as the "Caracazo," capital flight totaled $360 per capita; during the banking crisis in 1995, it was of $200 per capita, and in 2009 the capital outflow stood at $1,200.
Based an analysis of foreign reserves, Angel Garcia said that at this time Venezuela's international reserves are sufficient to cover all the needs of the economy, not only imports, for four months, one month less than when the government devalued the Venezuelan currency in January 2010.
In his opinion, during the period 2004-2008 the price of the Venezuelan oil basket increased at a rate higher than the inflation rate. Therefore, the economic imbalances were not so obvious, but the cycle came to an end.
"We created an economy which is highly dependent on imports, 70% of the demand for tradable goods is supplied by these means, and at the same time we have a heavy capital outflow; there are not enough US dollars. Things have ended in a stalemate," Angel Garcia says.
According to his projections for this year, the Venezuelan economy -- which fell 3.3% in 2009 -- will decline between 6 and 7%.
It's war between government and main economic forces ... Chavez picks up gauntlet
VHeadline News Editor Patrick J. O'Donoghue reports: It's on! President Chavez has decided to engage forces with Venezuela's main economic powers. During a visit to the expropriated Diana company in Carabobo, Chavez said he has taken up the gauntlet thrown him by the Federation of Chambers of Industry & Commerce (Fedecamaras), Confederation of Commerce & Services (Consecomercio), Venezuelan Chamber of Food Industries (Cavidea) and "other odds and ends."
The main face of the enemy is Lorenzo Mendoza, owner of the Polar beer and food company, who has come under presidential attack ever Chavez expropriated a site in Barquisimeto where the company ran a distribution point. Chavez has promised to build houses there.
Mendoza was told to take a "look in the mirror" and what he would see, Chavez said, was Radio Caracas Television (RCTV) whose main shareholder, the autocratic Marcel Granier, also declared war on the government, only to lose.
What has bothered Chavez is the unilateral reaction of Polar company workers that have come out in full support of Mendoza and the company. The President attributed the support to manipulation on the part of Mendoza. Once again, Chavez commented that it was shameful and embarrassing to see workers assigned a number like prisoners to secure their collaboration in photo shots.
The statements against the private sector, Chavez continued, should be taken properly in the spirit that like RCTV no group should think themselves indispensable. Polar's owner was advised not to run against Chavez in presidential elections in 2012 because he could be left "holding the body."
Polar was one of the leaders of the April 11, 2002 (11A) coup, Chavez reminded Mendoza.
If Mendoza thinks that the government would not expropriate the company, Chavez quipped, then he'd better think twice.
The main face of the enemy is Lorenzo Mendoza, owner of the Polar beer and food company, who has come under presidential attack ever Chavez expropriated a site in Barquisimeto where the company ran a distribution point. Chavez has promised to build houses there.
Mendoza was told to take a "look in the mirror" and what he would see, Chavez said, was Radio Caracas Television (RCTV) whose main shareholder, the autocratic Marcel Granier, also declared war on the government, only to lose.
What has bothered Chavez is the unilateral reaction of Polar company workers that have come out in full support of Mendoza and the company. The President attributed the support to manipulation on the part of Mendoza. Once again, Chavez commented that it was shameful and embarrassing to see workers assigned a number like prisoners to secure their collaboration in photo shots.
The statements against the private sector, Chavez continued, should be taken properly in the spirit that like RCTV no group should think themselves indispensable. Polar's owner was advised not to run against Chavez in presidential elections in 2012 because he could be left "holding the body."
Polar was one of the leaders of the April 11, 2002 (11A) coup, Chavez reminded Mendoza.
If Mendoza thinks that the government would not expropriate the company, Chavez quipped, then he'd better think twice.
"Within Marxism and historical materialism" by Wikipedia
By Wikipedia
Marxism defines the bourgeoisie as the social class that owns the means of production in a capitalist society. As such, the core of the modern bourgeoisie is industrial bourgeoisie, which obtains income by hiring workers to put in motion their capital, which is to say, their means of production - machines, tools, raw material, etc. Besides that, other bourgeois sectors also exist, notedly the commercial bourgeoisie, which earns income from commercial activities such as the buying and selling of commodities, wares, and services.
In medieval times, the bourgeois was typically a self-employed proprietor, small employer, entrepreneur, banker, or merchant. In industrial capitalism, on the other hand, the bourgeoisie becomes the ruling class - which means it also owns the bulk of the means of production (land, factories, offices, capital, resources - though in some countries land ownership would still be a monopoly of a different class, landed oligarchy), and controls the means of coercion (national armed forces, police, prison systems, court systems). Ownership of the means of production enables it to employ and exploit the work of a large mass of wage workers (the working class), who have no other means of livelihood than to sell their labour to property owners; while control over the means of coercion allows intervention during challenges from below.[2] Marx distinguished between "functioning capitalists" actually managing enterprises, and others merely earning property rents or interest-income from financial assets or real estate (rentiers).[3]
Marxism sees the proletariat (wage labourers) and bourgeoisie as directly waging an ongoing class struggle, in that capitalists exploit workers and workers try to resist exploitation. This exploitation takes place as follows: the workers, who own no means of production of their own, must seek employment in order to make a living. They get hired by a capitalist and work for him, producing some sort of goods or services. These goods or services then become the property of the capitalist, who sells them and gets a certain amount of money in exchange. Part of this money is used to pay workers' wages, another part is used to pay production costs, and a third part is kept by the capitalist in the form of profit (or surplus value in Marxist terms). Thus the capitalist can earn money by selling the surplus (profit) from the work of his employees without actually doing any work, or in excess of his own work. Marxists argue that new wealth is created through work; therefore, if someone gains wealth that he did not work for, then someone else works and does not receive the full wealth created by his work. In other words, that "someone else" is exploited. In this way, the capitalist might turn a large profit by exploiting workers.
Marx himself primarily used the term "bourgeois", with or without sarcasm, as an objective description of a social class and of a lifestyle based on ownership of private capital, not as a pejorative. He commended the industriousness of the bourgeoisie, but criticised it for its moral hypocrisy. This attitude is shown most clearly in the Communist Manifesto. He also used it to describe the ideology of this class; for example, he called its conception of freedom "bourgeois freedom" and opposed it to what he considered more substantive forms of freedom. He also wrote of bourgeois independence, individuality, property, family, etc.; in each case he referred to conceptions of these ideals which are compatible with condoning the existence of a class society.
Marxism defines the bourgeoisie as the social class that owns the means of production in a capitalist society. As such, the core of the modern bourgeoisie is industrial bourgeoisie, which obtains income by hiring workers to put in motion their capital, which is to say, their means of production - machines, tools, raw material, etc. Besides that, other bourgeois sectors also exist, notedly the commercial bourgeoisie, which earns income from commercial activities such as the buying and selling of commodities, wares, and services.
In medieval times, the bourgeois was typically a self-employed proprietor, small employer, entrepreneur, banker, or merchant. In industrial capitalism, on the other hand, the bourgeoisie becomes the ruling class - which means it also owns the bulk of the means of production (land, factories, offices, capital, resources - though in some countries land ownership would still be a monopoly of a different class, landed oligarchy), and controls the means of coercion (national armed forces, police, prison systems, court systems). Ownership of the means of production enables it to employ and exploit the work of a large mass of wage workers (the working class), who have no other means of livelihood than to sell their labour to property owners; while control over the means of coercion allows intervention during challenges from below.[2] Marx distinguished between "functioning capitalists" actually managing enterprises, and others merely earning property rents or interest-income from financial assets or real estate (rentiers).[3]
Marxism sees the proletariat (wage labourers) and bourgeoisie as directly waging an ongoing class struggle, in that capitalists exploit workers and workers try to resist exploitation. This exploitation takes place as follows: the workers, who own no means of production of their own, must seek employment in order to make a living. They get hired by a capitalist and work for him, producing some sort of goods or services. These goods or services then become the property of the capitalist, who sells them and gets a certain amount of money in exchange. Part of this money is used to pay workers' wages, another part is used to pay production costs, and a third part is kept by the capitalist in the form of profit (or surplus value in Marxist terms). Thus the capitalist can earn money by selling the surplus (profit) from the work of his employees without actually doing any work, or in excess of his own work. Marxists argue that new wealth is created through work; therefore, if someone gains wealth that he did not work for, then someone else works and does not receive the full wealth created by his work. In other words, that "someone else" is exploited. In this way, the capitalist might turn a large profit by exploiting workers.
Marx himself primarily used the term "bourgeois", with or without sarcasm, as an objective description of a social class and of a lifestyle based on ownership of private capital, not as a pejorative. He commended the industriousness of the bourgeoisie, but criticised it for its moral hypocrisy. This attitude is shown most clearly in the Communist Manifesto. He also used it to describe the ideology of this class; for example, he called its conception of freedom "bourgeois freedom" and opposed it to what he considered more substantive forms of freedom. He also wrote of bourgeois independence, individuality, property, family, etc.; in each case he referred to conceptions of these ideals which are compatible with condoning the existence of a class society.
Chavez Declares ‘Economic War’ Against Bourgeoisie
By Daniel Cancel
June 2 (Bloomberg) -- Venezuelan President Hugo Chavez said he’s declaring an “economic war” against the “bourgeoisie” after business chambers criticized his handling of the economy and the performance of nationalized companies.
Chavez threatened to nationalize the country’s largest food maker, Empresas Polar SA, saying that the company isn’t “indispensable.” Chavez said Polar is manipulating workers into attacking his policies and he challenged company President Lorenzo Mendoza to see who will last longer. Mendoza, Chavez said, won’t get into heaven because he’s wealthy.
“You’ve declared an economic war against me, so I accept your challenge, stateless bourgeoisie,” Chavez said today during a visit to a state-run vegetable oil company. “I’m declaring an economic war with the help of the people and workers. War is war, my friend. Don’t complain to me later.”
Chavez has nationalized companies in the oil, food, cement and metals industries as part of his push for socialism and he blames the private sector for accelerating inflation and a recession that is forecast to continue into 2011. Chavez has threatened to nationalize Polar to boost state control over the production and distribution of food, and the government seized one of the company’s rice plants for three months last year.
The drive to construct a socialist economy has left the country facing international arbitration cases with Exxon Mobil Corp., ConocoPhillips and Mexican cement maker Cemex SAB.
Exploited Workers
Chavez said Mendoza is trying to undermine his government and that the billionaire should look at Radio Caracas Television, an opposition network removed from the airwaves, as an example of an “indispensable” Venezuelan company.
Private companies exploit their workers for economic gain and sell goods at “inflated” prices, Chavez said. The bourgeoisie should read more Karl Marx, he recommended.
Venezuela’s economy contracted 5.8 percent in the first three months of the year, the fourth consecutive quarter of declines after investment plunged and oil export revenue fell. Gross domestic product may shrink 2.5 percent in 2010, according to the median forecast of nine banks surveyed by Bloomberg.
Business chambers Fedecamaras and Consecomercio have increased their criticism of Chavez since the first-quarter GDP report released May 25, saying his nationalization drive has ruined the economy and that government-run companies have been unproductive.
Currency Devaluation
Chavez devalued the bolivar for the first time since 2005 in January and created a multi-tiered exchange system as he struggled to close a budget deficit and slow capital flight. The government shut down the unregulated currency market on May 18 and will hand control over securities trading to the central bank.
The government has taken control of 36 brokerages and jailed 10 brokerage directors as part of an investigation into the currency market. Chavez has blamed the parallel market in currency for the 5.2 percent surge in consumer prices in April.
Venezuela, which has the highest annual inflation rate of 78 economies tracked by Bloomberg, may see consumer prices rise 40 percent this year after the devaluation and dismantling of the unregulated currency market, RBS Securities Inc. says.
Chavez said his government hasn’t been able to lower inflation because private company price increases outpace his annual minimum wage adjustments.
“As long as the bourgeoisie controls 90 percent of commerce, 80 percent of the banks and multinational companies, we won’t be able to lower inflation to one digit,” he said.
Chavez, who has been in power since 1999, is trying to maintain a majority in the National Assembly after September elections before he seeks another six-year term in 2012.
Joint Ventures
Chavez said today that the government will approach manufacturing companies and offer to set up joint venture businesses as a way to guarantee low prices and give workers more control over production. Companies that refuse to cooperate may be expropriated, he said.
Venezuela is close to signing an agreement to form a joint venture with French retailer Casino Guichard Perrachon SA to operate supermarkets, Chavez said today. He expropriated Exito hypermarkets following the devaluation in January on accusations that the majority-French-owned chain illegally raised prices.
“The only way to lower prices is having the workers take control of the factory,” Chavez said. “Those companies that want to work together are welcome. Those that don’t want to cooperate, we’ll expropriate them. I repeat, war is war.”
June 2 (Bloomberg) -- Venezuelan President Hugo Chavez said he’s declaring an “economic war” against the “bourgeoisie” after business chambers criticized his handling of the economy and the performance of nationalized companies.
Chavez threatened to nationalize the country’s largest food maker, Empresas Polar SA, saying that the company isn’t “indispensable.” Chavez said Polar is manipulating workers into attacking his policies and he challenged company President Lorenzo Mendoza to see who will last longer. Mendoza, Chavez said, won’t get into heaven because he’s wealthy.
“You’ve declared an economic war against me, so I accept your challenge, stateless bourgeoisie,” Chavez said today during a visit to a state-run vegetable oil company. “I’m declaring an economic war with the help of the people and workers. War is war, my friend. Don’t complain to me later.”
Chavez has nationalized companies in the oil, food, cement and metals industries as part of his push for socialism and he blames the private sector for accelerating inflation and a recession that is forecast to continue into 2011. Chavez has threatened to nationalize Polar to boost state control over the production and distribution of food, and the government seized one of the company’s rice plants for three months last year.
The drive to construct a socialist economy has left the country facing international arbitration cases with Exxon Mobil Corp., ConocoPhillips and Mexican cement maker Cemex SAB.
Exploited Workers
Chavez said Mendoza is trying to undermine his government and that the billionaire should look at Radio Caracas Television, an opposition network removed from the airwaves, as an example of an “indispensable” Venezuelan company.
Private companies exploit their workers for economic gain and sell goods at “inflated” prices, Chavez said. The bourgeoisie should read more Karl Marx, he recommended.
Venezuela’s economy contracted 5.8 percent in the first three months of the year, the fourth consecutive quarter of declines after investment plunged and oil export revenue fell. Gross domestic product may shrink 2.5 percent in 2010, according to the median forecast of nine banks surveyed by Bloomberg.
Business chambers Fedecamaras and Consecomercio have increased their criticism of Chavez since the first-quarter GDP report released May 25, saying his nationalization drive has ruined the economy and that government-run companies have been unproductive.
Currency Devaluation
Chavez devalued the bolivar for the first time since 2005 in January and created a multi-tiered exchange system as he struggled to close a budget deficit and slow capital flight. The government shut down the unregulated currency market on May 18 and will hand control over securities trading to the central bank.
The government has taken control of 36 brokerages and jailed 10 brokerage directors as part of an investigation into the currency market. Chavez has blamed the parallel market in currency for the 5.2 percent surge in consumer prices in April.
Venezuela, which has the highest annual inflation rate of 78 economies tracked by Bloomberg, may see consumer prices rise 40 percent this year after the devaluation and dismantling of the unregulated currency market, RBS Securities Inc. says.
Chavez said his government hasn’t been able to lower inflation because private company price increases outpace his annual minimum wage adjustments.
“As long as the bourgeoisie controls 90 percent of commerce, 80 percent of the banks and multinational companies, we won’t be able to lower inflation to one digit,” he said.
Chavez, who has been in power since 1999, is trying to maintain a majority in the National Assembly after September elections before he seeks another six-year term in 2012.
Joint Ventures
Chavez said today that the government will approach manufacturing companies and offer to set up joint venture businesses as a way to guarantee low prices and give workers more control over production. Companies that refuse to cooperate may be expropriated, he said.
Venezuela is close to signing an agreement to form a joint venture with French retailer Casino Guichard Perrachon SA to operate supermarkets, Chavez said today. He expropriated Exito hypermarkets following the devaluation in January on accusations that the majority-French-owned chain illegally raised prices.
“The only way to lower prices is having the workers take control of the factory,” Chavez said. “Those companies that want to work together are welcome. Those that don’t want to cooperate, we’ll expropriate them. I repeat, war is war.”
Wednesday, June 2, 2010
CUBA EXPANDS ITS INFLUENCE IN VENEZUELA
By Ian James, The Associated Press
It's no longer just doctors, nurses and teachers. Cuba now sends Venezuela troops to train its military, and computer experts to work on its passport and identification-card systems.
Critics fear that what is portrayed by both countries as a friendship committed to countering US influence in the region is in fact growing into far more. They see a seasoned authoritarian government helping President Hugo Chavez to protect his power through Cuban-style controls, in exchange for oil. The Cuban government routinely spies on dissidents and maintains tight controls on information and travel.
Cubans are involved in Venezuelan defense and communications systems to the point that they would know how to run both in a crisis, said Antonio Rivero, a former brigadier general whose break with Chavez over the issue has grabbed national attention. "They've crossed a line," Rivero said in a May interview. "They've gone beyond what should be permitted and what an alliance should be."
Cuban officials dismiss claims of outsized influence, saying their focus is social programs. Chavez recently scolded a Venezuelan reporter on live television for asking what the Cubans are doing in the military. "Cuba helps us modestly with some things that I'm not going to detail," Chavez said. "Everything Cuba does for Venezuela is to strengthen the homeland, which belongs to them as well."
But the communist government has a strong interest in securing the status quo because Venezuela is the island's principal economic benefactor, Rivero says.
As Cuba struggles with economic troubles, including shortages of food and other basics, $7 billion in annual trade with Venezuela has provided a key boost -- especially more than 100,000 barrels of oil Chavez's government sends each day in exchange for services.
Rivero, who retired early in protest and now plans to run for a seat in the National Assembly, said Cuban officers have sat in high-level meetings, trained snipers, gained detailed knowledge of communications and advised the military on underground bunkers built to store and conceal weapons. "They know which weapons they have in Venezuela that they could count on at any given time," he said.
Cuban advisers also have been helping with a digital radio communications system for security forces, meaning they have sensitive information on antenna locations and radio frequencies, Rivero said.
If Chavez were to lose elections in 2012 or be forced out of office -- like he was during a brief 2002 coup -- it's even feasible the Cubans could "become part of a guerrilla force," Rivero said. "They know where our weapons are, they know where our command offices are, they know where our vital areas of communications are."
Chavez has acknowledged that Cuban troops are teaching his soldiers how to repair radios in tanks and to store ammunition, among other tasks. No one complained years ago, he added, when Venezuela received such technical support from the US military. Cuba and Venezuela are so unified that they are practically "one single nation," says Chavez, who often visits his mentor Fidel Castro in Havana and sometimes flies on a Cuban jet.
The countries plan to link up physically next year with an undersea telecommunications cable. The Venezuelans are even getting advice from President Raul Castro's daughter Mariela Castro, who heads Cuba's National Sex Education Center and advocated civil unions for homosexuals during a recent seminar in Caracas.
Some Venezuelans mockingly call it "Venecuba." When the government took over the farm of former Venezuelan UN ambassador Diego Arria, he contested the seizure by delivering his ownership documents to the Cuban Embassy, saying the Cubans are in charge and "much more organized than the Venezuelan regime."
"No self-respecting country can place such delicate areas of the government as national security in the hands of officials of another country," said Teodoro Petkoff, an opposition leader who is editor of the newspaper Tal Cual. "President Chavez doesn't trust his own people very much. So he wants to count on the know-how and time-tested experience of a government that for 50 years has been carrying out a brutal and totalitarian dictatorship."
Cuban government officials, however, say the bulk of their assistance is in public services. At the National Genetic Medicine Center in Guarenas, east of Caracas, Cuban doctors and lab technicians diagnose and treat genetic illnesses. "What we came to do is science," said Dr. Reinaldo Menendez, the Cuban director of the center, which also employs Venezuelans. "Our weapons... are our minds, our work, our coats, our stethoscopes. "We're internationalists by conviction," he added, passing photos of Chavez and Fidel Castro on the walls.
Cuban Deputy Health Minister Joaquin Garcia Salavarria coordinates missions involving more than 30,000 doctors, nurses, and other specialists from the island. He estimated that about 95% of the approximately 40,000 Cubans in Venezuela work in medical, education, sports and cultural programs, and that others are helping as advisers on everything from agriculture to software for the state telephone company, CANTV.
As he spoke, Garcia flipped through a file of statistics that he said show the real impact of the Cuban presence: more than 408 million consultations in neighborhood health clinics since 2003. That's an average of 14 medical visits for each of Venezuela's more than 28 million people. Many Venezuelans are grateful for the free medical care provided by the Cubans, and waiting rooms are often bustling.
Still, polls have repeatedly shown a large majority of Venezuelans don't want their country to adopt a system like Cuba's. Chavez says he's not copying Cuba's socialist system but has adopted some practices, like creating a civilian militia to defend his government. When he founded a fledgling national police force last year, Chavez boasted that "we're going to compete with the Cuban police force, which is among the best in the world."
A senior Cuban police official, Rosa Campoalegre, has been in Caracas to help with plans for a new university for police and other security officials. She declined a request to be interviewed.
Cuban experts have also been working on systems in public registries and notaries. About 12 Cuban computer specialists from the University of Computer Science in Havana have been creating software to help the immigration agency improve passport control and computerize the identification card system, director Dante Rivas said. "There's nothing to hide here ... what they do is develop the software, jointly with us, but we operate it exclusively. That's all. They don't do anything else."
In Cuba, he said, the government uses a different system. The island's computerized civil registry includes all relevant data on its citizens, such as address, age and physical characteristics. All Cubans must carry an identity card, and those who want to travel outside the country must get special permission. It's especially worrying that Cubans are involved in areas "that have to do with control of information, people's private information," said Rocio San Miguel, who heads a Venezuelan organization that monitors security and defense issues.
Chavez, meanwhile, says Cuba's assistance is worth "10 times more than the cost of the oil we send."
He has effusively thanked Cuba for helping Venezuela to revamp its electrical system -- a move ridiculed by Chavez's opponents due to Cuba's own struggles with power outages. Chavez also credited a Cuban cloud-seeding program with helping to bring an earlier rainy season this year after a severe drought.
"What Cubanization?" he said. "The Cubans are helping us."
It's no longer just doctors, nurses and teachers. Cuba now sends Venezuela troops to train its military, and computer experts to work on its passport and identification-card systems.
Critics fear that what is portrayed by both countries as a friendship committed to countering US influence in the region is in fact growing into far more. They see a seasoned authoritarian government helping President Hugo Chavez to protect his power through Cuban-style controls, in exchange for oil. The Cuban government routinely spies on dissidents and maintains tight controls on information and travel.
Cubans are involved in Venezuelan defense and communications systems to the point that they would know how to run both in a crisis, said Antonio Rivero, a former brigadier general whose break with Chavez over the issue has grabbed national attention. "They've crossed a line," Rivero said in a May interview. "They've gone beyond what should be permitted and what an alliance should be."
Cuban officials dismiss claims of outsized influence, saying their focus is social programs. Chavez recently scolded a Venezuelan reporter on live television for asking what the Cubans are doing in the military. "Cuba helps us modestly with some things that I'm not going to detail," Chavez said. "Everything Cuba does for Venezuela is to strengthen the homeland, which belongs to them as well."
But the communist government has a strong interest in securing the status quo because Venezuela is the island's principal economic benefactor, Rivero says.
As Cuba struggles with economic troubles, including shortages of food and other basics, $7 billion in annual trade with Venezuela has provided a key boost -- especially more than 100,000 barrels of oil Chavez's government sends each day in exchange for services.
Rivero, who retired early in protest and now plans to run for a seat in the National Assembly, said Cuban officers have sat in high-level meetings, trained snipers, gained detailed knowledge of communications and advised the military on underground bunkers built to store and conceal weapons. "They know which weapons they have in Venezuela that they could count on at any given time," he said.
Cuban advisers also have been helping with a digital radio communications system for security forces, meaning they have sensitive information on antenna locations and radio frequencies, Rivero said.
If Chavez were to lose elections in 2012 or be forced out of office -- like he was during a brief 2002 coup -- it's even feasible the Cubans could "become part of a guerrilla force," Rivero said. "They know where our weapons are, they know where our command offices are, they know where our vital areas of communications are."
Chavez has acknowledged that Cuban troops are teaching his soldiers how to repair radios in tanks and to store ammunition, among other tasks. No one complained years ago, he added, when Venezuela received such technical support from the US military. Cuba and Venezuela are so unified that they are practically "one single nation," says Chavez, who often visits his mentor Fidel Castro in Havana and sometimes flies on a Cuban jet.
The countries plan to link up physically next year with an undersea telecommunications cable. The Venezuelans are even getting advice from President Raul Castro's daughter Mariela Castro, who heads Cuba's National Sex Education Center and advocated civil unions for homosexuals during a recent seminar in Caracas.
Some Venezuelans mockingly call it "Venecuba." When the government took over the farm of former Venezuelan UN ambassador Diego Arria, he contested the seizure by delivering his ownership documents to the Cuban Embassy, saying the Cubans are in charge and "much more organized than the Venezuelan regime."
"No self-respecting country can place such delicate areas of the government as national security in the hands of officials of another country," said Teodoro Petkoff, an opposition leader who is editor of the newspaper Tal Cual. "President Chavez doesn't trust his own people very much. So he wants to count on the know-how and time-tested experience of a government that for 50 years has been carrying out a brutal and totalitarian dictatorship."
Cuban government officials, however, say the bulk of their assistance is in public services. At the National Genetic Medicine Center in Guarenas, east of Caracas, Cuban doctors and lab technicians diagnose and treat genetic illnesses. "What we came to do is science," said Dr. Reinaldo Menendez, the Cuban director of the center, which also employs Venezuelans. "Our weapons... are our minds, our work, our coats, our stethoscopes. "We're internationalists by conviction," he added, passing photos of Chavez and Fidel Castro on the walls.
Cuban Deputy Health Minister Joaquin Garcia Salavarria coordinates missions involving more than 30,000 doctors, nurses, and other specialists from the island. He estimated that about 95% of the approximately 40,000 Cubans in Venezuela work in medical, education, sports and cultural programs, and that others are helping as advisers on everything from agriculture to software for the state telephone company, CANTV.
As he spoke, Garcia flipped through a file of statistics that he said show the real impact of the Cuban presence: more than 408 million consultations in neighborhood health clinics since 2003. That's an average of 14 medical visits for each of Venezuela's more than 28 million people. Many Venezuelans are grateful for the free medical care provided by the Cubans, and waiting rooms are often bustling.
Still, polls have repeatedly shown a large majority of Venezuelans don't want their country to adopt a system like Cuba's. Chavez says he's not copying Cuba's socialist system but has adopted some practices, like creating a civilian militia to defend his government. When he founded a fledgling national police force last year, Chavez boasted that "we're going to compete with the Cuban police force, which is among the best in the world."
A senior Cuban police official, Rosa Campoalegre, has been in Caracas to help with plans for a new university for police and other security officials. She declined a request to be interviewed.
Cuban experts have also been working on systems in public registries and notaries. About 12 Cuban computer specialists from the University of Computer Science in Havana have been creating software to help the immigration agency improve passport control and computerize the identification card system, director Dante Rivas said. "There's nothing to hide here ... what they do is develop the software, jointly with us, but we operate it exclusively. That's all. They don't do anything else."
In Cuba, he said, the government uses a different system. The island's computerized civil registry includes all relevant data on its citizens, such as address, age and physical characteristics. All Cubans must carry an identity card, and those who want to travel outside the country must get special permission. It's especially worrying that Cubans are involved in areas "that have to do with control of information, people's private information," said Rocio San Miguel, who heads a Venezuelan organization that monitors security and defense issues.
Chavez, meanwhile, says Cuba's assistance is worth "10 times more than the cost of the oil we send."
He has effusively thanked Cuba for helping Venezuela to revamp its electrical system -- a move ridiculed by Chavez's opponents due to Cuba's own struggles with power outages. Chavez also credited a Cuban cloud-seeding program with helping to bring an earlier rainy season this year after a severe drought.
"What Cubanization?" he said. "The Cubans are helping us."
Tuesday, June 1, 2010
The Implosion of Chavez Continues
The Washington Post: Venezuela ... the implosion of Chavez continues
The Washington Post (Jackson Diehl): Hugo Chavez has been keeping a relatively low profile of late -- there have been no grand world tours, no fiery speeches at the United Nations. The Obama administration, which once promised to "engage" the Venezuelan caudillo, is instead quietly shunning him.
There's a simple reason for this: The implosion of Chavez's self-styled "Bolivarian socialism" is accelerating.
Figures reported Tuesday by Venezuela's Chavez-controlled central bank portrayed an economy that is completely out of sync with the rest of the region -- and perhaps unique in the world in the degree of its distress. Gross national product fell 5.8% in the first quarter, while inflation remained at 30%. Private investment plummeted 27.9% as capital continued to flee the country.
Private economists suspect the economic contraction is even worse than what the official figures concede ... but let's assume they are correct. Now, contrast Venezuela's crash with quarterly growth rates of 8% in Brazil, Argentina and Mexico. It even comfortably exceeds the collapse of Greece's economy, which contracted 3% in the first quarter.
Inflation in Caracas is triple the next-highest rate in Latin America (Argentina) and is more than double that of the next-worst economy (Pakistan) among the 56 tracked by the Economist's Web site. Even Zimbabwe, which used to be considered the world's economic basket case, looks good compared with Venezuela: It is expecting 6% growth this year, while inflation is under 5%.
In short, economic recovery is taking hold across the world -- except in Chavez' Venezuela.
When I pointed out in January that Chavez' revolution was collapsing, a chorus of left-wing bloggers rose up in protest. The extremists among them claim that Venezuela is actually doing better than the rest of the world, because (loony version) Chavez is destroying evil capitalism or because (slightly less loony version) Venezuela's implosion is irrelevant to the rest of the region. But, of course, Venezuela really is cratering -- and Chavez' desperate measures to stop the free-fall are only making it worse.
Recently, for example, Chavez abruptly moved to abolish the private currency market, which supplies the dollars for 30-40% of Venezuela's imports. The dollar exchange rate was soaring, so the government arrested a bunch of currency traders and announced that sales of dollars henceforth would be controlled exclusively by the Central Bank. The result will almost certainly be another drastic decrease in imports, the worsening of already widespread shortages in food and basic consumer goods, and the creation of a new black market in dollars.
And, of course, the implosion of Chavez' potted socialism does matter to the rest of Latin America. It's not just that the Obama administration no longer needs to bother with the strongman, since he is doing an excellent job of self-destruction. It's that Venezuela's clients and imitators -- especially in Bolivia and Nicaragua -- stand to lose both subsidies and ideological sustainment from Caracas. Chavez' decade-long attempt to create a bloc of like-minded countries in the region is in tatters.
The caudillo's popularity rating around Latin America is now below 40%, and his backing in Venezuela has dropped below 50%.
With an election for the National Assembly coming this fall, he has resorted to the Iranian tactic of disqualifying prominent opponents from the ballot. He will try to steal the election; if that doesn't work, he will try to strip the legislature of power.
No matter: Chavez appears powerless to stop the unraveling of Venezuela's economy -- and with it, his "revolution." He will be left with a choice: surrender to his country's mounting discontent or rule entirely by force.
The Washington Post (Jackson Diehl): Hugo Chavez has been keeping a relatively low profile of late -- there have been no grand world tours, no fiery speeches at the United Nations. The Obama administration, which once promised to "engage" the Venezuelan caudillo, is instead quietly shunning him.
There's a simple reason for this: The implosion of Chavez's self-styled "Bolivarian socialism" is accelerating.
Figures reported Tuesday by Venezuela's Chavez-controlled central bank portrayed an economy that is completely out of sync with the rest of the region -- and perhaps unique in the world in the degree of its distress. Gross national product fell 5.8% in the first quarter, while inflation remained at 30%. Private investment plummeted 27.9% as capital continued to flee the country.
Private economists suspect the economic contraction is even worse than what the official figures concede ... but let's assume they are correct. Now, contrast Venezuela's crash with quarterly growth rates of 8% in Brazil, Argentina and Mexico. It even comfortably exceeds the collapse of Greece's economy, which contracted 3% in the first quarter.
Inflation in Caracas is triple the next-highest rate in Latin America (Argentina) and is more than double that of the next-worst economy (Pakistan) among the 56 tracked by the Economist's Web site. Even Zimbabwe, which used to be considered the world's economic basket case, looks good compared with Venezuela: It is expecting 6% growth this year, while inflation is under 5%.
In short, economic recovery is taking hold across the world -- except in Chavez' Venezuela.
When I pointed out in January that Chavez' revolution was collapsing, a chorus of left-wing bloggers rose up in protest. The extremists among them claim that Venezuela is actually doing better than the rest of the world, because (loony version) Chavez is destroying evil capitalism or because (slightly less loony version) Venezuela's implosion is irrelevant to the rest of the region. But, of course, Venezuela really is cratering -- and Chavez' desperate measures to stop the free-fall are only making it worse.
Recently, for example, Chavez abruptly moved to abolish the private currency market, which supplies the dollars for 30-40% of Venezuela's imports. The dollar exchange rate was soaring, so the government arrested a bunch of currency traders and announced that sales of dollars henceforth would be controlled exclusively by the Central Bank. The result will almost certainly be another drastic decrease in imports, the worsening of already widespread shortages in food and basic consumer goods, and the creation of a new black market in dollars.
And, of course, the implosion of Chavez' potted socialism does matter to the rest of Latin America. It's not just that the Obama administration no longer needs to bother with the strongman, since he is doing an excellent job of self-destruction. It's that Venezuela's clients and imitators -- especially in Bolivia and Nicaragua -- stand to lose both subsidies and ideological sustainment from Caracas. Chavez' decade-long attempt to create a bloc of like-minded countries in the region is in tatters.
The caudillo's popularity rating around Latin America is now below 40%, and his backing in Venezuela has dropped below 50%.
With an election for the National Assembly coming this fall, he has resorted to the Iranian tactic of disqualifying prominent opponents from the ballot. He will try to steal the election; if that doesn't work, he will try to strip the legislature of power.
No matter: Chavez appears powerless to stop the unraveling of Venezuela's economy -- and with it, his "revolution." He will be left with a choice: surrender to his country's mounting discontent or rule entirely by force.
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