Published: Monday, September 27, 2010
The Economist UK: Seldom has an election victory tasted so bitterly of defeat. Hugo Chavez, Venezuela's leftist President, had defined the legislative elections held yesterday as a plebiscite on his rule, spoken of the need to "demolish" the opposition and said that nothing less than a two-thirds super-majority in the 165-seat National Assembly would do. But with six races still to be defined, the ruling United Socialist Party (PSUV) had won just 96 seats, with the opposition taking 63.
Worse still for the President, the opposition is claiming a majority of the popular vote. Although the national electoral authority (CNE) has not yet released a vote tally, the Venezuela Unity (MUD) coalition, to which 60 of the 63 opposition candidates elected belong, says the government lost by 52% to 48%. If so, this would be just the second time in 12 years that Mr Chavez has lost an election, following the defeat of his constitutional-reform referendum in 2007. The PSUV only retained its congressional majority because of gerrymandering and a drastic reform of the electoral law that eliminated proportional representation.
Both the President and his campaign chief, Aristobulo Isturiz, brushed aside suggestions of failure. Using Twitter, Mr Chavez called the result a "solid victory", saying it was "enough to continue deepening" his "revolutionary socialist" project. But the PSUV's vanishing act on election night told a different story: its campaign headquarters emptied out by mid-evening, preventing journalists from obtaining comments from its members. At the MUD's base of operations, in contrast, opposition leaders clustered around microphones as they awaited the results.
Because the government brought the elections forward, the new congress will not take office until January, giving the PSUV free rein to rule as it pleases for nearly three more months. Afterwards, however, the party's underwhelming electoral performance will limit Mr Chavez' freedom to govern. Without a 110-seat super-majority, he will need support from the opposition to win some votes, such as appointments to the Supreme Court and the CNE. And if the PSUV fails to reach 99 seats, the President will no longer be able to legislate by decree. To circumvent such requirements, Mr Chavez may have to bypass the legislature through his control of the supreme court, a heavy-handed tactic he has used in the past.
The result also establishes a clear outline for the 2012 presidential campaign. A poor result for the MUD would have unleashed a power struggle in its ranks and might well have led to its disintegration. Now, the coalition can focus on debating how it will choose a rival to Mr Chavez. The candidacy of Henrique Capriles, the Governor of the State of Miranda, has already been announced. "The President has been given notice," Enrique Mendoza, an opposition leader who won a seat in the next congress.
Perhaps most importantly, the vote shows that Venezuelan democracy has not been reduced to a mere facade. In 2005 the opposition boycotted legislative elections, a decision that made it far easier for the President to cement his hold on power.
Now that the government has accepted a disappointing electoral outcome, opposition leaders who argue that voting is a waste of time will be further marginalized.
After 11 years of Mr Chavez' revolution, Venezuela is politically split down the middle. Neither side will be able to "demolish" the other anytime soon.
Tuesday, September 28, 2010
Friday, September 24, 2010
Will Venezuelan voters stand up to Hugo Chavez?
Dan Calabrese: A forerunner of America's expected electoral tidal wave could occur on Sunday in Venezuela. The presidency is not on the line, so Marxist dictator thug Hugo Chavez is safe for now. But he needs a two-thirds majority of the legislative assembly to maintain the absolute power with which he is so swiftly destroying the country.
Venezuelans appear poised to take it away from him -- if everything is on the up-and-up. Manny Lopez, my colleague at The Michigan View, is of Venezuelan descent, and recently visited the homeland for some interesting discussions about what may be coming:
Fortunately, Venezuelans are interested in change again -- only this time to get rid of the socialistic and totalitarian rules that have been imposed on the nation by a president who not only openly flaunts the law, he creates his own.
"Who is going to stop me?" Chavez said recently when questioned about campaigning illegally for candidates, according to Dow Jones Newswires.
Hopefully, more than 11,000 young people who have organized to monitor Sunday's elections to the national assembly as well as the millions more freedom and democracy loving people in Venezuela will do their part to keep him from intimidating voters, fomenting violence or flat-out altering results.
People around the world need to pay attention, too.
Chavez' socialists hold 137 of the 167 national assembly seats, but an energized opposition is poised to retake many of those and eliminate the two-thirds majority he needs to keep his dictatorial rule in place.
"The good thing is that the opposition has finally gotten the message and is consolidated (somewhat) and organized. They feel like if they get enough people at the polls to monitor, they can combat some of the fraud," Jon Perdue, director of Latin American Programs at The Fund for American Studies, told me Tuesday. But as Manny points out, a key to this potential success will be to keep Jimmy Carter out.
The self-proclaimed greatest former President alive showed up in Venezuela in 2004 to "certify" the election of Chavez, as if this tool has the authority to certify anything, completely ignoring all kinds of voting irregularities. In the process, he gave the international media an excuse for putting some bizarre imprimatur of legitimacy on the so-called results.
Chavez is more than just an irritating Marxist operating in our hemisphere, like, say, the Castro brothers -- who lost most of their strategic relevance when the Soviet Union collapsed. Venezuela is America's largest supplier of oil, and while Chavez has not been stupid enough to cut off supplies to his biggest customer (with thuggish Marxists, there's always a self-interested capitalist in there somewhere), he's been quite brazen about flaunting his position to cozy up to U.S. enemies like Iran.
And needless to say, Chavez has been a disaster for the people of Venezuela. Their economy is in tatters, crime is exploding and political right have virtually disappeared. For a guy who simply seizes control of TV stations who don't do his bidding, you'd think the U.S. media would be a bit more up in arms over it all. But that presumes some sort of intellectual honesty on the part of the U.S. media, and you'll never go hungry betting against that.
Hopefully, on Sunday, we can bet on the wisdom of the Venezuelan electorate -- as well as their ability to keep things clean and honest. It would be the sort of smackdown that would create hope for an entire region, and maybe provide a preview of an even sweeter one to come in November.
Venezuelans appear poised to take it away from him -- if everything is on the up-and-up. Manny Lopez, my colleague at The Michigan View, is of Venezuelan descent, and recently visited the homeland for some interesting discussions about what may be coming:
Fortunately, Venezuelans are interested in change again -- only this time to get rid of the socialistic and totalitarian rules that have been imposed on the nation by a president who not only openly flaunts the law, he creates his own.
"Who is going to stop me?" Chavez said recently when questioned about campaigning illegally for candidates, according to Dow Jones Newswires.
Hopefully, more than 11,000 young people who have organized to monitor Sunday's elections to the national assembly as well as the millions more freedom and democracy loving people in Venezuela will do their part to keep him from intimidating voters, fomenting violence or flat-out altering results.
People around the world need to pay attention, too.
Chavez' socialists hold 137 of the 167 national assembly seats, but an energized opposition is poised to retake many of those and eliminate the two-thirds majority he needs to keep his dictatorial rule in place.
"The good thing is that the opposition has finally gotten the message and is consolidated (somewhat) and organized. They feel like if they get enough people at the polls to monitor, they can combat some of the fraud," Jon Perdue, director of Latin American Programs at The Fund for American Studies, told me Tuesday. But as Manny points out, a key to this potential success will be to keep Jimmy Carter out.
The self-proclaimed greatest former President alive showed up in Venezuela in 2004 to "certify" the election of Chavez, as if this tool has the authority to certify anything, completely ignoring all kinds of voting irregularities. In the process, he gave the international media an excuse for putting some bizarre imprimatur of legitimacy on the so-called results.
Chavez is more than just an irritating Marxist operating in our hemisphere, like, say, the Castro brothers -- who lost most of their strategic relevance when the Soviet Union collapsed. Venezuela is America's largest supplier of oil, and while Chavez has not been stupid enough to cut off supplies to his biggest customer (with thuggish Marxists, there's always a self-interested capitalist in there somewhere), he's been quite brazen about flaunting his position to cozy up to U.S. enemies like Iran.
And needless to say, Chavez has been a disaster for the people of Venezuela. Their economy is in tatters, crime is exploding and political right have virtually disappeared. For a guy who simply seizes control of TV stations who don't do his bidding, you'd think the U.S. media would be a bit more up in arms over it all. But that presumes some sort of intellectual honesty on the part of the U.S. media, and you'll never go hungry betting against that.
Hopefully, on Sunday, we can bet on the wisdom of the Venezuelan electorate -- as well as their ability to keep things clean and honest. It would be the sort of smackdown that would create hope for an entire region, and maybe provide a preview of an even sweeter one to come in November.
Thursday, September 23, 2010
Venezuelan economy in shambles ... cliff-hanging parliamentary election
Post & Courier: When we last looked in on President Hugo Chavez of Venezuela he was fuming because departing Colombian President Alvaro Uribe had the nerve to give the Organization of American States documentary proof of Venezuela's support of the narco-terrorist FARC organization in his country.
Mr. Chavez threatened war. He was also still upset about the US Treasury Department declaring in 2008 that the two top intelligence officials in the Chavez government, along with a recent Interior minister, were guilty of arming, abetting and funding FARC. So Mr. Chavez proclaimed that a US diplomat, who truthfully related this fact in answer to a question from the Senate, was unwelcome in Venezuela.
More recently, he has accused his political opposition of sabotaging Venezuela's electrical grid, which has malfunctioned since he nationalized it. The Wall Street Journal reports other nationalized industries have recently experienced a string of costly accidents, probably caused by mismanagement. "We are facing a wave of sabotage, I have no doubt," said the President. An electrical engineer who revealed unfriendly thoughts about Mr. Chavez on Twitter is under arrest for inciting others to kill the President.
Meanwhile, Mr. Chavez has had the bones of Venezuela's founding hero, Simon Bolivar, exhumed for DNA studies. Some think he wants to claim descent from The Liberator, others that he wants to prove that Bolivar was murdered by US agents. He sees one plot after another against him.
The reasonable explanation for all these strange goings-on -- if the word "reasonable" can be applied to a man such as Hugo Chavez -- is that he faces an economy in shambles and a cliff-hanging parliamentary election on Sunday.
Those circumstances might similarly explain his decisions to jail several dozen political opponents, drive prominent media and financial leaders into exile and shut down any media operations that don't toe the government line.
Venezuela's economy is expected to contract by 11% over this year and next -- the worst performance in South America, by far -- according to The Economist, all the while experiencing double-digit inflation and ever- tightening rationing.
Earlier this month, the government even introduced a Cuba-like rationing card. It is called, with perfect irony, the "Good Life Card."
Yet none of this is expected to deliver the opposition a majority in Venezuela's congress. Mr. Chavez, despite -- or because of? -- his lack of emotional balance, has firmly gripped the reins of power.
That means Venezuela, due to Mr. Chavez' increasingly irrational leadership, is going from bad to worse.
Mr. Chavez threatened war. He was also still upset about the US Treasury Department declaring in 2008 that the two top intelligence officials in the Chavez government, along with a recent Interior minister, were guilty of arming, abetting and funding FARC. So Mr. Chavez proclaimed that a US diplomat, who truthfully related this fact in answer to a question from the Senate, was unwelcome in Venezuela.
More recently, he has accused his political opposition of sabotaging Venezuela's electrical grid, which has malfunctioned since he nationalized it. The Wall Street Journal reports other nationalized industries have recently experienced a string of costly accidents, probably caused by mismanagement. "We are facing a wave of sabotage, I have no doubt," said the President. An electrical engineer who revealed unfriendly thoughts about Mr. Chavez on Twitter is under arrest for inciting others to kill the President.
Meanwhile, Mr. Chavez has had the bones of Venezuela's founding hero, Simon Bolivar, exhumed for DNA studies. Some think he wants to claim descent from The Liberator, others that he wants to prove that Bolivar was murdered by US agents. He sees one plot after another against him.
The reasonable explanation for all these strange goings-on -- if the word "reasonable" can be applied to a man such as Hugo Chavez -- is that he faces an economy in shambles and a cliff-hanging parliamentary election on Sunday.
Those circumstances might similarly explain his decisions to jail several dozen political opponents, drive prominent media and financial leaders into exile and shut down any media operations that don't toe the government line.
Venezuela's economy is expected to contract by 11% over this year and next -- the worst performance in South America, by far -- according to The Economist, all the while experiencing double-digit inflation and ever- tightening rationing.
Earlier this month, the government even introduced a Cuba-like rationing card. It is called, with perfect irony, the "Good Life Card."
Yet none of this is expected to deliver the opposition a majority in Venezuela's congress. Mr. Chavez, despite -- or because of? -- his lack of emotional balance, has firmly gripped the reins of power.
That means Venezuela, due to Mr. Chavez' increasingly irrational leadership, is going from bad to worse.
Friday, September 17, 2010
The Cost of Chavez
By Matt Gurney on Sep 14th, 2010
Since coming to power in 1998, Venezuelan strongman Hugo Chavez has presided over radical changes inside the country. Promising to create “21st century socialism,” he has reformed the constitution, giving government-funded health care to all. He has nationalized key industries in repeated attempts to address what he perceives as an imbalance between Venezuela’s business elites and its masses of poor, including a “re-nationalization” of the oil sector. He’s worked within OPEC to keep the price of oil high and contain America’s power (while also blaming it for his economic woes).
Most alarmingly, he has turned into the bully of Latin America, purchasing large quantities of Russian weapons, threatening his neighbors with war and constantly yammering on about American assassination plots and military threats whenever he needs a boost to his domestic approval ratings. He has supported the FARC terrorists in their insurgency campaign against US-ally Colombia. Clearly, the man has been busy. So busy, in fact, that it was to be expected that he would drop at least one of the balls he was juggling. Too bad for the people of Venezuela that the ball in question was the one concerned with keeping crime low and the streets safe: Under his leadership, Venezuela has become a disaster.
The statistics are sobering, and astonishing. On the whole, the country, with 26 million people, saw a whopping 19,000 murders in 2009. To put that into perspective, the state of Texas, with a comparable population of roughly 24.5 million, experienced 1,374 murders in 2008, considerably less than a tenth of Venezuela’s total. Indeed, the United States as a whole, with roughly 12 times the population of Venezuela, recorded nearly 3,000 fewer murders in 2008 than did Venezuela in 2009. (Please note the differing years reflect the most recent available data for both nations.)
Put another way, it is safer to live in Iraq than it is in Venezuela.
The problem is particularly acute in the capital city of Caracas, currently the murder capital of the world. In 2008, as rival gangs battled for control of the underworld and kidnappings for ransom flourished, the city’s central forensic lab was filled to capacity with murder victims awaiting examination, with more arriving each hour. Later that year, after more than 500 people were murdered in the capital during the month of December alone, the Ministry of Interior Relations and Justice announced a slate of initiatives designed to help bring down the rate of violent crime the next year. Community outreach into troubled areas and specialized police units operating within the capital were entrusted with bringing the murder epidemic back under control. It didn’t work.
How is Chavez, a man willing to shake his fist at mighty America, tackling this national nightmare? He’s blaming the media for reporting the extent of the problem. Rather than face up to the fact that the number of murders in Venezuela has at least doubled (some figures suggest an even great increase of 400%) since he took office, Chavez’s government is accusing the media of supporting opposition parties ahead of legislative elections later this month by running pictures of the afore-mentioned Caracas morgue, overflowing with the bodies of murder victims. Venezuela’s courts quickly deemed the images pornographic and banned similar images from publication, in a move that brought swift condemnation from the United Nations and various international press agencies. The rulings have largely been reversed, though the first two papers to publish the images remain under sanction.
t seems to have escaped the notice of the government that if there’s a morgue full of crime victims, that itself is the problem, rather than the willingness of journalists to report on the facts. But for leaders such as Chavez, facts come a distant second behind ideology, and his ideology is simple: He is doing what is right for Venezuela, and if the country is in fact getting worse under his leadership, then it’s far preferable to shoot the media messengers than admit the truth. On the rare occasions when a government official is even willing to admit that there is a problem with a rising crime rate, they attribute it to regional factors, pointing out that other Latin American countries, such as Mexico, are also drowning in blood.
It is therefore interesting to compare Venezuela to its neighbor, Colombia. Colombia is of course far from perfect. It continues to grapple with an entrenched left-wing narco-insurgency, the very same FARC terrorists that Chavez supports. And violent crime remains a serious issue in many of Colombia’s major cities, in large part due to the same drug cartels and smuggling rings that beset Venezuela.
But unlike its socialist neighbor, Colombia shows no interest in denying that the problem exists and is more focused on finding solutions, including closer co-operation with America in modernizing its police. Such mutual assistance has paid dividends before; American military and technical aid was essential in allowing Colombia to deal several harsh military defeats to FARC, bringing large swathes of the country under government control for the first time in decades. FARC has even put out peace feelers.
Colombia’s efforts have paid off. Increasing security, economic development and a strengthening and maturing central government have seen the crime rate, while still problematic, drop by half during the same period than Venezuela’s has skyrocketed. With a newly inaugurated president, Colombia is well positioned to ride a wave of increasing prosperity in the wake of improving security conditions and continue to develop and modernize. None of this is to deny or minimize the challenges that lie ahead for a country that still must address economic disparity and remaining guerilla holdouts. But certainly, it is today better to live in democratic, capitalist, stabilizing Colombia than corrupt, violent Venezuela.
Hugo Chavez cannot be blind to the successes of his neighbor compared to the continued setbacks in his own nation. Whether or not he’s prepared to stop blaming the media for his own failures of leadership and take the steps necessary to improve the lives of his own people is an open question. But given his history of preferring the sound of a rattling saber over that of constructive criticism, there seems little reason for optimism.
Matt Gurney is an editor at the National Post, a Canadian national newspaper, and writes and speaks on military and geopolitical issues. He can be reached at matt@mattgurney.ca.
Since coming to power in 1998, Venezuelan strongman Hugo Chavez has presided over radical changes inside the country. Promising to create “21st century socialism,” he has reformed the constitution, giving government-funded health care to all. He has nationalized key industries in repeated attempts to address what he perceives as an imbalance between Venezuela’s business elites and its masses of poor, including a “re-nationalization” of the oil sector. He’s worked within OPEC to keep the price of oil high and contain America’s power (while also blaming it for his economic woes).
Most alarmingly, he has turned into the bully of Latin America, purchasing large quantities of Russian weapons, threatening his neighbors with war and constantly yammering on about American assassination plots and military threats whenever he needs a boost to his domestic approval ratings. He has supported the FARC terrorists in their insurgency campaign against US-ally Colombia. Clearly, the man has been busy. So busy, in fact, that it was to be expected that he would drop at least one of the balls he was juggling. Too bad for the people of Venezuela that the ball in question was the one concerned with keeping crime low and the streets safe: Under his leadership, Venezuela has become a disaster.
The statistics are sobering, and astonishing. On the whole, the country, with 26 million people, saw a whopping 19,000 murders in 2009. To put that into perspective, the state of Texas, with a comparable population of roughly 24.5 million, experienced 1,374 murders in 2008, considerably less than a tenth of Venezuela’s total. Indeed, the United States as a whole, with roughly 12 times the population of Venezuela, recorded nearly 3,000 fewer murders in 2008 than did Venezuela in 2009. (Please note the differing years reflect the most recent available data for both nations.)
Put another way, it is safer to live in Iraq than it is in Venezuela.
The problem is particularly acute in the capital city of Caracas, currently the murder capital of the world. In 2008, as rival gangs battled for control of the underworld and kidnappings for ransom flourished, the city’s central forensic lab was filled to capacity with murder victims awaiting examination, with more arriving each hour. Later that year, after more than 500 people were murdered in the capital during the month of December alone, the Ministry of Interior Relations and Justice announced a slate of initiatives designed to help bring down the rate of violent crime the next year. Community outreach into troubled areas and specialized police units operating within the capital were entrusted with bringing the murder epidemic back under control. It didn’t work.
How is Chavez, a man willing to shake his fist at mighty America, tackling this national nightmare? He’s blaming the media for reporting the extent of the problem. Rather than face up to the fact that the number of murders in Venezuela has at least doubled (some figures suggest an even great increase of 400%) since he took office, Chavez’s government is accusing the media of supporting opposition parties ahead of legislative elections later this month by running pictures of the afore-mentioned Caracas morgue, overflowing with the bodies of murder victims. Venezuela’s courts quickly deemed the images pornographic and banned similar images from publication, in a move that brought swift condemnation from the United Nations and various international press agencies. The rulings have largely been reversed, though the first two papers to publish the images remain under sanction.
t seems to have escaped the notice of the government that if there’s a morgue full of crime victims, that itself is the problem, rather than the willingness of journalists to report on the facts. But for leaders such as Chavez, facts come a distant second behind ideology, and his ideology is simple: He is doing what is right for Venezuela, and if the country is in fact getting worse under his leadership, then it’s far preferable to shoot the media messengers than admit the truth. On the rare occasions when a government official is even willing to admit that there is a problem with a rising crime rate, they attribute it to regional factors, pointing out that other Latin American countries, such as Mexico, are also drowning in blood.
It is therefore interesting to compare Venezuela to its neighbor, Colombia. Colombia is of course far from perfect. It continues to grapple with an entrenched left-wing narco-insurgency, the very same FARC terrorists that Chavez supports. And violent crime remains a serious issue in many of Colombia’s major cities, in large part due to the same drug cartels and smuggling rings that beset Venezuela.
But unlike its socialist neighbor, Colombia shows no interest in denying that the problem exists and is more focused on finding solutions, including closer co-operation with America in modernizing its police. Such mutual assistance has paid dividends before; American military and technical aid was essential in allowing Colombia to deal several harsh military defeats to FARC, bringing large swathes of the country under government control for the first time in decades. FARC has even put out peace feelers.
Colombia’s efforts have paid off. Increasing security, economic development and a strengthening and maturing central government have seen the crime rate, while still problematic, drop by half during the same period than Venezuela’s has skyrocketed. With a newly inaugurated president, Colombia is well positioned to ride a wave of increasing prosperity in the wake of improving security conditions and continue to develop and modernize. None of this is to deny or minimize the challenges that lie ahead for a country that still must address economic disparity and remaining guerilla holdouts. But certainly, it is today better to live in democratic, capitalist, stabilizing Colombia than corrupt, violent Venezuela.
Hugo Chavez cannot be blind to the successes of his neighbor compared to the continued setbacks in his own nation. Whether or not he’s prepared to stop blaming the media for his own failures of leadership and take the steps necessary to improve the lives of his own people is an open question. But given his history of preferring the sound of a rattling saber over that of constructive criticism, there seems little reason for optimism.
Matt Gurney is an editor at the National Post, a Canadian national newspaper, and writes and speaks on military and geopolitical issues. He can be reached at matt@mattgurney.ca.
Wednesday, September 15, 2010
Sweeping change in the "culture" of financial institutions
VenEconomy: The new regulations on the "Administration and Inspection of Risks Associated with Money Laundering and Financing of Terrorism Crimes Applicable to Institutions Regulated by the Superintendency of Banks and Other Financial Institutions" will go into effect on September 13. These regulations were issued by Sudeban on March 7, 2010, via Resolution No. 11910 and subsequently modified on August 24 to correct errors of substance and form.
It has to be said that the changes made in August clarified and improved the regulations issued in March, as a result of which the Venezuelan regulations are now in line with international standards in this matter.
In essence, these regulations aim to make financial institutions responsible for preventing and detecting activities involving money laundering and financing of terrorism by monitoring three aspects: the receipt of deposits or transfers, processing them, and sending them into the economy as legitimate funds.
It should be pointed out that the institutions subject to these regulations will not find things easy. The regulations are complex, difficult to implement, and costly, in particular for small financial institutions with little experience in international finance.
One of the requirements of these regulations is that banks and other financial institutions are under the obligation to set up a special internal structure, the "Comprehensive Risk Administration System (SIAR LC/FT after its initials in Spanish).
The new regulations require that all a bank's personnel, from the doorman to the president, "know" its customers and its customers' customers, which includes knowing what kind of business it is and where its managers, shareholders, suppliers and partners are from. It also means knowing where a transfer comes from and where it is going.
In order to comply with these regulations, it is essential that all personnel be trained in and committed to their application. Each employee, be he an executive or a teller, is a "risk factor," both for himself and for the bank. Failure to comply with these regulations could result in a prison sentence for those responsible or even the closure of the bank.
The regulations imply new, complicated procedures and controls that mean a sweeping change in the "culture" of financial institutions.
Recently, a Venezuelan financial institution was fined $10 million by the US authorities for what could be interpreted as an error committed in good faith when it accepted a deposit from a customer who turned out to be a drug trafficker. In this case, the fine was "only" US$10 million, but the example should serve as a warning for the owners and administrators of Venezuelan financial institutions on the importance of and the risks implicit in the new Sudeban regulations.
It has to be said that the changes made in August clarified and improved the regulations issued in March, as a result of which the Venezuelan regulations are now in line with international standards in this matter.
In essence, these regulations aim to make financial institutions responsible for preventing and detecting activities involving money laundering and financing of terrorism by monitoring three aspects: the receipt of deposits or transfers, processing them, and sending them into the economy as legitimate funds.
It should be pointed out that the institutions subject to these regulations will not find things easy. The regulations are complex, difficult to implement, and costly, in particular for small financial institutions with little experience in international finance.
One of the requirements of these regulations is that banks and other financial institutions are under the obligation to set up a special internal structure, the "Comprehensive Risk Administration System (SIAR LC/FT after its initials in Spanish).
The new regulations require that all a bank's personnel, from the doorman to the president, "know" its customers and its customers' customers, which includes knowing what kind of business it is and where its managers, shareholders, suppliers and partners are from. It also means knowing where a transfer comes from and where it is going.
In order to comply with these regulations, it is essential that all personnel be trained in and committed to their application. Each employee, be he an executive or a teller, is a "risk factor," both for himself and for the bank. Failure to comply with these regulations could result in a prison sentence for those responsible or even the closure of the bank.
The regulations imply new, complicated procedures and controls that mean a sweeping change in the "culture" of financial institutions.
Recently, a Venezuelan financial institution was fined $10 million by the US authorities for what could be interpreted as an error committed in good faith when it accepted a deposit from a customer who turned out to be a drug trafficker. In this case, the fine was "only" US$10 million, but the example should serve as a warning for the owners and administrators of Venezuelan financial institutions on the importance of and the risks implicit in the new Sudeban regulations.
Monday, September 13, 2010
Venezuela's economy has become a lasting casualty of the recession
The Economist: At dawn on September 16, 1810 Miguel Hidalgo, the parish priest of Dolores, a small town in central Mexico, rang the bells of his church to raise the cry of rebellion against the Spanish crown. Mexico, Spain's richest American colony, thus joined a struggle for independence which had already seen the colonial authorities ousted and rebel juntas installed in Caracas, Buenos Aires and other South American cities. Two years earlier, following Napoleon Bonaparte's invasion of the Iberian peninsula, King Joao VI of Portugal and his court had been installed in Rio de Janeiro by a British fleet. Brazil would never again be governed from Lisbon.
As Latin America marks the bicentenary of the start of its struggle for political independence, many of its constituent countries have more recent cause for celebration too. The five years to 2008 were Latin America's best since the 1960s, with economic growth averaging 5.5% a year and inflation generally in single digits. Even more impressively, a region which had become a byword for financial instability mostly sailed through the recent recession. After a brief downturn in late 2008 and early 2009, a strong recovery is now under way, with most forecasts suggesting economic growth of over 5% this year for the region as a whole.
Along with growth came a better life. Between 2002 and 2008 some 40 million Latin Americans, out of a total population of 580 million, were lifted out of poverty, and income distribution became a bit less unequal almost everywhere. Poverty increased in 2009 because of the recession, but will start declining again this year. Average unemployment went up slightly to 8.2%, but should come down again this year to 7.8%, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
Latin America weathered the recession partly thanks to good fortune but also to sound policies. After the cataclysmic debt crisis of 1982 the region's policymakers abandoned the protectionism and fiscal profligacy that had brought hyperinflation and bankruptcy. In their place they adopted the market reforms of the Washington Consensus (opening up their economies to trade and foreign investment, privatization and deregulation).
But they found the road to stability and faster growth a long and bumpy one. During a second bout of instability, from 1998 to 2002, the region introduced more pragmatic policies. The formula has generally included flexible exchange rates, inflation-targeting by more or less independent central banks, more responsible fiscal policies and tighter regulation of banks, as well as social policies aimed at the poor. The recession was an important test. Last year "may have been the final exam and the graduation party" after Latin America's lengthy education in getting macroeconomic policy right, says Santiago Levy, the chief economist at the Inter-American Development Bank (IDB).
The region's newfound economic stability and social progress also owes much to the fact that over the past 30 years democracy has become established almost everywhere. Nearly all elections are now free and fair. The big exception remains the gerontocratic dictatorship of the Castro brothers in Cuba.
There are threats to democracy in some other places: last year a coup toppled an elected government in Honduras, and opponents of the governments in Venezuela and Nicaragua face growing harassment and intimidation. But broadly speaking Latin America today is more democratic than ever before.
Latin America's new resilience and faster growth is starting to attract increased interest from outsiders. That is especially true of Brazil, now often perceived to be in a league of its own. That is only partly because Jim O'Neill, an economist at Goldman Sachs, did it a huge favor when in 2001 he bracketed it together with Russia, India and China as one of the BRICs which would dominate world economic growth over the coming decades. Another reason is Brazil's sheer size: with a population of 191 million it accounts for a third of Latin America's total and 40% of the region's GDP. Since 2007 Brazil has begun to grow faster than the regional average -- although by common consent its red-hot pace of 11% in the year to March 2010 will subside to less than half that rate next year.
As multinationals face mounting difficulties in China, some bankers and businessmen are looking at Latin America -- and not just Brazil -- as an alternative. The region has 15% of the world's oil reserves, a large stock of its minerals, a quarter of its arable land (much of it unused) and 30% of its fresh water. Mexico, its other giant, with almost 25% of its GDP, suffered a deeper recession in 2009 and is struggling to deal with violent drug gangs, but it has maintained economic and political stability. Like the big two, Chile, Colombia, Panama and Peru have investment-grade credit ratings, and all four are growing fast. Governments, households and companies in all these countries are less indebted than those in many developed countries.
Already, Latin America takes a quarter of the total exports of the United States and around a fifth of its outward flow of portfolio investment. Total bank credit in the region will grow by about 12% a year over the next few years, faster than anywhere except China and India, reckons Manuel Medina Mora, who heads Citibank's Latin American operations and its global consumer-banking business. Its share of the market capitalisation of publicly quoted companies and assets under management is only 3-5% of the world total but growing at 25% a year, faster than anywhere else, according to Paulo Oliveira of Brain Brasil, a body set up to promote the country as a business hub.
Marketing people are beginning to talk about a "Latin American decade." If the region can keep up the growth of the past few years, it will double its income per person by 2025, to an average of $22,000 a year at purchasing-power parity. By then Brazil may be the world's fifth-biggest economy, behind only China, the United States, India and Japan. Half a dozen countries may have achieved developed-country status, with an income equivalent to Spain's today.
Causes for caution
Some Latin American countries may at last have found a path towards economic development. But getting there may be no quicker or easier than achieving independence. Latin America has often flattered to deceive. Today there are at least three big worries. First, since 1960 it has seen the lowest growth in productivity of any region in the world, not least because around half of all economic activity takes place in the informal sector. Second, despite some recent improvement, its income distribution is still the most unequal anywhere. This has acted as a drag on growth and caused political conflict. Third, it suffers from widespread crime and violence, much of it perpetrated by organised drug gangs. The murder rate is hideously high in some countries.
A problem for any report such as this one is that Latin America is so diverse as to defy most generalizations. For some purposes it includes the small English-speaking island-states of the Caribbean. Haiti's problems were more akin to Africa's even before its devastating earthquake. On the other hand, some Brazilians argue that their country -- differentiated by speaking Portuguese and, until recently, geographically isolated from its neighbors -- is not really part of Latin America.
Income per person also varies widely, from $15,300 in Panama to $2,900 in Nicaragua. And there is an ideological divide too. Venezuela's Hugo Chavez and the Castro brothers in Cuba reject integration with the world economy in favor of state socialism and managed trade. Their economies have suffered for it: Venezuela's economy has become a lasting casualty of the recession, despite the swift recovery in the oil price.
So there are differences. But there are clear trends, and an identifiable majority. Mr Chavez, for instance, has his allies but very few want to embrace fully his brand of economic mayhem. Rafael Correa in Ecuador is discreetly distancing himself. Evo Morales in Bolivia has pursued a prudent macroeconomic policy at the same time as launching a collectivist experiment under which people of indigenous descent are being granted special rights. Despite the efforts of its first family, the Kirchners, Argentina retains a vigorous private sector.
This report will concentrate mainly on the region's larger countries that have embraced globalization: Brazil, Mexico, Chile, Colombia and Peru, which between them represent three-quarters of Latin America's GDP and more than 70% of its people.
They have all recently enjoyed a huge bonus: the world commodity boom that began earlier this decade as China and India sucked up foodstuffs and raw materials.
As Latin America marks the bicentenary of the start of its struggle for political independence, many of its constituent countries have more recent cause for celebration too. The five years to 2008 were Latin America's best since the 1960s, with economic growth averaging 5.5% a year and inflation generally in single digits. Even more impressively, a region which had become a byword for financial instability mostly sailed through the recent recession. After a brief downturn in late 2008 and early 2009, a strong recovery is now under way, with most forecasts suggesting economic growth of over 5% this year for the region as a whole.
Along with growth came a better life. Between 2002 and 2008 some 40 million Latin Americans, out of a total population of 580 million, were lifted out of poverty, and income distribution became a bit less unequal almost everywhere. Poverty increased in 2009 because of the recession, but will start declining again this year. Average unemployment went up slightly to 8.2%, but should come down again this year to 7.8%, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
Latin America weathered the recession partly thanks to good fortune but also to sound policies. After the cataclysmic debt crisis of 1982 the region's policymakers abandoned the protectionism and fiscal profligacy that had brought hyperinflation and bankruptcy. In their place they adopted the market reforms of the Washington Consensus (opening up their economies to trade and foreign investment, privatization and deregulation).
But they found the road to stability and faster growth a long and bumpy one. During a second bout of instability, from 1998 to 2002, the region introduced more pragmatic policies. The formula has generally included flexible exchange rates, inflation-targeting by more or less independent central banks, more responsible fiscal policies and tighter regulation of banks, as well as social policies aimed at the poor. The recession was an important test. Last year "may have been the final exam and the graduation party" after Latin America's lengthy education in getting macroeconomic policy right, says Santiago Levy, the chief economist at the Inter-American Development Bank (IDB).
The region's newfound economic stability and social progress also owes much to the fact that over the past 30 years democracy has become established almost everywhere. Nearly all elections are now free and fair. The big exception remains the gerontocratic dictatorship of the Castro brothers in Cuba.
There are threats to democracy in some other places: last year a coup toppled an elected government in Honduras, and opponents of the governments in Venezuela and Nicaragua face growing harassment and intimidation. But broadly speaking Latin America today is more democratic than ever before.
Latin America's new resilience and faster growth is starting to attract increased interest from outsiders. That is especially true of Brazil, now often perceived to be in a league of its own. That is only partly because Jim O'Neill, an economist at Goldman Sachs, did it a huge favor when in 2001 he bracketed it together with Russia, India and China as one of the BRICs which would dominate world economic growth over the coming decades. Another reason is Brazil's sheer size: with a population of 191 million it accounts for a third of Latin America's total and 40% of the region's GDP. Since 2007 Brazil has begun to grow faster than the regional average -- although by common consent its red-hot pace of 11% in the year to March 2010 will subside to less than half that rate next year.
As multinationals face mounting difficulties in China, some bankers and businessmen are looking at Latin America -- and not just Brazil -- as an alternative. The region has 15% of the world's oil reserves, a large stock of its minerals, a quarter of its arable land (much of it unused) and 30% of its fresh water. Mexico, its other giant, with almost 25% of its GDP, suffered a deeper recession in 2009 and is struggling to deal with violent drug gangs, but it has maintained economic and political stability. Like the big two, Chile, Colombia, Panama and Peru have investment-grade credit ratings, and all four are growing fast. Governments, households and companies in all these countries are less indebted than those in many developed countries.
Already, Latin America takes a quarter of the total exports of the United States and around a fifth of its outward flow of portfolio investment. Total bank credit in the region will grow by about 12% a year over the next few years, faster than anywhere except China and India, reckons Manuel Medina Mora, who heads Citibank's Latin American operations and its global consumer-banking business. Its share of the market capitalisation of publicly quoted companies and assets under management is only 3-5% of the world total but growing at 25% a year, faster than anywhere else, according to Paulo Oliveira of Brain Brasil, a body set up to promote the country as a business hub.
Marketing people are beginning to talk about a "Latin American decade." If the region can keep up the growth of the past few years, it will double its income per person by 2025, to an average of $22,000 a year at purchasing-power parity. By then Brazil may be the world's fifth-biggest economy, behind only China, the United States, India and Japan. Half a dozen countries may have achieved developed-country status, with an income equivalent to Spain's today.
Causes for caution
Some Latin American countries may at last have found a path towards economic development. But getting there may be no quicker or easier than achieving independence. Latin America has often flattered to deceive. Today there are at least three big worries. First, since 1960 it has seen the lowest growth in productivity of any region in the world, not least because around half of all economic activity takes place in the informal sector. Second, despite some recent improvement, its income distribution is still the most unequal anywhere. This has acted as a drag on growth and caused political conflict. Third, it suffers from widespread crime and violence, much of it perpetrated by organised drug gangs. The murder rate is hideously high in some countries.
A problem for any report such as this one is that Latin America is so diverse as to defy most generalizations. For some purposes it includes the small English-speaking island-states of the Caribbean. Haiti's problems were more akin to Africa's even before its devastating earthquake. On the other hand, some Brazilians argue that their country -- differentiated by speaking Portuguese and, until recently, geographically isolated from its neighbors -- is not really part of Latin America.
Income per person also varies widely, from $15,300 in Panama to $2,900 in Nicaragua. And there is an ideological divide too. Venezuela's Hugo Chavez and the Castro brothers in Cuba reject integration with the world economy in favor of state socialism and managed trade. Their economies have suffered for it: Venezuela's economy has become a lasting casualty of the recession, despite the swift recovery in the oil price.
So there are differences. But there are clear trends, and an identifiable majority. Mr Chavez, for instance, has his allies but very few want to embrace fully his brand of economic mayhem. Rafael Correa in Ecuador is discreetly distancing himself. Evo Morales in Bolivia has pursued a prudent macroeconomic policy at the same time as launching a collectivist experiment under which people of indigenous descent are being granted special rights. Despite the efforts of its first family, the Kirchners, Argentina retains a vigorous private sector.
This report will concentrate mainly on the region's larger countries that have embraced globalization: Brazil, Mexico, Chile, Colombia and Peru, which between them represent three-quarters of Latin America's GDP and more than 70% of its people.
They have all recently enjoyed a huge bonus: the world commodity boom that began earlier this decade as China and India sucked up foodstuffs and raw materials.
Friday, September 10, 2010
Giordani seems to think inflation of 30% is an achievement
Published: Wednesday, September 08, 2010
VenEconomy: Planning & Finance Minister Jorge Giordani denied outright that Venezuela would fail to meet payment of its foreign debt and fall into default.
According to the explanation he gave Jose Vicente Rangel in an interview broadcast by Televen, "Throughout its history, Venezuela has honored its commitments, and particularly during these ten years thanks to the political will of the government headed by President Chavez to honor them."
Perhaps because he was too young at the time or because his mind was on other things, Giordani does not remember the 1981 debt crisis, during the Luis Herrera Campins administration. Nor does he seem to remember the debt crisis at the beginning of the 20th century, when the British were given control of customs posts in order ensure servicing of the foreign debt of the day. Much less does he remember the many liabilities that this government has failed to meet as a result of expropriations and other matters subject to international treaties.
However, the important thing here is not the minister's bad memory, what's important is that, in his arguments for discarding default, he gave no hint of the elements that would guarantee payment in the future of the gigantic foreign debt incurred by this government. Among other things, he could have indicated where the resources for the payments will come from and which surplus or cash flow will be used to cover them, all relevant data, particularly bearing in mind that, for more than five years, both the national budget and the balance of payments have been sustained thanks to fresh borrowing.
Another unfortunate statement made by Giordani in that same interview with Rangel was when he said that the country's recession was a thing of the past, as the economy contracted less in the second quarter of 2010 than it had in the first. What Giordani did not mention were the factors that boosted the economy and that led him to make that optimistic forecast. The fact is that those factors are nowhere to be seen: no increases are predicted either in oil revenues or public spending, in private investment or consumption or in any other factor that would generate growth.
Another of Giordani's statements that looks hollow is that 2010 will close with inflation of less than 30%, for which there is no basis whatsoever.
What is worse, Giordani seems to think that inflation of 30% is an achievement, when the fact of the matter is that any figure above 3% is a disaster for any country. Nor does he seem to realize that Venezuela is the only country in the region with double-digit inflation.
All these statements by Giordani have electoral overtones, but, unfortunately, they reveal an even bigger vacuum: the lack of a clear strategy on the part of the planners of Chavez' revolution for getting Venezuela off the ground.
VenEconomy: Planning & Finance Minister Jorge Giordani denied outright that Venezuela would fail to meet payment of its foreign debt and fall into default.
According to the explanation he gave Jose Vicente Rangel in an interview broadcast by Televen, "Throughout its history, Venezuela has honored its commitments, and particularly during these ten years thanks to the political will of the government headed by President Chavez to honor them."
Perhaps because he was too young at the time or because his mind was on other things, Giordani does not remember the 1981 debt crisis, during the Luis Herrera Campins administration. Nor does he seem to remember the debt crisis at the beginning of the 20th century, when the British were given control of customs posts in order ensure servicing of the foreign debt of the day. Much less does he remember the many liabilities that this government has failed to meet as a result of expropriations and other matters subject to international treaties.
However, the important thing here is not the minister's bad memory, what's important is that, in his arguments for discarding default, he gave no hint of the elements that would guarantee payment in the future of the gigantic foreign debt incurred by this government. Among other things, he could have indicated where the resources for the payments will come from and which surplus or cash flow will be used to cover them, all relevant data, particularly bearing in mind that, for more than five years, both the national budget and the balance of payments have been sustained thanks to fresh borrowing.
Another unfortunate statement made by Giordani in that same interview with Rangel was when he said that the country's recession was a thing of the past, as the economy contracted less in the second quarter of 2010 than it had in the first. What Giordani did not mention were the factors that boosted the economy and that led him to make that optimistic forecast. The fact is that those factors are nowhere to be seen: no increases are predicted either in oil revenues or public spending, in private investment or consumption or in any other factor that would generate growth.
Another of Giordani's statements that looks hollow is that 2010 will close with inflation of less than 30%, for which there is no basis whatsoever.
What is worse, Giordani seems to think that inflation of 30% is an achievement, when the fact of the matter is that any figure above 3% is a disaster for any country. Nor does he seem to realize that Venezuela is the only country in the region with double-digit inflation.
All these statements by Giordani have electoral overtones, but, unfortunately, they reveal an even bigger vacuum: the lack of a clear strategy on the part of the planners of Chavez' revolution for getting Venezuela off the ground.
Tuesday, September 7, 2010
Standard procedure for Chavez to violate the Constitution
Published: Sunday, September 05, 2010
VenEconomy: It has already become standard procedure for the Hugo Chavez administration to violate the Constitution and the laws of the Republic whenever it feels like it, to suit its interests. It resorts to this practice to deal with any kind of circumstance, from the crisis of PDVAL's rotting food to the sinking of the Aban Pearl gas platform to matters having to do with elections.
The infringements of the Electoral Procedures Act committed by government officials and, in particular, by the President of the Republic are becoming ever more blatant.
This Thursday, September 2, Vicente Diaz, a director of the National Electoral Council (CNE), urged President Chavez and the rest of the country's government officials to respect the election campaign rules and to abide by the Electoral Procedures Act. Using videos, Diaz gave examples of these violations committed by the President, among them:
1) defamatory remarks about the democratic unity alliance candidates made by Hugo Chavez and his promotion of candidates of the government party, PSUV, in a nationwide networked broadcast, in violation of Article 145 of the Constitution and Article 17 of the Electoral Processes Act, which expressly forbids government officials to serve any political party or act in its favor;
2) the use of the national flag by the President when passing over to PSUV candidates during a television broadcast, even though the law forbids the use of patriotic symbols in election campaigns; and
3) the words, "We're going to give the opposition a beating on September 26," spoken by the President of the Republic at a public event broadcast in a nationwide networked broadcast.
Despite the gravity of the accusations, Diaz fell short ... he failed to mention, for example, that, while the President has suspended his Sunday program, Alo Presidente, for the duration of the election campaign as proof of his alleged political impartiality, Chavez has continued to make abusive use of presidential nationwide, networked broadcasts and programs on the government-controlled television channels to campaign in favor of PSUV candidates.
This was made patently obvious that same Thursday, September 2, when nearly all the government channels broadcast the electoral event "Hugo Chavez and candidates to the National Assembly for the PSUV" (the President's own party) from Maracaibo, while CNE director Tibisay Lucena gave a press conference to reject Vicente Diaz' accusations and give "guarantees" of the CNE's impartiality.
The cherry on the cake was when President Chavez, still campaigning in flagrante and in his best dictatorial style, attacked Vicente Diaz and threatened to take him to court.
VenEconomy: It has already become standard procedure for the Hugo Chavez administration to violate the Constitution and the laws of the Republic whenever it feels like it, to suit its interests. It resorts to this practice to deal with any kind of circumstance, from the crisis of PDVAL's rotting food to the sinking of the Aban Pearl gas platform to matters having to do with elections.
The infringements of the Electoral Procedures Act committed by government officials and, in particular, by the President of the Republic are becoming ever more blatant.
This Thursday, September 2, Vicente Diaz, a director of the National Electoral Council (CNE), urged President Chavez and the rest of the country's government officials to respect the election campaign rules and to abide by the Electoral Procedures Act. Using videos, Diaz gave examples of these violations committed by the President, among them:
1) defamatory remarks about the democratic unity alliance candidates made by Hugo Chavez and his promotion of candidates of the government party, PSUV, in a nationwide networked broadcast, in violation of Article 145 of the Constitution and Article 17 of the Electoral Processes Act, which expressly forbids government officials to serve any political party or act in its favor;
2) the use of the national flag by the President when passing over to PSUV candidates during a television broadcast, even though the law forbids the use of patriotic symbols in election campaigns; and
3) the words, "We're going to give the opposition a beating on September 26," spoken by the President of the Republic at a public event broadcast in a nationwide networked broadcast.
Despite the gravity of the accusations, Diaz fell short ... he failed to mention, for example, that, while the President has suspended his Sunday program, Alo Presidente, for the duration of the election campaign as proof of his alleged political impartiality, Chavez has continued to make abusive use of presidential nationwide, networked broadcasts and programs on the government-controlled television channels to campaign in favor of PSUV candidates.
This was made patently obvious that same Thursday, September 2, when nearly all the government channels broadcast the electoral event "Hugo Chavez and candidates to the National Assembly for the PSUV" (the President's own party) from Maracaibo, while CNE director Tibisay Lucena gave a press conference to reject Vicente Diaz' accusations and give "guarantees" of the CNE's impartiality.
The cherry on the cake was when President Chavez, still campaigning in flagrante and in his best dictatorial style, attacked Vicente Diaz and threatened to take him to court.
Monday, September 6, 2010
Chavez administration'spublic policies pushing Venezuela towards a precipice
Published: Friday, September 03, 2010
Bylined to: VenEconomy
VenEconomy: The Hugo Chavez administration's arrogance is preventing the country's institutions from honestly evaluating their performance and correcting the public policies that are pushing Venezuela towards a precipice. And in its eagerness to centralize the flow of information, the government is also preventing private institutions from promoting a debate of the situation.
Information on the deplorable state of the country thanks to the Chavez administration is being provided by groups outside the government: either by Venezuelan NGOs such as Transparencia Venezuela, Cedice, and, more recently, by the Coalition for Democratic Unity, which prepared a report on the food crisis in Venezuela, which also has implications for Venezuelans' health and pockets, and is the direct consequence of the government's wrongheaded social and economic policies, or most often, by reputable international agencies known for their independence of criteria and total credibility whose practice it is to analyze the economies and public policies of hundreds of countries.
From the World Bank to opinion forums and universities to nongovernment organizations, there are groups of people who measure the performance of countries in areas as diverse as economic freedoms, transparency in government, investment and business climate, competitiveness, human rights, freedom of speech, and violence and the lack of security.
And all these measurements have two common threads:
1) the higher a country's rating, the better the quality of life and standard of living of its population; and
2) the freer the economy, the greater its growth over time.
Another common factor in these measurements is that, in recent years, in the times of Chavez, Venezuela's ratings have been getting steadily and consistently worse. In practically all of the ten world indexes, Chavez' Venezuela is among the last in the ranking and, in most cases, side by side with poorer and poorly administered African countries.
For example, the Index of Economic Freedom 2010 issued by the Heritage Foundation and The Wall Street Journal ranks Venezuela 174 out of 182 countries. This classifies Venezuela as a repressed economy, ranking only above countries such as Burma-Eritrea, Cuba, Zimbabwe, and North Korea. Venezuela is even way below Ecuador and Bolivia.
Another worrisome rating is revealed by Transparency International's Corruption Perceptions Index 2009, where Venezuela ranked 162 out of 180 countries and 30 (out of 31) in Latin America, ahead only of Haiti.
It can be inferred from the results of nearly a dozen world indexes that, if the Chavez administration wanted to correct the negative course on which it has set Venezuela, all it would have to do would be to design policies based on those same international indicators of good government and solid economies.
Bylined to: VenEconomy
VenEconomy: The Hugo Chavez administration's arrogance is preventing the country's institutions from honestly evaluating their performance and correcting the public policies that are pushing Venezuela towards a precipice. And in its eagerness to centralize the flow of information, the government is also preventing private institutions from promoting a debate of the situation.
Information on the deplorable state of the country thanks to the Chavez administration is being provided by groups outside the government: either by Venezuelan NGOs such as Transparencia Venezuela, Cedice, and, more recently, by the Coalition for Democratic Unity, which prepared a report on the food crisis in Venezuela, which also has implications for Venezuelans' health and pockets, and is the direct consequence of the government's wrongheaded social and economic policies, or most often, by reputable international agencies known for their independence of criteria and total credibility whose practice it is to analyze the economies and public policies of hundreds of countries.
From the World Bank to opinion forums and universities to nongovernment organizations, there are groups of people who measure the performance of countries in areas as diverse as economic freedoms, transparency in government, investment and business climate, competitiveness, human rights, freedom of speech, and violence and the lack of security.
And all these measurements have two common threads:
1) the higher a country's rating, the better the quality of life and standard of living of its population; and
2) the freer the economy, the greater its growth over time.
Another common factor in these measurements is that, in recent years, in the times of Chavez, Venezuela's ratings have been getting steadily and consistently worse. In practically all of the ten world indexes, Chavez' Venezuela is among the last in the ranking and, in most cases, side by side with poorer and poorly administered African countries.
For example, the Index of Economic Freedom 2010 issued by the Heritage Foundation and The Wall Street Journal ranks Venezuela 174 out of 182 countries. This classifies Venezuela as a repressed economy, ranking only above countries such as Burma-Eritrea, Cuba, Zimbabwe, and North Korea. Venezuela is even way below Ecuador and Bolivia.
Another worrisome rating is revealed by Transparency International's Corruption Perceptions Index 2009, where Venezuela ranked 162 out of 180 countries and 30 (out of 31) in Latin America, ahead only of Haiti.
It can be inferred from the results of nearly a dozen world indexes that, if the Chavez administration wanted to correct the negative course on which it has set Venezuela, all it would have to do would be to design policies based on those same international indicators of good government and solid economies.
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